Palomar Holdings, Inc.

Previous wording

The results of operations for the nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2025, or for any other future period. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report, and in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K as filed with the SEC on February 25, 2025.

Current wording

The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2026, or for any other future period. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report, and in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K as filed with the SEC on February 24, 2026.

Previous wording

We are a specialty insurance company that provides property and casualty insurance products to individuals and businesses. We use our underwriting and analytical expertise to provide innovative solutions in five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop. We use proprietary data analytics and a modern technology platform to offer our customers flexible products with customized and granular pricing for both the admitted and excess and surplus lines (“E&S”) markets. Our insurance company subsidiaries, Palomar Specialty Insurance Company (“PSIC”), and Palomar Excess and Surplus Insurance Company (“PESIC”) carry an “A” rating from A.M. Best Company (“A.M. Best”), a leading rating agency for the insurance industry. First Indemnity of America Insurance Co. (“FIA”) carries an “A-” (Stable) rating from A.M. Best.

Current wording

We are a specialty insurance company that provides property and casualty insurance products to individuals and businesses. We use our underwriting and analytical expertise to provide innovative solutions in five product categories: Earthquake, Inland Marine and Property, Casualty, Crop, and Surety & Credit. We use proprietary data analytics and a modern technology platform to offer our customers flexible products with customized and granular pricing for both the admitted and excess and surplus lines (“E&S”) markets. Our insurance company subsidiaries, Palomar Specialty Insurance Company (“PSIC”), Palomar Excess and Surplus Insurance Company (“PESIC”), and First Indemnity of America Insurance Co. (“FIA”) carry an “A” (Excellent) rating from A.M. Best Company (“A.M. Best”), a leading rating agency for the insurance industry. Palomar Casualty and Surety Company (“PCSC”) carries an “A-” (Excellent) rating from A.M. Best.

Previous wording

Founded in 2014, we have significantly grown our business and have generated attractive returns. We have organically increased gross written premiums from $16.6 million in our first year of operations to $1.5 billion for the year ended December 31, 2024, which reflects a compound annual growth rate of approximately 57%. We have also been profitable since 2016 and our net income growth since 2016 reflects a compound annual growth rate of 43%.

Current wording

Founded in 2014, we have significantly grown our business and have generated attractive returns. We have organically increased gross written premiums from $16.6 million in our first year of operations to $2.0 billion for the year ended December 31, 2025, which reflects a compound annual growth rate of approximately 55%. We have also been profitable since 2016 and our net income growth since 2016 reflects a compound annual growth rate of 46%.

Previous wording

We seek to continuously grow our income by developing product offerings for lines of business that harness our core competencies and where we believe we can generate attractive risk adjusted returns. In recent years, we have introduced several new products including Crop, Environmental Liability, and E&S Casualty. These new products diversify our book of business and broaden our product portfolio. We believe that our market opportunity, distinctive products, and differentiated business model position us to grow our business profitably.

Current wording

We seek to continuously grow our income by developing product offerings for lines of business that harness our core competencies and where we believe we can generate attractive risk adjusted returns. In recent years, we have introduced several new products including Crop, E&S Casualty, Surety and Environmental Liability. These new products diversify our book of business and broaden our product portfolio. We believe that our market opportunity, distinctive products, and differentiated business model position us to grow our business profitably.

Previous wording

Our ceded written premiums can be impacted significantly in certain periods due to changes in quota share agreements. In periods where we modify a quota share agreement, ceded written premiums may increase or decrease significantly compared to prior periods and these fluctuations may not be indicative of future trends. Our XOL costs as a percentage of gross earned premiums also may vary each period due to changes in cost of XOL between contract periods, changes of premium in-force during the XOL contract period, or due to acceleration of XOL charges or the need to purchase additional XOL reinsurance due to losses. In addition, the volume of premiums ceded in fronting agreements each period may vary due to the timing of entering new fronting partnerships and terminations of fronting partnerships.

