Employers Holdings, Inc.

Previous wording

You should read the following discussion and analysis in conjunction with our consolidated financial statements and the related notes thereto included in Item 1 of Part I. Unless otherwise indicated, all references to "we," "us," "our," "the Company," or similar terms refer to EHI, together with its subsidiaries. In this Quarterly Report on Form 10-Q, the Company and its management discuss and make statements based on currently available information regarding their intentions, beliefs, current expectations, and projections of, among other things, the Company's future performance, economic or market conditions, including current or future levels of inflation, potential implications of increased tariffs, changes in interest rates, labor market expectations, catastrophic events or geo-political conditions, legislative or regulatory actions or court decisions, business growth, retention rates, loss costs, claim trends and the impact of key business initiatives, future technologies and planned investments. Certain of these statements may constitute "forward-looking" statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and are often identified by words such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "target," "project," "intend," "believe," "estimate," "predict," "potential," "pro forma," "seek," "likely," or "continue," or other comparable terminology and their negatives. The Company and its management caution investors that such forward-looking statements are not guarantees of future performance. Risks and uncertainties are inherent in the Company’s future performance. Factors that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements include, among other things, those discussed or identified from time to time in the Company’s public filings with the SEC, including the risks detailed in the Company's Annual Reports on Form 10-K and in the Company's subsequent Quarterly Reports on Form 10-Q. Except as required by applicable securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Current wording

You should read the following discussion and analysis in conjunction with our consolidated financial statements and the related notes thereto included in Item 1 of Part I. Unless otherwise indicated, all references to "we," "us," "our," "the Company," or similar terms refer to EHI, together with its subsidiaries. In this Quarterly Report on Form 10-Q, the Company and its management discuss and make statements based on currently available information regarding their intentions, beliefs, current expectations, and projections of, among other things, the Company's future performance, economic or market conditions, including current or future levels of inflation, potential implications of tariffs, changes in interest rates, labor market expectations, catastrophic events or geopolitical conditions, legislative or regulatory actions or court decisions, business growth, retention rates, loss costs, claim trends and the impact of key business initiatives, future technologies and planned investments. Certain of these statements may constitute "forward-looking" statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and are often identified by words such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "target," "project," "intend," "believe," "estimate," "predict," "potential," "pro forma," "seek," "likely," or "continue," or other comparable terminology and their negatives. The Company and its management caution investors that such forward-looking statements are not guarantees of future performance. Risks and uncertainties are inherent in the Company’s future performance. Factors that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements include, among other things, those discussed or identified from time to time in the Company’s public filings with the SEC, including the risks detailed in the Company's Annual Reports on Form 10-K and in the Company's subsequent Quarterly Reports on Form 10-Q. Except as required by applicable securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Previous wording

We provide workers’ compensation insurance throughout most of the United States, with a concentration in California, where 46% of our trailing twelve month gross written premiums, excluding adjustments, are generated. In February 2026, we launched a new excess workers’ compensation product that will be offered to self-insured enterprises in several jurisdictions across the United States. Our revenues primarily consist of net premiums earned, net investment income, and net realized and unrealized gains and losses on investments.

Current wording

We provide workers’ compensation insurance throughout most of the United States, with a concentration in California, where 47% of our trailing twelve month gross written premiums, excluding adjustments, are generated. In February 2026, we launched a new excess workers’ compensation product focused on self-insured enterprises in several jurisdictions across the United States. We wrote our first excess workers’ compensation policy in June 2026. Our revenues primarily consist of net premiums earned, net investment income, and net realized and unrealized gains and losses on investments.

Previous wording

For excess workers’ compensation, our approach is to deliver a flexible, data-driven solution that goes beyond traditional excess coverage by incorporating value-added services. We believe these services including improved organizational performance and reduced long-term loss costs will serve as a key competitive advantage in the self-insured market, differentiating us from carriers that offer coverage alone.

Current wording

For excess workers’ compensation, our approach is to deliver a flexible, data-driven solution that goes beyond traditional excess coverage by incorporating value-added services. We believe these services, resulting in improved organizational performance and reduced long-term loss costs for our policyholders, will serve as a key competitive advantage in the self-insured market, differentiating us from carriers that offer coverage alone.

