What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-02 compared with 2025-03-03 · 127 added, 110 removed, 379 unchanged (38% of the section changed)

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and our business mix is principally primary insurance and balanced between E&S and admitted markets.

A small portion of our business is specialty reinsurance (principally agriculture and credit) which is similarly focused on attractive specialty classes where we believe it is more efficient to approach these classes through reinsurance given factors such as cost of entry, including the costs of geographic expansion.

A portion of our business is specialty reinsurance (principally agriculture and credit) which is similarly focused on attractive specialty classes where we believe it is more efficient to approach these classes through reinsurance given factors such as cost of entry, including the costs of geographic expansion.

All of these factors enable us to respond to market opportunities and dislocations by deploying capital with attractive risk-adjusted returns.

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We believe that the principles underlying our strategy are key to achieving and sustaining best-in-class underwriting results through P&C insurance pricing cycles.

We consistently

strive for excellence in risk selection, pricing, and claims outcomes, and to amplify these critical functions with the use of advanced technology and analytics.

We consistently strive for excellence in risk selection, pricing, and claims outcomes, and to amplify these critical functions with the use of advanced technology and analytics.

During the first quarter of 2025, we updated our underwriting divisions to align with how management currently oversees the business, allocates resources and evaluates operating performance.

We added a ninth division, Agriculture and Credit (Re)insurance, which includes the Global Agriculture unit, previously reported with Global Property, and the Mortgage and Credit units, and focuses on specialty classes for which reinsurance provides a more attractive market entry.

The Industry Solutions division is now the Construction & Energy Solutions division and the Inland Marine unit is now included in the Transactional E&S division.

Programs is now Specialty Programs.

Prior reporting periods have been conformed to reflect the new presentation.

On September 2, 2025, we entered into two share purchase agreements (the "Apollo Majority SPAs") with institutional and management shareholders, respectively, of Apollo Group Holdings Limited ("Apollo") (the "Majority Sellers").

Pursuant to the Apollo Majority SPAs and in accordance with the terms and subject to the conditions therein, we agreed to acquire all of the issued shares of Apollo held by the Majority Sellers, representing approximately 87% of the issued share capital of Apollo.

In addition, closing of the transaction ("Closing") was conditioned upon our acquiring 100% of the issued share capital of Apollo (the “Acquisition”) at Closing pursuant to additional short-form share purchase agreements (the "Apollo Minority SPAs" and together with the Apollo Majority SPAs, the "Apollo SPAs") with the remaining minority shareholders of Apollo (the "Minority Sellers" and together with the Majority Sellers, the "Sellers").

The consideration for the entire issued share capital of Apollo under the Apollo SPAs was $555.0 million, which included (i) $371.0 million in cash (the “Cash Consideration”) and (ii) the issuance of 3,679,332 shares of the Company’s common stock.

In connection with the Apollo SPAs, on December 30, 2025, we entered into a Term Loan Credit Agreement (the “Facility”) we the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”), Barclays Bank PLC, as Administrative Agent (the “Agent”), and the Agent, Truist Securities, Inc., Citizens Bank, N.A.

and Texas Capital Bank as joint lead arrangers, joint book runners and co-syndication agents for the Tranche B Term Facility.

The facility includes (a) an unsecured senior delayed draw term loan facility in the aggregate principal amount of $150.0 million (the “Tranche A Term Facility”) and (b) an additional unsecured senior delayed draw term loan facility in the aggregate principal of $150.0 million.

The acquisition closed on January 1, 2026.

The consideration for the transaction was satisfied by the issuance of common stock of the Company to certain sellers and the remainder in cash.

As of December 31, 2025, we recognized $14.0 million in transaction expenses associated with the transaction.

