Lemonade, Inc.

Previous wording

On January 8, 2024, we entered into an Amended and Restated Customer Investment Agreement where GC will provide up to an additional $140 million of financing for our sales and marketing growth efforts beginning from the Original Commitment End Date through December 31, 2025. This was further amended and restated in April 2024 and June 2024 to clarify certain provisions with no changes to material terms and conditions of the Agreement. On February 3, 2025, the Agreement was further amended under which GC will provide up to an additional $200 million of financing from January 1, 2026 to December 31, 2026 for our sales and marketing growth efforts (collectively, the "Amended and Restated Agreement"). The Amended and Restated Agreement as of February 2025 contains standard customary representations, warranties and covenants by the parties, and will continue in effect unless terminated by any party pursuant to its terms. Under all of these agreements, subject to certain terms and conditions specified therein, at the start of each growth period, an Investment Amount of up to 80% of our growth spend (the "Investment Amount") will be advanced by GC. During each growth period, we will repay each Investment Amount including a 16% rate of return based upon an agreed schedule. Once fully repaid, we will retain all future reference income related to each respective Investment Amount.

Current wording

The Agreement has been amended and restated on several occasions to extend the commitment period and increase the financing agreement. On January 8, 2024, the Agreement was amended and restated to provide up to an additional $140 million of financing December 31, 2025. On February 3, 2025, the Agreement was further amended to provide up to an additional $200 million of financing from January 1, 2026 through December 31, 2026 for our sales and marketing growth efforts. In addition, the Agreement was amended in April 2024, June 2024 and December 2025 to clarify certain provisions with no material changes to terms and conditions. The Agreement, as amended and restated (the “Amended and Restated Agreement”) contains standard customary representations, warranties and covenants by the parties, and will continue in effect unless terminated by any party pursuant to its terms.

Previous wording

As of September 30, 2025, we had $139.0 million of outstanding borrowings under the Amended and Restated Agreement. We incurred interest expense of $11.9 million for the nine months ended September 30, 2025 and such interest is included in “General and Administrative expense” in the condensed consolidated statements of operations and comprehensive loss.

Current wording

As of March 31, 2026, we had $179.6 million of outstanding borrowings under the Amended and Restated Agreement. We incurred interest expense of $6.2 million for the three months ended March 31, 2026.

Previous wording

Seasonal patterns can impact both our rate of customer acquisition and the incurrence of claims and losses. Based on historical experience, existing and potential customers move more frequently in the third quarter, compared to the rest of the calendar year. As a result, we may see greater demand for new or expanded insurance coverage, and increased online engagement resulting in proportionately more growth during the third quarter. We expect that as we grow our customers, expand geographically, and launch new products, the impact of seasonal variability on our rate of growth may decrease.

Current wording

Based on historical experience, existing and potential customers move more frequently in the third quarter, compared to the rest of the calendar year. As a result, we may see greater demand for new or expanded insurance coverage, and increased online engagement resulting in proportionately more growth during the third quarter. We expect that as we grow our customers, expand geographically, and launch new products, the impact of seasonal variability on our rate of growth may decrease.

Previous wording

Changing U.S. and global economic conditions, including the potential impact from evolving tariff policy and capital market volatility, may impact our business. In particular, the effects of inflation, if any, could impact our claims costs, product pricing and investment yield, among other impacts. The actual effects of the current and potential future impact on our results remains to be unknown and cannot be estimated with precision.

