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

Longer-termOver the years, notable changes in long-term weather patterns have been observed, including an increase in both the frequency and intensity of severe convective events. These trends are changing,frequently andassociated new types of catastrophe losses are developing due towith climate change, a phenomenon that has been associated with greenhouse gases and extreme weather eventsprocess linked to rising temperatures,global includingtemperatures effectsthat onimpact globalworldwide weather patterns,systems. sea,In landgeneral, climate change may affect the occurrence of certain natural events, such as increasing the frequency or severity of wind, tornado, hailstorm, and airthunderstorm temperature,events due to increased convection in the atmosphere. There could also be increasingly frequent wildfires in certain geographies, more flooding, and increased severity of hurricanes due to higher sea levels,surface rain, and snow.temperatures. To the extent the frequency or severity of weather events iscontinues to be exacerbated due to climatechanging change,weather patterns or conditions, we may experience increases inincreased catastrophe losses in both coastal and non-coastal areas. This may cause an increaseincreases in claims-related and/or reinsurance costs orand may negatively affect our ability to provide homeowners insurance to our policyholders in the future. In addition, increased frequency of catastrophic events could result in increased credit exposure to the reinsurers with which we transact business. Our actual losses from catastrophic events might exceed levels protected against by the Insurance Entities’ respective reinsurance programs or might be larger than anticipated if one or more of our reinsurers fail to meet their obligations. In general, climate change may affect the occurrence of certain natural events, such as increasing the frequency or severity of wind, tornado, hailstorm, and thunderstorm events due to increased convection in the atmosphere. There could also be more frequent wildfires in certain geographies, more flooding, and the potential for increased severity of hurricanes due to higher sea surface temperatures. As a result, incurred losses from such events and the demand, price and availability of reinsurance coverages for homeowners insurance may be affected.

TheIn lossaddition, estimates developed by the models we use are dependent upon assumptions or scenarios incorporated by a third-party developer and by us. When these assumptions or scenarios do not reflect the characteristics of catastrophic events that affect areas covered by our policies or the resulting economic conditions, then we become exposed to losses not covered by our reinsurance program, which could adversely affect our financial condition, profitability, and results of operations. Further, although we use widely recognized and commercially available models to estimate our exposure to loss and LAE from hurricanes and certain other catastrophes, other models exist that might produce a wider or more narrow range of loss estimates, or loss estimates from perils considered less significant to our insured risks, such as wildfires. See “—We rely on models as a tool to evaluate risk, and those models are inherently uncertain and may not accurately predict existing or future losses.” Despitedespite our catastrophe management programs, we retain material exposure to catastrophic events. Additionally, the models themselves produce a range of results and associated probabilities of occurrence from which we can assess risks of exposure to catastrophic loss. Extreme catastrophe scenarios exist within the modeling results that may also have a material adverse effect on our results of operations during any reporting period due to increases in our losses and LAE. Our liquidity could also be constrained by a catastrophe, or multiple catastrophes, which could have a negative impact on our business. Catastrophes have erodederoded, and in the future may erodeerode, our statutory surplus or ability to obtain adequate reinsurance which could negatively affect our ability to write new or renewal business. Catastrophic claim severity is also impacted by the effects of continued, high levels of inflation and increases in insured value and factors such as the overall claims, legal and litigation environments in affected areas, in addition to the geographic concentration of insured property.

Because we conducthave significant exposure to the majorityFlorida of our business in Florida,market, our financial results are affected by the regulatory, economic,economic and weather conditions in Florida.

Although we are licensed to transact insurance business in other states, we write a majoritysignificant portion of our policies in Florida. Because of our concentration in Florida, and in particularparticular, in Broward, Palm Beach and Miami-Dade counties, we are exposed to hurricanes, windstorms, and other catastrophes affecting South Florida. We have incurredincurred, and may in the future incurincur, catastrophe losses in Florida or elsewhere in excess of those experienced in prior years;years, those estimated by catastrophe models we use;use, the average expected level used in pricing;pricing, and our current reinsurance coverage limits. We are also subject to claims arising from non-catastrophic weather events such as rain, hail, and high winds. Additionally, in Florida, the prevalence of represented and litigated claims has led to an increase in the frequency and severity of costs associated with both catastrophe claims and non-catastrophe claims. The nature and level of future catastrophes, the incidence and severity of weather conditions in any future period, and the impact of catastrophes on behaviors related to non-catastrophe claims cannot be predicted and could materially and adversely impact our operations.

Adverse changes in these conditions have a more pronounced effect on us than they would on other insurance companies that are more geographically diversified throughout the United States. Further, a single catastrophic event, or a series of such events, specifically affecting Florida, particularly in the more densely populated areas of the state, have had and could in the future have a disproportionately adverse impact on our business, financial condition, and results of operations. This is particularly true in certain Florida counties where we write a high concentration of policies such that a catastrophic event, or series of catastrophic events, in these counties have had and could in the future have a significant impact on our business, financial condition, and results of operations.

