Heritage Insurance Holdings, Inc.

Previous wording

The Supplemental Information table below demonstrates progress on our initiatives by providing policy count, premiums-in-force, and TIV for Florida and all other states as of June 30, 2025 and comparing those metrics to June 30, 2024.

Current wording

The Supplemental Information table below demonstrates the distribution of our portfolio by providing policy count, premiums-in-force, and TIV for Florida and all other states as of September 30, 2025 and comparing those metrics to September 30, 2024.

Previous wording

We address reinsurance and loss costs trends in the property insurance sector through rates and inflation guard factors which resulted in an increase in the average premium per policy of 14.1% for the quarter ended June 30, 2025 as compared to the prior year quarter. The higher average premium is driven by rate changes, inclusion of inflation guard, and by the mix of business written. We experienced intentional growth of our commercial residential business during 2024, with in-force premium in that line of business expected to flatten during 2025. New rates, which are subject to approval by our regulators, become effective when a policy is written or renewed, and the premium is earned pro rata over the policy period of one year. As a result of this timing, it can take up to twenty-four months for the complete impact of a rate change to be fully earned in our financial statements. For that reason, we account for inflation in our rate indications and filings with our regulators.

Current wording

We address reinsurance and loss costs trends in the property insurance sector through rates and inflation guard factors which resulted in an increase in the average premium per policy of 11.5% for the quarter ended September 30, 2025 as compared to the prior year quarter. The higher average premium is driven by rate changes, inclusion of inflation guard, and by the mix of business written. We experienced intentional growth of our commercial residential business during 2024, with in-force premium in that line of business decreasing during 2025, driven primarily by competitive market conditions. New rates, which are subject to approval by our regulators, become effective when a policy is written or renewed, and the premium is earned pro rata over the policy period of one year. As a result of this timing, it can take up to twenty-four months for the complete impact of a rate change to be fully earned in our financial statements. For that reason, we account for inflation in our rate indications and filings with our regulators.

Previous wording

We invest in data analytics, using software and experienced personnel, to continuously evaluate our underwriting criteria and manage exposure to catastrophe and other losses. Our retention has remained steadily in the range of 90%,which we believe is driven in large part due to a challenging property insurance market in many of the regions in which we operate, as well as our agency relationships and policyholder service. While we believe our rates are generally competitive with private market insurers operating in our space, we are focused on managing exposure and achieving rate adequacy throughout our book of business as we prudently grow our business in 2025.

Current wording

We invest in data analytics, using software and experienced personnel, to continuously evaluate our underwriting criteria and manage exposure to catastrophe and other losses. Our retention has remained steady in the range of near 90%,which we believe is driven in large part due to our strong agency relationships and focus on policyholder service level. While we believe our rates are generally competitive with private market insurers operating in our space, we are focused on maintaining rate adequacy throughout our book of business as we continue to prudently grow our business.

Previous wording

We continue to experience rising inflation in the form of increased labor and material costs, which drive up claim costs throughout all states in which we conduct business. However, the rate at which inflation is increasing is at a lower point than what we have experienced in the last several years. Florida personal lines claim costs associated with litigated claims have decreased due to favorable legislation over the last several years aimed to curtail claims abuse. This was a significant driver of our Florida exposure reduction in 2024 and previous years. The special legislative session of December 2022 included a number of additional provisions aimed at driving down claims abuses and stabilizing the Florida property insurance market. The legislation continues to be having the intended impact and has improved our outlook on conducting business in Florida, such that we intend to grow modestly in Florida in 2025.

Current wording

We continue to experience rising inflation in the form of increased labor and material costs, which drive up claim costs throughout all states in which we conduct business. However, inflation is increasing at a lower rate than what we have experienced in the last several years. We will make adjustment for increasing or decreasing inflation as we see fluctuations. Florida personal lines claim costs associated with litigated claims have decreased over the last several years due to favorable legislation aimed to curtail claims abuse. The special legislative session of December 2022 included a number of additional provisions aimed at driving down claims abuses and stabilizing the Florida property insurance market. The legislation appears to have achieved its intended impact and has improved our outlook on conducting business in Florida.

