KINGSWAY Corp

Previous wording

Management's Discussion and Analysis includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Words such as “expects,” “believes,” “anticipates,” “intends,” “estimates,” “seeks” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect Kingsway management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, see Kingsway’s securities filings, including its Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Annual Report"). The Company's securities filings can be accessed on the EDGAR section of the U.S. Securities and Exchange Commission’s website at www.sec.gov, on the Canadian Securities Administrators’ website at www.sedar.com or through the Company’s website at www.kingsway-financial.com. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements because of new information, future events or otherwise.

Current wording

Management's Discussion and Analysis includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Words such as "expects," "believes," "anticipates," "intends," "estimates," "seeks" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect Kingsway management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, see Kingsway’s securities filings, including its Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Annual Report"). The Company's securities filings can be accessed on the EDGAR section of the U.S. Securities and Exchange Commission’s website at www.sec.gov, on the Canadian Securities Administrators’ website at www.sedarplus.ca or through the Company’s website at www.kingsway-financial.com. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements because of new information, future events or otherwise.

Previous wording

Kingsway Search Xcelerator includes the following subsidiaries of the Company: CSuite Financial Partners, LLC ("CSuite"), Ravix Group, Inc. ("Ravix"), Secure Nursing Service LLC ("SNS"), Systems Products International, Inc. ("SPI"), Digital Diagnostics Inc. ("DDI"), Image Solutions, LLC ("Image Solutions"), Roundhouse Electric & Equipment Co., Inc. ("Roundhouse"), M.L.C. Plumbing, LLC (d/b/a Bud's Plumbing Service, "Bud's Plumbing"), Advanced Plumbing & Drain, LLC (d/b/a AAA Advanced Plumbing & Drain, "Advanced Plumbing") and Efficient Plumbing, LLC (d/b/a Southside Plumbing, "Southside Plumbing"). Throughout Management's Discussion and Analysis, the term the term "Kingsway Search Xcelerator" is used to refer to this segment.

Current wording

Kingsway Search Xcelerator includes the following subsidiaries of the Company: Ravix Group, Inc. ("Ravix") and CSuite Financial Partners, LLC ("CSuite") (collectively, the "Ravix Group"), Secure Nursing Service LLC ("SNS"), Systems Products International, Inc. ("SPI"), Digital Diagnostics Inc. ("DDI"), Image Solutions, LLC ("Image Solutions"), Roundhouse Electric & Equipment Co., Inc. ("Roundhouse"), M.L.C. Plumbing, LLC (d/b/a Bud's Plumbing Service, "Bud's Plumbing"), Advanced Plumbing & Drain, LLC (d/b/a AAA Advanced Plumbing & Drain, "Advanced Plumbing") and Efficient Plumbing, LLC (d/b/a Southside Plumbing, "Southside Plumbing"). Throughout Management's Discussion and Analysis, the term "Kingsway Search Xcelerator" is used to refer to this segment.

Previous wording

DDI provides outsourced 24 hours a day and 7 days per week ("24/7") cardiac telemetry services for general acute care, long-term acute care and inpatient rehabilitation hospitals. Outsourcing cardiac monitoring allows hospitals to eliminate personnel callouts and human resources issues, remove distractions from onsite operations, and free up facility staff to assist directly with patient care. DDI currently has a presence in 42 states and Puerto Rico.

Current wording

DDI provides outsourced 24 hours a day and 7 days per week ("24/7") cardiac telemetry services for general acute care, long-term acute care and inpatient rehabilitation hospitals nationwide and in the Caribbean. Outsourcing cardiac monitoring allows hospitals to eliminate personnel callouts and human resources issues, remove distractions from onsite operations, and free up facility staff to assist directly with patient care.

Previous wording

Image Solutions provides comprehensive information technology managed services, including equipment sales, service, and helpdesk support to customers primarily in North Carolina, Kansas, Georgia, Kentucky and Tennessee.

Current wording

Image Solutions provides comprehensive information technology managed services, including equipment sales, service, and helpdesk support to customers primarily in North Carolina, Kansas, Georgia, Kentucky, Tennessee and Michigan.

Previous wording

IWS is a licensed motor vehicle service agreement company and is a provider of after-market vehicle protection services distributed by credit unions in 28 states and the District of Columbia to their members, with customers in all fifty states.

Current wording

IWS is a licensed motor vehicle service agreement company and is a provider of after-market vehicle protection services distributed by credit unions in 29 states and the District of Columbia to their members, with customers in all fifty states.