Results of Operations

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Net investment income $ 83,619 $ 80,600

Net investment gains (losses) $ 6,256 $ 11,072

Net investment gains $ 22,149 $ 6,342

Income before income taxes $ 216,424 $ 152,739

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Adjusted loss and LAE ratio (1)

62.3 % 62.3 %

Expense ratio 28.9 % 28.6 %

Expense ratio NM (2)

Adjusted combined ratio (1)

91.2 % 90.9 %

Return on equity 18.9 % 16.3 %

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(1) See “Reconciliation of Non-GAAP Financial Measures” in this Item 7

(2) Not meaningful

Reconciliation of Non-GAAP Financial Measures

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Income as reported $ 216,424 $ 170,028 $ 152,739 $ 118,828

Net investment gains (losses) 6,256 4,942 11,072 8,747

Net investment gains 22,149 17,401 6,342 5,010

Net impact of LPT — — (11,598) (9,162)

Other (loss) income (167) (132) (632) (499)

Transaction costs (14,019) (11,014) — —

Other loss (587) (461) (167) (132)

Other expenses (4,162) (3,270) (4,392) (3,470)

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Amortization expense 1,636 2,007

Transaction costs 14,019 —

Other expenses 4,162 4,392

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Adjusted Loss Ratio / Adjusted Combined Ratio

The following table provides a reconciliation of the adjusted loss and LAE ratio and adjusted combined ratio to the loss and LAE ratio and combined ratio for the years ended December 31, 2024 and 2023:

The following table provides a reconciliation of the adjusted loss and LAE ratio and adjusted combined ratio to the loss and LAE ratio and combined ratio for the year ended December 31, 2024:

($ in thousands) 2024

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The following tables present gross written premiums by underwriting division for the years ended December 31, 2025 and 2024:

Years Ended December 31,

($ in thousands) 2025 2024 Change % Change

Industry Solutions 317,198 305,476 11,722 3.8 %

Global Property & Agriculture $ 311,402 $ 273,191 $ 38,211 14.0 %

Captives 241,902 167,624 74,278 44.3 %

Programs 218,407 178,726 39,681 22.2 %

Accident & Health $ 254,102 $ 173,073 $ 81,029 46.8 %

Transactional E&S 169,053 122,508 46,545 38.0 %

Agriculture and Credit (Re)insurance 346,212 118,070 228,142 193.2 %

Captives 275,694 241,902 33,792 14.0 %

Construction & Energy Solutions 274,318 296,582 (22,264) (7.5 %)

Global Property 178,128 201,796 (23,668) (11.7 %)

Professional Lines 149,231 159,785 (10,554) (6.6 %)

Specialty Programs 322,705 218,407 104,298 47.8 %

Surety 168,148 143,965 24,183 16.8 %

Transactional E&S 197,779 189,669 8,110 4.3 %

Total gross written premiums (1)

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(1) Excludes exited business

The year-over-year increase in gross written premiums, when compared to 2023, was driven by double-digit premium growth from our captives, surety, transactional E&S, programs and global property & agriculture underwriting divisions.

We continued to broaden and diversify our product portfolio during 2024, growing in areas that are less exposed to the P&C cycles.

The gross written premium increases were primarily driven by (i) new captive members and growth in existing captives, (ii) new product offerings, including participation in the Small Business Administration (“SBA”) Bond Guarantee Program, and regional expansion in surety, (iii) new business and rate in transactional E&S, (iv) the addition of four new programs, including Aviation.

and (iv) new business in global agriculture.

Slightly offsetting the gross written premium increases were (i) downward pricing pressure in the global property market, and (ii) our intentional actions to address profitability in commercial auto.

The year-over-year increase of $423.1 million in gross written premiums, when compared to 2024, was primarily driven by growth from the agriculture and credit (re)insurance division due to (i) new opportunities in dairy and livestock and crop, and (ii) growth in our credit portfolio which we started writing in the fourth quarter of 2024.

Specialty programs, accident & health, surety and captives also contributed meaningfully to the growth in 2025.

The growth in specialty programs was primarily due to the addition of two new programs in 2025.

The growth in accident and health was primarily driven by the acquisition of more high deductible accident and health captives when compared to 2024.

The increase in

surety was primarily due to market expansion in both commercial and contract bonds.

The growth in the captives division was primarily due to rate increases and new business.

Partially offsetting the growth in gross written premiums were decreases in our global property, construction and energy solutions and professional lines divisions due to (i) continued downward pricing pressure in the global property market, although retention remained steady, and (ii) the exit of unprofitable lines in construction and energy solutions and professional lines during 2025.

Net written premiums were $1,406.2 million compared to $1,123.6 million in 2024, an increase of $282.7 million, or 25.2%.

