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

We have a history of net losses and we may not achieve or maintain profitability in the future.

WePrior haveto 2025, we incurred significant net losses on an annual basis since our incorporation in 2015, and we may continue to experience net losses in the future. Several factors have contributed to our historical losses, including volatility in our earnings due to severe weather events. For example, significant catastrophe losses resulting from severe weather in the second quarter of 2023 prompted us to institute a nationwide pause on underwriting new premiums for our HO3 business. This pause was intended to reduce volatility, but it also had the effect of reducing premium and revenue. Also, over the long term, we expect to expend substantial financial and other resources on marketing and advertising as part of our strategy to increase our customer base. The marketing and advertising expenses that we incur are typically expensed immediately, while most revenues that the expenses generate are recognized ratably over the 12-month term of each insurance policy that we write. This timing difference can, therefore, result in expenses that exceed the related revenue generated in any given year and create a net loss. In addition, although we have reduced headcount in the past in an effort to reduce expenses, over time we intend to grow our employee base. Also, as a public company, we incur significant legal, accounting, and other expenses that we did not incur as a private company. Despite these actions and investments, we may not succeed in increasingIf our revenue ondeclines in the timeline that we expect or in an amount sufficient to lower our net loss and ultimately become profitable. Moreover, if our revenue declines,future, we may not be able to reduce costs in a timely manner because many of our costs are fixed, at least in the short term. In addition, if we reduce variable costs to respond to losses as we did in 2023, this may limit our ability to sign up new customers and increase our revenues. Accordingly, we may not achievebe orable to maintain profitability and we may continue to incur significant losses in the future.

Many of our competitors have brands that are well recognized. We have spent and over time expect to spend considerable money and other resources to create brand awareness and build our reputation. We may not be able to build brand awareness, and our efforts at building, maintaining, and enhancing our reputation could fail. Complaints or negative publicity about our business practices, our marketing and advertising campaigns, our compliance with applicable laws and regulations, the integrity of the data that we provide to consumers or business partners, data privacy and security issues, and other aspects of our business, whether valid or not, could diminish confidence in our brand, which could adversely affect our reputation and business. As we expand our product offerings and enter new markets, we need to establish our reputation with new customers, and to the extent we are not successful in creating positive impressions, our business in these newer markets could be adversely affected. There can be no assurance that we will be able to maintain or enhance our reputation, and failure to do so could materially adversely affect our business, results of operations, and financial condition. If we are unable to maintain or enhance consumer awareness of our brand cost-effectively, our business, results of operations, and financial condition could be materially adversely affected.

If our claims adjusters or third-party claims administrators are unable to effectively process our volume of claims, our ability to grow our business while maintaining high levels of customer satisfaction could be compromised, which—which, in turn—turn, could adversely affect our reputation and operating margins.

Intense competition in the segments of the insurance industry in which we operate could negatively affect current financials and our ability to attainmaintain or increase profitability.

Moreover, as we expand into new lines of business and potentially offer additional non-insurance home-related products beyond homeowners’ insurance, we could face intense competition from companies that are already established in such markets. In non-insurance products, we may face competition from large technology companies, such as Alphabet and Amazon, that have significant resources and long-standing relationships with customers across a variety of products.

Establishing adequate premium rates is necessary, together with investment income, if any, to generate sufficient revenue to offset losses,losses and loss adjustment expenses (“LAE”), acquisition expenses, and other costs. If we do not accurately assess the risks that we underwrite, we may not charge adequate premiums to cover our losses and expenses, which would adversely affect our results of operations and our profitability. Moreover, if we determine that our prices are too low, insurance regulations may preclude us from being able to non-renew insurance contracts, non-renew customers, or raise prices. Alternatively, we could set our premiums too high, which could reduce our competitiveness and lead to lower revenues, which could have a material adverse effect on our business, results of operations, and financial condition.

