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Item 1. Business

2025-02-27 compared with 2024-02-27 · 99 added, 123 removed, 133 unchanged (63% of the section changed)

Our mission is to help loving, responsible pet owners budget and care for their pets.

Our mission is to help loving, responsible pet parents budget and care for their pets.

Company Overview

We provide medical insurance for cats and dogs in the United States, Canada, Continental Europe, and Australia.

We provide medical insurance for cats and dogs in the United States, Canada, certain countries in Continental Europe, and Australia.

Through our data-driven, vertically-integrated approach, we develop and offer high value medical insurance products, priced specifically for each pet’s unique characteristics and coverage level.

Our growing and loyal membership base provides us with highly predictable and recurring revenue.

We operate in two business segments:

We operate in two reporting segments:

subscription business and other business.

We generate revenue in our subscription business segment primarily by subscription fees from direct-to-consumer products.

We generate revenue in our subscription business segment primarily through insurance premiums, which we refer to as subscription payments, from direct-to-consumer products.

We operate our subscription business segment similar to other subscription-based businesses, with a focus on achieving a target margin prior to our pet acquisition expense and acquiring as many pets as possible at our targeted average estimated internal rate of return.

Within our subscription business, we also provide "Powered by Trupanion" pet insurance product offerings marketed by third parties and, in Canada, low and medium average revenue per unit (ARPU) products marketed under the brand names Furkin and PHI Direct.

Within our subscription business, we also provide "Powered by Trupanion" pet insurance product offerings marketed by third parties, low and medium average revenue per pet products marketed under the brand names Furkin and PHI Direct in Canada, and a Trupanion branded product in Germany and Switzerland.

We either directly underwrite or assume full insurance risk for these products through reinsurance arrangements.

We provide a full suite of services and support for these products and they are designed to align with the target margin profile of our subscription business segment.

Within our subscription business segment we also offer products in Continental Europe, which are currently underwritten using third-party underwriters.

Within this segment we also offer products in certain countries in Continental Europe which are currently underwritten using third-party underwriters.

Going forward our intent is to assume full insurance risk for these products, either through direct underwriting or reinsurance arrangements.

Our other business segment is comprised of revenue from other product offerings with third parties with whom we generally have a business-to-business relationship.

This business segment has a different margin profile than our subscription segment and includes revenue from writing policies on behalf of third parties and revenue from other products and insurance software solutions.

It is very difficult for pet owners to budget for veterinary expenses when their pets become sick or injured.

Pet owners do not know whether their pet’s health will be “average,” “lucky,” or “unlucky.” Over the life of a pet, veterinary expense for a lucky versus unlucky pet can vary from $500 to more than $50,000.

This business segment has, and targets, a lower margin profile than our subscription business segment and is not part of our core business strategy.

The largest source of revenue within this segment is from our long-standing contractual relationship with Pets Best Insurance Services ("Pets Best"), a third-party partner we have worked with since 2015.

It is very difficult for pet owners, who we refer to as pet parents, to budget for veterinary expenses when their pets become sick or injured.

Pet parents do not know whether their pet’s health will be “average,” “lucky,” or “unlucky.” Over the life of a pet, veterinary expense for a lucky versus unlucky pet can vary from $500 to more than $50,000.

Even if a pet ends up being “average” over its life, the timing of accidents or illnesses may not align with the pet owner’s budget.

Further, many pet owners do not know how to budget for the “average” cost of medical care for their pets.

Average veterinary expenses often greatly exceed the expectations of pet owners and vary dramatically based on a multitude of factors, including the availability of care by region and the types of treatments advisable for specific pet breeds.

Consequently, self-insuring is not an effective solution for many pet owners as the cost of pet medical care has been outpacing inflation for over 20 years due to advancements in medical procedures and technology and due to increased availability of high-quality care.

Our monthly subscription products, priced specifically for each pet’s unique characteristics and coverage level, help pet owners budget for unforeseen medical expenses.

Through our high quality medical insurance products, pet owners are able to ensure coverage for the best care for their pet and avoid decisions being made due to financial constraints.

Our monthly subscription business model also provides us with high quality predictable and recurring revenue.

Our subscription business’s cost-plus model is designed to spread the risk evenly within categories of pets so our members can better budget for unexpected veterinary costs.

Further, many pet parents do not know how to budget for the “average” cost of medical care for their pets.