Current wording

Our ceded written premiums can be impacted significantly in certain periods due to changes in quota share agreements. In periods where we modify a quota share agreement, ceded written premiums may increase or decrease significantly compared to prior periods and these fluctuations may not be indicative of future trends. Our XOL costs as a percentage of gross earned premiums also may vary each period due to changes in cost of XOL between contract periods, changes of premium in-force during the XOL contract period, or due to acceleration of XOL charges or the need to purchase additional XOL reinsurance due to losses.

Previous wording

Net earned premiums represent the earned portion of our gross written premiums, less the earned portion that is ceded to third-party reinsurers under our reinsurance agreements. The majority of our insurance policies have a term of one year and premiums are earned pro rata over the terms of the policies. Crop premiums are earned ratably over the risk period. The requisite reporting of Crop premiums is primarily received in the third quarter, after the start of the risk period, and earned premium is caught up to cover the period between the start of the risk period and receipt of reporting. Generally, this process results in most of the Crop earned premiums being recognized in the third quarter of each year.

Current wording

Net earned premiums represent the earned portion of our gross written premiums, less the earned portion that is ceded to third-party reinsurers under our reinsurance agreements. The majority of our insurance policies have a term of one year and premiums are earned pro rata over the terms of the policies. Crop premiums are earned ratably over the risk period. The requisite reporting of Crop premiums is primarily received in the third quarter, after the start of the risk period, and earned premium is caught up to cover the period between the start of the risk period and receipt of reporting. Generally, this process results in a significant amount of the Crop earned premiums being recognized in the third quarter of each year.

Previous wording

Acquisition expenses are principally comprised of the commissions we pay retail agents, program administrators and wholesale brokers, net of ceding commissions and fronting fees we receive on business ceded under quota share and fronting reinsurance agreements. In addition, acquisition expenses include premium‑related taxes and other fees. Acquisition expenses related to each policy we write are deferred and expensed pro rata over the term of the policy. We earn fronting fees consistent with how we earn premiums on the underlying insurance policies, on a pro-rata basis over the terms of the policies.

Current wording

Acquisition expenses are principally comprised of the commissions we pay retail agents, program administrators and wholesale brokers, net of ceding commissions and fronting fees we receive on business ceded under quota share and fronting reinsurance agreements. In addition, acquisition expenses include premium‑related taxes and other fees. Acquisition expenses related to each policy we write are deferred and expensed pro rata over the term of the policy.

Previous wording

Adjusted net incomeis a non‑GAAP financial measure defined as net income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. We calculate the tax impact only on adjustments which would be included in calculating our income tax expense using the estimated tax rate at which the company received a deduction for these adjustments. See “Reconciliation of Non‑GAAP Financial Measures” for a reconciliation of net income calculated in accordance with GAAP to adjusted net income.

Current wording

Adjusted net incomeis a non‑GAAP financial measure defined as net income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. We calculate the tax impact only on adjustments which would be included in calculating our income tax expense using the estimated tax rate at which we received a deduction for these adjustments. See “Reconciliation of Non‑GAAP Financial Measures” for a reconciliation of net income calculated in accordance with GAAP to adjusted net income.

Previous wording

Gross written premiums increased $182.2 million, or 43.9%, to $597.2 million for the three months ended September 30, 2025 compared to $415.0 million for the three months ended September 30, 2024. Premium growth was primarily due to an increased volume of policies in the majority of our lines of business, particularly in our Casualty and Crop lines, which was driven by new business generated with existing partners, strong premium retention rates for existing business, expansion of our distribution footprint, and new partnerships, partially offset by a decrease in our Fronting line. The following table summarizes our gross written premiums by line of business and shows each line’s percentage of total gross written premiums for each period:

Current wording

Gross written premiums increased $187.7 million, or 42.4%, to $629.8 million for the three months ended March 31, 2026 compared to $442.2 million for the three months ended March 31, 2025. Premium growth was primarily due to an increased volume of policies in the majority of our lines of business, particularly in our Casualty and Inland Marine and Property lines, which was driven by new business generated with existing partners, strong premium retention rates for existing business, expansion of our distribution footprint, and new partnerships. The following table summarizes our gross written premiums by line of business and shows each line’s percentage of total gross written premiums for each period:

Previous wording

Ceded written premiums increased $66.7 million, or 26.1%, to $321.9 million for the three months ended September 30, 2025 from $255.3 million for the three months ended September 30, 2024. The increase in ceded written premium was primarily driven by growth in written premiums subject to quota share arrangements, such as those in Casualty and Crop lines, as well as elevated exposure leading to higher XOL reinsurance expense.

