GBLI 10-K & 10-Q changes, risk factors and insider trading

Establishing an appropriate level of reserves is an inherently uncertain process. The following factors may have a substantial impact on the Company’s future actual losses and loss adjustment experience: (i) claim and expense payments, (ii) frequency and severity of claims, (iii) legislative and judicial developments, (iv) changes in economic conditions, including the effect of inflation and social inflation, and (v) emerging economic and social trends, including rising litigation costs, third-party litigation funding, and expanded theories of legal liability.

The failure of any of the loss limitations or exclusions employed by the Company, or changes in other claims or coverage issues, or unexpectedly severe verdicts in claims cases could have a material adverse effect on the Company's financial condition or results of operations.

In addition, policy terms are designed to manage the Company's exposure to expanding theories of legal liability like those which have given rise to claims for lead paintpaint, asbestos, mold, construction defects and environmental matters. Many of the policies issued by the Company also include conditions requiring the prompt reporting of claims to the Company and entitle the Company to decline coverage in the event of a violation of those conditions. Also, many of the Company's policies limit the period during which a policyholder may bring a claim under the policy, which in many cases is shorter than the statutory period under which such claims can be brought againstby the Company's policyholders.

As industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. An example is court decisions that read policy exclusions narrowly so as to expand coverage, thereby requiring insurers to create and write new exclusions. Another example is unexpectedly severe verdicts in court cases where juries may award extraordinarily large damages, typically far exceeding historical norms and in excess of the amount that would be expected based on evidence in a particular case. The number of such verdicts, as well as their size, has been increasing in recent years and such verdicts appear in virtually all jurisdictions. Such verdicts have significantly increased litigation expense in potentially large exposure cases and the perceived risk of such verdicts generally increases pressure on insurers to settle claims, even on an inflated basis.

These issues may adversely affect the Company's business byby, as applicable, either broadening coverage beyond its underwriting intent orintent, by increasing the number or size of claims.claims, or affecting awards or settlements in litigation. In some instances, these changes may not become apparent until sometime after the Company has issued insurance contracts that are affected by the changes. As a result, the full extent of liability under the Company's insurance contracts may not be known for many years after a contract is issued.

The occurrence of natural or man-made disasters has in the past and could in the future adversely affect the Company’s business, financial condition and results of operations.

The Company is exposed to various risks arising out of natural disasters, including earthquakes, hurricanes, fires, floods, landslides, tornadoes, typhoons, tsunamis, hailstorms, explosions, climate events or weather patterns, public health crises such as illness, epidemics or pandemic health events, as well as man-made disasters, including acts of terrorism, military actions, cyber-terrorism, explosions and biological, chemical or radiological events. The continued threat of terrorism and ongoing military actions may cause significant volatility in global financial markets, and a natural or man-made disaster could trigger an economic downturn in the areas directly or indirectly affected by the disaster. These consequencesevents could, among other things, result in a decline in business and increased claims or losses from those areas.areas, such as losses to the Company that resulted from the January 2025 wildfire events. They could also result in reduced underwriting capacity making it more difficult for the Company’s agents to place business. In addition, there could be unanticipated problems with the Company’s disaster recovery processes, or a support failure from external providers, that could have an adverse effect on the Company’s ability to conduct businessbusiness, such as if a significant number of employees were unable to work in the event of a disaster. Disasters also could disrupt public and private infrastructure, including communications and financial services, which could disrupt the Company’s ordinary business operations.

A decline in rating for any of the Company’s insurance subsidiaries could adversely affect its position in the insurance market; making it more difficult to market its insurance products and cause premiums and earnings to decrease.

If the rating of any of the Company’s insurance companies is reduced from its current level of “A” (Excellent) by AM Best, the Company’s competitive position in the insurance industry could suffer, and it could be more difficult to market its insurance products. A downgrade could result in a significant reduction in the number of insurance contracts the Company writes and in a substantial loss of business;business, as such business could move to other competitors with higher ratings, thus causing premiums and earnings to decrease.

The Company’s internal and external controls, processes, and the vendors used to protect networks, systems and applications, individually or together, may be insufficient to prevent a security incident. Employee or third-party vendor errors, malicious acts, unauthorized access, computer viruses, malware, the introduction of malicious code, system failures and disruptions, and cyber-attacks can result inin, among other things, business interruption, compromise of data and loss of assets. Complexity of the Company’s technology increases regularly and has increased the risk of a security incident involving data, network, systems and applications.