Average veterinary expenses often greatly exceed the expectations of pet parents and vary dramatically based on a multitude of factors, including the availability of care by region and the types of treatments advisable for specific pet breeds.

Consequently, self-insuring is not an effective solution for many pet parents as the cost of pet medical care has been outpacing inflation for over 20 years due to advancements in medical procedures and technology and due to increased availability of care options.

Our subscription products, priced specifically for each pet’s unique characteristics and coverage level, help pet parents budget for unforeseen medical expenses.

Through our high quality medical insurance products, pet parents are able to ensure coverage for the best care for their pet and avoid treatment decisions being made due to financial constraints.

We believe, due to the nature of the reliability of our coverage and the satisfaction of our member base, our subscription business model also provides us with highly predictable and recurring revenue.

Our subscription business’s cost-plus model is designed to spread the risk evenly within categories of pets so our policy holders, which we refer to as members, can better budget for unexpected veterinary costs.

We have been collecting comprehensive pet health data for over 25 years.

We believe our data and approach to pricing is unmatched by other pet insurers and provides us with a greater understanding of anticipated veterinary costs.

We leverage this to price our subscription plan for each pet based on their specific circumstances such as breed, age (at enrollment), geography, desired deductible or co-payment and coverage level, so that, in aggregate, the amounts paid by owners of lucky pets helps to cover the veterinary costs incurred by unlucky pets.

We believe our actuarial team, working with our granular data, is able to price our subscription plan much more accurately than any other players in the pet health insurance industry, enabling us to provide our members with the most accurate cost and highest value proposition relative to coverage level.

Our core “Trupanion” product was designed by veterinarians to enable them to practice the best medicine – thus recommending the optimal treatment for the pet.

As a result, we believe our Trupanion-branded products enable veterinarians to establish stronger ties and better alignment with their clients.

Given the comprehensive and broad coverage of our subscription products and the capabilities of our software to collect and assess date, we believe our data and approach to pricing is unmatched by other pet insurers and provides us with a greater understanding of anticipated veterinary costs.

We leverage this data to price our subscription plan for each pet based on their specific circumstances such as breed, age, geography, desired deductible or co-payment and coverage level, so that, in aggregate, the amounts paid by parents of lucky pets helps to cover the veterinary costs incurred by unlucky pets.

We believe our actuarial team, working with our granular data, is able to price our subscription products much more accurately than any other players in the pet health insurance industry, enabling us to provide our members with the most accurate cost and highest value proposition relative to coverage level in our industry.

Since launch, our core “Trupanion” branded product has been designed by veterinarians to enable them to practice best medicine – thus recommending the optimal treatment for the pet.

As a result, we believe our Trupanion-branded products (the products with our most comprehensive coverage options) enable veterinarians to establish stronger ties and better alignment with our members.

Members with a Trupanion-branded product visit their veterinarian more frequently and spend more money on the best course of treatment for their pet.

This results in better health outcomes for pets, which we believe creates a flywheel effect that has been the key driver of growth for our subscription business.

Through the use of our proprietary, patented software designed to communicate directly with a veterinary hospital’s practice management system, we are able to offer a differentiated experience to pet owners.

Using our software, veterinary hospitals can receive payment from us directly for approved invoices in seconds, with their clients (our members) only paying their deductible or co-payment for covered treatments.

We believe this unique and patented solution, which is offered free to veterinarians and pet owners, transforms the insurance experience.

Using our software, veterinary hospitals can receive payment from us directly for approved invoices in seconds, with our members only paying their deductible or co-payment for covered treatments.

We believe this unique and patented solution, which is offered free to veterinarians and our members, transforms the pet insurance experience.

Through our "Powered by Trupanion" suite of products, which are marketed by third parties, we are broadening our distribution in the retail and corporate worksite channels.

Our "Powered by Trupanion" products offer the same differentiated experience Trupanion pet owners receive but with options for varying levels of coverage to meet budgetary requirements.

Our Furkin and PHI Direct products are currently distributed direct-to-consumer in Canada.

Our other business segment is comprised of other product offerings with third parties with whom we generally have a business-to-business relationship, and this business segment has a different margin profile than our subscription segment.

Products in this segment include providing pet medical insurance policies on behalf of the U.S.

Department of Veterans Affairs program, employer sponsored programs, and underwriting policies on behalf of third parties that do not carry reference to the Trupanion brand.

Additionally, our other business segment includes the sale of insurance software solutions.