We utilize our technology platform to gather customer and other third partythird-party data in order to determine whether or not to write and how to price our insurance products. Additionally, our claims operation utilizes our technology platform to manage claims and we intend to expand our technology platform to further support the processing of some or all of our claims. The continuous development, maintenance, and operation of our technology platform is complex and expensive to maintain and improve; its continuous development, maintenance, and operation may entail unforeseen difficulties, including material performance problems, undetected defects, or errors for example, with new capabilities incorporating artificial intelligence. We may encounter technical obstacles, and it is possible that we may discover additional problems that prevent our technology from operating properly. If our platform does not function reliably, we may incorrectly select or renew our customers, price insurance and non-insurance products for our customers, or incorrectly pay or deny claims made by our customers. These errors could result in (i) selecting an uneconomic mix of customers; (ii) customer dissatisfaction with us, which could cause customers to cancel or fail to renew their insurance policies or non-insurance products with us, or make it less likely that prospective customers obtain new insurance policies; (iii) causing us to underprice policies or overpay claims; or (iv) causing us to incorrectly deny policyholder claims and become subject to liability. If our data analytics do not function reliably, we may incorrectly price insurance products for our customers or incorrectly pay or deny claims made by our customers. Either of these situations could result in customer dissatisfaction with us, which could cause customers to cancel their insurance policies with us,us and prevent prospective customers from obtaining new insurance policies. Additionally, technology platform errors could result in failure to comply with applicable laws and regulations including, but not limited to, unintentional noncompliance with our rate and form filings, cancellation and non-renewal requirements, unfair trade and claims practices, and non-discrimination, which could subject us to legal or regulatory liability and harm our brand and reputation. Any of these eventualities could result in a material adverse effect on our business, reputation, results of operations, and financial condition.

We have begun to incorporate artificial intelligence and machine learning technologies in various areas of our business. State and federal lawmakers and insurance regulators are focusing upon the use of artificial intelligence broadly, including concerns about transparency, deception, and fairness in particular. New laws or regulations, changes in existing laws or regulations, or changes in the interpretation of laws or regulations by a regulatory authority, specific to the use of artificial intelligence, may decrease our revenues and earnings and may require us to change the manner in which we conduct some aspects of our business. For example, in December 2023 the NAIC adopted the Model Bulletin on Use of Artificial Intelligence Systems (“AI Systems”) by Insurers (the “Model AI Bulletin”) and as of January 2025,2026, 2125 states have adopted bulletins substantially similar to the Model AI Bulletin. California, Colorado, New Mexico,Illinois, New York, Texas, and Utah have also adopted regulations specific to the use of artificial intelligence.intelligence and other states have proposed similar legislation.

U.S. legislation related to the use of AI Systems generally has also been introduced at the federal level and is advancing at the state level. For example, in September 2025 the California Office of Administrative Law approved a major update to the CCPA regulations under the oversight authority of the California Privacy Protection Agency is(CPPA) currentlyintroducing innew therequirements related to Automated Decision-Making Technology (ADMT), including AI and algorithmic systems, that significantly expand how businesses must govern AI and automated tools when they process ofpersonal finalizing regulations under the CCPA regarding the use of automated decision-making.information. California alsohas enacted 17 new laws inand 2024amendments to such laws that further regulate use of AI Systems and provide consumers with additional protections around companies’ use of AI Systems, such as requiring companies to disclose certain uses of generative AI. Other states have also passed AI-focused legislation, such as Colorado’s Artificial Intelligence Act, which will require developers and deployers of “high-risk” AI Systems to implement certain safeguards against algorithmic discrimination, and Utah’s Artificial Intelligence Policy Act, whichas amended establishes disclosure requirements and accountability measures for the use of generative AI in certain“high-risk” consumer interactions. Such additional regulations may impact our ability to develop, use, procure and commercialize AI Systems in the future.