Previous wording

Trinity sold heating, ventilation, air conditioning ("HVAC"), standby generator, commercial LED lighting and commercial refrigeration warranty products and provided equipment breakdown and maintenance support services to companies across the United States. As a seller of warranty products, Trinity marketed and administered product warranty contracts for certain new and used products in the HVAC, standby generator, commercial LED lighting and commercial refrigeration industries throughout the United States. Trinity acted as an agent on behalf of the third-party insurance companies that underwrite and guaranty these warranty contracts. Trinity does not guaranty the performance underlying the warranty contracts it sells. As a provider of equipment breakdown and maintenance support services, Trinity acted as a single point of contact to its clients for both certain equipment breakdowns and scheduled maintenance of equipment. Trinity would provide such repair and breakdown services by contracting with certain HVAC providers.

Current wording

Trinity sold heating, ventilation, air conditioning ("HVAC"), standby generator, commercial LED lighting and commercial refrigeration warranty products and provided equipment breakdown and maintenance support services to companies across the United States. As a seller of warranty products, Trinity marketed and administered product warranty contracts for certain new and used products in the HVAC, standby generator, commercial LED lighting and commercial refrigeration industries throughout the United States. Trinity acted as an agent on behalf of the third-party insurance companies that underwrite and guaranty these warranty contracts. Trinity did not guaranty the performance underlying the warranty contracts it sold. As a provider of equipment breakdown and maintenance support services, Trinity acted as a single point of contact to its clients for both certain equipment breakdowns and scheduled maintenance of equipment. Trinity would provide such repair and breakdown services by contracting with certain HVAC providers.

Previous wording

Segment operating income represents one measure of the pretax profitability of our segments and is derived by subtracting direct segment expenses from direct segment revenues. Revenues and expenses are presented in the unaudited consolidated interim statements of operations, but are not subtotaled by segment; however, this information is available in total and by segment in Note 21, "Segmented Information," to the unaudited consolidated interim financial statements, regarding reportable segment information. The nearest comparable U.S. GAAP measure to total segment operating income is operating (loss) income that, in addition to total segment operating income, includes corporate general and administrative expenses and excludes segment non-operating other income, net.

Current wording

Segment operating income represents one measure of the pretax profitability of our segments and is derived by subtracting direct segment expenses from direct segment revenues. Revenues and expenses are presented in the unaudited consolidated interim statements of operations, but are not subtotaled by segment; however, this information is available in total and by segment in Note 21, "Segmented Information," to the unaudited consolidated interim financial statements, regarding reportable segment information. The nearest comparable U.S. GAAP measure to total segment operating income is operating income (loss) that, in addition to total segment operating income, includes corporate general and administrative expenses and excludes segment non-operating other (expenses) income, net.

Previous wording

The Company’s significant accounting policies and critical estimates are described in Management's Discussion and Analysis of Financial Condition and Results of Operations included in the 2025 Annual Report. There has been no material change subsequent to December 31, 2025 to the information previously disclosed in the 2025 Annual Report with respect to these significant accounting policies and critical estimates.

Current wording

The Company’s significant accounting policies and critical estimates are described in Management's Discussion and Analysis of Financial Condition and Results of Operations included in the 2025 Annual Report. There has been no material change to the information previously disclosed in the 2025 Annual Report with respect to these significant accounting policies and critical estimates.

Previous wording

A reconciliation of total segment operating income to net income (loss) for the three and six months ended June 30, 2026 and June 30, 2025 is presented in Table 1 below:

Current wording

A reconciliation of total segment operating income to net loss for the three and nine months ended September 30, 2026 and September 30, 2025 is presented in Table 1 below:

Previous wording

Kingsway Search Xcelerator revenue increased to $22.3 million (67.7%) for the three months ended June 30, 2026 compared to $13.3 million for the three months ended June 30, 2025 (an increase to $43.5 million year to date compared to $25.0 million prior year to date). Kingsway Search Xcelerator operating income was $3.5 million for the three months ended June 30, 2026 compared to $2.0 million for the three months ended June 30, 2025 ($6.4 million year to date compared to $3.8 million prior year to date).

Current wording

Kingsway Search Xcelerator revenue increased 18.2% to $22.4 million for the three months ended September 30, 2026 compared to $19.0 million for the three months ended September 30, 2025 (an increase to $65.9 million year to date compared to $43.9 million prior year to date). Kingsway Search Xcelerator operating income was $2.7 million for the three months ended September 30, 2026 compared to $2.2 million for the three months ended September 30, 2025 ($9.0 million year to date compared to $6.0 million prior year to date).

