Exzeo Group, Inc.

Previous wording

These forward-looking statements are based on management's current expectations, assumptions, estimates and projections. While we believe these expectations and assumptions are based on reasonable information, forward-looking statements are inherently predictive in nature and involve known and unknown risks and uncertainties, many of which are beyond our control. Actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including those discussed or referenced in Part II, Item 1A "Risk Factors" in this Quarterly Report, in our 2025 Annual Report and in other reports we file with the SEC.

Current wording

These forward-looking statements are based on management's current expectations, assumptions, estimates and projections. While we believe these expectations and assumptions are reasonable, forward-looking statements are inherently predictive in nature and involve known and unknown risks and uncertainties, many of which are beyond our control. Actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including those discussed in Part II, Item 1A "Risk Factors" in this Quarterly Report, in our 2025 Annual Report and in other reports we file with the SEC.

Previous wording

Factors that could cause actual results or events to differ materially include, among others, our ability to maintain profitability and manage fluctuations in operating results on a quarterly or annual basis; our dependence on a limited number of customers for a substantial portion of our revenue; our ability to retain existing customers and attract new customers; and our continued reliance on affiliated customers. Our future performance also depends on the successful development, enhancement, and scalability of our proprietary IaaS platform, including the introduction of new features, analytical models and services, as well as the accuracy of estimates regarding market size and growth opportunities.

Current wording

Factors that could cause actual results or events to differ materially include, among others, our ability to maintain profitability and manage fluctuations in operating results on a quarterly or annual basis; our dependence on a limited number of customers for a substantial portion of our revenue; our ability to retain existing customers and attract new customers; and our continued reliance on affiliated customers. Our future performance also depends on the successful development, enhancement and scalability of the Exzeo Platform, including the introduction of new features, analytical models and services, as well as the accuracy of estimates regarding market size and growth opportunities.

Previous wording

Our ownership structure further presents additional risks. HCI controls the direction of our business through its ownership interests, and this concentrated ownership limits the ability of other shareholders to influence significant corporate decisions. Potential conflicts of interest may arise between HCI and us, including those involving our executive officers and directors who hold positions or financial interests. In addition, if HCI were to sell a controlling interest of the Company in a private transaction, shareholders may not receive a change-of-control premium, and we could become subject to control by an unknown third party. We may also face challenges in realizing the anticipated benefits of operating as a standalone public company, including increased costs, regulatory compliance obligations and demands on management resources.

Current wording

Our ownership structure further presents additional risks. HCI controls the direction of our business through its ownership interests, and this concentrated ownership limits the ability of other shareholders to influence significant corporate decisions. Potential conflicts of interest may arise between HCI and us, including those involving our executive officers and directors who hold positions or financial interests. In addition, if HCI were to sell a controlling interest of the Company in a private transaction, shareholders may not receive a change-of-control premium, and we could become subject to control by an unknown third party. We may continue to incur significant costs and devote substantial management resources to operating as a public company, which could adversely affect our business, financial condition and results of operations.

Previous wording

You are cautioned not to place undue reliance on such forward-looking statements, which are not guarantees of future performance, and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report. Any forward-looking statement in this Quarterly Report speaks only as of the date of such statement, and except as required by applicable securities laws, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report.

Current wording

You are cautioned not to place undue reliance on such forward-looking statements, which are not guarantees of future performance, and our actual results of operations, financial condition, liquidity and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report. Any forward-looking statement in this Quarterly Report speaks only as of the date of such statement, and except as required by applicable securities laws, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report.

Previous wording

Exzeo Group, Inc., and its subsidiaries, a majority owned subsidiary of HCI, provide turnkey insurance technology and operations solutions to insurance carriers and their agents (collectively referred to as Exzeo's "customers") through a proprietary platform of internally developed software and data analytics applications designed specifically for the P&C insurance market.

Current wording

Exzeo Group, Inc. is a majority owned subsidiary of HCI. Together with its subsidiaries, Exzeo provides turnkey insurance technology and operations solutions to insurance carriers and their agents (collectively referred to as Exzeo's "customers") through a proprietary platform of internally developed software and data analytics applications designed specifically for the P&C insurance market.

Previous wording

Our Insurance-as-a-Service platform, the Exzeo Platform, is an integrated suite of configurable insurance applications purpose-built to support the entire P&C value chain. The Exzeo Platform delivers integrated technology solutions that streamline operational and administrative functions for insurance carriers, MGAs, reciprocal exchanges, program administrators, and their distribution partners, enabling organizations to modernize operations, improve efficiency, and scale through a single configurable platform which includes quoting and underwriting, policy administration, claims management, data reporting, and financial reporting. Through these capabilities, the Exzeo Platform streamlines and automates insurance operational workflows across carriers, agents and policyholders.