Previous wording

Our net income was $10.2 million for the three months ended March 31, 2026, compared to $12.8 million for the corresponding period of 2025. The key factors that affected our financial performance during the three months ended March 31, 2026, compared to the same period of 2025, included:

Current wording

Our net income was $29.1 million and $39.2 million for the three and six months ended June 30, 2026, compared to $29.7 million and $42.5 million for the corresponding periods of 2025. The key factors that affected our financial performance during the three and six months ended June 30, 2026, compared to the same periods of 2025, included:

Previous wording

•Net realized and unrealized losses on investments of $1.7 million compared to $12.8 million;

Current wording

•Net realized and unrealized gains on investments of $18.7 million and $17.0 million compared to $20.9 million and $8.1 million;

Previous wording

Our 2026 underwriting results reflect lower net premiums earned and higher losses and LAE expenses, combined with a slight increase in commission expense, partially offset by a reduction in underwriting expenses. Our investment results were impacted by lower returns from our investments in private equity limited partnerships and net realized and unrealized losses on investments.

Current wording

Our 2026 underwriting results reflect lower net premiums earned, partially offset by reductions in losses and LAE, commission expenses, and underwriting expenses. Our investment results were primarily impacted by favorable net realized and unrealized gains on investments as net investment income was slightly higher for the quarter, but lower in the first half of 2026, as compared to prior year periods.

Previous wording

Our 2025 underwriting results reflect lower net premiums earned and higher losses and LAE expenses offset by reductions in commission and underwriting expenses. Our investment results benefited from strong net investment income partially offset by net realized and unrealized losses.

Current wording

Our 2025 underwriting results reflect moderate increases in net premiums earned offset by higher losses and LAE. Commission expense and underwriting expenses were higher in the second quarter, but lower in the first half of 2025 compared to the same periods of 2024. Our 2025 investment results benefited from strong net investment income and favorable net realized and unrealized gains.

Previous wording

Our consolidated financial results of operations for the three months ended March 31, 2026 and 2025 are as follows:

Current wording

Our consolidated financial results of operations for the three and six months ended June 30, 2026 and 2025 are as follows:

Previous wording

Underwriting income or loss is determined by deducting losses and LAE, commission expense, and underwriting expenses from net premiums earned. Our underwriting results for the three months ended March 31, 2026 and 2025 are as follows:

Current wording

Underwriting income or loss is determined by deducting losses and LAE, commission expense, and underwriting expenses from net premiums earned. Our underwriting results for the three and six months ended June 30, 2026 and 2025 are as follows:

Previous wording

Gross premiums written were $180.8 million for the three months ended March 31, 2026, compared to $212.1 million for the corresponding period of 2025. For the three months ended March 31, 2026, the decrease in gross premiums written was largely driven by declines in both new and renewal business premiums driven predominately by our pricing and underwriting actions taken in 2025 to return to historical underwriting margins. Total in-force policies at March 31, 2026 were 130,321 compared to 133,121 in-force policies at March 31, 2025.

Current wording

Gross premiums written were $163.4 million and $344.2 million for the three and six months ended June 30, 2026, respectively, compared to $203.3 million and $415.4 million for the corresponding periods of 2025, respectively. For the three and six months ended June 30, 2026, decreases in gross premiums written were largely driven by declines in both new and renewal business premiums, primarily reflecting our pricing and underwriting actions, which commenced in 2025 and continue in 2026, taken to return to historical underwriting margins. These decreases were partially offset by increases in our ending final audit premium accruals and a premium restitution of $2.5 million from a former policyholder reflected in both periods. Additionally, during the second quarter of 2026, we bound our first excess workers' compensation policy. Total in-force policies at June 30, 2026 were 127,601 compared to 134,421 in-force policies at June 30, 2025.

Previous wording

Net premiums written were $179.4 million for the three months ended March 31, 2026, compared to $210.3 million for the corresponding period of 2025. Reinsurance premiums ceded were $1.4 million for the three months ended March 31, 2026, compared to $1.8 million for the corresponding period of 2025.