Previous wording

Extended Warranty revenue decreased 2.8% (or $0.5 million) to $17.1 million for the three months ended June 30, 2026 compared with $17.6 million for the three months ended June 30, 2025, while cash sales and the average price per contract sold were up 2.4% and 4.6%, respectively, over the prior year (revenue of $35.0 million year to date compared to $34.3 million prior year to date). Extended Warranty operating income was $0.7 million for the three months ended June 30, 2026 compared with operating loss of $0.1 million for the three months ended June 30, 2025 (operating income of $0.9 million year to date compared to $0.5 million prior year to date). Extended Warranty's revenue – and therefore operating income – is impacted by the fact that VSA sales are recognized over the life of the contract, which is not on a straight-line basis. This means that in periods where cash VSA sales are declining, revenue and operating income may continue to be strong due to higher prior-year sales. Conversely, when VSA cash sales are in a period of growth – as we are seeing now – revenue and operating income may continue to lag as prior-year lower sales have a larger impact on current period revenue/operating income than current period VSA cash sales.

Current wording

Extended Warranty's revenue – and therefore operating income – is impacted by the fact that VSA sales are recognized over the life of the contract, which is not on a straight-line basis. This means that in periods where cash VSA sales are declining, revenue and operating income may continue to be strong due to higher prior-year sales. Conversely, when VSA cash sales are in a period of growth – as we are seeing now – revenue and operating income may continue to lag as prior-year lower sales have a larger impact on current period revenue/operating income than current period VSA cash sales.

Previous wording

During the three and six months ended June 30, 2026, there was a 0.7% decrease and a 2.9% increase in claims paid at our auto Extended Warranty companies, respectively. While the number of claims were down in the quarter and year-to-date compared to prior year, the average cost per claim continued to increase primarily due to inflationary pressures on the cost of parts and labor, as well as the type of claims incurred. We are able to mitigate the impact of higher claims expense by increasing pricing and re-categorizing vehicles to ensure they are in the appropriate rate class, which we do at least annually. However, due to the deferred revenue model under US GAAP, these price increases may impact our financials more in future periods rather than in the current period.

Current wording

During the three and nine months ended September 30, 2026, there was a 1.6% and a 2.5% increase in claims paid at our auto Extended Warranty companies, respectively (Trinity did not incur claims). While the number of claims were down in the quarter and year-to-date compared to prior year, the average cost per claim continued to increase primarily due to inflationary pressures on the cost of parts and labor, as well as the type of claims incurred. We are able to mitigate the impact of higher claims expense by increasing pricing and re-categorizing vehicles to ensure they are in the appropriate rate class, which we do at least annually. However, due to the deferred revenue model under US GAAP, these price increases may impact our financials more in future periods rather than in the current period.

Previous wording

Interest and investment income, net was $2.7 million in the second quarter of 2026 compared to $0.7 million in the second quarter of 2025 ($3.4 million year to date compared to $1.0 million prior year to date). The increase for the second quarter and year to date of 2026 is primarily due to realized gains recognized of $2.0 million resulting from distributions received during the second quarter of 2026 from private company investments and investments held by Argo Holdings Fund I, LLC ("Argo Holdings"). Also, the gain on change in fair value recognized by Argo Holdings was $0.4 million for the three months ended June 30, 2026 compared to $0.2 million for the three months ended June 30, 2025 ($0.7 million year to date compared to $0.2 million prior year to date).

Current wording

Interest and investment loss, net was $0.3 million in the third quarter of 2026 compared to interest and investment income of $0.5 million in the third quarter of 2025 (income of $3.1 million year to date compared to $1.6 million prior year to date). The decrease for the third quarter of 2026 was primarily due to realized losses of $0.3 million from an investment held by Argo Holdings Fund I, LLC ("Argo Holdings"). Also, the loss on change in fair value recognized by Argo Holdings was $0.6 million for the three months ended September 30, 2026 compared to a gain of $0.1 million for the three months ended September 30, 2025.

Previous wording

Selling, general and administrative expenses and other income not allocated to segments was a net expense of $4.1 million in the second quarter of 2026 compared to $2.9 million in the second quarter of 2025 ($6.5 million year to date compared to $5.8 million prior year to date). Included are expenses associated with our corporate holding company, expenses associated with our Operator-in-Residence who search for our next acquisitions, revenue and expenses associated with our various other investments (such as Argo Holdings) that are accounted for on a consolidated basis, (loss) gain on change in fair value of debt and loss on extinguishment of debt.