Current wording

Ceded written premiums increased $61.2 million, or 26.5%, to $291.9 million for the three months ended March 31, 2026 from $230.7 million for the three months ended March 31, 2025. The increase in ceded written premium was primarily driven by growth in written premiums subject to quota share arrangements, such as those in Casualty and Inland Marine and Property lines.

Previous wording

Although our volume of ceded written premiums increased, ceded written premiums as a percentage of gross written premiums decreased to 53.9% for the three months ended September 30, 2025 from 61.5% for the three months ended September 30, 2024. This percentage decrease was driven by changes in our composition of business whereby premiums written in the current period were subject to lower quota share or XOL cession percentages compared to premiums written in the prior period.

Current wording

Although our volume of ceded written premiums increased, ceded written premiums as a percentage of gross written premiums decreased to 46.3% for the three months ended March 31, 2026 from 52.2% for the three months ended March 31, 2025. This percentage decrease was driven by changes in our composition of business whereby premiums written in the current period were subject to lower quota share or XOL cession percentages compared to premiums written in the prior period.

Previous wording

Net written premiums increased $115.5 million, or 72.3%, to $275.2 million for the three months ended September 30, 2025 from $159.7 million for the three months ended September 30, 2024. The increase was primarily due to an increase in gross written premiums, primarily in our Casualty and Crop lines, partially offset by increased ceded written premiums.

Current wording

Net written premiums increased $126.5 million, or 59.8%, to $337.9 million for the three months ended March 31, 2026 from $211.4 million for the three months ended March 31, 2025. The increase was primarily due to an increase in gross written premiums, primarily in our Casualty and Inland Marine and Property lines, partially offset by increased ceded written premiums.

Previous wording

Net earned premiums increased $89.5 million, or 66.0%, to $225.1 million for the three months ended September 30, 2025 from $135.6 million for the three months ended September 30, 2024 due primarily to the earning of increased gross written premiums partially offset by the earning of ceded written premiums under reinsurance agreements. The table below shows the amount of premiums we earned on a gross and net basis and net earned premiums as a percentage of gross earned premiums in each period presented:

Current wording

Net earned premiums increased $97.4 million, or 59.3%, to $261.4 million for the three months ended March 31, 2026 from $164.1 million for the three months ended March 31, 2025 due primarily to the earning of increased gross written premiums partially offset by the earning of ceded written premiums under reinsurance agreements. The following table shows the amount of premiums we earned on a gross and net basis and net earned premiums as a percentage of gross earned premiums in each period presented:

Previous wording

Commission and other income increased $0.7 million to $1.4 million for the three months ended September 30, 2025 from $0.7 million for the three months ended September 30, 2024. The balance increased due to an increase in commissions and policy related fees driven by increased premiums written.

Current wording

Commission and other income increased $0.6 million to $1.4 million for the three months ended March 31, 2026 from $0.8 million for the three months ended March 31, 2025. The balance increased due to an increase in commissions and policy related fees driven by increased premiums written.

Previous wording

Losses and loss adjustment expenses increased $32.5 million, or 80.6%, to $72.8 million for the three months ended September 30, 2025 from $40.3 million for the three months ended September 30, 2024. Losses and loss adjustment expenses consisted of the following elements during the respective periods:

Current wording

Losses and loss adjustment expenses increased $48.4 million, or 124.8%, to $87.1 million for the three months ended March 31, 2026 from $38.7 million for the three months ended March 31, 2025. Losses and loss adjustment expenses consisted of the following elements during the respective periods:

Previous wording

Catastrophe loss activity for the nine months ended September 30, 2025 was related to flood losses in the third quarter offset by favorable development on prior period catastrophe events.

Current wording

Catastrophe loss activity for the quarter ended March 31, 2026 was primarily related to Hawaii flood activity offset by favorable development on prior period catastrophe events.