In the ordinary course of business, we collect, store, and transmit information, including personal information, in relation to our current, past, or potential customers, business partners, agents, staff, and contractors. We could be subject to a cyber-incident or other adverse event that threatens the security, confidentiality, integrity, or availability of our information resources, including intentional attacks or unintentional events where parties gain unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information about subscribers, vendors, and employees. For example, unauthorized parties could steal or access our customers’ names, email addresses, physical addresses, phone numbers, and other information that we collect when providing insurance quotes. Outside parties may also attempt to fraudulently induce employees or customers to disclose sensitive information in order to gain access to our information or customers’ information. Further, our vendors are also susceptible to data breaches, including our payment processing vendors who handle customer credit card numbers or other payment information and successful cyberattacks that disrupt or result in unauthorized access to third partythird-party information systems can materially impact our operations and financial results. While we use encryption and authentication technology licensed from third parties designed to effect secure transmission of such information, we cannot guarantee the security of the transfer and storage of personal information. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, often they are not recognized until launched against a target and may originate from less regulated and remote areas around the world. Accordingly, we may be unable to proactively address these techniques or to implement adequate preventative measures. Despite our efforts and processes to prevent breaches, our products and services, as well as our servers, computer systems, and those of third parties that we use in our operations are vulnerable to cybersecurity risks, including cyber-attacks such as viruses and worms, phishing attacks, denial-of-service attacks, physical or electronic break-ins, third-party or employee theft or misuse, and similar disruptions from unauthorized tampering with our servers and computer systems or those of third parties that we use in our operations, which could threaten the confidentiality, integrity and availability of our information resources and confidential information and lead to interruptions, delays, loss of critical data, unauthorized access to customer data, and loss of consumer confidence. In addition, we may be the target of email scams that attempt to acquire personal information or company assets.

In the ordinary course of business, we collect, store, and transmit information, including personal information, in relation to our current, past, or potential customers, business partners, agents, staff, and contractors. In the U.S., there are numerous federal and state data privacy and protection laws and regulations governing the collection, use, disclosure, protection, and other processing of personal information, including federal and state data privacy laws, data breach notification laws, and consumer protection laws. For example, the CCPA, which became effective in January 2020, created new privacy rights for consumers residing in the state of California and imposes obligations on companies that process their personal information, including an obligation to provide certain new disclosures to such residents. Specifically, among other things, the CCPA creates new consumer rights and imposes corresponding obligations on covered businesses relating to the access to, deletion of, and sharing of personal information collected by covered businesses, including California residents’ right to access and delete their personal information, opt out of certain sharing and sales of their personal information, and receive detailed information about how their personal information is used. The law exempts from certain requirements of the CCPA certain information that is collected, processed, sold, or disclosed pursuant to the California Financial Information Privacy Act, the federal Gramm-Leach-Bliley Act, or the federal Driver’s Privacy Protection Act. The definition of “personal information” in the CCPA is broad and may encompass other information that we maintain beyond that excluded under the Gramm-Leach-Bliley Act, the Driver’s Privacy Protection Act, or the California Financial Information Privacy Act exemption. Further, the CCPA allows the California Attorney Generalregulator to impose civil penalties for violations and provides a private right of action for certain data breaches that result in the loss of personal information. This private right of action has increased the likelihood of, and risks associated with, data breach litigation. In addition, it remains unclear how various provisions of the CCPA will be interpreted and enforced. In 2020, California voters also passed the CPRA, which took effect on January 1, 2023. The CPRA significantly modifies the CCPA, including by imposing additional obligations on covered companies and expanding California consumers’ rights with respect to certain sensitive personal information, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply. The CCPA marked the beginning of a trend toward more stringent privacy legislation in the U.S., and multiple states have subsequently enacted or proposed similar laws. EighteenFor example, since the CCPA went into effect, comprehensive privacy statutes that share similarities with the CCPA are now in effect and enforceable in over a dozen states, and amendments to such laws are regularly proposed. Like the CCPA, many of these laws contain exclusions for entities subject to the Gramm-Leach-Bliley Act or for information covered by the Gramm-Leach-Bliley Act, the Driver’s Privacy Protection Act, and the Fair Credit Reporting Act. Many other states have passed data privacy laws, fourteen of which are currently inreviewing effect,or withproposing the remainderneed takingfor effectgreater laterregulation inof 2025the collection, sharing, use and other processing of information related to individuals for marketing purposes or early 2026.otherwise. There is also discussion in Congress of a new comprehensive federal data protection and privacy law to which we likely would be subject if it is enacted. Additionally, we are subject to the federal Telephone Consumer Protection Act, which restricts the making of telemarketing calls and the use of automatic telephone dialing systems. New laws and proposed legislation, if passed, could have conflicting requirements that could make compliance challenging, require us to expend significant resources to come into compliance, and restrict our ability to process certain personal information. The effects of the CCPA and other similar state laws subsequently enacted, as well as possible future state or federal laws, are potentially significant and may require us to modify our data collection and processing practices and policies and to incur substantial costs and potential liability in an effort to comply with such legislation.