The increase in net written premiums was primarily driven by the same reasons that drove the increases in gross written premiums discussed above.

The increase in net written premiums was primarily driven by the same reasons that drove the increase in gross written premiums discussed above.

Net earned premiums for 2025 were $1,304.5 million compared to $1,056.7 million for 2024, an increase of $247.8 million, or 23.4%.

The increase in net earned premiums was primarily driven by the same reasons that drove the increases in gross written premiums discussed above.

The increase in net earned premiums was primarily driven by the same reasons that drove the increase in gross written premiums discussed above.

For additional information regarding our reinsurance programs, see the discussion included in “Item 1 Business - Reinsurance” .

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The following tables set forth the components of the loss and LAE ratios and adjusted loss and LAE ratios for the years ended December 31, 2025 and 2024:

Twelve months ended December 31,

($ in thousands) Losses

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15,548 1.2 % 17,954 1.7 %

Prior accident year development - LPT

11,598 1.1 % (1,427) (0.2)%

Prior accident year development (7,475) (0.6)% 11,598 1.1%

Total losses and LAE $ 795,022 60.9 % $ 669,809 63.4 %

Adjusted losses and LAE (2) :

Non-cat loss and LAE

$ 640,257 60.6 % $ 504,664 60.9 %

Cat loss and LAE (1)

17,954 1.7 % 12,000 1.4 %

Total adjusted losses and LAE (2)

$ 658,211 62.3 % $ 516,664 62.3 %

(1) Current accident year

(2) See "Reconciliation of Non-GAAP Financial Measures" included in this Item 2

The 2024 loss ratio increased 1.3 points, respectively, when compared to 2023, primarily due to the net impact of prior accident year development related to the LPT, which added 1.1 points to the loss ratio.

The 2025 loss ratio improved 2.5 points when compared to 2024, primarily due to favorable prior accident year development compared to adverse development due to the net impact of the LPT in 2024.

The non-cat loss and LAE ratio for 2025 improved 0.3 points when compared to 2024, primarily driven by the shift in the mix of business.

The 2024 cat loss and LAE ratio increased 0.3 points when compared to 2023, primarily due to catastrophe losses from Hurricanes Helene and Beryl in the third quarter of 2024 and Hurricane Milton in the fourth quarter of 2024.

The 2025 cat loss and LAE ratio improved 0.5 points when compared to 2024, which was impacted by Hurricanes Helene and Beryl in the third quarter of 2024 and Hurricane Milton in the fourth quarter of 2024.

Losses and LAE Development

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2022 2,300 (1,479)

2023 (16,515) 1,300

2024 (5,658) —

Total $ (7,475) $ 25,728

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Reserve development on losses excluding losses subject to LPT $ (7,475) $ 428

In 2024, the Company transitioned from evaluating reserves on a policy year basis to an accident year basis which results in earlier recognition of underlying claim trends, better alignment of exposure to risks, and adherence to commonly used industry best practices.

In prior years, the Company’s methodology allocated IBNR from its policy year analysis to accident year.

As a result of transitioning to accident year, IBNR within short-tail/monoline specialty lines, multi-line solutions, and exited lines was reallocated for the years ended December 31, 2023, 2022, 2021 and 2020, and certain amounts have been conformed to the current year presentation.

For the year ended December 31, 2024, the Company recognized adverse development related to prior years’ loss and loss expense reserves of $25.7 million;

For the year ended December 31, 2025, we recognized favorable development related to prior years’ loss and loss expense reserves of $7.5 million due to favorable development of $24.6 million and $5.3 million in short-tail/monoline specialty lines and multi-line solutions, respectively, partially offset by $22.4 million of adverse development in exited lines.

The adverse development is primarily attributable to commercial auto and excess over auto in divisions that we have non-renewed or significantly reduced our exposure over the past three years.

This was offset by favorable development in surety and property.

For the year ended December 31, 2024, we recognized adverse development related to prior years’ loss and loss expense reserves of $25.7 million;

$10.1 million and $15.2 million in multi-line solutions and exited lines, respectively, were related to losses previously subject to the LPT from accident years 2018 and prior.

During the year ended December 31, 2023, the Company recognized adverse development related to prior years’ loss and loss expense reserves of $10.8 million.