Previous wording

•Gross premiums earned were $353.6 million, up 1.0% from $350.1 million in the prior year quarter, reflecting higher gross premiums written over the last twelve months primarily from rating actions.

Current wording

•Gross premiums earned were $362.0 million, up 2.2% from $354.2 million in the prior year quarter, reflecting higher gross premiums written over the last twelve months primarily from rating actions.

Previous wording

•Net loss ratio decreased to 38.5%, a 17.2 point improvement from 55.7% in the same quarter last year, reflecting significantly lower net losses and LAE, coupled with higher net premiums earned. Net weather losses for the current year quarter were $12.5 million, a decrease of $7.2 million from $19.7 million in the prior year quarter. There were no catastrophe losses in the current or prior year quarters. The reduction in weather losses was coupled with a reduction in attritional losses and favorable reserve development compared to the prior year quarter. Favorable net loss development was $2.3 million in the current year quarter compared to adverse development of $8.7 million in the prior year quarter.

Current wording

•Net loss ratio decreased to 38.3%, a 27.1 point improvement from 65.4% in the same quarter last year, reflecting significantly lower net losses and LAE. Net weather losses for the current year quarter were $13.8 million, a decrease of $49.2 million from $63.0 million in the prior year quarter. There were no catastrophe losses in the current quarter compared to $48.7 million in the prior year quarter. The reduction in weather losses was coupled with favorable reserve development compared to the prior year quarter. Favorable net loss development was $5.0 million in the current year quarter compared to adverse development of $6.3 million in the prior year quarter.

Previous wording

•The net expense ratio was 34.4%, a 2.4 point improvement from the prior year quarter amount of 36.8%, driven by growth in net premiums earned, coupled with higher ceding commission income which decreased the net policy acquisition cost ratio by 2.8%. Higher ceding commission income was associated with both a larger amount of premium ceded under the net quota share program and a higher ceding commission rate driven by favorable loss experience for that program. This offset a one-half point increase in the net general and administrative expense ratio.

Current wording

•The net expense ratio was 34.6%, a 0.6 point improvement from the prior year quarter amount of 35.2%, driven primarily by a decrease in policy acquisition costs. The reduction in policy acquisition costs was driven primarily by higher ceding commission income associated with both a larger amount of premium ceded under the net quota share program and a higher ceding commission rate driven by favorable loss experience for that program. This resulted in a 1.2% reduction in policy acquisition costs which was partly offset by a 0.6 point increase in the net general and administrative expense ratio.

Previous wording

•Net combined ratio of 72.9% improved 19.6 points from 92.5% in the prior year quarter, driven by primarily by a lower net loss ratio as well as a lower net expense ratio as described above.

Current wording

•Net combined ratio of 72.9% improved 27.7 points from 100.6% in the prior year quarter, driven by primarily by a lower net loss ratio as well as a lower net expense ratio as described above.

Previous wording

•Net investment income was $9.0 million, a decrease from $9.8 million in the prior year quarter, primarily driven by a lower interest rate environment for our sweep accounts and money market funds. We continue to manage our investment portfolio, while maintaining a conservative portfolio with high quality investments and duration liability matched.

Current wording

•Net investment income was $9.7 million, relatively flat from the prior year quarter, due to a lower interest rate environment for our sweep accounts and money market funds, despite higher invested assets. We continue to manage our investment portfolio, while maintaining a conservative portfolio with high quality investments and duration liability matched.

Previous wording

•The effective tax rate was 23.8% compared to 24.1% in the prior year quarter. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The effective tax rate is lower than the prior year quarter due to higher projected pre-tax income for the year 2025 compared to the projection for the year 2024. This had a dilutive effect on the rate impacts of permanent tax differences compared to the prior year quarter income tax provision. The effective tax rate can fluctuate throughout the year as estimates used in each quarterly tax provision are updated with additional information.

Current wording

•The effective tax rate was 26.2% compared to 9.4% in the prior year quarter. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The effective tax rate for the prior year quarter was favorably impacted by updated estimates used in the quarterly tax provision as well as the benefit of interest income on a previous year's income tax refund, which lowered income tax expense for the prior year quarter. The effective tax rate can fluctuate throughout the year as estimates used in each quarterly tax provision are updated with additional information.