Previous wording

Catastrophe loss activity for the quarter ended September 30, 2025 was primarily related to flood events.

Current wording

Catastrophe loss activity for the quarter ended March 31, 2025 was related to favorable development on prior period catastrophe events.

Previous wording

Non-catastrophe losses increased for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due mainly to higher attritional losses driven by premium growth on lines of business subject to attritional losses such as Casualty, Crop, and Inland Marine and Other Property.

Current wording

Non-catastrophe losses increased for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due mainly to higher attritional losses driven by premium growth on lines of business subject to attritional losses such as Casualty, Crop, and Inland Marine and Property and due to our decision to retain a higher percentage of premiums and losses on our Crop business in 2026.

Previous wording

Acquisition expenses increased $14.8 million, or 35.7%, to $56.3 million for the three months ended September 30, 2025 from $41.5 million for the three months ended September 30, 2024. The increase was primarily due to higher commissions and premium-related taxes resulting from higher gross earned premiums. Acquisition expenses as a percentage of gross earned premiums were 10.8% for the three months ended September 30, 2025 compared to 10.5% for the three months ended September 30, 2024. Acquisition expenses as a percentage of gross earned premiums increased due to higher commissions as a percentage of gross earned premiums and lower fronting fees as a percentage of gross earned premiums due to changes in the composition of our business.

Current wording

Acquisition expenses increased $24.0 million, or 51.7%, to $70.3 million for the three months ended March 31, 2026 from $46.4 million for the three months ended March 31, 2025. The increase was primarily due to higher commissions and premium-related taxes resulting from higher gross earned premiums. Acquisition expenses as a percentage of gross earned premiums were 14.0% for the three months ended March 31, 2026 compared to 12.3% for the three months ended March 31, 2025. Acquisition expenses as a percentage of gross earned premiums increased due to higher commissions as a percentage of gross earned premiums due to changes in the composition of our business.

Previous wording

Other underwriting expenses increased $20.2 million, or 71.7%, to $48.3 million for the three months ended September 30, 2025 from $28.1 million for the three months ended September 30, 2024. The increase was primarily due to the Company incurring higher payroll, technology, and stock-based compensation expenses associated with general growth.

Current wording

Other underwriting expenses increased $29.2 million, or 81.6%, to $64.9 million for the three months ended March 31, 2026 from $35.7 million for the three months ended March 31, 2025. The increase was primarily due to us incurring higher payroll, technology, and stock-based compensation expenses associated with general growth.

Previous wording

Other underwriting expenses as a percentage of gross earned premiums were 9.3% for the three months ended September 30, 2025 compared to 7.1% for the three months ended September 30, 2024. Excluding the impact of expenses relating to transactions, stock-based compensation, and amortization of intangibles, other underwriting expenses as a percentage of gross earned premiums were 7.9% for the three months ended September 30, 2025 compared to 5.9% for the three months ended September 30, 2024. Other underwriting expenses as a percentage of gross earned premiums fluctuates period over period based on timing of certain expenses relative to premium growth.

Current wording

Other underwriting expenses as a percentage of gross earned premiums were 12.9% for the three months ended March 31, 2026 compared to 9.5% for the three months ended March 31, 2025. Excluding the impact of expenses relating to transactions, stock-based compensation, and amortization of intangibles, other underwriting expenses as a percentage of gross earned premiums were 8.5% for the three months ended March 31, 2026 compared to 7.5% for the three months ended March 31, 2025. Other underwriting expenses as a percentage of gross earned premiums fluctuates period over period based on timing of certain expenses relative to premium growth.

Previous wording

Net investment income increased $5.2 million, or 54.9%, to $14.6 million for the three months ended September 30, 2025 from $9.4 million for the three months ended September 30, 2024. The increase was primarily due to a higher average balance of investments during the three months ended September 30, 2025 due to the investing of cash generated from operations and the proceeds from our August 2024 secondary offering as well as higher yields on invested assets versus the prior year.

Current wording

Net investment income increased $5.9 million, or 49.0%, to $18.0 million for the three months ended March 31, 2026 from $12.1 million for the three months ended March 31, 2025. The increase was primarily due to a higher average balance of investments during the three months ended March 31, 2026 due to the investing of cash generated from operations and higher yields on invested assets versus the prior year.