Our target markets are large and under-penetrated, as measured by insured pets:

Our "Powered by Trupanion" products offer the same experience members with Trupanion branded products receive but with options for varying levels of coverage to meet the different needs of our target pet parents and associated budgetary requirements.

In addition, our Furkin and PHI Direct products are currently distributed direct-to-consumer in Canada and offer similar optionality of coverage at different price points.

Our other business segment is comprised of a collective of other product offerings with third parties with whom we generally have a business-to-business relationship, and this business segment has, and targets, a different margin profile than our subscription business segment.

The largest source of revenue within this segment is from our long-standing contractual relationship with Pets Best, an unaffiliated pet insurance company we have worked with since 2015.

Additional products in this segment include the U.S.

Department of Veterans Affairs program and certain employer sponsored programs.

Our key markets are large and under-penetrated, as measured by insured pets:

North America 1

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1 According to IBIS World and Canadian Animal Health Institute, there are approximately 213.3 million household dogs and cats in the United States and Canada.

North American Pet Health Insurance Association estimates that the penetration rate for medical insurance for cats and dogs in North America is approximately three percent.

We believe that over the long-term, the North American penetration rate can reach levels comparable to the U.K., where, according to Global Market Insights, approximately one in four cats and dogs has medical insurance.

2 According to FEDIAF European Facts & Figures, GfK Czech consumer panel, and KVL Czech Republic, there are approximately 161 million household dogs and cats in Continental Europe.

The estimated penetration rate for medical insurance for cats and dogs is approximately eight and a half percent.

3 According to PetKeen, there are approximately 8.9 million household dogs and cats in the Australia.

The estimated penetration rate for medical insurance for cats and dogs is approximately nine percent.

Our total enrolled pets grew from 31,207 pets on January 1, 2010 to 1,714,473 pets on December 31, 2023, which represents a compound annual growth rate of 33%.

As a result, our revenue has grown from $19.1 million in 2010 to $1,108.6 million in 2023 which represents a compound annual growth rate of 34%.

We are focused on attracting and retaining members by providing a best-in-class value and member experience.

In particular, we concentrate on the following:

North American Pet Health Insurance Association estimates that the penetration rate for medical insurance for cats and dogs in North America is less than four percent.

2 According to FEDIAF European Facts & Figures, GfK Czech consumer panel, and KVL Czech Republic, there are approximately 161 million household dogs and cats in Continental Europe and the estimated penetration rate for medical insurance for cats and dogs is approximately eight and a half percent.

We believe that, over the long-term, pet insurance penetration rates in the markets we currently operate in could approach those seen in the United Kingdom or Sweden where approximately 28% and 67%, respectively, of household dogs and cats are insured.

Our total enrolled pets has grown from 31,207 pets on January 1, 2010 to 1,677,570 pets on December 31, 2024, which represents a compound annual growth rate of 30%.

As a result, our revenue has grown from $19.1 million in 2010 to $1.3 billion in 2024, which represents a compound annual growth rate of 32%.

We are focused on attracting and retaining members by providing the highest customer value proposition and best-in-class member experience.

To execute on our strategy, we concentrate on the following:

Increasing leads from veterinary hospitals.

We intend to increase the number of veterinary hospitals that help their clients learn about high quality medical insurance, and to increase the rate at which active veterinary hospitals refer leads to us by leveraging our outside sales team of Territory Partners who interface directly with veterinarians.

Our outside team of Territory Partners (who interface directly with veterinarians) work to increase the number of veterinary hospitals that educate their clients about high quality medical insurance, and to increase the rate at which veterinary hospitals refer leads to us.

Increasing referrals from members.

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Improving conversion.

We are investing to increase the rate at which we convert pet owners receiving quotes for our subscription plan into enrolled members.

We are investing to increase the rate at which we convert pet parents receiving quotes for our subscription plan into enrolled members.

Targeting a 71% value proposition.

We aim to return to our members 71% of premiums we collect in the aggregate, which we believe is the highest targeted value proposition in our industry.

Our ability to target the highest sustainable value proposition stems from our low cost operating model.

Achieving our targeted value proposition requires we grow our ARPU in-line with the cost of veterinary care.

We aim to pay veterinary invoices promptly and return 71% of premiums we collect, in the aggregate, to members, which we believe is the highest targeted value proposition in our industry.

