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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-03-03 · 84 added, 129 removed, 238 unchanged (47% of the section changed)

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2026 Annual Election Period Results

On January 13, 2025, the Company announced a 27% year-over-year growth of its MA membership during the most recent Annual Election Period ("AEP").

The Company entered 2025 with over 100,000 members, approximately 95% of whom are enrolled in Clover’s flagship PPO plans.

On January 14, 2026, the Company announced a 53% year-over-year growth of its MA membership during the most recent Annual Election Period.

The Company entered 2026 with over 153,000 members, over 97% of whom are enrolled in the Company's flagship PPO plans.

Geographic Presence

Beginning in 2025, our MA plans will be available in a total of 200 counties and 5 states.

Beginning in 2026, our MA plans will be available in a total of 203 counties and five states.

CMS Star Ratings

In October 2023, CMS initially released the Company’s 2024 Star ratings, which related to the 2022 measurement year and would have impacted the 2025 payment year.

For both of the Company's plans (PPO and HMO), CMS had awarded a rating of 3.0 Stars for the measurement year 2022, which represented a 0.5 Star rating decrease for both plans from the 2021 measurement year.

Subsequently, on June 14, 2024, the Company announced that CMS had recalculated the Company's 2024 Star ratings for its PPO Medicare Advantage plans for the 2025 payment year, and had increased such plans’ rating by 0.5 Star, to a revised rating of 3.5 Stars.

Pursuant to CMS’s Medicare Advantage Star ratings system, CMS annually awards between 1.0 and 5.0 Stars to Medicare Advantage plans based on performance in several categories.

In the calendar year 2024, the Company was paid on the basis of 3.5 Stars for both our PPO and HMO plans.

On October 10, 2024, the Company announced that CMS had increased the Star rating of its PPO Medicare Advantage plans to 4.0 Stars for 2025, which will affect payment year 2026.

In payment year 2026, the Company expects to experience a general 5% quality bonus increase in benchmark rates as a result of its PPO contract being rated 4.0 Stars, in accordance with CMS regulations.

Increased quality bonus payments enable the Company to further reinvest in more competitive benefits, which the Company believes will deliver greater value to its members while fueling continued membership growth.

On October 9, 2025, the Company announced that CMS has decreased the Star rating of its PPO Medicare Advantage plans to 3.5 Stars for Star rating year 2026, which will affect payment year 2027.

Additionally, CMS increased the rating of Clover’s HMO MA plan to 4.0 Stars.

As discussed earlier, as of December 31, 2024, over 95% of the Company's insurance members are members of our PPO Medicare Advantage Plans.

Counterpart Health

During the second quarter of 2024, the Company launched Counterpart Health, Inc., or ("Counterpart Health"), a subsidiary of the Company which houses a new software-as-a-service and tech enabled services solution to bring the power of Counterpart Assistant technology to external payors and providers serving the Medicare eligible population.

This external offering aims to equip clinician users with our already built, clinician-centric, and AI-powered care management platform.

Strategically, Counterpart Health aims to extend the benefits of data-driven proven technology and personalized care to a wider audience, enabling enhanced patient outcomes and reduced healthcare costs across the nation.

Counterpart Health is complementary to Clover Health, and enables the Company to deploy and expand the reach of its existing technology asset for new potential growth and high margin business opportunities, with low startup costs.

Revenue from our Counterpart Health SaaS and tech enabled services is included within Other income on our consolidated statements of operations and comprehensive loss.

We previously participated as a Direct Contracting Entity ("DCE") in the Centers for Medicare and Medicaid Services ("CMS") Accountable Care Organization Realizing Equity, Access, and Community Health Model ("ACO REACH Model" or "ACO REACH").

On December 1, 2023, the Company notified CMS that it will no longer participate as a REACH ACO in connection with the 2024 performance year.

The remaining activity recognized during 2024 directly relates to prior performance years with CMS.

As of January 1, 2024, this line of business met the definition of discontinued operations, and prior period amounts have been updated to conform to the current period presentation.

At December 31, 2024, the Company did not anticipate any further material activity related to its discontinued operations.

Refer to Note 22 "Discontinued Operations" in the accompanying notes to the consolidated financial statements included in this Form 10-K for additional information.

Currently over 97% of our insurance members are members of our PPO Medicare Advantage Plans.