Previous wording

Premiums-in-force were $1.43 billion as of second quarter 2025, an increase of 0.5% compared to $1.42 billion as of second quarter 2024, driven by rate actions taken and a reduction in policies in force, while concurrently, TIV decreased by 4.7%.

Current wording

Premiums-in-force were $1.44 billion as of third quarter 2025, an increase of 1.0% compared to $1.43 billion as of third quarter 2024, driven by rate actions taken while concurrently, TIV decreased by 2.2%.

Previous wording

Gross premiums earned of $353.6 million were up 1.0% from $350.1 million in the prior year quarter, reflecting higher gross premiums written over the last twelve months, driven by rating actions and use of inflation guard.

Current wording

Gross premiums earned were $362.0 million, a 2.2% improvement from $354.2 million in the prior year quarter, reflecting higher gross premiums written over the last twelve months.

Previous wording

Net investment income was $9.0 million in second quarter 2025, down 7.5% from $9.8 million in the prior year quarter, driven primarily by lower yields on money market accounts in the current interest rate environment.

Current wording

Net investment income was $9.7 million in third quarter 2025, relatively flat from $9.8 million in the prior year quarter, primarily due to lower yields on money market accounts in the current interest rate environment, despite higher invested asset balances. We continue to manage our investment portfolio, while maintaining a conservative portfolio with high quality investments and duration liability matched.

Previous wording

Total expenses were $143.2 million in second quarter 2025, down 18.6% compared to $175.9 million in the prior year quarter. As described below, losses and LAE declined, policy acquisition costs declined, and general and administrative expenses increased.

Current wording

Total expenses were $142.3 million in third quarter 2025, a 28.9% improvement compared to $200.1 million in the prior year quarter. As described below, losses and LAE declined, policy acquisition costs declined, and general and administrative expenses increased.

Previous wording

Losses and LAE incurred were $75.6 million in second quarter 2025, down 28.6% from $105.9 million in the prior year quarter. The decrease primarily stems from lower attritional losses and favorable net loss development coupled with lower weather losses. Net weather losses for the current accident quarter were $12.5 million, a decrease from $19.7 million in the prior year quarter. There were no catastrophe losses in the current or prior year quarters. Net favorable prior year loss development was $2.3 million for the second quarter of 2025 compared to net unfavorable loss development of $8.7 million for the prior year quarter.

Current wording

Losses and LAE incurred were $74.8 million in third quarter 2025, a 42.5% improvement from $130.0 million in the prior year quarter. The decrease primarily stems from lower weather losses and favorable net loss development. We experienced no catastrophe losses during the third quarter of 2025 as compared to $48.7 million in the prior year quarter. Other weather losses were down to $13.8 million for the third quarter of 2025 compared to the prior year quarter amount of $14.3 million. Net favorable prior year loss development was $5.0 million for the third quarter of 2025 compared to net unfavorable loss development of $6.3 million for the prior year quarter.

Previous wording

Policy acquisition costs were $43.1 million in second quarter 2025, down 8.6% from $47.2 million in the prior year quarter. The decrease is primarily attributable to higher ceding commission earned on the net quota share reinsurance contract, the income of which offsets other policy acquisition costs. Higher ceding commission income was associated with both a larger amount of premium ceded under the net quota share program and a higher ceding commission rate driven by favorable loss experience for that program.

Current wording

Policy acquisition costs were $45.2 million in third quarter 2025, a 6.9% improvement from $48.5 million in the prior year quarter. The decrease is primarily attributable to higher ceding commission earned on the net quota share reinsurance contract, the income of which offsets other policy acquisition costs. Higher ceding commission income was associated with both a larger amount of premium ceded under the net quota share program and a higher ceding commission rate driven by favorable loss experience for that program.

Previous wording

General and administrative expenses were $24.4 million in second quarter 2025, up 7.1% from $22.8 million in the prior year quarter. The increase was driven largely by higher human capital related costs including employee benefits and stock compensation.

Current wording

General and administrative expenses were $22.3 million in third quarter 2025, up 3.6% from $21.6 million in the prior year quarter. The increase was driven largely by higher systems related costs.

