Exzeo Group, Inc. (NYSE: XZO) lifts Q2 net income to $23.3M
Rhea-AI Filing Summary
Exzeo Group reported continued profitability for the quarter ended June 30, 2026. Revenue was $57,787 thousand, slightly higher than a year earlier, while net income rose to $23,269 thousand and basic and diluted EPS were $0.26. For the first six months, revenue reached $113,321 thousand and net income $43,675 thousand, with EPS of $0.48. Gross profit increased as cost of revenue declined, though selling, general and administrative expenses grew.
Cash and cash equivalents were $136,731 thousand at June 30, 2026, as Exzeo invested in $197,072 thousand of U.S. Treasury securities classified as available-for-sale, boosting investment income and creating modest unrealized losses in other comprehensive income. Shareholders’ equity was $288,171 thousand. Affiliates of controlling shareholder HCI collectively accounted for 85.6% of second-quarter revenue, indicating significant related-party concentration. The company repurchased 834,250 shares for approximately $12,000 thousand under a completed share repurchase program and subsequently created Exzeo Ventures to develop AI-native products focused on insurance applications.
Positive
- None.
Negative
- None.
Filing Explained
The completed buyback leaves 90,085,918 shares outstanding as of July 31; 6,350,000 options remain unexercised and out of the money.
Form 10-Q is an unaudited quarterly report covering interim financial statements and updates to liquidity and risks.
The company reports that its share repurchase program was completed on
Those repurchased shares were treated as retirements, so the program reduced the shares outstanding rather than adding shares; the filing reports 90,085,918 shares outstanding as of
Separately, 6,350,000 stock options remained outstanding and unexercised at
The 2025 Omnibus Plan had 9,768,170 shares available for future grants, while 2,541,953 restricted stock awards remained nonvested at quarter-end.
The remaining ownership question is therefore tied to the option and restricted-award line items: later equity disclosures would show whether options are exercised or awards vest.
Key Figures
Key Terms
Managing General Agent regulatory
Net Dollar Retention Rate financial
available-for-sale fixed-maturity securities financial
Insurance-as-a-Service technical
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What were Exzeo Group (XZO) key financial results for Q2 2026?
How did Exzeo Group (XZO) perform in the first half of 2026?
What is Exzeo Group (XZO)'s cash and investment position as of June 30, 2026?
What operating metrics did Exzeo Group (XZO) report as of June 30, 2026?
What is Exzeo Ventures and how does it relate to Exzeo Group (XZO)?
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Registrant's telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of July 31, 2026, the registrant had
Table of Contents
Table of Contents
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PART I. |
FINANCIAL INFORMATION |
4 |
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Item 1. |
Financial Statements (Unaudited) |
4 |
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Consolidated Balance Sheets |
4 |
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Consolidated Statements of Income |
5 |
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Consolidated Statements of Comprehensive Income |
6 |
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Consolidated Statements of Shareholders' Equity |
7 |
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Consolidated Statements of Cash Flows |
8 |
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Notes to Consolidated Financial Statements |
9 |
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Note 1. Nature of Operations |
9 |
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Note 2. Summary of Significant Accounting Policies |
9 |
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Note 3. Investments |
10 |
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Note 4. Fair Value Measurements |
11 |
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Note 5. Revenue |
12 |
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Note 6. Comprehensive Income |
14 |
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Note 7. Concentrations of Risk |
14 |
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Note 8. Related Party Transactions |
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Note 9. Leases |
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Note 10. Income Taxes |
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Note 11. Earnings Per Share |
18 |
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Note 12. Share-Based Compensation |
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Note 13. Shareholders' Equity |
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Note 14. Segment Information |
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Note 15. Accounts Payable and Accrued Liabilities |
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Note 16. Commitments and Contingencies |
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Note 17. Subsequent Events |
22 |
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
23 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
38 |
Item 4. |
Controls and Procedures |
38 |
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PART II. |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
40 |
Item 1A. |
Risk Factors |
40 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
40 |
Item 3. |
Defaults Upon Senior Securities |
40 |
Item 4. |
Mine Safety Disclosures |
40 |
Item 5. |
Other Information |
40 |
Item 6. |
Exhibits |
41 |
Signatures |
42 |
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In this report, for all periods presented, Exzeo Group, Inc. and its wholly-owned subsidiaries are referred to as "we," "us," "our," the "Company" and "Exzeo."
2
Table of Contents
Glossary
This report contains acronyms, abbreviations, and other defined terms throughout this Quarterly Report on Form 10-Q. These terms are defined as follows:
Term |
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Definition |
2021 Omnibus Plan |
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2021 Omnibus Incentive Plan |
2025 Omnibus Plan |
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2025 Omnibus Incentive Plan |
ARR |
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Annual Recurring Revenue |
ASC 606 |
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ASC Topic 606, Revenue from Contracts with Customers |
ASU |
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Accounting Standards Update |
CEO |
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Chief Executive Officer, who is our principal executive officer |
CFO |
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Chief Financial Officer, who is our principal financial officer |
CODM |
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Chief Operating Decision Maker |
CORE |
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Condo Owners Reciprocal Exchange, a Florida reciprocal insurance exchange owned by its subscribers |
CRM |
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Core Risk Managers, LLC, a Florida limited liability company and a direct wholly-owned subsidiary of HCI |
EGC |
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Emerging Growth Company |
EIS |
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Exzeo Insurance Services, Inc., a Florida corporation and a direct wholly-owned subsidiary of Exzeo Group, Inc. |
EPS |
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Earnings Per Share |
Exchange Act |
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Securities Exchange Act of 1934, as amended |
FASB |
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Financial Accounting Standards Board |
GAAP |
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Accounting principles generally accepted in the United States |
GCM |
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Griston Claim Management, Inc., a Florida corporation and an indirect wholly-owned subsidiary of HCI |
HCI |
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HCI Group, Inc., a Florida corporation and the controlling shareholder of Exzeo Group, Inc. |
HCM |
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Homeowners Choice Managers, Inc., a Florida corporation and a direct wholly-owned subsidiary of HCI |
HCPCI |
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Homeowners Choice Property & Casualty Insurance Company, Inc., a Florida corporation and a direct wholly-owned subsidiary of HCI |
IPO |
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Initial Public Offering |
JOBS Act |
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Jumpstart Our Business Startups Act |
MGA |
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Managing General Agent |
MGA agreement |
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Agreement under which the Company provides underwriting, policy administration, claims, or related services as MGA |
NRR |
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Net Dollar Retention Rate |
Omega |
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Omega Insurance Agency, Inc., a Florida corporation and a direct wholly-owned subsidiary of HCI |
P&C |
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Property and Casualty |
SEC |
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Securities and Exchange Commission |
Share Repurchase Program |
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The program which the Board of Directors authorized to repurchase shares of up to $12.0 million of Exzeo's stock |
Sub-broker services |
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Reinsurance placement and brokerage assistance services |
Tailrow |
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Tailrow Insurance Exchange, a Florida reciprocal insurance exchange owned by its subscribers |
TRM |
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Tailrow Risk Managers, LLC, a Florida limited liability company and a direct wholly-owned subsidiary of HCI |
TTIC |
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TypTap Insurance Company, a Florida corporation and a direct wholly-owned subsidiary of HCI |
3
Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
EXZEO GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
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June 30, |
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December 31, |
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(in thousands, except share and per share amounts) |
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2026 |
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2025 |
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(Unaudited) |
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Assets: |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable |
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Receivable from related parties |
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Prepaid expense |
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Current contract cost assets |
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Other current assets |
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Total current assets |
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Non-current assets: |
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Fixed-maturity securities, available-for-sale, at fair value (amortized cost: $ |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Non-current contract cost assets |
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Deferred income taxes, net |
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Other assets |
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Total non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Shareholders' Equity: |
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Current liabilities: |
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Current contract liabilities |
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$ |
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$ |
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Commissions payable |
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Accounts payable and accrued liabilities |
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Operating lease liabilities |
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Income taxes payable |
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Payable to related parties |
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Total current liabilities |
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Non-current liabilities: |
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Non-current contract liabilities |
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Operating lease liabilities |
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Other liabilities |
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Total non-current liabilities |
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Total liabilities |
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Shareholders' equity: |
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Common stock ($ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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See accompanying Notes to Consolidated Financial Statements (Unaudited).
4
Table of Contents
EXZEO GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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(in thousands, except per share amounts) |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenue (1) |
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$ |
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$ |
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$ |
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$ |
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Cost of revenue (2) |
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Gross profit |
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Operating expenses: |
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Selling, general and administrative |
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Research and development |
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Depreciation and amortization |
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Total operating expenses |
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Operating income |
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Investment income |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Basic and diluted earnings per share |
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$ |
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$ |
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$ |
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$ |
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See accompanying Notes to Consolidated Financial Statements (Unaudited).