Current wording

Selling, general and administrative expenses and other income not allocated to segments was a net expense of $3.0 million in the third quarter of 2026 compared to $3.5 million in the third quarter of 2025 ($9.5 million year to date compared to $9.3 million prior year to date). Included are expenses associated with our corporate holding company, expenses associated with our Operators-in-Residence who search for our next acquisitions, revenue and expenses associated with our various other investments (such as Argo Holdings) that are accounted for on a consolidated basis, (loss) gain on change in fair value of debt and loss on extinguishment of debt.

Previous wording

The increase in net expense for the three and six months ended June 30, 2026 is primarily attributable to higher stock-based compensation expenses during the three months ended June 30, 2026 compared to the same period in 2025. See Note 16, "Stock-Based Compensation," to the unaudited consolidated interim financial statements, for further discussion of stock options granted during the second quarter of 2026. The six months ended June 30, 2026 increase was partially offset by lower acquisition and search related expenses during the six months ended June 30, 2026 compared to the same period in 2025.

Current wording

The increase in net expense for the nine months ended September 30, 2026 is primarily attributable to higher loss on change in fair value of debt and higher stock-based compensation expenses during the nine months ended September 30, 2026 compared to the same period in 2025. See Note 16, "Stock-Based Compensation," to the unaudited consolidated interim financial statements, for further discussion of stock options granted during 2026. The nine months ended September 30, 2026 increase was partially offset by lower acquisition and search related expenses during the nine months ended September 30, 2026 compared to the same period in 2025.

Previous wording

See Note 10, "Debt," to the unaudited consolidated interim financial statements, for further discussion of changes in fair value of debt and loss on extinguishment of debt recorded for the three and six months ended June 30, 2026 and June 30, 2025.

Current wording

See Note 10, "Debt," to the unaudited consolidated interim financial statements, for further discussion of changes in fair value of debt and loss on extinguishment of debt recorded for the three and nine months ended September 30, 2026 and September 30, 2025.

Previous wording

Interest expense for the second quarter of 2026 was $1.4 million compared to $1.3 million in the second quarter of 2025 ($2.8 million year to date compared to $2.5 million prior year to date). The increase for the three and six months ended June 30, 2026 is primarily due to the inclusion of the Roundhouse and KPH loans for the second quarter and year to date of 2026, partially offset by reduced expense for existing loans due to principal amortization.

Current wording

Interest expense for the third quarter of 2026 was $1.4 million compared to $1.5 million in the third quarter of 2025 ($4.2 million year to date compared to $4.0 million prior year to date). The decrease for the three months ended September 30, 2026 was primarily due to reduced expense for existing loans due to principal amortization. The increase for the nine months ended September 30, 2026 was primarily due to the inclusion of interest expense for the Roundhouse and KPH loans for the year to date of 2026, partially offset by reduced expense for existing loans due to principal amortization.

Previous wording

Amortization of intangible assets was $2.1 million in the second quarter of 2026 compared to $1.7 million in the second quarter of 2025 ($4.3 million year to date compared to $3.4 million prior year to date). The increase is primarily due to the inclusion of Roundhouse, Advanced Plumbing and Southside Plumbing (acquired in the third quarter of 2025) for the three and six months ended June 30, 2026, partially offset by decreased amortization expense for the Company's other intangible assets.

Current wording

Amortization of intangible assets was $2.0 million in the third quarter of 2026 compared to $2.4 million in the third quarter of 2025 ($6.3 million year to date compared to $5.8 million prior year to date). The increase for the nine months ended September 30, 2026 was primarily due to the inclusion of Roundhouse, Advanced Plumbing and Southside Plumbing (acquired in the third quarter of 2025) for the nine months ended September 30, 2026, partially offset by decreased amortization expense for the Company's other intangible assets.

Previous wording

Impairment of intangible assets was $0.3 million in the second quarter of 2026 compared to $0.1 million in the second quarter of 2025 ($0.5 million year to date compared to $0.2 million prior year to date). The Company's indefinite-lived intangible assets consist of trade names, which are assessed for impairment annually as of November 30, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. At each quarter end of the first and second quarters of 2026 and 2025, the Company determined that certain of its trade name intangible assets should be further examined under a quantitative approach due to actual revenue coming in lower than previous projections. Based upon this assessment, the Company recorded an impairment charge during the second quarter of 2026 related to the CSuite indefinite-lived trade name (year to date impairment related to CSuite and SNS indefinite-lived trade names); and during the second quarter and year to date of 2025 related to the Ravix indefinite-lived trade name. The reductions in value are primarily due to higher discount rates and a reduction in projected revenue. See Note 8,"Intangible Assets," to the unaudited consolidated interim financial statements, for further discussion.