Previous wording

The Company incurred $3.5 million of net realized and unrealized gains on investments for the three months ended September 30, 2025 compared to $2.7 million of net realized and unrealized gains for the three months ended September 30, 2024. In both periods, the balance was primarily driven by unrealized gains on our equity securities. Unrealized gains and losses on fixed maturity securities are recognized as a component of other comprehensive income and do not impact our net income. The following table summarizes the components of our investment income for each period presented:

Current wording

We incurred $1.9 million of net realized and unrealized losses on investments for the three months ended March 31, 2026 compared to $2.3 million of net realized and unrealized losses for the three months ended March 31, 2025. In both periods, the balance was primarily driven by unrealized losses on our equity securities. Unrealized gains and losses on fixed maturity securities are recognized as a component of other comprehensive income and do not impact our net income. The following table summarizes the components of our investment income for each period presented:

Previous wording

Income tax expense increased $16.2 million to $39.8 million for the nine months ended September 30, 2025 from $23.6 million for the nine months ended September 30, 2024 due to higher pre-tax income for the period ended September 30, 2025. For the nine months ended September 30, 2025 and 2024, the Company’s income tax rates of 22.0% and 22.2%, respectively, were higher than the statutory rate of 21% due primarily to non-deductible executive compensation expense.

Current wording

Income tax expense decreased $0.3 million to $10.5 million for the three months ended March 31, 2026 from $10.8 million for the three months ended March 31, 2025 due to lower pre-tax income for the period ended March 31, 2026. For the three months ended March 31, 2026 and 2025 our income tax rates of 19.7% and 20.1%, respectively, were lower than the statutory rate of 21% due primarily to the tax impact of the permanent component of employee stock option exercises, offset by non-deductible executive compensation expense.

Previous wording

We define adjusted net income as net income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. We calculate the tax impact only on adjustments which would be included in calculating our income tax expense using the estimated tax rate at which the company received a deduction for these adjustments. We use adjusted net income as an internal performance measure in the management of our operations because we believe it gives our management and financial statement users useful insight into our results of operations and our underlying business performance. Adjusted net income does not reflect the overall profitably of our business and should not be viewed as a substitute for net income calculated in accordance with GAAP. Other companies may define adjusted net income differently.

Current wording

We define adjusted net income as net income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. We calculate the tax impact only on adjustments which would be included in calculating our income tax expense using the estimated tax rate at which we received a deduction for these adjustments. We use adjusted net income as an internal performance measure in the management of our operations because we believe it gives our management and financial statement users useful insight into our results of operations and our underlying business performance. Adjusted net income does not reflect the overall profitably of our business and should not be viewed as a substitute for net income calculated in accordance with GAAP. Other companies may define adjusted net income differently.

Previous wording

The Company’s U.S. insurance company subsidiaries, PSIC, PESIC and FIA, are restricted by the statutes as to the amount of dividends that they may pay without prior approval by state insurance commissioners.

Current wording

Our U.S. insurance company subsidiaries, PSIC, PESIC, FIA, and PCSC are restricted by the statutes as to the amount of dividends that they may pay without prior approval by state insurance commissioners.

Previous wording

Under California and Oregon statutes which govern PSIC, dividends paid in a consecutive twelve month period cannot exceed the greater of (i) 10% of an insurance company’s statutory policyholders’ surplus as of December 31 of the preceding year, or (ii) 100% of its statutory net income for the preceding calendar year. Any dividends or distributions in excess of these amounts would require regulatory approval. In addition, under Oregon statute PSIC may only declare a dividend from earned surplus, which does not include contributed capital. Surplus arising from unrealized capital gains or revaluation of assets is not considered part of earned surplus. Based on the above restrictions, PSIC may pay a dividend or distribution of no greater than $99.6 million in 2025 without approval by the California and Oregon Insurance Commissioners.