We may also face particular privacy, data security, and data protection risks in connection with requirements of the European Union’s (“E.U.”) General Data Protection Regulation 2016/679 (“GDPR”), the United Kingdom (“UK”) GDPR and UK Data Protection Act 2018 (which retains the GDPR in UK national law) and other data protection regulations in the E.U. and UK. Among other stringent requirements, the GDPR restricts transfers of data outside of the E.U. to third countries deemed to lack adequate privacy protections (such as the U.S.), unless an appropriate safeguard specified by the GDPR is implemented. In 2020, a decision of the Court of Justice of the European Union invalidated a key mechanism for lawful data transfer to the U.S. and called into question the viability of its primary alternative. As such, the ability of companies to lawfully transfer personal data from the E.U. to the U.S. is presently uncertain. Other countries have enacted or are considering enacting similar cross-border data transfer rules or data localization requirements. These developments could limit our future ability to deliver our products in the E.U. and other foreign markets. In addition, any failure or perceived failure to comply with these rules may result in regulatory fines or penalties, including orders that require us to change the way we process data. In 2025, the National Security Division of the U.S. Department of Justice (DOJ) issued a new rule that went into effect, referred to as the “Data Security Program” (DSP), to implement Executive Order 14117 aimed at preventing access to “bulk U.S. sensitive personal data” and “government-related data” by “countries of concern” (including China, Russia, Iran, North Korea, Cuba, and Venezuela) and “covered persons” (as all such terms are defined in the DSP). The DSP imposes stringent obligations on companies within its scope and prohibits or restricts “covered data transactions” that grant countries of concern or covered persons access to bulk U.S. sensitive personal data or any amount of government-related data. The DSP is new, complex and has yet to be enforced, and as such, there is a risk that our interpretation of its applicability, scope, and requirements is incorrect, incomplete, or misapplied.

Additionally, we are subject to the terms of our privacy policies and data privacy-related obligations to third parties. Any failure or perceived failure by us to comply with our privacy policies, our data privacy-related obligations to customers or other third parties, or our other data privacy-related legal obligations, may result in governmental or regulatory investigations, enforcement actions, regulatory fines, civil or criminal penalties, compliance orders, litigation (including class actions), or public statements against us by consumer advocacy groups or others and could cause customers to lose trust in us, all of which could be costly and have an adverse effect on our business. In addition, new and changed rules and regulations regarding data privacy, data protection (in particular those that impact the use of artificial intelligence), and cross-border transfers of customer information could cause us to delay planned uses and disclosures of data to comply with applicable data privacy and data protection requirements. Moreover, if third parties that we work with violate applicable laws or our policies, such violations also may put personal information at risk, which may result in increased regulatory scrutiny and have a material adverse effect on our reputation, business, and operating results.

