Lemonade, Inc.

Previous wording

In addition to digitizing insurance end-to-end, we also reimagined the underlying business model to minimize volatility while maximizing trust and social impact. To lessen the volatility inherent in an industry directly impacted by the weather, we utilize several forms of reinsurance, with the goal of dampening the impact on our gross margin. The result is that excess claims are generally offloaded to reinsurers, while excess premiums can be donated to nonprofits selected by our customers as part of our annual "Giveback". These two ballasts, reinsurance and Giveback, reduce volatility, while creating an aligned, trustful, and values-rich relationship with our customers.

Current wording

In addition to digitizing insurance end-to-end, we also reimagined the underlying business model to minimize volatility while maximizing trust and social impact. To lessen the volatility inherent in an industry directly impacted by the weather, we utilize several forms of reinsurance, with the goal of dampening the impact on our gross margin. The result is that excess claims are generally offloaded to reinsurers, while excess premiums can be donated to nonprofits selected by our customers as part of our annual "Giveback". These two ballasts reinsurance, which reduces volatility, and Giveback, which creates an aligned, trustful, and values-rich relationship with our customers, are central to our model.

Previous 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.

Current wording

As of June 30, 2026, we had $206.4 million of outstanding borrowings under the Amended and Restated Agreement. We incurred interest expense of $13.2 million for the six months ended June 30, 2026.

Previous wording

Seasonal patterns can impact both our rate of customer acquisition and the incurrence of claims and losses.

Current wording

Seasonal patterns can impact both our rate of customer acquisition and the incurrence of losses.

Previous 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.

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 a portion of the remaining business with 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 other terms similar to the contracts that expired on June 30, 2025.

Current wording

We agreed to the terms of our reinsurance program effective July 1, 2025 through June 30, 2026 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") and MAPFRE Re Compania De Reaseguros S.A. ("MAPFRE") (collectively referred to as “Reinsurers”) ("Reinsurance Program"). Under the Reinsurance Program, which covers all products and geographies, the Company transfers, or "cedes," approximately 20% 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, 2026 and will expire on June 30, 2027, with a reduced effective cession rate of 18% of premiums to Reinsurers. The renewed terms include a $40,000,000 limit per loss occurrence and $100,000,000 in aggregate, including catastrophe losses as defined in the agreement. Other terms are similar to the contracts that expired on June 30, 2026.

Previous wording

LIC and MIC entered into a Property Per Risk Excess of Loss Reinsurance Contract with a panel of reinsurance companies (the "PPR Contract") which was effective July 1, 2024 and expired on June 30, 2025. Under the PPR Contract, claims in excess of $750,000 were 100% ceded up to a maximum recovery of $2,250,000, subject to certain limitations. The PPR Contract was renewed at similar terms effective July 1, 2025 and will expire on June 30, 2026.

Current wording

LIC and MIC entered into a Property Per Risk Excess of Loss Reinsurance Contract with a panel of reinsurance companies (the "PPR Contract") which was effective July 1, 2025 and expired on June 30, 2026. Under the PPR Contract, claims in excess of $750,000 were 100% ceded up to a maximum recovery of $2,250,000, subject to certain limitations. The PPR Contract was not renewed.

Previous wording

We also entered into an Excess of Loss Reinsurance Contract (the "XOL reinsurance contract") through a captive in Bermuda in which we have a variable interest. This XOL reinsurance contract primarily covers catastrophe risk on property and car business underwritten by LIC and MIC over the initial $50,000,000 limit for each loss occurrence, and further subject to a limit of $80,000,000 for each loss occurrence and in aggregate. This XOL reinsurance contract effective July 1, 2024 expired on June 30, 2025, and was renewed at similar terms effective July 1, 2025 and expiring on June 30, 2026.