5
Table of Contents
EXZEO GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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(in thousands) |
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2026 |
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2025 |
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2026 |
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2025 |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive loss, net of income taxes: |
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Available-for-sale fixed-maturity securities |
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( |
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( |
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Other comprehensive loss, net of income taxes |
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( |
) |
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( |
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See accompanying Notes to Consolidated Financial Statements (Unaudited).
6
Table of Contents
EXZEO GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
(Unaudited)
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Common Stock |
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Additional |
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Retained |
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Accumulated |
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Total |
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(in thousands, except per share amounts) |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Equity |
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Balance as of March 31, 2026 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net of income taxes |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Non-cash capital contributions from parent |
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— |
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— |
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— |
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— |
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Issuance of restricted stock |
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— |
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— |
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— |
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— |
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— |
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Forfeiture of restricted stock |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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Repurchase of common stock |
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( |
) |
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( |
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( |
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— |
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— |
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( |
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Share-based compensation |
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— |
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— |
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— |
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— |
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Balance as of June 30, 2026 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Common Stock |
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Additional |
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Retained |
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Accumulated |
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Total |
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(in thousands, except per share amounts) |
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Shares |
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Amount |
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Capital |
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Deficit) |
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Loss |
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Equity |
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Balance as of March 31, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
— |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Non-cash capital contributions from parent |
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— |
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— |
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— |
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— |
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Forfeiture of restricted stock |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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— |
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Balance as of June 30, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
— |
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$ |
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Common Stock |
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Additional |
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Retained |
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Accumulated |
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Total |
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(in thousands, except per share amounts) |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Equity |
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Balance as of December 31, 2025 |
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$ |
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$ |
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$ |
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$ |
— |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net of income taxes |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Non-cash capital contributions from parent |
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— |
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— |
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— |
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— |
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Issuance of restricted stock |
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— |
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— |
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|
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— |
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|
|
— |
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|
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— |
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Forfeiture of restricted stock |
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( |
) |
|
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— |
|
|
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— |
|
|
|
— |
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|
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— |
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— |
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Repurchase of common stock |
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( |
) |
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( |
) |
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( |
) |
|
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— |
|
|
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— |
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( |
) |
Share-based compensation |
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— |
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— |
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|
|
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|
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— |
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|
— |
|
|
|
|
||
Balance as of June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Common Stock |
|
|
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Total |
|
|||||||||
(in thousands, except per share amounts) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit) |
|
|
Loss |
|
|
Equity |
|
||||||
Balance as of December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Non-cash capital contributions from parent |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Forfeiture of restricted stock |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance as of June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||
See accompanying Notes to Consolidated Financial Statements (Unaudited).
7
Table of Contents
EXZEO GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
|
|
Six Months Ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
|
|
|
||
Share-based compensation |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
( |
) |
|
Net accretion of discount on investments in fixed-maturity securities |
|
|
( |
) |
|
|
|
|
Foreign currency remeasurement losses |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
|
||
Related party receivable and payable |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses |
|
|
( |
) |
|
|
( |
) |
Contract cost assets |
|
|
|
|
|
|
||
Income taxes payable |
|
|
( |
) |
|
|
|
|
Contract liabilities |
|
|
|
|
|
|
||
Commissions payable |
|
|
|
|
|
|
||
Accounts payable and accrued liabilities |
|
|
|
|
|
|
||
Other liabilities |
|
|
( |
) |
|
|
( |
) |
Other assets |
|
|
( |
) |
|
|
( |
) |
Operating leases, net |
|
|
|
|
|
|
||
Cash provided by operating activities |
|
|
|
|
|
|
||
Investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Purchase of available-for-sale securities |
|
|
( |
) |
|
|
|
|
Cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing activities: |
|
|
|
|
|
|
||
Payment of issuance costs |
|
|
( |
) |
|
|
|
|
Repurchase of common stock |
|
|
( |
) |
|
|
|
|
Cash used in financing activities |
|
|
( |
) |
|
|
|
|
Effect of exchange rate changes on cash |
|
|
( |
) |
|
|
( |
) |
Net (decrease) increase in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
Non-cash financing activities: |
|
|
|
|
|
|
||
Capital contribution from parent |
|
$ |
|
|
$ |
|
||
Payable related to share repurchases |
|
$ |
|
|
$ |
|
||
See accompanying Notes to Consolidated Financial Statements (Unaudited).
8
Table of Contents
EXZEO GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share and per share amounts, unless otherwise stated)
Note 1. Nature of Operations
Exzeo Group, Inc., and its subsidiaries, a majority owned subsidiary of HCI, provide technology-enabled services to P&C insurance companies, including underwriting, policy management, claims processing management, and related software solutions. The Company primarily operates through MGA agreements and technology service agreements. The Company is headquartered in the United States and all revenue generating activities are conducted domestically. The Company also maintains a wholly-owned subsidiary in India that provides product research and development and software enhancement services.
On November 6, 2025, the Company completed its IPO, pursuant to which it issued and sold shares of its common stock to the public and commenced trading on the New York Stock Exchange. The net proceeds from the offering are being used for general corporate purposes, including working capital and pending the use of such proceeds, the Company is investing the net proceeds in short-term and long-term interest-bearing obligations, investment-grade investments, certificates of deposit or direct or guaranteed obligations of the U.S. government.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information. The unaudited interim Consolidated Financial Statements include the accounts of the Company's controlled subsidiaries and all intercompany balances and transactions have been eliminated.
Certain information and footnote disclosures normally included in annual audited Consolidated Financial Statements prepared in accordance with GAAP have been condensed or omitted in this interim presentation. In the opinion of management, the accompanying unaudited interim Consolidated Financial Statements reflect all normal, recurring adjustments necessary for a fair statement of the Company's financial position as of June 30, 2026, and the results of operations and cash flows for the interim periods presented. Operating results for the interim periods presented are not necessarily indicative of results expected for the fiscal year ending December 31, 2026. These unaudited interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 26, 2026. There have been no material changes to the Company's significant accounting policies from those described in the audited Consolidated Financial Statements.
In preparing these unaudited interim Consolidated Financial Statements, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures as of the financial reporting date and for the periods presented. Certain estimates result from assumptions that can be subjective and complex and consequently actual results may differ from these estimates. Accounting policies specific to revenue recognition, income taxes, and share-based compensation involve significant estimates and assumptions that are material to the Company's unaudited interim Consolidated Financial Statements.
Recent Accounting Pronouncements
Accounting Standards Adopted in the Current Year
In July 2025, the FASB issued ASU No. 2025-05 - Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update simplifies the estimation of current expected credit losses on current accounts receivable and current contract assets related to revenue from contracts with customers by allowing all entities to assume that current conditions as of the balance sheet date will not change for the remaining life of the current accounts receivable and current contract assets. This standard is effective for all entities for fiscal years and interim periods beginning after December 15, 2025, with early adoption permitted. The Company adopted the amendments on a prospective basis, effective January 1, 2026. The adoption of this standard did not have a material impact on the Company's unaudited interim Consolidated Financial Statements.
Accounting Standards Issued but Not Yet Adopted
In September 2025, the FASB issued ASU No. 2025-06 - Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update enhances guidance on the capitalization of software development costs by eliminating project phase-based criteria and clarifying the conditions signifying significant development uncertainty used by entities to evaluate when the probable-to-complete recognition threshold is met. This standard is effective for fiscal years and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the potential impact of these updates on its Consolidated Financial Statements.
In November 2024, the FASB issued ASU No. 2024-03 - Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendment requires additional disclosures of certain costs and expenses within the notes to the Consolidated Financial Statements. Additionally, in January 2025, the FASB issued ASU No. 2025-01 - Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
9
Table of Contents
(Subtopic 220-40): Clarifying the Effective Date, which clarified that the updates for this standard are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the potential impact of these updates on its Consolidated Financial Statements.
Note 3. Investments
Available-for-Sale Fixed-Maturity Securities
During the six months ended June 30, 2026, the Company began investing in U.S. Treasury securities, which are classified as available-for-sale debt securities. The Company held no investment securities as of December 31, 2025.
|
|
Amortized |
|
|
Gross Unrealized Gains |
|
|
Gross |
|
|
Estimated |
|
||||||||
U.S. Treasury securities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
( |
) |
|
$ |
|
|
|||
Accrued interest receivable on available-for-sale fixed-maturity securities is recorded within other current assets in the Consolidated Balance Sheets. As of June 30, 2026 and December 31, 2025, was $
There were
Contractual Maturities of Available-for-Sale Fixed-Maturity Securities
The following table presents the amortized cost and estimated fair value of the Company's available-for-sale fixed-maturity securities by contractual maturity as of June 30, 2026.
|
|
Amortized Cost |
|
|
Estimated Fair Value |
|
||||
Within one year |
|
$ |
|
|
|
$ |
|
|
||
After one year through five years |
|
|
|
|
|
|
|
|
||
After five years through ten years |
|
|
|
|
|
|
|
|
||
After ten years |
|
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
|
$ |
|
|
||
Expected maturities may differ from contractual maturities as certain instruments may be subject to call or prepayment provisions. As of June 30, 2026, the Company's U.S. Treasury securities were not subject to call or prepayment provisions. Accordingly, expected maturities were consistent with contractual maturities for all securities held as of that date.