Additionally, a number of aspects of intellectual property protection in the field of AI and machine learning are currently under development, and there is uncertainty and ongoing litigation in different jurisdictions as to the degree and extent of protection warranted for AI and machine learning systems and relevant system input and outputs. Courts and regulatory agencies continue to evaluate the patentability and copyrightability of AI-generated innovations and works, and we cannot predict how these legal developments will affect our ability to protect intellectual property created through or in connection with our AI Technologies. The law is also uncertain across jurisdictions regarding the copyright ownership of content that is produced in whole or in part by generative AI tools. As we incorporate generative AI Technologies into certain of our business processes, including customer communications and document generation, we may face increased risk that outputs produced using such tools may not be protectable under intellectual property laws or may inadvertently incorporate third-party copyrighted material, potentially exposing us to infringement claims.

A large portion of our business originates from customers in California and Texas. As a result of this concentration, if a significant catastrophe event or series of catastrophe events occur, such as a natural disaster or severe weather event (such as the Southern California wildfires in 2025, Texas hail storms in 2019 and 2023, or the Texas winter storm in February 2021,2021), and cause material losses in California and Texas, our business, financial condition, and results of operations could be materially adversely affected. Further, as compared to our competitors who operate on a wider geographic scale, any adverse changes in the regulatory or legal environment affecting property and casualty insurance in California and Texas may expose us to more significant risks. In addition, as Spinnaker is domiciled in Illinois, any adverse changes in the regulatory environment affecting property and casualty insurance in Illinois may also expose us to more significant risks.

We are subject to federal and state income and non-income taxes in the United States.States and internationally. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating these taxes. Our effective tax rates could be affected by numerous factors, such as entry into new businesses and geographies, changes to our existing business and operations, acquisitions and investments and how they are financed, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles and interpretations. We are required to take positions regarding the interpretation of complex statutory and regulatory tax rules and on valuation matters that are subject to uncertainty, and the IRS or other tax authorities may challenge the positions that we take.

It is possible that we will not generate sufficient future taxable income to fully use our U.S. federal and state NOL carryforwards, if at all. In addition, under Section 382 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change, by value, in the corporation’s equity ownership by certain shareholders or groups of shareholders over a rolling three-year period), the corporation’s ability to use its pre-ownership change NOLs to offset its post-ownership change income may be limited. We have experienced two historical ownership changes (in 2016 and 2018) and we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If we undergo a future ownership change, we may be prevented from fully utilizing our NOL carryforwards existing at the time of the ownership change prior to their expiration. Future regulatory changes could also limit our ability to utilize our NOL carryforwards. To the extent we are not able to offset future taxable income with our NOL carryforwards, our net income and cash flows may be adversely affected.

WeOver the past few years the global economy has been negatively impacted by the military conflict between Russia and Ukraine, and the ongoing conflicts in the Middle East have caused political, economic, and military instability in the Middle East and surrounding regions. Our business may be indirectly adversely affected by the effects of conflicts such as these and we are unable to predict the impact of eitherinternational the Israel-Hamas conflict or the Russia-Ukraine conflictconflicts on our business or the global economy. The impactpotential impacts of further escalation of geopolitical tensions related to these conflicts,tensions, including increased trade barriers or restrictions on global trade, isare unknown and could result in, among other things, heightened cybersecurity threats, protracted or further increased inflation, lower consumer demand, fluctuations in interest and foreign exchange rates and increased volatility in financial markets, any of which could adversely affect our businesses, results of operations and financial condition.

Adverse economic factors, including recession, inflation, tariffs and trade wars, periods of high unemployment or lower economic activity could result in the sale of fewer policies than expected or an increase in the frequency of claims and premium defaults, and even the falsification of claims, or a combination of these effects, which, in turn, could affect our growth and ability to achievemaintain profitability.

Our insurance company subsidiaries are subject to assessments and other surcharges from state guaranty funds and mandatory state insurance facilities, which may affect our ability to achievemaintain profitability.