Our ability to target the highest value proposition stems from our low cost operating model and requires we increase our subscription payments in-line with the cost of veterinary care.

Improving retention.

Member retention is a key part of our strategy.

Historically, members in their first year of membership have the lowest retention rate.

We are investing in the education process for our members and improving initial member communication and experiences in order to increase our retention rates.

Our approach to retention includes the assessment of three member cohorts:

members in their first year of membership, members receiving rate changes below 20%, and members receiving rate changes over 20%.

As part of our effort to increase retention in these cohorts, we seek to enhance the education of individual pet parents accordingly and invest in improving overall member communication and experience.

Automating payment of veterinary invoices.

We use artificial intelligence and machine learning to leverage data to automate the payment of a portion of our veterinary invoices.

We intend to increase the percentage of veterinary invoices paid without human intervention with the goal of ensuring that we can process veterinary invoices in seconds, at a lower cost and without reducing the quality of service.

Expanding additional member acquisition channels.

We are growing new member acquisition channels including employee benefits, point-of-sale, retail and direct-to-consumer, for the sale of our pet medical insurance products.

We also continue to pursue new channels that we believe could, over time, deliver our desired return on investment.

Aligning with strategic partners.

We maintain relationships with players who are leaders in their field, have long-term alignment, and recognize the value of our brand and expertise.

These companies generally have well-developed distribution channels but do not have our expertise in pet medical insurance.

Expanding internationally.

While the majority of our revenue is derived from the sale of insurance products in the U.S.

and Canada, we have operations in Europe and operate in Australia through a joint-venture.

We continue to explore other international expansion opportunities.

Expanding our product offering.

We have introduced additional monthly subscription products, maintaining what we believe to be the highest value pet medical insurance, but with reduced coverage that is less expensive.

In line with our low-cost operating model, we use artificial intelligence and machine learning to leverage data to automate the payment of a portion of our veterinary invoices.

We intend to increase the percentage of veterinary invoices paid without human intervention with the goal of ensuring that we can process veterinary invoices in seconds, providing settlement at check-out and therefore enhancing our member and veterinary support, while lowering our cost of operations.

Expanding our insurance product offerings.

We seek to grow our subscription membership through the addition of new member acquisition channels including employee benefits, retail, and direct-to-consumer.

We also intend to expand internationally, including in certain countries in Continental Europe, and enter into relationships with strategic partners who are leaders in their field and are aligned with our goals.

Pursuing non-insurance revenue offerings.

We intend to continue pursuing opportunities to provide pet owners with complementary products and services.

We intend to continue pursuing opportunities to provide pet parents with complementary products and services.

For example, we have invested in a pet food initiative to explore whether pets on a calorie-controlled, high-quality diet have improved health outcomes that can justify a decrease in the cost of their medical insurance.

We also sell software solutions to third parties.

Sales and Marketing (New Pet Acquisition)

We generate leads through a diverse set of member acquisition channels, which we then convert into members primarily through our contact center, website and other direct-to-consumer activities.

These channels primarily include leads from third-parties such as veterinarians, strategic partners and referrals from existing members.

We generate leads for our core Trupanion product through a diverse set of pet parent acquisition channels, which we then aim to convert into members primarily through our website and contact center.

These acquisition channels include leads from third-parties such as veterinarians, strategic partners and referrals from existing members.

We build awareness of our core Trupanion product predominately through the veterinary community, engaging our team of “Territory Partners." Our Territory Partners are independent contractors who market our product and are paid fees based on activity in their regions.

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We believe this structure aligns our interests and provides a platform that we can leverage over time.

Our Territory Partner approach is unique and unmatched in our industry.

We believe that it would be extremely difficult, costly and time consuming for a competitor to replicate this model.

We compete primarily with pet owners who choose to self-fund their veterinary costs, mainly via credit cards, as well as new and existing pet medical insurance brands.

We view our primary competitive challenge as educating pet owners on why high-quality medical insurance for pets is a better alternative to self-insuring.

The vast majority of pet owners in the markets in which we operate do not currently have medical insurance for their pets and those that do have medical insurance for their pets do not typically move from one insurance company to another because pre-existing conditions would likely not be covered following a move.

As a result, we are focused primarily on expanding the overall size of our markets by providing pet owners with high value, transparent medical coverage designed for each pet's unique characteristics and coverage level.

We have been competing against numerous brands at any given time in our operating history.