Gross Unrealized Losses for Available-for-Sale Fixed-Maturity Securities
Available-for-sale fixed-maturity securities with gross unrealized loss positions as of June 30, 2026, aggregated by investment category and length of time the individual securities have been in a continuous loss position are as follows:
|
|
|
Less Than Twelve Months |
|
|
|
Twelve Months or Longer |
|
||||||||||||
|
|
Gross |
|
|
Fair Value |
|
|
Gross |
|
|
Fair Value |
|
||||||||
U.S. Treasury securities |
|
$ |
|
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|||
As of June 30, 2026,
10
Table of Contents
Allowance for Credit Losses of Available-for-Sale Fixed-Maturity Securities
The Company regularly reviews its individual investment securities for credit impairment. The Company considers various factors, including the financial condition and near-term prospects of the issuer, the extent to which the fair value of the security is below its amortized cost, general market conditions, industry or sector specific factors, any nonpayment of contractually due principal or interest, and the Company's ability to hold the investment for a period of time sufficient to allow for recovery of its amortized cost.
The Company's available-for-sale fixed-maturity securities consist entirely of U.S. Treasury securities. The unrealized losses as of June 30, 2026 were attributable to changes in market interest rates since the date of purchase and are not indicative of credit deterioration. Because U.S. Treasury securities are backed by the full faith and credit of the U.S. government, the risk of credit loss is generally considered remote. The Company has the intent and ability to hold these securities until recovery of the amortized cost or maturity, accordingly, no allowance for credit losses was recorded.
Investment Income
Investment income by source is as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Available-for-sale fixed-maturity securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment income |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Note 4. Fair Value Measurements
The Company records and discloses certain financial assets at their estimated fair values. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:
The Company's financial assets measured at fair value on a recurring basis consist of cash and cash equivalents and available-for-sale fixed-maturity securities. Cash and cash equivalents, which consist primarily of money market funds, are classified as Level 1 due to the use of quoted prices in active markets. Available-for-sale fixed-maturity securities consist of U.S. Treasury securities and are also classified as Level 1, as fair value is determined using quoted prices in active markets.
The fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value is as follows:
|
|
Fair Value Measurements Using |
|
|
|
|
||||||||||
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
Total |
|
||||
As of June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Treasury securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of June 30, 2026 and December 31, 2025, the Company did
11
Table of Contents
Note 5. Revenue
The Company generates revenue from three primary sources: underwriting and management services, claim services, and other technology services.
Revenue disaggregated by service type and the timing of recognition is as follows:
|
|
|
Three Months Ended June 30, 2026 |
|
|
|
Three Months Ended June 30, 2025 |
|
||||||||||||||||||||||
|
|
Point in Time |
|
|
Over Time |
|
|
Total |
|
|
Point in Time |
|
|
Over Time |
|
|
Total |
|
||||||||||||
Underwriting and management services |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||
Claim services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other technology services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Six Months Ended June 30, 2026 |
|
|
|
Six Months Ended June 30, 2025 |
|
||||||||||||||||||||||
|
|
Point in Time |
|
|
Over Time |
|
|
Total |
|
|
Point in Time |
|
|
Over Time |
|
|
Total |
|
||||||||||||
Underwriting and management services |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||
Claim services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other technology services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||
The Company primarily derives revenue through insurance solutions services provided to various customers. The Company provides services to certain of its affiliates under separate MGA, policy administration, and technology agreements. Refer to Note 8. Related Party Transactions for additional details.
Underwriting and Management Services
The Company provides policy issuance and renewal services that result in executed insurance policies. In addition, the Company provides management services, including soliciting and negotiating reinsurance for authorized programs and managing and maintaining a policy administration system. The Company also provides administrative services, including maintaining policy records, and printing policy-related documents.
The Company has identified three performance obligations within its underwriting and management services: 1) policy issuance and renewal, 2) management services, and 3) sub-broker services.
The transaction price allocated to the policy issuance and renewal performance obligation is determined based on the estimated standalone selling price of the service. This price is calculated as a proportion of direct written premiums, assumed written premiums, or both, plus related policy fees, and varies based on the specific terms of each agreement. The estimated standalone selling price was determined using the expected cost plus a margin approach. The transaction price is comprised of variable consideration because the Company is obligated to return a portion of the consideration if an underlying policy is canceled subsequent to issuance or renewal. Accordingly, the Company applies an estimate of constraint against the transaction price related to possible underlying policy cancellations in the future using the expected value method. Revenue related to the policy issuance and renewal performance obligation is recognized at the point in time when a policy is issued or renewed, as this marks the point at which the customer receives the economic benefits of the policy issuance or renewal, with the related services being substantially complete.
The transaction price allocated to the management services performance obligation is determined based on the estimated standalone selling price of the services. This price is calculated as a proportion of direct written premiums, assumed written premiums, or both, and varies based on the specific terms of each agreement. The estimated standalone selling price was determined using the expected cost plus a margin approach. Revenue for management services is deferred and recognized ratably over time as the services are provided.
Revenue from sub-broker services is recognized at a point in time when the Company fulfills its performance obligation by completing the services for the customer and is included within underwriting and management services. Due to the nature of the services, there are no significant financing components or variable consideration. For the three and six months ended June 30, 2026, the Company recognized revenue from sub-broker services of $
Claim Services
The Company provides services for all reported and assigned claims on behalf of its customers, for which the Company will handle each claim, including investigating, evaluating, adjusting and settling. While a variety of activities are performed, the overall nature of the
12
Table of Contents
obligation is to provide services for all reported and assigned claims, including catastrophe claims. The Company also provides "catastrophe services" in the form of claim services to handle and adjust the increased and extraordinary volume of claims attributable to a catastrophe.
The Company has identified two performance obligations within claim services: 1) claim services and 2) catastrophe services.
The transaction price allocated to the claim services performance obligation is determined based on the estimated standalone selling price of the services. This price is calculated as a proportion of direct and assumed written premiums and varies based on the specific terms of each agreement. The estimated standalone selling price is determined using the estimated cost plus a margin approach. Revenue related to claim services is recognized ratably over the policy term, typically over a twelve-month period. This method reflects the continuous transfer of services to the customer and aligns revenue recognition with the ongoing delivery of claims handling services.
The transaction price allocated to the catastrophe services performance obligation is determined based on the estimated standalone selling price, which includes per-claim fees and a percentage of indemnification costs and varies by agreement. The transaction price involves variable consideration because the Company must estimate both the ultimate number of claims and the total indemnification expected to be paid. Accordingly, the Company applies a constraint to the transaction price related to possible overestimation of the transaction price using the expected value method. Revenue for this performance obligation is recognized over time using an output method that measures progress by comparing total claims paid to date against the total expected claims to be paid.
Other Technology Services
The Company's other technology services revenue is derived primarily from fees for providing services using various proprietary software, which includes functionality for policy administration, billing, reporting and compliance, and claims handling, to the customer through software service agreements.
The Company has identified two performance obligations related to software services: 1) policy administration software services and 2) catastrophe claims software services.
The transaction price of the policy administration software services performance obligation is based on the claims processed by the customer using a flat per-claim fee. The overall nature of the obligation is to provide customers with continuous access to the Company's hosted policy administration software platform through which the Company processes policy administration activities. Each of these arrangements represents a stand-ready obligation to perform these activities on an as-needed basis. As the Company has a right to invoice the customer at an amount that corresponds directly with the value of services delivered, the Company applies the as-invoiced practical expedient to recognize revenue.
The transaction price of the catastrophe claims software service performance obligation is calculated as a percentage of the amount incurred for each catastrophe claim handled. The nature of the performance obligation is that the Company will provide the service of allowing the customer access to its software systems. This catastrophe claims software services revenue is recognized over time as the performance obligation is satisfied, generally ratably over the period of to
Remaining Performance Obligations
As of June 30, 2026 and December 31, 2025, the aggregate transaction price allocated to remaining performance obligations that are unsatisfied or partially unsatisfied was $
The Company's remaining performance obligations primarily consist of contractual fees under multi-year underwriting management agreements and technology service agreements. The Company expects to recognize revenue on the current portion of the remaining performance obligations within the next 12 months. The non-current portion relates primarily to multi-year catastrophe software claims service agreements that the Company expects to recognize revenue ratably over the period in which it expects to satisfy the related performance obligations, which is generally estimated to be four to five years.