Our primary market risk exposures are to changes in interest rates and overall debt markets given that a majority of our portfolio is invested in debt securities, treasury bills, municipal bonds and mortgage- and asset-backed securities. We have limited exposure to equities but may in the future increase our portfolio’s allocation to equities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Disclosures About Market Risk.” For several years prior to 2022, interest rates were at or near historic lows. A protracted low interest rate environment would continue to place pressure on our net investment income, particularly as it relates to fixed income securities and short-term investments, which, in turn, may adversely affect our operating results. Interest rates increased significantly in 2022 and 2023,2023 before being cut between late 2024 and anylate 2025. Any future increases in interest rates could cause the values of our fixed income securities portfolios to decline, with the magnitude of the decline depending on the duration of securities included in our portfolio and the amount by which interest rates increase. Some fixed income securities have call or prepayment options, which create possible reinvestment risk in declining rate environments. Other fixed income securities, such as mortgage-backed and asset-backed securities, carry prepayment risk or, in a rising interest rate environment, may not prepay as quickly as expected.

We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which requires management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. As of December 31, 2025, we are no longer considered an “emerging growth company,” thus our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 untilbeginning thein date2026. we are no longer an emerging growth company. At such time, ourOur independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, or operating.

To comply with the requirements of being a public company, we have undertaken various actions, and will need to take additional actions, such as implementing numerous internal controls and procedures and hiring additional accounting or internal audit staff or consultants. Testing and maintaining internal control can divert our management’s attention from other matters that are important to the operation of our business. Additionally, when evaluating our internal control over financial reporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404. If we identify any material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting oncegoing we are no longer an emerging growth company,forward, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected. We could also become subject to investigations by the SEC, the stock exchange on which our securities are listed or other regulatory authorities, which could require additional financial and management resources. In addition, if we fail to remedy any material weakness, our financial statements could be inaccurate, and we could face restricted access to capital markets.

We do not currently expect to pay any cash dividends on our common stock for the foreseeable future. Instead, we intend to retain future earnings, if any,earnings for the future operation and expansion of our business. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend on our results of operations (including our ability to generate cash flow in excess of expenses and our expected or actual net income), liquidity, cash requirements, financial condition, retained earnings and collateral and capital requirements, general business conditions, contractual restrictions, legal, tax and regulatory limitations, the effect of a dividend or dividends upon our financial strength ratings, and other factors that our board of directors deems relevant.

Many members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. The obligations associated with being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors requiresrequire significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations and financial condition.

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “our,” “Hippo” and “the Company” refer to the business and operations of Hippo Holdings Inc. and its consolidated subsidiaries. This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can 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 fiscal year ended December 31, 2023.

The following discussion and analysis of our financial condition and results of our operations addresses the consolidated financial condition as of MarchJune 31,30, 2026, compared with December 31, 2025, and consolidated results of operations for the three months and six months ended MarchJune 31,30, 2026 and 2025. This should be read in conjunction with our unaudited interim condensed consolidated financial statements and notes thereto included in Item 1 of this report and also our Management’s Discussion and Analysis of Financial Condition and Results of Operations, the “Risk Factors” section, and the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” in our Annual Report and may be updated from time to time in our other filings with the SEC. Certain percentages herein may not sum or recalculate due to rounding.

Hippo is an insurance holding company with subsidiaries that provide property and casualty insurance products to both individuals and business customers primarily in the United States. We conduct insurance underwriting through our regulated carrier subsidiaries and generate revenue from a combination of insurance underwriting activities and fee- and commission-based services. Our operations include providing insurance capacity and related services for our owned managing general agent (“MGA”) and in partnership with third-party MGAs and fee-based and commission-based services that support the placement and servicing of insurance policies.