We maintain loss reserves to cover our estimated ultimate liability for unpaid losses and LAE for reported and unreported claims as of the end of each accounting period. The reserve for losses and LAE is reported net of receivables for subrogation. Recorded claim reserves in the property and casualty business and amounts recoverable through subrogation are based on our best estimates of what the ultimate settlement and administration of claims will cost, both reported and incurred but not reported (“IBNR”). These estimates, which generally involve actuarial projections, are based on management’s assessment of known facts and circumstances, including our experience with similar cases, actual claims paid, historical trends involving claim payment patterns, pending levels of unpaid claims and contractual terms. External factors are also considered, which include but are not limited to changes in the law, court decisions, changes to regulatory requirements, economic conditions including inflation as experienced in recent years, and consumer behavior. Many of these factors are not quantifiable and are subject to change over time. The currenteffects Floridaof homeowners’these insurancenumerous marketfactors, isincluding adverselythe impactedtiming byof changescatastrophes in claimantrelation behaviorsto resultingother inevents, such as the end of a financial reporting period, can affect the availability of information needed to estimate reserves for the reporting period. The ultimate settlement of unpaid losses and LAE exceedingmay historicalvary trends,materially amountsfrom experiencedthe inrecorded other states,liability, and amountssuch wevariance previouslymay estimated.adversely The increases in losses and LAE are attributable toaffect the activeCompany’s solicitationfinancial of claims activity by policyholder representatives, high levels of represented claims compared to historical patterns or patterns seen in other states, and a proliferation of inflated claims filed by policyholder representatives and vendors. These trends are facilitated by Florida’s legal climate, including the threat of one-way attorneys’ fees against insurers pursuant to a statute that existed prior to December 16, 2022, and the relatively high cost of defending against inflated claims in relation to amounts in dispute. Some of the law changes apply only to policies with effective dates after December 16, 2022, resulting in an extended period during which our losses and LAE will continue to be influenced by pre-reform laws and market conditions.results.

Additionally,In addition, there sometimes is a significant reporting lag between the occurrence of an event and the time it is reported to us. The inherent uncertainties of estimating reserves are greater for certain types of liabilities, particularly those in which the various considerations affecting the type of claim are subject to change and in which long periods of time elapse before a definitive determination of liability is made. The deterioration in the current Florida market also has produced an increased number of claims that are filed or re-opened well after the alleged dates of loss. We continually refine reserve estimates as experience develops and as subsequent claims are reported and settled. Adjustments to reserves are reflected in the financial statement results of the periods in which such estimates are changed. The adverse conditions in Florida and inflationary pressure causing increases in the costs of building materials and labor have resulted in our paid losses exceeding prior reserve estimates and in increases in our current estimates of unpaid losses and LAE. Because setting reserves is inherently uncertain and claims conditions change over time, the ultimate cost of losses has varied and, in the future, may vary materially from recorded reserves, and such variance may continue to adversely affect our operating results and financial condition. The full extent of the ongoing disruptions and claims behaviors in the Florida market, and the extent to which legislative efforts aimed at mitigating these concerns will be successful, is unknown and still unfolding.

If we fail to adequately price the risks we underwrite, or if emerging trends outpace our ability to adjust prices timely,in a timely manner, or if we lose desirable exposures to competitors by overpricing our risks, we may experience underwriting losseslosses, thereby depleting surplus at the Insurance Entities and capital at the holding company.

Our results of operations and financial condition depend on our ability to underwrite and set premiums adequately for a variety of risks while remaining competitive. Rate adequacy is necessary to generate sufficient premiums to pay losses, LAE, reinsurance costs, and underwriting expenses and to earn a reasonable profit. We endeavor to price our products adequately by collecting and analyzing a substantial amount of data; developing, testing, and applying relevant ratingsrating formulas and methodologies; closely monitoring and seeking to timely recognize changes in cost trends; and projecting both severity and frequency of losses and other costs including loss adjustment expenses,LAE, reinsurance costs and other underwriting costs. We utilize industry insurance data, internal claims experience and both internal and external actuarial experience during the rate making process. During the establishment of underwriting standards and the analogous rate making process, we also collect and leverage data points related to age, location, and relevant construction characteristics of properties and establish insurance-to-value estimates to help ensure adequate pricing. While addressing price adequacy, management also seeks to anticipate and navigate potential impacts to market share and competition.

•our ability to stay competitive as evolving technologies emerge such as artificial intelligence (“AI”) and machine learning emerge and are increasingly used by our competitors to make pricing, underwriting, or other decisions;

•the effect of climate change or global or localized weather patterns on the frequency and severity of insured events from severe weather;

As a result, we could underprice risks, which, in the past, has,has and, in the future, could result in significant underwriting losses negatively impacting the profitability and financial condition of our Insurance Entities and the consolidated group. We also could overprice our risks, thereby making our products relatively less attractive than other alternatives, thereby negatively impacting our competitive position and potentially leading to a reduction in demand for our products and in our market share.

Changes in the severity or frequency of claims affect our profitability. Changes in homeowners’ claim severity can be and have been driven by inflation in the construction industry, in building materials, and in home furnishings, as well as by other economic and environmental factors, including increased demand for services and supplies in areas affected by catastrophes, supply chain disruptions, tariffs, labor shortages, and prevailing attitudes towards insurers and the claims process,process includingas thereflected prevalence ofthrough litigated claims or claims involving representation as well asincluding continuing efforts by policyholder representatives to seek largerlarge settlements on pre-reform claims in recognition that the elimination of the statutory right to attorneys’ fees and other law changes will apply to future claims. However, changes in the level of the severity of claims are not limited to the effects of inflation and demand surge in these various sectors of the economy or to Florida’s disproportionately high incidence of represented claims. Increases in claim severity can also arise from unexpected events that are inherently difficult to predict. In addition, significant long-term increases in claim frequency also have an adverse effect on our operating results and financial condition. Further, the level of claim frequency we experience varies from period to period, and from region to region. Claim frequency can be influenced by natural conditions such as the number and types of severe weather events affecting areas where we write policies as well as by factors such as the prevalence of solicited and represented claims, including efforts by policyholder representatives to encourage claims activity related to policy periods predating law changes.claims. Although we pursue various loss management initiatives in order to mitigate future increases in claim severity and frequency, there can be no assurances that these initiatives will successfully identify or reduce the effect of future increases in claim severity and frequency.

However, there are inherent limitations in all of these strategies, and no assurance can be given that an event or series of events will not result in loss levels in excess of those considered in our probablemodeling, maximumpricing lossor models,reinsurance placement, or that our non-catastrophe forecasts or modeling is accurate, which could have a material adverse effect on our financial condition or results of operations. It is also possible that losses could manifest themselves in ways that we do not anticipate and that our risk mitigation strategies are not designed to address. Such a manifestation of losses could have a material adverse effect on our financial condition and results of operations.