Previous wording

Second quarter 2025 net income was $48.0 million or $1.55 per diluted share, compared to net income of $18.9 million or $0.61 per diluted share in the prior year quarter, primarily driven by a significant reduction in losses and LAE, an increase in net premiums earned and a reduction in operating expenses. The improvement in net income is attributable to the positive impact of rate actions, underwriting actions, and targeted exposure management taken over the last several years, which continue to favorably impact results. These and other actions resulted in growth of 3.2% in net premiums earned while investment income was down due to a lower interest rate environment. Losses and LAE decreased by 28.6%, driven primarily from lower attritional losses and favorable net loss development coupled with lower weather losses. Policy acquisition costs decreased 8.6%, driven by an increase in ceding commission on the net quota share reinsurance contract, which offsets higher costs that vary with gross premiums written. General and administrative costs increased 7.1% driven primarily by human capital costs, with the net general and administrative expense ratio one-half point higher than the prior year quarter.

Current wording

Third quarter 2025 net income was $50.4 million or $1.63 per diluted share, compared to net income of $8.2 million or $0.27 per diluted share in the prior year quarter, primarily driven by a significant reduction in losses and LAE and a reduction in operating expenses. Losses and LAE decreased by 42.5%, driven primarily from lower weather losses and favorable net loss development. Policy acquisition costs decreased 6.9%, driven by an increase in ceding commission on the net quota share reinsurance contract, which offsets higher costs that vary with gross premiums written. General and administrative costs increased 3.6% driven primarily by systems costs, with the net general and administrative expense ratio 0.6 points higher than the prior year quarter.

Previous wording

Interest expense, net was $1.9 million in the second quarter of 2025, lower than $2.8 million for the prior year quarter, driven by the reduction in debt obligations and a lower interest rate environment.

Current wording

Interest expense, net was $1.9 million in the third quarter of 2025, a $0.9 million decrease from $2.8 million for the prior year quarter, driven by the reduction in debt obligations and a lower interest rate environment.

Previous wording

Income tax expense was $15.0 million in second quarter 2025 compared to $6.0 million in the prior year quarter, with the higher provision in the current quarter driven by higher pre-tax earnings compared to the prior year quarter. The effective tax rate for the current year quarter was 23.8% compared to 24.1% in the prior year quarter. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The effective tax rate is lower than the prior year quarter, which was driven primarily by differences in projected pre-tax income for the calendar year, which includes a dilutive effect on the rate impacts of permanent tax differences compared to the prior year quarter income tax provision. The effective tax rate can fluctuate throughout the year as estimates used in the quarterly tax provision are updated with additional information.

Current wording

Income tax expense was $17.9 million in third quarter 2025 compared to $0.8 million in the prior year quarter. The effective tax rate for the current year quarter was 26.2% compared to 9.4% in the prior year quarter. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The effective tax rate for the prior year quarter was favorably impacted by updated estimates used in the quarterly tax provision as well as the benefit of interest income on a previous year's income tax refund, which lowered income tax expense for the prior year quarter. The effective tax rate can fluctuate throughout the year as estimates used in each quarterly tax provision are updated with additional information.

Previous wording

The net combined ratio was 72.9% in second quarter 2025, a 19.6 point improvement from 92.5% in the prior year quarter. The decrease primarily stems from a lower net loss and LAE ratio and lower net expense ratio as described below.

Current wording

The net combined ratio was 72.9% in third quarter 2025, a 27.7 point improvement from 100.6% in the prior year quarter. The decrease primarily stems from a lower net loss and LAE ratio and lower net expense ratio as described below.

Previous wording

The net loss and LAE ratio was 38.5% in second quarter 2025, a 17.2 point improvement from 55.7% in the prior year quarter, reflecting higher net premiums earned and a significant decrease in net losses and LAE as described above.

Current wording

The net loss and LAE ratio was 38.3% in third quarter 2025, a 27.1 point improvement from 65.4% in the prior year quarter, reflecting a significant decrease in net losses and LAE as described above.

Previous wording

The net expense ratio was 34.4%, a 2.4 point improvement from the prior year quarter amount of 36.8%, primarily driven by growth in net premiums earned which, coupled with higher ceding commission income, lowered the net policy acquisition costs ratio. This was partly offset by a half point higher net general and administrative expense ratio.

