What changed in this filing

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Item 1. Business

2026-02-13 compared with 2025-02-27 · 84 added, 122 removed, 110 unchanged (65% of the section changed)

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Company Overview

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.

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

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

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

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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.

We operate our subscription business segment similar to other subscription-based businesses, with a focus on achieving a target margin prior to our new 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, 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.

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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 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, 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.

Within this segment we also offer products in certain countries in Continental Europe which are currently underwritten by third parties who pay us commissions that we recognize as revenue.

Our other business segment generates revenue from other product offerings, primarily by underwriting policies on behalf of third parties with whom we generally have a business-to-business relationship.

This business segment has, and targets, a significantly 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 as an underwriter for Pets Best Insurance Services ("Pets Best"), a third-party insurance provider we have worked with since 2015.

We expect that enrollment from Pets Best will continue to decline as it engages other third-party underwriters.

Additional products in this segment include the U.S.

Department of Veterans Affairs program and employer-sponsored programs, primarily for companies with animal health related operations.

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.

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

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.

Consequently, self-insuring is not an effective solution for many pet parents.

This challenge has compounded further as the cost of veterinary care has been outpacing inflation, a trend that has been accelerating in recent years due to advancements in medical procedures and technology and due to increased availability of care options.

We provide a solution for the challenge of planning for unexpected costs of veterinary care.

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.

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, which can frequently lead to the economic euthanasia of a pet.

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.

We believe that providing an exceptional member experience has increased the rate at which our existing members enroll additional pets and/or refer their friends and family, all of which has contributed towards our industry leading retention rates.

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.

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.

Given the comprehensive and broad coverage of our subscription products and the capabilities of our software to collect and assess data, 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.

As a result, we believe our Trupanion-branded product (the product with our most comprehensive coverage options) enables 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.

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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 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.

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

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

Our "Powered by Trupanion" products offer the same experience members with Trupanion branded products receive including veterinary direct payment and access to our 24/7 member support contact center.

However, they also include 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, available as direct-to-consumer products in Canada, offer further optionality of coverage at different price points.

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

The largest source of revenue within this segment is from our long-standing contractual relationship as an underwriter for Pets Best.

Additional products in this segment include the U.S.

Department of Veterans Affairs program and certain employer sponsored programs.

Department of Veterans Affairs program and certain employer sponsored programs, primarily for companies with animal health related operations.

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

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Pet insurance market penetration 3.9 % 8.6 %

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 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%.

1 According to NAPHIA, there are approximately 180.7 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 less than four percent as of April 22, 2025.

2 According to internal estimates incorporating figures from FEDIAF European Facts & Figures, GfK Czech consumer panel, and KVL Czech Republic, there are approximately 165 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 as of December 31, 2025.

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

Total pets enrolled in our subscription business have grown from 31,200 pets on January 1, 2010 to 1,096,173 pets on December 31, 2025, which represents a compound annual growth rate of 25%.

As a result, our subscription business revenue has grown from $19.1 million in 2010 to $989.3 million in 2025, which represents a compound annual growth rate of 28%.

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

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Targeting a 71% value proposition.

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.

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 operationally sustainable 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.

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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%.

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

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.

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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.

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

In recent years, we have expanded internationally in certain countries in Continental Europe and entered into relationships with strategic partners who are leaders in their field and are aligned with our goals.

Pursuing non-insurance revenue offerings.

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Sales and Marketing (New Pet Acquisition)

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.

Their role is to create meaningful, long-term relationships with veterinarians and to educate those veterinarians about the benefits of high quality medical insurance for pets.

We generate leads for our core Trupanion-branded 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 strategic partners and referrals from veterinarians and existing members.

We build awareness of our core Trupanion-branded product predominately through the veterinary community, engaging our team of "Territory Partners".

The Trupanion Territory Partners are independent contractors who market our product and are paid fees based on activity in their regions.

Their role is to create meaningful, long-term relationships with veterinarians and to educate those veterinarians, and their teams, about the benefits of high quality medical insurance for pets.

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

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

Our Territory Partner approach has been cultivated over the last 25 years and 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.

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 and on the differences between Trupanion's unique lifetime coverage and coverage offered by other providers.

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

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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.

Competitive Advantages

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:

• broader coverage and a superior value proposition due, in part, to our vertically integrated structure that reduces frictional costs,

• a unique member acquisition strategy that leverages the relationships our Territory Partners have developed in the veterinary community,

• a proprietary database containing over 25 years of comprehensive pet health data enabling us to be more precise in our pricing and pet acquisition expense, and

• our patented, proprietary software which allows us to pay veterinary invoices directly at time of treatment.