Our reinsurance strategy includes a mix of quota share and excess of loss (“XOL”) structures, alongside collateralized protection through catastrophe bonds. We work with reinsurers rated “A-” (Excellent) or better by A.M. Best,Best or require appropriate collateral. Contracts often include provisions allowing for replacement of reinsurers whose financial condition deteriorates.

Our catastrophe reinsurance program supports property risks underwritten by us on behalf of our MGA and third-party MGAs. These risks are protected mainly by a corporate level group catastrophe XOL (the “Group Cat”) and in some cases by program-specific XOL treaties, catastrophe bonds, and in some cases, quota share reinsurance. In addition to the program-specific covers, weWe are also protected by a corporate catastrophe cover, and participation in the Florida Hurricane Catastrophe Fund (“FHCF”). ThisOur catastrophe reinsurance structure is designed to provide protection against severe loss events across the portfolio,portfolio. coveringEffective upJune to1, at2026, leastthe acatastrophe 1-in-250-yearreinsurance returnprogram periodhas threshold.an occurrence limit of $512.9 million and an aggregate limit of $776.9 million.

For business written by our MGA, we have strategically retainedretain morea risksignificant inlevel recentof periods by scaling back proportional reinsurance,risk, reflecting our confidence in the portfolio’s underwriting performance. OurThe business written by our MGA is primarily covered by standalone catastrophe XOL protection.

Additionally,We wealso utilize collateralized reinsurance through Mountain Re Ltd., a Bermuda-based special purpose insurer. The catastrophe bonds issued through Mountain Re Ltd. provide multi-year per occurrence coverage for a range of perilsperils, including hurricane and wildfire, for business written through our MGA.

Results of Operations for the Three Months Ended MarchJune 31,30, 2026 and 2025

The following table summarizes net income (loss) for the periods presented:

(1) Note: “NM” (not meaningful) is used where the base period is near-zero and percentage change would be misleading.

For the three months ended MarchJune 31,30, 2026, net earned premium was $98.9$118.7 million, an increase of $11.6$24.7 million, or 13%26% compared to $87.3$94.0 million for the three months ended MarchJune 31,30, 2025. The increase was due primarily to the earnings of increased gross written premiums volume and increase in retention across our Commercial Multi-Peril and Casualty lines.

For the three months ended MarchJune 31,30, 2026, commission income was $12.7$15.7 million, aan decreaseincrease of $1.7$1.0 million, or 12%,7%, compared to $14.4$14.7 million for the three months ended MarchJune 31,30, 2025. The decreaseincrease was due primarily to a decrease in agency commissions of $5.4 million due to the sale of our homebuilder distribution network in the third quarter of 2025, partially offset by an increase in fronting fee revenue of $4.2$5.6 million earned from third-party MGA program partners, driven by growth across our Commercial Multi-Peril and Casualty lines.lines, partially offset by a decrease in agency commissions of $4.9 million due to the sale of our homebuilder distribution network in the third quarter of 2025.

For the three months ended MarchJune 31,30, 2026, service and fee income was $3.2$3.7 million, an increase of $0.4$0.8 million, or 14%,28%, compared to $2.8$2.9 million for the three months ended MarchJune 31,30, 2025. The increase was due primarily to an increase in service fees of $0.5 million.

For the three months ended MarchJune 31,30, 2026, net investment income was $6.7$6.6 million, an increase of $0.9 million, or 16%, compared to $5.8$5.7 million for the three months ended MarchJune 31,30, 2025. The increase was due primarily to higher average balance in cash and investments during the period. The Company’s investment portfolio is primarily comprised of securities issued by the U.S. government and agencies, money market accounts, high-grade corporate securities, asset backed securities, and residential and commercial mortgage-backed securities, and other governmental related securities.