Third parties, including third party administratorsadministrators, third party vendors, and cloud-based systems, are also subject to cyber-attacks and breaches of confidential information, along with the other risks outlined above,above. anySuch oneincidents, ofwhether whichat the Company or its third-party vendors, may result in the Company incurring substantial costs and other negative consequences, including a material adverse effect on the Company's business, reputation, financial condition, results of operations or liquidity. The Company's increased use of open source software, cloud technology andtechnology, software as a serviceservice, and open source software can make it more difficult to identify and remedy such situations due to the disparate location of code utilized in its operations.

The Company depends in large part on its technology systems for conducting business and processing claims, as well as for providing the data and analytics the Company utilizes to manage its business. In addition, part of the Company’s business strategy is to continue to develop or acquire and realize the benefit of proprietary technology. As a result, the Company’s business success is dependent on maintaining the effectiveness of existing technology systems and on continuing to develop and enhance technology systems that support the Company’s business processes and strategic initiatives in an efficient manner, particularly as business processes become more digital and certain of the Company’s products are more technology-based. Some system development projects are long-term in nature and may take longer to complete than originally expected, negatively impact the Company’s expense ratios and may/or cost more than expected to complete.complete and implement. In addition, system development projects may not deliver the benefits or perform as expected, or may be replaced or become obsolete more quickly than expected, which could result in operational difficulties, additional costs or accelerated recognition of expenses. The Company’s ability to provide competitive services to, and conduct business with, new and existing customers in a cost effective manner as well as its ability to implement the Company’s strategic initiatives could be adversely impacted if the Company does not effectively and efficiently manage and upgrade its technology portfolio or if the costs of doing so are higher than expected.

The rapid evolution of artificial intelligence (“AI”) could exacerbate the information technology related risks described above, as well as alter the competitive landscape. While the Company anticipateshas thatimplemented itand willexpects to continue to research and implement AI-enabled or AI-based technology solutions in an effort to both mitigate risk and increase automation in its environment, it is possible that bad actors and/or competitors will leverage AI solutions more quickly or more effectively than the Company, and exploit vulnerabilities or take market share, which could impair the Company's ability to compete effectively and adversely affectaffect, among other things, its results of operations. AI is still in its early stages, and the introduction and incorporation of AI technologiestechnologies, including through third-party vendors, may result in unintended consequences or other new or expanded risks and liabilities, such as unintended or inadvertent transmission of proprietary or sensitive information.information or security risks with respect to third-party vendors and their products. Additionally, if the content, analyses or recommendations that AI applications assist in producing are, or are alleged to be, deficient, inaccurate or biased, such as due to limitations in AI algorithms, insufficient or biased base data or flawed training methodologies, the Company's business, financial condition, results of operations and reputation may be adversely affected. Further, AI technology is continuously evolving, and the Company may incur costs to adopt and deploy AI technologies that could become obsolete earlier than expected, and there can be no assurance that the Company will realize the desired or anticipated benefits from AI.

In addition, technological advancements in the industry, including with respect to AI and machine learning technologies, could result in increased demand and competition for qualified professionals with such skills and technological knowledge. There can be no assurance that the Company will be successful in finding, attracting and retaining such qualified individuals.individuals or in effectively training its personnel to utilize AI technologies.

Also, there is uncertainty in the legal and regulatory landscape for AI, which is not fully developed, and any laws, regulations or industry standards adopted in response to the emergence of AI may be burdensome, could result, given the diverse legal and regulatory landscape for AI, in legal and regulatory compliance challenges, could entail significant costs, and may restrict or impede the Company's ability to successfully develop, adopt and deploy AI technologies efficiently and effectively.

Any of these factors could adversely impact the Company'sCompany, including its business, financial condition and results of operations.

The Company has investments in limited partnerships which are not liquid. For several limited partnership investments, the Company does not have the contractual option to redeem its interests but receives distributions based on the liquidation of the underlying assets. During the third quarter of 2023, the Company provided the Global Debt Fund, LP with a formal withdrawal request in full. Going forward, one fifth of the partnership will be redeemed based on June 30th and December 31st fair values until the limited partnership investment is fully liquidated. The Company does not have the ability to sell or transfer its limited partnership interests without consent from the general partner. The Company’s returns could be negatively affected if the market values of the limited partnerships decline. If the Company needs liquidity, it might be forced to liquidate other investments at a time when prices are not optimal.