Current wording

The Exzeo Platform is an integrated suite of configurable insurance applications purpose-built to support the entire P&C value chain. The Exzeo Platform delivers integrated technology solutions that streamline operational and administrative functions for insurance carriers, MGAs, reciprocal exchanges, program administrators, and their distribution partners, enabling organizations to modernize operations, improve efficiency and scale through a single configurable platform which includes quoting and underwriting, policy administration, claims management, data reporting and financial reporting. Through these capabilities, the Exzeo Platform streamlines and automates insurance operational workflows across carriers, agents and policyholders.

Previous wording

The Exzeo business was established in 2012 as the technology and innovation division of HCI Group, Inc., a leading underwriter of homeowners insurance in Florida that now writes policies in 12 additional states. In 2020, Exzeo became an independent business entity and completed its initial public offering on November 5, 2025. Since inception, Exzeo has been led by experienced technology and insurance professionals with deep domain expertise focused on developing advanced data analytics algorithms and software tools that enable carriers to maximize system efficiency, optimize underwriting outcomes, and serve their customers more effectively.

Current wording

The Exzeo business was established in 2012 as the technology and innovation division of HCI Group, Inc., a leading underwriter of homeowners insurance in Florida that now writes policies in 12 additional states. In 2020, Exzeo became an independent business entity and completed its IPO in November 2025. Since inception, Exzeo has been led by experienced technology and insurance professionals with deep domain expertise focused on developing advanced data analytics algorithms and software tools that enable carriers to maximize system efficiency, optimize underwriting outcomes and serve their customers more effectively.

Previous wording

Technology-driven underwriting support and continued investments in our platform. We leverage data, technology, and proprietary algorithms to support our customers’ underwriting and risk management processes. This includes incorporating additional dynamic external data sources and applying advanced statistical methods to inform pricing and risk selection decisions. Underwriting decisions and ultimate risk outcomes, including loss experience, remain the responsibility of our carrier customers. We expect that continued enhancements to our platform will improve underwriting, lower loss frequency, and lower loss ratios over time for policies on our platform, after adjusting for weather-related events. Our ability to deliver value depends on successfully integrating new data sources and refining our analytical capabilities to support more informed decision making by our customers.

Current wording

Technology-driven underwriting support and continued investments in our platform. We leverage data, technology, and proprietary algorithms embedded within the Exzeo Platform to support our customers’ underwriting and risk management processes. This includes incorporating additional dynamic external data sources and applying advanced statistical methods to inform pricing and risk selection decisions. Underwriting decisions and ultimate risk outcomes, including loss experience, remain the responsibility of our carrier customers. We believe continued enhancements to our platform will improve underwriting, lower loss frequency, and lower loss ratios over time for policies on our platform, after adjusting for weather-related events. Our ability to deliver value depends on successfully integrating new data sources and refining our analytical capabilities to support more informed decision making by our customers.

Previous wording

New customer acquisition, success and retention. We have relied and expect to continue to rely on customer relationships with a relatively small number of carriers in the P&C insurance industry for a substantial portion of our revenue, and the loss of any of these customers or a reduction in revenue from any of these customers would significantly harm our business, results of operations, and financial condition. As part of our growth strategy, we are focused on expanding our customer base by developing new partnerships with additional carriers and their agents. Our future operating results will depend, in part, on the rate at which we acquire new customers that are not affiliates of HCI and increase the amount of managed premium generated through those relationships. We believe that demonstrating the advantages of our technology platform and variable fee structure to prospective carriers will be critical to diversifying our revenue and reducing customer concentration over time. Our ability to support this expansion depends on the continued performance of our customer success and support teams, which are critical to ensuring high customer adoption, satisfaction, and retention.

Current wording

New customer acquisition, success and retention. We have relied and expect to continue to rely on customer relationships with a relatively small number of carriers in the P&C insurance industry for a substantial portion of our revenue, and the loss of any of these customers or a reduction in revenue from any of these customers would significantly harm our business, results of operations, and financial condition. As part of our growth strategy, we are focused on expanding our customer base by developing new partnerships with additional carriers and their agents. Our future operating results will depend, in part, on the rate at which we acquire new customers that are not affiliates of HCI and increase the amount of managed premium generated through those relationships. We believe that demonstrating the advantages of the Exzeo Platform and variable fee structure to prospective carriers will be critical to diversifying our revenue and reducing customer concentration over time. Our ability to support this expansion depends on the continued performance of our customer success and support teams, which are critical to ensuring high customer adoption, satisfaction, and retention.