Current wording

Changing U.S. and global economic conditions may impact our business. Evolving U.S. trade policy, including tariffs imposed on imported goods in 2025, could affect our claims costs. In February 2026, the United States Supreme Court ruled that the use of the International Emergency Economic Powers Act ("IEEPA") to impose tariffs was not authorized by Congress, invalidating a significant portion of tariffs that had been in effect since April 2025. While the ruling struck down the IEEPA-based tariffs, it does not prevent the administration from imposing tariffs using other legal authorities. Following the ruling, the administration invoked alternative statutory authorities imposing a global tariff, and the administration has indicated its intention to continue to pursue alternative statutory mechanisms to reinstate or impose new tariffs. Tariffs on building materials may increase home repair costs, tariffs on automotive parts may increase vehicle repair and replacement costs, and tariffs on consumer goods may increase the cost of replacing covered personal property. To the extent tariff-driven cost increases are sustained, we may seek premium rate adjustments, subject to regulatory approval in applicable states; however, there may be a lag between when we experience increased claims costs and when we are able to implement corresponding rate increases, which could negatively impact our loss ratios in the interim. More broadly, inflation, whether driven by tariffs, supply chain disruptions, labor market conditions, or other factors, if any, has impacted and could continue to impact our claims costs, product pricing and investment yield, among other impacts. Capital market volatility may also affect our investment portfolio and access to capital. The actual effects of these macroeconomic factors on our results remains unknown and cannot be estimated with precision.

Previous wording

We conduct certain of our operations in Israel and therefore our operations and results may be adversely affected by political, economic and military instability and conflict in Israel and the surrounding region. There is still uncertainty regarding the extent to which the war and its broader macroeconomic implications will impact our operations in Israel. We will continue to evaluate the extent to which this may impact our business, financial condition, or results of operations. These and other uncertainties could result in changes to our current expectations. For additional information, see "Risk Factors — Risks Relating to our Business —We conduct certain of our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israel and the surrounding region." in our Annual Report on Form 10-K.

Current wording

We conduct certain of our operations in Israel and therefore our results may be adversely affected by political, economic and military instability and conflict in Israel and the surrounding region. There is still uncertainty regarding the extent to which the war and its broader macroeconomic implications will impact our operations in Israel. We will continue to evaluate the extent to which this may impact our business, financial condition, or results of operations. These and other uncertainties could result in changes to our current expectations. For additional information, see "Risk Factors - Risks Relating to our Business -We conduct certain of our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israel and the surrounding region." in our Annual Report on Form 10-K.

Previous wording

We maintain proportional reinsurance contracts which cover all of the Company's products and geographies, and transfers, or “cedes,” a specified percentage of the premium to reinsurers. We also manage the remaining percentage of the business with alternative forms of reinsurance through non-proportional reinsurance contracts.

Current wording

We maintain proportional reinsurance contracts which cover all of the Company's products and geographies, and transfer, or “cede,” a specified percentage of the premium to reinsurers. We also manage the remaining percentage of the business with alternative forms of reinsurance through non-proportional reinsurance contracts.

Previous wording

We agreed to the terms of our reinsurance program effective July 1, 2024 through June 30, 2025 which included Whole Account Quota Share Reinsurance Contracts by and among the Company, Lemonade Insurance Company ("LIC"), Metromile Insurance Company ("MIC") and Lemonade Insurance N.V. ("LINV"), and each of Hannover Ruck SE ("Hannover"), MAPFRE Re Compania De Reaseguros S.A. ("MAPFRE"), and Swiss Reinsurance America Corporation (collectively referred to as “Reinsurers”) ("Reinsurance Program"). Under the Reinsurance Program, which covers all products and geographies, the Company transfers, or "cedes," approximately 55% of premium to the Reinsurers. In exchange, these Reinsurers pay us a ceding commission on all premiums ceded to the Reinsurers, in addition to funding the corresponding claims, subject to certain limitations, including but not limited to, the exclusion of hurricane losses, and a limit of $10,000,000 per occurrence for non-hurricane catastrophe losses. The Per Risk Cap across the contracts is $750,000. Additionally, these contracts are subject to loss ratio caps and variable ceding commission, which align our interests with those of our Reinsurers and is settled primarily on a funds withheld basis. We renewed the Reinsurance Program with Hannover and MAPFRE effective July 1, 2025 and will expire on June 30, 2026, with a reduced effective cession rate of 20% and with similar terms to the contracts that expired on June 30, 2025.