Current wording

Under California and Oregon statutes which govern PSIC, dividends paid in a consecutive twelve month period cannot exceed the greater of (i) 10% of an insurance company’s statutory policyholders’ surplus as of December 31 of the preceding year, or (ii) 100% of its statutory net income for the preceding calendar year. Any dividends or distributions in excess of these amounts would require regulatory approval. In addition, under Oregon statute PSIC may only declare a dividend from earned surplus, which does not include contributed capital. Surplus arising from unrealized capital gains or revaluation of assets is not considered part of earned surplus. Based on the above restrictions, PSIC may pay a dividend or distribution of no greater than $176.0 million in 2026 without approval by the California and Oregon Insurance Commissioners.

Previous wording

Under Arizona statute which governs PESIC, dividends paid in a consecutive twelve month period cannot exceed the lesser of (i) 10% of an insurance company’s statutory policyholders’ surplus as of December 31 of the preceding year, or (ii) 100% of its statutory net income for the preceding calendar year. Based on the above restrictions, PESIC may pay a dividend or distribution of no greater than $4.2 million in 2025 without approval of the Arizona Insurance Commissioner.

Current wording

Under Arizona statute which governs PESIC, dividends paid in a consecutive twelve month period cannot exceed the lesser of (i) 10% of an insurance company’s statutory policyholders’ surplus as of December 31 of the preceding year, or (ii) 100% of its statutory net income for the preceding calendar year. Based on the above restrictions, PESIC may pay a dividend or distribution of no greater than $7.4 million in 2026 without approval of the Arizona Insurance Commissioner.

Previous wording

The Company is subject to New Jersey law, such that all dividend payments require 30-day prior approval of the New Jersey Commissioner of Banking and Insurance (the “Commissioner”). The maximum dividend, which may be paid in any twelve-month period, is limited to the greater of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year. Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, FIA has capacity to pay a dividend of $2.3 million in 2025, conditional upon the Commissioner’s approval.

Current wording

We are subject to New Jersey law, such that all dividend payments require 30-day prior approval of the New Jersey Commissioner of Banking and Insurance (the “Commissioner”). The maximum dividend, which may be paid in any twelve-month period, is limited to the greater of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year. Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, FIA has capacity to pay a dividend of $1.8 million in 2026, conditional upon the Commissioner’s approval.

Previous wording

Pursuant to Bermuda regulations, the maximum amount of dividends and return of capital available to be paid by a reinsurer is determined pursuant to a formula. Under this formula, the maximum amount of dividends and return of capital available from PSRE during 2025 is calculated to be approximately $4.2 million. However, this dividend amount is subject to annual enhanced solvency requirement calculations.

Current wording

Pursuant to Bermuda regulations, the maximum amount of dividends and return of capital available to be paid by a reinsurer is determined pursuant to a formula. Under this formula, the maximum amount of dividends and return of capital available from PSRE during 2026 is calculated to be approximately $4.5 million. However, this dividend amount is subject to annual enhanced solvency requirement calculations.

Previous wording

Management believes that our current liquidity and cash receipts from written premiums, investment income, proceeds from investment sales and redemptions, and reinsurance recoveries, if necessary, are sufficient to cover cash outflows for each of the Company’s insurance subsidiaries in the foreseeable future.

Current wording

Management believes that our current liquidity and cash receipts from written premiums, investment income, proceeds from investment sales and redemptions, and reinsurance recoveries, if necessary, are sufficient to cover cash outflows for each of our insurance subsidiaries in the foreseeable future.

Previous wording

The following table summarizes our cash flows for the nine months ended September 30, 2025 and 2024:

Current wording

The following table summarizes our cash flows for the three months ended March 31, 2026 and 2025:

Previous wording

Cash used in investing activities for the nine months ended September 30, 2025 and 2024 related primarily to purchases of fixed maturity securities in excess of sales and maturities and acquisitions occurring in each period.

Current wording

Cash used in investing activities for the three months ended March 31, 2026 and 2025 related primarily to purchases of fixed maturity securities in excess of sales and maturities and acquisitions occurring in each period.

