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

In Q1 2026 we assumed 28,78337,668 policies, representing approximately $67$83 million in assumed unearned premiums from Citizens. These policies carry no upfront acquisition costs and are captured in our current treaty year reinsurance program.

Net investment income. Net investment income represents interest earned from cash, cash equivalents, restricted cash, restricted cash and cash equivalents fixed-maturity securities, money market accounts and other investments and the realized gains or losses from the sale of investments. Factors affecting net investment income include the size of our investment portfolio and the yield generated by the underlying investments in our investment portfolio.

Return on equity represents net income expressed on an annualized basis as a percentage of average beginning and ending shareholders’ equity during the period.

Return on tangible equity is a non-GAAP financial measure. We define tangible shareholders’ equity as shareholders’ equity less goodwill and other intangible assets. We define return on tangible equity as net income expressed on an annualized basis as a percentage of average beginning and ending tangible shareholders’ equity during the period. We regularly evaluate acquisition opportunities and have historically made acquisitions that affect shareholders’ equity. We use return on tangible equity 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. “See “Results of Operations - Non-GAAP Financial Measures” for a reconciliation of return on tangible equity to return on equity, the most directly comparable GAAP measure.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

The following table summarizes our results of operations for the three months ended MarchJune 31,30, 2026 and 2025:

Gross premiums written. Gross premiums written increased to $414.8$508.0 million for the three months ended MarchJune 31,30, 2026 from $278.2$435.4 million for the three months ended MarchJune 31,30, 2025. The increase in net premiums written was driven by growth of voluntary new business, and renewals of previously acquired Citizens policies, and further Citizens acquisitions.policies.

Our policies in force as of MarchJune 31,30, 2026 were 509,928,509,075, compared to 348,029348,439 as of MarchJune 31,30, 2025, a 46.2%46.1% increase year-over-year. Our average premium per residential policy decreased from $3,641$3,614 at MarchJune 31,30, 2026 compared to $3,933$3,964 at MarchJune 31,30, 2025 as a result of a decrease in average premium of Citizens policies assumed. Additionally, our average premium per commercial residential policy was $100,307$99,515 at MarchJune 31,30, 2026.2026 and $110,575 at June 30, 2025.

Gross premiums earned. Gross premiums earned increased to $481.0$486.1 million for the three months ended MarchJune 31,30, 2026 from $350.9$338.7 million for the three months ended MarchJune 31,30, 2025. The increase was driven primarily by the earnings resulting from strong premium production across the portfolio including prior years Citizen acquisitions.

Ceded premiums earned. Ceded premiums for the three months ended MarchJune 31,30, 2026 and 2025 were approximately $115.1$125.5 million and $84.9$94.8 million, respectively, representing 23.9%25.8% and 24.2%,28.0%, respectively, of gross premiums earned. The $30.3$30.7 million increase was primarily attributable to increased catastrophe reinsurance costs in line with growth inof policiesthe in force.portfolio.

Net premiums earned. Net premiums earned increased to $365.9$360.6 million for the three months ended MarchJune 31,30, 2026 from $266.0$243.9 million for the three months ended MarchJune 31,30, 2025. The increase inand netyear-over-year premiumsgrowth earnedwere directly driven by earnings growth from previous increase in thevoluntary comparablehomeowners periods was primarily attributable to increased assumptions of policies fromand Citizens and increased renewals of existingacquired policies, offset by higher reinsurance costs directly related to the growth of the portfolio.

Net investment income. Net investment income, inclusive of realized investment gains and losses, increased to $20.1$22.2 million for the three months ended MarchJune 31,30, 2026 from $13.8$15.0 million for the three months ended MarchJune 31,30, 2025, which was attributable to an increase in investable assets. Our average investable assets increased to $2,345$2,535 million for the three months ended MarchJune 31,30, 2026 from $1,307$1,613 million for the three months ended MarchJune 31,30, 2025.

Policy fees. Policy fees increased to $2.6$3.3 million for the three months ended MarchJune 31,30, 2026 from $1.5$2.5 million for the three months ended MarchJune 31,30, 2025. The increase in policy fees was primarily attributable to increased renewals of existing policies.