Key Performance Measures

Starting in the first quarter of 2024, we manage our operations based on one reportable segment:

We manage our operations based on one reportable segment:

Through our Insurance segment, we provide PPO and HMO plans to Medicare Advantage members in several states.

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Total PMPM (1)

(amounts in thousands, except PMPM amounts)

(dollar amounts in thousands, except PMPM amounts)

Consolidated:

Total revenues $ 1,924,308 $ 1,498 $ 1,371,131 $ 1,418

Net medical claims incurred $ 1,568,406 $ 1,221 $ 1,006,327 $ 1,041

Consolidated Gross profit $ 355,902 $ 277 $ 364,804 $ 377

Adjusted SG&A $ 334,207 $ 260 $ 294,713 $ 305

Adjusted EBITDA $ 21,695 $ 17 $ 70,091 $ 73

Adjusted Net income from continuing operations $ 19,989 $ 16 $ 68,243 $ 71

Insurance Segment:

Insurance members at period end (#) 113,803 N/A 82,664 N/A

Premiums earned, gross $ 1,345,280 $ 1,392 $ 1,236,213 $ 1,250

Premiums earned, net $ 1,891,732 $ 1,472 $ 1,344,881 $ 1,391

Insurance medical claim expense incurred, gross $ 1,012,905 $ 1,048 $ 1,004,454 $ 1,016

Insurance Net medical claims incurred $ 1,618,219 $ 1,259 $ 1,010,289 $ 1,045

Medical care ratio, gross 75.3 % N/A 81.3 % N/A

Medical care ratio, net 75.1 % N/A 81.2 % N/A

Benefits expense ratio, gross 81.3 % N/A 86.5 % N/A

Benefits expense ratio, net 81.2 % N/A 86.5 % N/A

Adjusted SG&A $ 294,713 N/A $ 297,508 N/A

Adjusted EBITDA $ 70,091 N/A $ (41,555) N/A

Adjusted Net income (loss) from continuing operations

$ (48,883) N/A

Insurance Benefits expense ratio 90.9 % N/A 81.2 % N/A

Normalized Insurance benefits expense ratio 91.5 % N/A 84.2 % N/A

(1) Calculated per member per month ("PMPM") figures are based on the applicable amount divided by member months in the given period.

Member months represents the number of months members are enrolled in a Clover Health plan in the period.

Total revenues

Total revenues represents the sum of Premiums earned, net and Other income for a given period.

Premiums earned, net reflects the earned portion of premiums under our Medicare Advantage contracts with CMS, net of premiums ceded to reinsurers and inclusive of risk adjustment revenue.

Other income primarily consists of investment income and other ancillary revenues.

We believe Total revenues is a useful measure of the overall scale and growth of our business, as it captures the aggregate economic inflows generated from our Insurance operations and related activities.

Management uses Total revenues to evaluate period-over-period growth, assess the impact of membership levels and risk adjustment performance, analyze revenue trends relative to medical cost and operating expense trends, and support strategic planning and capital allocation decisions.

Membership and associated premiums earned and medical claim expenses

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We believe these data-driven insights lead to better care delivery as well as improved identification, documentation and management of members' chronic conditions, helping to lower PMPM medical claim expenses.

Premiums earned, gross.

Premiums earned, gross is the amount received, or to be received, for insurance policies written by us during a specific period of time without reduction for premiums ceded to reinsurance.

We believe premiums earned, gross provides useful insight into the gross economic benefit generated by our business operations and allows us to evaluate our underwriting performance without regard to changes in our underlying reinsurance structure.

Premiums earned, gross excludes the effects of premiums ceded to reinsurers, and therefore should not be used as a substitute for Premiums earned, net, Total revenues, or any other measure presented in accordance with GAAP.

Premiums earned, net

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The volume of our ceded earned premium is impacted by the level of our premiums earned, gross and any decision we make to adjust our reinsurance agreements.

Insurance gross medical claims incurred.

Insurance gross medical claims incurred reflects claims incurred, excluding amounts ceded to reinsurers, and the costs associated with processing those claims.

We believe gross medical claims incurred provides useful insight into the gross medical expense incurred by members and allows us to evaluate our underwriting performance without regard to changes in our underlying reinsurance structure.

Insurance gross medical claims incurred excludes the effects of medical claims and associated costs ceded to reinsurers, and therefore should not be used as a substitute for Net claims incurred, Total operating expenses, or any other measure presented in accordance with GAAP.