See Note 5 of the notes to the consolidated financial statements in Item 8 of Part II of this report for further information surroundingregarding the Company’s investments as of December 31, 20242025 and 2023.2024.

The Company’s Penn-America products are distributed through approximately 360350 wholesale general agentsagent offices that have specific quoting and binding authority and that in turn sell the Company’s insurance products to insureds through retail insurance brokers. Penn-AmericaThe Company also distributes its products through approximately 2,8003,300 retail agents. The Company markets and distributes its reinsurance products through third-party brokers, insurance companies and reinsurance companies. A loss of all or substantially all of the business produced by one or more of these wholesale general agents or larger retail agents as well as other insurance companies or reinsurance companies could have an adverse effect on the Company’s results of operations.

Historically, the results of companies in the property and casualty insurance industry have been subject to significant fluctuations and uncertainties. The industry's profitability can be affected significantly by: (i) competition, (ii) capital capacity, (iii) rising levels of actual costs that are not foreseen by companies at the time they price their products, (iv) volatile and unpredictable developments, including man-made, weather-related and other natural catastrophes or terrorist attacks, (v) changes in loss reserves resulting from the general claims and legal environments as different types of claims arise and judicial interpretations relating to the scope of insurers' liability develop;develop, and (vi) fluctuations in interest rates, inflationary pressures and other changes in the investment environment, which affect returns on invested assets and may affect the ultimate payout of losses.

The Company competes with a large number of other companies in its selected lines of business. The Company competes, and will continue to compete, with major U.S. and non-U.S. insurers and other regional companies, as well as mutual companies, specialty insurance companies, reinsurance companies, underwriting agencies and diversified financial services companies. Some of the Company’s competitors have greater financial and marketing resources than the Company does. The Company’s profitability could be adversely affected if it loses business to competitors offering similar products at or below the Company’s prices.

Global Indemnity Group LLC’s primary source of funds to meet ongoing liquidity needs is investment income generated by its investment portfolio, interest and principal payments on intercompany debt with Belmont Holdings GX, Inc. and reimbursement for equity awards granted to employees of Belmont Holdings GX, Inc. and Penn-AmericaKatalyx Underwriters,Holdings LLC.

Belmont Holdings GX, Inc.’s source of funds to meet ongoing liquidity needs is investment income generated by its investment portfolio and dividends from theirits insurance company subsidiaries.

Risks Related to Ownership of Global Indemnity Group, LLC’s Shares and Certain Limited Liability Company Agreement ("LLCA") Provisions

While the Fox Paine Entities have the right under the terms of the LLCA to appoint a certain number of directors of the Board of Directors, equal in aggregate to the pro rata percentage of the voting power in Global Indemnity Group, LLC beneficially held by the Fox Paine Entities for so long as the Fox Paine Entities beneficially own (i) a majority of the outstanding class B common shares and (ii) shares representing, in the aggregate, at least 25% or more of the voting power in Global Indemnity Group, LLC, it also controls the election of all directors to the Board of Directors due to its controlling share ownership. The Board of Directors currently consists of sixseven directors, all of whom were either identified and proposed for consideration for the Board of Directors by the Fox Paine Entities or appointed by the Fox Paine Entities.

Since October 2022 and through March 11, 2025, Global Indemnity Group, LLC repurchased and retired an aggregate of 1,357,082 shares of its class A common shares in the open market and in privately negotiated transactions at an aggregate price of $34.0 million or an average purchase price of $25.05 per share.share during October 2022 through April 2023. As ofMarch such10, date, under its share repurchase program,2026, Global Indemnity Group, LLC had a remaining authorization to purchase up to an additional $101.0 million of its class A common shares.shares under its share repurchase program which expires on December 31, 2027. Although Global Indemnity Group, LLC’s Board of Directors has determined that the repurchase program is in the best interests of its shareholders, the repurchases expose the Company to risks including:

the risk that the Company may not be able to replenish its cash reserves by raising debt or equity financing in the future on terms acceptable to the Company, or at all; and the risk that these repurchases have reduced the Company’s “public float,” which is the number of Global Indemnity Group, LLC shares owned by non-affiliate shareholders and available for trading in the securities markets, and likely reduced the number of its shareholders, which may reduce the volume of trading in Global Indemnity Group, LLC shares and may result in lower share prices and reduced liquidity in the trading of Global Indemnity Group, LLC shares.