Our Territory Partner approach provides a unique and unmatched moat in our industry.

We believe that it would be extremely difficult, costly and time consuming for a competitor to replicate this model and that heavy investment alone would not likely dissolve the competitive advantage this model provides us.

We compete primarily with pet parents who choose to self-fund their veterinary costs, mainly via credit cards, as well as new and existing pet medical insurance brands.

We view our primary competitive challenge as educating pet parents on why high-quality medical insurance for pets is a better alternative to self-insuring.

The vast majority of pet parents in the markets in which we operate do not currently have medical insurance for their pets and those that do have medical insurance for their pets do not typically move from one insurance company to another because pre-existing conditions would likely not be covered following a move.

As a result, we are focused primarily on expanding the overall size of our markets by providing pet parents with high value, transparent medical coverage designed for each pet's unique characteristics and coverage level.

Throughout our operating history we have competed, and continue to compete, against numerous pet insurance brands.

In our experience, competing pet medical insurance companies generally fall into one of two segments:

(a) traditional providers with low target price points and narrow coverage that is unlikely to cover things most likely to go wrong, like congenital and hereditary conditions, and (b) higher-value providers that offer some form of an annual plan designed to increase the cost of the plan as the pet ages.

In recent years, there has been significant consolidation in the pet medical insurance industry resulting in many brands being controlled by a small number of companies.

We believe that we have competitive advantages that position our product offering favorably compared to other brands offered in the marketplace.

We believe that we have competitive advantages that position our core Trupanion branded product offerings favorably compared to other brands offered in the marketplace.

These include:

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We rely on federal, state, common law, and international rights, as well as contractual restrictions, to protect our intellectual property.

We control access to our proprietary technology, software, and documentation by entering into confidentiality and invention assignment agreements with our employees and partners, and confidentiality and, in some cases, exclusive agreements with third parties, such as service providers, vendors, individuals and entities that may be exploring a business relationship with us.

We control access to our proprietary technology, software, and documentation by entering into confidentiality and invention assignment agreements with our employees and independent contractors and non-disclosure agreements with third parties, such as service providers, vendors, individuals and entities that may be exploring a business relationship with us.

We also rely on a combination of intellectual property rights, including trade secrets, patents, copyrights, trademarks, and domain names to establish and protect our intellectual property.

We seek to protect our proprietary position by filing patent applications in the United States and in jurisdictions outside of the United States related to our technology, inventions, and improvements that are important to our business.

We hold six U.S.

utility patents and one U.S.

design patent related to our proprietary software, and we have multiple additional patent applications pending in the United States.

We also have three issued utility patents and two issued design patents in other jurisdictions, as well as multiple additional patent applications pending.

We hold several U.S.

utility and design patents related to our proprietary software, and we have additional patent applications pending in the United States.

We also have several issued utility and design patents in other jurisdictions, as well as additional patent applications pending.

We additionally rely on data and market exclusivity, and patent term extensions when available.

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We are a mission driven organization with a diverse team united by a shared passion for pets.

Our team members are our greatest asset, and we focus on attracting great people to our team and offering high-quality experiences to all team members.

Our employees and independent contractors, which we refer to as team members, are our greatest asset, and we focus on attracting great people to our team and offering high-quality experiences to all team members.

As of December 31, 2024, we employed 1,130 people across the U.S., Canada and Europe.

Our team is further supported by 171 field sales Territory Partner business owners and their associates who represent Trupanion.

We also contract with team members in the Philippines through a third-party service provider, and we operate in Australia through a joint venture.

Our team is increasingly global with team members working in our Seattle headquarters in the United States, in our offices in the U.K., Germany, and Czechia, and virtually across the U.S., Canada, and Europe.

We also contract with team members in the Philippines through a third-party service provider.

We have team members working in our Seattle headquarters in the United States, in our offices in the U.K., Germany, and Czechia, and virtually across the U.S., Canada, and Europe.

Our Seattle headquarters is pet friendly.

We offer each team member substantially the same benefits, regardless of role or level in the organization (with appropriate variations due to the country in which they reside).

We also recognize the importance of family and design our benefits plans to support the physical, financial, and emotional wellbeing of team members and their families.

The benefits available to all team members regardless of role include:

• Childcare & Support for Parents – We understand the importance of family and offer benefits to support working parents.

Most notably, we offer onsite childcare at our Seattle headquarters.

Trupanion pays 100% of the tuition costs for one child per Trupanion team member, when space is available.