Pandemics, including COVID-19Pandemics and othermacroeconomic outbreaks of disease,conditions could impact our business, financial results,results and growth.

Pandemics and other outbreaks of disease can have significant and wide-spreadwidespread impacts. As we saw with the COVID-19 pandemic, outbreaks of disease can cause governments, public institutions, and other organizations to impose or recommend, and businesses and individuals to implement restrictions onon, various activities or take other actions to combat the disease’s spread, such as warnings, restrictions, and bans on travel, transportation, or in-person gatherings;gatherings, and local or regional closures or lockdowns. Outbreaks of disease, and actions taken in response to the outbreak,which could in the future materially negatively impact our workforce as well as our business, operations, and financial results in many ways, both directly and indirectly. In general, other effects of a pandemic may include significant volatility and disruption of the global financial markets and limitations on access to sources of liquidity, among others.

We currently market our policies to a broad range of prospective policyholders through approximately 4,0003,900 independent insurance agents in Florida as well as approximately 5,600 independent insurance agents outside of Florida. As a result, our business depends on the marketing efforts of these independent agents and on our ability to offer products and services that meet their and their customers’ requirements. These independent insurance agents maintain the primary customer relationship. Independent agents typically represent other insurance companies in addition to representing us, and such agents are not obligated to sell or promote our products. Other insurance companies may pay higher commissions than we do, provide services to the agents that we do not provide,provide or mayadapt beto evolving technologies faster than we do. If other insurance companies are more attractive to the agents than we are.are, Insuch Floridaas due to familiarity, pricing considerations, additional service offerings, ease of use, or perceived reliability, our business could be adversely affected. The emergence of AI or other machine learning technologies is likely to change the statutorily-createdways residualconsumers marketand currentlyinsurance offersagents policiesshop atfor, premiumevaluate levelsand purchase insurance products in ways that in many areas and for most coverage types are lower than premiums the Insurance Entities charge, which are subjectdifficult to regulatory review, governed by actuarial standards, and cannot be inadequate, excessive, or unfairly discriminatory.predict. We cannot provide assurance that we will retain our current relationships,relationships or be able to establish new relationships, with independent agents. The loss or decline in effectiveness of these marketing relationships could adversely affect our ability to attract new agents, retain our agency network, or more generally write new or renewal insurance policies, which could materially adversely affect our business, financial condition, and results of operations.

Along with other insurers in the industry, weWe use models developed by third-party vendors in assessing our exposure to catastrophe losses, and these models assume various conditions and probability scenarios, most of which are not known to us or are not within our control.scenarios. These models may not accurately predict future losses or accurately measure losses incurred. CatastropheAlthough models, which have been evolving since the early 1990s,we use historicalwidely informationrecognized aboutand variouscommercially catastrophes,available detailedmodels informationto aboutestimate our in-forceexposure businessto loss and LAE from hurricanes and certain assumptionsother catastrophes, other models exist that might produce a wider or judgments,more thatnarrow arerange proprietaryof loss estimates, or loss estimates from perils considered less significant to our insured risks, such as wildfires. Additionally, the modelingmodels firms.themselves produce a range of results and associated probabilities of occurrence from which we can assess risks of exposure to catastrophic loss. While we use thismodel informationoutputs or analysis in connection with our pricing and risk management activities, there are limitations with respect to their usefulness in predicting losses in any reporting period. Examples of these limitations are significant variations in estimates between models and modelersmodels, and material increases and decreases in model results across editions due to changes and refinements of the underlying data elements and assumptions, including with respect to the risks arising from weather patterns or climate change. Such limitations lead to questionable predictive capability and post-event measurements that have not been well understood or proven in some cases to be sufficiently reliable. In addition, the models are not necessarily reflective of company or state-specific policy language, demand surge for labor and materials, consumer behavior, prevailing or changing claims, legal and litigation environments, or loss settlement expenses, all of which are subject to wide variation by catastrophe. Further, in accordance with Florida law and regulatory requirements, we must use a model that has been reviewed and deemed acceptable by a state commission in accordance with standards over which we have no control and that might not align with our business. For these reasons and other factors that might not be known to us, the accuracy of models in estimating insured losses from prior storms has varied considerably by catastrophe when compared to actual results from those catastrophes.

Our reinsurance program is designed to mitigate our exposure to catastrophes. Market conditions and public policy decisions beyond our control determine the availability and cost of the reinsurance we purchase,purchase and the ability of the FHCF to reimburse insurers at levels contemplated by their reimbursement contracts, and the expiration of time-limited governmental programs such as RAP, which expired on May 31, 2024.contracts. No assurances can be made that reinsurance will remain continuously available to us to the same extent and on the same or similar terms and rates as are currently available. In addition, our ability to afford reinsurance to reduce our catastrophe risk may beis dependent upon our ability to adequately and timely adjust premium rates for our costs, and there are no assurances that the terms and rates for our current reinsurance program will continue to be available next year or that we will be able to adjust our premiums.premiums commensurate with any changes. The Insurance Entities are responsible for losses related to catastrophic events with incurred losses in excess of coverage provided by our reinsurance program and the FHCF, and for losses that otherwise are not covered by the reinsurance program. If we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient and at prices and terms that we consider acceptable, we would have to either accept an increase in our exposure risk,to catastrophe losses, reduce our insurance writings, seek rate adjustments at levels that might not be approved or might adversely affect policy retention, or develop or seek other alternatives, which could have an adverse effect on our profitability and results of operations.