Previous wording

Expansion into new geographies and programs. We believe expanding our services across additional states and insurance programs will be an important driver of long-term growth and success of our business. As of June 30, 2026, we provide technology-enabled underwriting, policy administration and claims support services to P&C carriers operating in multiple jurisdictions, including Connecticut, Florida, Georgia, Massachusetts, Montana, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, South Carolina, South Dakota, and Utah. We expect to extend our platform to support additional geographies and use cases, applying a tailored approach that reflects state specific regulatory requirements and local dynamics. While our carrier customers retain responsibility for underwriting decisions, premium growth, and reinsurance arrangements, broader geographic deployment of our platform is expected to enhance the scalability and consistency of our service offerings. Our ability to execute on this strategy depends on successfully adapting our technology and operational capabilities to support customers across diverse regulatory environments.

Current wording

Expansion into new geographies and programs. We believe expanding our services across additional states and insurance programs will be an important driver of long-term growth and success of our business. As of September 30, 2026, we provide technology-enabled underwriting, policy administration and claims support services to P&C carriers operating in multiple jurisdictions, including Connecticut, Florida, Georgia, Massachusetts, Montana, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, South Carolina, South Dakota and Utah. We expect to extend our platform to support additional geographies and use cases, applying a tailored approach that reflects state-specific regulatory requirements and local dynamics. While our carrier customers retain responsibility for underwriting decisions, premium growth, and reinsurance arrangements, broader geographic deployment of the Exzeo Platform is expected to enhance the scalability and consistency of our service offerings. Our ability to execute on this strategy depends on successfully adapting our technology and operational capabilities to support customers across diverse regulatory environments.

Previous wording

Regulatory matters. The legal environment for cloud-based technology businesses is evolving in the United States, and we are subject to a variety of laws and regulations that involve matters central to our business. Many of these laws and regulations are still evolving and being tested in courts and could be interpreted in ways that could harm our business. These may involve privacy, data protection and personal information, content, intellectual property, data security, and data retention and deletion. In particular, we are subject to federal and state laws regarding privacy and protection of personal data. U.S. federal and state laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the evolving industry in which we operate, and may be interpreted and applied inconsistently from state to state and inconsistently with our current policies and practices.

Current wording

Regulatory matters. The legal environment for cloud-based technology businesses is evolving in the United States, and we are subject to a variety of laws and regulations that involve matters central to our business. Many of these laws and regulations are still evolving and being tested in courts and could be interpreted in ways that could harm our business. These may involve privacy, personal information, content, intellectual property, data security and data retention and deletion. In particular, we are subject to federal and state laws regarding privacy and protection of personal data. U.S. federal and state laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the evolving industry in which we operate, and may be interpreted and applied inconsistently from state to state and inconsistently with our current policies and practices.

Previous wording

Data privacy. Our customers and their policyholders upload to and store their data in our cloud-based platform. This presents legal challenges to our business and operations, such as consumer privacy rights and intellectual property rights. We must monitor and comply with a wide variety of laws and regulations regarding the data stored and processed on our cloud-based platform as well as in the operation of our business. Non-compliance with these laws could result in penalties or significant legal liability. We have invested, and continue to invest, human and technology resources into our compliance efforts and our data privacy compliance efforts generally.

Current wording

Data privacy. Our customers and their policyholders upload to and store their data in our cloud-based platform. This presents legal challenges to our business and operations, such as consumer privacy rights and intellectual property rights. We must monitor and comply with a wide variety of laws and regulations regarding the data stored and processed on our cloud-based platform as well as in the operation of our business. Non-compliance with these laws could result in penalties or significant legal liability. We have invested, and continue to invest, personnel and technology resources to support our compliance and data privacy initiatives.

Previous wording

Managed premium is defined as the aggregate gross dollar value of in-force premiums that are processed, managed, or administered by our software solutions as of the period end date. This excludes any applicable policy fee income associated with managed policies. Premium pricing may vary by state due to a combination of factors including regulatory requirements; however, the majority of the policies are written in the state of Florida. Revenue is primarily derived from usage-based pricing models, which are structured based on the amount of managed premiums processed, in most cases. We view this as an important metric because it is an indicator of the overall size of our platform. However, managed premium is an operational metric and should not be considered a substitute for revenue or other financial results.

Current wording

Managed premium is defined as the aggregate gross dollar value of in-force premiums that are processed, managed or administered by our software solutions as of the period end date. This excludes any applicable policy fee income associated with managed policies. Premium pricing may vary by state due to a combination of factors including regulatory requirements; however, the majority of the policies are written in the state of Florida. Revenue is primarily derived from usage-based pricing models, which are structured based on the amount of managed premiums processed, in most cases. We view managed premium as an important metric because it is an indicator of the overall size of the Exzeo Platform. However, managed premium is an operational metric and should not be considered a substitute for revenue or other financial results.