Contract Balances
The Company receives payments from customers based on billing terms established in contractual agreements. Accounts receivable are recognized when the right to consideration becomes unconditional and only the passage of time is required before payment of consideration is due. The timing of revenue recognition may differ from the timing of invoicing. Receivables related to these services are classified within accounts receivable and receivable from related parties in the Consolidated Balance Sheets. These receivables are typically collected within 15 to 30 days after month-end or invoice date, as applicable, and substantially all cash collections are completed within one year, consistent with the annual term of insurance policies. As of June 30, 2026 and December 31, 2025, the Company reported $
13
Table of Contents
The portion of revenue not yet earned is recorded as a contract liability in the Consolidated Balance Sheets. Contract liabilities are recorded when the Company has received consideration or has an unconditional right to payment but has not yet transferred the related services. This represents the portion of revenue that will be recognized over the term of the respective agreements. The over time performance obligations fall in this category given the Company recognizes revenue over the non-cancelable term of the underlying contracts.
The changes in contract liabilities during the three and six months ended June 30, 2026 resulted from normal business activity and were not materially affected by unusual or nonrecurring items. During the three and six months ended June 30, 2026, the Company recognized revenue of $
Contract cost assets primarily consist of incremental costs to fulfill customer contracts that are expected to be recovered. Changes in the contract cost asset balance occur in the ordinary course of business. Contract cost assets are reflected in current assets when expected to be recognized in less than 12 months and in non-current assets when expected to be recognized in more than 12 months from the date presented in the Company's Consolidated Balance Sheets. The changes in contract cost assets during the three and six months ended June 30, 2026 resulted from normal business activity and were not materially affected by unusual or nonrecurring items. As of June 30, 2026 and December 31, 2025, total contract cost assets were $
Note 6. Comprehensive Income
Comprehensive income consists of net income and other comprehensive income (loss), which reflects valuation changes in available-for-sale fixed-maturity securities carried at fair value, net of income taxes.
The components of other comprehensive income (loss) are as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Unrealized changes on fixed-maturity securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at the beginning of the period |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Unrealized losses on available-for-sale fixed-maturity securities |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other comprehensive loss, net of income taxes |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Balance at the end of the period |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Note 7. Concentrations of Risk
The Company is exposed to certain concentrations of risk that could reasonably be expected to have a material impact on its business, financial condition, and results of operations, including customer concentration risk, related party concentration risk and cash concentration risk.
Customer Concentration
A customer is considered significant if it represents 10% or more of total revenue or total receivables for the applicable period.
For the three months ended June 30, 2026, the Company had
As of June 30, 2026, receivables from related parties constituting customers individually accounting for more than
For the three months ended June 30, 2025, the Company had
As of December 31, 2025, receivables from related parties constituting customers individually accounting for more than
14
Table of Contents
Related Party Concentration
A significant portion of the Company's revenue is generated from customers affiliated with the Company's controlling shareholder, HCI. For the three and six months ended June 30, 2026, customers that individually represented more than 10% collectively accounted for
Management Fee Revenue from Insurance Carriers
The following table presents underwriting and management services, as well as claim services revenue, recognized under agreements with related parties:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
Counterparty |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
TTIC (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
CRM (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
TRM (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
HCM (4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total management fee revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unearned revenue related to these agreements was recorded within contract liabilities in the Consolidated Balance Sheets and is presented as follows:
|
|
June 30, |
|
|
December 31, |
|
||
Counterparty |
|
2026 |
|
|
2025 |
|
||
TTIC |
|
$ |
|
|
$ |
|
||
CRM |
|
|
|
|
|
|
||
TRM |
|
|
|
|
|
|
||
HCM |
|
|
|
|
|
|
||
Total unearned revenue |
|
$ |
|
|
$ |
|
||
Receivable from related parties related to these agreements are as follows:
|
|
June 30, |
|
|
December 31, |
|
||
Counterparty |
|
2026 |
|
|
2025 |
|
||
TTIC |
|
$ |
|
|
$ |
|
||
CRM |
|
|
|
|
|
|
||
TRM |
|
|
|
|
|
|
||
HCM |
|
|
|
|
|
|
||
Total receivable from related parties (1) |
|
$ |
|
|
$ |
|
||
Other Technology Services
The following table presents policy administration software services revenue and catastrophe claims software services revenue recognized from related parties:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
Service Type |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Policy administration software services (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Catastrophe claims software services (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total other technology services revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15
Table of Contents
Unearned revenue and receivables from related parties related to catastrophe claims software services are as follows:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Unearned revenue (1) |
|
$ |
|
|
$ |
|
||
Receivable from related parties (2) |
|
$ |
|
|
$ |
|
||
Policy Administration Services
The Company charges HCM a service fee for each new and renewed HCPCI flood policy issued outside of Florida. Policy administration services revenue and the related accounts receivable were immaterial for all periods presented. Such fees are typically settled within two weeks following the invoice date.
Related Party Service Agreements - Expenses
Agent Commissions
Under an agent commission agreement with Omega, a subsidiary of HCI, the Company pays commissions on premiums received in cash for policies issued by specific customers during the term of the agreement. Commission expenses pursuant to the agent commission agreement with Omega were $
Claim Services
The Company receives field adjuster services from Griston Claim Services, Inc., a subsidiary of HCI, and generally pays a flat fee per claim handled. The Company also engages GCM, a subsidiary of HCI, to provide claims management services. Fees paid to GCM vary by program and claim type. For TTIC and Tailrow, the Company pays a per-claim fee for non-catastrophe claims, and a per-claim fee plus a percentage of incurred loss for catastrophe claims, including litigated claims. For CORE, the Company pays a per-claim fee plus a percentage of the amounts expended for indemnification for both catastrophe and non-catastrophe claims, including litigated claims.
Expenses related to claim services are as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Field adjuster services expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Claim management services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total claim services expenses (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of June 30, 2026 and December 31, 2025, accounts payable related to claim services were $
Office Leases
The Company leases office space in Tampa, Florida, from Century Park Holdings, LLC, a subsidiary of HCI, under an agreement that commenced on January 1, 2023 and expires on
For each of the three and six months ended June 30, 2026 and 2025, lease expense related to these agreements was $
As of June 30, 2026 and December 31, 2025, there were
16
Table of Contents
Corporate Cost Allocation
The Company provided corporate services to TTIC under a cost allocation agreement between Exzeo and its affiliates, amended effective July 1, 2025, to remove TTIC from the scope of the agreement. Following this amendment, the Company ceased providing corporate services to TTIC under the cost allocation agreement.
Non-cash Capital Contributions
For the three and six months ended June 30, 2026, the Company recognized compensation expense related to HCI restricted stock held by certain Company employees of $
Note 9. Leases
Right-of-use assets and operating lease liabilities are as follows:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Assets: |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
$ |
|
|
$ |
|
||
Liabilities: |
|
|
|
|
|
|
||
Operating lease liabilities - current |
|
$ |
|
|
$ |
|
||
Operating lease liabilities - non-current |
|
|
|
|
|
|
||
Total operating lease liabilities |
|
$ |
|
|
$ |
|
||
Weighted-average lease term and discount rate are as follows:
|
|
As of June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Weighted-average remaining lease term (in years) |
|
|
|
|
|
|
||
Weighted-average discount rate |
|
|
% |
|
|
% |
||
The Company has entered into lease agreements with both affiliates and third parties. Refer to Note 8. Related Party Transactions for additional details.
Class of Assets |
|
Initial Term |
|
Renewal Option |
|
Other Terms and Conditions |
Office space |
|
|
|
(1), (2) |
||
Office equipment |
|
|
Not applicable |
|
Not applicable |
As of June 30, 2026, maturities of operating lease liabilities are as follows:
Due in 12 months following June 30, |
|
Operating Leases |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total undiscounted liabilities |
|
|
|
|
Less: Imputed interest |
|
|
|
|
Total operating lease liabilities |
|
$ |
|
|
17
Table of Contents
Quantitative information regarding the components of lease cost and cash payments related to operating leases for the periods presented is as follows:
|
|
|
Three Months Ended June 30, |
|
|
|
Six Months Ended June 30, |
|
||||||||||||
|
|
|
2026 |
|
|
|
2025 |
|
|
|
2026 |
|
|
|
2025 |
|
||||
Operating lease cost (1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating cash flows – operating leases |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
||||
Note 10. Income Taxes
For the three months ended June 30, 2026 and 2025, the Company recorded income tax expense of $
The Company evaluates the realizability of deferred tax assets on a quarterly basis and records a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considers all positive and negative evidence, including recent operating results, available tax planning strategies, and forecasted future taxable income. The Company maintained a valuation allowance of $
Basic EPS is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period. The Company applies the two-class method in calculating basic EPS because certain unvested restricted stock awards are considered participating securities, as the holders have non-forfeitable dividend rights. Under this method, earnings are allocated between common shareholders and participating securities based on their respective rights to receive dividends and undistributed earnings.
Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Potentially dilutive securities are excluded from diluted EPS when their effect would be anti-dilutive. For the periods presented, weighted-average diluted shares outstanding were the same as weighted-average basic shares outstanding.
The calculation of basic and diluted earnings per share for the periods presented is as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||
(in thousands, except per share amounts) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Less: Income attributable to participating securities |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
Income attributable to common shareholders |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average basic shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average diluted shares outstanding (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted earnings per share |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Note 12. Share-Based Compensation
Share-based compensation cost is measured at the grant date fair value of the award and recognized over the requisite service period. Compensation expense is recorded within cost of revenue, selling, general and administrative, and research and development expenses in the Consolidated Statements of Income. Forfeitures are accounted for as they occur.
18
Table of Contents
Omnibus Incentive Plans
The Company's 2021 Omnibus Plan authorized the issuance of shares of common stock for equity-based compensation awards to employees, directors, and consultants. On November 4, 2025, the Company terminated the 2021 Omnibus Plan and adopted the 2025 Omnibus Plan, which authorized the issuance of up to
Stock Options
Stock options generally vest based on service conditions, typically over
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
||||
|
|
|
|
|
|
Weighted |
|
|
Average |
|
|
|
|
|
||||
|
|
|
|
|
|
Average |
|
|
Remaining |
|
|
|
Aggregate |
|
||||
|
|
Number of |
|
|
|
Exercise |
|
|
Contractual |
|
|
|
Intrinsic |
|
||||
(in thousands, except per share amounts and options) |
|
Options |
|
|
|
Price |
|
|
Term (in years) |
|
|
|
Value (1) |
|
||||
Outstanding as of January 1, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding as of March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding as of June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
||||
Exercisable as of June 30, 2026 (2) |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding as of January 1, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|||||
Granted |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Exercised |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Forfeited |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Outstanding as of March 31 2025 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
||||
Granted |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Exercised |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Forfeited |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Outstanding as of June 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
||||
Exercisable as of June 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
||||
As of June 30, 2026, all outstanding stock options were vested and exercisable, subject to the approval requirement described above for certain awards. For the three and six months ended June 30, 2026, there was
19
Table of Contents
Restricted Stock Awards
Nonvested restricted stock award activity during the three and six months ended June 30, 2026 and 2025 is as follows:
|
|
Number of |
|
|
|
Weighted |
|
||
|
|
Restricted |
|
|
|
Average |
|
||
|
|
Stock |
|
|
|
Grant Date |
|
||
|
|
Awards |
|
|
|
Fair Value |
|
||
Nonvested as of January 1, 2026 |
|
|
|
|
$ |
|
|
||
Granted |
|
|
|
|
$ |
|
|
||
Vested |
|
|
— |
|
|
$ |
|
— |
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
Nonvested as of March 31, 2026 |
|
|
|
|
$ |
|
|
||
Granted |
|
|
|
|
$ |
|
|
||
Vested |
|
|
— |
|
|
$ |
|
— |
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
Nonvested as of June 30, 2026 |
|
|
|
|
$ |
|
|
||
|
|
|
|
|
|
|
|
||
Nonvested as of January 1, 2025 |
|
|
|
|
$ |
|
|
||
Granted |
|
|
— |
|
|
$ |
|
— |
|
Vested |
|
|
( |
) |
|
$ |
|
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
Nonvested as of March 31, 2025 |
|
|
|
|
$ |
|
|
||
Granted |
|
|
— |
|
|
$ |
|
— |
|
Vested |
|
|
— |
|
|
$ |
|
— |
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
Nonvested as of June 30, 2025 |
|
|
|
|
$ |
|
|
||
Share-based compensation expense related to restricted stock awards are as follows:
|
|
|
Three Months Ended June 30, |
|
|
|
Six Months Ended June 30, |
|
||||||||||||
|
|
|
2026 |
|
|
|
2025 |
|
|
|
2026 |
|
|
|
2025 |
|
||||
Share-based compensation expense (1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Deferred tax benefit (2) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
As of June 30, 2026 and December 31, 2025, there was approximately $
HCI Equity Incentive Plan
HCI maintains an incentive plan that provides restricted stock awards to employees of HCI and its subsidiaries. The terms of the restricted stock awards include service and market conditions, and the awards generally vest over a period of four years. In December 2024, certain employees of HCI and its subsidiaries were transferred to the Company. The Company recognizes share-based compensation expense for those employees' nonvested shares based on the fair value determined by HCI at the original grant date and the same vesting terms established at the grant date. The awards are not remeasured following the transfer.
For the three and six months ended June 30, 2026, the Company recognized compensation expense related to HCI restricted stock of $
Note 13. Shareholders' Equity
As of June 30, 2026, the Company was authorized to issue
20
Table of Contents
Share Repurchase Program
On May 26, 2026, the Company's Board of Directors authorized the Share Repurchase Program to repurchase up to $
During the three and six months ended June 30, 2026, the Company repurchased
As of June 30, 2026, the Company may repurchase up to approximately $
Note 14. Segment Information
Operating segments are defined as components of an entity for which discrete financial information is available and that are regularly reviewed by the CODM for the purpose of allocating resources and assessing performance. The Company's serves as the CODM.
Geographic Information
All of the Company's revenues are generated in the United States, and substantially all of its long-lived assets are located in the United States. As a result, no geographic information by country is presented. Refer to Note 7. Concentrations of Risk for additional details.
The consolidated revenue, net income and significant expense categories regularly reviewed by the CODM for the periods indicated are as follows:
|
|
|
Three Months Ended June 30, |
|
|
|
Six Months Ended June 30, |
|
||||||||||||
|
|
|
2026 |
|
|
|
2025 |
|
|
|
2026 |
|
|
|
2025 |
|
||||
Revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policy commission and related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outsourced claims fees |
|
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Direct personnel expense |
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Other operating expenses |
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Depreciation and amortization |
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Gross profit |
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Operating expenses: |
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Selling, general and administrative: |
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Personnel cost |
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Other operating expenses |
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Research and development |
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||||
Depreciation and amortization |
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Total operating expenses |
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Operating income |
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Investment income |
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Income before income taxes |
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Income tax expense |
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||||
Net income |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Note 15. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consist primarily of amounts owed to vendors and service providers, accrued compensation and employee benefits, taxes and other operating accruals. These obligations are expected to be settled within twelve months of the balance sheet date and are classified as current liabilities in the Consolidated Balance Sheets.
21
Table of Contents
Accounts payable and accrued liabilities were comprised of the following:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Accrued employee compensation |
|
$ |
|
|
$ |
|
||
Other accrued and accounts payable |
|
|
|
|
|
|
||
Total accounts payable and accrued liabilities |
|
$ |
|
|
$ |
|
||
Note 16. Commitments and Contingencies
Legal Matters
From time to time, the Company may be involved in legal and regulatory proceedings arising in the ordinary course of business. The Company accrues a liability for loss contingencies when a loss is both probable and reasonably estimable.
As of June 30, 2026 and December 31, 2025, the Company was not a party to any legal proceedings, nor is aware of any matters that, individually or in the aggregate, were expected to have a material adverse effect on its financial position, results of operations, or cash flows, and no related liabilities were recorded.
Lease Commitments
The Company leases office space and certain equipment under non-cancelable operating lease agreements with initial terms ranging from to
Indemnification Obligations
The Company provides indemnification obligations under certain customer agreements, which may require the Company to defend against claims arising from breaches of contractual obligations. These indemnification provisions do not specify a maximum potential payment amount.
As of June 30, 2026 and December 31, 2025, the Company had
Regulatory Matters
The Company is subject to various federal and state regulatory requirements applicable to its operations.
Note 17. Subsequent Events
On July 8, 2026, the Company completed its Share Repurchase Program, repurchasing an additional
On August 6, 2026, the Company announced the formation of Exzeo Ventures, a new division dedicated to the development of AI-native products, services and businesses. Exzeo Ventures will initially focus on opportunities within the insurance industry, including agentic AI for catastrophe claims, underwriting and risk transfer solutions, and distribution automation.
22
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report") and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on February 26, 2026 ("2025 Annual Report"). This section is intended to provide management’s perspective on our financial performance, material events, trends, and uncertainties that may affect our business, financial condition, results of operations, and cash flows.