• Resources for Wellbeing – We offer a variety of benefits to support wellness at and away from work, including free access to our onsite gym and an Employee Assistance Program for confidential support to navigate life's challenges.

We also offer to our team members globally a virtual healthcare concierge service through a leading third-party provider specializing in the field of virtual medicine.

• Sabbatical – For every five consecutive years of service at Trupanion, team members are eligible for a paid five-week sabbatical.

• Paid Volunteer Time – The TruGiving Volunteer Program offers one paid work day per year to volunteer with an organization of each team member's choice.

• Paid Time Off – At least four weeks of paid time off is granted to team members each year in January, and increases with tenure.

• Medical Insurance for You – Trupanion pays 100% of the premiums for team members’ medical, dental, and vision coverage and offers options to enroll eligible family members.

• Medical Insurance for Your Pet – Team members have the option to enroll one dog or cat in 100% company paid Trupanion medical insurance at the highest coverage level we offer.

• Health Savings Account – Team members enrolled in our eligible medical plan have access to a Trupanion funded Health Spending Account.

• Flexible Spending Dollars – Team members receive flexible spending dollars each year on benefits of their choice, including contributions to dependent premiums, fitness and nutrition, childcare, and personal development.

• Leave of Absence & Salary Continuation – We provide all team members that are too ill or injured to work with access to time off through leave of absence at a reduced percentage of their salary through our disability pay programs.

• Severance and Change in Control Policy – We have a Severance and Change in Control policy that applies equally to all team members, regardless of their role at Trupanion.

We offer each employee team member substantially the same benefits, regardless of role or level in the organization (with appropriate variations due to the country in which they reside).

We also recognize the importance of family and design our benefits plans to support the physical, financial, and emotional wellbeing of team members and their families, including their pets.

Among the benefits we offer include:

• Full medical, dental, and vision benefits at no cost to employees.

• At least four weeks of paid time off and paid floating holidays.

• Five-week sabbatical after five years of employment.

• Free medical health insurance for one pet.

• Paid time off to volunteer at nonprofit organizations.

• A variety of benefits to support employee wellness both at and away from work.

• Seattle headquarters office amenities, including on-site childcare at no cost to employees, free on-site gym, and free dog walking services for office pets during business hours.

Diversity, Equity, and Inclusion

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At Trupanion we are committed to helping everyone grow and thrive along with the company.

We are proud to continually see approximately 15% of our team members transitioning to new roles within Trupanion each year.

We are proud to continually see approximately 15% of our employee team members transitioning to new roles within Trupanion each year.

Team members have access to ongoing development designed to help them succeed in their roles today, develop skills for the future, and build a career at Trupanion.

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• Mentorship – Our TruMentor program creates connection across departments, so team members can learn from and support each other in their development.

• Professional skills – Our continuing education course catalogue includes a wide variety of topics related to our business, the animal health industry, and professional skills.

• Professional skills – Our continuing education course catalog includes a wide variety of topics related to our business, the animal health industry, and professional skills.

• Leadership Development – Our Leadership Unleashed program offers development for aspiring, new and experienced managers to drive ownership and growth for the future of our business.

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state, territory, and possession.

Because APIC is domiciled in New York, APIC is subject to laws governing insurance holding companies in New York.

Because APIC is domiciled in New York, we are subject to laws governing insurance holding companies in New York.

These laws, among other things, require that we file periodic information reports with the NY DFS, including information concerning our capital structure, ownership, financial condition and general business operations;

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In 2021, we established two new wholly-owned insurance subsidiaries, ZPIC Insurance Company (ZPIC) and QPIC Insurance Company (QPIC), domiciled in Missouri and Nebraska, respectively.

ZPIC is currently licensed to do business in 41 states and the District of Colombia.

QPIC is currently licensed to do business in 30 states and the District of Colombia.

We have funded required statutory capital to these new subsidiaries, however, neither subsidiary has begun underwriting insurance policies as of December 31, 2023.

ZPIC is currently licensed to do business in 41 states and the District of Columbia.

We have funded required statutory capital to ZPIC, however, it has not begun underwriting insurance policies as of December 31, 2024.

Due to anticipated lack of use, we dissolved QPIC in the fourth quarter of 2024.

federal law generally does not directly regulate the insurance industry.