Current wording

The net expense ratio was 34.6%, a 0.6 point improvement from the prior year quarter amount of 35.2%, primarily driven by higher ceding commission income which lowered the net policy acquisition costs ratio. This was partly offset by a higher net general and administrative expense ratio.

Previous wording

Comparison of the Six Months Ended June 30, 2025 and 2024

Current wording

Comparison of the nine months Ended September 30, 2025 and 2024

Previous wording

Total revenue was $419.6 million for the six months ended June 30, 2025, up 6.3% compared to $394.9 million in the prior year period. The increase primarily stems from higher net premiums earned as described below.

Current wording

Total revenue was $632.0 million for the nine months ended September 30, 2025, a 4.2% improvement compared to $606.7 million in the prior year period. The increase primarily stems from higher net premiums earned as described below.

Previous wording

Premiums-in-force were $1.43 billion as of second quarter 2025, an increase of 0.5% compared to $1.42 billion as of second quarter 2024, driven by rate actions taken and a reduction in policies in force, while concurrently, TIV decreased by 4.7%.

Current wording

Premiums-in-force were $1.44 billion as of third quarter 2025, a 1.0% improvement compared to $1.43 billion as of third quarter 2024, driven by rate actions taken, use of inflation guard, and growth in new business written, while concurrently, TIV decreased by 2.2%.

Previous wording

Gross premiums earned were $707.4 million for the six month period ended June 30, 2025, an increase of 2.3% from $691.5 million in the prior year period. Rating actions and use of inflation guard contributed to this increase, which was partly offset by reductions in the southeast associated with fewer personal lines policies in force.

Current wording

Gross premiums earned were $1.07 billion for the nine month period ended September 30, 2025, a 2.3% improvement from $1.05 billion in the prior year period. Rating actions and use of inflation guard contributed to this increase, which was partly offset by reductions in the southeast associated with previous exposure management actions and a reduction for the commercial residential business driven by competitive market condition.

Previous wording

Net premiums earned were $396.4 million for the six month period ended June 30, 2025, up 7.2% from $369.7 million in the prior year period. The increase primarily stems from growth in gross premiums earned coupled with a decline in ceded premiums, as described above.

Current wording

Net premiums earned were $591.5 million for the nine month period ended September 30, 2025, a 4.0% improvement from $568.6 million in the prior year period. The increase primarily stems from growth in gross premiums earned as described above.

Previous wording

Net investment income was $17.6 million for the six month period ended June 30, 2025, down 3.9% from $18.3 million in the prior year period, driven primarily by lower yields on money market and our bank sweep accounts in the current interest rate environment.

Current wording

Net investment income was $27.3 million for the nine month period ended September 30, 2025, down 2.9% from $28.1 million in the prior year period, driven primarily by lower yields on money market and our bank sweep accounts in the current interest rate environment.

Previous wording

Total expenses were $312.2 million for the six month period ended June 30, 2025, down 9.4% compared to $344.5 million in the prior year period. As described below, losses and LAE declined, policy acquisition costs declined, and general and administrative expenses increased.

Current wording

Total expenses were $454.5 million for the nine month period ended September 30, 2025, a 16.5% improvement compared to $544.6 million in the prior year period. As described below, losses and LAE declined, policy acquisition costs declined, and general and administrative expenses increased.

Previous wording

Losses and LAE incurred were $175.0 million for the six month period ended June 30, 2025, down 15.8% from $208.0 million in the prior year period. The decrease primarily stems from lower attritional losses and favorable net loss development which more than offset the impact of higher weather and catastrophe losses. Net weather and catastrophe losses for the current accident quarter were $56.1 million, an increase from $18.0 million from $38.1 million in the prior year period. Catastrophe losses were $31.8 million compared to $15.9 million in the prior year period. Other weather losses totaled $24.3 million, an increase from the prior year period amount of $22.2 million. Net favorable prior year loss development was $10.0 million for the six months of 2025 compared to net unfavorable loss development of $15.4 million for the prior year period.