Reinsurance does not legally discharge us from our primary liability for the full amount of the risk we insure, although it does make the reinsurer liable to us in the event of a covered claim. As such, we are subject to credit risk with respect to our reinsurers. The collectability of reinsurance recoverables is subject to uncertainty arising from a number of factors, including (i) our reinsurers’ financial capacity and willingness to make payments under the terms of a reinsurance treaty or contract orand (ii) whether insured losses meet the qualifying conditions and are recoverable under our reinsurance contracts for covered events or are excluded. Further, if a reinsurer fails to pay an amount due to us within 90 days of such amount coming due, we are required by certain statutory accounting rules to account for a portion of this unpaid amount as a non-admitted asset, which would negatively impact our statutory surplus. Our inability to collect a material recovery from a reinsurer, or to collect such recovery in a timely fashion, could have a material adverse effect on our operating results, financial condition, liquidity and surplus.

The property and casualty insurance market is cyclical and has experienced periods characterizedof by relatively high levels ofsignificant price competition, less restrictive underwriting standards and relatively low premium rates, followed by periods of relatively lower levels of competition, more selective underwriting standards, and relatively high premium rates. As premium levels increase,increase in relation to anticipated losses and competitors perceive an increased opportunity for profitability,profitability such as in Florida’s current post-reform property insurance market, competition increases from new entrants to the market orand expansion by existing participantsparticipants. leadThis leads to increased competition, a reductionreductions in premiumrate rates,levels, less favorablebroadening policy terms, and fewer opportunities to underwrite insurance risks. In addition, certain law changes take effect only with respect to new or renewal policies issued after the changes are adopted, which can favor new entrants to the market over insurers like the Insurance Entities that continue to service policies issued before the law changes and claims received under thosepre-reform policies. These conditions can have a material adverse effect on our results of operations and cash flows. In addition to these considerations, changes in the frequency and severity of losses suffered by insureds and insurers, including changes resulting from multiple and/or catastrophic hurricanes and from increases in represented and litigated claims, affect the cycles of the property and casualty insurance business significantly. Negative market conditions, whether through adverse conditions resulting in higher losses and LAE or through competition affecting rate levels and policy coverage language, can impair our ability to write insurance at rates that we consider adequate and appropriate relative to the risk written. To the extent that we cannot write insurance at appropriaterates rates,we consider appropriate, our business would beis materially and adversely affected. We cannot predict whether market conditions will improve, remain constant or deteriorate. An extended period of negative market conditions could have a material adverse effect on our business, financial condition and results of operations.

Our success depends, in part, on our ability to attractattract, retain, and retaindevelop talented employees, and the loss of any one of our key personnel could adversely impact our operations.

The success of our business depends, in part, on the leadership and performance of our executive management team and key employees and on our ability to attract, retain, develop and motivate talented employees.employees in a rapidly changing technological environment. Competition for these individuals is intenseintense, especially as new and existing insurers seek to expand their businesses, and our ability to operate successfully may be impaired if we are not effective in filling critical leadership positions, in developing the talent and skills of our human resources, in assimilating new executive talent into our organization, or in deploying human resource talent consistent with our business goals.

From time to time, we are subject to civil or administrative actions and litigation. This is especially the case inIn Florida, where insurance companies, including the Insurance Entities, have experienced high rates of first-party litigation due largely to the state’s prior one-way attorneys’ fee statute and resulting institutionalization of a litigation-oriented climaterepresentation and tolitigation-oriented the ability of vendors to take assignments of policyholders’ post-loss claims benefits.climate. Although we strive to pay meritorious claims in a fair and prompt manner, civil litigation can result when we do not pay insurance claims in the amounts or at the times demanded by policyholders or their representatives or assignees.representative. We also are subject to litigation orand administrative actions arising from the conduct of our business and the regulatory authority of state insurance departments or other agencies having oversight or enforcement authority over the various aspects of our business. Further, we are subject to other types of litigation inherent in operating our businesses, employing personnel, contracting with vendors and otherwise carrying out our affairs. As industry practices and legal, judicial, social, and other environmental conditions change, unexpected and unintended issues related to claims and coverage have arisen and may in the future arise, including judicial expansion of policy coverage and the impact of new theories of liability, plaintiffs targeting property and casualty insurers in purported class-action litigation, litigation financing or other forms of litigation relating to claims-handling,claims-handling and other practices, and adverse changes in loss cost trends, including inflationary pressures in home repair costs or other legal or regulatory conditionspractices incentivizing increases in disputed or litigated claims. Multiparty or class action claims and similar types of actions, especially when incentivized by potential recoveries by representative plaintiffs and their attorneys, present additional exposure to substantial economic, non-economic, or punitive damage awards. This exposure, and the costs of protracted litigation, can result in decisions to settle litigation notwithstanding our belief that meritorious defenses exist or that we ultimately would prevail at trial or on appeal. Litigation or regulatory matters have negatively affected and may in the future negatively affect us by resulting in the payment of substantial awards or settlements, increasing legal and compliance costs, requiring us to change certain aspects of our business operations, diverting management attention from other business issues, harming our reputation with agents, customers, reinsurers, creditors, regulators or others, or making it more difficult to attract or retain current customers and to recruit and retain employees or agents.

The property and casualty insurance industry is highly competitive. We compete against large national carriers that have greater capital resources and longer operating histories, regional carriers, and managing general agencies, as well as newly formed and less-capitalized companies that might have more aggressive underwriting or pricing strategies. Many of these entities may also be affiliated with other entities that have greater financial and other resources than we have. When competitors attempt to increase market share by lowering rates, we can experience reductions in our underwriting margins,margins or a decline in sales of our insurance policies as customers purchase lower-priced products from our competitors. Competitors also might adopt more prompt or more effective solutions to adverse market conditions than we are able to implement, including through the use of AI or machine learning, providing those competitors with a competitive advantage through lower losses and loss adjustment expenses,LAE, more competitive premium levels, or thea greater ability to expand their businesses. Additionally, due to statutorily-imposed limits on rate increases, Florida’s residual property insurance market, Citizens, often charges lower premiums in hardsome insuranceareas marketsor for some policy types than what the Insurance Entities are able to charge in accordance with applicable regulatory filings, actuarial standards and prudent financial management. In hard markets such as the current Florida market, insurance agents and their customers therefore commonly choose Citizens over private market insurers like the Insurance Entities for their residential property insurance coverage. Additionally, some law changes intended to alleviate abuses in the property insurance market are interpreted as applying only prospectively to policies issued or renewed after the new laws’ effective dates, potentially creating competitive advantages for insurers that enter markets or expand writings after the laws’ effective dates as compared to insurers like the Insurance Entities, which continue to have certain policy and claims servicing obligations on previously issued policies.