Adverse development of $11.7 million in multi-line solutions was driven by

greater than expected severity in auto, general, and excess liability lines of business primarily from accident years 2020 to 2022.

The adverse development was partially offset by favorable development in short-tail/monoline specialty lines.

The favorable development was in the property line of business primarily from accident years 2021 and 2022.

Expense Ratio

The following tables set forth the components of the expense ratios for the years ended December 31, 2025 and 2024:

Twelve months ended December 31,

($ in thousands) Expenses % of

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Total net expenses $ 370,504 28.4 % $ 305,054 28.9 %

The expense ratio for 2024 increased 0.3 points when compared 2023, primarily driven by the business mix shift partially offset by earnings leverage.

The expense ratios for the periods presented exclude the impact of IPO related stock compensation and secondary offering expenses, which are reported in other expenses in our consolidated statements of operations and comprehensive income.

The expense ratio for 2025 improved 0.5 points when compared to 2024, primarily due to earnings leverage, partially offset by higher acquisition costs due to the business mix shift.

Investment Results

Beginning January 1, 2024, we simplified the investment portfolio classifications to align with our strategy and the underlying risk characteristics of the portfolio.

The prior period has been reclassified to conform to the current period presentation.

The following table sets forth the components of net investment income and net investment gains (losses) for the years ended December 31, 2025 and 2024:

Twelve months ended December 31,

$ in thousands 2025 2024

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Net investment income $ 83,619 $ 80,600

Net unrealized gains on securities still held

Net unrealized (losses) gains on securities still held

$ (1,555) $ 7,921

Net realized losses (1,665) (58)

Net realized gains (losses) 23,704 (1,579)

Net investment gains $ 22,149 $ 6,342

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The increase in income from our fixed income portfolio for 2025, when compared to 2024, was due to (i) a larger asset base as we continued to increase our allocation to this part of our investment portfolio and (ii) a higher book yield of 5.4% at December 31, 2025 compared to 5.2% at December 31, 2024.

The increase in income from short-term investments & cash and cash equivalents for 2024 when compared to 2023 was due to higher investment yields and a larger asset base.

The fair value of our alternative and strategic investments portfolio for 2024 increased when compared to 2023 due to an increase in the fair value of limited partnership investments.

The decrease in income from short-term investments & cash and cash equivalents for 2025 when compared to 2024 was due to an overall decrease in yields.

The decrease in income from our alternative and strategic investments portfolio in 2025 when compared to 2024 due to a decline in the fair value of limited partnership investments.

The decrease in income from equities was due to the sale of the equity portfolio in the third quarter of 2025.

Composition of Investment Portfolio

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Total fixed income portfolio $ 1,866,205 100.0 % $ 1,318,708 100.0 %

The weighted average credit rating of our available-for-sale fixed income portfolio was “AA-” by Standard & Poor’s Financial Services, LLC (“Standard & Poor’s”) at December 31, 2024 and 2023.

The following table sets forth the credit quality of our available-for-sale fixed income portfolio at December 31, 2024 and 2023, as rated by Standard & Poor’s or equivalent designation:

The weighted average credit rating of our available-for-sale fixed income portfolio was “A+” at December 31, 2025 and “AA-” at December 31, 2024.

The following table sets forth the credit quality of our available-for-sale fixed income portfolio at December 31, 2025 and 2024:

($ in thousands) Fair Value % of Total Fair Value % of Total

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The average duration of our fixed income portfolio was approximately 3.60 years and 4.34 years, respectively, as of December 31, 2025 and 2024.

The equities portfolio primarily consists of domestic preferred stocks, common equities, exchange traded funds, limited partnerships, limited liability corporations and other types of equity interests, 100.0% of which are publicly traded.

The equities portfolio primarily consisted of domestic preferred stocks, common equities, exchange traded funds, limited partnerships, limited liability corporations and other types of equity interests, 100.0% of which were publicly traded.

During the third quarter of 2025, we sold almost all of our equities portfolio, retaining only our preferred stocks.

The following table sets forth the components of our equities portfolio by security type at December 31, 2025 and 2024:

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Our risk management strategy and investment policy is to invest primarily in debt instruments of high credit quality issuers and to limit the amount of credit exposure with respect to particular ratings categories and any one issuer.