Previous wording

Managed premiums attributable to insurance policies written in Florida represented 91.7% and 90.0% of total managed premiums as of June 30, 2026 and 2025, respectively.

Current wording

Managed premiums attributable to insurance policies written in Florida represented 91.6% and 89.9% of total managed premiums as of September 30, 2026 and 2025, respectively.

Previous wording

As of June 30, 2026 and 2025, managed premiums attributable to policyholders active from the end of the prior year period used in the gross dollar retention rate calculation were $1,087,674 and $446,209, respectively.

Current wording

As of September 30, 2026 and 2025, managed premiums attributable to policyholders active from the end of the prior year period used in the gross dollar retention rate calculation were $1,055,537 and $436,427, respectively.

Previous wording

We generate revenue from three primary sources: underwriting and management services, claim services, and other technology services. Underwriting and management services include policy issuance and renewal, reinsurance placement, and administrative support, with fees tied to a percentage of premiums written or assumed, plus related policy fees. Claim services involve investigating, adjusting, and settling claims, including catastrophe-related claims, with pricing based on percentage of premiums written or assumed, per-claim fees and/or a percentage of indemnification costs. Other technology services are primarily derived from proprietary software solutions offered through Software-as-a-Service service agreements, with fees based on a combination of policy or claim volumes, fixed charges, or percentages of claims handled.

Current wording

We generate revenue from three primary sources: underwriting and management services, claim services and other technology services. Underwriting and management services include policy issuance and renewal, reinsurance placement and administrative support, with fees tied to a percentage of premiums written or assumed, as well as related policy fees. Claim services involve investigating, adjusting, and settling claims, including catastrophe-related claims, with pricing based on a combination of a percentage of premiums written or assumed, per-claim fees or a percentage of indemnity payments. Other technology services are primarily derived from proprietary software solutions offered through Software-as-a-Service agreements, with fees based on a combination of policy or claim volumes, fixed charges, or percentages of indemnity payments associated with claims handled.

Previous wording

Our cost of revenue includes expenses directly attributable to providing our services, including salaries and benefits for employees supporting underwriting, management, administrative and claim services. For certain customers, we are responsible for compensating agents supporting underwriting services and recognize related agent commission expenses. Cost of revenue also includes amortization of capitalized internal-use software and other intangible assets used to provide services, information technology expenses supporting policy underwriting, administrative functions, and claim handling services, and allocated overhead. Claim handling costs include adjustment, investigation, defense, recording, and payment functions. Allocated expenses from departments supporting these functions are also included in cost of revenue.

Current wording

Our cost of revenue consists of expenses directly attributable to providing our services, including personnel-related costs for employees engaged in underwriting, management, administrative and claim services. For certain customers, we are responsible for compensating agents supporting underwriting services and recognize related agent commission expenses. In addition, cost of revenue includes amortization of capitalized internal-use software and other intangible assets used to provide services, information technology expenses supporting policy underwriting, administrative functions, allocated overhead expenses and claim handling expenses. Claim handling expenses consist of costs incurred in connection with claim adjustment, investigation, defense, recording and payment activities. Personnel-related costs include salaries, discretionary pay, stock-based compensation and benefits.

Previous wording

Gross profit represents revenue less cost of revenue. The increase in gross profit in recent periods was primarily driven by growth in managed premium, which allows us to leverage our relatively fixed cost structure. As we continue to scale and achieve operational efficiencies, we expect gross margins to improve over time, although there can be no assurance that we will achieve these improvements.

Current wording

Gross profit represents revenue less cost of revenue. Recent increases in gross profit have been primarily driven by growth in managed premium, which allows us to leverage our relatively fixed cost structure. As we continue to scale our business and achieve operational efficiencies, we expect gross margins to benefit over time, although there can be no assurance that such improvements will be achieved.

Previous wording

Selling, general and administrative expenses represent costs associated with supporting operations and primarily consist of employee compensation, including share-based compensation and benefits for our finance, IT, sales and marketing, human resources, legal and general management functions, as well as facilities and professional services.

Current wording

Selling, general and administrative expenses represent costs associated with supporting operations and primarily consist of personnel-related costs for our finance, IT, sales and marketing, human resources, legal and general management functions, as well as facilities and professional services. Personnel-related costs include salaries, discretionary pay, stock-based compensation and benefits.