For the three months ended MarchJune 31,30, 2026, losses and loss adjustment expenses were $47.5$59.8 million, aan decreaseincrease of $44.9$15.3 million, or 49%,34%, compared to $92.4$44.5 million for the three months ended MarchJune 31,30, 20252025. The increase was due primarily to lossesan from a series of destructive wildfires affecting Los Angeles, California (the “LA Wildfires”)increase in thenon-catastrophe firstlosses quarterrelated ofto 2025.premium growth on Commercial Multi-Peril and Casualty lines. Losses and loss adjustment expenses consisted of the following elements during the respective periods:

Included in our catastrophe loss ratio for the three months ended MarchJune 31,30, 2026 isand 2025 was a benefit of 1 percentage point relatedand to prior year favorable developments, whereas for the three months ended March 31, 2025, there was noa benefit of 2 percentage points related to prior year developments.developments, respectively.

Included in ourThe non-catastrophe loss ratio increased 4.7 percentage points to 43.7% for the three months ended MarchJune 31,30, 2026,2026 is a benefit of 2 percentage points relatedcompared to prior year developments, whereas39.0% for the three months ended MarchJune 31,30, 2025, theredue was a benefit of 4 percentage points relatedprimarily to lower prior year favorable developments.

For the three months ended MarchJune 31,30, 2026, insurance related expenses were $34.9$38.7 million, an increase of $4.7$5.9 million, or 16%,18%, compared to $30.2$32.8 million for the three months ended MarchJune 31,30, 2025. The increase was due primarily to an increase in net acquisition expenses of $4.8$3.8 million due to increased premium.

For the three months ended MarchJune 31,30, 2026, technology and development expenses were $9.4$10.1 million, an increase of $1.3$2.0 million, or 16%,25%, compared to $8.1 million for the three months ended MarchJune 31,30, 2025. The increase was due primarily to higherthe employee-related coststransfer of $1.2headcount millioninto duetechnology and development related to an internal reorganization as well as an increase in headcount.headcount to support a transition services agreement with associated service fee income.

For the three months ended MarchJune 31,30, 2026, sales and marketing expenses were $6.3 million, a decrease of $2.6$2.9 million, or 29%,32%, compared to $8.9$9.2 million for the three months ended MarchJune 31,30, 2025. The decrease was due primarily to a decrease$1.9 million reduction in employee-related costs ofresulting $2.0from million, including a decrease in stock-based compensation of $0.3 million, due to a decrease inlower headcount due to the sale of our homebuilder distribution network. The decrease was also due to the elimination of $0.6 million in amortization of intangible assets acquired in connection with our homebuilder distribution network, which was soldnetwork in the third quarter of 2025.

For the three months ended MarchJune 31,30, 2026, general and administrative expenses were $16.2$18.2 million, aan decreaseincrease of $0.3$0.8 million, or 2%,5%, compared to $16.5$17.4 million for the three months ended MarchJune 31,30, 2025. The decreaseincrease was due primarily to aan decreaseincrease in employee-related expenses of $0.3$0.7 million.million due to an increase in headcount.

For the three months ended MarchJune 31,30, 2026, there was no interest and other expense, net was $0.6 million, an increase of $0.5 million, compared to interest and other income,expense, net of $0.2$0.1 million for the three months ended MarchJune 31,30, 2025. The current period reflects $1.1interest millionexpense of earnout consideration received in connection with a prior divestiture of First Connect Insurance Services (“First Connect”) in the fourth quarter of 2024, offset by $1.1$1.2 million of interest expense on our surplus note issued in June 2025.2025, partially offset by a $0.6 million gain from litigation settlement.

For the three months ended MarchJune 31,30, 2026 and 2025, income tax expense was $0.1$0.9 million and benefit of $0.2$0.1 million, respectively. The increase was due primarily to an increase in current expense for state income taxes.

For the three months ended MarchJune 31,30, 2026, there is no net income attributable to noncontrolling interest, compared to $2.3$2.6 million for the three months ended MarchJune 31,30, 2025. The decrease was due primarily to the elimination of the remaining noncontrolling interests related to the sale of our homebuilder distribution network.