Because of the competitive nature of the insurance industry, including competition for producers such as independent agents, there can be no assurance that we will continue to develop and maintain productive relationships with independent agents, effectively compete with our industry rivals, or that competitive pressures will not have a material adverse effect on our business, operating results or financial condition. There is also a risk that consumer preferences regarding insurance providers may change over time, and that we may not effectively adapt our business model in reaction to these changing preferences, including choosing to purchase insurance through direct-to-consumer providers or other channels.

Residential property insurers like the Insurance Entities must maintain financial strength or stability ratings from at least one rating organization acceptable to each of the Federal Home Loan Mortgage Corporation (“Freddie Mac’Mac”) and the Federal National Mortgage Association (“Fannie Mae”). Our Insurance Entities maintain Financial Stability Ratings® of “A” (“Exceptional”) by Demotech and insurance financial strength ratings of “A-” by Kroll. TheseIn addition, these and similar ratings arecontribute importantto factorscustomers’ inand establishingagents’ perceptions of the competitive position of insurance companies and generallytherefore can have an effect on an insurance company’s business. On an ongoing basis, ratingRating agencies review the financial performance and condition of insurers on an ongoing basis and couldcan downgrade or change the outlook on an insurer’s ratings due to, for example, a changereduction in an insurer’s statutory capital; a change in a rating agency’s determination of the amount of risk-adjusted capital required to maintain a particular rating; a change in the perceived adequacy of an insurer’s reinsurance program; an increase in the perceived risk of an insurer’s investment portfolio; a reduced confidence in management or a host of other considerations that may or may not be within an insurer’s knowledge or control. Because these ratings are subject to continuous review, the retention of these ratings cannot be assured. A downgrade in or withdrawal of these ratings, or a decision by a rating agency to require us to make a capital infusion into the Insurance Entities or otherwise alter operations to maintain its rating, may adversely affect our liquidity, operating results and financial condition. A downgrade to or loss of a rating also might cause reputational damage to us among customers, insurance agents, reinsurers, creditors, regulators or others that could affect our ability to write and retain business. In addition, our failure to maintain at least one financial strength or stability rating acceptable in the secondary mortgage market would adversely affect our ability to write new and renewal business. Further, a downgrade to or reduction of our financial strength or stability ratings below acceptable levels could constitute a default under the Company’s credit obligations of UVE.obligations. Financial strength and stability ratings are primarily directed towards policyholders of the Insurance Entities, and are not evaluations directed toward the protection of our shareholders,shareholders and are not recommendations to buy, sell or hold securities.

Breaches or other failures of our information systems or denial of service on our website could have an adverse impact on our business and reputation.

Our ability to effectively operate our business depends on our ability, and the ability of certain third-party vendors and business partners, to access our computer systems to perform necessary business functions, such as providing quotes and product pricing, billing and processing premiums, administering claims and reporting our financial results. Our business and operations rely on the secure and efficient processing, storage and transmission of customer and company data, including policyholders’ nonpublic personal information, including financial information, and proprietary business information, on our computer systems and networks. Unauthorized access to personally identifiable information, even if not financial information, could be damaging to all affected parties. Breaches can involve attacks intended to obtain unauthorized access to nonpublic personal information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, including through the introduction of computer viruses or malware, cyberattacks and other means; breaches can also involvebe caused by human error, such as employees falling victim to phishing schemes or computer coding errors that may inadvertently leave data exposed.

Our computer systems and our vendors’ computer systems are vulnerable to unauthorized access and hackers, computer viruses and other scenarios in which our data may be exposed or compromised. Cyberattacks can originate from a variety of sources, including third parties who are affiliated with foreign governments or employees acting negligently or in a manner adverse to our interests. Third parties may seek to gain access to our or our vendors’ systems either directly or using equipment or security passwords belonging to employees, customers, third-party service providers, or other users of our systems. These threat actors have grown increasingly sophisticated,sophisticated and have begun using tools like AI to facilitate cyberattacks, leaving us increasingly vulnerable to these kinds of attacks. Our systems also may inadvertently expose, through a computer programming error or otherwise, confidential information as well as that of our customers and third parties with whom we interact.

Our computer systems and our vendors’ computer systems have been, and likely will continue to be, subject to cybercyberattacks, hackingdata activities,breaches, cybersecurity incidents, computer viruses, other malicious codes, or other computer-related penetrations. This is especially the case as the number of our employees working remotely has increased. We commit significant resources to administrative and technical controls to prevent cyber incidents and protect our information technology, but our preventative actions to reduce the risk of cyber threats may be insufficient to prevent physical and electronic break-ins and other cyberattacks or security breaches, including those due to human vulnerabilities. Any such event could damage our computers or systems; compromise our confidential information as well as that of our customers and third parties with whom we interact; significantly impede or interrupt business operations, including denial of service on our website; and could result in violations of applicable privacy and other laws, financial loss to us or to our policyholders, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure and reputational harm, all of which could have a material adverse effect on us. We expend significant additional resources to modify our protective measures and to investigate and remediate vulnerabilities, exposures, and information security events. Due to the complexity and interconnectedness of our systems, the process of enhancing our protective measures can itself create a risk of systems disruptions and security issues.

