AMERICAN COASTAL INSURANCE Corp

The Company is involved in routine claims-related legal actions arising in the ordinary course of business. The Company accrues amounts resulting from claims-related legal actions in unpaid losses and loss adjustment expenses during the period that the Company determines an unfavorable outcome becomes probable and can estimate the amounts. Management makes revisions to the Company's estimates based on its analysis of subsequent information that the Company receives regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation.

On October 20, 2023, the Company received notice that the Florida Department of Financial Services (“DFS”) filed a notice of claim and demand for tender of policy limits under the Company’s director and officer insurance policy (the “Claim”). The Claim alleges that former officers and directors of United Property & Casualty Insurance Company (“UPC”) were involved in wrongful acts that resulted in UPC’s insolvency. The Claim demanded immediate tender of the Company’s director and officer’s policy limit of $40,000,000 where the Company has a retention of $1,500,000. The former directors and officers of UPC deny the allegations. Although the Claim remains open as of September 30, 2026, no litigation has arisen and on June 25, 2026, the Florida Office of Insurance Regulation (“OIR”) determined that former officers and directors of UPC were not a substantial contributing cause of UPC's insolvency. The Company believes that the OIR determination significantly diminishes the likelihood of litigation by DFS. Should the litigation be initiated, the directors and officers plan to vigorously defend against the Claim; however, due to the Company’s indemnification obligation, the Company accrued the policy retention amount of $1,500,000.