Insurance net medical claims incurred

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These expenses generally vary based on the total number of members and their utilization rate of our services.

Medical care ratio, gross and net.

We calculate our medical care ratio ("MCR") by dividing total Insurance medical claim expenses incurred by premiums earned, in each case on a gross or net basis, as the case may be, in a given period.

We believe our MCR is an indicator of our gross margin for our Insurance plans and the ability of our Clover Assistant platform to capture and analyze data over time to generate actionable insights for returning members to improve care and reduce medical expenses.

Non-GAAP Financial Measures

We use non-GAAP measures in this Form 10-K, including Insurance BER, Adjusted SG&A and Adjusted EBITDA.

We use non-GAAP measures in this Form 10-K, including Consolidated Gross profit, Adjusted SG&A, Adjusted EBITDA, and Adjusted Net income from continuing operations, and Insurance Benefits expense ratio ("BER") and Normalized Insurance BER.

These non-GAAP financial measures are provided to enhance the reader's understanding of Clover Health's past financial performance and our prospects for the future.

Clover Health's management team uses these non-GAAP financial measures in assessing Clover Health's performance, as well as in planning and forecasting future periods.

These non-GAAP financial measures are not computed according to generally accepted accounting principles in the United States ("GAAP"), and the methods we use to compute them may differ from the methods used by other companies.

These non-GAAP financial measures are not computed according to GAAP, and the methods we use to compute them may differ from the methods used by other companies.

Non-GAAP financial measures are supplemental to and should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

For a description of these non-GAAP financial measures, including the reasons management uses such measures, and the reconciliations of these non-GAAP financial measures to the comparable GAAP measures, please see "Benefits expense ratio, gross and net", "Adjusted SG&A" and "Adjusted EBITDA" below.

Benefits expense ratio, gross and net.

Benefits expense ratio ("Insurance BER") is a non-GAAP financial measure.

We calculate our Insurance BER by taking the total of Insurance net medical expenses incurred and quality improvements, and dividing that total by premiums earned on a net basis, in a given period.

Quality improvements include expenses associated with activities that improve health outcomes, as defined by the U.S.

Department of Health and Human Services ("HHS"), as well as those directly tied to enhancing healthcare quality, such as the Company's spend on health information technology, wellness and prevention programs, initiatives to reduce hospital readmissions, and our clinically focused Member Rewards program.

We believe our Insurance BER is useful to management, investors, and others because it offers a clearer and more accurate representation of our investment in healthcare quality and member engagement, and gives a comprehensive view of costs related to maintaining and improving the quality of care of our members, which is crucial for sustaining member satisfaction and adherence to treatment regimens.

The table below provides a reconciliation of Net medical claims incurred and Premiums earned, net, both of which are GAAP measures, to Insurance BER, a non-GAAP measure.

Year ended December 31,

(in thousands)

Net medical claims incurred, gross (GAAP):

$ 1,012,905 $ 1,004,454

Quality improvements

81,144 64,943

Benefits expense, gross (non-GAAP)

$ 1,094,049 $ 1,069,397

Premiums earned, gross (GAAP)

$ 1,345,280 $ 1,236,213

Benefits expense ratio, gross (non-GAAP)

81.3 % 86.5 %

For a description of these non-GAAP financial measures, including the reasons management uses such measures, and the reconciliations of these non-GAAP financial measures to the comparable GAAP measures, please see "Consolidated Gross profit", "Adjusted SG&A", "Adjusted EBITDA", Adjusted Net income from continuing operations, and "Benefits expense ratio & Normalized benefits expense ratio" below.

Consolidated Gross profit

Consolidated Gross profit represents net loss from continuing operations before salaries and benefits, general and administrative expenses, depreciation and amortization, premium deficiency reserve expense, restructuring costs, impairment of goodwill and other intangible assets, interest expense, change in fair value of warrants, and loss on investment.

We believe that Consolidated Gross profit provides management, investors, and others a useful view of consolidated business performance and is much more informative of operational results.

Accordingly, we believe that Consolidated Gross profit provides investors and others useful information to understand and evaluate our operating results in the same manner as our management and our board of directors.