Current wording

Losses and LAE incurred were $249.8 million for the nine month period ended September 30, 2025, a 26.1% improvement from $338.0 million in the prior year period. The decrease primarily stems from lower weather and attritional losses and favorable net loss development. Net weather and catastrophe losses for the accident period ended September 30, 2025 were $69.8 million, a decrease from $101.1 million in the prior year period. There were no catastrophe losses in the current year period compared to $48.7 million in the prior year period. Other weather losses totaled $69.8 million, an increase from the prior year period amount of $52.4 million. Net favorable prior year loss development was $15.1 million for the nine months of 2025 compared to net unfavorable loss development of $21.6 million for the prior year period.

Previous wording

Policy acquisition costs were $89.0 million for the six month period ended June 30, 2025, down 5.5% from $94.2 million in the prior year period. The decrease is primarily attributable to higher ceding commission earned on the net quota share reinsurance contract, the income of which offsets other policy acquisition costs. The increase in ceding commission income is due to changes in the program which incepted December 31, 2024 and included a higher ceded rate as well more written premium applicable to the program as well as a higher ceding commission rate driven by favorable loss experience for that program.

Current wording

Policy acquisition costs were $134.1 million for the nine month period ended September 30, 2025, a 6.0% improvement from $142.7 million in the prior year period. The decrease is primarily attributable to higher ceding commission earned on the net quota share reinsurance contract, the income of which offsets other policy acquisition costs. The increase in ceding commission income is due to changes in the program which incepted December 31, 2024 and included a higher ceded rate as well as more written premium applicable to the program as well as a higher ceding commission rate driven by favorable loss experience for that program.

Previous wording

General and administrative expenses were $48.3 million for the six month period ended June 30, 2025, up 13.8% from $42.4 million in the prior year period. The increase was driven largely by higher costs related to software and associated costs with the implementation of a new claims, billing and policy system, higher regulatory costs, and higher human capital related costs including medical insurance and stock compensation. The policy, billing and claims system was placed in service on a pilot basis late in the third quarter of 2024. Certain costs associated with the system are currently being capitalized as development is still in progress and the previously capitalized costs are now being amortized, which drives up general and administrative expenses. The Company’s implementation of enhanced and updated claims, policy, and billing systems is expected to achieve efficiencies, enhance customer service, and improve the timeliness and quality of data analytics used to drive underwriting income.

Current wording

General and administrative expenses were $70.6 million for the nine month period ended September 30, 2025, up 10.3% from $64.0 million in the prior year period. The increase was driven largely by human capital costs, and higher costs related to software and associated costs with the implementation of a new claims, billing and policy system, and higher regulatory costs, which were partly offset by higher ceding commission and certain lower costs associated with non-recurring 2024 expenses such as insurance and systems consulting costs. The policy, billing and claims system was placed in service on a pilot basis late in the third quarter of 2024. Certain costs associated with the system are currently being capitalized as development is still in progress and the previously capitalized costs are now being amortized, which drives up general and administrative expenses. The Company’s implementation of enhanced and updated claims, policy, and billing systems is expected to achieve efficiencies, enhance customer service, and improve the timeliness and quality of data analytics used to drive underwriting income.

Previous wording

For the six months ended June 30, 2025 net income was $78.5 million or $2.54 per diluted share, compared to net income of $33.1 million or $1.08 per diluted share in the prior year period, primarily driven by a significant decrease in loss and LAE, an increase in net premiums earned, and lower operating expenses. Theimprovement in net income is attributable to the positive impact of rate actions, underwriting actions, and exposure management taken during the last several years, which favorably impacted results for the period ended June 30, 2025. These actions resulted in growth of 7.2% in net premiums earned, with a 15.8% decrease in net losses and LAE, as described above. Policy acquisition costs decreased 5.5%, primarily related to an increase in ceding commission income on the net quota share reinsurance contracts. General and administrative costs increased 13.8% driven primarily by costs associated with software, including a new claims, billing and policy system as well as an increase in certain human capital costs as described above.

Current wording

For the nine months ended September 30, 2025 net income was $128.9 million or $4.17 per diluted share, compared to net income of $41.2 million or $1.35 per diluted share in the prior year period, primarily driven by higher net premiums earned, a gain on the sale of investment property, a significant decrease in losses and LAE, and lower operating expenses. Theimprovement in net income is attributable to the positive impact of rate actions, underwriting actions, and exposure management taken during the last several years, which favorably impacted results for the period ended September 30, 2025. These actions resulted in growth of 4.0% in net premiums earned, with a 26.1% decrease in net losses and LAE, as described above. Policy acquisition costs decreased 6.0%, primarily related to an increase in ceding commission income on the net quota share reinsurance contracts. General and administrative costs increased 10.3% driven primarily by costs associated with software, including a new claims, billing and policy system as well as an increase in certain human capital costs as described above.

Previous wording

Interest expense, net was $4.3 million for the six month period ended June 30, 2025, a decrease of 23.2% compared to $5.6 million for the prior year period, The decrease was attributed to the impact from the reduction of debt obligations accompanied with a lower interest rate environment.

Current wording

Interest expense, net was $6.2 million for the nine month period ended September 30, 2025, a decrease of 26.4% compared to $8.4 million for the prior year period, The decrease was attributed to the impact from the reduction of debt obligations accompanied with a lower interest rate environment.

Previous wording

Income tax expense was $24.5 million for the six month period ended June 30, 2025 compared to $11.6 million in the prior year period, with the higher income tax provision in the current period driven by higher pre-tax earnings compared to the prior year period, coupled with a lower effective tax rate. The effective tax rate for the current year period was 23.8% compared to 26.0% in the prior year period. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The effective tax rate is lower than the prior year period, which was driven primarily by differences in projected pre-tax income for the calendar year, which includes a dilutive effect on the rate impacts of permanent tax differences compared to the prior year quarter income tax provision. The effective tax rate can fluctuate throughout the year as estimates used in the quarterly tax provision are updated with additional information.

Current wording

Income tax expense was $42.4 million for the nine month period ended September 30, 2025 compared to $12.5 million in the prior year period, with the higher income tax provision in the current period driven by higher pre-tax earnings compared to the prior year period, coupled with a lower effective tax rate. The effective tax rate for the current year period was 24.7% compared to 23.2% in the prior year period. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The effective tax rate for the prior year period was favorably impacted by updated estimates used in the quarterly tax provision as well as the benefit of interest income on a previous year's income tax refund, which lowered income tax expense for the period. The effective tax rate can fluctuate throughout the year as estimates used in each quarterly tax provision are updated with additional information.

Previous wording

The net combined ratio was 78.8% for the six month period ended June 30, 2025, a 14.3 point improvement from 93.1% in the prior year period. The decrease primarily stems from a lower net loss and LAE ratio and lower net expense ratio as described below.

Current wording

The net combined ratio was 76.8% for the nine month period ended September 30, 2025, an 18.9 point improvement from 95.7% in the prior year period. The decrease primarily stems from a lower net loss and LAE ratio and lower net expense ratio as described below.

Previous wording

The ceded premium ratio was 44.0% for the six month period ended June 30, 2025, a 2.5 point improvement from 46.5% in the prior year period, primarily driven by growth in gross premiums earned as well as lower reinsurance costs, as described above.

Current wording

The ceded premium ratio was 44.7% for the nine month period ended September 30, 2025, a 0.9 point improvement from 45.6% in the prior year period, primarily driven by growth in gross premiums earned as well as slightly lower reinsurance costs, as described above.

Previous wording

The net loss and LAE ratio was 44.2% for the six month period ended June 30, 2025, a 12.0 point improvement from 56.2% in the prior year period, reflecting higher net premiums earned, coupled with a decrease in net losses and LAE as described above.

Current wording

The net loss and LAE ratio was 42.2% for the nine month period ended September 30, 2025, a 17.2 point improvement from 59.4% in the prior year period, reflecting higher net premiums earned, coupled with a decrease in net losses and LAE as described above.

Previous wording

The net expense ratio was 34.6% for the six month period ended June 30, 2025, a 2.3 point improvement from the prior year period amount of 36.9%, primarily driven by growth in net premiums earned which, coupled with higher ceding commission income, lowered the net policy acquisition costs ratio and was partly offset by a higher net general and administrative expense ratio.

Current wording

The net expense ratio was 34.6% for the nine month period ended September 30, 2025, a 1.7 point improvement from the prior year period amount of 36.3%, primarily driven by growth in net premiums earned which, coupled with higher ceding commission income, lowered the net policy acquisition costs ratio and was partly offset by a higher net general and administrative expense ratio.