We believe these include:

• Value Proposition - the broadest coverage and a superior value proposition to any other offerings, in part, due to our vertically integrated structure that allows us to control all aspects of the insurance process and reduce frictional costs;

• Deep Veterinary Relationships - a unique member acquisition strategy that leverages the relationships our Territory Partners have developed in the veterinary community;

• Data Focused Approach - a proprietary database containing over 25 years of comprehensive pet health data enabling us to be more precise in our pricing and pet acquisition expense;

• Direct Veterinary Payments - our patented, proprietary software which allows us to pay veterinary invoices directly at time of treatment.

Intellectual Property

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 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 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 rely on a combination of intellectual property rights, including trade secrets, patents, copyrights, trademarks, and domain names, as well as contractual restrictions, to establish and protect our intellectual property.

Foremost, 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 13 patents and have 23 patents pending across several countries, including the U.S., in four main patent families related to our:

1) veterinary integration software 2) claims automation 3) pet tracking technology and 4) pet food formulation, manufacturing and integration systems.

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

Our ability to protect and enforce our intellectual property rights is subject to risk and our failure to do so may adversely impact our business.

We monitor market activity for potential infringement of our patents and bring litigation claims from time to time.

In addition, 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.

Human Capital Resources

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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.

We strive to foster an environment where team members with different perspectives and backgrounds can thrive.

A core tenet of Trupanion is that we offer a work experience that applies equally to all team members, regardless of role, such as our Benefits offerings described below.

This approach extends throughout the way we work together.

For example, team members that come into any of our offices work in an open environment where the size of working space is the same for everyone regardless of role or seniority.

As of December 31, 2025, we employed 1,121 people across the U.S., Canada and Europe, with women representing 63% of leadership positions.

Our team is further supported by 159 field sales Territory Partners and their associates who represent Trupanion.

We also contract with team members in India and the Philippines through third-party service providers.

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.

Our Seattle headquarters and our Czechia office are pet friendly.

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).

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• 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

We believe that diversity, equity, and inclusion (DEI) is critical to supporting our fellow team members and enhancing our ability to fulfill our mission and achieve our goals.

We strive to foster an environment where diversity of people with different perspectives and backgrounds can thrive.

A core tenet of Trupanion is that we offer a work experience that applies equally to all team members, regardless of role, as noted for example with respect to our Benefits offerings.

This approach extends throughout the way we work together;

for example, team members that come into any of our offices work in an open environment where the size of working space is the same for everyone regardless of role or seniority.

We have multiple employee-led resource groups that celebrate aspects of our team’s diversity and help foster a welcoming and safe space for support, education, professional development, and networking.

Our DEI Committee is also employee-led and focuses on cultivating a culture of inclusion and belonging by supporting DEI activities, fostering effective DEI communications with Trupanion employees and advising on ways to improve progress in Trupanion's commitment to DEI.

We have also developed a DEI curriculum that is required for all team members, and we continue to develop accessibility enhancements to both our physical and digital spaces.

We have a large representation of women at Trupanion including 61% of leadership positions.

Our culture of inclusion at Trupanion is in part reflected by, in 2024, 39% of our US new hires self-identifying that they are from an underrepresented group.

Trupanion is committed to paying equitably for equal work, regardless of gender or race/ethnicity, and conducts pay equity analyses as part of our efforts in furtherance of this commitment.

Career Development

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– All team members participate in company orientation to learn about our history, culture, product, business model, and operations.

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

• TruSpark - TruSpark fosters meaningful, two-way connections between Territory Partners and our home office teams, providing valuable insight, context, and support by fostering engagement and collaboration.

• Mentorship – Our Trupanion Women in Leadership ("TWIL") mentorship program creates connection across departments, so team members can learn from and support each other in their development.

• 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.

For further information, refer to the Regulation section included in Part II Item 7 of this report.

United States Regulations

federal law and the laws and regulations of each United States state, territory and possession apply to companies licensed to transact insurance business in these jurisdictions.

Our primary insurance subsidiary and underwriter, American Pet Insurance Company (APIC), is domiciled in New York State and the New York Department of Financial Services (NY DFS) serves as its primary regulator.

APIC is currently licensed to do business in all 50 states, Puerto Rico and the District of Columbia.

As such, APIC is also subject to comprehensive regulation and supervision under laws and regulations of each U.S.

state, territory, and possession.

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;

limit our ability to enter into transactions between APIC and our other affiliated entities;

restrict the ability of any one person to acquire certain levels of our voting securities without prior regulatory approval;

and restrict APIC’s ability to pay dividends to its holding company parent.

Other state regulators also have broad authority to perform on-site market conduct examinations of our management and operations, marketing and sales, underwriting, customer service, claims handling and licensing.

Regulators may perform market conduct examinations by visiting our facilities for a period of time to identify potential regulatory violations, discuss and correct identified violations, or to obtain a better understanding of how we operate in the marketplace.

Further, U.S.

state insurance laws and regulations require APIC to file financial statements with state insurance regulators in each state where it is licensed and its operations and accounts are subject to examination at any time.

APIC prepares statutory financial statements in accordance with accounting practices and procedures prescribed or permitted by these regulators.

The National Association of Insurance Commissioners (NAIC) has approved a series of uniform statutory accounting principles (SAP) that have been adopted, in some cases with minor modifications, by all state insurance regulators.

As a basis of accounting, SAP was developed to monitor and regulate the solvency of insurance companies.

When developing SAP, insurance regulators were primarily concerned with assuring an insurer’s ability to pay all its current and future obligations to policyholders.

As a result, statutory accounting focuses on conservatively valuing the assets and liabilities of insurers, generally in accordance with standards specified by the insurer’s state of domicile.

The financial statements included in this document are prepared in accordance with U.S.

generally accepted accounting principles.

The values for assets, liabilities and equity reflected in these financial statements are usually different from those reflected in financial statements prepared under SAP.

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 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.

However, from time to time, various federal regulatory and legislative changes have been proposed.

Among the proposals that have in the past been, or are at present may be under consideration, are the possible introduction of federal regulation in addition to, or in lieu of, the current system of state regulation of insurers.

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.

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.

Department of the Treasury.

The Federal Insurance Office initially was charged with monitoring all aspects of the insurance industry (with exceptions for certain types of insurance), gathering data and conducting a study on methods to modernize and improve the insurance regulatory system in the United States.

It is not possible to predict whether, in what form or in what jurisdictions any of these proposals might be adopted, or the effect federal involvement in insurance will have, if any, on us.

Industry Regulations

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 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.

Our insurance subsidiaries are required to be licensed to transact insurance business in, and are subject to the comprehensive regulation and supervision in, the jurisdictions where they are domiciled and conduct business.

In the United States, our primary insurance subsidiary and underwriter, American Pet Insurance Company ("APIC"), is licensed to do business in all 50 states, Puerto Rico and the District of Columbia.

Our subsidiary ZPIC Insurance Company ("ZPIC"), which has not yet begun underwriting activity, is currently licensed to do business in 40 states and the District of Columbia.

Other Jurisdictions Regulations

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.

In Canada, we have transitioned most of our business to our wholly-owned insurance subsidiary, GPIC Insurance Company ("GPIC").

This business was previously written by an unaffiliated Canadian-licensed insurer, Accelerant Insurance Company of Canada ("Accelerant"), formerly known as Omega General Insurance Company.

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

GPIC provides us with flexibility to directly underwrite policies as part of our vertical integration approach.

Pursuant to the Canadian Office of the Superintendent of Financial Institutions ("OSFI"), we have funded required statutory capital to GPIC, which is, and may continue to be for the foreseeable future, more than the amount we have historically held with our fronting arrangement with Accelerant.

Under the terms of our existing 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.

Under this arrangement we are required to fund a trust account in accordance with Canadian regulations.

As we transition more of our business to GPIC, the amount we are required to fund in this trust account will be reduced.

As of December 31, 2025, the account held CAD $8.7 million.

In 2022, we incorporated a new wholly-owned insurance subsidiary, GPIC Insurance Company (GPIC), domiciled in Canada.

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 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.

We also own three segregated accounts with Wyndham Insurance Company (SAC) Limited ("WICL"), located in Bermuda, relating to our reinsurance agreements with insurance partners in Canada, Germany and Switzerland.

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

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In addition, BMA has the authority to supervise and, in certain circumstances, investigate and intervene in the affairs of insurance companies.

Most significantly, Bermudan law restricts WICL’s ability to declare or pay dividends and the value of WICL’s assets must remain greater than the aggregate of its liabilities, issued share capital, and share premium accounts.

Most significantly, Bermudian law restricts WICL’s ability to declare or pay dividends and the value of WICL’s assets must remain greater than the aggregate of its liabilities, issued share capital, and share premium accounts.

For further information regarding these regulatory regimes and how they may materially affect our business, including our financial results and condition and ability to compete in our industry, please see Item 1A.

"Risk Factors" and Item 7.

"Management's Discussion and Analysis of Financial Condition and Results of Operations - Regulation."

Corporate Information

16 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 1. Business