Year ended December 31,

(in thousands)

Net medical claims incurred, net (GAAP):

$ 1,010,289 $ 1,003,683

Quality improvements

81,144 64,943

Benefits expense, net (non-GAAP)

Net loss from continuing operations (GAAP):

$ (85,549) $ (46,266)

Premiums earned, net (GAAP) $ 1,344,881 $ 1,235,769

Benefits expense ratio, net (non-GAAP)

Salaries and benefits 225,475 232,454

General and administrative expenses 214,270 176,480

Depreciation and amortization 1,686 1,331

Restructuring costs — 288

Change in fair value of warrants 20 50

Loss on investment — 467

Consolidated Gross profit (Non-GAAP)

$ 355,902 $ 364,804

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Total SG&A (GAAP) 439,745 408,934

408,934 440,246

Stock-based compensation (103,657) (114,331)

(114,331) (140,931)

Non-recurring legal expenses and settlements (1,881) 110

Adjusted SG&A (non-GAAP) $ 334,207 $ 294,713

$ 294,713 $ 297,508

Total revenues (GAAP) $ 1,924,308 $ 1,371,131

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Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure defined by us as net loss from continuing operations before depreciation and amortization, loss on investment, interest expense, change in fair value of warrants, stock-based compensation, premium deficiency reserve benefit, restructuring costs, impairment of goodwill and other intangible assets, and non-recurring legal expenses and settlements.

Adjusted EBITDA is a non-GAAP financial measure defined by us as net loss from continuing operations before depreciation and amortization, loss on investment, interest expense, change in fair value of warrants, stock-based compensation, premium deficiency reserve expense, restructuring (recoveries) costs, impairment of goodwill and other intangible assets, and non-recurring legal expenses and settlements.

Adjusted EBITDA is a key measure used by our management team and the board of directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operating plans.

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$ (85,549) $ (46,266)

Interest expense — 7

Depreciation and amortization 1,686 1,331

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Stock-based compensation 103,657 114,331

Premium deficiency reserve benefit — (7,239)

Restructuring costs — 288

Non-recurring legal expenses and settlements 1,881 (110)

Impairment of goodwill and other intangible assets — 15,945

Adjusted EBITDA (non-GAAP) $ 21,695 $ 70,091

Adjusted Net income (loss) from continuing operations

Adjusted Net income (loss) from continuing operations is a non-GAAP financial measure defined by us as net loss from continuing operations before stock-based compensation, premium deficiency reserve benefit, restructuring costs, non-recurring legal expenses and settlement, and impairment of goodwill and other intangible assets.

Adjusted Net income (loss) from continuing operations is a key measure used by our management team and the board of directors to understand and evaluate our operating performance and trends.

We believe that Adjusted Net income (loss) from continuing operations is helpful to investors in assessing the Company’s financial performance in the same manner as our management and our board of directors.

Adjusted Net income from continuing operations

Adjusted Net income from continuing operations is a non-GAAP financial measure defined by us as net loss from continuing operations before stock-based compensation, premium deficiency reserve benefit, restructuring costs, non-recurring legal expenses and settlement, and impairment of goodwill and other intangible assets.

Adjusted Net income from continuing operations is a key measure used by our management team and the board of directors to understand and evaluate our operating performance and trends.

We believe that Adjusted Net income from continuing operations is helpful to investors in assessing the Company’s financial performance in the same manner as our management and our board of directors.

Year ended December 31,

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Stock-based compensation 103,657 114,331

Premium deficiency reserve benefit — (7,239)

Restructuring costs — 288

Non-recurring legal expenses and settlements 1,881 (110)

Impairment of goodwill and other intangible assets — 15,945

Adjusted Net income (loss) from continuing operations (non-GAAP)

$ 68,243 $ (48,883)

Adjusted Net income from continuing operations (non-GAAP) $ 19,989 $ 68,243

Insurance Benefits expense ratio & Normalized Insurance Benefits expense ratio

Insurance Benefits expense ratio ("BER") and Normalized Insurance Benefits expense ratio are non-GAAP financial measures.

We calculate our BER by taking the total of Insurance net medical expenses incurred and quality improvements, and dividing that total by premiums earned on a net basis, in a given period.

Quality improvements include expenses associated with activities that improve health outcomes, as defined by the U.S.

We believe our BER is useful to management, investors, and others because it offers a clearer and more accurate representation of our investment in healthcare quality and member engagement, and gives a comprehensive view of costs related to maintaining and improving the quality of care of our members, which is crucial for sustaining member satisfaction and adherence to treatment regimens.

Furthermore, Normalized Insurance BER adjusts out activity related to prior period development.