The increase in the use of cloud technologies and in consumer preference for online transactions can heighten these and other operational risks. Any disruption, outage, or degradation in cloud computing performance could impair our ability to operate. Such incidents could result in operational delays, customer dissatisfaction, and reputational harm. Certain aspects of the security of such technologies are unpredictable or beyond our control, and this lack of transparency may inhibit our ability to discover a failure by cloud service providers to adequately safeguard their systems and prevent cyberattacks that could disrupt our operations and result in misappropriation, corruption or loss of confidential and other information. In addition, there is a risk that encryption and other protective measures, despite their sophistication, may be defeated, particularly to the extent that new computing technologies vastly increase the speed and computing power available. Further, the interconnectedness of our technology platforms and those of direct or indirect third-party providers could result in disruptions to our service due to malfunctions of or errors in third-parties’ software or systems that are beyond our control.

Developments in technology are affecting the insurance business. For example, insurance companies are beginning to use AI in a number of applications, including risk assessment, administrative aspects of claims processing, customer service, fraud detection, and predictive analytics and modeling. We believe that the development and implementation of new technologies will require additional investment of our capital resources in the future, and it is possible that we may not be able to effectively implement or adapt to new technologies. We have not determined the amount of resources and the time that this development and implementation may require, which may result in short-term, unexpected interruptions to our business,business as we endeavor to develop or implement new technologies. Any development of new technologies, including AI, may introduce new risks. AI algorithms and the data used to train them may be incomplete or inadequate, and any disruption or failure of AI product offerings may result in adverse impacts to our business operations or reputation. There is a risk that our competitors may utilize these technologies more effectively than us, which may result in a competitive disadvantage in price and/or efficiency. InFederal addition,and changesstate authorities, and foreign jurisdictions, have proposed or enacted legislation or regulations relating to the development and use of AI, which could be interpreted in technologyways typicallythat outpacewould correspondingaffect regulations,our whichdevelopment mayand lead to periodsuse of uncertainty in the permissible uses of certain technologyAI and toother differencessimilar technologies. These laws or even inconsistencies in the regulatory approaches across jurisdictions. The absence of regulations or conflicts in regulations may furthervary limitor be inconsistent across jurisdictions in which we do business. Further, the insurance business is subject to extensive regulations that might affect our ability, or the ability of the insurance industry as a whole, to implementuse newAI technologyas ineffectively anas effectiveother andtypes timelyof manner.businesses. In addition, the cost to comply with such laws or regulations could be significant.

Lack of effectiveness of exclusions and other loss limitation methods in the insurance policies we write or changes in laws and/or potential regulatory approaches relating to them could have a material adverse effect on our financial condition or our results of operations.

All of the policies we issue include exclusions or other conditions that define and limit coverage. These exclusions and conditions are designed to manage our exposure to certain risk types or risk characteristics and to expanding theories of legal liability. In addition, applicable law limits the time period during which a policyholder may bring a claim under the policy. It is possible that a regulatory authority would refuse to approve an exclusion or a court could nullify or void an exclusion or limitation or interpret existing coverages more broadly than we anticipate, that legislation could be enacted modifying or barring the use of these exclusions or limitations, or that legislation purporting to implement limitations or exclusions will be determined by courts to be ineffective or less effective than anticipated. This could result in higher than anticipated losses and LAE by extending coverage beyond our underwriting intent or increasing the number or size of claims, which could have a material adverse effect on our operating results. In some instances, the intended effects of approved policy language and court interpretations of the same may not become apparent until sometime after we have issued the insurance policies and case law sets a precedent for legal interpretation of them. As a result, the full extent of liability under our insurance contracts may not be known for many years after a policy is issued.

Our primary market risk exposures are changes in equity prices and interest rates, which impact our investment income and returns. Fluctuations in interest rates could expose us to increased financial risk. Declines in market interest rates can have an adverse effect on our investment income to the extent that we invest cash in new interest-bearing investments that yield less than our portfolio’s average rate of return or purchase longer-term or riskier assets in order to obtain adequate investment yields resulting in a duration gap when compared to the duration of liabilities. Conversely, increases in market interest rates also can have an adverse effect on the value of our investment portfolio by decreasing the fair values of the available-for-sale debt securities that comprise a large portion of our investment portfolio. Similarly, declines in the equities markets adversely affect our existing portfolio. Increases in the equities markets might increase returns on our existing portfolio but reduce the attractiveness of future investments. In addition, high inflation, such as what we are seeing in the current economic environment, could also adversely impact our business and financial results.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to assist in an understanding of our financial condition and results of operations and should be read in conjunction with our consolidated financial statements and accompanying notes in “Part II—Item 8—Financial Statements and Supplementary Data” below. Except for the historical information contained herein, the discussions in this MD&A contain forward-looking statements that involve risks and uncertainties. Our future results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed above under “Cautionary Note Regarding Forward-Looking Statements” and “Part I— Item 1A—Risk Factors.Factors”.

We are a vertically integrated holding company offering property and casualty insurance and value-added insurance services. In addition, we generate revenue from our investment portfolio, reinsurance brokerage services, the receipt of managing general agency fees from policy holders and from other sources of revenue (collectively “Other Revenue Sources”). We develop, market, and underwrite insurance products for consumers predominantly in the personal residential homeowners’ line of business and perform substantially all insurance-related services for our insurance entities, including risk management, claims management, and distribution. Our Insurance Entities offer insurance products through both appointed independent insurance agents and through our online distribution channel across 19 states with Florida representing 77.2% of our direct premiums written for the year ended December 31, 2024,states, with licenses to write insurance in one additional state. We seek to produce an underwriting profit (defined as net premiums earned premium-net minus losses, LAE, policy acquisition costs and other operating costs and expenses) over the long term, along with growing our Other Revenue Sources.