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In August 2022, members of the National Association of Insurance Commissioners (NAIC) passed a pet insurance model act to establish appropriate regulatory standards for the pet insurance industry.

It standardizes how insurers enforce waiting periods, certain policy conditions, and the sale of pet insurance in general.

Since then, 7 states (DE, LA, ME, MS, NE, NH, and WA) have adopted the model act, some with slight variances, and 10 additional states (CA, DC, FL, MD, NY, NJ, OH, PA, RI, and VT) have draft legislation in progress for 2024.

Trupanion is proactively engaged in the drafting and passage of the pet insurance law in these states through the North American Pet Health Insurance Association (NAPHIA).

This act standardizes how insurers enforce waiting periods, certain policy conditions, and the sale of pet insurance in general.

As of January 2025, twelve states (ME, DE, LA, MS, NE, NH, WA, PA, CA, MD, OH, and VT) have either adopted these NAIC standards or have enacted their own versions.

Trupanion is proactively engaged in the development of the pet insurance law through its government relations efforts.

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) established a Federal Insurance Office within the U.S.

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The NAIC adopted risk-based capital requirements for life, health and property and casualty insurance companies .

APIC is subject to these risk-based capital requirements that require us to maintain certain levels of surplus, specifically $137.6 million as of December 31, 2023, to support our overall business operations in consideration of our size and risk profile.

APIC is subject to these risk-based capital requirements that require us to maintain certain levels of surplus to support our overall business operations in consideration of our size and risk profile.

If we fail to maintain the amount of risk-based capital required, we will be subject to additional regulatory oversight.

To comply with these regulations, we may be required to maintain capital that we would otherwise invest in our growth and operations.

ZPIC will be subject to similar regulations after it begins underwriting insurance policies.

Refer to Item 1A.

“Risk Factors” for additional details of these requirements.

Further, NAIC developed a set of financial relationships or tests known as the Insurance Regulatory Information System, or IRIS, to assist state regulators in monitoring the financial condition of U.S.

insurance companies.

As of December 31, 2023, APIC had one IRIS ratios outside the usual range relating to net premiums written to surplus.

While a ratio outside the usual range is not considered a failing result, regulators may investigate or monitor an insurance company if its IRIS ratios fall outside the prescribed usual range .

ZPIC and QPIC will be subject to similar regulations after they begin underwriting insurance policies.

Other Jurisdictions Regulations

In Canada, our insurance is written by an unaffiliated Canadian-licensed insurer, Omega General Insurance Company (Omega).

Under the terms of our agreements with Omega, we retain any financial risk associated with our Canadian business.

In October 2023, Omega was acquired by Accelerant.

Omega’s Canadian insurance operations are supervised and regulated by Canadian federal, provincial and territorial governments and Omega is a fully licensed insurer in all of the Canadian provinces and territories in which we do business.

In Canada, our insurance is currently written by an unaffiliated Canadian-licensed insurer, Accelerant Insurance Company of Canada (Accelerant), formerly known as Omega General Insurance Company.

Under the terms of our agreements with Accelerant, we retain any financial risk associated with our Canadian business.

Accelerant’s Canadian insurance operations are supervised and regulated by Canadian federal, provincial and territorial governments and Accelerant is a fully licensed insurer in all of the Canadian provinces and territories in which we do business.

In addition, we are required to fund a Canadian trust account in accordance with Canadian regulations.

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GPIC is currently licensed to do business in all provinces and territories in Canada except for Nunavut.

We have funded required statutory capital to this new subsidiary;

however, GPIC has not begun underwriting insurance policies as of December 31, 2023.

We have a segregated cell business called Wyndham Segregated Account AX (WICL), located in Bermuda.

We have funded required statutory capital to this new subsidiary and expect our underwriting activity to ramp up significantly in 2025 and our business with Accelerant to diminish.

We have three segregated accounts with Wyndham Insurance Company (SAC) Limited ("WICL"), located in Bermuda.

WICL is regulated by the Bermuda Monetary Authority (BMA).

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Investors and others should note that we may announce material financial information to our investors using our investor relations website, SEC filings, our annual stockholder meeting, press releases, public conference calls, investor conferences, presentations and webcasts.

We use these channels, as well as social media, to communicate with our members and the public about our company, our services and other issues.

We regularly use these channels, as well as social media, to communicate with our members and the public about our company, our services and other issues.

It is possible that the information we post on these channels, such as social media, could be deemed to be material information.

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 1. Business