At December 31, 2024, our core fixed income portfolio had an average rating of “AA-,” with approximately 81.5% of securities in that portfolio rated “A” or better by at least one nationally recognized rating organization.

At December 31, 2025, our fixed income portfolio had an average rating of “A+,” with approximately 78.5% of securities in that portfolio rated “A” or better by at least one nationally recognized rating organization.

Our policy is to invest in investment grade fixed income securities which are high quality and liquid, providing a stable income stream, supplemented by opportunistic fixed income and equity securities, with the objective of further enhancing the portfolio’s diversification and risk-adjusted returns.

At December 31, 2024, approximately 1.7% of our core fixed income portfolio was unrated or rated below investment-grade.

At December 31, 2025, approximately 1.1% of our fixed income portfolio was unrated or rated below investment-grade.

Through our investment managers, we monitor the financial condition of all of the issuers of securities in our portfolio.

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Fluctuations in interest rates have a direct effect on the market valuation of these securities.

When market interest rates rise, the fair value of our securities decreases.

When market interest rates rise,

the fair value of our securities decreases.

Conversely, as interest rates fall, the fair value of our securities increases.

manage this interest rate risk by investing in securities with varied maturity dates and by managing the duration of our investment portfolio in directional relation to the duration of our reserves.

We manage this interest rate risk by investing in securities with varied maturity dates and by managing the duration of our investment portfolio in directional relation to the duration of our reserves.

Expressed in years, duration is the weighted average payment period of cash flows, where the weighting is based on the present value of the cash flows.

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At December 31, 2025, approximately 0.1% of the fair value of our investment portfolio (excluding cash and cash equivalents and short-term investments) was invested in equity securities.

We manage equity price risk through portfolio diversification and maintain a tail-risk management strategy that is designed to provide some protection for the equity portfolio if there is a significant decline in the S&P 500 within a 30 day period.

During the third quarter of 2025, we sold almost all of our equities portfolio, retaining only our preferred stocks.

Income tax expense for the year ended December 31, 2025 was $46.4 million, compared to $33.9 million, for the year ended December 31, 2024.

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We cede, or pay out, part of the premiums we receive to our reinsurers and collect cash back when losses subject to our reinsurance coverage are paid.

The timing of our cash flows from operating activities can vary among periods due to the timing by which payments are made or received.

The timing of our cash flows from operating activities can vary amongst periods due to the timing by which payments are made or received.

Some of our payments and receipts, including loss settlements and subsequent reinsurance receipts, can be significant, and as a result their timing can influence cash flows from operating activities in any given period.

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Change in cash and cash equivalents and restricted cash $ 41,589 $ 57,189

The decrease in cash provided by operating activities in 2024 when compared to 2023 was primarily due an increase in cash outflows from our net reinsurance recoverables and net premiums receivables.

The increase in cash provided by operating activities in 2025 when compared to 2024 was primarily due to an increase in cash inflows from our insurance operations.

Cash from operations can vary from period to period due to the timing of premium receipts, claim payments and reinsurance activity.

Cash flows from operations in each of the past two years were used primarily to fund investing activities.

Net cash used in investing activities in 2024 was primarily driven by purchases of fixed maturity securities, partially offset by sales and maturities of investment securities and sales of short-term investments.

Net cash used in investing activities in 2023 was primarily driven by purchases of fixed maturity securities.

Net cash used in financing activities in 2024 was driven by net payments on debt.

Net cash used in investing activities in 2025 was primarily driven by purchases of fixed maturity securities, partially offset by sales and maturities of investment securities.

Net cash used in investing activities in 2024 was driven by

purchases of fixed maturity securities, partially offset by sales and maturities of investment securities and sales of short-term investments.

Credit Agreements

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The FHLB Loan is fully secured by a pledge of specific investment securities of HSIC.

We used the proceeds to fund the redemption of the March 15, 2024 draw on the Revolving Credit Facility and redeemed $7.0 million of the March 29, 2023 draw on the Revolving Credit Facility (see “Revolving Credit Facility” below for additional information regarding the redemption).

Revolving Credit Facility

On March 29, 2023, we entered into an unsecured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of participating banks.

The Revolving Credit Facility provides us with up to a $150.0 million revolving credit facility and a letter of credit sub-facility of up to $30.0 million.

