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What changed in Presurance Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Presurance Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+379 added−322 removedSource: 10-K (2026-03-27) vs 10-K (2025-03-28)

Top changes in Presurance Holdings, Inc.'s 2025 10-K

379 paragraphs added · 322 removed · 268 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

67 edited+29 added−12 removed56 unchanged
Biggest changeYear Ended December 31, 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (1) 2024 (1) Net liability for losses and loss expenses $ 28,307 $ 30,017 $ 47,993 $ 67,830 $ 63,122 $ 84,667 $ 87,052 $ 98,741 $ 82,888 $ 103,805 $ 104,795 Liability re-estimated as of: One year later 29,321 40,239 57,452 71,186 79,351 100,261 106,482 123,668 100,698 111,090 Two years later 33,274 52,321 60,453 87,536 94,786 118,116 129,665 144,116 154,900 Three years later 38,569 58,251 69,833 95,367 108,022 137,327 143,307 148,435 Four years later 40,822 62,185 74,381 102,335 117,607 146,027 145,961 Five years later 42,274 64,547 76,860 106,705 122,597 122,635 Six years later 42,967 66,072 79,622 109,865 110,310 Seven years later 43,341 66,883 80,235 80,639 Eight years later 43,771 67,020 67,678 Nine years later 43,712 44,378 Ten years later 30,085 Net cumulative redundancy (deficiency) $ (1,778 ) $ (14,361 ) $ (19,685 ) $ (12,809 ) $ (47,188 ) $ (37,968 ) $ (58,909 ) $ (49,694 ) $ (72,012 ) $ (7,285 ) — Cumulative amount of net liability paid as of: One year later 16,091 $ 20,200 $ 29,533 $ 44,521 $ 29,520 $ 40,244 $ 39,187 $ 51,129 $ 57,963 $ 52,897 Two years later 24,060 35,972 56,962 62,369 57,864 70,478 79,965 95,765 93,994 Three years later 32,699 50,676 61,168 77,409 78,861 103,770 114,622 110,729 Four years later 37,474 58,317 66,556 87,587 100,377 128,772 121,339 Five years later 40,438 61,349 70,945 99,544 114,346 111,559 Six years later 41,979 63,814 76,563 106,535 105,956 Seven years later 42,428 65,654 78,821 78,513 Eight years later 43,025 66,238 66,342 Nine years later 43,148 43,383 Ten years later 29,518 Gross liability-end of year 31,531 35,422 54,651 87,896 92,807 107,246 111,270 139,085 165,539 174,612 189,285 Reinsurance recoverable on unpaid losses 3,224 5,405 6,658 20,066 29,685 22,579 24,218 40,344 82,651 70,807 84,490 Net liability-end of year 28,307 30,017 47,993 67,830 63,122 84,667 87,052 98,741 82,888 103,805 104,795 Gross liability re-estimated - latest 36,180 53,162 85,435 116,114 179,028 183,142 180,494 199,540 219,312 227,005 Reinsurance recoverable on unpaid losses re-estimated - latest 6,095 8,784 17,757 35,475 68,718 60,507 34,533 51,105 64,412 115,915 Net liability re-estimated - latest 30,085 44,378 67,678 80,639 110,310 122,635 145,961 148,435 154,900 111,090 Gross cumulative redundancy (deficiency) $ (4,649 ) $ (17,740 ) $ (30,784 ) $ (28,218 ) $ (86,221 ) $ (75,896 ) $ (69,224 ) $ (60,455 ) $ (53,773 ) $ (52,393 ) (1) The 2024 and 2023 column includes $10.6 million and $10.9 million of reinsurance recoverables on unpaid losses from the loss portfolio transfer (“LPT”), respectively.
Biggest changeYear Ended December 31, 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (1) 2025 (1) Net liability for losses and loss expenses $ 30,017 $ 47,993 $ 67,830 $ 63,122 $ 84,667 $ 87,052 $ 98,741 $ 82,888 $ 103,805 104,795 $ 82,353 Liability re-estimated as of: One year later 40,239 57,452 71,186 79,351 100,261 106,482 123,668 100,698 132,005 118,769 Two years later 52,321 60,453 87,536 94,786 118,116 129,665 144,116 131,931 142,161 Three years later 58,251 69,833 95,367 108,022 137,327 143,307 162,887 140,662 Four years later 62,185 74,381 102,335 117,607 146,027 151,941 169,192 Five years later 64,547 76,860 106,705 122,597 151,055 153,330 Six years later 66,072 79,622 109,865 126,201 153,694 Seven years later 66,883 80,235 110,881 129,232 Eight years later 67,020 81,030 111,711 Nine years later 67,627 81,518 Ten years later 67,704 Net cumulative redundancy (deficiency) $ (37,687 ) $ (33,525 ) $ (43,881 ) $ (66,110 ) $ (69,027 ) $ (66,278 ) $ (70,451 ) $ (57,774 ) $ (38,356 ) $ (13,974 ) — Cumulative amount of net liability paid as of: One year later $ 20,200 $ 29,533 $ 44,521 $ 29,520 $ 40,244 $ 39,187 $ 51,129 $ 57,963 $ 52,897 $ 52,585 Two years later 35,972 56,962 62,369 57,864 70,478 79,965 95,765 100,828 97,400 Three years later 50,676 61,168 77,409 78,861 103,770 114,622 126,529 134,948 Four years later 58,317 66,556 87,587 100,377 128,772 132,192 147,478 Five years later 61,349 70,945 99,544 114,346 139,954 143,799 Six years later 63,814 76,563 106,535 120,758 147,785 Seven years later 65,654 78,821 108,484 124,932 Eight years later 66,238 79,509 109,328 Nine years later 66,596 80,241 Ten years later 66,810 Gross liability-end of year 35,422 54,651 87,896 92,807 107,246 111,270 139,085 165,539 174,612 189,285 146,262 Reinsurance recoverable on unpaid losses 5,405 6,658 20,066 29,685 22,579 24,218 40,344 82,651 70,807 84,490 63,909 Net liability-end of year 30,017 47,993 67,830 63,122 84,667 87,052 98,741 82,888 103,805 104,795 82,353 Gross liability re-estimated - latest 53,145 85,711 116,736 181,906 186,185 181,376 202,561 223,823 239,112 207,305 Reinsurance recoverable on unpaid losses re-estimated - latest (14,559 ) 4,193 5,025 52,674 32,491 28,046 33,369 83,161 96,951 88,536 Net liability re-estimated - latest 67,704 81,518 111,711 129,232 153,694 153,330 169,192 140,662 142,161 118,769 Gross cumulative redundancy (deficiency) $ (17,723 ) $ (31,060 ) $ (28,840 ) $ (89,099 ) $ (78,939 ) $ (70,106 ) $ (63,476 ) $ (58,284 ) $ (64,500 ) $ (18,020 ) (1) The 2025 and 2024 column includes $3.4 million and $10.6 million of reinsurance recoverables on unpaid losses from the loss portfolio transfer (“LPT”), respectively.
In addition, during the three years ending on the third anniversary of the Closing Date, the Company is eligible under the CIS Agreement to receive up to three contingent payments based on performance thresholds of the gross revenue earned by CIS in the applicable quarter, with the aggregate amount of contingent capped at $25.0 million.
In addition, during the three years ending on the third anniversary of the Closing Date, the Company is eligible under the CIS Agreement to receive up to three contingent payments based on performance thresholds of the gross revenue earned by CIS in the applicable quarter, with the aggregate amount of contingent payments capped at $25.0 million.
In addition, for some classes of insureds individual state insurance departments may prevent premium rates for some classes of insureds from reflecting the level of risk assumed by the insurer for those classes. Such developments may adversely affect the profitability of various lines of insurance.
In addition, for some classes of insureds, individual state insurance departments may prevent premium rates from reflecting the level of risk assumed by the insurer for those classes. Such developments may adversely affect the profitability of various lines of insurance.
Claims We believe that effective claims management is vitally important to our success, allowing us to effectively pay valid claims, while vigorously defending those claims that lack merit. With our oversight, we employ a third party claims service which consists of experienced claims professionals located in Michigan, Florida, Oklahoma, Pennsylvania and Texas.
Claims We believe that effective claims management is vitally important to our success, allowing us to effectively pay valid claims, while vigorously defending those claims that lack merit. With our oversight, we employ a third party claims service which consists of experienced claims professionals located in Michigan, Florida, Oklahoma, California, Pennsylvania and Texas.
The policy management system also conveyed with CIS, which we can continue to use for our existing business, but may not be available for any new programs we may consider. CIS and SSU also handle all billing and collections. We no longer have the capacity to operate a direct bill process.
The policy management system also conveyed with CIS, which we can continue to use for our existing business, but may not be available for any new programs we may consider. CIS and SSU also handle all billing and collections. We no longer have the internal capacity to operate a direct bill process.
Carriers writing in the E&S market are not bound by most of the rate and form regulations imposed on standard market (admitted) companies, allowing them the flexibility to change the coverage offered and the rate charged without the time constraints and financial costs associated with the filing and approval process subject to admitted business.
Carriers writing in the E&S market are not bound by most of the rate and form regulations imposed on standard market (admitted) companies, allowing them the flexibility to change the coverage offered and the rate charged without the time constraints and financial 7 costs associated with the filing and approval process subject to admitted business.
Additional information relating to our reserves is included within the Unpaid Losses and Loss Adjustment Expenses section of Note 1 ~ Summary of Significant Accounting Policies and Note 7 ~ Unpaid Losses and Loss Adjustment Expenses of the Notes to the Consolidated Financial Statements, as well as in the Critical Accounting Policies: Unpaid Loss and Loss Adjustment Expense Reserves and Reinsurance Recoverables on Unpaid Loss and Loss Adjustment Expenses section of Item 7, Management’s Discussion and Analysis .
Additional information relating to our reserves is included within the Unpaid Losses and Loss Adjustment Expenses section of Note 1 ~ Summary of Significant Accounting Policies and Note 6 ~ Unpaid Losses and Loss Adjustment Expenses of the Notes to the Consolidated Financial Statements, as well as in the Critical Accounting Policies: Unpaid Loss and Loss Adjustment Expense Reserves and Reinsurance Recoverables on Unpaid Loss and Loss Adjustment Expenses section of Item 7, Management’s Discussion and Analysis .
We offer coverage to our insureds both on an E&S and admitted basis. We believe this flexibility enables us to pivot effectively between E&S and admitted policies as customer needs and regulatory conditions dictate. Our Competitive Strengths We believe the following competitive strengths have allowed us to grow our business: • Controlled and disciplined underwriting.
We offer coverage to our insureds both on an E&S and admitted basis. We believe this flexibility enables us to pivot effectively between E&S and admitted policies as customer needs and regulatory conditions dictate. 8 Our Competitive Strengths We believe the following competitive strengths have allowed us to grow our business: • Controlled and disciplined underwriting.
Sale and Disposal of Agency Business 3 On August 30, 2024 the Company completed the sale of all of the issued and outstanding membership interests of CIS to BSU Leaf Holdings LLC, a Delaware limited liability company ("Buyer"), pursuant to the Interest Purchase Agreement, dated as of August 30, 2024 (the "CIS Agreement"), by and among the Company, Buyer and Buyer's parent (the "CIS Sale").
Sale and Disposal of Agency Business On August 30, 2024, the Company completed the sale of all of the issued and outstanding membership interests of CIS to BSU Leaf Holdings LLC, a Delaware limited liability company (the "Buyer"), pursuant to the Interest Purchase Agreement, dated as of August 30, 2024 (the "CIS Agreement"), by and among the Company, Buyer and Buyer's parent (the "CIS Sale").
These outside vendors are mainly compensated based on pre‑negotiated fee schedules to control overall costs. Claims personnel are organized by line of business, with specific managers assigned as supervisors for each line of business. Reserving and payment authority levels of claims personnel are set by our CEO.
These outside vendors are mainly compensated based on pre‑negotiated fee schedules to control overall costs. 9 Claims personnel are organized by line of business, with specific managers assigned as supervisors for each line of business. Reserving and payment authority levels of claims personnel are set by our CEO.
We focus on tailoring our business to concentrate on the geographic markets and regulatory environments with the greatest opportunities for 7 growth and profitability. Our business plan centers on identification of market opportunities in jurisdictions where our insurance products can profitably suit the needs of our potential customers. • Emphasis on flexibility.
We focus on tailoring our business to concentrate on the geographic markets and regulatory environments with the greatest opportunities for growth and profitability. Our business plan centers on identification of market opportunities in jurisdictions where our insurance products can profitably suit the needs of our potential customers. • Emphasis on flexibility.
Sale of SSU 4 Prior to August 30, 2024, the Company owned 50% of SSU and the other 50% of SSU was owned by Andrew Petcoff, the son of James Petcoff, the Company’s former Executive Chairman and Co-Chief Executive Officer and beneficial owner of more than 5% of the Company’s common stock.
Sale of SSU Prior to August 30, 2024, the Company owned 50% of SSU and the other 50% of SSU was owned by Andrew Petcoff, the son of James Petcoff, the Company’s former Executive Chairman and Co-Chief Executive Officer and beneficial owner of more than 5% of the Company’s common stock.
Adjusted operating income (loss) on a per share represents the net income (loss) allocable to common shareholders excluding net realized investment gains (losses) per share, change in fair value of equity securities per share, other gains (losses0 and net income from discontinued operations.
Adjusted operating income (loss) on a per share represents the net income (loss) allocable to common shareholders excluding net realized investment gains (losses) per share, change in fair value of equity securities per share, other gains (losses) and net income from discontinued operations.
Available Information We maintain an internet website at http://www.cnfrh.com, where we make available, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Statements of Beneficial Ownership (Forms 3, 4, and 5), and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish to, the SEC.
Available Information We maintain an internet website at http://www.prehld.com, where we make available, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Statements of Beneficial Ownership (Forms 3, 4, and 5), and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish to, the SEC.
Petcoff resigned from his role as Chief Executive Officer and as a director on August 30, 2024. Concurrently, Brian Roney, President of the Company, was appointed as the Company’s Chief Executive Officer.
Petcoff resigned from his role as Chief Executive Officer and as a director on August 30, 2024. Concurrently, Brian Roney, President of the Company, was appointed as the Company’s new Chief Executive Officer.
In addition, a change of control of a domestic insurer or of any controlling person requires the prior approval of the state of domicile insurance regulator. 11 Various State and Federal Regulations Insurance companies are also affected by a variety of state and federal legislative and regulatory measures and judicial decisions that define and extend the risks and benefits for which insurance is sought and provided.
In addition, a change of control of a domestic insurer or of any controlling person requires the prior approval of the state of domicile insurance regulator. 12 Various State and Federal Regulations Insurance companies are also affected by a variety of state and federal legislative and regulatory measures and judicial decisions that define and extend the risks and benefits for which insurance is sought and provided.
The Company's assessments from insolvency funds were minimal for the years ended December 31, 2024 and 2023. Our Insurance Company Subsidiaries are also required to participate in various mandatory insurance facilities or in funding mandatory pools, which are generally designed to provide insurance coverage for consumers who are unable to obtain insurance in the voluntary insurance market.
The Company's assessments from insolvency funds were minimal for the years ended December 31, 2025 and 2024. Our Insurance Company Subsidiaries are also required to participate in various mandatory insurance facilities or in funding mandatory pools, which are generally designed to provide insurance coverage for consumers who are unable to obtain insurance in the voluntary insurance market.
Loss ratio The ratio of incurred losses and loss adjustment expenses to net earned premiums plus other income. 14 Loss reserves Liabilities established by insurers and reinsurers to reflect the estimated cost of claims incurred that the insurer or reinsurer will ultimately be required to pay in respect of insurance or reinsurance it has written.
Loss ratio The ratio of incurred losses and loss adjustment expenses to net earned premiums plus other income. 15 Loss reserves Liabilities established by insurers and reinsurers to reflect the estimated cost of claims incurred that the insurer or reinsurer will ultimately be required to pay in respect of insurance or reinsurance it has written.
Our proactive handling of claims reinforces our relationships with our customers and agents by demonstrating our willingness to defend our insureds aggressively and help them mitigate losses. • Proven management team. Our senior management team has an average of over 29 years of experience in the insurance industry. • Ability to leverage technology to drive efficiency.
Our proactive handling of claims reinforces our relationships with our customers and agents by demonstrating our willingness to defend our insureds aggressively and help them mitigate losses. • Proven management team. Our senior management team has an average of over 30 years of experience in the insurance industry. • Ability to leverage technology to drive efficiency.
There was significant judgment in deriving the fair value of the final two $10.0 million contingent payments, including estimating the extent of time it will take to achieve the earnout, the credit quality of the buyer and, most importantly, the risk that the contingent payments may not be achieved at all.
There was significant judgment in deriving the fair value of the final $10.0 million contingent payment, including estimating the extent of time it will take to achieve the earnout, the credit quality of the buyer and, most importantly, the risk that the contingent payments may not be achieved at all.
Adjusted operating income (loss) represents net income (loss) excluding net realized investment gains (losses), change in fair value of equity securities, other gains (losses) and net income from discontinued operations. 13 Adjusted operating income (loss), per share Adjusted operating income (loss) per share is a non-GAAP measure.
Adjusted operating income (loss) represents net income (loss) excluding net realized investment gains (losses), change in fair value of equity securities, other gains (losses) and net income from discontinued operations. 14 Adjusted operating income (loss), per share Adjusted operating income (loss) per share is a non-GAAP measure.
For the years ended December 31, 2024 and 2023, total assessments paid to all such facilities were minimal. 12 Restrictions on Dividends and Risk-Based Capital For information on Restrictions on Dividends and Risk-based Capital that affect us please refer to Note 11 ~ Statutory Financial Data, Risk-Based Capital and Dividend Restrictions of the Notes to the Consolidated Financial Statements and the Regulatory and Rating Issues section within Item 7, Management’s Discussion and Analysis .
For the years ended December 31, 2025 and 2024, total assessments paid to all such facilities were minimal. 13 Restrictions on Dividends and Risk-Based Capital For information on Restrictions on Dividends and Risk-Based Capital that affect us please refer to Note 11 ~ Statutory Financial Data, Risk-Based Capital and Dividend Restrictions of the Notes to the Consolidated Financial Statements and the Regulatory and Rating Issues section within Item 7 ~ Management’s Discussion and Analysis .
We no longer directly market and sell our insurance products through a network of over 4,400 independent agents that distribute our policies through approximately 950 sales offices as stated in that filing. Those relationships are now owned by unrelated third parties (CIS and SSU). This greatly amplifies our concentration of risk relative to our marketing and distribution network.
We no longer directly “market and sell our insurance products through a network of over 4,400 independent agents that distribute our policies through approximately 950 sales offices” as stated in that filing. Those relationships are now owned by unrelated third parties (CIS and SSU). This greatly amplifies our concentration of risk relative to our marketing and distribution network.
CIS comprised the Company’s MGA business and was the legal entity used to implement the strategic shift to non-risk bearing revenue from an underwriting-based model as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. CIS also represented almost all of the wholesale agency segment.
CIS comprised the Company’s managing general agency (“MGA”) business and was the legal entity used to implement the strategic shift to non risk-bearing revenue from an underwriting-based model as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. CIS also represented almost all of the wholesale agency segment.
("VSRM"). CIC, WPIC and RCIC are collectively referred to as the "Insurance Company Subsidiaries." On a stand-alone basis Conifer Holdings, Inc. is referred to as the "Parent Company." VSRM owned a 50% non-controlling interest in Sycamore Specialty Underwriters, LLC ("SSU" or "Affiliate") until August 30, 2024, when VSRM sold its interest in SSU.
TIC, WPIC and RCIC are collectively referred to as the "Insurance Company Subsidiaries." On a stand-alone basis Presurance Holdings, Inc. is referred to as the "Parent Company." VSRM owned a 50% non-controlling interest in Sycamore Specialty Underwriters, LLC ("SSU" or "Affiliate") until August 30, 2024, when VSRM sold its interest in SSU.
The Company's written premiums in states other than Illinois, Indiana and Texas relates to the commercial lines business which is substantially all in run off.
The Company's written premiums in states other than Illinois, Indiana and Texas relates to the commercial lines business, which is in run off.
For example, premium growth, alone, can trigger one or more unusual values. Refer to the Regulatory and Rating Issues section within Item 7 ~ Management’s Discussion and Analysis . Employees At December 31, 2024, we had nine full-time employees.
For example, premium growth, alone, can trigger one or more unusual values. Refer to the Regulatory and Rating Issues section within Item 7 ~ Management’s Discussion and Analysis . Employees At December 31, 2025, we had twelve full-time employees.
The Company incurred a redemption premium of $397,000 from the Series A Preferred Stock and recorded the premium as additional dividends paid on the Series A Preferred Stock. See Note 9 ~ Debt and Note 12 ~ Shareholders Equity of the Notes to the Consolidated Financial Statements for further details. A.M.
The Company incurred a redemption premium of $397,000 from the Series A Preferred Stock, and recorded the premium as additional dividends paid on the Series A Preferred Stock. See Note 8 ~ Debt and Note 12 ~ Shareholders' Equity of the Notes to the Consolidated Financial Statements for further details.
With the previously disclosed strategic shift away from underwriting revenues, the Company was relying on the growth of commission revenue to replace the lost revenue from underwriting. Now that the wholesale agency segment has been sold, the Company will need to rely entirely on underwriting revenues. These revenues have reduced significantly in the past year.
With the strategic shift away from underwriting revenues, as discussed in previous filings, the Company was relying on the growth of commission revenue to replace the lost revenue from underwriting. Now that the wholesale agency segment has been sold, the Company will need to rely entirely on underwriting revenues. These revenues have reduced significantly in the past year.
Recent Developments Premium Revenue Reductions In January 2024, the Company's premium revenues from underwriting operations began to be reduced due to a lack of adequate statutory capital and surplus in its Insurance Company Subsidiaries. The Company ceased writing almost all commercial lines premiums by August 30, 2024.
Premium Revenue Reductions In January 2024, the Company began to reduce premium revenues from underwriting operations due to a lack of adequate statutory capital and surplus in its Insurance Company Subsidiaries. The Company ceased writing almost all commercial lines premiums by August 30, 2024.
CIS and the related wholesale agency segment are now reported as discontinued operations for all periods presented. The Company sold CIS in order to generate liquidity to pay down debt and provide capital to the Insurance Company Subsidiaries. The CIS Sale had and will have a significant negative impact on revenues for the Company going forward.
CIS and the related wholesale agency segment are now reported as discontinued operations in 2024. The Company sold CIS in order to generate liquidity to pay down debt and provide capital to the Insurance Company Subsidiaries. The CIS Sale has and will continue to have a significant negative impact on revenues for the Company going forward.
The Company expects to continue to directly write the Midwest and Texas homeowners business going forward, however, the Company is subject to significant concentration of risk because all of the homeowners business is produced by one agency, SSU, and as we no longer have any ownership interest or control over SSU, we cannot control where SSU places its business and cannot assure that SSU will place its business with the Company.
The Company expects to continue to directly write the Midwest and Texas homeowners business going forward, however, the Company is subject to significant 4 concentration of risk because all of the homeowners business is produced by one agency, SSU, and we no longer have any ownership interest or control over where SSU places its business.
Our staff is now nine full-time employees. We are relying heavily upon the CIS and SSU teams to handle underwriting, claims, and information technology services. Much of this is managed either through program administration agreements with CIS and SSU or a claims administration agreement with CIS.
Our staff is now only twelve people. We are relying heavily upon the CIS and SSU teams to handle underwriting, claims, and information technology services. Much of this is managed either through program administration agreements with CIS and SSU or a claims administration agreement with CIS.
We employ a proactive claims handling philosophy that utilizes an experienced team to manage and supervise our claims from inception until resolution. We pay what we owe, contest what we don't, and make sound judgment for those claims that fall in between.
We employ a proactive claims handling philosophy that utilizes third-party experienced claim services teams to manage and supervise our claims from inception until resolution. We pay what we owe, contest what we don't, and make sound judgment for those claims that fall in between.
We utilize a web‑based information technology system that creates greater organizational efficiency in our company. Leveraging the infrastructure of programmers and support staff of third‑party vendors allows us to focus on capital management and profitability. Marketing and Distribution We sell all homeowners insurance through an independent MGA. The commercial lines previously written through CIS is now in run off.
We utilize a web‑based information technology system that creates greater organizational efficiency in our company. Leveraging the infrastructure of programmers and support staff of third‑party vendors allows us to focus on capital management and profitability. Marketing and Distribution We sell all homeowners insurance through an independent MGA, SSU.
As used in this Form 10-K, references to “Conifer,” “Conifer Holdings,” “the Company,” “our Company,” “we,” “us,” and “our” refer to Conifer Holdings, Inc., a Michigan corporation, and its wholly owned subsidiaries Conifer Insurance Company (“CIC”), White Pine Insurance Company ("WPIC"), Red Cedar Insurance Company (“RCIC”), Conifer Insurance Services ("CIS"), until August 30, 2024, and as of October 13, 2022, VSRM, Inc.
As used in this Form 10-K, references to “Presurance,” “Presurance Holdings,” “the Company,” “our Company,” “we,” “us,” and “our” refer to Presurance Holdings, Inc., a Michigan corporation, and its wholly owned subsidiaries Triassic Insurance Company (“TIC”), White Pine Insurance Company ("WPIC"), Red Cedar Insurance Company (“RCIC”), VSRM, Inc. ("VSRM") and Conifer Insurance Services ("CIS"), until August 30, 2024.
We employ third-party actuaries and other specialists to evaluate the MGA’s business performance and consider pricing adequacy, concentration of risk, and other underwriting factors that could result in modifications to the book of business.
We employ our internal actuary and other specialists to evaluate the MGA’s business performance and consider pricing adequacy, concentration of risk, and other underwriting factors that could result in modifications to the book of business.
There is greater than an insignificant chance that we do not receive one or both of these contingent payments. There are no provisions allowing for a partial payment of the earnout.
There is greater than an insignificant chance that we do not receive the final contingent payment. There are no provisions allowing for a partial payment of the earnout.
The contingent consideration included in the gain on sale was calculated based on the fair value of the three contingent payments as of September 30, 2024, in accordance with ASC 820 - Fair Value Measurement. The first contingent payment was earned as of September 30, 2024, and received in December 2024.
The contingent consideration included in the gain on sale was calculated based on the fair value of the three contingent payments as of September 30, 2024, in accordance with ASC 820 - Fair Value Measurement. The first contingent payment was earned as of September 30, 2024, and was reported at a fair value of $4.9 million.
Underwriting We employ product managers to review our position relative to our competition, create better segmentation of pricing and originate premium rate changes as appropriate. Consistent with industry practice, we grant our personal lines MGA binding authority within our specific guidelines.
Controls include frequent review of the quality of business, loss experience and other mechanisms. Underwriting We employ product managers to review our position relative to our competition, create better segmentation of pricing and originate premium rate changes as appropriate. Consistent with industry practice, we grant our personal lines MGA binding authority within our specific guidelines.
To provide ongoing capital support for the Insurance Company Subsidiaries, the Company sold its agency operations.
To provide ongoing capital support for the Insurance Company Subsidiaries, the Company sold its agency operations on August 30, 2024.
Information relating to our reinsurance structure and treaty information is included within Note 8 ~ Reinsurance. 9 Loss Reserve Development The following table presents the development of our loss and loss adjustment expenses ("LAE") reserves from 2014 through 2024, net of reinsurance recoverables (dollars in thousands).
Information relating to our reinsurance structure and treaty information is included within Note 7 ~ Reinsurance. 10 Loss Reserve Development The following table presents the development of our loss and loss adjustment expense ("LAE") reserves from 2015 through 2025, net of reinsurance recoverables (dollars in thousands).
Our daily oversight ensures we can quickly assess claims, improve communication with our policyholders and claimants and better control our claims management costs. 8 In addition, our claims professionals utilize a network of independent local adjusters and appraisers to assist with specific aspects of claims investigations, such as securing witness statements and conducting initial appraisals in states where it is practical to do so.
In addition, our claims professionals utilize a network of independent local adjusters and appraisers to assist with specific aspects of claims investigations, such as securing witness statements and conducting initial appraisals in states where it is practical to do so.
We actively solicit their input regarding potential improvements to our business methods and consult with them in developing new products and entering new customer markets. At the same time, we take careful measure to appropriately control and monitor our agents’ operations. Controls include frequent review of the quality of business, loss experience and other mechanisms.
We view our agents as key partners in risk selection. We actively solicit their input regarding potential improvements to our business methods and consult with them in developing new products and entering new customer markets. At the same time, we take careful measure to appropriately control and monitor our agents’ operations.
The increase/decrease from the original estimate would generally be a combination of factors, including, but not limited to: • Claims being settled for amounts different from the original estimates; • Reserves being increased or decreased for individual claims that remain open as more information becomes known about those individual claims; and • More or fewer claims being reported after the related year end, than had been expected to be reported before that date.
The increase/decrease from the original estimate would generally be a combination of factors, including, but not limited to: • Claims being settled for amounts different from the original estimates; • Reserves being increased or decreased for individual claims that remain open as more information becomes known about those individual claims; and • More or fewer claims being reported after the related year end, than had been expected to be reported before that date. 11 As our historical data for a particular line of business increases, both in terms of the number of years of loss experience and the size of our data pool, we will increasingly rely upon our own loss experience rather than industry loss experience in establishing our loss and LAE reserves.
Insurance Company Subsidiaries Capital Constraints As a result of multiple years of underwriting losses, mainly from the commercial lines of business, the Insurance Company Subsidiaries capital and surplus has diminished over the years. In addition, in the fourth quarter of 2024, there was significant additional adverse development in CIC.
Insurance Company Subsidiaries Capital Constraints 6 As a result of multiple years of underwriting losses, mainly from the legacy commercial lines of business, the Insurance Company Subsidiaries capital and surplus has diminished over the years. In addition, there was $12.3 million and $29.9 million of adverse development in TIC during 2025 and 2024, respectively.
We expect minimal premiums from commercial lines in the near term with no current plans to re-establish commercial lines premium volumes in the future.
The Company wrote minimal premiums from commercial lines in 2025, and has no current plans to re-establish commercial lines premium volumes in the near future.
Insurance companies writing on an admitted basis are licensed by the states in which they sell policies and are required to offer policies using premium rates and forms that are typically filed with and approved by the state insurance regulators.
As of December 31, 2025, approximately 94.6% of our gross written premiums were E&S, and approximately 5.4% were admitted. Insurance companies writing on an admitted basis are licensed by the states in which they sell policies and are required to offer policies using premium rates and forms that are typically filed with and approved by the state insurance regulators.
The Company also entered into a producer administration agreement with CIS with regards to the current books of business requiring CIS to support any underwriting and related system obligations of the run-off book of business.
The Company incurred $145,000 and $104,000 of expense for the years ended December 31, 2025 and 2024, respectively, related to the transition services agreement. The Company also entered into a producer administration agreement with CIS with regards to the current books of business requiring CIS to support any underwriting and related system obligations of the run-off book of business.
This is a significantly different structure from when we filed our 2023 Annual Report on Form 10-K, on April 1, 2024, with the U. S. Securities and Exchange Commission.
SSU has control of our remaining homeowners book of business and could move that business to another insurer or insurers. This is a significantly different structure from when we filed our 2023 Annual Report on Form 10-K, on April 1, 2024 with the U. S. Securities and Exchange Commission.
We also generate other revenues through investment income. Our expenses consist primarily of losses and loss adjustment expenses, agents’ commissions, and other underwriting and administrative expenses. Historically, we have organized our operations in three insurance businesses: commercial insurance lines, personal lines, and agency business.
Following the CIS Sale, we no longer generate commission income or related installment and policy issuance fees. Our expenses consist primarily of losses and loss adjustment expenses, agents’ commissions, and other underwriting and administrative expenses. Historically, we have organized our operations in three insurance businesses: commercial insurance lines, personal lines, and agency business prior to the CIS Sale.
The Company entered into a transition services agreement with the buyer to allow both parties to share resources for a certain period of time, generally less than twelve months, to effectuate an orderly separation of the internal systems and operations. The net cost to the Company was $225,000 which expense will be recognized over the period the services are provided.
The Company entered into a transition services agreement with the buyer to allow both parties to share resources for a certain period of time in order to effectuate an orderly separation of the internal systems and operations.
We seek to maintain favorable relationships with our select group of agents. Our distribution philosophy is to treat our agents as partners, and we provide them with competitive products, personal service and attractive commissions. We view our agents as key partners in risk selection.
The commercial lines previously written through CIS are no longer being written as of December 31, 2025. We seek to maintain favorable relationships with our select group of agents. Our distribution philosophy is to treat our agents as partners, and we provide them with competitive products, personal service and attractive commissions.
We are licensed to write insurance as an admitted carrier in 42 states, including the District of Columbia. As of December 31, 2024, we offer insurance products primarily in Texas, Illinois and Indiana, for homeowners lines and Nevada and Michigan for other lines. Our revenues are primarily derived from premiums earned from our insurance operations.
Currently, we are authorized to write insurance as an excess and surplus lines carrier in 44 states, including the District of Columbia. We are licensed to write insurance as an admitted carrier in 42 states, including the District of Columbia. As of December 31, 2025, we offer only homeowners insurance products in Texas, Illinois and Indiana.
Each share of the Series B Preferred Stock entitles the Holder to 3,000 votes on each matter properly submitted to the Company’s shareholders for their vote, however the aggregate voting power of all outstanding shares of the Series B Preferred Stock shall not exceed 19.99% of the aggregate voting power of all voting securities. 5 Redemption of Series A Preferred Stock and payoff of Senior Secured Debt On August 30, 2024, with a portion of the proceeds from the sale of CIS, the Company paid off all $9.3 million of its privately placed 12.5% Senior Secured Notes which were outstanding on August 30, 2024 (the "Senior Secured Notes"), and redeemed all of the $6.0 million of its outstanding Series A Preferred Stock.
Redemption of Series A Preferred Stock and payoff of Senior Secured Debt On August 30, 2024, with a portion of the proceeds from the sale of CIS, the Company paid off all of its outstanding $9.3 million privately placed 12.5% Senior Secured Notes, and redeemed all of the $6.0 million of its outstanding Series A Preferred Stock.
The following tables summarize our gross written premiums by segment and state for the years indicated therein (dollars in thousands): Gross Written Premium by Segment 2024 % 2023 % Commercial $ 26,686 37 % $ 107,078 74 % Personal 45,367 63 % 36,756 26 % Total $ 72,053 100 % $ 143,834 100 % Gross Written Premiums by State 2024 % 2023 % Texas $ 36,450 50.6 % $ 21,783 15.1 % Michigan 15,628 21.7 % 34,996 24.3 % Oklahoma 5,884 8.2 % 17,972 12.5 % Nevada 3,017 4.2 % 12,967 9.0 % Indiana 2,558 3.6 % 3,422 2.4 % Illinois 1,628 2.3 % 3,839 2.7 % Ohio 1,386 1.9 % 4,996 3.5 % Pennsylvania 843 1.2 % 4,314 3.0 % Kentucky 701 1.0 % 1,922 1.3 % West Virginia 653 0.9 % 2,276 1.6 % Colorado 608 0.8 % 2,723 1.9 % All Other States 2,697 3.6 % 32,624 22.7 % Total $ 72,053 100.0 % $ 143,834 100.0 % The Conifer Approach We have built our business in a manner that is designed to adapt to changing market conditions and deliver predictable results over time.
The following tables summarize our gross written premiums by segment and state for the years indicated therein (dollars in thousands): Gross Written Premium by Segment 2025 % 2024 % Commercial $ 8,712 15 % $ 26,686 37 % Personal 51,128 85 % 45,367 63 % Total $ 59,840 100 % $ 72,053 100 % Gross Written Premiums by State 2025 % 2024 % Texas $ 47,592 79.5 % $ 36,450 50.6 % Nevada 9,018 15.1 % 3,017 4.2 % Indiana 1,810 3.0 % 2,558 3.5 % Illinois 1,609 2.7 % 1,628 2.3 % All Other States (189 ) (0.3 )% 28,400 39.4 % Total $ 59,840 100.0 % $ 72,053 100.0 % The Presurance Approach We have built our business in a manner that is designed to adapt to changing market conditions and deliver predictable results over time.
Pursuant to the Membership Interest Purchase Agreement, dated as of August 30, 2024 (the “SSU Agreement”) among Sycamore Financial Group, LLC, Andrew Petcoff and VSRM Insurance Agency, Inc., the aggregate purchase price was $6.5 million, with $3.0 million paid in cash to the Company at the time of the closing and the remaining $3.5 million paid to the Company during the fourth quarter of 2024.
Pursuant to the Membership Interest Purchase Agreement, dated as of August 30, 2024 (the “SSU Agreement”) among Sycamore Financial Group, LLC, Andrew Petcoff (the buyers) and VSRM Insurance Agency, Inc.
Our insurance policies were sold to targeted small and mid-sized businesses on a single or multiple-coverage basis. We expect minimal commercial lines business going forward. 6 We write business on both an admitted and excess and surplus lines (“E&S”) basis. As of December 31, 2024, approximately 39.2% of our gross written premiums were admitted, and approximately 60.8% were E&S.
Our insurance policies were sold to targeted small and mid-sized businesses on a single or multiple-coverage basis. Effective December 31, 2025, the Company no longer writes any commercial lines business. We write business on both an admitted and excess and surplus lines (“E&S”) basis.
Our specialty homeowners insurance product line is primarily comprised of low-value dwelling insurance tailored for owners of lower valued homes, which we offer in Illinois, Indiana and Texas. Geographic Diversity and Mix of Business We have ceased writing almost all commercial lines of business, shifting our focus to mostly low-value dwelling and homeowners lines of business.
Our specialty homeowners insurance product line is primarily comprised of low-value dwelling insurance tailored for owners of lower valued homes, which we offer in Texas, Illinois and Indiana. Through our commercial insurance lines, we historically offered coverage for both commercial property and commercial liability. We also offered coverage for commercial automobiles and workers’ compensation.
Together, the commercial and personal lines refer to “underwriting” operations that take insurance risk, and the agency business refers to non-risk insurance business. Through our commercial insurance lines, we historically offered coverage for both commercial property and commercial liability. We also offered coverage for commercial automobiles and workers’ compensation.
Together, the commercial and personal lines refer to “underwriting” operations that take insurance risk, and the agency business refers to non-risk insurance business. Through our personal insurance lines, we offer homeowners insurance and dwelling fire insurance products to individuals in several states.
A gain of $6.5 million was recognized on the sale of SSU. As part of the sale, the Company entered into a new producer management agreement with SSU, which requires SSU to provide underwriting and systems support to the homeowners programs that they produce.
As part of the sale, the Company entered into a new program administration agreement with SSU, which requires SSU to provide underwriting and systems support to the homeowners programs that they produce. Separately, the Company entered into a claims administration agreement with CIS, now owned by BSU Leaf Holdings LLC., to handle all homeowners claims going forward.
ITEM 1. B USINESS Legal Organization Conifer Holdings, Inc. (Nasdaq: CNFR) is a Michigan‑domiciled insurance holding company formed in 2009. Our principal executive offices are located at 3001 West Big Beaver Road, Suite 200, Troy, MI 48084 (telephone number: (248) 559-0840). Our corporate website address is www.cnfrh.com.
Our principal executive offices are located at 3001 West Big Beaver Road, Suite 319, Troy, MI 48084: telephone number: (248) 509-9202. Our corporate website address is www.prehld.com.
As fair value estimates change over time, subsequent measurement adjustments will be reflected in income or loss from continuing operations in the period of change.
The Company determined the fair value of the third contingent payments to be $4.3 million as of 5 December 31, 2025. As fair value estimate of the third contingent payment changes over time, subsequent measurement adjustments will be reflected in income or loss in the period of change. See Note 4 ~ Fair Value Measurements for further details.
Our corporate structure allows us to offer both admitted and E&S products in select markets through either CIC or WPIC. Through our personal insurance lines, we offer homeowners insurance and dwelling fire insurance products to individuals in several states.
Our corporate structure allows us to offer both admitted and E&S products in select markets through TIC. WPIC no longer writes any business. Our MGA, CIS, operated through our wholesale agency segment. Through CIS, we historically offered commercial and personal lines insurance products for our Insurance Company Subsidiaries as well as third-party insurers.
This resulted in the need for CHI to contribute an additional $16.0 million into CIC in order for CIC to remain above the Regulatory Action Level of the Risk Based Capital (“RBC”). Even with these contributions, CIC fell within the Company Action Level of the RBC and was required to submit a plan of remediation to the domiciliary state regulators.
Even with these contributions, TIC fell within the Company Action Level of the Risk Based Capital ("RBC") with an RBC ratio of 236% and 156% as of December 31, 2025 and 2024, respectively, and is required to submit an updated plan of remediation to its domiciliary regulator.
To fund these additional contributions, CHI utilized proceeds from the CIS Sale and raised $7.5 million from the issuance of our Series B Preferred Stock. WPIC no longer writes any business and CIC’s writings are significantly constrained by its diminished capital position.
To fund these additional contributions, PHI initially raised $7.5 million from the issuance of the Series B Preferred Stock in the first quarter of 2025. PHI also utilized proceeds from the second $10.0 million earnout from the CIS Sale, which were received in the second quarter of 2025.
Business Overview We are an insurance holding company that markets and services our product offerings through specialty personal insurance business lines. Currently, we are authorized to write insurance as an excess and surplus lines carrier in 44 states, including the District of Columbia.
To further support capital, PHI did not charge any services fees to the Insurance Company Subsidiaries during 2024 or 2025. WPIC no longer writes any business and TIC’s writings are significantly constrained by its diminished capital position. Business Overview We are an insurance holding company that markets and services our product offerings through specialty personal insurance lines of business.
Removed
For example, gross written premiums were $24.4 million in the fourth quarter of 2023, as compared to only $13.7 million in the fourth quarter of 2024. Homeowners gross written premiums was $10.6 million in the fourth quarter of 2024.
Added
ITEM 1. B USINESS Legal Organization On September 30, 2025, Conifer Holdings, Inc. changed its name to Presurance Holdings, Inc. On August 21, 2025, Conifer Insurance Company changed its name to Triassic Insurance Company. Presurance Holdings, Inc. (Nasdaq: PRHI) is a Michigan‑domiciled insurance holding company formed in 2009.
Removed
The remaining premium in the fourth quarter of 2024 was generated from commercial lines, which is expected to reduce to a very small amount in the next year.
Added
Recent Developments Rights Offering On February 27, 2026, the Company issued $14.0 million of common stock through a backstopped rights offering for 14,000,000 shares of common stock priced at $1.00 per share. A portion of the proceeds were used to redeem all of the $7.5 million of the Company's outstanding Series B Preferred Stock, described below.
Removed
The second contingent payment is expected to be earned in 2025 and the third contingent payment is not expected to be earned until after 2025, if at all. The Company determined the combined fair value of the second and third contingent payments to be $8.1 million as of December 31, 2024.
Added
The remaining proceeds will be used for working capital and general corporate purposes.
Removed
Separately, the Company entered into a claims administration agreement with CIS, now owned by BSU Leaf Holdings LLC., to handle all homeowners claims going forward. Other Impacts of Recent Developments With the completion of the disposal of the agency business, we have two significant agency relationships; CIS and SSU.
Added
Backstop Agreement On February 3, 2026, The Company entered into a Backstop Agreement with Clarkston Companies, Inc., pursuant to which Clarkston Companies, Inc. agreed to purchase all unsubscribed shares of common stock to be issued under the rights offering at a price of $1.00 per share (the “Backstop Commitment”).
Removed
CIS has control over almost all of our historical commercial lines premium which is now substantially all in run off. SSU has control of our remaining homeowners book of business and could move that business to another insurer or insurers.
Added
In satisfaction of the Backstop Commitment, Clarkston and its assignee (the “Backstop Purchasers”) paid an aggregate purchase price of approximately $2.2 million in cash together with the offset of proceeds of the repurchase and redemption of the Series B Preferred Stock described below and the 3 Company issued 9,715,360 shares of common stock to the Backstop Purchasers.
Removed
Sale of Series B Preferred Stock and Warrants On February 27, 2025 (the “Initial Issue Date”), the Company sold 1,000 shares of its newly designated Series B Preferred Stock, no par value (the “Series B Preferred Stock”) and common stock purchase warrants (the “Warrants”) exercisable for 4,000,000 shares of the Company’s common stock (the “Warrant Shares,” and together with the Warrants and Preferred Stock, the “Securities”), to Clarkston 91 West LLC (the “Purchaser”), an entity affiliated with Gerald and Jeffrey Hakala, members of the Board of Directors of the Company, for an aggregate purchase price of $5,000,000.
Added
The gross cash proceeds received by the Company from the Backstop Commitment were approximately $2.2 million. All shares issued to the Backstop Purchasers in satisfaction of the Backstop Commitment were issued in a transaction pursuant to Section 4(a)(2) of the Securities Act of 1933.
Removed
The sale of the Securities was consummated on the Initial Issue Date pursuant to a Securities Purchase Agreement by and between the Company and the Purchaser. Upon approval by the Company’s stockholders, the Warrants entitle the Purchaser to purchase up to 4,000,000 shares of the Company’s common stock at an exercise price of $1.50 per share.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

78 edited+37 added−9 removed116 unchanged
Biggest changeWe have currently utilized $14.0 million of that limit and have $6.0 million of coverage remaining; • When we enter new lines of business, or encounter new theories of claims liability, we may encounter an increase in claims frequency and greater claims handling costs than we had anticipated; and • Estimation of IBNR losses is a complex and inherently uncertain process which involves a considerable degree of judgment and expertise, which adds to the overall difficulty of estimating loss reserves. 16 If any of our insurance reserves should prove to be inadequate, including reinsurance recoverables on reserves, for the reasons discussed above, or for any other reason, we will be required to increase reserves, resulting in a reduction in our net income and shareholders’ equity in the period in which the deficiency is identified.
Biggest changeIf any of our insurance reserves should prove to be inadequate, including reinsurance recoverables on reserves, for the reasons discussed above, or for any other reason, we will be required to increase reserves, resulting in a reduction in our net income and shareholders’ equity in the period in which the deficiency is identified.
These regulations generally are administered by a department of insurance in each state and relate to, among other things, authorizations to write certain lines of business, capital and surplus requirements, reserve requirements, rate and form approvals, investment and underwriting limitations, affiliate transactions, dividend limitations, cancellation and non‑renewal of policies, changes in control, solvency and a variety of other financial and non‑financial aspects of our business.
These regulations generally are administered by a department of insurance in each state and relate to, among other things, authorizations to write certain lines of business, capital and surplus requirements, reserve requirements, rate and form approvals, investment and underwriting limitations, affiliate transactions, dividend limitations, cancellation and non‑renewal of policies, changes in control, solvency and a 24 variety of other financial and non‑financial aspects of our business.
The termination of a relationship with one or more significant agents could result in lower premium revenue and could have a material adverse effect on our results of operations or business prospects. We will no longer have non risk-bearing agency revenue and must rely almost entirely on insurance premium revenue generated from our Insurance Company Subsidiaries.
The termination of a relationship with one or more significant agents could result in lower premium revenue and could have a material adverse effect on our results of operations or business prospects. We no longer have non risk-bearing agency revenue and must rely almost entirely on insurance premium revenue generated from our Insurance Company Subsidiaries.
Best considers both companies to have a “weak” ability to meet ongoing financial obligations. Concurrently, the Company withdrew its participation from the rating process, and shall be non-rated by A.M. Best going forward. 25 Claims-paying and financial strength ratings are important to an insurer’s competitive position. Our withdrawal of our participation from A.M.
Best considers both companies to have a “weak” ability to meet ongoing financial obligations. Concurrently, the Company withdrew its participation from the rating process, and shall be non-rated by A.M. Best going forward. Claims-paying and financial strength ratings are important to an insurer’s competitive position. Our withdrawal of our participation from A.M.
Such vesting or acceleration could discourage the acquisition of our Company. We could also become subject to certain anti‑takeover provisions under Michigan law which may discourage, delay or prevent someone from acquiring us or merging with us, whether or not an acquisition or merger is desired by or beneficial to our shareholders.
Such vesting or acceleration could discourage the acquisition of our Company. 30 We could also become subject to certain anti‑takeover provisions under Michigan law which may discourage, delay or prevent someone from acquiring us or merging with us, whether or not an acquisition or merger is desired by or beneficial to our shareholders.
At times, securities class action litigation has been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. This litigation, if instituted against us, could result in substantial costs, divert our management’s attention and resources, and harm our business, operating results, and financial condition.
At times, securities class action litigation has been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. This litigation, if instituted against us, could result in 27 substantial costs, divert our management’s attention and resources, and harm our business, operating results, and financial condition.
In some instances, these changes may not become apparent until sometime after we have issued insurance contracts that are affected by the changes. As a result, the full extent of liability under our insurance contracts may not be known for many years after a contract is issued.
In some instances, these changes 26 may not become apparent until sometime after we have issued insurance contracts that are affected by the changes. As a result, the full extent of liability under our insurance contracts may not be known for many years after a contract is issued.
Failure to meet these requirements could subject us to regulatory action. Our Insurance Company Subsidiaries are subject to minimum capital and surplus requirements imposed under the laws of their respective states of domicile and each state in which they issue policies.
Failure to meet these requirements could subject us to regulatory action. 25 Our Insurance Company Subsidiaries are subject to minimum capital and surplus requirements imposed under the laws of their respective states of domicile and each state in which they issue policies.
Failure to maintain adequate RBC at the required 23 levels could adversely affect the ability of our Insurance Company Subsidiaries to maintain regulatory authority to conduct their business. The State of Michigan has adopted the NAIC’s holding company act and regulations.
Failure to maintain adequate RBC at the required levels could adversely affect the ability of our Insurance Company Subsidiaries to maintain regulatory authority to conduct their business. The State of Michigan has adopted the NAIC’s holding company act and regulations.
Many factors affect our ability to pay claims accurately and timely, including the training and experience of our claims representatives, our claims organization’s culture, our ability to develop or select and implement appropriate procedures and systems to support our 19 claims functions and other factors.
Many factors affect our ability to pay claims accurately and timely, including the training and experience of our claims representatives, our claims organization’s culture, our ability to develop or select and implement appropriate procedures and systems to support our claims functions and other factors.
If we are unable to collect premiums from agents, underwriting profits may decline and our financial condition and results of operations could be materially and adversely affected. 17 Significant staff reduction and heavy reliance on third party vendors increases operational risks and may adversely impact our results of operations, reporting abilities and reputation. 68 of our 77 employees conveyed with the sale of CIS, including the entire underwriting, claims, and information technology teams.
If we are unable to collect premiums from agents, underwriting profits may decline and our financial condition and results of operations could be materially and adversely affected. 18 Significant staff reduction and heavy reliance on third party vendors increases operational risks and may adversely impact our results of operations, reporting abilities and reputation. 68 of our 77 employees conveyed with the sale of CIS, including the entire underwriting, claims, and information technology teams.
Our indebtedness, including the indebtedness we or our Insurance Company Subsidiaries may incur in the future, could have important consequences for the holders of the New Public Notes, including: • limiting our ability to satisfy our obligations with respect to the New Public Notes; • increasing our vulnerability to general adverse economic and industry conditions; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, and other general corporate requirements; • requiring a substantial portion of our cash flow from operations for the payment of principal of, and interest on, our indebtedness and thereby reducing our ability to use our cash flow to fund working capital, capital expenditures and general corporate requirements; and 28 • limiting our flexibility in planning for, or reacting to, changes in our business and the industry; and putting us at a disadvantage compared to competitors with less indebtedness.
Our indebtedness, including the indebtedness we or our Insurance Company Subsidiaries may incur in the future, could have important consequences for the holders of the notes, including: • limiting our ability to satisfy our obligations with respect to the notes; • increasing our vulnerability to general adverse economic and industry conditions; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, and other general corporate requirements; • requiring a substantial portion of our cash flow from operations for the payment of principal of, and interest on, our indebtedness and thereby reducing our ability to use our cash flow to fund working capital, capital expenditures and general corporate requirements; and • limiting our flexibility in planning for, or reacting to, changes in our business and the industry; and putting us at a disadvantage compared to competitors with less indebtedness.
These material risks include, but are not limited to, the following: • Operational Risks 15 • Investment Risks • Liquidity Risks • Legal and Regulatory Risks • Rating Agency Risks • General Risk Factors Operational Risks Our actual incurred losses may be greater than our loss and loss adjustment expense reserves, which could have a material adverse effect on our financial condition and results of operations.
These material risks include, but are not limited to, the following: • Operational Risks 16 • Investment Risks • Liquidity Risks • Legal and Regulatory Risks • Rating Agency Risks • General Risk Factors Operational Risks Our actual incurred losses may be greater than our loss and loss adjustment expense reserves, which could have a material adverse effect on our financial condition and results of operations.
A BB- and a B rating indicates that the insurer’s financial condition is low quality. Concurrently, the Company withdrew its participation from the rating process, and shall be non-rated by Kroll going forward. On March 14, 2024, A.M. Best downgraded the financial strength ratings of CIC and WPIC to C. A rating of C means A.M.
A BB- and a B rating indicates that the insurer’s financial condition is low quality. Concurrently, the Company withdrew its participation from the rating process, and shall be non-rated by Kroll going forward. On March 14, 2024, A.M. Best downgraded the financial strength ratings of TIC and WPIC to C. A rating of C means A.M.
With the sale of CIS, our only significant source of revenues will be from earned premiums in our Insurance Company Subsidiaries. This is at a time when we are significantly restricted by the amount of premiums we can write due to a lack of sufficient regulatory capital in our Insurance Company Subsidiaries (see Legal and Regulatory Risks ).
With the sale of CIS, our only significant source of revenues are from earned premiums in our Insurance Company Subsidiaries. This is at a time when we are significantly restricted by the amount of premiums we can write due to a lack of sufficient regulatory capital in our Insurance Company Subsidiaries (see Legal and Regulatory Risks ).
Any significant reduction in the intercompany service fees we receive, and any regulatory and other limitations on the payment of dividends to us by our Insurance Company Subsidiaries, may adversely affect our ability to pay interest on the New Public Notes as it comes due and the principal of the New Public Notes at their maturity.
Any significant reduction in the intercompany service fees we receive, and any regulatory and other limitations on the payment of dividends to us by our Insurance Company Subsidiaries, may adversely affect our ability to pay interest on the notes as it comes due and the principal of the notes at their maturity.
If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal and interest on the New Public Notes, or if we otherwise fail to comply with the various covenants, including certain operating covenants, we could be in default under the terms of the agreements governing the New Public Notes.
If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal and interest on the notes, or if we otherwise fail to comply with the various covenants, including certain operating covenants, we could be in default under the terms of the agreements governing the notes.
Insurance companies’ financial condition and results of operations depend upon their ability to accurately assess the potential losses and loss adjustment expenses under the terms of the insurance policies they underwrite. Reserves and related estimates of reinsurance recoverables on reserves do not represent an exact calculation of liability.
Insurance companies’ financial condition and results of operations depend upon their ability to accurately assess the potential losses and loss adjustment expenses under the terms of the insurance policies they underwrite. Reserves and related estimates of reinsurance recoverables on reserves do not represent an exact calculation of the respective liability and related asset.
Holders of the New Public Notes have limited protection under the Indenture in the event of a highly leveraged transaction, reorganization, default under our existing indebtedness, restructuring, merger or similar transaction. For these reasons, you should not consider the covenants in the Indenture a significant factor in evaluating whether to invest in the New Public Notes.
Holders of the notes have limited protection under the Indenture in the event of a highly leveraged transaction, reorganization, default under our existing indebtedness, restructuring, merger or similar transaction. For these reasons, you should not consider the covenants in the Indenture a significant factor in evaluating whether to invest in the notes.
None of our Insurance Company Subsidiaries is a guarantor of the New Public Notes and the New Public Notes are not guaranteed by any subsidiary we may acquire or create in the future. Any assets of our Insurance Company Subsidiaries will not be directly available to satisfy the claims of our creditors, including holders of the New Public Notes.
None of our Insurance Company Subsidiaries is a guarantor of the notes and the notes are not guaranteed by any subsidiary we may acquire or create in the future. Any assets of our Insurance Company Subsidiaries will not be directly available to satisfy the claims of our creditors, including holders of the notes.
As a holding company which owns insurance companies domiciled in the United States, we and our admitted Insurance Company Subsidiaries are subject to extensive regulation, primarily by Michigan (the domiciliary state for CIC and WPIC) and to a lesser degree, the other jurisdictions in which we operate.
As a holding company which owns insurance companies domiciled in the United States, we and our admitted Insurance Company Subsidiaries are subject to extensive regulation, primarily by Michigan (the domiciliary state for TIC and WPIC) and to a lesser degree, the other jurisdictions in which we operate.
Kroll’s ratings range from AAA (extremely strong) to R (under regulatory supervision). On March 25, 2024, Kroll downgraded the financial strength ratings of CIC and WPIC. Kroll has given CIC an insurance financial strength rating of BB- with a negative outlook. Kroll has given WPIC an insurance financial strength rating of B with a negative outlook.
Kroll’s ratings range from AAA (extremely strong) to R (under regulatory supervision). On March 25, 2024, Kroll downgraded the financial strength ratings of TIC and WPIC. Kroll has given TIC an insurance financial strength rating of BB- with a negative outlook. Kroll has given WPIC an insurance financial strength rating of B with a negative outlook.
The New Public Notes may trade at a discount to their face value depending on access to markets, prevailing interest rates, the market for similar securities, our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors.
The notes may trade at a discount to their face value depending on access to markets, prevailing interest rates, the market for similar securities, our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors.
If we are prohibited from redeeming or repurchasing the New Public Notes, we could try to obtain the consent of lenders under those arrangements, or we could attempt to refinance the borrowings that contain the restrictions. If we do not obtain the necessary consents or refinance the borrowings, we will be unable to repurchase the New Public Notes.
If we are prohibited from redeeming or repurchasing the notes, we could try to obtain the consent of lenders under those arrangements, or we could attempt to refinance the borrowings that contain the restrictions. If we do not obtain the necessary consents or refinance the borrowings, we will be unable to repurchase the notes.
If we are unable to generate sufficient cash flow to service our debt and meet our other commitments, we may need to restructure or refinance all or a portion of our debt, sell material assets or operations or raise additional debt or equity capital.
If we are unable to generate sufficient cash flow to service our debt, pay dividends and meet our other commitments, we may need to restructure or refinance all or a portion of our debt, sell material assets or operations or raise additional debt or equity capital.
In the event of such default, the holders of the New Public Notes could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest. There are limited financial covenants in the Indenture relating to our New Public Notes.
In the event of such default, the holders of the notes could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest. There are limited financial covenants in the Indenture relating to our notes.
Our ability to underwrite new insurance 18 policies could also be materially adversely impacted as a result of corresponding reductions in our capital. In addition, a natural disaster could materially impact the financial condition of our policyholders, resulting in loss of premiums.
Our ability to underwrite new insurance 19 policies could also be materially adversely impacted as a result of corresponding reductions in our capital. In addition, a natural disaster could materially impact the financial condition of our policyholders, resulting in loss of premiums.
The New Public Notes are structurally subordinated to all future indebtedness and other liabilities of any of our Insurance Company Subsidiaries and any subsidiary that we may in the future acquire or establish. Our Insurance Company Subsidiaries may incur substantial indebtedness in the future, all of which would be structurally senior to the New Public Notes.
The notes are structurally subordinated to all future indebtedness and other liabilities of any of our Insurance Company Subsidiaries and any subsidiary that we may in the future acquire or establish. Our Insurance Company Subsidiaries may incur substantial indebtedness in the future, all of which would be structurally senior to the notes.
As of December 31, 2024, all of the business that we write is produced by agents who handle all of the billings and collections. Accordingly, all of our premiums are first collected directly by the agents and forwarded to our Insurance Company Subsidiaries.
As of December 31, 2025, all of the business that we write is produced by agents who handle all of the billings and collections. Accordingly, all of our premiums are first collected directly by the agents and forwarded to our Insurance Company Subsidiaries.
We may also use dividends from our Insurance Company Subsidiaries, however, insurance regulations limit such dividend payments. As a result, our ability to use dividends as a source of funds to meet our debt obligations may be significantly limited.
We may also use dividends from our Insurance Company Subsidiaries, however, insurance regulations limit such dividend payments. As a result, our ability to use dividends as a source of funds to meet our debt obligations and dividend distributions may be significantly limited.
Although the New Public Notes are currently listed on Nasdaq, we cannot provide any assurances that it will remain on Nasdaq or that an active trading market will exist for the New Public Notes or that you will be able to sell your New Public Notes.
Although the notes are currently listed on Nasdaq, we cannot provide any assurances that it will remain on Nasdaq or that an active trading market will exist for the notes or that you will be able to sell your notes.
The Indenture does not restrict us or our Insurance Company Subsidiaries from incurring additional debt or other liabilities. If we incur additional debt or liabilities, our ability to pay the obligations on the New Public Notes could be adversely affected.
The Indenture does not restrict us or our Insurance Company Subsidiaries from incurring additional debt or other liabilities. If we incur additional debt or liabilities, our ability to pay the obligations on the notes could be adversely affected.
Rather, reserves and reinsurance recoverables on reserves represent an estimate of what the expected ultimate settlement and administration of claims will cost, and the ultimate liability may be greater or less than the current estimate. Our ultimate reinsurance recoverable may be greater or less than the current estimate.
Rather, reserves and reinsurance recoverables on reserves represent an estimate of what the expected ultimate settlement and administration of claims will cost, and the ultimate liability and related asset may be greater or less than the current estimate. Our ultimate reinsurance recoverable may be greater or less than the current estimate.
Moreover, the Indenture does not require us to maintain any financial ratios or specific levels of net worth, revenues, income, cash flow or liquidity and, accordingly, does not protect holders of the New Public Notes in the event that we experience material adverse changes in our financial condition or results of operations.
Moreover, the Indenture does not require us to maintain any financial ratios or specific levels of net worth, revenues, income, cash flow or liquidity and, accordingly, does not protect holders of the 31 notes in the event that we experience material adverse changes in our financial condition or results of operations.
We cannot assure you that a liquid trading market will be available for the New Public Notes, that you will be able to sell the New Public Notes at a particular time or that the price you receive when you sell will be favorable.
We cannot assure you that a liquid trading market will be available for the notes, that you will be able to sell the notes at a particular time or that the price you receive when you sell will be favorable.
Any future borrowing arrangements or debt agreements to which we become a party may contain restrictions on or prohibitions against our redemption or repurchase of the New Public Notes.
Any future borrowing arrangements or debt agreements to which we become a party may contain restrictions on or prohibitions against our redemption or repurchase of the notes.
Although the New Public Notes are currently listed on Nasdaq, the trading market for the New Public Notes may be limited, which could affect the market price of the New Public Notes or your ability to sell them.
Although the notes are currently listed on Nasdaq, the trading market for the notes may be limited, which could affect the market price of the notes or your ability to sell them.
CIC is also subject to additional regulatory monitoring requirements as a result of the Company not being above the minimum required RBC levels as of December 31, 2024. Management believes that, with a combination of the reduced writings and the capital contributions made to CIC, CIC will be back in compliance by December 31, 2025.
TIC is also subject to additional regulatory monitoring requirements as a result of the Company not being above the minimum required RBC levels as of December 31, 2025. Management believes that, with a combination of the reduced writings and the capital contributions made to TIC, TIC will be back in compliance by December 31, 2026.
Management believes that, with a combination of the reduced writings and the capital contributions made to CIC, CIC will be back in compliance by December 31, 2025. However, in the event there are losses in excess of expectations, it may take longer and more capital than expected to bring CIC back into full compliance.
Management believes that with a combination of reduced writings and capital contributions made to TIC, TIC will be back in compliance by December 31, 2026. However, in the event there are losses in excess of expectations, it may take longer and more capital than expected to bring TIC back into full compliance.
Any new minimum capital and surplus requirements adopted in the future may require us to increase the capital and surplus of our Insurance Company Subsidiaries, which we may not be able to do. As of December 31, 2024, CIC fell within the Company Action Level of the RBC formula.
Any new minimum capital and surplus requirements adopted in the future may require us to increase the capital and surplus of our Insurance Company Subsidiaries, which we may not be able to do. As of December 31, 2025, TIC fell within the Company Action Level of the RBC formula.
Any new minimum capital and surplus requirements adopted in the future may require us to increase the capital and surplus of our Insurance Company Subsidiaries, which we may not be able to do. As of December 31, 2024, CIC fell within the Company Action Level of the RBC formula.
Any new minimum capital and surplus requirements adopted in the future may require us to increase the capital and surplus of our Insurance Company Subsidiaries, which we may not be able to do. As of December 31, 2025, TIC fell within the Company Action Level of the RBC formula.
A decrease in the market price of our common stock could adversely impact the trading price of the New Public Notes. We may redeem the New Public Notes before maturity, and holders of the redeemed New Public Notes may be unable to reinvest the proceeds at the same or a higher rate of return.
A decrease in the market price of our common stock could adversely impact the trading price of the notes. We may redeem the notes before maturity, and holders of the redeemed notes may be unable to reinvest the proceeds at the same or a higher rate of return. We may redeem all or a portion of the notes.
Volatility in the market price and trading volume of our common stock could adversely impact the trading price of the New Public Notes.
Volatility in the market price and trading volume of our common stock could adversely impact the trading price of the notes.
Our principal shareholders and management own a significant percentage of our stock and are able to exert significant control over matters subject to shareholder approval. As of December 31, 2024, our executive officers, directors, 5% shareholders and their affiliates owned approximately 68.9% of our voting stock. Therefore, these shareholders have the ability to influence us through their ownership position.
Our principal shareholders and management own a significant percentage of our stock and are able to exert significant control over matters subject to shareholder approval. As of December 31, 2025, our executive officers, directors, 5% shareholders and their affiliates owned approximately 73.1% of our voting stock. Therefore, these shareholders have the ability to influence us through their ownership position.
Our ability to meet our obligations on our outstanding debt obligations, including making principal and interest payments on the New Public Notes, depends on continuing to receive sufficient funds from our Insurance Company Subsidiaries. We have met our outstanding debt obligations primarily through intercompany service fees we receive.
Our ability to meet our obligations on our outstanding debt obligations, including making principal and interest payments on the notes and making dividend distributions on our preferred stock, depends on continuing to receive sufficient funds from our Insurance Company Subsidiaries. We have met our outstanding debt obligations primarily through intercompany service fees we receive.
The New Public Notes are structurally subordinated to any future indebtedness and other liabilities of our Insurance Company Subsidiaries. The New Public Notes are obligations exclusively of Conifer Holdings, Inc. and not of any of our Insurance Company Subsidiaries.
The notes are structurally subordinated to any future indebtedness and other liabilities of our Insurance Company Subsidiaries. The notes are obligations exclusively of Presurance Holdings, Inc. and not of any of our Insurance Company Subsidiaries.
We may redeem all or a portion of the New Public Notes. If redemption does occur, holders of the redeemed New Public Notes may be unable to reinvest the money received in the redemption at a rate that is equal to or higher than the rate of return on the New Public Notes.
If redemption does occur, holders of the redeemed notes may be unable to reinvest the money received in the redemption at a rate that is equal to or higher than the rate of return on the notes.
In addition, certain legislation proposing greater regulation of the industry is periodically considered by governing bodies of some jurisdictions. 24 Our business could be adversely affected by changes in state laws, including those relating to asset and reserve valuation requirements, surplus requirements, limitations on investments and dividends, enterprise risk and RBC requirements and, at the federal level, by laws and regulations that may affect certain aspects of the insurance industry, including proposals for preemptive federal regulation.
Our business could be adversely affected by changes in state laws, including those relating to asset and reserve valuation requirements, surplus requirements, limitations on investments and dividends, enterprise risk and RBC requirements and, at the federal level, by laws and regulations that may affect certain aspects of the insurance industry, including proposals for preemptive federal regulation.
Upon the sale of CIS and the sale of our 50% ownership interest in SSU on August 30, 2024, we no longer have any control or ability to direct relationships with the retail or third party wholesale agencies.
Upon the sale of CIS and the sale of our 50% ownership interest in SSU on August 30, 2024, we no longer have any control or ability to direct relationships with the retail or third party wholesale agencies. In addition, we no longer write any commercial lines business effective December 31, 2025.
A leadership transition may also increase the likelihood of turnover among our employees and result in changes in our business strategy, which may create uncertainty and negatively impact our ability to execute our business strategy quickly and effectively.
Leadership transitions can be difficult to manage and may cause disruptions to our operations. A leadership transition may also increase the likelihood of turnover among our employees and result in changes in our business strategy, which may create uncertainty and negatively impact our ability to execute our business strategy quickly and effectively.
Some of our competitors have financial strength ratings whereas we withdrew our participation from financial strength rating agencies, offer a larger variety of products, set lower prices for insurance coverage and/or offer higher commissions than we do.
They are not obligated to sell or promote our products and may sell or promote competitors’ insurance products in addition to our products. Some of our competitors have financial strength ratings whereas we withdrew our participation from financial strength rating agencies, offer a larger variety of products, set lower prices for insurance coverage and/or offer higher commissions than we do.
In addition, the terms of our existing or future debt arrangements may restrict us from effecting any of these alternatives which could cause significant disruption to our operations, including a requirement to immediately repay our indebtedness. The occurrence of any of these events would have severe adverse effects on our liquidity and financial flexibility.
In addition, the terms of our existing or future debt arrangements may restrict us from effecting any of these alternatives which could cause significant disruption to our operations, including a requirement to immediately repay our indebtedness.
We have recorded an asset on our Consolidated Balance Sheet of $8.1 million which reflects the estimated fair value of two contingent considerations we may receive if CIS meets certain revenue hurdles in the future. We cannot be certain that we will receive either of these payments.
We have recorded an asset on our Consolidated Balance Sheet of $4.3 million which reflects the estimated fair value of the final contingent consideration we may receive if CIS meets certain revenue hurdles in the future. We cannot be certain that we will receive this payment.
Moreover, regions in and around the southeastern U.S. commonly experience hurricanes and other extreme weather conditions. As a result, certain of our insureds, especially those in Texas, are susceptible to physical damage from an active hurricane season or increased frequency of less severe storms.
Moreover, regions in and around southeastern Texas commonly experience hurricanes and other extreme weather conditions. As a result, certain of our insureds are susceptible to physical damage from an active hurricane season or increased frequency of less severe storms. Adverse climate conditions could increase the intensity of individual hurricanes or the number of hurricanes that occur each year.
As a result of the CIS Sale, the Company expects a significant decline in revenue which may adversely impact our financial performance and liquidity. Part of the gain on the sale of CIS is $8.1 million of contingent considerations that we may not receive which would reduce anticipated future liquidity.
As a result of the CIS Sale, the Company expects a significant decline in revenue which may adversely impact our financial performance and liquidity. There is a final earnout from the CIS Sale that is a $4.3 million contingent consideration as of December 31, 2025, that we may not receive which would reduce anticipated future liquidity.
Our ability to meet our obligations on our outstanding debt, including making principal and interest payments on the New Public Notes, may be limited by our holding company structure and regulatory constraints restricting dividends or other distributions by our Insurance Company Subsidiaries.
The occurrence of any of these events would have severe adverse effects on our liquidity and financial flexibility. 23 Our ability to meet our obligations on our outstanding debt, including making principal and interest payments on the notes, may be limited by our holding company structure and regulatory constraints restricting dividends or other distributions by our Insurance Company Subsidiaries.
To the extent an active trading market does not exist, the liquidity and trading price for the New Public Notes may be harmed. We may not be able to make payments on the New Public Notes.
To the extent an active trading market does not exist, the liquidity and trading price for the notes may be harmed. We may not be able to make payments on the notes. We may be unable to pay the principal and interest on the notes which will substantially decrease the market value of the notes.
The domiciliary regulator requires that CIC maintain an RBC level above the Company Action Level. Management has provided a plan to its domiciliary regulator that showed how CIC will get above the minimum level requirements.
The domiciliary regulator requires that TIC maintain an RBC level above the Company Action Level. Management is required to submit an updated plan of remediation to its domiciliary regulator to show how TIC will get above the minimum level requirements.
To fund these additional contributions, CHI utilized proceeds from the CIS Sale and raised $7.5 million from the issuance of the Series B Preferred Stock in March 2025.
To fund these additional contributions, PHI initially raised $7.5 million from the issuance of the Series B Preferred Stock in the first quarter of 2025. PHI also utilized proceeds from the second $10.0 million earnout from the CIS Sale, which were received in the second quarter of 2025.
In addition, a significant volume of customer complaints or litigation could adversely affect our brand and reputation, regardless of whether such allegations are valid or whether we are liable. Accordingly, we cannot predict with any certainty whether we will be involved in such litigation in the future or what impact such litigation would have on our business.
In addition, a significant volume of customer complaints or litigation could adversely affect our brand and reputation, regardless of whether such allegations are valid or whether we are liable.
Our failure to accurately and timely pay claims could materially and adversely affect our business, financial condition and results of operations. We must accurately and timely evaluate and pay claims that are made under our policies.
On March 10, 2026, Mr. Petcoff filed an amended complaint. The Company is reviewing the amended complaint and intends to vigorously defend the matter. Our failure to accurately and timely pay claims could materially and adversely affect our business, financial condition and results of operations. We must accurately and timely evaluate and pay claims that are made under our policies.
This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our shareholders. 27 In addition, our 2015 Omnibus Incentive Plan permits the Board or a committee thereof to accelerate, vest or cause the restrictions to lapse with respect to outstanding equity awards, in the event of, or immediately prior to, a change in control.
In addition, our 2015 Omnibus Incentive Plan permits the Board or a committee thereof to accelerate, vest or cause the restrictions to lapse with respect to outstanding equity awards, in the event of, or immediately prior to, a change in control.
We may not have sufficient funds or may be unable to arrange for additional financing to pay the repurchase price of the New Public Notes or the principal amount due at maturity.
At maturity, the entire outstanding principal amount of our 9.75% senior unsecured notes due on September 30, 2028 (the “notes”) will become due and payable. We may not have sufficient funds or may be unable to arrange for additional financing to pay the repurchase price of the notes or the principal amount due at maturity.
Because of the risks set forth above, catastrophes or an increase in the frequency of less severe storm activity could materially and adversely affect our results of operations, financial position and/or liquidity. Further, we may not have sufficient resources to respond to claims arising from a high frequency of high-severity natural catastrophes and/or of man-made catastrophic events.
We have experienced and may in the future experience a considerable increase in our insurance claims due to property damages in storm-affected areas. Because of the risks set forth above, catastrophes or 21 an increase in the frequency of less severe storm activity could materially and adversely affect our results of operations, financial position and/or liquidity.
We seek to hold a diversified portfolio of investments that is managed by professional investment advisory management firms in accordance with our investment policy and routinely reviewed by our Investment Committee. However, our investments are subject to general economic conditions and market risks as well as risks inherent to particular securities.
Our results of operations depend, in part, on the performance of our investment portfolio. We seek to hold a diversified portfolio of investments that is managed by professional investment advisory management firms in accordance with our investment policy and routinely reviewed by our Investment Committee.
It may also result in our Insurance Company Subsidiaries being limited 22 in their ability to make a dividend to us and could be a factor in causing rating agencies to downgrade our ratings.
This may include requiring the adoption of a comprehensive financial plan, revocation of its license to sell insurance products or placing the subsidiary under state regulatory control. It may also result in our Insurance Company Subsidiaries being limited in their ability to make a dividend to us and could be a factor in causing rating agencies to downgrade our ratings.
Any debt service obligations will reduce the funds available for other business purposes, and the terms and covenants relating to our current and future indebtedness could adversely impact our financial performance and liquidity. As of December 31, 2024, the Company had $12.9 million of New Public Notes outstanding. See Note 9 ~ Debt for additional details.
Any debt service obligations and required dividends on our preferred stock will reduce the funds available for other business purposes, and the terms and covenants relating to our current and future indebtedness could adversely impact our financial performance and liquidity.
We may not be able to extend or repay our indebtedness owed to our lenders, which would have a material adverse effect on our financial condition and ability to continue as a going concern. 21 At maturity, the entire outstanding principal amount of our 9.75% Senior Notes due on September 30, 2028 (the “New Public Notes”) will become due and payable.
Or it may affect our ability to continue as a going concern. We may not be able to extend or repay our indebtedness owed to our lenders, which would have a material adverse effect on our financial condition and ability to continue as a going concern.
The domiciliary regulator requires that CIC maintain an RBC level above the Company Action Level. Management has provided a plan to its domiciliary regulator that showed how CIC will get above the minimum level requirements. As part of this plan, management significantly decreased its writings in CIC.
The domiciliary regulator requires that TIC maintain an RBC level above the Company Action Level. Management is required to submit an updated plan of remediation to its domiciliary regulator to show how TIC will get above the minimum level requirements.
In addition, we already only receive a small amount of commercial business from CIS, and expect any remaining business in CIS to ultimately be transferred to another insurer. Our current plan is to write substantially only homeowners’ insurance going forward, and we will be relying entirely on just one agent for that premium channel.
Our current plan is to only write homeowners’ insurance going forward, and we will be relying entirely on just one agent for that premium channel. CIS and SSU have the full independent right to move their business to other insurers.
Investment Risks 20 Our investment portfolio is subject to significant market and credit risks, which could result in an adverse impact on our financial conditions or results of operations. Our results of operations depend, in part, on the performance of our investment portfolio.
Further, we may not have sufficient resources to respond to claims arising from a high frequency of high-severity natural catastrophes and/or of man-made catastrophic events. Investment Risks Our investment portfolio is subject to significant market and credit risks, which could result in an adverse impact on our financial conditions or results of operations.
As of March 18, 2025, the closing price of our 26 common stock was $0.69. There can also be no assurance that our stock price will meet the Minimum Bid Price Requirement or that we will maintain compliance with any other of Nasdaq’s continued listing requirements.
We continue to monitor the closing bid price of our common stock and consider our available options to resolve our noncompliance with the Minimum Bid Price Requirement. There can be no assurance that we will be able to regain compliance with the Minimum Bid Price Requirement or we will otherwise be in compliance with other Nasdaq listing criteria.
As a result of multiple years of underwriting losses, mainly from the commercial lines of business, the Insurance Company Subsidiaries capital and surplus has diminished over the years. In addition, in the fourth quarter of 2024, there was significant additional adverse development in CIC.
Required capital needed to support our Insurance Company Subsidiaries could reduce anticipated future liquidity at the Parent Company which may affect our ability to continue as a going concern. As a result of multiple years of underwriting losses, mainly from the legacy commercial lines of business, the Insurance Company Subsidiaries capital and surplus has diminished over the years.
If we do not receive these payments our assets and shareholders’ equity would be reduced by $8.1 million and it may impair our ability to pay down debt. Required capital needed to support our Insurance Company Subsidiaries could reduce anticipated future liquidity at the Parent Company which may affect our ability to continue as a going concern.
If we do not receive this payment, our assets and shareholders’ equity would be reduced by $4.3 million and it may impair our ability to pay down debt and meet other obligations.
We are subject to risks typically associated with debt financing, such as insufficient cash flow to meet required debt service payment obligations. Our ability to make payments on our indebtedness is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
In addition, as of December 31, 2025, the Company had $8.0 million of liquidation preference of Series C Preferred Stock outstanding. Our ability to make payments on our indebtedness and preferred stock is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
Our common stock may be delisted from The Nasdaq Stock Market if we cannot maintain compliance with Nasdaq’s continued listing requirements. Nasdaq Listing Rule 5550(a)(2) requires that, for continued listing on The Nasdaq Capital Market, we must maintain a minimum bid price of $1 per share (the “Minimum Bid Price Requirement”).
On March 3, 2026, the Company received a letter (the “Notice”) from the Listing Qualifications Staff of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that because the closing bid price of the Company’s common stock was below $1.00 per share for the prior 30 consecutive business days, the Company is not in compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).
This resulted in the need for CHI to contribute an additional $16.0 million into CIC in order for CIC to remain above the Regulatory Action Level of the Risk Based Capital (“RBC”). Even with these contributions, CIC fell within the Company Action Level of the RBC and was required to submit a plan of remediation to the domiciliary state regulators.
Even with these contributions, TIC fell within the Company Action Level of the Risk Based Capital ("RBC") with an RBC ratio of 22 236% and 156% as of December 31, 2025 and 2024, respectively, and is required to submit an updated plan of remediation to its domiciliary regulator.
If we fail to satisfy the continued listing requirements of The Nasdaq Capital Market, Nasdaq may take steps to delist our common stock, which could have a materially adverse effect on our ability to raise additional funds as well as the price and liquidity of our common stock.
If the price of the Company’s common stock continues to trade below $1.00 per share for a sustained period or the Company does not meet other continued listing requirements, the common stock may be delisted from the Nasdaq Capital Market, which could affect the market price and liquidity for the common stock and reduce the Company’s ability to raise additional capital.
Removed
CIS and SSU have the full independent right to move their business to other insurers. They are not obligated to sell or promote our products and may sell or promote competitors’ insurance products in addition to our products.
Added
We have currently utilized $16.5 million of that limit.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. P ROPERTIES We lease office space in Troy, Michigan, where our principal executive office is located. We also lease offices in Southfield, Michigan; and Miami, Florida. We believe that our facilities are adequate for our current needs and that suitable additional or substitute space will be available as needed.
Biggest changeITEM 2. P ROPERTIES We lease office space in Troy, Michigan, where our principal executive office is located. We also lease an office in Miami, Florida. We believe that our facilities are adequate for our current needs and that suitable additional or substitute space will be available as needed.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGA L PROCEEDINGS We are party to legal proceedings which arise in the ordinary course of business. We believe that the outcome of such matters, individually and in the aggregate, will not have a material adverse effect on our consolidated financial position, operating results or liquidity. ITEM 4. MINE SA FETY DISCLOSURES Not Applicable. 30 PART II
Biggest changeITEM 3. LEGA L PROCEEDINGS We are party to legal proceedings which arise in the ordinary course of business. We believe that the outcome of such matters, individually and in the aggregate, will not have a material adverse effect on our consolidated financial position, operating results or liquidity.
Added
On February 10, 2026, James Petcoff, a shareholder of the Company, filed a complaint against the Company, current and former directors of the Company, the Company’s Chief Executive Officer and Clarkston 91 West (“Clarkston 91”), which purchased preferred shares and warrants from the Company.
Added
The complaint alleges, among other things, breaches of fiduciary duties and Michigan law with respect to the sale by the Company of Series B Preferred Stock and Warrants to Clarkston 91 in February and March 2025 and the sale by the Company of Series C Preferred Stock to an affiliate of Clarkston 91 in December 2025.
Added
On March 10, 2026, Mr. Petcoff filed an amended complaint. The Company is reviewing the amended complaint and intends to vigorously defend the matter. ITEM 4. MINE SA FETY DISCLOSURES Not Applicable. 33 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities On December 20, 2023 (the “Initial Issue Date”), the Company issued $6.0 million of its newly designated Series A Preferred Stock, no par value, through a private placement of 1,000 shares of Series A Preferred Stock priced at $6,000 per share that matures on June 30, 2026 (the “Maturity Date”).
Biggest changeOn December 23, 2025, the Company issued a total of $8.0 million of its newly designated non-convertible mandatorily redeemable Series C Preferred Stock, no par value, through a private placement of 1,600 preferred shares priced at $5,000 per share that matures on April 2, 2027, to Clarkston Companies, Inc., an entity affiliated with Jeffrey Hakala, a member of the Board of Directors of the Company.
Conifer Holdings, Inc. is a holding company that has no substantial revenues of its own, and relies primarily on intercompany service fees, cash dividends or distributions from its subsidiaries to pay operating expenses, service debts, and pay dividends to shareholders.
Presurance Holdings, Inc. is a holding company that has no substantial revenues of its own, and relies primarily on intercompany service fees, cash dividends or distributions from its subsidiaries to pay operating expenses, service debts, and pay dividends to shareholders.
The Parent Company has not historically paid dividends and does not anticipate paying cash dividends on its common stock for the foreseeable future. Shareholders of Record Our common stock is traded on The Nasdaq Capital Market under the symbol "CNFR." As of March 28, 2025, there were 24 shareholders of record of our common stock.
The Parent Company has not historically paid dividends and does not anticipate paying cash dividends on its common stock for the foreseeable future. Shareholders of Record Our common stock is traded on The Nasdaq Capital Market under the symbol "PRHI." As of March 27, 2026, there were 24 shareholders of record of our common stock.
The repurchase program does not include specific 31 price targets or timetables. The company did not repurchase any shares of stock for the quarter ended December 31, 2024 related to the stock repurchase program.
The repurchase program does not include specific 34 price targets or timetables. The Company did not repurchase any shares of stock for the year ended December 31, 2025 related to the stock repurchase program.
Big Beaver Rd., Suite 200 Equiniti Trust Company, LLC Troy, MI 48084 48 Wall Street Phone: (248) 559-0840 New York, NY 10005 Corporate Counsel Honigman, LLP 660 Woodward Avenue 2290 First National Building Detroit, MI 48226-3506 Shareholder Relations and Form 10-K A copy of our 2024 Annual Report and Form 10-K, as filed with the Securities and Exchange Commission, may be obtained upon written request to our Financial Reporting Department at our corporate headquarters at ir@cnfrh.com.
Big Beaver Rd., Suite 319 Equiniti Trust Company, LLC Troy, MI 48084 48 Wall Street Phone: (248) 509-9202 New York, NY 10005 Corporate Counsel Honigman, LLP 660 Woodward Avenue 2290 First National Building Detroit, MI 48226-3506 Shareholder Relations and Form 10-K A copy of our 2025 Annual Report and Form 10-K, as filed with the Securities and Exchange Commission, may be obtained upon written request to our Financial Reporting Department at our corporate headquarters at ir@prehld.com Dividend Policy Neither Michigan law nor our amended and restated articles of incorporation requires our Board to declare dividends on our common stock.
The Series A Preferred Stock was sold to Clarkston 91 West LLC (the "Purchaser"), an entity affiliated with Gerald and Jeffrey Hakala, members of the Board of the Company.
The Series B Preferred Stock was sold to Clarkston 91 West LLC (the "Purchaser"), an entity affiliated with Gerald and Jeffrey Hakala, who were both at such time members of the Board of Directors of the Company. The Company used the proceeds for working capital and general corporate purposes.
Removed
Dividend Policy Neither Michigan law nor our amended and restated articles of incorporation requires our Board to declare dividends on our common stock.
Added
Recent Sales of Unregistered Securities On February 3, 2026, The Company entered into a Backstop Agreement with Clarkston Companies, Inc., pursuant to which Clarkston Companies, Inc. agreed to purchase all unsubscribed shares of common stock to be issued under the backstopped rights offering at a price of $1.00 per share (the “Backstop Commitment”).
Removed
The sale of the Series A Preferred Stock was not registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and certain rules and regulations promulgated thereunder.
Added
In satisfaction of the Backstop Commitment, Clarkston and its assignee (the “Backstop Purchasers”) paid an aggregate purchase price of approximately $2.2 million in cash together with the offset of proceeds of the repurchase and redemption of the Series B Preferred Stock described below and the Company issued 9,715,360 shares of common stock to the Backstop Purchasers.
Removed
On August 30, 2024, the Company redeemed all of the $6.0 million of its outstanding Series A Preferred Stock. ITEM 6. [Reserved] 32
Added
The gross cash proceeds received by the Company from the Backstop Commitment were approximately $2.2 million. All shares issued to the Backstop Purchasers in satisfaction of the Backstop Commitment were issued in a transaction pursuant to Section 4(a)(2) of the Securities Act of 1933.
Added
On February 27, 2025 and March 3, 2025, the Company issued a total of $7.5 million of its newly designated non-convertible mandatorily redeemable Series B Preferred Stock, no par value, through a private placement of 1,500 preferred shares priced at $5,000 per share that matures on December 31, 2026, and issued the Purchaser (as defined below) common stock purchase warrants (the "Warrants") to purchase 4,000,000 shares at an exercise price of $1.50 per share.
Added
The Warrants entitle the Purchaser to purchase up to 4,000,000 shares of the Company’s common stock at an exercise price of $1.50 per share. The Warrants will expire on January 31, 2027.
Added
The Company redeemed the Series B Preferred Stock in full in February 2026 in connection with its backstopped rights offering, as discussed above. ITEM 6. [Reserved] 35

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

109 edited+36 added−29 removed74 unchanged
Biggest changeAdjusted operating loss, a non-GAAP measure, was $34.6 million, or $2.83 per share in 2024, compared to $27.9 million, or $2.28 per share in 2023. 42 Results of Operations - 2024 Compared to 2023 The following table summarizes our operating results for the years indicated (dollars in thousands): Summary Operating Results Years Ended December 31, 2024 2023 $ Change % Change Gross written premiums $ 72,053 $ 143,834 $ (71,781 ) (49.9 %) Net written premiums $ 49,338 $ 68,688 $ (19,350 ) (28.2 %) Net earned premiums $ 60,862 $ 83,935 $ (23,073 ) (27.5 %) Other income 328 552 (224 ) (40.6 %) Losses and loss adjustment expenses, net 73,302 82,413 (9,111 ) (11.1 %) Policy acquisition costs 13,335 15,797 (2,462 ) (15.6 %) Operating expenses 11,831 16,738 (4,907 ) (29.3 %) Underwriting gain (loss) (37,278 ) (30,461 ) (6,817 ) 22.4 % Net investment income 5,763 5,447 316 5.8 % Net realized investment gains (losses) (125 ) (20 ) (105 ) * Change in fair value of equity securities (203 ) 608 (811 ) * Other gains (losses) 646 — 646 * Interest expense 4,883 3,206 1,677 52.3 % Income (loss) from continuing operations before income taxes (36,080 ) (27,632 ) (8,448 ) 30.6 % Income tax expense (benefit) (1,840 ) (353 ) (1,487 ) * Net income (loss) from continuing operations (34,240 ) (27,279 ) (6,961 ) 25.5 % Net income from discontinued operations 58,587 1,375 57,212 * Net income (loss) $ 24,347 $ (25,904 ) $ 50,251 Book value per common share outstanding $ 1.76 $ 0.24 Underwriting Ratios: Loss ratio (1) 120.2 % 97.8 % Expense ratio (2) 35.8 % 37.1 % Combined ratio (3) 156.0 % 134.9 % (1) The loss ratio is the ratio, expressed as a percentage, of net losses and loss adjustment expenses to net earned premiums and other income from underwriting operations.
Biggest changeAdjusted operating loss, a non-GAAP measure, was $24.2 million, or $1.98 per share in 2025, compared to $34.6 million, or $2.83 per share in 2024. 46 Results of Operations - 2025 Compared to 2024 The following table summarizes our operating results for the years indicated (dollars in thousands): Summary Operating Results Years Ended December 31, 2025 2024 $ Change % Change Gross written premiums $ 59,840 $ 72,053 $ (12,213 ) (17.0 %) Net written premiums $ 21,348 $ 49,338 $ (27,990 ) (56.7 %) Net earned premiums $ 32,387 $ 60,862 $ (28,475 ) (46.8 %) Other income 142 328 (186 ) (56.7 %) Losses and loss adjustment expenses, net 38,541 73,302 (34,761 ) (47.4 %) Policy acquisition costs 8,405 13,335 (4,930 ) (37.0 %) Operating expenses 11,470 11,831 (361 ) (3.1 %) Underwriting gain (loss) (25,887 ) (37,278 ) 11,391 * Net investment income 5,037 5,763 (726 ) (12.6 %) Net realized investment gains (losses) (716 ) (125 ) (591 ) * Change in fair value of equity securities 234 (203 ) 437 * Other gains (losses) — 500 (500 ) * Change in fair value of contingent considerations 6,220 146 6,074 * Interest expense 3,185 4,883 (1,698 ) (34.8 %) Income (loss) from continuing operations before income taxes (18,297 ) (36,080 ) 17,783 * Income tax expense (benefit) 141 (1,840 ) 1,981 * Net income (loss) from continuing operations (18,438 ) (34,240 ) 15,802 * Net income from discontinued operations — 58,587 (58,587 ) * Net income (loss) $ (18,438 ) $ 24,347 $ (42,785 ) * Book value per common share outstanding $ 0.73 $ 1.76 Underwriting Ratios: Loss ratio (1) 119.0 % 120.2 % Expense ratio (2) 49.8 % 35.8 % Combined ratio (3) 168.8 % 156.0 % (1) The loss ratio is the ratio, expressed as a percentage, of net losses and loss adjustment expenses to net earned premiums and other income from underwriting operations.
The contingent consideration included in the gain on sale was calculated based on the fair value of the three contingent payments as of September 30, 2024, in accordance with ASC 820 - Fair Value Measurement. The first contingent payment was earned as of September 30, 2024, and was reported at a fair value of $4.9 million value.
The contingent consideration included in the gain on sale was calculated based on the fair value of the three contingent payments as of September 30, 2024, in accordance with ASC 820 - Fair Value Measurement. The first contingent payment was earned as of September 30, 2024, and was reported at a fair value of $4.9 million.
Unpaid Loss and Loss Adjustment Expense Reserves and Reinsurance Recoverables on Unpaid Loss and Loss Adjustment Expenses Our recorded loss and loss adjustment expenses ("LAE") reserves represent management’s best estimate of unpaid loss and LAE, and related reinsurance recoverables, at each balance sheet date, based on information, facts and circumstances known at such time.
Unpaid Loss and Loss Adjustment Expense Reserves and Reinsurance Recoverables on Unpaid Loss and Loss Adjustment Expenses Our recorded loss and loss adjustment expense ("LAE") reserves represent management’s best estimate of unpaid loss and LAE, and related reinsurance recoverables, at each balance sheet date, based on information, facts and circumstances known at such time.
The case reserve is based primarily upon an evaluation of the following factors: • The type of loss; • The severity of injury or damage; • Our knowledge of the circumstances surrounding the claim; • The jurisdiction of the occurrence; • Policy provisions related to the claim; 36 • Expenses intended to cover the ultimate cost of settling claims, including investigation and defense of lawsuits resulting from such claims, costs of outside adjusters and experts, and all other expenses which are identified to the case; and • Any other information considered pertinent to estimating the indemnity and expense exposure presented by the claim.
The case reserve is based primarily upon an evaluation of the following factors: • The type of loss; • The severity of injury or damage; • Our knowledge of the circumstances surrounding the claim; • The jurisdiction of the occurrence; • Policy provisions related to the claim; • Expenses intended to cover the ultimate cost of settling claims, including investigation and defense of lawsuits resulting from such claims, costs of outside adjusters and experts, and all other expenses which are identified to the case; and • Any other information considered pertinent to estimating the indemnity and expense exposure presented by the claim.
Losses are charged against the allowance when management believes the uncollectability of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Our outside investment managers assist us in this evaluation. Fair values are measured in accordance with ASC 820, Fair Value Measurements .
Losses are charged against the allowance when management believes the uncollectability of an available-for-sale 43 security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Our outside investment managers assist us in this evaluation. Fair values are measured in accordance with ASC 820, Fair Value Measurements .
We do not discount the loss and LAE reserves for the time value of money. Case reserves are initially set by our claims personnel. When a claim is reported to us, our claims department completes a case‑basis valuation and establishes a case reserve for the estimated amount of the probable ultimate losses and LAE associated with that claim.
We do not discount the loss and LAE reserves for the time value of money. 39 Case reserves are initially set by our claims personnel. When a claim is reported to us, our claims department completes a case‑basis valuation and establishes a case reserve for the estimated amount of the probable ultimate losses and LAE associated with that claim.
The policy management system also conveyed with CIS, which we can continue to use for our existing business, but may not be available for any new programs we may consider. CIS and SSU also handle all billing and collections. We no longer have the capacity to operate a direct bill process.
The policy management system also conveyed with CIS, which we can continue to use for our existing business, but may not be available for any new programs we may consider. CIS and SSU also handle all billing and collections. We no longer have the internal capacity to operate a direct bill process.
The prices provided by the independent pricing services are generally based on observable market data in active markets (e.g., broker quotes and prices observed for comparable securities). 40 The values for publicly‑traded equity securities are generally based on Level 1 inputs which use the market approach valuation technique. The values for debt securities generally incorporate significant Level 2 inputs.
The prices provided by the independent pricing services are generally based on observable market data in active markets (e.g., broker quotes and prices observed for comparable securities). The values for publicly‑traded equity securities are generally based on Level 1 inputs which use the market approach valuation technique. The values for debt securities generally incorporate significant Level 2 inputs.
In addition, during the three years ending on the third anniversary of the Closing Date, the Company is eligible under the CIS Agreement to receive up to 33 three contingent payments based on performance thresholds of the gross revenue earned by CIS in the applicable quarter, with the aggregate amount of contingent capped at $25.0 million.
In addition, during the three years ending on the third anniversary of the Closing Date, the Company is eligible under the CIS Agreement to receive up to three contingent payments based on performance thresholds of the gross revenue earned by CIS in the applicable quarter, with the aggregate amount of contingent payments capped at $25.0 million.
In connection with the CIS Sale, 68 of the Company’s 77 employees were transferred to the Buyer, including Nicholas Petcoff, the Company’s then current Chief Executive Officer, as well as all of the underwriting, claims and IT teams, and a portion of the finance staff and other operating staff. As part of the completion of t the CIS Sale, Mr.
In connection with the CIS Sale, 68 of the Company’s 77 employees were transferred to the Buyer, including Nicholas Petcoff, the Company’s then current Chief Executive Officer, as well as all of the underwriting, claims and IT teams, and a portion of the finance staff and other operating staff. As part of the completion of the CIS Sale, Mr.
Our loss and LAE reserves do not represent an exact measurement of liability, but are estimates. The most significant assumptions affecting our IBNR reserve estimates are the loss development factors applied to paid losses and case reserves to develop IBNR by line of business and accident year.
Our loss and LAE reserves are estimates and do not represent an exact measurement of liability. The most significant assumptions affecting our IBNR reserve estimates are the loss development factors applied to paid losses and case reserves to develop IBNR by line of business and accident year.
Contingent Considerations from the CIS Sale As noted earlier, the Company is eligible to receive three contingent payments from the CIS Sale, based on performance thresholds of the gross revenue earned by CIS. The first contingent payment was earned as of September 30, 2024, and received in December 2024.
Contingent Considerations from the CIS Sale As noted earlier, the Company was eligible to receive three contingent payments from the CIS Sale, based on performance thresholds of the gross revenue earned by CIS. The first contingent payment was earned as of September 30, 2024, and received in December 2024.
Critical Accounting Policies and Estimates General We identified the accounting estimates below as critical to the understanding of our financial position and results of operations. Critical accounting estimates are defined as those estimates that are both important to the portrayal of our financial condition and results of operations and which require us to exercise significant judgment.
Critical Accounting Estimates General We identified the accounting estimates below as critical to the understanding of our financial position and results of operations. Critical accounting estimates are defined as those estimates that are both important to the portrayal of our financial condition and results of operations and which require us to exercise significant judgment.
Andrew Petcoff purchased 50% of SSU from the Company on December 31, 2022, for $1,000. On August 30, 2024, the Company completed the sale of its 50% ownership interest in SSU to an entity owned by Andrew Petcoff.
Andrew Petcoff purchased 50% of SSU from the Company on December 31, 2022, for $1,000. 37 On August 30, 2024, the Company completed the sale of its 50% ownership interest in SSU to an entity owned by Andrew Petcoff.
These estimates, which are referred to as unallocated loss adjustment expense ("ULAE") reserves, are based on internal cost studies and analyses reflecting the relationship of ULAE paid to actual paid 37 and incurred losses.
These estimates, which are referred to as unallocated loss adjustment expense ("ULAE") reserves, are based on internal cost studies and analyses reflecting the relationship of ULAE paid to actual paid and incurred losses.
A BB- and a B rating indicates that the insurer's financial condition is low quality. Concurrently, the Company withdrew its participation in the rating process, and shall be non-rated by Kroll going forward. On March 14, 2024, A.M. Best downgraded the financial strength ratings of CIC and WPIC to C. A rating of C means A.M.
A BB- and a B rating indicates that the insurer's financial condition is low quality. Concurrently, the Company withdrew its participation in the rating process, and shall be non-rated by Kroll going forward. On March 14, 2024, A.M. Best downgraded the financial strength ratings of TIC and WPIC to C. A rating of C means A.M.
There was significant judgment in deriving the fair value of the final two $10.0 million contingent payments, including estimating the extent of time it will take to achieve the earnout, the credit quality of the buyer and, most importantly, the risk that the contingent payments may not be achieved at all.
There was significant judgment in deriving the fair value of the final $10.0 million contingent payment, including estimating the extent of time it will take to achieve the earnout, the credit quality of the buyer and, most importantly, the risk that the contingent payments may not be achieved at all.
The shareholders' equity amounts include an income tax rate assumption of 21%, however due to the net operating losses (“NOL”) available to use against taxable income and the offsetting valuation allowance, there is no difference between pre-tax income and shareholders’ equity in this schedule. The dollar amounts in the table are in thousands.
The shareholders' equity amounts include an income tax rate assumption of 21%, however due to the net operating losses available to use against taxable income and the offsetting valuation allowance, there is no 42 difference between pre-tax income and shareholders’ equity in this schedule. The dollar amounts in the table are in thousands.
Generally, the limitations are based on the greater of statutory net income for the preceding year or 10% of statutory surplus at the end of the preceding year. There were no dividends paid from our Insurance Company Subsidiaries for the years ended December 31, 2024 and 2023.
Generally, the limitations are based on the greater of statutory net income for the preceding year or 10% of statutory surplus at the end of the preceding year. There were no dividends paid from our Insurance Company Subsidiaries for the years ended December 31, 2025 and 2024.
We applied the sensitivity factors to each accident year amount and have calculated the amount of potential net loss and LAE reserve change and the impact on 2024 reported pre-tax income and on net income and shareholders’ equity at December 31, 2024.
We applied the sensitivity factors to each accident year amount and have calculated the amount of potential net loss and LAE reserve change and the impact on 2025 reported pre-tax income and on net income and shareholders’ equity at December 31, 2025.
As a result, there were no taxable impacts to adjusted operating income from the adjustments to net income (loss) in the table above after taking into account the use of NOLs and the change in the valuation allowance.
As a result, there were no taxable impacts to adjusted operating income from the adjustments to net income (loss) in the table above after taking into account the use of net operating losses and the change in the valuation allowance.
Adjusted operating income and adjusted operating income per share should be read in conjunction with the GAAP financial results. Our definition of adjusted operating income may be 41 different from that used by other companies.
Adjusted operating income and adjusted operating income per share should be read in conjunction with the GAAP financial results. Our definition of adjusted operating income may be different 44 from that used by other companies.
In December 2024, the Company bought back $5.0 million of its outstanding New Public Notes held by the lender of the Company's prior Senior Secured Notes at a 10.0% discount. The Company recognized a $500,000 gain from the buyback that is included in Other Gains on the Consolidated Statement of Operations.
In December 2024, the Company bought back $5.0 million of its outstanding senior unsecured notes held by the lender of the Company's prior Senior Secured Notes at a 10.0% discount. The Company recognized a $500,000 gain from the buyback that is included in Other Gains on the Consolidated Statement of Operations.
Our staff is now only approximately ten people. We are relying heavily upon the CIS and SSU teams to handle underwriting, claims, and information technology services. Much of this is managed either through program administration agreements with CIS and SSU or a claims administration agreement with CIS.
Our staff is now only twelve people. We are relying heavily upon the CIS and SSU teams to handle underwriting, claims, and information technology services. Much of this is managed either through program administration agreements with CIS and SSU or a claims administration agreement with CIS.
Redemption of Series A Preferred Stock and payoff of Senior Secured Debt 34 On August 30, 2024 with a portion of the proceeds from the sale of CIS, the Company paid off all $9.3 million of its privately placed 12.5% Senior Secured Notes which were outstanding at August 30, 2024, and redeemed all of the $6.0 million of its outstanding Series A Preferred Stock.
Redemption of Series A Preferred Stock and payoff of Senior Secured Debt On August 30, 2024, with a portion of the proceeds from the sale of CIS, the Company paid off all of its outstanding $9.3 million privately placed 12.5% Senior Secured Notes, and redeemed all of the $6.0 million of its outstanding Series A Preferred Stock.
The New Public Notes bear an interest rate of 9.75% per annum, payable quarterly at the end of March, June, September and December and mature on September 30, 2028. The Company may redeem the New Public Notes, in whole or in part, at face value at any time after September 30, 2025.
The senior unsecured notes bear an interest rate of 9.75% per annum, payable quarterly at the end of March, June, September and December and mature on September 30, 2028. The Company may redeem the senior unsecured notes in whole or in part, at face value at any time after September 30, 2025.
Sale and Disposal of Agency Business On August 30, 2024 the Company completed the sale of all of the issued and outstanding membership interests of CIS to BSU Leaf Holdings LLC, a Delaware limited liability company, pursuant to the CIS Agreement, by and among the Company, Buyer and Buyer's parent).
Sale and Disposal of Agency Business On August 30, 2024, the Company completed the sale of all of the issued and outstanding membership interests of CIS to BSU Leaf Holdings LLC, a Delaware limited liability company (the "Buyer"), pursuant to the Interest Purchase Agreement, dated as of August 30, 2024 (the "CIS Agreement"), by and among the Company, Buyer and Buyer's parent (the "CIS Sale").
As an effort to support CIC and WPIC during 2024, the Parent Company received no intercompany service fees from the Insurance Company Subsidiaries and has relied significantly on proceeds from sales of assets and capital raises over the last two years in order to ensure its ability to meet its obligations as they became due.
As an effort to support TIC and WPIC during 2025 and 2024, PHI received no intercompany service fees from the Insurance Company Subsidiaries and has relied significantly on proceeds from sales of assets and capital raises over the last two years in order to ensure its ability to meet its obligations as they became due.
The Company incurred a redemption premium of $397,000 from the Series A Preferred Stock, and recorded the premium as additional dividends paid on the Series A Preferred Stock. See Note 9 ~ Debt and Note 12 ~ Shareholders Equity of the Notes to the Consolidated Financial Statements for further details. A.M.
The Company incurred a redemption premium of $397,000 from the Series A Preferred Stock, and recorded the premium as additional dividends paid on the Series A Preferred Stock. See Note 8 ~ Debt and Note 12 ~ Shareholders' Equity of the Notes to the Consolidated Financial Statements for further details. A.M.
The following table displays ultimate net loss and LAE and net loss and LAE reserves by accident year for the year ended December 31, 2024.
The following table displays ultimate net loss and LAE and net loss and LAE reserves by accident year for the year ended December 31, 2025.
On August 30, 2024, the Company paid off all of its $9.3 million of outstanding Senior Secured Notes with the proceeds from the CIS Sale. The Company incurred a $753,000 call premium from the paydown of the Senior Secured Notes. The Company amortized through interest expense $771,000 of debt issuance costs related to the paydown of the Senior Secured Notes.
The Company amortized through interest expense $379,000 of debt issuance costs related to the $5.0 million buyback of notes. On August 30, 2024, the Company paid off all of its $9.3 million of outstanding Senior Secured Notes with the proceeds from the CIS Sale. The Company incurred a $753,000 call premium from the paydown of the Senior Secured Notes.
Our ability to service debt, and pay administrative expenses is primarily reliant upon our intercompany service fees paid by the Insurance Company Subsidiaries to the holding company for management, administrative, and information technology services provided to the Insurance Company Subsidiaries by the Parent Company.
Our ability to service debt, pay dividends on our preferred stock and pay administrative expenses is primarily reliant upon our intercompany service fees paid by the Insurance Company Subsidiaries to the holding company for management, administrative, and information technology services provided to the Insurance Company Subsidiaries by the Parent Company.
Non-GAAP Financial Measures Adjusted Operating Income (Loss) and Adjusted Operating Income (Loss) Per Share Adjusted operating income (loss) and adjusted operating income (loss) per share are non-GAAP measures that represent net income allocable to common shareholders excluding net realized investment gains (losses), change in fair value of equity securities, other gains (losses) and net income from discontinued operations.
Non-GAAP Financial Measures Adjusted Operating Income (Loss) and Adjusted Operating Income (Loss) Per Share Adjusted operating income (loss) and adjusted operating income (loss) per share are non-GAAP measures that represent net income allocable to common shareholders excluding net realized investment gains (losses), change in fair value of equity securities, other gains (losses), change in fair value of contingent considerations, change in contingent consideration bonus expense and net income (loss) from discontinued operations.
Investment Valuation and Credit Losses We carry debt securities classified as available-for-sale at fair value, and unrealized gains and losses on such securities, totaled $12.3 million as of December 31, 2024, net of any deferred taxes, which are reported as a separate component of accumulated other comprehensive income.
Investment Valuation and Credit Losses We carry debt securities classified as available-for-sale at fair value, and unrealized gains and losses on such securities, totaled $8.4 million as of December 31, 2025, net of any deferred taxes, which are reported as a separate component of accumulated other comprehensive income.
With the previously mentioned strategic shift away from underwriting revenues, the Company was relying on the growth of commission revenue to replace the lost revenue from underwriting. Now that the wholesale agency segment has been sold, the Company will need to rely entirely on underwriting revenues. These revenues have reduced significantly in the past year.
With the strategic shift away from underwriting revenues, as discussed in previous filings, the Company was relying on the growth of commission revenue to replace the lost revenue from underwriting. Now that the wholesale agency segment has been sold, the Company will need to rely entirely on underwriting revenues. These revenues have reduced significantly in the past year.
The estimation of ultimate liability for losses and LAE is a complex, imprecise and inherently uncertain process, and therefore involves a considerable degree of judgment and expertise.
The estimation of ultimate liability for losses and LAE is a complex process, and therefore involves a considerable degree of judgment and expertise.
The Company entered into a transition services agreement with the buyer to allow both parties to share resources for a certain period of time, generally less than twelve months, in order to effectuate an orderly separation of the internal systems and operations.
The Company entered into a transition services agreement with the buyer to allow both parties to share resources for a certain period of time in order to effectuate an orderly separation of the internal systems and operations.
The option adjusted duration of the debt securities portfolio was 2.7 years and 2.9 years at December 31, 2024 and 2023, respectively. Realized Investment Gains (Losses) Net realized investment losses were $125,000 during 2024, compared to $20,000 of losses during 2023. The Company had minimal activity related to selling equity securities in 2024 and 2023.
The option adjusted duration of the debt securities portfolio was 2.6 years and 2.7 years at December 31, 2025 and 2024, respectively. Realized Investment Gains (Losses) Net realized investment losses were $716,000 during 2025, compared to $125,000 of losses during 2024. The Company had minimal activity related to selling equity securities in 2025 and 2024.
Best and Kroll On March 25, 2024, Kroll downgraded the financial strength ratings of CIC and WPIC. Kroll has given CIC an insurance financial strength rating of BB- with a negative outlook. Kroll has given WPIC an insurance financial strength rating of B with a negative outlook.
Best and Kroll On March 25, 2024, Kroll downgraded the financial strength ratings of TIC and WPIC. Kroll had given TIC an insurance financial strength rating of BB- with a negative outlook. Kroll had given WPIC an insurance financial strength rating of B with a negative outlook.
Liquidity and Capital Resources Sources and Uses of Funds At December 31, 2024, the Company had $48.8 million in cash, cash equivalents, and short-term investments. Our principal sources of funds are insurance premiums, investment income and proceeds from maturities and sales of invested assets.
Liquidity and Capital Resources Sources and Uses of Funds At December 31, 2025, the Company had $52.1 million in cash, cash equivalents, and short-term investments. Our principal sources of funds are insurance premiums, investment income and proceeds from maturities and sales of invested assets.
Of this amount, $6.8 million are limited in the amount that can be utilized in any one year and may expire before they are realized under Section 382 of the Internal Revenue Code. The Company has state net operating loss carryforwards of $82.4 million, which expire in tax years 2025 through 2044.
Of this amount, $8.0 million are limited in the amount that can be utilized in any one year and may expire before they are realized under Section 382 of the Internal Revenue Code. The Company has state net operating loss carryforwards of $89.4 million, which expire in tax years 2026 through 2045.
CIS and the related wholesale agency segment are now reported as discontinued operations for all periods presented. The Company sold CIS in order to generate liquidity to pay down debt and provide capital to the Insurance Company Subsidiaries. The CIS Sale will have a significant negative impact on revenues for the Company going forward.
CIS and the related wholesale agency segment are now reported as discontinued operations in 2024. The Company sold CIS in order to generate liquidity to pay down debt and provide capital to the Insurance Company Subsidiaries. 36 The CIS Sale has had and will continue to have a significant negative impact on revenues for the Company going forward.
Securities and Exchange Commission (“SEC”). Recent Developments and Significant Transactions Premium Revenue Reductions In January 2024, the Company began to reduce premium revenues from underwriting operations due to a lack of adequate statutory capital and surplus in its Insurance Company Subsidiaries. The Company ceased writing almost all commercial lines premiums by August 30, 2024.
Premium Revenue Reductions In January 2024, the Company began to reduce premium revenues from underwriting operations due to a lack of adequate statutory capital and surplus in its Insurance Company Subsidiaries. The Company ceased writing almost all commercial lines premiums by August 30, 2024.
The investment portfolio was comprised of 84.1% debt securities, 1.6% equity securities, and 14.3% short-term investments as of December 31, 2023. The debt securities portfolio had an average credit quality was AA+ at December 31, 2024 and 2023, respectively. The portfolio produced a tax-equivalent book yield of 3.2% and 3.3% for the years ended December 31, 2024 and 2023, respectively.
The investment portfolio was comprised of 82.3% debt securities, 1.2% equity securities, and 16.5% short-term investments as of December 31, 2024. The debt securities portfolio had an average credit quality was AA+ at December 31, 2025 and 2024, respectively. The portfolio produced a tax-equivalent book yield of 3.2% for the years ended December 31, 2025 and 2024.
However, these accounting adjustments may not accurately reflect the current market value of our assets. • Contingent Liabilities: Potential liabilities or obligations that are not recorded on the balance sheet under GAAP could impact the net proceeds in a liquidation or sale. • Transaction Costs: Costs associated with our future operations and with any sale or liquidation, such as legal fees, taxes and other expenses, are not considered in the book value calculation.
However, these accounting adjustments may not accurately reflect the current market value of our assets. • Contingent Liabilities: Potential liabilities or obligations that are not recorded on the balance sheet under GAAP could impact the net proceeds in a liquidation or sale. • Transaction Costs: Costs associated with our future operations and with any sale or liquidation, such as legal fees, taxes and other expenses, are not considered in the book value calculation. 53 Our outstanding public debt securities are currently trading at a discount to their face amount.
There is greater than an insignificant chance that we do not receive one or both of these contingent payments. There are no provisions allowing for a partial payment of the earnout.
There is greater than an insignificant chance that we do not receive the final contingent payment. There are no provisions allowing for a partial payment of the earnout.
The Company paid $420,000 in dividends and incurred a redemption premium of $397,000 related to the Series A Preferred Stock in 2024. The Company incurred $19,000 of dividends related to the Series A Preferred stock in 2023. The dividends and the redemption premium both reduced the Company's net income allocable to common shareholders.
The Company incurred a redemption premium of $397,000 and recorded the premium as additional dividends paid on the Series A Preferred Stock. The redemption premium reduced the Company's net income allocable to common shareholders. The Company paid $420,000 in dividends and incurred a redemption premium of $397,000 related to the Series A Preferred Stock in 2024.
To provide ongoing capital support for the Insurance Company Subsidiaries, the Company sold its agency operations.
To provide ongoing capital support for the Insurance Company Subsidiaries, the Company sold its agency operations on August 30, 2024.
Therefore, neither company is currently rated by a nationally recognized statistical rating organization which can have an impact on the ability to market to policyholders. These circumstances could jeopardize the ability of the Company to generate insurance underwriting revenues.
Best and Kroll downgraded the financial strength ratings of both companies and we terminated the rating relationship. Therefore, neither company is currently rated by a nationally recognized statistical rating organization which can have an impact on the ability to market to policyholders. These circumstances could jeopardize the ability of the Company to generate insurance underwriting revenues.
Our actuaries give different weights to each of these methods based upon the amount of historical experience data by line of business and by accident year, and based on judgment as to what method is believed to result in the most accurate estimate.
Our actuaries give different weights to each of these methods based upon the amount of historical experience data by line of business and by accident year and based on judgment as to what method is believed to result in the most accurate estimate. 40 The application of each method by line of business and by accident year may change in the future if it is determined that a different emphasis for each method would result in more accurate estimates.
The Company amortized through interest expense $771,000 of debt issuance costs related to the paydown of the Senior Secured Notes. 46 In December 2024, the Company bought back $5.0 million of its outstanding New Public Notes held by the lender of the Company's prior Senior Secured Notes at a 10.0% discount.
The Company incurred a $753,000 call premium from the paydown of the Senior Secured Notes. The Company amortized through interest expense $771,000 of debt issuance costs related to the paydown of the Senior Secured Notes. In December 2024, the Company bought back $5.0 million of its outstanding senior unsecured notes at a 10.0% discount.
With the recent sale proceeds of $7.5 million from Series B Preferred Stock, anticipated go-forward revenue primarily from CIC, the expected receipt of a $10.0 million second earnout payment during mid-2025, the potential sale of available assets which could generate short-term cash flow and additional short-term financing available from existing investors, management believes the Company has the ability to meet its obligations as they become due over the next twelve months.
With the recently issued $14.0 million of common stock through a backstopped rights offering, proceeds of $8.0 million from the Series C Preferred Stock, anticipated go-forward revenue primarily from TIC, the expected receipt of a $10.0 million third earnout payment by September 2026 and the potential sale of available assets which could generate short-term cash flow and additional short-term financing available from existing investors, management believes the Company has the ability to meet its obligations as they become due over the next twelve months.
This increase was due to an increase in interest income in our debt securities due to higher interest rates in 2024. Average invested assets during 2024 were $136.9 million compared to $141.7 million for the same period in 2023. The investment portfolio was comprised of 82.3% debt securities, 1.2% equity securities, and 16.5% short-term investments as of December 31, 2024.
This decrease was due to a decrease in interest income in our debt securities due to lower interest rates in 2025. Average invested assets during 2025 were $121.3 million compared to $136.9 million for the same period in 2024. The investment portfolio was comprised of 77.3% debt securities, 1.1% equity securities, and 21.6% short-term investments as of December 31, 2025.
The fair value of the second and third contingent payments was calculated in accordance with ASC 820 - Fair Value Measurement. See Note 5 ~ Fair Value Measurements for further discussion of the calculations of the contingent considerations.
The fair value of the third contingent payment was calculated in accordance with ASC 820 - Fair Value Measurement. See Note 4 ~ Fair Value Measurements for further discussion of the calculation of the contingent consideration.
The decrease was mostly attributable to a $25.0 million decrease in current accident year losses due to a significant reduction in net earned premiums described above. The decrease in current accident year losses was partially offset by a $33.7 million increase in adverse development on prior-year loss reserves.
The decrease was partially attributable to a $14.8 million decrease in current accident year losses due to a significant reduction in net earned premiums as shown above. The decrease in current accident year losses was further added to by a $20.0 million decrease in adverse development on prior-year loss reserves.
We will evaluate any such transactions in light of then-existing market conditions, taking into account our current liquidity and prospects for future access to capital. The amounts involved in such transactions, individually or in the aggregate, may be material. In March 2025, the Company issued $7.5 million of its newly designated Series B Preferred Stock.
We will evaluate any such transactions in light of then-existing market conditions, taking into account our current liquidity and prospects for future access to capital. The amounts involved in such transactions, individually or in the aggregate, may be material. Cash Flows Operating Activities.
We expect minimal premiums from commercial lines in the near term with no current plans to re-establish commercial lines premium volumes in the future.
The Company wrote minimal premiums from commercial lines in 2025, and has no current plans to re-establish commercial lines premium volumes in the near future.
Insurance Company Subsidiaries Capital Constraints As a result of multiple years of underwriting losses, mainly from the commercial lines of business, the Insurance Company Subsidiaries capital and surplus has diminished over the years. In addition, in the fourth quarter of 2024, there was significant additional adverse development in CIC.
As a result of multiple years of underwriting losses, mainly from the legacy commercial lines of business, the Insurance Company Subsidiaries capital and surplus has diminished over the years. In addition, there was $12.3 million and $29.9 million of adverse development in TIC during 2025 and 2024, respectively.
Best considers both companies to have a "weak" ability to meet ongoing financial obligations. Concurrently, the Company withdrew its participation in the rating process, and shall be non-rated by A.M. Best going forward.
Best considers both companies to have a "weak" ability to meet ongoing financial obligations. Concurrently, the Company withdrew its participation in the rating process, and shall be non-rated by A.M. Best going forward. Business Overview We are an insurance holding company that markets and services our product offerings through specialty personal insurance business lines.
This is a significantly different structure from when we filed our 2023 Annual Report on Form 10-K, on April 1, 2024 with the U. S. Securities and Exchange Commission.
SSU has control of our remaining homeowners book of business and could move that business to another insurer or insurers. This is a significantly different structure from when we filed our 2023 Annual Report on Form 10-K, on April 1, 2024 with the U. S. Securities and Exchange Commission.