•Georgia: +7.4% effective March 1, 20252025, for new business and existingrenewal business

•IndianaAlabama: +6.0%8.1% effective March 22,13, 20252025, for new business and May 11,2, 2025, for renewal business

•MinnesotaIndiana: +15.0%, the6.0% effective dateMarch 22, 2025, for new business,business and May 11, 2025, for renewal business is pending approval

•New YorkMassachusetts: +10.2%, the12.9% effective dateApril 8, 2025, for new business and May 28, 2025, for renewal business is pending approval

PleaseThere referhave been no material changes to the risk factors previously disclosed in “Part I, Item 1A—Risk Factors,” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Our ability to write and retain policies is influenced by a range of local, national and global factors. Among these, the amount and types of policies we write depend on the regulatory environments in the states in which the Insurance Entities write policies. In particular, the Florida personal residential insurance market ishas experiencingexperienced and continues to experience significant transitions due to a series of law changes passed in December 2022 that were intended to address substantialprevious market disruption.

Prior to the significantlaw statutory reforms adopted by Florida in December 2022,changes, the Florida residential property insurance market suffered from declining availability and increasing premiums among authorized insurers. This was attributable to elevated loss and LAE levels and related impacts on insurers’ operating results and reinsurance pricing and availability. During this period, Citizens, Florida’s statutorily-created insurer that generally is intended to be the state’s market of last resort, instead became a market of choice as authorized insurers limited writings and state laws capped Citizens’ annual rate increases at levels wellwere belowsuppressed marketby levels.statutory limitations on its rate changes.

The overall residential property insurance market in Florida has steadily improved since the reforms were enacted. Nonetheless,Even so, the ultimate long-term benefits of Florida’s statutory reforms remain unknown and difficult to predict. The Florida political environment, prevailing sentiment among policymakers or the public such as growing concerns with inflation and costs of living, and economic factors beyond insurers’ control may directly or indirectly mitigate the impact of the reforms. These influences can mask the reforms’ benefits or diminish their perceived effectiveness even when the market shows objective signs of improvement through moderating rate levels, increased product availability and competition, and reductions in Citizens’ policy count. Over time, these political or external influences attributing broader rising costs or other market conditions to deficiencies in the reforms rather than other causes can result in policymakers questioning the merits of the reforms, considering proposals to reverse them, or pursuing other law changes or interpretations that could negate improvements in the Florida market and renew concerns with rising costs and reduced availability.

Prior to the 2022 reforms, most residential property insurers in Florida, including the Insurance Entities, sought to limit their exposure to rising losses and LAE. Although the Insurance Entities faced little competition from authorized insurers during this period, the Insurance Entities’ own exposure management considerations led them to limit their new business intake. The Insurance Entities historically have enjoyed a high policyholder retention rate from year to year, both prior to the reforms and currently. Even so,Nonetheless, the Company’s limited appetite for new business prior to the reforms led to a decline in its in-force Florida policy count. DuringAs other insurers similarly limited their writings during this time, Citizens grew to become the largest insurer of residential property in Florida by a wide margin.

Other established insurers also are expanding new business writings. Established insurers are increasingly expanding their writings by location and policy type. In addition, aapproximately reported 1720 new insurers have entered the Florida market in recent years. Unlike the Insurance Entities, some new and established insurers write business predominantly by assuming risks from Citizens. Altogether, renewedincreased activity among authorized insurers has led to a decrease in Citizens’ policy count by approximately one million policies since the reforms. UPCICThe hascurrent long been, and currently remains, one of the largestFlorida residential property insurersinsurance inmarket Florida.therefore Still,is ascharacterized theby benefitsincreased ofcompetition theamong reformsauthorized continueinsurers, toexpanded emerge,coverage newoptions for consumers, declining average rate levels and existinga competitorssignificantly insmaller theresidual post-reform market often remain selective as to the policy types, locations, coverage limits or other characteristics of policies they write, leading to segmentation in theinsurance market. The degree of competition the Insurance Entities face in Florida therefore varies by policy type, region, and other factors.

Other states have experienced less disruption than Florida. The Insurance Entities therefore experienceface a high but stable degree of competition when entering and expanding into other states. In these states, the Insurance Entities often compete with national or regional insurers with greater experience in the specific markets. Our growth plan therefore includes developing relationships with the states’ independent agents and gradually expanding our presence as we gain familiarity with new markets. Over time, this has allowed our business outside of Florida to steadily increase as a percentage of our overall business.

The Company continues to experience higher costs associated with claims that pre-date the reforms. The remaining pre-reform claims typically are litigated claims that have resisted formal and informal efforts at dispute resolution. Although the number of claims subject to pre-reform laws continueshas todeclined decline,substantially, itsome maymight be severalresolved yearsonly beforethrough alllitigation ofand themtherefore aremight resolved.remain pending for months or longer.

Our business is affected by evolving domestic, national or global economic conditions, including the potential impact from tariffs and other inflationary pressures. Increased labor and materials costs can increase our claims costs. They can also have other direct effects on our business, such as increasing the values of properties we insure and the corresponding premium levels, as well as indirect effects such as offsetting and diminishing the perceived benefits of the statutory reforms. We will continue to monitor our business model and strategy as economic conditions develop.

We also rely on global reinsurance markets to mitigate our exposure under policies we write. The availability and pricing of reinsurance can be influenced by global economic conditions such as inflation. Our ability to purchase desired levels of reinsurance at competitive prices also can be influenced by severe weather in Florida and elsewhere. Florida did not suffer a landfalling hurricane in 2025, which iscontributed ato favorable considerationreinsurance asmarket we prepareconditions for the mid-year renewal of our catastrophe reinsurance program. However, thisthe benefit mightof short-term weather or economic conditions can be offsettempered by reinsurers’ assessments of past and potential future events.