On March 14, 2024, we drew $50.0 million on the Revolving Credit Facility and used the proceeds and existing cash to fund the redemption of the Debentures (see “Debentures” below for additional information regarding the redemption).

On August 30, 2024, we fully redeemed the March 15, 2024 draw on the Revolving Credit Facility and redeemed $7.0 million of the March 29, 2023 draw on the Revolving Credit Facility.

As of December 31, 2024, we had $43.0 million outstanding under the Revolving Credit Facility with another $107.0 million of undrawn capacity.

We used the proceeds to fund redemptions of the draws on the 2023 Revolving Credit Facility (see “Revolving Credit Facility” below for additional information regarding the redemption).

Term Loan Facility

During the fourth quarter of 2025, we entered into a Term Loan Credit Agreement (the “Term Loan Facility”) with a syndicate of participating banks The Term Loan Facility includes (a) an unsecured senior delayed draw term loan facility (“DDTL”) in the aggregate principal amount of $150.0 million (the “Tranche A DDTL”) and (b) an additional unsecured senior DDTL in the aggregate principal amount of $150.0 million (the “Tranche B DDTL”) and together with the Tranche A DDTL, the “Term Loan Facility”).

We used the Term Loan Facility to fund a portion of the consideration of the acquisition of Apollo Group Holdings Limited (“Apollo”) and related transaction fees and expenses.

Amounts drawn under the Term Loan Facility will bear interest at either term SOFR plus a margin, which will range from 150 basis points to 190 basis points, or the base rate plus a margin, which will range from 50 basis points to 90 basis points, each depending on our debt to capitalization ratio.

SOFR will be calculated using a SOFR floor of 0.00% and a credit spread adjustment of 0.10%.

The base rate will be the highest of (i) the Agent’s then-current prime lending rate, (ii) the Federal Funds Rate plus 0.50%, (iii) SOFR plus 1.00% and (iv) zero percent (0%).

In addition, we will also pay a fee ranging from 0.20% to 0.35% on average daily undrawn amounts under the Facility, depending on our debt to capitalization ratio.

The Tranche A DDTL matures on January 1, 2028 and the Tranche B DDTL matures on July 2, 2029.

On December 30, 2025, we drew $150 million of the Tranche A DDTL and $150 million of the Tranche B DDTL for the acquisition of Apollo on January 1, 2026.

The Term Loan Facility includes customary covenants, including certain limitations on the incurrence by us of additional indebtedness exceeding $10.0 million and on our ability to make distributions to our stockholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants, including financial covenants relating to our minimum consolidated net worth, maximum total debt to capitalization, minimum A.M.

Best rating and minimum liquidity, as well as customary events of default.

As of December 31, 2025, we were in compliance with all covenants.

The Term Loan Facility is unsecured.

In connection with the Credit Agreement, during the fourth quarter of 2025, we and the subsidiary guarantors party thereto, entered into a guaranty agreement, pursuant to which our obligations under the Term Loan Facility are guaranteed by us and our existing wholly-owned subsidiaries and subsequently acquired or organized subsidiaries, excluding insurance company subsidiaries and subject to certain other exceptions.

Revolving Credit Facilities

During the fourth quarter of 2025, we entered into a Credit Agreement (the “Revolving Credit Facility”) with a syndicate of participating banks.

The Revolving Credit Facility is unsecured and provided us with up to an initial maximum principal amount of $150.0 million which was increased to $250.0 million on the closing date of our acquisition of Apollo.

Also, during the fourth quarter of 2025, we amended the Revolving Credit Facility to permit the funding of certain revolving loans in connection with the acquisition of Apollo, among other things.

We initially drew $43.0 million, which was used to redeem our prior revolving credit facility (described below).

On December 30, 2025, we drew an additional $71.5 million which was used for the consideration paid for the acquisition.

The proceeds from the draws on the Term Loan Facility and the draw of the Revolving Credit Facility are presented net with the liabilities on the Consolidated Balance Sheets for the year ended December 31, 2025.

The proceeds were used for the acquisition of Apollo on January 1, 2026.

Interest on the Revolving Credit Facility is payable quarterly.