Current wording

We also entered into an Excess of Loss Reinsurance Contract (the "XOL reinsurance contract") through a captive in Bermuda in which we have a variable interest. This XOL reinsurance contract primarily covers catastrophe risk on property and car business underwritten by LIC and MIC over the initial $50,000,000 limit for each loss occurrence, and further subject to a limit of $80,000,000 for each loss occurrence and in aggregate. This XOL reinsurance contract which was effective July 1, 2025 expired on June 30, 2026. The XOL reinsurance contract between the captive and LIC was renewed effective July 1, 2026 and will expire on June 30, 2027, with a limit of liability of $50,000,000 for each loss occurrence and in aggregate. The XOL reinsurance contract between the captive and MIC was not renewed.

Previous 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.

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, 2025 was terminated and the parties agreed to a new QS reinsurance contract effective July 1, 2026 with an increase in cession rate from 35% to 40%. The MIC QS reinsurance contract will remain effective for an indefinite period until terminated by either party. The LIC QS reinsurance contract was renewed effective on July 1, 2026 through June 30, 2027 with an increase in cession rate from 15% to 25%.

Previous 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.

Current wording

Net earned premium increased $139.5 million, or 124%, to $252.0 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to the earning of increased gross written premium and the impact of the reduced cession rate from the Company's reinsurance program as discussed in more detail in the "Reinsurance" section above.

Previous 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.

Current wording

Gross written premium increased $95.5 million, or 34%, to $380.0 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily due to a 23% increase in 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 8% 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 $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.

Current wording

Ceded written premium decreased $75.2 million, or 48%, to $81.9 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to the impact of the reduced cession rate from the Company's reinsurance program, offset by growth in business across all products. 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 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.

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 24% and 55% for the three months ended June 30, 2026 and 2025, respectively, consistent with the change in our participation rate from our reinsurance contracts as discussed in more detail in the "Reinsurance" section above.

Previous wording

Ceding commission income decreased $3.3 million, or 12%, to $23.6 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, consistent with the reduction in cession rate from the reinsurance program.

Current wording

Ceding commission income decreased $10.0 million, or 33%, to $20.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, consistent with the reduction in cession rate from the reinsurance program.

Previous 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.

Current wording

Net investment income increased $0.3 million, or 3% to $9.7 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. 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-U.S. Government.

Previous wording

Commission and other income increased $1.5 million, or 14%, to $12.0 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to installment fees and realized gains from sale of investments.

Current wording

Commission and other income increased $0.5 million, or 4%, to $12.3 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to installment fees and continued growth on premium placed with third-party insurance companies during the period.

Previous 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.

Current wording

Loss and LAE, net increased $76.5 million, or 99%, to $154.0 million for the three months ended June 30, 2026 compared to the three months ended June 30, 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.

Previous 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.

Current wording

Other insurance expense increased $5.3 million, or 25%, to $26.7 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Amortization of deferred acquisition costs, net of ceding commissions increased $3.3 million, or 85% as compared to the three months ended June 30, 2025 as a result of growth in business across all products. Credit card processing fees increased $2.0 million, or 35%, as compared to the three months ended June 30, 2025 as a result of the increase in customers and associated premium. Employee-related expense decreased $1.1 million or 18%, as compared to the three months ended June 30, 2025.

Previous 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.

Current wording

Technology development expense increased $7.6 million, or 34%, to $30.0 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Employee-related expense, including stock-based compensation, and net of capitalized costs for the development of internal-use software, increased $5.7 million, or 31%, as compared to the three months ended June 30, 2025 primarily due to increase in headcount. Software expense increased $1.5 million, or 125%, as compared to the three months ended June 30, 2025.

Previous 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.

Current wording

General and administrative expense increased $22.0 million, or 85%, to $47.8 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Employee-related expense, including stock-based compensation, increased $7.7 million, or 50%, as compared to three months ended June 30, 2025. Interest expense related to borrowings from financing agreement with GC increased $3.0 million, or 75%, as compared to three months ended June 30, 2025 due to increased borrowings during the period. Bad debt expense increased by $2.1 million or 49%, as compared to three months ended June 30, 2025. Depreciation and amortization decreased by $2.3 million, or 49% as compared to three months ended June 30, 2025. During the three months ended June 30, 2025, we also recorded $11.7 million of tax refund received under the ERC program.