Prior period development refers to changes in the Company’s Insurance Revenue and Insurance Medical claims levels from previous periods.

Management believes that Normalized Insurance BER presents a clearer representation of performance during the current period being presented.

The tables below provide reconciliations of Insurance Net medical claims incurred, net and Premiums earned, net which are GAAP measures, to Insurance BER and Normalized Insurance BER, which represent non-GAAP measures.

Year ended December 31,

(in thousands)

Net medical claims incurred, net (GAAP) $ 1,618,219 $ 1,010,289

Quality improvements 100,572 81,144

Insurance Benefits expense (non-GAAP) $ 1,718,791 $ 1,091,433

Premiums earned, net (GAAP) $ 1,891,732 $ 1,344,881

Insurance Benefits expense ratio (non-GAAP) 90.9 % 81.2 %

Prior period development 0.6 3.0

Normalized Insurance Benefits expense ratio (non-GAAP) 91.5 % 84.2 %

Results of Operations

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General and administrative expenses 214,270 176,480 37,790 21.4

Impairment of goodwill and other intangible assets

— 15,945 (15,945) *

Premium deficiency reserve benefit — (7,239) 7,239 *

Depreciation and amortization 1,686 1,331 355 26.7

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Loss from continuing operations (85,529) (45,749) (39,780) 87.0

(45,749) (205,329) 159,580 (77.7)

Change in fair value of warrants 20 50 (30) (60.0)

Interest expense — 7 (7) *

Loss on investment

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Net loss from continuing operations $ (85,549) $ (46,266) $ (39,283) 84.9 %

$ (46,266) $ (210,148) $ 163,882 (78.0) %

Net income (loss) from discontinued operations (Note 22 )

3,257 (3,213) 6,470 *

Net income from discontinued operations (Note 16 )

— 3,257 (3,257) *

Net loss $ (85,549) $ (43,009) $ (42,540) 98.9 %

* Not presented because the current or prior period amount is zero or the amount for the line item changed from a gain to a loss (or vice versa) and thus yields a result that is not meaningful.

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Premiums earned, net increased $546.9 million, or 41%, to $1,891.7 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The increase was primarily due to an increase in our risk adjustment revenue driving favorability as a result of the Company focusing on member retention.

The increase was primarily due to an increase in our average members over the period, which increased approximately 33%.

The remaining increase was due to an increase in our risk adjustment revenue as a result of the Company's high member retention rate.

Other income increased $6.3 million, or 24%, to $32.6 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The increase was primarily attributable to an increase in net investment income due to a higher interest rate environment as compared to the prior period.

The increase was primarily attributable to an increase in fair value of our equity investments.

Net medical claims incurred

Net medical claims incurred remained materially consistent for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Net medical claims incurred increased $562.1 million, or 56%, to $1,568.4 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The increase was primarily driven by growth in our average members during the period, which increased approximately 33% and an increase in our Part D cost sharing due to changes arising from the Inflation Reduction Act.

Additionally, prior year amounts were impacted by more favorable prior period developments as compared to the current year.

Salaries and benefits

Salaries and benefits decreased $7.0 million, or 3%, to $225.5 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.

This decrease was primarily driven by a decrease in share-based compensation related costs.

This decrease was primarily attributable to lower variable incentive compensation and stock-based compensation, partially offset by higher base salaries driven by headcount growth.

General and administrative expenses

General and administrative expenses decreased $6.6 million, or 4%, to $176.5 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.

The decrease was primarily driven by a decrease in legal, consulting and contractor related costs.

Restructuring costs

On April 17, 2023, the Company announced it would implement certain business transformation initiatives, including an agreement to move its core plan operations to UST HealthProof’s integrated technology platform and additional corporate restructuring actions.

The agreement with UST HealthProof includes the transition of certain of the Company’s plan operation functions in support of its Medicare Advantage members pursuant to a master services agreement.

In addition to the arrangement with UST HealthProof, the Company conducted a reduction in force to better align its Selling, General, and Administrative cost structure with its revenue base.

For the year ended December 31, 2024 the Company recorded $0.3 million of restructuring charges related to these business transformation initiatives, which consisted of employee termination benefits, vendor related costs, and other costs.

Refer to Note 15 "Restructuring Costs" of the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

Loss on investment

In February 2022, Character Biosciences completed a private capital transaction.