Current wording

Impairment of intangible assets was zero in the third quarter of 2026 compared to $0.2 million in the third quarter of 2025 ($0.5 million year to date compared to $0.5 million prior year to date). The Company's indefinite-lived intangible assets consist of trade names, which are assessed for impairment annually as of November 30, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. At each quarter end of the first through third quarters of 2026 and 2025, the Company determined that certain of its trade name intangible assets should be further examined under a quantitative approach due to actual revenue coming in lower than previous projections. Based upon this assessment, the Company recorded no impairment charge during the third quarter of 2026 (year to date impairment related to CSuite and SNS indefinite-lived trade names); and during the third quarter and year to date of 2025 related to the CSuite and Ravix indefinite-lived trade names. The reductions in value are primarily due to higher discount rates and a reduction in projected revenue. See Note 8,"Intangible Assets," to the unaudited consolidated interim financial statements, for further discussion.

Previous wording

On May 8, 2026, the Company sold its subsidiary, Trinity. As a result of the sale, the Company recognized a net gain on disposal of $1.3 million during the three and six months ended June 30, 2026. The sale of Trinity did not represent a strategic shift that will have a major effect on the Company's operations or financial results; therefore, Trinity is not presented as a discontinued operation. See Note 5,"Acquisitions and Disposal," to the unaudited consolidated interim financial statements, for further discussion of the Trinity disposal.

Current wording

On May 8, 2026, the Company sold its subsidiary, Trinity. As a result of the sale, the Company recognized a net gain on disposal of $1.3 million during the nine months ended September 30, 2026. The sale of Trinity did not represent a strategic shift that will have a major effect on the Company's operations or financial results; therefore, Trinity is not presented as a discontinued operation. See Note 5,"Acquisitions and Disposal," to the unaudited consolidated interim financial statements, for further discussion of the Trinity disposal.

Previous wording

Income tax for the second quarter of 2026 was an expense of $0.2 million compared to a benefit of $0.1 million in the second quarter of 2025 (expense of $0.1 million year to date compared to a benefit of $0.4 million prior year to date). For the three and six months ended June 30, 2026, the Company reported a tax expense primarily due to state income tax expense. For the three and six months ended June 30, 2025, the Company reported a tax benefit primarily due to the release of its valuation allowance associated with indefinite life business interest expense carryforwards. See Note 14, "Income Taxes," to the unaudited consolidated interim financial statements, for additional detail of the income tax expense (benefit) recorded for the three and six months ended June 30, 2026 and June 30, 2025.

Current wording

Income tax benefit for the third quarter of 2026 was $0.2 million compared to $2.1 million in the third quarter of 2025 (less than $0.1 million year to date compared to $2.4 million prior year to date). For the three and nine months ended September 30, 2026, the Company reported a tax benefit primarily due to the current period operating losses generating indefinite life deferred tax assets utilizable against indefinite life deferred tax liabilities. For the three and nine months ended September 30, 2025, the Company reported a tax benefit primarily due to the release of its valuation allowance related to deferred tax liabilities from corporate acquisitions. See Note 14, "Income Taxes," to the unaudited consolidated interim financial statements, for additional detail of the income tax benefit recorded for the three and nine months ended September 30, 2026 and September 30, 2025.

Previous wording

At June 30, 2026, we held cash and cash equivalents, restricted cash and investments with a carrying value of $59.1 million. Our operations typically invest in U.S. dollar-denominated instruments to mitigate their exposure to currency rate fluctuations.

Current wording

At September 30, 2026, we held cash and cash equivalents, restricted cash and investments with a carrying value of $59.7 million. Our operations typically invest in U.S. dollar-denominated instruments to mitigate their exposure to currency rate fluctuations.

Previous wording

The Company performs a quarterly analysis of its investments to determine if declines in fair value may result in the recognition of impairment losses in net income (loss). Factors considered in the determination of whether or not an impairment loss is recognized in net income (loss) include a current intention or need to sell the security or an indication that a credit loss exists. See the "Significant Accounting Policies and Critical Estimates" section of Management's Discussion and Analysis of Financial Condition included in the 2025 Annual Report for further information regarding the Company's detailed analysis and factors considered in establishing an impairment loss on an investment.

Current wording

The Company performs a quarterly analysis of its investments to determine if declines in fair value may result in the recognition of impairment losses in net loss. Factors considered in the determination of whether or not an impairment loss is recognized in net loss include a current intention or need to sell the security or an indication that a credit loss exists. See the "Significant Accounting Policies and Critical Estimates" section of Management's Discussion and Analysis of Financial Condition included in the 2025 Annual Report for further information regarding the Company's detailed analysis and factors considered in establishing an impairment loss on an investment.