The existence of a share repurchase program may cause the Company's class A common share price to be higher than it would be in the absence of the program. In addition, the program may be suspended or discontinued at any time, which could cause the market price of the Company's class A common shares to decline.

The Company may be subject to adverse foreign taxes related to its historichistorical non-US subsidiaries.

Although the Company and its subsidiaries have eliminated most of their historichistorical foreign subsidiaries, the statute of limitations remains open in certain foreign jurisdictions, and it is possible that the Company could be subject to materially adverse foreign taxes with respect to its historichistorical operations. Such adverse foreign taxes could also potentially arise as a result of retroactive changes in law.

The ability of Global Indemnity Group, LLC’s corporate subsidiaries to useutilize their federal and state net operating losses and built-inbuilt‑in losses (“NOLs”) to offset potential future taxable income and related income taxes may be limited. The Internal Revenue Code imposes an annual limitation on the amount of taxable income that may be offset by lossfederal NOL carryforwards ofif a “loss corporation” if the corporation experiences an “ownership change” (generally, a cumulative change in ownership thatof exceedsmore than 50% of the value of a corporation’s stock over a rolling three-yearthree‑year period). Global Indemnity Group, LLC’s corporate subsidiaries may experience an ownership change as a result of issuances or other changes in ownership of Global Indemnity Group, LLC’s shares. In addition, certain anti-avoidanceanti‑avoidance rules could result in the application of similar limitations on the ability of Global Indemnity Group, LLC’s corporatesubsidiaries’ subsidiariesuse of NOLs. Federal capital losses may be carried forward for up to usefive theiryears NOLs.and may be used only to offset capital gains. To the extent Globalthese Indemnitylimitations Group, LLC’s corporate subsidiaries experience an ownership change or the above rules otherwise become applicable,apply, the ability of Global Indemnity Group, LLC’s corporate subsidiaries to utilize their NOLs and federal NOLscapital loss carryforwards could be significantly limited, and similar limitations may apply at the state level. Further, these NOLs are limited to a carryforward of 15 years and these capital losses are limited to a carryforward of 5 years.restricted.

The Company’s success depends upon its ability to attract and retain qualified employees and upon the ability of senior management and other key employees to implement the Company’s business strategy. The Company believes there are a limited number of available, qualified executives in the business lines in which it competes. The success of the Company’s initiatives and future performance depend, in significant part, upon the continued service of the senior management team and successful transitions of senior management when new members come on and/or existing members leave. The future loss of any of the services of members of the Company’s senior management team or the inability to attract and retain other talented personnel could impede the further implementation of the Company’s business strategy, which could have a material adverse effect on its business. In addition,If the Company doescannot notattract currentlyor retain top-performing executive officers, underwriters and other employees, the quality of their performance decreases or it fails to implement succession plans for its key employees, the Company may be unable to maintain keyits mancurrent lifecompetitive insuranceposition policiesin withthe respectmarkets toin anywhich ofit operates or expand its employees.operations into new markets.

The following discussion and analysis of the Company’s financial condition and results of operations for the years ended December 31, 20242025 and 2023,2024, including year-to-year comparisons between 20242025 and 2023,2024, should be read in conjunction with the consolidated financial statements and accompanying notes of Global Indemnity included elsewhere in this report. Year-to-year comparisons between 20232024 and 20222023 have been omitted from this Form 10-K but may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023,2024, filed with the SEC on March 15,11, 2024.2025. SomeFor ofcomparison purposes, Belmont Core was previously known as Penn‑America and Belmont Non-Core was previously known as Non-Core Operations. Segment results for 2024 and 2023 were not impacted by the informationsegment containedrecast in this2025. discussionRather, andthe analysissegments orwere setrenamed forthto elsewhere in this report, including informationalign with respect to the Company’s planscurrent strategy and strategy,to constitutesreflect forward-lookingthe statementsaddition thatof involvea risksnew segment, Agency and uncertainties.Insurance PleaseServices, seein "Cautionary2025. Note Regarding Forward-Looking Statements" at the end of this Item 7Agency and “RiskInsurance Factors”Services did not have any financial results in Item 1A above for more information. You should review “Risk Factors” in Item 1A above for a discussion of important factors that could cause actual results to differ materially from the results described in2024 or implied by the forward-looking statements contained herein.2023.