Current wording

We agreed to the terms of our reinsurance program effective July 1, 2024 through June 30, 2025 which included Whole Account Quota Share Reinsurance Contracts by and among the Company, Lemonade Insurance Company ("LIC"), Metromile Insurance Company ("MIC") and Lemonade Insurance N.V. ("LINV"), and each of Hannover Ruck SE ("Hannover"), MAPFRE Re Compania De Reaseguros S.A. ("MAPFRE"), and Swiss Reinsurance America Corporation (collectively referred to as “Reinsurers”) ("Reinsurance Program"). Under the Reinsurance Program, which covers all products and geographies, the Company transfers, or "cedes," approximately 55% of premium to the Reinsurers. In exchange, these Reinsurers pay us a ceding commission on all premiums ceded to the Reinsurers, in addition to funding the corresponding claims, subject to certain limitations, including but not limited to, the exclusion of hurricane losses, and a limit of $10,000,000 per occurrence for non-hurricane catastrophe losses. The Per Risk Cap across the contracts is $750,000. Additionally, these contracts are subject to loss ratio caps and variable ceding commission, which align our interests with those of our Reinsurers and is settled primarily on a funds withheld basis. We renewed the Reinsurance Program with Hannover and MAPFRE effective July 1, 2025 and will expire on June 30, 2026, with a reduced effective cession rate of 20% and with other terms similar to the contracts that expired on June 30, 2025.

Previous wording

We are also exposed to some risks on property, auto and pet insurance underwritten by LIC and MIC ceded through Quota Share Reinsurance Contracts (the "QS reinsurance contracts") which is retained in an offshore captive subsidiary, Lemonade Re SPC in the Cayman Islands. The MIC QS reinsurance contract which became effective July 1, 2023 was terminated and the parties agreed to a new QS reinsurance contract effective July 1, 2025 on the same terms except for the increase in cession rate to 35% and ceding commission rate effective July 1, 2025. The new MIC QS reinsurance contract will remain effective for an indefinite period until terminated by either party. The LIC QS reinsurance contract became effective on July 1, 2025 and will expire on June 30, 2026.

Current wording

We are also exposed to some risks on property, car and pet insurance underwritten by LIC and MIC ceded through Quota Share Reinsurance Contracts (the "QS reinsurance contracts") which is retained in an offshore captive subsidiary, Lemonade Re SPC in the Cayman Islands. The MIC QS reinsurance contract which became effective July 1, 2023 was terminated and the parties agreed to a new QS reinsurance contract effective July 1, 2025 on the same terms except for the increase in cession rate to 35% and ceding commission rate effective July 1, 2025. The new MIC QS reinsurance contract will remain effective for an indefinite period until terminated by either party. The LIC QS reinsurance contract became effective on July 1, 2025 and will expire on June 30, 2026.

Previous wording

Gross written premium is the amount received, or to be received, for insurance policies written by us during a specific period of time without reduction for premiums ceded to reinsurers. Gross written premium includes direct and assumed premium. We began assuming premium related to car insurance policies written in Texas in December 2022, in connection with our fronting arrangement with a third party carrier in Texas. We also include gross written premium from the sale of pay-per-mile car insurance policies within the United States following the Metromile Acquisition in July 2022. The volume of our gross written premium in any given period is generally influenced by new business submissions, binding of new business submissions into policies, renewals of existing policies, and average size and premium rate of bound policies.

Current wording

Gross written premium is the amount received, or to be received, for insurance policies written by us during a specific period of time without reduction for premiums ceded to reinsurers. Gross written premium includes direct and assumed premium. The volume of our gross written premium in any given period is generally influenced by new business submissions, binding of new business submissions into policies, renewals of existing policies, and average size and premium rate of bound policies.

Previous wording

Ceding commission income is commission we receive based on premium ceded to third-party reinsurers to reimburse us for acquisition and underwriting expenses. We earn commissions on reinsurance premium ceded in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies reinsured. The portion of ceding commission income which represents reimbursement of successful acquisition costs related to the underlying policies is recorded as an offset to other insurance expense.

Current wording

Ceding commission income is commission we receive based on the premium ceded to third-party reinsurers to reimburse us for acquisition and underwriting expenses. We earn commissions on reinsurance premium ceded in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies reinsured. The portion of ceding commission income which represents reimbursement of successful acquisition costs related to the underlying policies is recorded as an offset to other insurance expense.

Previous wording

We have incurred and expect to continue to incur significant additional general and administrative expense as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and the listing standards of the New York Stock Exchange and New York Stock Exchange American, additional corporate, director and officer insurance expenses, greater investor relations expenses and increased legal, audit and consulting fees.

Current wording

We have incurred and expect to continue to incur significant additional general and administrative expense as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and the listing standards of the New York Stock Exchange, additional corporate, director and officer insurance expenses, greater investor relations expenses and increased legal, audit and consulting fees.

Previous wording

Gross earned premium is the earned portion of our gross written premium. Gross earned premium includes direct and assumed premium. We also began assuming premium related to car insurance policies written in Texas in December 2022, in connection with our fronting arrangement with a third party carrier in Texas.

Current wording

Gross earned premium is the earned portion of our gross written premium. Gross earned premium includes direct and assumed premium. We have assumed premium related to car insurance policies written in Texas, in connection with our fronting arrangement with a third party carrier in Texas.

Previous wording

We define adjusted EBITDA, a non-GAAP financial measure, as net loss excluding the impact of income tax expense, depreciation and amortization, stock-based compensation, interest expense, interest income and others, net investment income, change in fair value of warrants liability, amortization of fair value adjustment on insurance contract intangible liability relating to the Metromile Acquisition, and other non-cash adjustments and other transactions that we consider to be unique in nature. See “— Non-GAAP Financial Measures” for a reconciliation of net loss to adjusted EBITDA in accordance with GAAP.

Current wording

We define adjusted EBITDA, a non-GAAP financial measure, as net loss excluding the impact of income tax expense, depreciation and amortization, stock-based compensation, interest expense, interest income and others, net investment income, amortization of fair value adjustment on insurance contract intangible liability relating to the acquisition of Metromile, and other one time and non-cash adjustments and other transactions that we consider to be unique in nature. See “Non-GAAP Financial Measures” for a reconciliation of net loss to adjusted EBITDA in accordance with GAAP.

Previous wording

Net earned premium increased $44.3 million, or 46%, to $140.0 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to the earning of increased gross written premium and the impact of the Company's new reinsurance program as discussed in more detail in the "Reinsurance" section above.

Current wording

Net earned premium increased $108.3 million, or 104%, to $212.6 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to the earning of increased gross written premium and the impact of the Company's reinsurance program as discussed in more detail in the "Reinsurance" section above.

Previous wording

Gross written premium increased $64.4 million, or 24%, to $333.3 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily due to a 24% increase in net added customers year over year driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings. In addition, we also saw a 5% increase in premium per customer year over year due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies. Assumed premium related to car insurance policies written in Texas through our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.

Current wording

Gross written premium increased $89.7 million, or 35%, to $343.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily due to a 23% increase in net added customers year over year driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings. In addition, we also saw a 7% increase in premium per customer year over year due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies. Assumed premium related to car insurance policies written in Texas through our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.

Previous wording

Ceded written premium decreased $96.7 million, or 63%, to $56.7 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to impact of the Company's new reinsurance program. See "Reinsurance" above for further information.

Current wording

Ceded written premium decreased $68.9 million, or 50%, to $69.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to impact of the reduced cession rate from Company's reinsurance program. See "Reinsurance" above for further information.

Previous wording

The table below shows the amount of premium we earned on a gross and net basis. Ceded earned premium as a percentage of gross earned premium is at 49% and 55% for the three months ended September 30, 2025 and 2024, respectively, consistent with our participation rate in our reinsurance contracts as discussed in more detail in the "Reinsurance" section above.

Current wording

The table below shows the amount of premium we earned on a gross and net basis. Ceded earned premium as a percentage of gross earned premium is at 31% and 55% for the three months ended March 31, 2026 and 2025, respectively, consistent with our participation rate in our reinsurance contracts as discussed in more detail in the "Reinsurance" section above.

Previous wording

Net investment income increased $0.8 million, or 9% to $9.7 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily driven by the diversification of the Company's investment portfolio with higher returns, offset by investment expenses. We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. Government and Non-US Government.

Current wording

Net investment income increased $0.3 million, or 3% to $9.8 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily driven by the diversification of the Company's investment portfolio with higher returns. We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. Government and Non-U.S. Government.

Previous wording

Loss and LAE, net increased $38.2 million, or 18%, to $252.5 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was due to growth in premium offset by reserve releases due to better than expected loss reserve emergence on homeowners multi-peril line of business and car. Net incurred losses included the impact of the California Wildfires in January 2025 in the amount of $19.9 million.

Current wording

Loss and LAE, net increased $47.9 million, or 56%, to $133.3 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was due to growth in premium and impact of the reduced cession rate from the reinsurance program, offset by reserve releases due to better than expected loss reserve emergence on homeowners multi-peril line of business and car. Net incurred loss and loss adjustment expenses for the three months ended March 31, 2025 included the $16.8 million impact of the January 2025 California Wildfires.

Previous wording

Other insurance expense increased $4.3 million, or 22%, to $24.1 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 consistent with growth in earned premium. Credit card processing fees increased $1.9 million, or 40%, as compared to the three months ended September 30, 2024 as a result of the increase in customers and associated premium. Amortization of deferred acquisition costs, net of ceding commissions increased $1.6 million, or 43% as compared to the three months ended September 30, 2024 as a result of growth in business across all products. Professional and other services increased $0.7 million or 175% as compared to the three months ended September 30, 2024.

Current wording

Other insurance expense decreased $2.0 million, or 8%, to $24.1 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to the California FAIR Plan assessment charge of $6.9 million related to the January 2025 California Wildfires. Employee-related expense decreased $1.1 million or 19% as compared to the three months ended March 31, 2025. Credit card processing fees increased $2.0 million, or 39%, as compared to the three months ended March 31, 2025 as a result of the increase in customers and associated premium. Amortization of deferred acquisition costs, net of ceding commissions increased $2.2 million, or 65% as compared to the three months ended March 31, 2025 as a result of growth in business across all products.

Previous wording

Sales and marketing expense increased $6.0 million, or 12%, to $57.4 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily due to brand and performance advertising, which is the largest component of our sales and marketing expenses. Expense related to advertising, other customer acquisition channels and partner payments increased $6.2 million, or 16%, as compared to the three months ended September 30, 2024 consistent with growth in our business. Compensation expense related to the warrant shares decreased $2.0 million, or 100%, as compared to the three months ended September 30, 2024 due to the termination of the Warrant Agreement with Chewy.

Current wording

Sales and marketing expense increased $22.9 million, or 53%, to $66.1 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to brand and performance advertising, which is the largest component of our sales and marketing expenses. Expense related to advertising, other customer acquisition channels and partner payments increased $16.2 million, or 43%, to $54.3 million as compared to the three months ended March 31, 2025 consistent with growth in our business. Compensation expense related to the warrant shares decreased $5.2 million, or 100%, as compared to the three months ended March 31, 2025 due to the termination of the Warrant Agreement with Chewy in prior period.

Previous wording

Technology development expense increased $2.8 million, or 13%, to $24.7 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Employee-related expense, including stock-based compensation, and net of capitalized costs for the development of internal-use software, increased $2.8 million, or 16%, as compared to the three months ended September 30, 2024.

Current wording

Technology development expense increased $4.9 million, or 22%, to $26.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Employee-related expense, including stock-based compensation, and net of capitalized costs for the development of internal-use software, increased $4.2 million, or 24%, as compared to the three months ended March 31, 2025.

Previous wording

General and administrative expense increased $3.6 million, or 11%, to $35.0 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Interest expense related to borrowings from financing agreement with GC increased $2.9 million, or 171%, as compared to three months ended September 30, 2024 due to increased borrowings during the period. Employee-related expense, including stock-based compensation, increased $2.3 million, or 16%, as compared to three months ended September 30, 2024. Bad debt expense increased by $2.6 million or 100%, as compared to three months ended September 30, 2024. Depreciation and amortization decreased by $1.7 million, or 33% as compared to three months ended September 30, 2024. During the period, we recorded $2.3 million of gain on early lease termination related to the Company's office space in San Francisco.

Current wording

General and administrative expense increased $6.3 million, or 18%, to $42.2 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Employee-related expense, including stock-based compensation, increased $5.0 million, or 33%, as compared to three months ended March 31, 2025. Interest expense related to borrowings from financing agreement with GC increased $2.9 million, or 88%, as compared to three months ended March 31, 2025 due to increased borrowings during the period. Bad debt expense increased by $1.4 million or 31%, as compared to three months ended March 31, 2025. In addition, the Company received a recovery in the amount of $1.7 million related to a pre-acquisition Metromile extra-contractual claim liability which was previously recorded in the third quarter of 2024. Depreciation and amortization decreased by $1.8 million, or 40% as compared to three months ended March 31, 2025.

Previous wording

Net loss decreased $30.2 million, or 45%, to $37.5 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to the factors described above.

Current wording

Net loss decreased $26.6 million, or 43%, to $35.8 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to the factors described above.

Previous wording

We define Adjusted EBITDA, a non-GAAP financial measure, as net loss excluding income tax expense, depreciation and amortization, stock-based compensation, interest expense, interest income and others, net investment income, change in fair value of warrants liability, amortization of fair value adjustment on insurance contract intangible liability relating to the Metromile Acquisition, and other non-cash adjustments and other transactions that we would consider to be unique in nature. We exclude these items from Adjusted EBITDA because we do not consider them to be directly attributable to our underlying operating performance. We use Adjusted EBITDA as an internal performance measure in the management of our operations because we believe it gives our management and other customers of our financial information useful insight into our results of operations and our underlying business performance. Adjusted EBITDA should not be viewed as a substitute for net loss calculated in accordance with U.S. GAAP, and other companies may define Adjusted EBITDA differently.

Current wording

We define Adjusted EBITDA, a non-GAAP financial measure, as net loss excluding income tax expense, depreciation and amortization, stock-based compensation, interest expense, interest income and others, net investment income, amortization of fair value adjustment on insurance contract intangible liability relating to the acquisition of Metromile, and other one time and non-cash adjustments and other transactions that we would consider to be unique in nature. We exclude these items from Adjusted EBITDA because we do not consider them to be directly attributable to our underlying operating performance. We use Adjusted EBITDA as an internal performance measure in the management of our operations because we believe it gives our management and other customers of our financial information useful insight into our results of operations and our underlying business performance. Adjusted EBITDA should not be viewed as a substitute for net loss calculated in accordance with U.S. GAAP, and other companies may define Adjusted EBITDA differently.

Previous wording

(1) Includes the impact of canceled unvested warrant shares for contract year 2 related to the termination of the Warrant Agreement with Chewy of $5.2 million for the nine months ended September 30, 2025 and compensation expense related to the warrant shares of $2.0 million and $4.5 million for the three and nine months ended September 30, 2024, respectively (See Note 11 of the unaudited condensed consolidated financial statements).

Current wording

(1) Includes the impact of canceled unvested warrant shares for contract year 2 related to the termination of the Warrant Agreement with Chewy of $5.2 million for the three months ended March 31, 2025 (See Note 11 of the condensed consolidated financial statements).

Previous wording

(2) Includes the California FAIR Plan assessment of $6.9 million related to the January 2025 California Wildfires for the nine months ended September 30, 2025 (See Note 15 of the unaudited condensed consolidated financial statements).

Current wording

(2) Includes the California FAIR Plan assessment of $6.9 million related to the January 2025 California Wildfires for the three months ended March 31, 2025 (See Note 15 of the condensed consolidated financial statements).

Previous wording

As of September 30, 2025, we had $345.9 million in cash and cash equivalents, and $705.3 million in investments. From the date we commenced operations, we have generated negative cash flows from operations, and we have financed our operations primarily through private and public sales of equity securities and third party financing. Our principal sources of funds are insurance premiums, investment income, reinsurance recoveries and proceeds from maturity and sale of invested assets. These funds are primarily used to pay claims, operating expenses and taxes. In June 2023, we entered into an Agreement with GC, where up to $150 million of financing was provided for our sales and marketing growth efforts through December 31, 2024. The Agreement was amended and restated in January 2024, pursuant to which an additional financing of $140 million will be provided for our sales and marketing growth efforts through December 31, 2025, and was further amended and restated in April 2024 and June 2024 to clarify certain provisions and all material terms and conditions remain unchanged. On February 3, 2025, the Agreement was further amended in which GC will provide up to an additional $200 million of financing for our sales and marketing growth efforts from January 1, 2026 to December 31, 2026. As of September 30, 2025, we had $139.0 million of outstanding borrowings under the Amended and Restated Agreement with GC. We believe our existing cash and cash equivalents as of September 30, 2025 will be sufficient to meet our working capital, liquidity and capital expenditure needs over at least the next 12 months. This belief is subject, to a certain extent, on general economic, financial, competitive, regulatory and other factors that are beyond our control.

Current wording

As of March 31, 2026, we had $374.3 million in cash and cash equivalents, and $669.4 million in investments. From the date we commenced operations, we have generated negative cash flows from operations, and we have financed our operations primarily through private and public sales of equity securities and third party financing. Our principal sources of funds are insurance premiums, investment income, reinsurance recoveries and proceeds from maturity and sale of invested assets. These funds are primarily used to pay claims, operating expenses and taxes. In June 2023, we entered into an Agreement with GC, where up to $150 million of financing was provided for our sales and marketing growth efforts through December 31, 2024. The Agreement was amended and restated in January 2024, pursuant to which an additional financing of $140 million will be provided for our sales and marketing growth efforts through December 31, 2025. On February 3, 2025, the Agreement was further amended in which GC will provide up to an additional $200 million of financing for our sales and marketing growth efforts from January 1, 2026 to December 31, 2026. In addition, the Agreement was further amended and restated in April 2024, June 2024 and December 2025 to clarify certain provisions with no material changes to terms and conditions. As of March 31, 2026, we had $179.6 million of outstanding borrowings under the Amended and Restated Agreement with GC. We believe our existing cash and cash equivalents as of March 31, 2026 will be sufficient to meet our working capital, liquidity and capital expenditure needs over at least the next 12 months. This belief is subject, to a certain extent, to general economic, financial, competitive, regulatory and other factors that are beyond our control.

Previous wording

Our U.S. and Dutch insurance company subsidiaries, and our Dutch insurance holding company, are restricted by statute as to the amount of dividends that they may pay without the prior approval of their respective competent regulatory authorities. As of September 30, 2025, cash and investments held by these companies was $703.5 million of which $278.1 million is held as regulatory surplus.

Current wording

Our U.S. and Dutch insurance company subsidiaries, and our Dutch insurance holding company, are restricted by statute as to the amount of dividends that they may pay without the prior approval of their respective competent regulatory authorities. As of March 31, 2026, cash and investments held by these companies was $826.1 million of which $355.8 million is held as regulatory surplus.

Previous wording

Cash used in operating activities was $37.2 million for the nine months ended September 30, 2025, an increase of $12.0 million from $25.2 million for the nine months ended September 30, 2024. This reflected the $28.4 million decrease in our net loss, primarily offset by changes in our operating assets and liabilities. The increase in cash used in operating activities from the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to claim payments, settlements with our reinsurance partners, and growth and expansion spend of the Company, offset by collection of premiums and recoveries from reinsurance partners.

Current wording

Cash used in operating activities was $0.6 million for the three months ended March 31, 2026, a decrease of $46.6 million from $47.2 million for the three months ended March 31, 2025. The improvement was driven by the $26.6 million reduction in our net loss and changes in our operating assets and liabilities. The decrease in cash used in operating activities from the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to claim payments, settlements with our reinsurance partners, and growth and expansion spend of the Company, offset by collection of premiums and recoveries from reinsurance partners.

Previous wording

Cash used in investing activities was $70.2 million for the nine months ended September 30, 2025, primarily due to purchases of U.S. government obligations, corporate debt securities, asset-backed securities, offset by proceeds from sales and maturities of U.S. government obligations, corporate debt securities, asset-backed securities, short term investments. We also purchased property and equipment during the period.

Current wording

Cash used in investing activities was $34.6 million for the three months ended March 31, 2026, primarily due to purchases of U.S. government obligations, corporate debt securities, asset-backed securities, short term investments offset by proceeds from sales and maturities of U.S. government obligations, corporate debt securities, asset-backed securities, short term investments. We also purchased property and equipment during the period.

Previous wording

Cash provided by investing activities was $38.1 million for the nine months ended September 30, 2024, primarily due to proceeds from sales and maturities of U.S. government obligations, corporate debt securities, asset-backed securities, short term investments offset by purchases of U.S. government obligations, corporate debt securities, asset-backed securities, short term investments. We also purchased property and equipment during the period.

Current wording

Cash used in investing activities was $40.3 million for the three months ended March 31, 2025, primarily due to purchases of U.S. government obligations, corporate debt securities, asset-backed securities, short term investments, offset by proceeds from sales and maturities of U.S. government obligations, corporate debt securities, asset-backed securities, short term investments. We also purchased property and equipment during the period.

Previous wording

Cash provided by financing activities was $68.1 million for the nine months ended September 30, 2025, primarily due to borrowings under the financing agreement offset by principal payments. We also had proceeds from stock option exercises during the period.

Current wording

Cash provided by financing activities was $26.2 million for the three months ended March 31, 2026, primarily due to borrowings under the financing agreement offset by principal payments. We also had proceeds from stock option exercises during the period.

Previous wording

Cash provided by financing activities was $52.7 million for the nine months ended September 30, 2024, primarily due to borrowings under the financing agreement offset by principal payments. We also had proceeds from stock option exercises during the period.

Current wording

Cash provided by financing activities was $20.0 million for the three months ended March 31, 2025, primarily due to borrowings under the financing agreement offset by principal payments. We also had proceeds from stock option exercises during the period.

Previous wording

We do not have any current plans for material capital expenditures other than current operating requirements. There have been no material changes as of September 30, 2025 to our contractual obligations from those described in our Annual Report on Form 10-K. To the extent our future operating cash flows are insufficient to cover our net losses from catastrophic events, we had $1,051.2 million in cash, cash equivalents and investments available at September 30, 2025. We may also seek to raise additional capital through third-party borrowings, sales of our equity, issuance of debt securities or entrance into new reinsurance arrangements. There can be no assurance that we will be able to raise additional capital on favorable terms or at all.

Current wording

We do not have any current plans for material capital expenditures other than current operating requirements. There have been no material changes as of March 31, 2026 to our contractual obligations from those described in our Annual Report on Form 10-K. To the extent our future operating cash flows are insufficient to cover our net losses from catastrophic events, we had $1,043.7 million in cash, cash equivalents and investments available at March 31, 2026. We may also seek to raise additional capital through third-party borrowings, sales of our equity, issuance of debt securities or entrance into new reinsurance arrangements. There can be no assurance that we will be able to raise additional capital on favorable terms or at all.

Previous wording

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. We evaluate our significant estimates on an ongoing basis, including, but not limited to, estimates related to unpaid loss and loss adjustment expense, reinsurance assets, intangible assets, stock-based compensation, income tax assets and liabilities, including recoverability of our net deferred tax asset, income tax provisions and certain non-income tax accruals. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Current wording

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. We evaluate our significant estimates on an ongoing basis, including, but not limited to, estimates related to unpaid loss and loss adjustment expense, stock-based compensation, income tax assets and liabilities, including recoverability of our net deferred tax asset, income tax provisions and certain non-income tax accruals. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Previous wording

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K and the notes to the unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report. During the nine months ended September 30, 2025, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K.

Current wording

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K and the notes to the unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report. During the three months ended March 31, 2026, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K.