The interest rate on the Revolving Credit Facility is the SOFR plus a margin of between 150 and 190 basis points based on the ratio of debt to total capital and a credit spread adjustment of 10 basis points.

At December 31, 2024, the six-month SOFR on the Revolving Credit Facility was 4.25%, plus a margin of 1.60%.

Amounts drawn under the Facility bear interest at either term SOFR plus a margin, which range from 150 and 190 basis points, or the base rate plus a margin, which range from 50 basis points to 90 basis points, each depending on our debt to capitalization ratio.

SOFR will be calculated using a SOFR floor of 0.00% and a credit spread adjustment of 0.10%.

The base rate will be the highest of (i) the Agent’s then current prime lending rate, (ii) the Federal Funds Rate plus 0.50%, (iii) SOFR plus 1.00% and (iv) zero percent (0%).

we will also pay a fee ranging from 0.20% to 0.35% on average daily undrawn amounts under the Facility, depending on our debt to capitalization ratio.

The availability period under the Facility will terminate on November 12, 2030.

We are subject to covenants on the Revolving Credit Facility based on minimum net worth, maximum debt to capital ratio, minimum A.M.

Best Rating and minimum liquidity.

As of December 31, 2024, we are in compliance with all covenants.

In August 2006, we received $58.0 million of proceeds from a debenture offering through a statutory trust, Delos Capital Trust (the “Trust”).

The sole asset of the Trust consists of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Trust Preferred”) with a principal amount of $59.8 million issued by us and cash of $1.8 million from the issuance of Trust common shares purchased by us equal to 3% of the Trust capitalization.

On March 15, 2024, the Company redeemed the Debentures and paid $1.4 million of accrued interest.

Subordinated Debt

In May 2019, we issued unsecured subordinated notes (the “Notes”) with an aggregate principal amount of $20.0 million.

Interest on the subordinated notes is 7.25% fixed for the first eight years and 8.25% fixed thereafter.

Early retirement of the debt ahead of the eight-year commitment requires all interest payments to be paid in full, as well as the return of all capital.

Principal payment is due at maturity on May 24, 2039 and interest is payable quarterly.

At December 31, 2024 the ratio of total debt outstanding, including the FHLB Loan, the Revolving Credit Facility and the Notes, to total capitalization (defined as total debt plus stockholders’ equity) was 13.1% and at December 31, 2023, the ratio of total debt outstanding, including the Term Loan, the Revolver, the Trust Preferred and the Notes, to total capitalization was 16.3%.

Best Rating and minimum liquidity, as well as customary events of default.

As of December 31, 2025, we were in compliance with all covenants.

During the first quarter of 2023, we entered into an agreement to obtain a unsecured revolving credit facility (the “2023 Revolving Credit Facility”) with a syndicate of participating banks.

The 2023 Revolving Credit Facility provided us with up to a $150.0 million revolving credit facility and a letter of credit sub-facility of up to $30.0 million.

On November 13, 2025, we redeemed the 2023 Revolving Credit Facility, paid $0.3 million of accrued interest and recognized $0.6 million of expense for the remaining unamortized deferred financing costs.

In May 2019, we entered into an agreement to issue unsecured subordinated notes (the “Notes”) with an aggregate principal amount of $20.0 million.

Interest on the Notes is fixed at 7.25% for the first 8 years and fixed at 8.25% thereafter.

Early retirement of the debt ahead of the 8-year commitment requires all interest payments to be paid in full as well as the return of outstanding principal.

Principal is due at maturity on May 24, 2039 and interest is payable quarterly.

The Notes have junior priority to all previously issued debt.

We report debt related to the Notes in our December 31, 2025 and 2024 Consolidated Balance Sheets, net of debt issuance costs of approximately $0.4 million and $0.5 million, respectively.

These deferred financing costs are presented as a direct deduction from the carrying amount of the subordinated debt.

Share Repurchase Program

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Interest on debt obligations 107,070 26,828 80,242

Operating lease obligations 3,632 968 2,664

Total $ 2,974,464 $ 551,157 $ 2,423,307

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We identified the accounting estimates below as critical to the understanding of our financial position and results of operations.

Critical accounting estimates are defined as those estimates that are both important to the portrayal of our financial condition and results of operations and require us to exercise significant judgment.