DividendsGross paidwritten per sharepremiums increased 40%2.3% to $1.40$398.9 million in 20242025 as compared to the same period in 2023.2024.

BookShareholders' value per common shareequity increased 5.2%$17.5 frommillion to $706.6 million at December 31, 20232025 tofrom $49.98$689.1 million at December 31, 2024.

The Company operates in the Excess and Surplus Lines Marketplace ("E&S Marketplace") and derives its revenues primarily from premiums paid on insurance policies that it writes and from income generated by its investment portfolio, net of fees paid for investment management services. The amount of insurance premiums that the Company receives is a function of the amount and type of policies it writes, as well as prevailing market prices.

The Company’s expenses include losses and loss adjustment expenses, net commission expenses, and other underwritingoperating expenses, corporate and other operating expenses, interest, investment expenses, and income taxes. Losses and loss adjustment expenses are estimated by management and reflect the Company’s best estimate of ultimate losses and costs arising during the reporting period and revisions of prior period estimates. The Company records its best estimate of losses and loss adjustment expenses considering both internal and external actuarial analyses of the estimated losses the Company expects to incur on the insurance policies it writes. The ultimate losses and loss adjustment expenses will depend on the actual costs to resolve claims. Net commission expenses are typically a percentage of the premiums on the insurance policies the Company writes, net of ceding commissions earned from reinsurers. Other underwritingoperating expenses consist primarily of personnel expenses and general operating expenses related to underwriting and distribution activities. Corporate and other operating expenses are comprised primarily of outside legal fees, other professional and accounting fees, directors’ fees, management fees & advisory fees, and salaries and benefits for holding company personnelpersonnel, whosedevelopment servicescosts relatefor new products, impairment losses, and taxes incurred which are not directly related to the support of corporate activities. Interest expense is primarily comprised of amounts due on outstanding debt.operations.

In developing losses and loss adjustment expense ("loss" or "losses") reserve estimates, the Company’s actuaries perform detailed reserve analyses each quarter. To perform the analysis, the data is organized at a "reserve category" level. A reserve category can be a line of business such as commercial automobile liability,physical damage, or it can be a particular type of claim such as constructionasbestos defect.or catastrophic events. The reserves within a reserve category level are characterized as long-tail or short-tail. For long-tail business, it will generally be several years between the time the business is written and the time when all claims are settled. The Company’s long-tail exposures include general liability, professional liability, products liability, commercial automobile liability, and excess and umbrella. Short-tail exposures include property,property and commercial automobile physical damage, and equine mortality.damage. The Company also reviews assumed reinsurance segmentsreserve categories each quarter by treatygroups of similar treaties and treaty year which ishas historically comprised primarily of long-tailed business. Recent active business has included more short-tail exposures than in the past. To manage its Insuranceinsurance Operations,operations, the Company's insurance products target specific, defined groups of insureds with customized coverage to meet their needs. For further discussion about the Company’s business divisions, see “General – Business Segments – Insurance Operations” in Item 1 of Part I of this report. Each of the Company’s business divisions contain both long-tail and short-tail exposures. Every reserve category is analyzed by the Company’s actuaries each quarter. Management is responsible for the final determination of loss reserve selections.

TheA variety of actuarial methods are used to project ultimate losses for both long-tail and short-tail reserve categories since no single method is appropriate in all scenarios. The methods include, but are not limited to, the following:

For many reserve categories, especially those that can be considered long-tail, a particular accident year may not have a sufficient volume of paid losses to produce a statistically reliable estimate of ultimate losses. In such a case, the Company’s actuaries typically assign more weight to the Incurred Development method than to the Paid Development method. As claims continue to settle and the volume of paid losses increases, the Company's actuaries may assign additional weight to the Paid Development method.method, especially if case reserve adequacy has changed over time. For most of the Company’s reserve categories, even the case incurred losses for accident years that are early in the claim settlement process will not be of sufficient volume to produce a reliable estimate of ultimate losses. In these cases, the Company's actuaries will not assign any weight to the Paid and Incurred Development methods and will use the Bornhuetter-Ferguson and Expected Loss Ratio methods. For short-tail exposures, the Paid and Incurred Development methods can often be relied on sooner primarily because the Company’s history includes a sufficient number of accident years to cover the entire period over which paid and incurred losses are expected to change. However, the Company's actuaries may also assign weights to the Expected Loss Ratio, Bornhuetter-Ferguson, and Average Loss methods for short-tail exposures when developing estimates of ultimate losses.

Generally, reserves for long-tail lines give more weight to the Expected Loss Ratio method in the more recent immature years. As the accident years mature, weight shifts to the Bornhuetter-Ferguson methods and eventually to the Incurred and/or Paid Development method. Claims related to umbrella business are usually reported later than claims for other long-tail lines. For umbrella business, the shift from the Expected Loss Ratio method to the Bornhuetter-Ferguson methods to the Loss Development method may be more protracted than for most other long-tailed lines. Reserves for short-tail lines tend to make the shift across methods more quickly than the long-tail lines.

Management’s best estimate at December 31, 20242025 was recorded as the loss reserve. Management’s best estimate is as of a particular point in time and is based upon known facts, the Company’s actuarial analyses, current law, and the Company’s judgment. This resulted in carried gross and net reserves of $800.4$750.2 million and $739.6$800.4 million, respectively,million as of December 31, 2024.2025 and 2024, respectively, and net reserves of $689.3 million and $739.6 million as of December 31, 2025 and 2024, respectively. A breakout of the Company’s gross and net reserves as of December 31, 2024 isare as follows:

Previous reserve analyses have resulted in the Company’s identification of information and trends that have caused it to increase or decrease frequency and severity assumptions in prior periods and could lead to the identification of a need for additional material changes in losses and loss adjustment expense reserves, which could materially affect results of operations, equity, business and insurer financial strength and debt ratings. Factors affecting loss frequency include, but are not limited to, the effectiveness of loss controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include, but are not limited to, changes in policy limits and deductibles, rate of inflation, judicial interpretations, and judicialunexpectedly interpretations.large damage awards. Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects the Company’s ability to accurately predict loss frequency (loss frequencies are more predictable for short-tail lines) as well as the amount of reserves needed for IBNR.

The carrying amount of the Company’s investments approximates their fair value. The Company regularly performs various analytical valuation procedures with respect to fixed maturity investments, including reviewing each fixed maturity security in an unrealized loss position to determine whether the decline in fair value below amortized cost basis has resulted from a credit loss or other factors, such as changes in interest rates. In assessing whether a credit loss exists, the Company compares the present value of the cash flows expected to be collected from the security to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis of the security, a credit loss exists and an allowance for expected credit losses is recorded. Subsequent changes in the allowances are recorded in the period of change as either credit loss expense or reversal of credit loss expense. Any impairments related to factors other than credit losses or the intent to sell are recorded through other comprehensive income, net of taxes. During its review, the Company considers credit rating, market price, and issuer specific financial information, among other factors, to assess the likelihood of collection of all principal and interest as contractually due. See Note 5 of the notes to the consolidated financial statements in Item 8 of Part II of this report for the specific methodologies and significant assumptions used by asset class as well as an analysis of the Company’s securities with gross unrealized losses as of December 31, 20242025 and 2023.2024.

In accordance with accounting guidance for insurance enterprises, the method followed in computing such amounts limits them to amounts recoverable from premium to be earned, related investment income, losses and loss adjustment expenses, and certain other costs expected to be incurred as the premium is earned. A premium deficiency is recognized if the sum of expected losses and loss adjustment expenses and unamortized acquisition costs exceeds related unearned premium. This evaluation is done at a distribution and product line/treaty level. Any future expected loss on the related unearned premium is recorded first by impairing the unamortized acquisition costs on the related unearned premium followed by an increase to losses and loss adjustment expense reserves on additional expected loss in excess of unamortized acquisition costs. The Company calculates deferred acquisition costs for Penn-AmericaBelmont Core and Belmont Non-Core Operations separately by distribution lines. For reinsurance treaties, the Company calculates deferred acquisition costs separately for each treaty.