In 2024, for Florida, UPCIC implemented new homeowners policy rates, resulting in an average rate decrease of 1.5% compared to previous rates, effective for new policies August 15, 2024 and renewal policies May 17, 2025. These Florida rate changes were implemented under use and file rating laws and subsequently received regulatory approval. In October 2025, UPCIC implemented new homeowners policy rates for new and renewal business policies, resulting in an average rate decrease of 5.1% compared to previous rates with an effective date of October 16, 2025. These Florida rate changes were implemented under use and file rating laws and subsequently received regulatory approval.

•New Jersey: +18.9%, effective July 6, 2026, for new business and renewal business The following rate filings are pending approval by state regulators:

•Delaware: +14.6%, the9.9%, effective dateAugust 13, 2026, for new business and renewal business is pending approval

•IowaMinnesota: +9.0%,15.0%, the effective date for new and renewal business is pending approval

Expense Ratio (Including Policy Acquisition Cost Ratio and Other Operating Costs and Expenses Ratio) ― calculated as policy acquisition costs and other operating costs and expenses as a percentage of premiums earned, net. Policy acquisition costs and other operating costs and expenses include such items as underwriting costs, facilities, and corporate overhead. The expense ratio, including the sub-expense ratios of policy acquisition cost ratio and other operating costs and expenses ratios,ratio, are indicators to management of the Company’s cost efficiency in acquiring and servicing its business and the impact of expense items to overall profitability.

•Full reinstatement is available on $1.098 billion of non-FHCF first event catastrophe coverage for guaranteed second event coverage. For all layers purchased between $111$45 million and the projected attachment point of the FHCF layer, to the extent that all of our coverage or a portion thereof is exhausted in a first catastrophic event and reinstatement premium is due, we have purchased enough reinstatement premium protection coverage (“RPP”) limit to fundpay the reinstatementpremium premiumsnecessary due onfor the reinstatement of these coverages.coverages Lossesor exceedinghave thesecured RPPa limitspecific wouldsecond beevent subject to reinstatement premiums.contract.

•Specific third and fourthsecond event private market excess of loss coverage of $86$66 million in excess of $25$45 million providesis frequencysitting protectionbehind forcaptive multiple events during the treaty period, an incremental $20 million reduction in retention for a third and fourth event.arrangement.

•For the FHCF Reimbursement Contracts effective June 1, 2025,2026, theboth InsuranceUPCIC Entitiesand APPCIC have continued the election atof the 90% coverage level. We estimate the total mandatory FHCF coveragelayer will provide approximately $1.37$1.39 billion of coverage for UPCIC, and $22.8 million for APPCIC which complements and inures to the benefit of the Allopen Statesmarket coverage secured from private market reinsurers and discussedwe above.estimate the total mandatory FHCF layer will provide approximately $25.0 million of coverage for APPCIC, which inures to the benefit of the open market coverage secured from private reinsurers.

•To further insulate for future years, theUPCIC Insuranceand EntitiesAPPCIC have secured certain multi-year treaties, providing $352 million of catastrophe capacity with contractually agreed limits that extends portions of the catastropheextend coverage to include the 2026-20272027-2028 treaty year.period, of which $277 million of the capacity sits below the FHCF layer.

Results of Operations for the three months ended MarchJune 31,30, 2026, or second quarter, are compared to the same period last year, unless stated otherwise

Highlights for the three months ended MarchJune 31,30, 2026

•Net investment income increased in$2.96 themillion, firstor quarter of 202617.1%, to $19.5 million an increase of $3.4 million or 21.3%, compared to $16.1$20.2 million in the firstsecond quarter of 2026, compared with $17.3 million in the second quarter of 2025, duedriven toby an increase in thehigher book yieldyields and an increase inincreased invested assets.

•On January 7, 2026, the Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to $20.0 million of its outstanding shares of common stock through January 8, 2028. During the three months ended MarchJune 31,30, 2026, the Company repurchased 209,742121,808 shares for $4.5 million at an average price of $33.98$37.19 per share, totaling $7.1 million.share. As of MarchJune 31,30, 2026, $13.1$8.6 million remains under the share repurchase plan, which expires January 8, 2028.

•Book value per share was $20.95$22.89 at MarchJune 31,30, 2026, compared to $19.67 at December 31, 2025, an increase of 6.5%.16.4%.

•On FebruaryApril 4,10, 2026, the Company declared a quarterly cash dividend of $0.16 per share of common sharestock, was declared, with payment madepayable on MarchMay 6,15, 2026, to shareholders of record on May 8, 2026.

•Demotech reaffirmed its A rating for UPCIC and APPCIC on MarchJune 23,19, 2026.

Results of Operations for the three months ending MarchJune 31,30, 2026, are compared to the same period last year, unless stated otherwise.

Results of Operations—Three Months Ended MarchJune 31,30, 2026, Compared to Three Months Ended MarchJune 31,30, 2025

For the three months ended MarchJune 31,30, 2026, net income rosewas $59.2 million compared to $54.3 million from $41.4$35.1 million in 2025, with diluted EPS increasing to $1.88$2.04 from $1.44.$1.21. Growth in premiums earned, net, investment income, realized gains, and policyunrealized fees, combined with total lower operating costs and expenses,gains contributed to improved performance. HigherLower unrealizedrealized lossesgains and lower commission revenue impactedpartially resultsoffset inthese the first quarter of 2026.increases. While losses and LAE costs were reduced, these were partially offset by increases in acquisition costs and other operating costs and expenses. The net loss ratio declined to 63.9%64.8% from 70.5%72.3% in 2025, and the combined ratio was 89.7%,91.6%, down from 95.0%97.8% in 2025. No catastrophe events or prior-year reserve developments occurred in either period. See the “Overview—Trends and Geographical Distribution—Florida Trends” section for more information.