Previous wording

Cash used in financing activities for the nine months ended September 30, 2025 was related to the repurchase of $37.3 million of our common stock and $0.1 million in offering costs from the August 2024 Secondary Offering, partially offset by the receipt of $3.3 million in proceeds from stock option exercises, the receipt of $2.9 million in proceeds from policy holder contributions of surplus, and the receipt of $1.2 million in proceeds from our employee stock purchase plan. Cash provided by financing activities for the nine months ended September 30, 2024 was related to the receipt of $115.7 million in net proceeds from the August 2024 Secondary Offering, the receipt of $5.0 million in proceeds from stock option exercises, the receipt of $2.0 million in proceeds from policy holder contributions of surplus, and the receipt of $0.9 million in proceeds from our employee stock purchase plan, partially offset by $52.6 million in payments on our FHLB line of credit.

Current wording

Cash provided by financing activities for the three months ended March 31, 2026 was related to the issuance of a term loan for $297.4 million, the receipt of $0.9 million in proceeds from policy holder contributions of surplus, and the receipt of $0.7 million in proceeds from our employee stock purchase plan, partially offset by repurchases of $23.1 million of our common stock. Cash provided by financing activities for the three months ended March 31, 2025 was related to the receipt of $2.4 million in proceeds from stock option exercises, the receipt of $0.8 million in proceeds from policy holder contributions of surplus, and the receipt of $0.5 million in proceeds from our employee stock purchase plan, partially offset by $0.1 million in offering costs from the August 2024 secondary offering.

Previous wording

We do not have any current plans for material capital expenditures other than current operating requirements. We believe that we will generate sufficient cash flows from operations to satisfy our liquidity requirements for at least the next 12 months and beyond. The key factor that will affect our future operating cash flows is the frequency and severity of catastrophe losses. To the extent our future operating cash flows are insufficient to cover our net losses from catastrophic events, we had $1.3 billion in cash and investment securities available at September 30, 2025. We also have the ability to access additional capital through pursuing third‑party borrowings, sales of our equity or debt securities or entrance into a reinsurance arrangement.

Current wording

We do not have any current plans for material capital expenditures other than current operating requirements. We believe that we will generate sufficient cash flows from operations to satisfy our liquidity requirements for at least the next 12 months and beyond. The key factor that will affect our future operating cash flows is the frequency and severity of catastrophe losses. To the extent our future operating cash flows are insufficient to cover our net losses from catastrophic events, we had $1.6 billion in cash and investment securities available at March 31, 2026. We also have the ability to access additional capital through pursuing third‑party borrowings, sales of our equity or debt securities or entrance into a reinsurance arrangement.

Previous wording

On July 31, 2025, the Company’s Board of Directors approved a share repurchase program authorizing the repurchase of up to $150 million of the Company’s outstanding common stock through July 31, 2027. We also have implemented a share repurchase plan and have used and may use our cash in the future to purchase outstanding shares of our common stock. Under our current share repurchase program, shares may be repurchased from time to time in the open market or negotiated transactions at prevailing market rates, or by other means in accordance with federal securities laws. We repurchased 308,417 shares for $37.3 million under this program during the nine months ended September 30, 2025 and $112.7 million remains available for future repurchases.

Current wording

On July 31, 2025, our Board of Directors approved a share repurchase program authorizing the repurchase of up to $150 million of our outstanding common stock through July 31, 2027. As such, we have used and may use our cash in the future to purchase outstanding shares of our common stock. Under this share repurchase program, shares may be repurchased from time to time in the open market or negotiated transactions at prevailing market rates, or by other means in accordance with federal securities laws. We repurchased 190,255 shares for $23.1 million under this program during the three months ended March 31, 2026 and $89.6 million remains available for future repurchases.

Previous wording

In December 2021, we entered into a Credit Agreement (the “Credit Agreement”) with U.S. Bank National Association which provides a revolving credit facility of up to $100 million through December 8, 2026. Interest on the credit facility accrues on each Secured Overnight Financing Rate (“SOFR”) rate loan at the applicable SOFR (as defined in the Credit Agreement) plus 1.75% and on each base rate loan at the applicable Alternate Base Rate (as defined in the Credit Agreement) plus 0.75%. A loan may be either a SOFR rate loan or a base rate loan, at our discretion. Outstanding amounts under the Credit Agreement may be prepaid in full or in part at any time with no prepayment premium and may be reduced in full or in part at any time upon prior notice. Currently, $5.6 million of the borrowing capacity of the Credit Agreement is pledged as collateral and not able to be utilized.