Current wording

Net premiums written were $162.0 million and $341.4 million for the three and six months ended June 30, 2026, respectively, compared to $201.5 million and $411.8 million for the corresponding periods of 2025, respectively. Reinsurance premiums ceded were $1.4 million and $2.8 million for the three and six months ended June 30, 2026, respectively, compared to $1.8 million and $3.6 million for the corresponding period of 2025, respectively.

Previous wording

The increase in our calendar year losses and LAE during the three months ended March 31, 2026, as compared to the same period of 2025, was primarily due to a higher current accident year loss and LAE estimate due to increased cumulative trauma (CT) claim frequency in California. Prior accident year favorable loss reserve development totaled $0.1 million on our assigned risk business during the three months ended March 31, 2026. Prior accident year unfavorable loss reserve development totaled $1.3 million during the three months ended March 31, 2025, which included $0.6 million of net unfavorable loss reserve development on our assigned risk business.

Current wording

The decrease in our calendar year losses and LAE during the three months ended June 30, 2026, as compared to the same period of 2025, was primarily due to lower earned premiums as our current accident year loss and LAE estimate remains consistent. The decrease in our calendar year losses and LAE during the six months ended June 30, 2026, as compared to the same period of 2025, was primarily due to lower earned premiums, partially offset by a higher current accident year loss and LAE estimate due to increased cumulative trauma (CT) claim frequency in California.

Previous wording

Our commission expense ratio was 13.1% for the three months ended March 31, 2026, compared to 12.6% for the corresponding period of 2025, and our commission expense was $23.7 million for the three months ended March 31, 2026, compared to $23.0 million for the corresponding period of 2025. The increase in our commission expense ratio and our commission expense for the three months ended March 31, 2026 was primarily driven by a release of commissions payable associated with non-performing policies sent to collections totaling $1.4 million that was recognized in the first quarter of 2025.

Current wording

The decrease in our commission expense ratio and our commission expense for the three months ended June 30, 2026 was primarily driven by lower agency incentive accruals, which are specific to individual contracts and vary with agency targets, and lower new business premiums written. Our commission expense ratio was flat and the decrease in our commission expense for the six months ended June 30, 2026 was primarily driven by lower agency incentive accruals, which are specific to individual contracts and vary with agency targets, lower premiums written, and release of commissions payable associated with non-performing policies sent to collections.

Previous wording

Our underwriting expense ratio was 22.6% for the three months ended March 31, 2026, compared to 23.4% for the corresponding period of 2025, and our underwriting expenses were $40.9 million for the three months ended March 31, 2026, compared to $42.9 million for the corresponding period of 2025. The decrease in our underwriting expense ratio for the three months ended March 31, 2026 was driven by our disciplined focus on expense reduction and our underwriting decisions to reduce policyholder dividends.

Current wording

Our underwriting expense ratio was 22.8% and 22.7% for the three and six months ended June 30, 2026, respectively, compared to 21.7% and 22.6% for the corresponding periods of 2025, respectively, and our underwriting expenses were $39.7 million and $80.6 million for the three and six months ended June 30, 2026, respectively, compared to $43.1 million and $86.0 million for the corresponding periods of 2025, respectively. Despite the reduction in our underwriting expenses, our underwriting expense ratio for the three and six months ended June 30, 2026 increased due to lower premiums earned. As highlighted below, we continue our disciplined focus on expense reductions.

Previous wording

The decrease in underwriting expenses for the three months ended March 31, 2026 was primarily the result of lower compensation-related expenses of $2.6 million and policyholder dividends of $1.7 million. These decreases were partially offset by lower internal AO and other expense allocations of $2.0 million, each compared to the same period of 2025.

Current wording

The decrease in underwriting expenses for the six months ended June 30, 2026 was primarily the result of lower compensation-related expenses of $3.6 million, policyholder dividends of $3.1 million, and premium taxes and assessments of $1.1 million. These decreases were partially offset by lower internal AO and other expense allocations of $2.9 million, each compared to the same period of 2025.

Previous wording

Net investment income decreased 11.8% during the three months ended March 31, 2026, compared to the same period of 2025. The decrease for the three months ended March 31, 2026 was primarily attributable to reduced distributions from our investments in private equity limited partnerships, which were elevated in the prior period, partially offset by higher yields on fixed maturity securities resulting from our investment rebalancing activity in 2025.