Previous wording

The Company's fixed maturities are subject to declines in fair value below amortized cost that may result in the recognition of impairment losses in net income (loss). If the decline in fair value is due to credit factors and the Company does not expect to receive cash flows sufficient to support the entire amortized cost basis, the credit loss is reported in the consolidated statements of operations in the period that the declines are evaluated. Significant judgment is required in the determination of whether a credit loss has occurred for a security. The Company considers all available evidence when determining whether a security requires a credit allowance to be recorded, including the financial condition and expected near-term and long term prospects of the issuer, whether the issuer is current with interest and principal payments, credit ratings on the security or changes in ratings over time, general market conditions, industry, sector or other specific factors and whether the Company expects to receive cash flows sufficient to recover the entire amortized cost basis of the security.

Current wording

The Company's fixed maturities are subject to declines in fair value below amortized cost that may result in the recognition of impairment losses in net loss. If the decline in fair value is due to credit factors and the Company does not expect to receive cash flows sufficient to support the entire amortized cost basis, the credit loss is reported in the consolidated statements of operations in the period that the declines are evaluated. Significant judgment is required in the determination of whether a credit loss has occurred for a security. The Company considers all available evidence when determining whether a security requires a credit allowance to be recorded, including the financial condition and expected near-term and long term prospects of the issuer, whether the issuer is current with interest and principal payments, credit ratings on the security or changes in ratings over time, general market conditions, industry, sector or other specific factors and whether the Company expects to receive cash flows sufficient to recover the entire amortized cost basis of the security.

Previous wording

There were no impairment losses recorded related to investments during the three and six months ended June 30, 2026 and June 30, 2025.

Current wording

There were no impairment losses recorded related to investments during the three and nine months ended September 30, 2026 and September 30, 2025.

Previous wording

At June 30, 2026 and December 31, 2025, the gross unrealized losses for fixed maturities amounted to $0.6 million and $0.5 million, respectively, and there were no unrealized losses attributable to non-investment grade fixed maturities.

Current wording

At September 30, 2026 and December 31, 2025, the gross unrealized losses for fixed maturities amounted to $1.3 million and $0.5 million, respectively, and there were no unrealized losses attributable to non-investment grade fixed maturities.

Previous wording

The principal and carrying value of the Company's debt instruments at June 30, 2026 and December 31, 2025 are as follows:

Current wording

The principal and carrying value of the Company's debt instruments at September 30, 2026 and December 31, 2025 were as follows:

Previous wording

See Note 10, "Debt," to the unaudited consolidated interim financial statements for a detailed discussion of the Company’s debt instruments. Changes related to the Company’s debt during the six months ended June 30, 2026 are further described below.

Current wording

See Note 10, "Debt," to the unaudited consolidated interim financial statements for a detailed discussion of the Company's debt instruments. Changes related to the Company's debt during the nine months ended September 30, 2026 are further described below.

Previous wording

Beginning March 31, 2024 through June 30, 2026, SNS was in default under its loan due to debt covenant violations related to the leverage and fixed charge ratios (measured quarterly). In February 2026, SNS and the lender amended the credit agreement to (1) extend the SNS revolver maturity date to be June 2, 2026; and (2) suspend monthly principal payments beginning February 2026 through May 2026, with the next principal payment resuming in June 2026. In July 2026, SNS and the lender amended the credit agreement to (1) extend the SNS revolver maturity date to be December 2, 2026; and (2) suspend monthly principal payments through November 2026, with the next principal payment resuming in December 2026.

Current wording

Beginning March 31, 2024 through September 30, 2026, SNS was in default under its loan due to debt covenant violations related to the leverage and fixed charge ratios (measured quarterly). In February 2026, SNS and the lender amended the credit agreement to (1) extend the SNS revolver maturity date to be June 2, 2026; and (2) suspend monthly principal payments beginning February 2026 through May 2026, with the next principal payment resuming in June 2026. In July 2026, SNS and the lender amended the credit agreement to (1) extend the SNS revolver maturity date to December 2, 2026; and (2) suspend monthly principal payments through November 2026, with the next principal payment resuming in December 2026.