Current wording

Currently, $4.1 million of the borrowing capacity of the Revolving Facility is pledged as collateral and not able to be utilized.

Previous wording

As of September 30, 2025, we had no borrowings outstanding through the Credit Agreement.

Current wording

As of March 31, 2026, we had no borrowings outstanding through the 2021 Credit Agreement and the Revolving Facility.

Previous wording

At September 30, 2025 total stockholders’ equity was $878.1 million and tangible stockholders’ equity was $815.6 million, compared to total stockholders’ equity of $729.0 million and tangible stockholders’ equity of $715.8 million as of December 31, 2024. Stockholders’ equity increased due to net income earned for the period, activity related to stock-based compensation, and unrealized gains on fixed maturity securities.

Current wording

At March 31, 2026, total stockholders’ equity was $959.0 million and tangible stockholders’ equity was $712.9 million, compared to total stockholders’ equity of $942.7 million and tangible stockholders’ equity of $881.6 million as of December 31, 2025. Stockholders’ equity increased due to net income earned for the period, activity related to stock-based compensation, and unrealized gains on fixed maturity securities.

Previous wording

Our primary investment objectives are to maintain liquidity, preserve capital and generate a stable level of investment income. We purchase securities that we believe are attractive on a relative value basis and seek to generate returns in excess of predetermined benchmarks. Our Investment Committee reviews and recommends investment guidelines, which are subject to approval by our Board of Directors in accordance with applicable regulatory restrictions on asset type, quality and concentration. Our current investment guidelines allow us to invest in taxable and tax‑exempt fixed maturities, as well as publicly traded mutual funds and common stock of individual companies. Our cash and invested assets consist of cash and cash equivalents, fixed maturity securities, and equity securities. As of September 30, 2025, the majority of our investment portfolio, or $1.1 billion, was comprised of fixed maturity securities that are classified as available‑for‑sale and carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of accumulated other comprehensive income. Also included in our investment portfolio were $52.2 million of equity securities, $15.1 million of investments in limited partnerships, and $4.4 million of a livestock put option. In addition, we maintained a non‑restricted cash and cash equivalent balance of $111.7 million at September 30, 2025. Our fixed maturity securities, including cash equivalents, had a weighted average effective duration of 4.01 and 4.04 years and an average rating of “A2/A” and “A1/A+” at September 30, 2025 and December 31, 2024, respectively. Our fixed income investment portfolio had a book yield of 4.84% as of September 30, 2025, compared to 4.59% as of December 31, 2024.

Current wording

Our primary investment objectives are to maintain liquidity, preserve capital and generate a stable level of investment income. We purchase securities that we believe are attractive on a relative value basis and seek to generate returns in excess of predetermined benchmarks. Our Investment Committee reviews and recommends investment guidelines, which are subject to approval by our Board of Directors in accordance with applicable regulatory restrictions on asset type, quality and concentration. Our current investment guidelines allow us to invest in taxable and tax‑exempt fixed maturities, as well as publicly traded mutual funds and common stock of individual companies. Our cash and invested assets consist of cash and cash equivalents, fixed maturity securities, and equity securities. As of March 31, 2026, the majority of our investment portfolio, or $1.4 billion, was comprised of fixed maturity securities that are classified as available‑for‑sale and carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of accumulated other comprehensive income. Also included in our investment portfolio were $112.3 million of equity securities, $36.0 million of investments in limited partnerships, and $4.4 million of a livestock put option. In addition, we maintained a non‑restricted cash and cash equivalent balance of $56.5 million at March 31, 2026. Our fixed maturity securities, including cash equivalents, had a weighted average effective duration of 4.21 and 3.81 years and an average rating of “A1/A+” as of March 31, 2026 and December 31, 2025, respectively. Our fixed income investment portfolio had a book yield of 4.89% as of March 31, 2026, compared to 4.83% as of December 31, 2025.