Previous wording

Our research and development costs consist primarily of personnel expenses, including salaries and benefits, bonuses, share-based compensation, facilities, and related overhead costs for employees engaged in the design and development of our technology offerings and other internally developed systems and applications.

Current wording

Our research and development costs consist primarily of personnel-related costs, information technology expenses, facilities, and related overhead costs for employees engaged in the design and development of our technology offerings and other internally developed systems and applications. Personnel-related costs include salaries, discretionary pay, stock-based compensation and benefits.

Previous wording

A portion of this revenue is earned through services delivered directly via outsourcing to a subsidiary of HCI. Although this revenue is recognized on a gross basis because we are considered the principal in the transaction, the economics are largely neutral, as the related costs incurred from the subsidiary of HCI closely match the revenue recognized. Refer to Non-GAAP Financial Measures for additional details.

Current wording

A portion of this revenue is earned through services delivered by a subsidiary of HCI. Although this revenue is recognized on a gross basis because we are considered the principal in the transaction, the economics are largely neutral, as the related costs incurred from the subsidiary of HCI closely match the revenue recognized. Refer to Non-GAAP Financial Measures for additional details.

Previous wording

Underwriting and management services revenue increased by $3,047, or 6.7%, to $48,342 for the three months ended June 30, 2026, compared to $45,295 for the same period in 2025, representing 83.7% and 80.8% of total revenue, respectively. The increase was primarily driven by higher managed premiums from two new customers that were onboarded at the end of 2025, along with growth in underwriting and management services from our existing customer base. The fee rate charged as a percentage of premium managed was modestly lower in 2026 compared to 2025, reflecting changes in service mix.

Current wording

Underwriting and management services revenue increased by $980, or 2.2%, to $45,859 for the three months ended September 30, 2026, compared to $44,879 for the same period in 2025, representing 83.1% and 81.4% of total revenue, respectively. The increase was primarily driven by higher managed premiums generated from customers onboarded in late 2025 as these customers contributed revenue throughout 2026 compared to no revenue contribution during the corresponding prior-year period. The fee rate charged as a percentage of managed premiums was modestly lower in 2026 compared to 2025, reflecting changes in service mix.

Previous wording

Claim services revenue decreased by $1,879, or 21.8%, to $6,744 for the three months ended June 30, 2026, compared to $8,623 for the same period in 2025, representing 11.7% and 15.4% of total revenue, respectively. The decrease was primarily due to lower catastrophe-related claim activity, associated with services delivered through our outsourced claims arrangement, in the current period compared to the same period in 2025. Claim services revenue in future periods will continue to be influenced by the level of managed premiums and the timing and severity of weather events.

Current wording

Claim services revenue decreased by $1,419, or 17.7%, to $6,611 for the three months ended September 30, 2026, compared to $8,030 for the same period in 2025, representing 12.0% and 14.6% of total revenue, respectively. The decrease was primarily due to a $1,508 decrease from services delivered through our outsourced claims arrangement, the majority of which was attributable to lower catastrophe-related claim activity, during the current period compared to the same period in 2025. Claim services revenue in future periods will continue to be influenced by the level of managed premiums and the timing and severity of weather events.

Previous wording

Other technology services revenue increased by $528, or 24.3%, to $2,701 for the three months ended June 30, 2026, compared to $2,173 for the same period in 2025, representing 4.7% and 3.9% of total revenue, respectively. The increase was primarily driven by higher catastrophe software service revenue associated with the progression of certain catastrophe events, including Hurricane Ian, in the current period. The current period results reflect the impact of additional revenue recognized as a result of refined claims estimates in the prior year. Because catastrophe-related software activity is event driven, revenue from these services may vary between periods.

Current wording

Other technology services revenue increased by $459, or 20.3%, to $2,716 for the three months ended September 30, 2026, compared to $2,257 for the same period in 2025, representing 4.9% and 4.1% of total revenue, respectively. The increase was primarily driven by higher catastrophe software service revenue associated with the progression of certain catastrophe events, including Hurricane Ian, in the current period. The current period results reflect the impact of additional revenue recognized as a result of refined claims estimates in the prior year. Because catastrophe-related software activity is event driven, revenue from these services may vary between periods.

Previous wording

Cost of revenue decreased by $1,591, or 7.1%, to $20,949 for the three months ended June 30, 2026, compared to $22,540 for the same period in 2025, representing 36.3% and 40.2% of total revenue, respectively. The decrease in the cost of revenue as a percentage of revenue was primarily driven by a significant reduction in outsourced claim fees, partially offset by higher other operating expenses and direct personnel expense.