After the Company evaluated its ownership interest in Character Biosciences, it began applying the equity method of accounting.

From this point forward, the Company recognizes its proportionate share of the gain/loss on equity of that entity during the period.

For the year ended December 31, 2024, the Company recognized $0.5 million in shared losses.

Refer to Note 12 "Variable Interest Entity and Equity Method of Accounting" of the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

General and administrative expenses increased $37.8 million, or 21%, to $214.3 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The increase was primarily driven by higher professional fees and higher broker fees, both being driven by membership growth during the most recent annual enrollment period.

Liquidity and Capital Resources

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Cash Flows Data:

Net cash provided by (used in) operating activities from continuing operations

$ 82,450 $ (35,148)

Net cash (used in) provided by operating activities from continuing operations $ (66,934) $ 82,450

Net cash provided by investing activities 4,076 565

1 unchanged sentence

(53,384) (17,361)

Increase in cash, cash equivalents, and restricted cash from continuing operations

$ 65,654 $ 99,795

(Decrease) increase in cash, cash equivalents, and restricted cash from continuing operations $ (116,242) $ 65,654

Cash Requirements

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Our primary uses of cash from operating activities are payments for medical benefits and payments of operating expenses.

For the year ended December 31, 2024, Net cash provided by operating activities was $82.5 million, which reflects a Net loss from continuing operations of $46.3 million.

Non-cash activities primarily included a $114.3 million charge to Stock-based compensation expense.

For the year ended December 31, 2025, Net cash used in operating activities was $66.9 million, which reflects a Net loss from continuing operations of $85.5 million.

Non-cash activities primarily included a $140.9 million charge to Stock-based compensation expense, $15.9 million Goodwill and intangible asset impairment, $7.2 million amortization of the 2022 Premium deficiency reserve, and a $4.7 million Loss on investment.

Non-cash activities primarily included a $103.7 million charge to Stock-based compensation expense.

For the year ended December 31, 2024, Net cash provided by operating activities was $82.5 million, which reflects a Net loss from continuing operations of $46.3 million.

Non-cash activities primarily included a $114.3 million charge to Stock-based compensation expense, and a $0.5 million Loss on investment.

Investing Activities

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Financing Activities

Net cash used in financing activities for the year ended December 31, 2024 of $17.4 million was primarily the result of the acquisition of $16.5 million in Treasury stock and repurchases of $1.8 million of Class A Common stock.

Net cash used in financing activities for the year ended December 31, 2023 of $5.1 million was primarily the result of the acquisition of $6.2 million in Treasury stock.

Net cash used in financing activities for the year ended December 31, 2025 of $53.4 million was primarily the result of cash paid for shares withheld related to stock-based compensation totaling $36.9 million and class A common share repurchases totaling $18.3 million.

Net cash used in financing activities for the year ended December 31, 2024 of $17.4 million was primarily the result of was primarily the result of cash paid for shares withheld related to stock-based compensation totaling $16.5 million and class A common share repurchases totaling $1.8 million.

Financing Arrangements

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There were no other material cash requirements from known contractual obligations and commitments at December 31, 2025.

For additional information regarding our remaining estimated contractual obligations and commitments, see Note 13 "Commitments and Contingencies" and Note 22 "Discontinued Operations" in the accompanying notes to the consolidated financial statements included in this Form 10-K.

For additional information regarding our remaining estimated contractual obligations and commitments, see Note 13 "Commitments and Contingencies" in the accompanying notes to the consolidated financial statements included in this Form 10-K.

Indemnification Agreements

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We continually adjust our completion factor with our knowledge of recent events that may impact current completion factors when establishing our reserves.

Because our reserving practice is to consistently recognize the actuarial best estimate using an assumption of moderately adverse conditions as required by actuarial standards, there is a reasonable possibility that there could be variances between actual completion factors and those assumed in our December 31, 2024 and 2023 unpaid claim estimates.

Actuarial standards require the use of assumptions based on moderately adverse experience, and as such, a provision for adverse deviation ("PAD") is recognized on current reserves and released on prior reserves.

Actuarial standards require the use of assumptions based on moderately adverse experience, and as such, a provision for adverse deviation is recognized on current reserves and released on prior reserves.

For further discussion of our reserving methodology, including our use of completion factors to estimate IBNR, refer to Note 2 "Summary of Significant Accounting Policies" in the consolidated financial statements included in this Form 10-K.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis