CLOVER HEALTH INVESTMENTS, CORP. /DE 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the result of changes in equity prices, interest rates, foreign currency exchange rates and commodity prices. Our consolidated balance sheets include assets and liabilities with estimated fair values that are subject to market risk. Our primary market risk has been interest rate risk associated with investments in instruments with fixed maturities. We do not have material exposure to commodity risk. We are also exposed to credit risk on our investment portfolio. We manage the exposure to credit risk in our portfolio by investing in high quality securities and diversifying our holdings. We monitor our investment portfolio to ensure that credit risk does not exceed prudent levels. Our investment policy is focused on preservation of capital, liquidity and earning a modest yield. Substantially all of our investment portfolio is invested in U.S. Treasury fixed maturity securities. At December 31, 2025, none of our fixed maturity securities portfolio was unrated or rated below investment grade. Inflation Risk The United States economy has experienced elevated levels of inflation in recent years, and while inflation has moderated from prior peaks, it remains above historical norms and the Federal Reserve’s long-term target. Ongoing inflationary pressures and changes in interest rates could adversely affect our operating results if increases in medical costs, prescription drug prices, provider reimbursement rates, employee compensation, or other operating expenses are not fully offset by corresponding increases in Medicare Advantage benchmark rates or other forms of reimbursement. As a Medicare Advantage insurer, we are required to submit bids to CMS based on projected medical and administrative costs for future contract periods, which limits our ability to adjust pricing in the near term in response to unanticipated inflationary trends. In addition, inflationary conditions and interest rate volatility may affect the fair value and returns of our investment portfolio, which consists primarily of fixed-income securities, and could contribute to volatility in accumulated other comprehensive income or impact statutory capital levels of our regulated insurance subsidiaries. Prolonged inflationary conditions could place pressure on margins, liquidity, or capital if cost trends or market conditions evolve unfavorably relative to reimbursement adjustments. 67