Special Note Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws. All statements contained in this Quarterly Report, other than statements of historical fact, including statements regarding our future results of operations, financial position, market opportunity, business strategy, plans, objectives, and factors affecting our performance are forward-looking statements. In some cases, forward-looking statements can be identified by words such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential," or "continue" or the negative of these terms or other similar expressions.
These forward-looking statements are based on management's current expectations, assumptions, estimates and projections. While we believe these expectations and assumptions are based on reasonable information, forward-looking statements are inherently predictive in nature and involve known and unknown risks and uncertainties, many of which are beyond our control. Actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including those discussed or referenced in Part II, Item 1A "Risk Factors" in this Quarterly Report, in our 2025 Annual Report and in other reports we file with the SEC.
Factors that could cause actual results or events to differ materially include, among others, our ability to maintain profitability and manage fluctuations in operating results on a quarterly or annual basis; our dependence on a limited number of customers for a substantial portion of our revenue; our ability to retain existing customers and attract new customers; and our continued reliance on affiliated customers. Our future performance also depends on the successful development, enhancement, and scalability of our proprietary IaaS platform, including the introduction of new features, analytical models and services, as well as the accuracy of estimates regarding market size and growth opportunities.
In addition, we operate in a highly competitive and regulated environment. Competitive pressures, consolidation within the insurance industry, regulatory scrutiny of delegated authority and claims administration functions, and evolving data privacy and cybersecurity requirements could adversely affect our business, financial condition and results of operations. Natural catastrophes, environmental risks and climate-related events, such as hurricanes and other severe weather, may significantly impact our customers’ P&C insurance operations, particularly in Florida where a substantial majority of our managed premiums are concentrated, which could in turn affect demand for our products and services. Our business also depends on the reliability and security of our information systems and third-party cloud infrastructure, and any system failures, security breaches or unauthorized disclosures of sensitive data could result in operational disruptions, regulatory action, litigation or reputational harm.
Our ownership structure further presents additional risks. HCI controls the direction of our business through its ownership interests, and this concentrated ownership limits the ability of other shareholders to influence significant corporate decisions. Potential conflicts of interest may arise between HCI and us, including those involving our executive officers and directors who hold positions or financial interests. In addition, if HCI were to sell a controlling interest of the Company in a private transaction, shareholders may not receive a change-of-control premium, and we could become subject to control by an unknown third party. We may also face challenges in realizing the anticipated benefits of operating as a standalone public company, including increased costs, regulatory compliance obligations and demands on management resources.
For further discussion of certain of these factors, see the risk factors disclosed in the section entitled "Risk Factors" in this Quarterly Report and in the 2025 Annual Report.
You are cautioned not to place undue reliance on such forward-looking statements, which are not guarantees of future performance, and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report. Any forward-looking statement in this Quarterly Report speaks only as of the date of such statement, and except as required by applicable securities laws, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report.
Company Overview
Exzeo Group, Inc., and its subsidiaries, a majority owned subsidiary of HCI, provide turnkey insurance technology and operations solutions to insurance carriers and their agents (collectively referred to as Exzeo's "customers") through a proprietary platform of internally developed software and data analytics applications designed specifically for the P&C insurance market.
23
Table of Contents
Our Insurance-as-a-Service platform, the Exzeo Platform, is an integrated suite of configurable insurance applications purpose-built to support the entire P&C value chain. The Exzeo Platform delivers integrated technology solutions that streamline operational and administrative functions for insurance carriers, MGAs, reciprocal exchanges, program administrators, and their distribution partners, enabling organizations to modernize operations, improve efficiency, and scale through a single configurable platform which includes quoting and underwriting, policy administration, claims management, data reporting, and financial reporting. Through these capabilities, the Exzeo Platform streamlines and automates insurance operational workflows across carriers, agents and policyholders.
The Exzeo business was established in 2012 as the technology and innovation division of HCI Group, Inc., a leading underwriter of homeowners insurance in Florida that now writes policies in 12 additional states. In 2020, Exzeo became an independent business entity and completed its initial public offering on November 5, 2025. Since inception, Exzeo has been led by experienced technology and insurance professionals with deep domain expertise focused on developing advanced data analytics algorithms and software tools that enable carriers to maximize system efficiency, optimize underwriting outcomes, and serve their customers more effectively.
The Exzeo Platform is a proprietary suite of software, analytics, and visualization tools capable of supporting, enhancing, or replacing legacy operational systems commonly used in the insurance industry. We enter into MGA or policy administration services agreements with our P&C insurance-industry customers under which we serve as an MGA of an insurance carrier or provide services to a carrier's MGA in exchange for fees largely based on a percentage of managed premiums. Under these agreements, we utilize the Exzeo Platform to provide policy issuance and renewal services, as well as management services such as soliciting and negotiating reinsurance for authorized programs, managing and maintaining policy administration, and providing claims management.
Key Factors and Trends Affecting Results of Operations
We believe our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section entitled Item 1A. Risk Factors, included in our 2025 Annual Report.
24
Table of Contents
Presentation of Financial Information
Unless otherwise indicated, all dollar amounts presented in this Management's Discussion and Analysis of Financial Condition and Results of Operations are stated in thousands. Percentages, ratios, and per policy figures are based on the underlying whole dollar amount.
Key Performance Metrics
We review a number of key operating metrics, which we use as we make strategic decisions, measure our performance, evaluate our business, and identify trends in our business. These operational measures are presented as follows:
|
|
As of June 30, |
|
|||||||
(in thousands, except percentages, counts, and per policy figures) |
|
2026 |
|
|
2025 |
|
||||
Managed Premium |
|
$ |
|
1,395,576 |
|
|
$ |
|
1,220,280 |
|
Managed Policies |
|
|
|
321,141 |
|
|
|
|
270,094 |
|
Premium Per Policy |
|
$ |
|
4,346 |
|
|
$ |
|
4,518 |
|
Gross Dollar Retention Rate |
|
|
|
89.1 |
% |
|
|
|
88.8 |
% |
Net Dollar Retention Rate |
|
|
|
114.4 |
% |
|
|
|
242.7 |
% |
Annual Recurring Revenue |
|
$ |
|
210,710 |
|
|
$ |
|
195,257 |
|
Managed Premium
Managed premium is defined as the aggregate gross dollar value of in-force premiums that are processed, managed, or administered by our software solutions as of the period end date. This excludes any applicable policy fee income associated with managed policies. Premium pricing may vary by state due to a combination of factors including regulatory requirements; however, the majority of the policies are written in the state of Florida. Revenue is primarily derived from usage-based pricing models, which are structured based on the amount of managed premiums processed, in most cases. We view this as an important metric because it is an indicator of the overall size of our platform. However, managed premium is an operational metric and should not be considered a substitute for revenue or other financial results.
Managed premiums attributable to insurance policies written in Florida represented 91.7% and 90.0% of total managed premiums as of June 30, 2026 and 2025, respectively.
Managed Policies
Managed policies are defined as the number of currently active policies managed by us on our platform as of the period end date. We consider managed policies a key metric for evaluating our financial performance, as growth in the number of managed policies not only drives revenue growth, but we also believe that an increase in managed policies may reflect broader brand awareness and deeper market penetration of our Exzeo Platform.
25
Table of Contents
Premium Per Policy
Premium per policy is defined as the managed premium divided by managed policies. We view premium per policy as an important metric which provides information as to the average size of our customers' policyholder relationships. Growth in the metric can be indicative of increased coverages offered to our customers.
Gross Dollar Retention Rate
Gross dollar retention rate measures the percentage of managed premium retained from our customers' existing policyholders. We calculate gross dollar retention rate by measuring the managed premium attributable to policyholders who remained active as of the end of the current period and dividing this amount by the managed premium attributable to those same policyholders as of the end of the corresponding prior year period (i.e., twelve months earlier). We believe the gross dollar retention rate is a valuable indicator of platform engagement among existing policyholders and provides insight into our ability to retain and sustain premium volume over time through our services.
As of June 30, 2026 and 2025, managed premiums attributable to policyholders active from the end of the prior year period used in the gross dollar retention rate calculation were $1,087,674 and $446,209, respectively.
Net Dollar Retention Rate
We use NRR as a key performance metric to measure the success of our carrier customer relationships and the growth of our revenue from new and existing carrier customers. To calculate NRR, we divide the amount of managed premium from new and existing policyholders of our customers at the end of the current period, by the amount of managed premium attributable to the policyholders active as of the respective prior year period (i.e., twelve months earlier).
Our NRR is influenced by both the growth of existing carrier customers on the platform as well as the addition of new carrier customers. We believe that maintaining a high NRR is critical to achieving sustained long-term growth and reflects the strength of our value proposition to existing as well as future customers.