Current wording

Cost of revenue decreased by $453, or 2.1%, to $20,940 for the three months ended September 30, 2026, compared to $21,393 for the same period in 2025, representing 37.9% and 38.8% of total revenue, respectively. The decrease in the cost of revenue as a percentage of total revenue was primarily driven by a significant reduction in outsourced claims fees, partially offset by higher other operating expenses and direct personnel expense.

Previous wording

Outsourced claims fees decreased by $2,337, or 61.0%, to $1,494 for the three months ended June 30, 2026, compared to $3,831 for the same period in 2025, representing 2.6% and 6.8% of total revenue, respectively. The decrease was primarily due to lower catastrophe claims handling activity and reduced litigation-related activity in 2026 compared with 2025, when claims handling and related litigation costs were elevated due to activity associated with storms that occurred in late 2024 and other historical storm events. The decrease in fees was attributable to this lower claim volume rather than changes in the cost per claim. Catastrophe-related activity is inherently volatile and may fluctuate significantly from period to period.

Current wording

Outsourced claims fees decreased by $1,508, or 53.7%, to $1,301 for the three months ended September 30, 2026, compared to $2,809 for the same period in 2025, representing 2.4% and 5.1% of total revenue, respectively. The decrease was primarily due to lower catastrophe claims handling and associated litigation-related activities in 2026 compared with 2025, when claims handling and related litigation costs were elevated due to activity associated with storms that occurred in late 2024 along with other historical storm events. Catastrophe-related activity is inherently volatile and may fluctuate significantly from period to period.

Previous wording

Direct personnel expense increased by $324, or 6.4%, to $5,387 for the three months ended June 30, 2026, compared to $5,063 for the same period in 2025, representing 9.3% and 9.0% of total revenue, respectively. The increase was primarily driven by higher headcount to support continued business growth, partially offset by a lower portion of discretionary compensation costs being reflected in cost of revenue as accruals were recognized.

Current wording

Direct personnel expense increased by $324, or 6.4%, to $5,410 for the three months ended September 30, 2026, compared to $5,086 for the same period in 2025, representing 9.8% and 9.2% of total revenue, respectively. The increase was primarily driven by higher headcount to support continued business growth. These increases were partially offset by lower discretionary compensation costs recognized in cost of revenue due to allocation of such costs compared to the prior year period.

Previous wording

Other operating expenses increased by $974, or 16.2%, to $6,985 for the six months ended June 30, 2026, compared to $6,011 for the same period in 2025, representing 6.2% and 5.5% of total revenue, respectively. The increase was driven by higher postage and related fees resulting from higher policy volumes in 2026, higher claims management activity, and increased investment in systems and technology. These increases were partially offset by lower bank fees from a system optimization initiative implemented in mid-2025.

Current wording

Other operating expenses increased by $1,030, or 36.7%, to $3,835 for the three months ended September 30, 2026, compared to $2,805 for the same period in 2025, representing 6.9% and 5.1% of total revenue, respectively. The increase was driven by higher policy administration expenses, including postage and supplies, resulting from higher policy volumes and increased claims management activity, as well as continued investment in systems and technology.

Previous wording

Research and development expenses remained relatively flat at $2,440 for the three months ended June 30, 2026, compared to $2,354 for the same period in 2025, representing 4.2% of total revenue in both periods. Research and development was relatively unchanged year-over-year and did not materially affect our cost structure.

Current wording

Depreciation and amortization remained relatively flat at $597 for the three months ended September 30, 2026, compared to $622 for the same period in 2025, representing 1.1% of total revenue in both periods. As a result, depreciation and amortization did not materially impact the period-over-period change in cost of revenue.

Previous wording

Selling, general and administrative expenses increased by $2,828, or 95.5%, to $5,788 for the three months ended June 30, 2026, compared to $2,960 for the same period in 2025, representing 10.0% and 5.3% of total revenue, respectively. Employee-related costs accounted for approximately half of the increase, primarily due to a higher portion of discretionary compensation costs being reflected in selling, general and administrative expenses rather than in cost of revenue as accruals were finalized, along with higher salary and wage expenses resulting from increased headcount to support continued business growth. In addition, the increase reflects lower overhead allocations to TTIC following the sale of TTIC to HCI in July 2024. The corporate overhead allocation to TTIC included shared services such as HR, IT, legal, accounting, and lease-related costs which were allocated using methodologies appropriate to each cost type and applied consistently for all periods presented. We ceased providing corporate services, and therefore ceased allocating related expenses, to TTIC as of July 1, 2025. The remaining increase reflects higher operating costs associated with being a publicly traded Company and as a result of continued business growth.