Current wording

Net investment income increased 1.1% and decreased 5.9% during the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025. The increase for the three months ended June 30, 2026 was primarily related to higher yield on fixed maturity securities. The decrease for the six months ended June 30, 2026 was primarily attributable to reduced distributions from our investments in private equity limited partnerships, which were elevated in the prior period, and lower invested balances, partially offset by higher yields on fixed maturity securities resulting from our investment rebalancing activity in 2025.

Previous wording

Realized and unrealized gains and losses on our investments are reported separately from our net investment income. Realized gains and losses on investments include the gain or loss on a security at the time of sale compared to its original or adjusted cost (equity securities) or amortized cost (fixed maturity securities). Realized losses are also recognized for adverse changes in our CECL allowance or when securities are written down because of an other-than-temporary impairment. Changes in the fair value of equity securities and other invested assets are also included in Net realized and unrealized losses on investments on our Consolidated Statements of Comprehensive Income (Loss).

Current wording

Net realized and unrealized gains and losses on our investments are reported separately from our net investment income. Net realized gains and losses on investments include the gain or loss on a security at the time of sale compared to its original or adjusted cost (equity securities) or amortized cost (fixed maturity securities). Realized losses are also recognized for adverse changes in our CECL allowance or when securities are written down because of an other-than-temporary impairment. Changes in the fair value of equity securities and other invested assets are also included in Net realized and unrealized losses on investments on our Consolidated Statements of Comprehensive Income (Loss).

Previous wording

Net realized and unrealized losses on investments were $1.7 million for the three months ended March 31, 2026, compared to $12.8 million for the corresponding period of 2025. The net realized and unrealized losses on investments for the three months ended March 31, 2026 and 2025 included $1.2 million and $11.9 million of net realized and unrealized losses on equity securities and other investments, respectively, and $0.5 million and $0.9 million of net realized losses on fixed maturity securities, respectively.

Current wording

Net realized and unrealized gains on investments were $18.7 million and $17.0 million for the three and six months ended June 30, 2026, respectively, compared to $20.9 million and $8.1 million for the corresponding periods of 2025, respectively. The net realized and unrealized gains on investments for the three months ended June 30, 2026 and 2025 included $19.2 million and $21.0 million of net realized and unrealized gains on equity securities and other investments, respectively, and $0.5 million and $0.1 million of net realized losses on fixed maturity securities, respectively. The net realized and unrealized gains on investments for the six months ended June 30, 2026 and 2025 included $18.0 million and $9.1 million of net realized and unrealized gains on equity securities and other investments, respectively, and $1.0 million of net realized losses on fixed maturity securities in each period.

Previous wording

The net investment losses on our equity securities during the three months ended March 31, 2026 were largely consistent with the performance of the U.S. equity markets. The net investment gains on our other investments during the three months ended March 31, 2026 resulted from an increase in the underlying value of the private equity limited partnership interests we own. The net realized investment losses on our fixed maturity securities during the three months ended March 31, 2026 included a $0.3 million increase in our allowance for CECL.

Current wording

The net investment gains on our equity securities during the three and six months ended June 30, 2026 were largely consistent with the performance of the U.S. equity markets. The net investment gains on our other investments during the three and six months ended June 30, 2026 resulted from an increase in the underlying value of the private equity limited partnership interests we own. The net realized investment losses on our fixed maturity securities during the three and six months ended June 30, 2026 included a $0.4 million and $0.7 million increase in our allowance for CECL.

Previous wording

The net investment losses on our equity securities during the three months ended March 31, 2025 were largely consistent with the performance of the U.S. equity markets. The net investment losses on our other investments during the three months ended March 31, 2025 included the returns from our investments in private equity limited partnerships. The net realized investment losses on our fixed maturity securities during the three months ended March 31, 2025 included a $0.3 million increase in our allowance for CECL.

Current wording

The net investment gains on our equity securities during the three and six months ended June 30, 2025 were largely consistent with the performance of the U.S. equity markets. The net investment gains on our other investments during the three months ended June 30, 2025 resulted primarily from an increase in the underlying value of the private equity limited partnership interests we own. The net investment losses on our other investments during the six months ended June 30, 2025 was primarily driven by the reduction in net asset value due to distributed investment returns from our investments in private equity limited partnerships. The net realized investment losses on our fixed maturity securities during the three and six months ended June 30, 2025 were primarily the result of sales associated with the rebalancing of our fixed maturity investment portfolio.

Previous wording

Interest and financing expenses were $1.1 million for the three months ended March 31, 2026, compared to $0.1 million for the corresponding period of 2025. The increase for the three months ended March 31, 2026, resulted primarily from interest expense associated with our various advances with the FHLB.

Current wording

Interest and financing expenses were $1.3 million and $2.4 million for the three and six months ended June 30, 2026, respectively, compared to less than $0.1 million and $0.1 million for the three and six months ended June 30, 2025. The increase for the three and six months ended June 30, 2026, resulted primarily from interest expense associated with our various advances with the FHLB.

Previous wording

Income tax expense was $2.6 million for the three months ended March 31, 2026, compared to $3.1 million for the corresponding period of 2025. The effective tax rate was 20.3% for the three months ended March 31, 2026, compared to 19.5% for the corresponding period of 2025. The effective rates during each of the periods presented deviate favorably from the statutory rate of 21.0% due to, in part, income tax benefits and exclusions associated with tax-advantaged investment income, LPT adjustments, Deferred Gain amortization and related adjustments, and tax credits utilized.

Current wording

Income tax expense was $5.6 million and $8.2 million for the three and six months ended June 30, 2026, respectively, compared to $7.3 million and $10.4 million for the corresponding periods of 2025, respectively. The effective tax rate was 16.1% and 17.3% for the three and six months ended June 30, 2026, compared to 19.7% for each of the corresponding periods of 2025, respectively. The effective rates during each of the periods presented deviate favorably from the statutory rate of 21.0% due to, in part, income tax benefits and exclusions associated with tax-advantaged investment income, LPT adjustments, Deferred Gain amortization and related adjustments, income adjustments related to the Fund, and tax credits utilized.

Previous wording

Total cash and investments at the holding company were $42.3 million at March 31, 2026, consisting of $37.9 million of cash and cash equivalents, $3.9 million of fixed maturity securities, and $0.5 million of equity securities.

Current wording

Total cash and investments at the holding company were $34.2 million at June 30, 2026, consisting of $30.5 million of cash and cash equivalents, $3.2 million of fixed maturity securities, and $0.5 million of equity securities.

Previous wording

In November 2025, EHI entered into two three-year intercompany loan agreements with its insurance subsidiaries: one with EICN (the "EICN Agreement") and one jointly with EAC, ECIC, EPIC, and CIC (the "Omnibus Agreement"). Together, the agreements provide approximately $200.0 million of lending capacity, with individual advances bearing interest at the prevailing rate published by the FHLB for advances of comparable duration. As of March 31, 2026, $140.0 million is outstanding under these intercompany loan agreements.

Current wording

In November 2025, EHI entered into two three-year intercompany loan agreements with its insurance subsidiaries: one with EICN (the "EICN Agreement") and one jointly with EAC, ECIC, EPIC, and CIC (the "Omnibus Agreement"). Together, the agreements provide approximately $200.0 million of lending capacity, with individual advances bearing interest at the prevailing rate published by the FHLB for advances of comparable duration. As of June 30, 2026, $160.0 million is outstanding under these intercompany loan agreements, which were primarily utilized to fund our recapitalization plan.

Previous wording

On May 28, 2024, EHI entered into a Credit Agreement (the Credit Agreement) which provides for a $25.0 million, unsecured, three-year revolving credit facility and is guaranteed by EGI and CGI. Borrowings under the Credit Agreement may be used for working capital and general corporate purposes of EHI and its subsidiaries. Pursuant to the terms of the Credit Agreement, EHI has an option to request an increase of the credit available under the facility up to a maximum facility amount of $35.0 million, subject to the consent of the lender(s) and the satisfaction of certain conditions.

Current wording

On May 28, 2024, EHI entered into a Credit Agreement (as amended, the Credit Agreement) which provides for a $25.0 million, unsecured, three-year revolving credit facility and is guaranteed by EGI and CGI. On July 29, 2026, EHI and Wells Fargo Bank, National Association, entered into Amendment No. 1 to the Credit Agreement. The Credit Agreement provides for a $35.0 million, unsecured, three-year revolving credit facility and remains guaranteed by EGI and CGI. Borrowings under the Credit Agreement may be used for working capital and general corporate purposes of EHI and its subsidiaries.

Previous wording

The interest rates applicable to loans under the Credit Agreement are generally based on, at EHI's option: (i) a base rate, defined as the higher of the Prime Rate, the Federal Funds Rate plus 0.50% and the Adjusted Term SOFR for a one-month tenor plus 1.00%, or (ii) an Adjusted Term SOFR, defined as the applicable Adjusted Term SOFR plus 1.50%. Borrowings under the Credit Agreement may be used for working capital and general corporate purposes of EHI and its subsidiaries. Interest paid and/or fees incurred pursuant to the Credit Agreement, as applicable, was $0.1 million for each of the three months ended March 31, 2026 and 2025.

Current wording

The interest rates applicable to loans under the Credit Agreement are generally based on, at EHI's option: (i) a base rate, defined as the higher of the Prime Rate, the Federal Funds Rate plus 0.50% and the Adjusted Term SOFR for a one-month tenor plus 1.00%, or (ii) an Adjusted Term SOFR, defined as the applicable Adjusted Term SOFR plus 1.50%. Interest paid and/or fees incurred pursuant to the Credit Agreement, as applicable, was $0.3 million and less than $0.1 million for the three months ended June 30, 2026 and 2025, respectively, and $0.4 million and $0.1 million for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

On February 17, 2026, EHI borrowed $20.0 million under the Credit Agreement as part of the Company’s recapitalization plan. The advance bears interest at a rate of 5.50% based on the three-month Adjusted Term SOFR, with a reset date of May 18, 2026. As of March 31, 2026, $20.0 million was outstanding under the Credit Agreement. The outstanding balance is classified as long-term debt as the Credit Agreement does not expire until May 28, 2027. Advances can be repaid at any time without prepayment penalties or additional fees.

Current wording

On February 17, 2026, EHI borrowed $20.0 million under the Credit Agreement as part of our recapitalization plan. The advance bears interest at a rate of 5.15% based on the three-month Adjusted Term SOFR, with a reset date of August 18, 2026. As of June 30, 2026, $20.0 million was outstanding under the Credit Agreement. The outstanding balance is classified as long-term debt as the amended Credit Agreement expires on July 29, 2029. Advances can be repaid at any time without prepayment penalties or additional fees.

Previous wording

Total cash and investments held by our operating subsidiaries was $2,445.9 million at March 31, 2026, consisting of $115.4 million of cash and cash equivalents, and restricted cash, $2,029.8 million of fixed maturity securities, $190.3 million of equity securities, $95.8 million of other invested assets, and $14.6 million of short-term investments. Sources of immediate and unencumbered liquidity at our operating subsidiaries as of March 31, 2026 consisted of $115.2 million of cash and cash equivalents, $182.8 million of publicly traded equity securities whose proceeds are available within two business days, and $762.9 million of highly liquid fixed maturity securities whose proceeds are also available within two business days. We believe that our subsidiaries’ liquidity needs over the next 12 months and for the longer-term period thereafter will be met with cash from operations, investment income, and maturing investments.

Current wording

Total cash and investments held by our operating subsidiaries was $2,415.2 million at June 30, 2026, consisting of $83.0 million of cash and cash equivalents, and restricted cash, $2,034.7 million of fixed maturity securities, $179.7 million of equity securities, $96.1 million of other invested assets, and $21.7 million of short-term investments. Sources of immediate and unencumbered liquidity at our operating subsidiaries as of June 30, 2026 consisted of $82.8 million of cash and cash equivalents, $170.9 million of publicly traded equity securities whose proceeds are available within two business days, and $787.2 million of highly liquid fixed maturity securities whose proceeds are also available within two business days. We believe that our subsidiaries’ liquidity needs over the next 12 months and for the longer-term period thereafter will be met with cash from operations, investment income, and maturing investments.

Previous wording

These advances were assumed by EHI through the intercompany loan agreements as described above and executed as part of the Company’s recapitalization plan. Interest incurred and paid on these borrowings during the three months ended March 31, 2026 was $0.9 million.

Current wording

These advances were assumed by EHI through the intercompany loan agreements as described above and executed as part of the Company’s recapitalization plan. Interest incurred and paid on these borrowings during the three and six months ended June 30, 2026 was $1.0 million and $1.9 million, respectively.

Previous wording

Various state laws and regulations require us to hold investment securities or letters of credit on deposit with certain states in which we do business. Securities having a fair value of $587.0 million and $587.4 million were on deposit at March 31, 2026 and December 31, 2025, respectively. These laws and regulations govern both the amount and types of investment securities that are eligible for deposit. Additionally, standby letters of credit from the FHLB have been issued in lieu of $170.0 million of securities on deposit at both March 31, 2026 and December 31, 2025.

Current wording

Various state laws and regulations require us to hold investment securities or letters of credit on deposit with certain states in which we do business. Securities having a fair value of $585.3 million and $587.4 million were on deposit at June 30, 2026 and December 31, 2025, respectively. These laws and regulations govern both the amount and types of investment securities that are eligible for deposit. Additionally, standby letters of credit from the FHLB have been issued in lieu of $170.0 million of securities on deposit at both June 30, 2026 and December 31, 2025.

Previous wording

We purchase reinsurance annually to protect us against the costs of severe claims and certain catastrophic events. On July 1, 2025, we entered into a new reinsurance program that is effective through June 30, 2026. The reinsurance program consists of one treaty covering excess of loss and catastrophic loss events in four layers of coverage, which includes a 10% co-participation share within each layer of coverage retained by us. Our reinsurance coverage is $190.0 million ($171.0 million net of our co-participation) in excess of our $10.0 million retention on a per occurrence basis, including a maximum any one life limit of $20.0 million, subject to certain exclusions. We believe that our reinsurance program currently meets our needs.

Current wording

We purchase reinsurance annually to protect us against the costs of severe claims and certain catastrophic events. On July 1, 2026, we entered into a new reinsurance program that is effective through June 30, 2027. The reinsurance program consists of one treaty covering excess of loss and catastrophic loss events in four layers of coverage. Our reinsurance coverage is $190.0 million in excess of our $10.0 million retention on a per occurrence basis; including a maximum any one life limit of $20.0 million, subject to certain exclusions. Our previous reinsurance program consisted of one treaty covering excess of loss and catastrophic loss events in four layers of coverage, which included a 10% co-participation share within each layer of coverage retained by us. The reinsurance coverage was $190.0 million ($171.0 million net of our co-participation) in excess of our $10.0 million retention on a per occurrence basis, including a maximum any one life limit of $20.0 million, subject to certain exclusions. We believe that our reinsurance program currently meets our needs.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2025 included net premiums received of $192.7 million, investment income received of $32.8 million, and federal tax refund received of $2.8 million. The cash provided by these operating activities was partially offset by net claims payments of $132.9 million, underwriting expenses paid of $54.1 million, and commissions paid of $26.6 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2026 included net claims payments of $279.9 million, underwriting expenses paid of $75.5 million, commissions paid of $48.4 million, interest paid of $2.4 million and federal income taxes paid of $1.4 million. The cash outflows used in these activities were partially offset by net premiums received of $345.9 million and investment income received of $53.6 million.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2026 included net premiums received of $178.3 million and investment income received of $28.2 million. The cash provided by these operating activities was partially offset by net claims payments of $129.7 million, underwriting expenses paid of $46.7 million, commissions paid of $26.8 million and interest paid of $1.1 million.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2025 included net premiums received of $385.4 million and investment income received of $58.1 million. The cash provided by these operating activities were partially offset by net claims payments of $274.9 million, underwriting expenses paid of $92.1 million, commissions paid of $50.2 million, and federal income taxes paid of $11.6 million.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2026 related primarily to investments of premiums received and the reinvestment of funds from investment sales, maturities, redemptions and interest income. The cash outflows used in these activities were partially offset by investment sales, maturities, and redemptions whose proceeds were used to fund claims payments, underwriting expenses, stockholder dividend payments, and common stock repurchases.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 related primarily to investments of premiums received and the reinvestment of funds from investment sales, maturities, redemptions, and interest income. The cash outflows used in these activities were partially offset by investment sales, maturities, and redemptions whose proceeds were used to fund claims payments, underwriting expenses, stockholder dividend payments, and common stock repurchases.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2025 related primarily to returns from our investments, investment sales, maturities, and redemptions whose proceeds were used to fund claims payments, underwriting expenses, stockholder dividend payments, and common stock repurchases. Those investing cash inflows were partially offset by investments of premiums received and the reinvestment of funds from investment sales, maturities, redemptions and interest income.