These laws require increasing degrees of regulatory oversight and intervention as an insurance company’s RBC declines. At December 31, 2024, CIC fell within the Company Action Level with an RBC ratio of 156%. Management is required to provide a plan to its domiciliary regulator that shows how CIC will get above the minimum level requirements.
At December 31, 2025 and 2024, TIC fell within the Company Action Level with an RBC ratio of 236% and 156%, respectively. Management is required to update a plan to its domiciliary regulator that shows how TIC will get above the minimum level requirements.
Losses and Loss Adjustment Expenses The tables below detail our losses and LAE and loss ratios for the years ended December 31, 2024 and 2023 (dollars in thousands).
This decrease was consistent with the decrease in net written premiums during 2025. 48 Losses and Loss Adjustment Expenses The tables below detail our losses and LAE and loss ratios for the years ended December 31, 2025 and 2024 (dollars in thousands).
The Company reported net income from discontinued operations of $58.6 million, or $4.79 per share in 2024, compared to net income from discontinued operations of $1.4 million, or $0.11 per share in 2023.
The Company did not have any discontinued operations in 2025. The Company reported net income from discontinued operations of $58.6 million, or $4.79 per share in 2024.
As of December 31, 2024, the carrying value of the New Public Notes was offset by $955,000 of capitalized debt issuance costs, respectively. The debt issuance costs are amortized through interest expense over the life of the loans.
The Company amortized through interest expense $771,000 of debt issuance costs related to the paydown of the Senior Secured Notes. As of December 31, 2025, the carrying value of the senior unsecured notes was offset by $700,000 of capitalized debt issuance costs. The debt issuance costs are amortized through interest expense over the life of the loans.
We are licensed to write insurance as an admitted carrier in 42 states, including the District of Columbia, and we used to offer our insurance products in almost all 50 states. As of December 31, 2024, we offer insurance products primarily in Texas, Illinois and Indiana for homeowners lines and Nevada and Michigan for other lines.
We are authorized to write insurance as an excess and surplus lines carrier in 44 states, including the District of Columbia. We are licensed to write insurance as an admitted carrier in 42 states, including the District of 38 Columbia, and we used to offer our insurance products in almost all 50 states.
The following is a reconciliation of net income to adjusted operating income (dollars in thousands), as well as net income per share to adjusted operating income per share: For the Years Ended December 31, 2024 2023 Net income (loss) $ 24,347 $ (25,904 ) Less: Net realized investment gains (losses) (125 ) (20 ) Change in fair value of equity securities (203 ) 608 Other gains 646 — Net income from discontinued operations 58,587 1,375 Impact of income tax expense (benefit) from adjustments * — — Adjusted operating income (loss) $ (34,558 ) $ (27,867 ) Weighted average common shares, diluted 12,222,881 12,220,511 Diluted income (loss) per common share: Net income (loss) $ 1.99 $ (2.12 ) Less: Net realized investment gains (losses) (0.01 ) — Change in fair value of equity securities (0.02 ) 0.05 Other gains 0.06 — Net income from discontinued operations 4.79 0.11 Impact of income tax expense (benefit) from adjustments * — — Adjusted operating income (loss) per share $ (2.83 ) $ (2.28 ) * The Company has recorded a full valuation allowance against its deferred tax assets as of December 31, 2024 and 2023.
The following is a reconciliation of net income to adjusted operating income (dollars in thousands), as well as net income per share to adjusted operating income per share: For the Years Ended December 31, 2025 2024 Net income (loss) $ (18,438 ) $ 24,347 Less: Net realized investment gains (losses) (716 ) (125 ) Change in fair value of equity securities 234 (203 ) Other gains — 500 Change in fair value of contingent considerations 6,220 146 Change in contingent consideration bonus expense * 1,458 — Net income from discontinued operations — 58,587 Impact of income tax expense (benefit) from adjustments ** — — Adjusted operating income (loss) $ (25,634 ) $ (34,558 ) Weighted average common shares, diluted 12,222,881 12,222,881 Diluted income (loss) per common share: Net income (loss) $ (1.51 ) $ 1.99 Less: Net realized investment gains (losses) (0.06 ) (0.01 ) Change in fair value of equity securities 0.02 (0.02 ) Other gains — 0.04 Change in fair value of contingent considerations 0.51 0.02 Change in contingent consideration bonus expense * 0.12 — Net income from discontinued operations — 4.79 Impact of income tax expense (benefit) from adjustments ** — — Adjusted operating income (loss) per share $ (2.10 ) $ (2.83 ) * Amount is included in Operating Expenses on the Consolidated Statement of Operations.
Management believes the actions it has already taken over the course of 2024 and 2025, including cash contributions made to CIC in 2024 and 2025 totaling $16.0 million, will be sufficient to bring CIC back into compliance by December 31, 2025.
In the event TIC does not regain compliance, the director may suspend, revoke, or limit the certificate of authority of the Companies. Management believes the actions it has already taken over the course of 2025 and 2024, including cash contributions made to TIC in 2025 and 2024, will be sufficient to bring TIC back into compliance by December 31, 2026.
Year Ended December 31, 2024 Commercial Lines Personal Lines Total Accident year net losses and LAE $ 18,692 $ 20,895 $ 39,587 Net (favorable) adverse development 33,463 252 33,715 Calendar year net loss and LAE $ 52,155 $ 21,147 $ 73,302 Accident year loss ratio 66.3 % 63.8 % 64.9 % Net (favorable) adverse development 118.5 % 0.8 % 55.3 % Calendar year loss ratio 184.8 % 64.6 % 120.2 % 44 Year Ended December 31, 2023 Commercial Lines Personal Lines Total Accident year net losses and LAE $ 43,622 $ 20,958 $ 64,580 Net (favorable) adverse development 19,206 (1,373 ) 17,833 Calendar year net loss and LAE $ 62,828 $ 19,585 $ 82,413 Accident year loss ratio 73.4 % 84.5 % 76.6 % Net (favorable) adverse development 32.3 % (5.6 )% 21.2 % Calendar year loss ratio 105.7 % 78.9 % 97.8 % Net losses and LAE decreased by $9.1 million, or 11.1%, to $73.3 million for the year ended December 31, 2024, compared to $82.4 million for the year ended December 31, 2023.
Year Ended December 31, 2025 Commercial Lines Personal Lines Total Accident year net losses and LAE $ 4,718 $ 20,110 $ 24,828 Net (favorable) adverse development 11,234 2,479 13,713 Calendar year net loss and LAE $ 15,952 $ 22,589 $ 38,541 Accident year loss ratio 184.8 % 67.4 % 76.7 % Net (favorable) adverse development 439.9 % 8.3 % 42.3 % Calendar year loss ratio 624.7 % 75.7 % 119.0 % Year Ended December 31, 2024 Commercial Lines Personal Lines Total Accident year net losses and LAE $ 18,692 $ 20,895 $ 39,587 Net (favorable) adverse development 33,463 252 33,715 Calendar year net loss and LAE $ 52,155 $ 21,147 $ 73,302 Accident year loss ratio 66.3 % 63.8 % 64.9 % Net (favorable) adverse development 118.5 % 0.8 % 55.3 % Calendar year loss ratio 184.8 % 64.6 % 120.2 % Net losses and LAE decreased by $34.8 million, or 47.4%, to $38.5 million for the year ended December 31, 2025, compared to $73.3 million for the year ended December 31, 2024.
Our revenues are primarily derived from premiums earned from our insurance operations. We also generate other revenues through investment income. Prior to the sale of CIS we also generated other income mainly from installment fees and policy issuance fees related to the policies we wrote.
Prior to the sale of CIS we also generated other income mainly from installment fees and policy issuance fees related to the policies we wrote. Our revenues generated from the Company's MGA, CIS, are reflected in discontinued operations in 2024. Following the CIS Sale, we no longer generate commission income or related installment and policy issuance fees.
The full $5.0 million contingent payment was received by the Company in December 2024, with the change in fair value being reflected in Other gains in the Consolidated Statements of Operations. The second contingent payment is expected to be earned in 2025 and the third contingent payment is not expected to be earned until after 2025, if at all.
The full $5.0 million contingent payment was received by the Company in December 2024, with the change in fair value being reflected in Change in fair value of contingent considerations in the Consolidated Statements of Operations.
Our specialty homeowners insurance product line is primarily comprised of low-value dwelling insurance tailored for owners of lower valued homes, which we offer in Illinois, Indiana and Texas. Our MGA, CIS, operated through our wholesale agency business segment. Through CIS, we historically offered commercial and personal lines insurance products for our Insurance Company Subsidiaries as well as third-party insurers.
Our specialty homeowners insurance product line is primarily comprised of low-value dwelling insurance tailored for owners of lower valued homes, which we offer in Texas, Illinois and Indiana. Through our commercial insurance lines, we historically offered coverage for both commercial property and commercial liability. We also offered coverage for commercial automobiles and workers’ compensation.
The following table provides the underwriting gain or loss for the years ended December 31, 2024 and 2023 (dollars in thousands): Underwriting Gain (Loss) Years Ended December 31, 2024 2023 Change Commercial Lines $ (32,329 ) $ (24,512 ) $ (7,817 ) Personal Lines (1,853 ) (4,882 ) $ 3,029 Total Underwriting (34,182 ) (29,394 ) (4,788 ) Corporate (3,096 ) (1,067 ) (2,029 ) Total underwriting income (loss) $ (37,278 ) $ (30,461 ) $ (6,817 ) Investment Income Net investment income increased by $316,000, or 5.8%, to $5.8 million for the year ended December 31, 2024, compared to $5.4 million for the year ended December 31, 2023.
The following table provides the underwriting gain or loss for the years ended December 31, 2025 and 2024 (dollars in thousands): Underwriting Gain (Loss) Years Ended December 31, 2025 2024 Change Commercial Lines $ (14,715 ) $ (32,329 ) $ 17,614 Personal Lines (7,583 ) (1,853 ) $ (5,730 ) Total Underwriting (22,298 ) (34,182 ) 11,884 Corporate (3,589 ) (3,096 ) (493 ) Total underwriting income (loss) $ (25,887 ) $ (37,278 ) $ 11,391 Investment Income Net investment income decreased by $726,000, or 12.6%, to $5.0 million for the year ended December 31, 2025, compared to $5.8 million for the year ended December 31, 2024.
The net cost to the Company was $225,000 which expense will be recognized over the period the services are provided. The Company also entered into a producer administration agreement with CIS with regards to the current books of business requiring CIS to support any underwriting and related system obligations of the run-off book of business.
The Company incurred $145,000 and $104,000 of expense for the years ended December 31, 2025 and 2024, respectively, related to the transition services agreement. The Company also entered into a producer administration agreement with CIS with regards to the current books of business requiring CIS to support any underwriting and related system obligations of the run-off book of business.
Pursuant to the Membership Interest Purchase Agreement, dated as of August 30, 2024 (the “SSU Agreement”) among Sycamore Financial Group, LLC, Andrew Petcoff and VSRM Insurance Agency, Inc., the aggregate purchase price was $6.5 million, with $3.0 million paid in cash to the Company at the time of the closing and the remaining $3.5 million was paid to the Company during the fourth quarter of 2024.
Pursuant to the Membership Interest Purchase Agreement, dated as of August 30, 2024 (the “SSU Agreement”) among Sycamore Financial Group, LLC, Andrew Petcoff (the buyers) and VSRM Insurance Agency, Inc.
Our personal lines gross written premiums increased $8.6 million, or 23.4%, to $45.4 million in 2024, compared to $36.8 million in 2023. The Company reported a net loss from continuing operations of $34.2 million, or $2.87 per share in 2024, compared to a net loss from continuing operations of $27.3 million, or $2.23 per share in 2023.
The Company's commercial lines gross written premiums decreased $18.0 million, or 67.4%, to $8.7 million in 2025, compared to $26.7 million in 2024. The Company reported a net loss from continuing operations of $18.4 million, or $1.51 per share in 2025, compared to a net loss from continuing operations of $34.2 million, or $2.87 per share in 2024.
However, future payments may be different than historical payment patterns. Regulatory and Rating Issues The NAIC has a RBC formula to be applied to all property and casualty insurance companies. The formula measures required capital and surplus based on an insurance company’s products and investment portfolio and is used as a tool to evaluate the capital adequacy of regulated companies.
However, future payments may be different than historical payment patterns. Regulatory and Rating Issues The NAIC has a RBC formula (referred to above) to be applied to all property and casualty insurance companies.
These lines are in run off and will continue to earn some premium during the first three months of 2025. We currently do not expect to write a significant amount of other commercial lines in the near term.
As of September 1, 2024, we no longer write any hospitality or small business commercial lines business. These lines are in run-off, and earned a small amount of premium in 2025. We currently do not expect to write a significant amount of other commercial lines in the near term.
Net written premiums decreased $19.4 million, or 28.2%, to $49.3 million, for the year ended December 31, 2024, compared to $68.7 million for the year ended December 31, 2023. Net written premiums declined during the year as a result of the Company's reduction in commercial lines business.
Net written premiums decreased $28.0 million, or 56.7%, to $21.3 million, for the year ended December 31, 2025, compared to $49.3 million for the year ended December 31, 2024. Net written premiums declined, in part due to the run-off of most of the commercial lines business.
The Company recognized a $500,000 gain from the buyback that is included in Other Gains on the Consolidated Statement of Operations. The Company amortized through interest expense $379,000 of debt issuance costs related to the $5.0 million buyback of New Public Notes.
The Company recognized a $500,000 gain from the buyback that is included in Other Gains on the Consolidated Statement of Operations.
Even with these contributions, CIC fell within the Company Action Level with an RBC ratio of 156% and was required to submit a plan of remediation to its domiciliary regulator. CIC is also subject to additional regulatory monitoring requirements as a result of the Company not being above the minimum required RBC levels as of December 31, 47 2024.
Even with 52 these contributions, TIC fell within the Company Action Level of the Risk Based Capital ("RBC") with an RBC ratio of 236% and 156% as of December 31, 2025 and 2024, respectively, and is required to submit an updated plan of remediation to its domiciliary regulator.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur investment portfolio consists principally of investment-grade, fixed-income securities, classified as debt securities. Accordingly, the primary market risk exposure to our debt portfolio is interest rate risk.
Biggest changeInterest Rate Risk At December 31, 2025 and 2024, the fair value of our investment portfolio, excluding cash and cash equivalents, was $114.3 million and $128.4 million, respectively. Our investment portfolio consists principally of investment-grade, fixed-income securities, classified as debt securities. Accordingly, the primary market risk exposure to our debt portfolio is interest rate risk.
The table below summarizes our interest rate risk. The table also illustrates the sensitivity of the fair value of our investments, classified as debt securities and short-term investments, to selected hypothetical changes in interest rates as of December 31, 2024.
The table below summarizes our interest rate risk. The table also illustrates the sensitivity of the fair value of our investments, classified as debt securities and short-term investments, to selected hypothetical changes in interest rates as of December 31, 2025.
We attempt to mitigate interest rate risks by investing in securities with varied maturity dates and by managing the duration of our investment portfolio to a defined range of three to four years. The option adjusted duration of the debt securities portfolio was 2.7 and 2.9 years as of December 31, 2024 and 2023, respectively.
We attempt to mitigate interest rate risks by investing in securities with varied maturity dates and by managing the duration of our investment portfolio to a defined range of three to four years. The option adjusted duration of the debt securities portfolio was 2.6 and 2.7 years as of December 31, 2025 and 2024, respectively.
At December 31, 2024 and 2023, the net amount due to the Company from reinsurers, including prepaid reinsurance, was $97.5 million and $112.3 million, respectively. We believe all amounts recorded as due from reinsurers are recoverable.
At December 31, 2025 and 2024, the net amount due to the Company from reinsurers, including prepaid reinsurance, was $79.4 million and $97.5 million, respectively. We believe all amounts recorded as due from reinsurers are recoverable.
Hypothetical Percentage Increase (Decrease) in Hypothetical Change in Interest Rates As of December 31, 2024 Estimated Fair Value Estimated Change in Fair Value Fair Value Shareholders' Equity 200 basis point increase 120,488 $ (6,328 ) (5.0 )% (29.4 )% 100 basis point increase 123,531 (3,285 ) (2.6 )% (15.3 )% No change 126,816 — — — 100 basis point decrease 130,354 3,538 2.8 % 16.4 % 200 basis point decrease 134,121 7,305 5.8 % 33.9 % Credit Risk An additional exposure to our debt securities portfolio is credit risk.
Hypothetical Percentage Increase (Decrease) in Hypothetical Change in Interest Rates As of December 31, 2025 Estimated Fair Value Estimated Change in Fair Value Fair Value Shareholders' Equity 200 basis point increase 107,650 $ (5,380 ) (4.8 )% (60.0 )% 100 basis point increase 110,238 (2,792 ) (2.5 )% (31.1 )% No change 113,030 — — — 100 basis point decrease 116,037 3,007 2.7 % 33.5 % 200 basis point decrease 119,235 6,205 5.5 % 69.2 % Credit Risk An additional exposure to our debt securities portfolio is credit risk.
The following is a discussion of our primary risk exposures and how those exposures are currently managed as of December 31, 2024.
The following is a discussion of our primary risk exposures and how those exposures are 55 currently managed as of December 31, 2025. Our market risk sensitive instruments are primarily related to fixed income securities, which are available-for-sale and not held for trading purposes.
Removed
Our market risk sensitive instruments are primarily related to fixed income securities, which are available-for-sale and not held for trading purposes. 50 Interest Rate Risk At December 31, 2024 and 2023, the fair value of our investment portfolio, excluding cash and cash equivalents, was $128.4 million and $145.3 million, respectively.

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