Current wording

Selling, general and administrative expenses increased by $1,664, or 42.7%, to $5,564 for the three months ended September 30, 2026, compared to $3,900 for the same period in 2025, representing 10.1% and 7.1% of total revenue, respectively. Employee-related costs accounted for approximately half of the increase, primarily reflecting a higher allocation of discretionary compensation costs, as well as higher salary and wage expenses resulting from increased headcount to support continued business growth. In addition, the increase reflected lower overhead allocations to TTIC following its sale to HCI in July 2024, as shared corporate services previously provided to TTIC ended on July 1, 2025. The remaining increase reflected higher operating costs associated with being a publicly traded company and continued business growth.

Previous wording

Depreciation and amortization remained relatively flat at $147, for the three months ended June 30, 2026, compared to $110 for the same period in 2025, representing 0.3% and 0.2% of total revenue, respectively. Depreciation and amortization were relatively unchanged year-over-year and did not materially affect our cost structure.

Current wording

Depreciation and amortization remained relatively flat at $149 for the three months ended September 30, 2026, compared to $127 for the same period in 2025, representing 0.3% and 0.2% of total revenue, respectively. As a result, depreciation and amortization did not materially impact the period-over-period change in operating expenses.

Previous wording

Investment income increased by $2,200, or 288.3%, to $2,963 for the three months ended June 30, 2026, compared to $763 for the same period in 2025. The increase was attributable in approximately equal measure to interest income earned on U.S. Treasury available-for-sale fixed-maturity securities acquired during the first half of 2026, for which there was no comparable activity in the prior year period, and to increased income earned on cash and cash equivalents. The increase in income from cash and cash equivalents was primarily due to higher average balances invested in money market funds following our IPO in November 2025. Investment income may fluctuate in future periods based on cash levels, the timing of the deployment of cash proceeds, and market conditions.

Current wording

Interest income increased by $2,238, or 203.1%, to $3,340 for the three months ended September 30, 2026, compared to $1,102 for the same period in 2025. The increase was primarily attributable to interest income earned on AFS securities, which contributed $2,382 during the current period, with no comparable activity in the prior-year period. The increase also reflects $958 of income earned on cash and cash equivalents during the current period compared to $1,102 in the prior-year period. The increase in interest income reflects the deployment of a portion of the proceeds from our November 2025 IPO into U.S. Treasury securities during 2026. Interest income may fluctuate in future periods based on cash levels, the timing of cash deployment, prevailing interest rates and market conditions.

Previous wording

Income tax expense increased by $930, or 12.9%, to $8,157 for the three months ended June 30, 2026, compared to $7,227 for the same period in 2025. Our effective tax rate was 26.0% for the three months ended June 30, 2026, compared to 25.0% for the same period in 2025.

Current wording

Income tax expense increased by $282, or 3.9%, to $7,485 for the three months ended September 30, 2026, compared to $7,203 for the same period in 2025. Our effective tax rate was 25.1% for the three months ended September 30, 2026, compared to 25.4% for the same period in 2025.

Previous wording

Our effective tax rate for both periods differed from the U.S. federal statutory rate of 21.0% primarily due to state income taxes, net of federal tax benefits, and other immaterial nondeductible expenses. The year-over-year increase in our effective tax rate was primarily driven by permanent differences related to nondeductible executive compensation. We expect our effective tax rate to continue to vary from the statutory rate principally as a result of state income taxes, permanent differences, and state tax obligations. There were no material changes in our income tax estimation methodologies for the periods presented. The increase in income tax expense was primarily due to higher income before income taxes and, to a lesser extent, the increase in our effective tax rate.

Current wording

Our effective tax rate for both periods differed from the U.S. federal statutory rate of 21.0% primarily due to state and foreign income taxes, net of federal tax benefits, and other immaterial nondeductible expenses. We expect our effective tax rate to continue to vary from the statutory rate principally as a result of state income taxes, permanent differences, and state tax obligations. There were no material changes in our income tax estimation methodologies during the periods presented, and the year-over-year change in our effective tax rate was not material. The year-over-year increase in income tax expense was primarily driven by higher income before income taxes.

Previous wording

Selected financial information for the six months ended June 30, 2026, and 2025, including amounts expressed as a percentage of total revenue and the year-over-year change, is presented as follows:

Current wording

Selected financial information for the nine months ended September 30, 2026 and 2025, including amounts expressed as a percentage of total revenue and the year-over-year change, is presented as follows:

Previous wording

A portion of this revenue is earned through services delivered directly via outsourcing to a subsidiary of HCI. Although this revenue is recognized on a gross basis because we are considered the principal in the transaction, the economics are largely neutral, as the related costs incurred from the subsidiary of HCI closely match the revenue recognized. Refer to Non-GAAP Financial Measures for additional details.