Annual Recurring Revenue
We use ARR as a key operational metric to assess the scale of our recurring revenue generated from managed premium. ARR is defined as the sum of each customer's managed premiums, multiplied by their respective contractual fee rates, plus any applicable policy fee income associated with managed policies as of the period end date. ARR excludes revenue from nonrecurring sources, such as catastrophe services.
Components of Operating Results
Revenue
We generate revenue from three primary sources: underwriting and management services, claim services, and other technology services. Underwriting and management services include policy issuance and renewal, reinsurance placement, and administrative support, with fees tied to a percentage of premiums written or assumed, plus related policy fees. Claim services involve investigating, adjusting, and settling claims, including catastrophe-related claims, with pricing based on percentage of premiums written or assumed, per-claim fees and/or a percentage of indemnification costs. Other technology services are primarily derived from proprietary software solutions offered through Software-as-a-Service service agreements, with fees based on a combination of policy or claim volumes, fixed charges, or percentages of claims handled.
Cost of Revenue
Our cost of revenue includes expenses directly attributable to providing our services, including salaries and benefits for employees supporting underwriting, management, administrative and claim services. For certain customers, we are responsible for compensating agents supporting underwriting services and recognize related agent commission expenses. Cost of revenue also includes amortization of capitalized internal-use software and other intangible assets used to provide services, information technology expenses supporting policy underwriting, administrative functions, and claim handling services, and allocated overhead. Claim handling costs include adjustment, investigation, defense, recording, and payment functions. Allocated expenses from departments supporting these functions are also included in cost of revenue.
Gross Profit
Gross profit represents revenue less cost of revenue. The increase in gross profit in recent periods was primarily driven by growth in managed premium, which allows us to leverage our relatively fixed cost structure. As we continue to scale and achieve operational efficiencies, we expect gross margins to improve over time, although there can be no assurance that we will achieve these improvements.
Selling, General and Administrative Expenses
Selling, general and administrative expenses represent costs associated with supporting operations and primarily consist of employee compensation, including share-based compensation and benefits for our finance, IT, sales and marketing, human resources, legal and general management functions, as well as facilities and professional services.
26
Table of Contents
Research and Development
Our research and development costs consist primarily of personnel expenses, including salaries and benefits, bonuses, share-based compensation, facilities, and related overhead costs for employees engaged in the design and development of our technology offerings and other internally developed systems and applications.
Depreciation and Amortization
Depreciation and amortization expense reflects the expenses associated with the ongoing use of our tangible long-lived assets, including computer hardware, office furniture and equipment, and leasehold improvements.
Investment Income
Investment income represents interest and returns earned from both short‑term and long‑term investments. The principal factors that influence investment income include the size and composition of our investment portfolio, the mix of short and long-term duration assets, prevailing market conditions, and the yields generated over time.
Income Tax Expense
Income tax expense primarily consists of domestic corporate federal and state income taxes related to the sale of our services. The effective tax rate can be affected by many factors, including changes in tax laws, states in which we operate, regulations or rates, new interpretations of existing laws or regulations, and changes in our overall levels of income before income taxes.
Results of Operations
Three Months Ended June 30, 2026 and 2025
Selected financial information for the three months ended June 30, 2026, and 2025, including amounts expressed as a percentage of total revenue and the year-over-year change, is presented as follows:
|
|
Three Months Ended June 30, |
|
|
Percentage of Revenue |
|
|
|
Increase (Decrease) |
|
|||||||||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
|
($) |
|
|
(%) |
|
|||||||
Revenue |
|
$ |
|
57,787 |
|
|
$ |
|
56,091 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
$ |
|
1,696 |
|
|
|
3.0 |
% |
Cost of revenue |
|
|
|
20,949 |
|
|
|
|
22,540 |
|
|
|
36.3 |
% |
|
|
40.2 |
% |
|
|
|
(1,591 |
) |
|
|
(7.1 |
)% |
Gross profit |
|
|
|
36,838 |
|
|
|
|
33,551 |
|
|
|
63.7 |
% |
|
|
59.8 |
% |
|
|
|
3,287 |
|
|
|
9.8 |
% |
Selling, general and administrative |
|
|
|
5,788 |
|
|
|
|
2,960 |
|
|
|
10.0 |
% |
|
|
5.3 |
% |
|
|
|
2,828 |
|
|
|
95.5 |
% |
Research and development |
|
|
|
2,440 |
|
|
|
|
2,354 |
|
|
|
4.2 |
% |
|
|
4.2 |
% |
|
|
|
86 |
|
|
|
3.7 |
% |
Depreciation and amortization |
|
|
|
147 |
|
|
|
|
110 |
|
|
|
0.3 |
% |
|
|
0.2 |
% |
|
|
|
37 |
|
|
|
33.6 |
% |
Total operating expenses |
|
|
|
8,375 |
|
|
|
|
5,424 |
|
|
|
14.5 |
% |
|
|
9.7 |
% |
|
|
|
2,951 |
|
|
|
54.4 |
% |
Operating income |
|
|
|
28,463 |
|
|
|
|
28,127 |
|
|
|
49.3 |
% |
|
|
50.1 |
% |
|
|
|
336 |
|
|
|
1.2 |
% |
Investment income |
|
|
|
2,963 |
|
|
|
|
763 |
|
|
|
5.1 |
% |
|
|
1.4 |
% |
|
|
|
2,200 |
|
|
|
288.3 |
% |
Income before income taxes |
|
|
|
31,426 |
|
|
|
|
28,890 |
|
|
|
54.4 |
% |
|
|
51.5 |
% |
|
|
|
2,536 |
|
|
|
8.8 |
% |
Income tax expense |
|
|
|
8,157 |
|
|
|
|
7,227 |
|
|
|
14.1 |
% |
|
|
12.9 |
% |
|
|
|
930 |
|
|
|
12.9 |
% |
Net income |
|
$ |
|
23,269 |
|
|
$ |
|
21,663 |
|
|
|
40.3 |
% |
|
|
38.6 |
% |
|
$ |
|
1,606 |
|
|
|
7.4 |
% |
Comparison of the Three Months Ended June 30, 2026 and 2025
Revenue
|
|
Three Months Ended June 30, |
|
|
Change |
|
||||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
($) |
|
|
(%) |
|
||||||
Underwriting and management services |
|
$ |
|
48,342 |
|
|
$ |
|
45,295 |
|
|
|
3,047 |
|
|
|
6.7 |
% |
Claim services (1) |
|
|
|
6,744 |
|
|
|
|
8,623 |
|
|
|
(1,879 |
) |
|
|
(21.8 |
)% |
Other technology services |
|
|
|
2,701 |
|
|
|
|
2,173 |
|
|
|
528 |
|
|
|
24.3 |
% |
Total revenue |
|
$ |
|
57,787 |
|
|
$ |
|
56,091 |
|
|
|
1,696 |
|
|
|
3.0 |
% |
Revenue increased by $1,696, or 3.0%, to $57,787 for the three months ended June 30, 2026, compared to $56,091 for the same period in 2025. The increase was primarily attributable to growth in underwriting and management services, offset by lower claim services.
27
Table of Contents
Underwriting and management services revenue increased by $3,047, or 6.7%, to $48,342 for the three months ended June 30, 2026, compared to $45,295 for the same period in 2025, representing 83.7% and 80.8% of total revenue, respectively. The increase was primarily driven by higher managed premiums from two new customers that were onboarded at the end of 2025, along with growth in underwriting and management services from our existing customer base. The fee rate charged as a percentage of premium managed was modestly lower in 2026 compared to 2025, reflecting changes in service mix.
Claim services revenue decreased by $1,879, or 21.8%, to $6,744 for the three months ended June 30, 2026, compared to $8,623 for the same period in 2025, representing 11.7% and 15.4% of total revenue, respectively. The decrease was primarily due to lower catastrophe-related claim activity, associated with services delivered through our outsourced claims arrangement, in the current period compared to the same period in 2025. Claim services revenue in future periods will continue to be influenced by the level of managed premiums and the timing and severity of weather events.
Other technology services revenue increased by $528, or 24.3%, to $2,701 for the three months ended June 30, 2026, compared to $2,173 for the same period in 2025, representing 4.7% and 3.9% of total revenue, respectively. The increase was primarily driven by higher catastrophe software service revenue associated with the progression of certain catastrophe events, including Hurricane Ian, in the current period. The current period results reflect the impact of additional revenue recognized as a result of refined claims estimates in the prior year. Because catastrophe-related software activity is event driven, revenue from these services may vary between periods.