2026 FirstSecond Quarter Consolidated Results of Operations

GrossCurrent writtenaccident premiumsyear wereunderwriting $96.5income increased 3.2% to $5.8 million infor 2026 comparedfrom to $98.7$5.6 million of underwriting income for the same period in 2025.

BookCurrent valueaccident peryear commoncombined shareratio was $47.9294.7% at March 31,in 2026 compared to $48.9694.6% atfor Decemberthe 31,same period in 2025.

The following table summarizes the Company’s results for the quarters and six months ended MarchJune 31,30, 2026 and 2025:

Includes third-party distribution expenses of $1.1$1.2 million inand 2026.$2.3 million for the quarter and six months ended June 30, 2026, respectively. There were no third-party distribution expenses in 2025.

Belmont Core's assumedgross businesswritten grewpremiums increased by 6.8% to $11.2$117.3 million for the quarter ended MarchJune 31,30, 2026 fromcompared $10.9to $109.8 million for the same period in 2025 dueand increased 2.7% to new$213.8 treatiesmillion inceptingfor duringthe 2025six andmonths ended June 30, 2026 andcompared organicto growth$208.2 frommillion existingfor treaties.the same period in 2025.

The components of income (loss) from the Company’s reportable segments and corresponding underwriting ratios for the quarters ended June 30, 2026 and 2025 are as follows:

Agency and Insurance Services' segment lossincome was $0.4$1.4 million for the quarter ended MarchJune 31,30, 2026 compared to segment income of $1.8$2.3 million for the same period in 2025.

DirectGross written premiums produced for Belmont Core was $80.1$87.9 million and $87.5$97.8 million for the quarters ended MarchJune 31,30, 2026 and 2025, respectively. Commission income on premiums produced for Belmont Core was $9.5$10.5 million and $10.6$11.5 million for the quarters ended MarchJune 31,30, 2026 and 2025, respectively, and service fee income for technology and claims services provided to Belmont Core and Non-Core segments was $2.9 million and $3.5$3.4 million for the quarters ended MarchJune 31,30, 2026 and 2025, respectively. These amounts are eliminated in the Company's Consolidated Financial Statements.

Third-party commission and service fee income ofwas $0.4$0.3 million for the quarter ended MarchJune 31,30, 2026. There was no third-party commission and service fee income for the quarter ended MarchJune 31,30, 2025.

Policy and installment fee income was $0.5 million andfor $0.4each million duringof the quarters ended MarchJune 31,30, 2026 and 2025, respectively.2025.

Belmont Core's segment income increased 145.3%23.4% to $5.2$3.4 million for the quarter ended MarchJune 31,30, 2026 compared to a segment loss of $11.6$2.7 million for the same period in 2025. Excluding California Wildfires losses of $15.6 million in 2025, Belmont Core's segment income increased from $4.0 million for the quarter ended March 31, 2025 to $5.2 million for the quarter ended March 31, 2026. The current accident year combined ratio improvedincreased 17.80.6 points to 94.7%96.3% for quarter ended MarchJune 31,30, 2026 from 112.5%95.7% for the same period in 2025 mainly due to the California Wildfires which impacted the combined ratio by 16.9 points in 2025.

Net earned premiums within the Belmont Core segment increased by 6.6%1.4% to $98.4$98.8 million for the quarter ended MarchJune 31,30, 2026 compared to $92.3$97.5 million for the same period in 2025. Property net earned premiums were $39.3 million and $37.7$40.4 million for the quarters ended MarchJune 31,30, 2026 and 2025, respectively. Casualty net earned premiums were $59.1$59.5 million and $54.6$57.1 million for the quarters ended MarchJune 31,30, 2026 and 2025, respectively.

The current accident year loss ratio improved by 16.82.0 points to 55.2%54.1% for the quarter ended MarchJune 31,30, 2026 compared to 72.0%56.1% for the same period in 2025 primarily driven by an improvement in the catastrophe loss ratio. The California Wildfires impacted the 2025 current accident year loss ratio by 16.9 points.

Net losses and loss adjustment expenses related to prior accident years waswere lesszero thanand $0.1$1.4 million for the quarters ended MarchJune 31,30, 2026 and 2025.2025, respectively. See Note 6 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development.