Current wording

A portion of this revenue is earned through services delivered by a subsidiary of HCI. Although this revenue is recognized on a gross basis because we are considered the principal in the transaction, the economics are largely neutral, as the related costs incurred from the subsidiary of HCI closely match the revenue recognized. Refer to Non-GAAP Financial Measures for additional details.

Previous wording

Revenue increased by $1,696, or 3.0%, to $57,787 for the three months ended June 30, 2026, compared to $56,091 for the same period in 2025. The increase was primarily attributable to growth in underwriting and management services, offset by lower claim services.

Current wording

Revenue increased by $4,843, or 3.0%, to $168,507 for the nine months ended September 30, 2026, compared to $163,664 for the same period in 2025. The increase was primarily attributable to growth in underwriting and management services and other technology services revenue, offset by lower claim services revenue.

Previous wording

Underwriting and management revenue increased by $5,725, or 6.5%, to $94,270 for the six months ended June 30, 2026, compared to $88,545 for the same period in 2025, representing 83.2% and 81.6% of total revenue, respectively. The increase was primarily driven by higher managed premiums from two new customers that were onboarded at the end of 2025, along with growth in underwriting and management services from our existing customer base. The fee rate charged as a percentage of premium managed was modestly lower in 2026 compared to 2025, reflecting changes in service mix.

Current wording

Underwriting and management services revenue increased by $6,705, or 5.0%, to $140,129 for the nine months ended September 30, 2026, compared to $133,424 for the same period in 2025, representing 83.2% and 81.5% of total revenue, respectively. The increase was primarily driven by higher managed premiums generated from customers onboarded in late 2025 as these customers contributed revenue throughout 2026 compared to no revenue contribution during the corresponding prior-year period. The increase was also driven by higher managed premiums from certain existing customers. The fee rate charged as a percentage of managed premiums was modestly lower in 2026 compared to 2025, reflecting changes in service mix.

Previous wording

Claim services revenue decreased by $1,817, or 11.8%, to $13,635 for the six months ended June 30, 2026, compared to $15,452 for the same period in 2025, representing 12.0% and 14.2% of total revenue, respectively. The decrease was primarily due to lower catastrophe-related claim activity, associated with services delivered through our outsourced claims arrangement, in the current period compared to the same period in 2025. Claim services revenue was elevated in 2025 due to higher volumes of catastrophe claims arising from prior storm events, including Hurricane Ian, Milton, and Helene. As claims associated with these events progressed toward resolution and related claim volumes normalized, claim services revenue decreased from the prior year elevated levels. The decrease was partially offset by higher managed premiums from our existing customer base, which increased related claims volume and associated service fees. Claim services revenue in future periods will continue to be influenced by the level of managed premiums and the timing and severity of weather events.

Current wording

Claim services revenue decreased by $3,236, or 13.8%, to $20,246 for the nine months ended September 30, 2026, compared to $23,482 for the same period in 2025, representing 12.0% and 14.3% of total revenue, respectively. The decrease was primarily due to a $4,571 decrease from services delivered through our outsourced claims arrangement, the majority of which was attributable to lower catastrophe-related claim activity in the current period compared to the same period in 2025. Claim services revenue was elevated in 2025 due to higher volumes of catastrophe claims arising from prior storm events, including Hurricanes Ian, Milton, and Helene. As claims associated with these events progressed toward resolution and related claim volumes normalized, claim services revenue decreased from the prior year elevated levels. The decrease was partially offset by higher managed premiums from existing customers, which increased related claims volume and associated service fees. Claim services revenue in future periods will continue to be influenced by the level of managed premiums and the timing and severity of weather events.

Previous wording

Other technology services revenue increased by $915, or 20.3%, to $5,416 for the six months ended June 30, 2026, compared to $4,501 for the same period in 2025, representing 4.8% and 4.1% of total revenue, respectively. The increase was primarily driven by higher catastrophe software service revenue associated with the progression of certain catastrophe events, including Hurricane Ian, in the current period. The current period results reflect the impact of additional revenue recognized as a result of refined claims estimates in the prior year. Because catastrophe-related software activity is event driven, revenue from these services may vary between periods.

Current wording

Other technology services revenue increased by $1,374, or 20.3%, to $8,132 for the nine months ended September 30, 2026, compared to $6,758 for the same period in 2025, representing 4.8% and 4.1% of total revenue, respectively. The increase was primarily driven by higher catastrophe software service revenue associated with the progression of certain catastrophe events, including Hurricane Ian, in the current period. The current period results reflect the impact of additional revenue recognized as a result of refined claims estimates in the prior year. Because catastrophe-related software activity is event driven, revenue from these services may vary between periods.