Critical accounting estimates are defined as those estimates that are both important to the portrayal of our

financial condition and results of operations and require us to exercise significant judgment.

We use significant judgment concerning future results and developments in applying these critical accounting estimates and in preparing our consolidated financial statements.

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Reserves for unpaid losses and LAE

The reserves for unpaid losses and LAE is the largest and most complex estimate in our consolidated balance sheet.

The reserves for unpaid losses and LAE is the largest and most complex estimate in our Consolidated Balance Sheets.

The reserves for unpaid losses and LAE represent our estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust these losses that have occurred as of or before the balance sheet date.

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Management’s best estimate of the ultimate unpaid liability is set by our Reserve Committee, who consider the actuarial indications along with other factors such as underwriting, claims handling, economic, legal and environmental changes.

Our Reserve Committee includes our Chief Actuary, Chief Financial Officer and Chief Claims Officer.

Our Reserve Committee includes our Chief Actuary, Chief Reserving Actuary, Chief Financial Officer and Chief Claims Officer.

The Reserve Committee meets quarterly to review the actuarial reserving recommendations made by the Chief Actuary and uses their judgment to determine the best estimate to be recorded for the reserve for losses and LAE on our balance sheet.

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The impact of potential changes in the regulatory or legislative environment is difficult to quantify in the absence of specific, significant new regulation or legislation.

In the event of significant new regulation or legislation, we will attempt to quantify its impact on our business, but no assurance can be given that our attempt to quantify such inputs will be accurate or successful.

The actuarial review considers multiple actuarial methods are used to estimate the reserve for losses and LAE.

In the event of significant new regulation or legislation, we

will attempt to quantify its impact on our business, but no assurance can be given that our attempt to quantify such inputs will be accurate or successful.

The actuarial review considers multiple actuarial methods to estimate the reserve for losses and LAE.

These methods include paid and incurred loss development methods, paid and incurred Bornhuetter-Ferguson methods, paid and incurred loss ratio cape cod methods and frequency and severity methods.

In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate.

For example, the paid loss and incurred loss development methods rely on historical paid and incurred loss data.

For new lines of business, where there is insufficient history of paid and incurred claims data, or in circumstances where there have been significant changes in claim practices, the paid and incurred loss development methods would be less credible than other actuarial methods.

The actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods considered.

These methods utilize, to varying degrees, the initial expected loss ratio, detailed statistical analysis of past claims reporting and payment patterns, claims frequency and severity, paid loss experience, industry loss experience, and changes in market conditions, policy forms, exclusions, and exposures.

The actuarial methods used to estimate losses and LAE reserves are:

• Reported and/or Paid Loss Development Methods

• Reported Bornhuetter-Ferguson Methods

• Paid Bornhuetter-Ferguson Method

When evaluating reserves related to less mature policy years, our actuaries rely on the Bornhuetter-Ferguson Method as the primary method for our ultimate loss indications.

As we move to more mature policy years, we transition to the Reported and/or Paid Loss Development Methods.

We primarily rely on reported methods where case reserving is consistently applied across policy years, however, when there is a change in reserving philosophy we will blend both reported and paid methods in our evaluation of ultimate loss indications.

Although we believe that our reserve estimates are reasonable, it is possible that our actual loss experience may not conform to our assumptions.

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Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280).

ASU 2023-07 requires segment disclosures for (i) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), (ii) how the CODM uses the reported measure(s) of segment profitability in assessing segment performance and resource allocation and (iii) the title and position of the CODM.

This update states that entities with a single reportable segment are required to provide full segment disclosures.

The guidance became effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

This update is applied retrospectively to all prior periods presented.

We have added additional segment disclosures as required by ASU 2023-07.

There was no impact to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740).

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This update also requires public companies to, among other things, disaggregate income taxes paid by federal, state and foreign taxes.

The guidance is effective for fiscal years beginning after December 15, 2024.

We do not expect the amendments will have a material impact on our consolidated financial statements.

The guidance became effective for fiscal years beginning after December 15, 2024.

This update is applied prospectively.

We have added additional disclosures as required by ASU 2023-09.

There was no impact to the consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, which requires disaggregated disclosure of income statement expenses for public business entities (“PBEs”).

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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