Previous wording

Income tax expense increased $0.2 million, or 20%, to $1.2 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily driven by increase in nondeductible items in foreign jurisdictions.

Current wording

Income tax expense slightly increased by $0.3 million, or 23%, to $1.6 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily driven by increase in foreign income tax expense and unrecognized tax benefits.

Previous 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.

Current wording

Net loss slightly decreased by $0.5 million, or 1%, to $43.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 due to the factors described above.

Previous 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.

Current wording

Sales and marketing expense increased $41.0 million, or 40%, to $143.8 million for the six months ended June 30, 2026 compared to the six months ended June 30, 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 $30.9 million, or 35%, as compared to the six months ended June 30, 2025 consistent with growth in our business. Employee-related expense, including stock-based compensation, increased $2.4 million, or 17%, as compared to six months ended June 30, 2025. Compensation expense related to the warrant shares of $5.2 million due to the termination of the Warrant Agreement with Chewy was recorded during the six months ended June 30, 2025.

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, 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.

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 users 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 three months ended March 31, 2025 (See Note 11 of the 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 which was recorded in the first quarter of 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 three months ended March 31, 2025 (See Note 15 of the condensed consolidated financial statements).

Current wording

(3) Includes the California FAIR Plan assessment of $6.9 million related to the January 2025 California Wildfires which was recorded in the first quarter of 2025 (See Note 15 of the condensed consolidated financial statements).

Previous wording

(3) Includes $1.7 million recovery related to a pre-acquisition Metromile extra-contractual claim which was previously recorded in the third quarter of 2024.

Current wording

(4) Includes $1.7 million recovery received in the first quarter of 2026 related to a pre-acquisition Metromile extra-contractual claim which was previously recorded in the third quarter of 2024.

Previous 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.

Current wording

As of June 30, 2026, we had $367.6 million in cash and cash equivalents, and $695.2 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 June 30, 2026, we had $206.4 million of outstanding borrowings under the Amended and Restated Agreement with GC. On June 22, 2026, we entered into a Financing Agreement with Hannover Re under which up to $250 million of outstanding capital will be provided to our sales and marketing growth efforts from January 1, 2027 through December 31, 2028, subject to a maximum outstanding capital amount of $150 million from Funding Begin Date through December 31, 2027, and up to $250 million at any time during the period from January 1, 2028 through December 31, 2028. We believe our existing cash and cash equivalents as of June 30, 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 March 31, 2026, cash and investments held by these companies was $826.1 million of which $355.8 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 June 30, 2026, cash and investments held by these companies was $810.5 million of which $352.4 million is held as regulatory surplus.

Previous 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.

Current wording

Cash used in operating activities was $4.0 million for the six months ended June 30, 2026, a decrease of $37.7 million from $41.7 million for the six months ended June 30, 2025. The improvement was driven by the $27.1 million reduction in our net loss and changes in our operating assets and liabilities. The decrease in cash used in operating activities from the six months ended June 30, 2026 compared to the six months ended June 30, 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 $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.

Current wording

Cash used in investing activities was $66.8 million for the six months ended June 30, 2026, primarily due to purchases of U.S. government obligations, corporate debt securities, asset-backed securities including collateralized loan obligations, 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 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.

Current wording

Cash used in investing activities was $10.8 million for the six months ended June 30, 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 $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.

Current wording

Cash provided by financing activities was $54.4 million for the six months ended June 30, 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 $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.

Current wording

Cash provided by financing activities was $44.1 million for the six months ended June 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.

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 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.

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 June 30, 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 $1,062.8 million in cash, cash equivalents and investments available at June 30, 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 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.

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 six months ended June 30, 2026, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K.