Other income. Other income increased to $0.7 million for the three months ended MarchJune 31,30, 2026 from $0.2$0.3 million for the three months ended MarchJune 31,30, 2025. The increase in other income was primarily attributable to an increase in service fee revenue.

Total revenue. Total revenue increased to $389.3$386.8 million for the three months ended MarchJune 31,30, 2026 from $281.6$261.6 million for the three months ended MarchJune 31,30, 2025. The increase inand totalyear-over-year revenuegrowth waswere duedirectly primarilydriven toby anearnings growth from previous increase in netvoluntary premiumshomeowners earned primarily attributable to increased assumptions of policies fromand Citizens and increased renewals of existingacquired policies.

Losses and loss adjustment expenses incurred, net. Losses and loss adjustment expenses incurred, net increased to $111.1$108.7 million for the three months ended MarchJune 31,30, 2026 from $83.8$91.4 million for the three months ended MarchJune 31,30, 2025. There were no incurred losses from named storms during the three months ended MarchJune 31,30, 2026 and 2025. The increase in net losses and loss adjustment expenses incurred was primarily driven by the increasegrowth inof policiesthe in forceportfolio partially offset by lower catastropheoverall lossesloss experience for the period ending MarchJune 31,30, 2026 versus MarchJune 31,30, 2025.

Policy acquisition and other underwriting expenses. Policy acquisition and other underwriting expenses for the three months ended MarchJune 31,30, 2026 and 2025 were approximately $44.1$42.3 million and $28.6$32.1 million, respectively, representing 12.6%11.7% and 10.7%13.2% of net premiums earned, respectively. The increase was primarily attributable to increased renewal policies from prior year assumed Citizens' policies, resulting in increased policy acquisition costs in 2026.

General and administrative expenses. General and administrative expenses for the three months ended MarchJune 31,30, 2026 and 2025 were approximately $46.2$55.0 million and $41.4$37.9 million, respectively, representing 12.1%15.3% and 15.6%, respectively, of net premiums earned. The increase was due primarily to the growth in staffing and technology to support the Company’s increasedstrategic policiesgrowth in force.initiative. Personnel count increased to 558627 at MarchJune 31,30, 2026 from 392422 at MarchJune 31,30, 2025.

Interest expense. Interest expense decreasedincreased slightly for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The decreaseincrease was due primarily to the decreaseincrease in outstandingdebt debt.financing costs.

Depreciation expense. Depreciation expense for the three months ended MarchJune 31,30, 2026 and 2025 was $1.3$1.4 million and $1.1 million, respectively. The increase was due primarily to depreciation of capitalized costs of internal-use software projects that were put into production in 2025.

Amortization expense. Amortization expense for the three months ended MarchJune 31,30, 2026 and 2025 was $0.1$0.0 million and $1.9 million, respectively, representing 0.0% and 0.7%,0.8%, respectively, of net premiums earned. The decrease was due primarily to intangible assets being fully amortized at the end of 2025.amortized.

Income tax expense. Income tax expense was $46.1$43.6 million and $31.4$26.2 million for the three months ended MarchJune 31,30, 2026 and 2025,2025 respectively. Our effective tax rate for each of the three months ended MarchJune 31,30, 2026 and 2025 was 24.9%24.4% and 25.4%,27.2%, respectively. The decrease in our effective tax rate was primarily due to the favorable treatment of stock options.

Debt to capitalizationLoss ratio. Our debt to capitalizationloss ratio decreased to 2.8%30.2% for the three months ended MarchJune 31,30, 2026 from 6.6%37.4% for the three months ended MarchJune 31,30, 2025, primarily asdue to a result of growthdecrease in retainedoverall earningsloss from net income.experience.

ReturnExpense on equity.ratio. Our returnexpense on equityratio decreased to 12.5%27.4% for the three months ended MarchJune 31,30, 2026 from 19.2%30.0% for the three months ended MarchJune 31,30, 2025, as a result of growth in equityprimarily due to retainedscaling earningsimpact fromin net income.earned premium growth with more moderate operating expense growth and a reduction in amortization expense as intangible assets were fully amortized.