Current wording

Net cash provided by investing activities for the six months ended June 30, 2025 related primarily to returns from our investments, investment sales, maturities, and redemptions whose proceeds were used to fund claims payments, underwriting expenses, stockholder dividend payments, and common stock repurchases. Those investing cash inflows were partially offset by investments of premiums received and the reinvestment of funds from investment sales, maturities, redemptions, and interest income.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2026 related primarily to FHLB advances and borrowings on the Credit Agreement offset by stockholder dividend payments and common stock repurchases.

Current wording

Net cash used in financing activities for the six months ended June 30, 2026 related primarily to stockholder dividend payments and common stock repurchases offset by FHLB advances and borrowings on the Credit Agreement.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2025 related primarily to stockholder dividend payments and common stock repurchases.

Current wording

Net cash used in financing activities for the six months ended June 30, 2025 related primarily to stockholder dividend payments and common stock repurchases.

Previous wording

We paid $6.3 million and $7.5 million in dividends to our stockholders and eligible equity plan award holders for the three months ended March 31, 2026 and 2025, respectively. The declaration and payment of future dividends to our stockholders, including any special dividends, will be at the discretion of our Board of Directors (Board) and will depend upon many factors including our financial position, capital requirements of our operating subsidiaries, legal and regulatory requirements, and any other factors that our Board deems relevant. On April 29, 2026, the Board declared a quarterly dividend per share of $0.34, which represents a 6.25% increase over the $0.32 dividend paid in March 2026, which is payable May 27, 2026 to stockholders of record on May 13, 2026.

Current wording

We paid $12.6 million and $15.4 million in dividends to our stockholders and eligible equity plan award holders for the six months ended June 30, 2026 and 2025, respectively. The declaration and payment of future dividends to our stockholders, including any special dividends, will be at the discretion of our Board of Directors (Board) and will depend upon many factors including our financial position, capital requirements of our operating subsidiaries, legal and regulatory requirements, and any other factors that our Board deems relevant. On July 29, 2026, the Board declared a quarterly dividend per share of $0.34, which is payable August 26, 2026 to stockholders of record on August 12, 2026.

Previous wording

We repurchased 1,812,329 shares of our common stock for $76.9 million during the three months ended March 31, 2026. Future repurchases of our common stock will be at the discretion of our Board and will depend upon many factors, including our financial position, capital requirements of our operating subsidiaries, general business and socioeconomic conditions, legal, tax, regulatory, and/or contractual restrictions, and any other factors that our Board deems relevant.

Current wording

We repurchased 651,752 shares of our common stock for $27.7 million during the three months ended June 30, 2026 and we repurchased 2,464,081 shares of our common stock for $104.5 million during the six months ended June 30, 2026. We have $113.0 million repurchase authorization remaining under the 2026 Program. Future repurchases of our common stock will be at the discretion of our Board and will depend upon many factors, including our financial position, capital requirements of our operating subsidiaries, general business and socioeconomic conditions, legal, tax, regulatory, and/or contractual restrictions, and any other factors that our Board deems relevant.

Previous wording

As of March 31, 2026, the capital resources available to us consisted of $866.5 million of stockholders’ equity and the $86.8 million Deferred Gain.

Current wording

As of June 30, 2026, the capital resources available to us consisted of $858.8 million of stockholders’ equity and the $85.3 million Deferred Gain.