Previous wording

Each of SNS and DDI has entered into an amendment to its respective loan that waives the events of default for the fiscal quarter ended June 30, 2026. As of the report date, there is some uncertainty as to whether the companies will be in compliance with the covenants in future periods, and if not, when the companies will be able to cure any potential violations. As a result, the Company has included the total principal balance due after one-year related to the DDI Loan of $2.6 million and the SNS Loan of $1.7 million in short-term and current portion of long-term debt in the consolidated balance sheet as of June 30, 2026. A default may permit the lender to declare the amounts owed under the loans immediately due and payable, exercise their rights with respect to collateral securing the obligations, and/or exercise any other rights and remedies available.

Current wording

As of the report date, SNS and DDI have not received a waiver or amendment from their respective lender regarding their non-compliance. SNS and DDI are in active discussions with their lender with respect to obtaining a waiver. Also, as of the report date, there is some uncertainty as to whether the companies will be in compliance with the covenants in future periods, and if not, when the companies will be able to cure any potential violations. As a result, the Company has included the total principal balance due after one-year related to the DDI Loan of $2.3 million and the SNS Loan of $1.4 million in short-term and current portion of long-term debt in the consolidated balance sheet as of September 30, 2026. A default may permit the lender to declare the amounts owed under the loans immediately due and payable, exercise their rights with respect to collateral securing the obligations, and/or exercise any other rights and remedies available.

Previous wording

At June 30, 2026, KPH was in default under the KPH Loan due to a debt covenant violation related to the leverage and fixed charge ratios (measured quarterly). As of the report date, the Company has not received a waiver or amendment from the lender regarding this non-compliance. As a result, the Company has reclassified the total principal balance of the KPH Loan due after one-year of $3.3 million from long-term debt to short-term and current portion of long-term debt in the consolidated balance sheet as of June 30, 2026. The Company is in active discussions with the lender with respect to obtaining a waiver. As of the report date, there is some uncertainty as to whether the Company will be in compliance with the covenants in future periods, and if not, when the Company will be able to cure any potential violations. A default may permit the lender to declare the amounts owed under the KPH Loan immediately due and payable, exercise their rights with respect to collateral securing the obligation, and/or exercise any other rights and remedies available.

Current wording

At June 30, 2026 and September 30, 2026, KPH was in default under the KPH Loan due to a debt covenant violation related to the leverage and fixed charge ratios (measured quarterly). As of the report date, the Company has not received a waiver or amendment from the lender regarding this non-compliance. As a result, the Company has reclassified the total principal balance of the KPH Loan due after one-year of $3.2 million from long-term debt to short-term and current portion of long-term debt in the consolidated balance sheet as of September 30, 2026. The Company is in active discussions with the lender with respect to obtaining a waiver. As of the report date, there is some uncertainty as to whether the Company will be in compliance with the covenants in future periods, and if not, when the Company will be able to cure any potential violations. A default may permit the lender to declare the amounts owed under the KPH Loan immediately due and payable, exercise their rights with respect to collateral securing the obligation, and/or exercise any other rights and remedies available.

Previous wording

The Company's subordinated debt is measured and reported at fair value. At June 30, 2026, the carrying value of the subordinated debt is $13.4 million. The fair value of the subordinated debt is calculated using a model based on significant market observable inputs and inputs developed by a third party. For a description of the market observable inputs and inputs developed by a third party used in determining fair value of debt, see Note 22, "Fair Value of Financial Instruments," to the unaudited consolidated interim financial statements.

Current wording

The Company's subordinated debt is measured and reported at fair value. At September 30, 2026, the carrying value of the subordinated debt was $13.3 million. The fair value of the subordinated debt is calculated using a model based on significant market observable inputs and inputs developed by a third party. For a description of the market observable inputs and inputs developed by a third party used in determining fair value of debt, see Note 22, "Fair Value of Financial Instruments," to the unaudited consolidated interim financial statements.

Previous wording

During the six months ended June 30, 2026, the net cash provided by operating activities was $1.2 million, primarily due to operating income from the Kingsway Search Xcelerator and Extended Warranty (the latter due to higher cash sales) segments. During the six months ended June 30, 2025, the Company reported $1.5 million of net cash used in operating activities, primarily due to cash paid to settle the Ravix contingent liability of $2.3 million that is reported as an operating activity, partially offset by operating income from the Extended Warranty and Kingsway Search Xcelerator segments.

Current wording

During the nine months ended September 30, 2026, the net cash provided by operating activities was $5.3 million, primarily due to operating income from the Kingsway Search Xcelerator and Extended Warranty (the latter due to higher cash sales) segments. During the nine months ended September 30, 2025, the Company reported less than $0.1 million of net cash provided by operating activities, primarily due to operating income from the Extended Warranty and Kingsway Search Xcelerator segments, partially offset by cash paid to settle the Ravix contingent liability of $2.3 million that is reported as an operating activity.

