Financial Analysis

Commitments and Contingencies The Company is, from time to time, party to various legal actions and is subject to various claims arising in the ordinary course of business from time to time. Management believes that the resolution of these matters will not have a material adverse effect on the Companys financial position or results of operations. …

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Revolving Credit Facility The Company has a $260,000 revolving credit facility (the Amended 2025 Revolver) with a lender syndicate, which matures on November 10, 2030. At the Company's option, the interest rate on the Amended 2025 Revolver may be based on either ABR plus an applicable margin ranging from 0.75% to 2.00% or Term SOFR ranging from 1.75% to 3.00%, depending on the Company's total net leverage ratio of the prior fiscal quarter. As of June 30, 2026, the applicable interest rate was 5.9%. The Amended 2025 Revolver is secured by substantially all of the assets of the Company and its subsidiaries. The Company was in compliance with all financial covenants under the Amended 2025 Revolver as of June 30, 2026. The following table summarizes the activity under the Amended 2025 Revolver for the six months ended June 30, 2026: (In thousands) Beginning balance, December 31, 2025 $ 240,000 Drawdown 24,000 Less repayments (24,000) Ending balance, June 30, 2026 $ 240,000 As of June 30, 2026, the Company had $20,000 of available borrowing capacity under the Amended 2025 Revolver. For the three and six months ended June 30, 2026, the weighted average interest rate on borrowings outstanding was 6.2% and 6.0%, respectively and the average outstanding balance was $233.5 million and $233.3 million, respectively. There have been no material changes to the terms of the Amended 2025 Revolver from those described in Note 5, 'Debt,' of the Company's Annual Report on Form 10-K for the year …

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The following table disaggregates revenue by source for the: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Commission income $ 42,531 $ 32,062 $ 71,565 $ 54,769 Fee income 13,341 10,004 22,102 16,650 Total revenues $ 55,872 $ 42,066 $ 93,667 $ 71,419

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Share-Based Compensation Plan The Company's accounting policies for share-based compensation are described in Note 7, 'Share-Based Compensation,' of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to these policies during the three and six months ended June 30, 2026. The disclosures below should be read in conjunction with that note. Stock Options During the three and six months ended June 30, 2026, the Company did not grant stock option awards and no stock option awards were forfeited. As of June 30, 2026, no unrecognized compensation remains for Time-Based and Performance Based stock options as they are fully vested. A summary of stock option activity during the three and six months ended June 30, 2026, is presented below: Time Based Performance Based Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2025 4,351,430 5.80 8.2 $ 101,658 4,426,955 5.79 8.3 $ 103,445 Granted 0 0.00 0 0.00 Exercised (91,500) 5.53 (97,981) 5.52 Forfeited 0 0.00 0 0.00 Expired 0 0.00 0 0.00 Outstanding as of March 31, 2026 4,259,930 5.80 7.8 $ 75,087 4,328,974 5.80 7.8 $ 76,326 Exercisable as of March 31, 2026 4,259,930 5.80 7.8 $ 75,087 4,328,974 5.80 7.8 $ 76,326 Granted 0 0.00 0 0.00 Exercised (86,278) 5.50 (57,603) 5.50 Forfeited 0 0 …

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Income Taxes The Company's quarterly income tax provision is measured using an estimate of its consolidated annual effective tax rate, adjusted for discrete items. The Companys effective tax rate for the three and six months ended June 30, 2026 was 31.9% and 30.4%, respectively, and differed from the U.S. federal statutory rate primarily due to limitations on deductions for officer compensation and state income taxes, partially offset by the excess benefits of stock compensation. The Company's effective tax rate for the three and six months ended June 30, 2025 was 25.8% and 25.8%, respectively, and differed from the U.S. federal statutory rate primarily due to state income taxes. …

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"Recent Accounting Pronouncements: The Company has not adopted any new accounting pronouncements since the audited consolidated financial statements for the year ended December 31, 2025. Refer to Note 2, ""Significant Accounting Policies,"" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, for information pertaining to the effects of recently adopted and other recent accounting pronouncements."

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Related-Party Transactions Rent Expense In February 2021, the Company entered into a month-to-month operating lease agreement for office space for management and administrative services at a rate of $12 per month from an affiliate of the Companys executive and principal stockholder. Rent expense was $36 and $72, respectively, for the three and six months ended June 30, 2026 and $36 and $72, respectively for the three and six months ended June 30, 2025, which were included in general and administrative expense in the condensed consolidated statements of income. …

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"Revenue The Companys revenue is derived from the sale of insurance policies and is primarily comprised of commission income and fee income. The Company's revenue recognition accounting policies for those sources of income and related contract costs are described in Note 3, ""Revenue,"" of the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to these policies during the three and six months ended June 30, 2026. The disclosures below should be read in conjunction with that note. Disaggregation of Revenue The following table disaggregates revenue by source for the: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Commission income $ 42,531 $ 32,062 $ 71,565 $ 54,769 Fee income 13,341 10,004 22,102 16,650 Total revenues $ 55,872 $ 42,066 $ 93,667 $ 71,419 Contract Asset and Premium Deposits The timing of revenue recognition may not align with the right to invoice the customer. The Company records accounts receivable when it has the unconditional right to issue an invoice and receive payment, regardless of whether revenue has been recognized. Policyholder payments received in advance of commencement of the performance obligation are recorded as premium deposits. No revenue is recognized on these deposits until the performance obligation is complete. The following table provides information about receivables and premium dep …

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Segment Reporting The Company has one operating segment and therefore one reportable segment relating to its business as a Managing General Agent that offers residential and commercial insurance products, including primary and excess flood insurance and parametric earthquake insurance, primarily through a nationwide agency network in the United States. The Companys chief operating decision maker (CODM), the CEO, manages the Company's operations on a consolidated basis as one operating segment for the purpose of evaluating financial performance and allocating resources. The accounting policies of the Companys segment are the same as those described in the summary of significant accounting policies. The CODM uses net income, as reported on the condensed consolidated statements of income, to assess performance and allocate resources. The significant segment expense categories regularly provided to the CODM are the same as those included on the condensed consolidated statements of income. The measure of segment assets is total assets as reported on the condensed consolidated balance sheets. The CODM uses net income to assess performance by examining period-over-period trends, benchmarking to the Companys competitors, and monitoring budget versus actual results. The CODM uses net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the segment or into other parts of the entity. For the three and six months ended June 30, 2026 and the …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"Significant Accounting Policies There have been no material changes to the Companys significant accounting policies from those disclosed in Note 2, ""Significant Accounting Policies,"" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Please refer to that report for a full description of those policies. Recent Accounting Pronouncements: The Company has not adopted any new accounting pronouncements since the audited consolidated financial statements for the year ended December 31, 2025. Refer to Note 2, ""Significant Accounting Policies,"" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, for information pertaining to the effects of recently adopted and other recent accounting pronouncements."

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Stockholders Deficit The total number of shares of all classes of stock that the Company has the authority to issue is 500,000,000, consisting of 480,000,000 shares of common stock, par value $0.00001 per share (the Common Stock), 428,422,036 shares of which are designated as Class A common stock, par value $0.00001 per share and 51,577,964 shares of which are designated as Class B common stock, par value $0.00001 per share, and 20,000,000 shares of Preferred Stock, par value $0.00001 per share. There were no shares of preferred stock issued or outstanding at June 30, 2026, and December 31, 2025. Share Repurchase Program On April 21, 2026, the Company's Board of Directors (the Board) approved a stock repurchase program (the Repurchase Program) authorizing the Company to repurchase, in the open market or through accelerated share repurchase, negotiated, or block transactions, up to $100.0 million of shares of the Company's Class A common stock. Shares may be repurchased through open market purchases or privately negotiated transactions, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the Exchange Act ), and, to the extent applicable, in accordance with the timing, price, and volume guidelines of Rule 10b-18. The timing and actual number of shares repurchased depend on a variety of factors, including price, general business and market conditions, and other investment opportunities, and repur …

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Subsequent events On July 16, 2026, the Company repaid an additional $7.0 million under the Amended 2025 Revolver, reducing the outstanding balance to $233.0 million as of the date these financial statements were issued.

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