Previous wording

During the six months ended June 30, 2026, the net cash provided by investing activities was $3.3 million. This source of cash is primarily attributed to proceeds received from the sale of Trinity, net of cash disposed, of $4.4 million and cash distributions received from private company investments and investments held by Argo Holdings of $2.0 million, partially offset by purchases of fixed maturities in excess of sales and maturities of fixed maturities, as well as net purchases of property and equipment. During the six months ended June 30, 2025, the net cash used in investing activities was $13.7 million. This use of cash is primarily attributed to the acquisition of Bud's Plumbing, net of cash acquired, and cash paid on June 30, 2025 to pre-fund the acquisition of Roundhouse that occurred on July 1, 2025 of $10.3 million.

Current wording

During the nine months ended September 30, 2026, the net cash used in investing activities was $0.6 million. This use of cash was primarily attributed to purchases of fixed maturities in excess of sales and maturities of fixed maturities, the acquisition of RCC, net of cash acquired and net purchases of property and equipment, partially offset by the proceeds received from the sale of Trinity, net of cash disposed, of $4.4 million and cash distributions received from private company investments and investments held by Argo Holdings of $2.0 million. During the nine months ended September 30, 2025, the net cash used in investing activities was $29.9 million. This use of cash was primarily attributed to the acquisitions of Bud's Plumbing, Roundhouse, Advanced Plumbing and Southside Plumbing, net of cash acquired.

Previous wording

During the six months ended June 30, 2026, the net cash used in financing activities was $5.7 million. This use of cash was primarily attributed to principal repayments on debt of $7.1 million, distributions to noncontrolling interest holders of $0.7 million and payment of preferred stock dividends of $0.6 million, partially offset by principal proceeds from debt of $3.0 million. During the six months ended June 30, 2025, the net cash provided by financing activities was $21.5 million. This source of cash was primarily attributed to net proceeds from the issuance of common stock of $15.6 million, principal proceeds from debt of $9.4 million and proceeds from the issuance of Class C and Class D preferred stock of $6.0 million and $2.0 million, respectively, partially offset by principal repayment on debt of $10.4 million, cash paid to settle the Ravix contingent liability of $0.4 million, payment of preferred stock dividends of $0.4 million and cash paid for repurchases of common stock of $0.3 million.

Current wording

During the nine months ended September 30, 2026, the net cash used in financing activities was $4.8 million. This use of cash was primarily attributed to principal repayments on debt of $14.8 million, distributions to noncontrolling interest holders of $0.7 million and payment of preferred stock dividends of $1.0 million, partially offset by principal proceeds from debt of $12.0 million. During the nine months ended September 30, 2025, the net cash provided by financing activities was $33.6 million. This source of cash was primarily attributed to net proceeds from the issuance of common stock of $15.6 million, principal proceeds from debt of $24.1 million and proceeds from the issuance of Class C and Class D preferred stock of $6.0 million and $2.0 million, respectively, partially offset by principal repayment on debt of $12.6 million, cash paid to settle the Ravix contingent liability of $0.4 million, payment of preferred stock dividends of $0.7 million and cash paid for repurchases of common stock of $0.3 million.

Previous wording

The holding company’s liquidity, defined as the amount of cash in the bank accounts of Kingsway Corporation and Kingsway America Inc., was $1.0 million and $1.0 million at June 30, 2026 and December 31, 2025, respectively, which excludes future actions available to the holding company that could be taken to generate liquidity. Such future actions include, but are not limited to, issuance of equity securities and distributions from the Kingsway Search Xcelerator and Extended Warranty operating companies subject to certain loan covenants that may be in place at each operating company. The holding company cash amounts are reflected in the cash and cash equivalents of $7.4 million and $8.3 million reported at June 30, 2026 and December 31, 2025, respectively, on the Company’s consolidated balance sheets.

Current wording

The holding company’s liquidity, defined as the amount of cash in the bank accounts of Kingsway Corporation and Kingsway America Inc., was $1.0 million at September 30, 2026 and December 31, 2025, which excludes future actions available to the holding company that could be taken to generate liquidity. Such future actions include, but are not limited to, issuance of equity securities and distributions from the Kingsway Search Xcelerator and Extended Warranty operating companies subject to certain loan covenants that may be in place at each operating company. The holding company cash amounts are reflected in the cash and cash equivalents of $8.3 million reported at September 30, 2026 and December 31, 2025, on the Company’s consolidated balance sheets.