Cost of Revenue
|
|
Three Months Ended June 30, |
|
|
Change |
|
||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
($) |
|
|
(%) |
|
||||
Policy commission and related expenses |
|
$ |
10,038 |
|
|
$ |
10,074 |
|
|
$ |
(36 |
) |
|
|
(0.4 |
)% |
Outsourced claims fees |
|
|
1,494 |
|
|
|
3,831 |
|
|
|
(2,337 |
) |
|
|
(61.0 |
)% |
Direct personnel expense |
|
|
5,387 |
|
|
|
5,063 |
|
|
|
324 |
|
|
|
6.4 |
% |
Other operating expenses |
|
|
3,451 |
|
|
|
2,964 |
|
|
|
487 |
|
|
|
16.4 |
% |
Depreciation and amortization |
|
|
579 |
|
|
|
608 |
|
|
|
(29 |
) |
|
|
(4.8 |
)% |
Total cost of revenue |
|
$ |
20,949 |
|
|
$ |
22,540 |
|
|
$ |
(1,591 |
) |
|
|
(7.1 |
)% |
Cost of revenue decreased by $1,591, or 7.1%, to $20,949 for the three months ended June 30, 2026, compared to $22,540 for the same period in 2025, representing 36.3% and 40.2% of total revenue, respectively. The decrease in the cost of revenue as a percentage of revenue was primarily driven by a significant reduction in outsourced claim fees, partially offset by higher other operating expenses and direct personnel expense.
Policy commission and related expenses remained relatively flat at $10,038 for the three months ended June 30, 2026, compared to $10,074 for the same period in 2025, representing 17.4% and 18.0% of total revenue, respectively. Policy commission services and related expenses remained relatively unchanged and did not materially impact the change in cost of revenue.
Outsourced claims fees decreased by $2,337, or 61.0%, to $1,494 for the three months ended June 30, 2026, compared to $3,831 for the same period in 2025, representing 2.6% and 6.8% of total revenue, respectively. The decrease was primarily due to lower catastrophe claims handling activity and reduced litigation-related activity in 2026 compared with 2025, when claims handling and related litigation costs were elevated due to activity associated with storms that occurred in late 2024 and other historical storm events. The decrease in fees was attributable to this lower claim volume rather than changes in the cost per claim. Catastrophe-related activity is inherently volatile and may fluctuate significantly from period to period.
Direct personnel expense increased by $324, or 6.4%, to $5,387 for the three months ended June 30, 2026, compared to $5,063 for the same period in 2025, representing 9.3% and 9.0% of total revenue, respectively. The increase was primarily driven by higher headcount to support continued business growth, partially offset by a lower portion of discretionary compensation costs being reflected in cost of revenue as accruals were recognized.
Other operating expenses increased by $487, or 16.4%, to $3,451 for the three months ended June 30, 2026, compared to $2,964 for the same period in 2025, representing 6.0% and 5.3% of total revenue, respectively. The increase was driven by higher postage and related fees resulting from higher policy volumes, increased investment in systems and technology, and an increase to claims management activity. These increases were partially offset by lower bank fees from a system optimization initiative implemented in mid-2025.
Depreciation and amortization remained relatively flat at $579 for the three months ended June 30, 2026, compared to $608 for the same period in 2025, representing 1.0% and 1.1% of total revenue, respectively. Depreciation and amortization were relatively unchanged year-over-year and did not materially impact the change in cost of revenue.
Operating Expenses
|
|
Three Months Ended June 30, |
|
|
Change |
|
||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
($) |
|
|
(%) |
|
||||
Selling, general and administrative |
|
$ |
5,788 |
|
|
$ |
2,960 |
|
|
$ |
2,828 |
|
|
|
95.5 |
% |
Research and development |
|
|
2,440 |
|
|
|
2,354 |
|
|
|
86 |
|
|
|
3.7 |
% |
Depreciation and amortization |
|
|
147 |
|
|
|
110 |
|
|
|
37 |
|
|
|
33.6 |
% |
Total operating expenses |
|
$ |
8,375 |
|
|
$ |
5,424 |
|
|
$ |
2,951 |
|
|
|
54.4 |
% |
28
Table of Contents
Operating expenses increased by $2,951, or 54.4%, to $8,375 for the three months ended June 30, 2026, compared to $5,424 for the same period in 2025, representing 14.5% and 9.7% of total revenue, respectively. The increase was primarily driven by higher selling, general and administrative expenses.
Selling, general and administrative expenses increased by $2,828, or 95.5%, to $5,788 for the three months ended June 30, 2026, compared to $2,960 for the same period in 2025, representing 10.0% and 5.3% of total revenue, respectively. Employee-related costs accounted for approximately half of the increase, primarily due to a higher portion of discretionary compensation costs being reflected in selling, general and administrative expenses rather than in cost of revenue as accruals were finalized, along with higher salary and wage expenses resulting from increased headcount to support continued business growth. In addition, the increase reflects lower overhead allocations to TTIC following the sale of TTIC to HCI in July 2024. The corporate overhead allocation to TTIC included shared services such as HR, IT, legal, accounting, and lease-related costs which were allocated using methodologies appropriate to each cost type and applied consistently for all periods presented. We ceased providing corporate services, and therefore ceased allocating related expenses, to TTIC as of July 1, 2025. The remaining increase reflects higher operating costs associated with being a publicly traded Company and as a result of continued business growth.
Research and development expenses remained relatively flat at $2,440 for the three months ended June 30, 2026, compared to $2,354 for the same period in 2025, representing 4.2% of total revenue in both periods. Research and development was relatively unchanged year-over-year and did not materially affect our cost structure.
Depreciation and amortization remained relatively flat at $147, for the three months ended June 30, 2026, compared to $110 for the same period in 2025, representing 0.3% and 0.2% of total revenue, respectively. Depreciation and amortization were relatively unchanged year-over-year and did not materially affect our cost structure.
Investment Income
|
|
Three Months Ended June 30, |
|
|
Change |
|
||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
($) |
|
|
(%) |
|
||||
Investment income |
|
$ |
2,963 |
|
|
$ |
763 |
|
|
$ |
2,200 |
|
|
|
288.3 |
% |
Investment income increased by $2,200, or 288.3%, to $2,963 for the three months ended June 30, 2026, compared to $763 for the same period in 2025. The increase was attributable in approximately equal measure to interest income earned on U.S. Treasury available-for-sale fixed-maturity securities acquired during the first half of 2026, for which there was no comparable activity in the prior year period, and to increased income earned on cash and cash equivalents. The increase in income from cash and cash equivalents was primarily due to higher average balances invested in money market funds following our IPO in November 2025. Investment income may fluctuate in future periods based on cash levels, the timing of the deployment of cash proceeds, and market conditions.
Income Tax
|
|
Three Months Ended June 30, |
|
|
Change |
|
||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
($) |
|
|
(%) |
|
||||
Income before income taxes |
|
$ |
31,426 |
|
|
$ |
28,890 |
|
|
$ |
2,536 |
|
|
|
8.8 |
% |
Income tax expense |
|
$ |
8,157 |
|
|
$ |
7,227 |
|
|
$ |
930 |
|
|
|
12.9 |
% |
Effective tax rate |
|
|
26.0 |
% |
|
|
25.0 |
% |
|
|
|
|
|
|
||
Income tax expense increased by $930, or 12.9%, to $8,157 for the three months ended June 30, 2026, compared to $7,227 for the same period in 2025. Our effective tax rate was 26.0% for the three months ended June 30, 2026, compared to 25.0% for the same period in 2025.
Our effective tax rate for both periods differed from the U.S. federal statutory rate of 21.0% primarily due to state income taxes, net of federal tax benefits, and other immaterial nondeductible expenses. The year-over-year increase in our effective tax rate was primarily driven by permanent differences related to nondeductible executive compensation. We expect our effective tax rate to continue to vary from the statutory rate principally as a result of state income taxes, permanent differences, and state tax obligations. There were no material changes in our income tax estimation methodologies for the periods presented. The increase in income tax expense was primarily due to higher income before income taxes and, to a lesser extent, the increase in our effective tax rate.
29
Table of Contents
Six Months Ended June 30, 2026 and 2025
Selected financial information for the six months ended June 30, 2026, and 2025, including amounts expressed as a percentage of total revenue and the year-over-year change, is presented as follows:
|
|
|
Six Months Ended June 30, |
|
|
Percentage of Revenue |
|
|
|
Increase (Decrease) |
|
||||||||||||||||
(Unaudited, in thousands, except percentages) |
|
|
2026 |
|
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
|
($) |
|
|
(%) |
|
||||||
Revenue |
|
$ |
|
113,321 |
|
|
$ |
|
108,498 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
$ |
|
4,823 |
|
|
|
4.4 |
% |
Cost of revenue |
|
|
|
43,740 |
|
|
|
|
46,122 |
|
|
|
38.6 |
% |
|
|
42.5 |
% |
|
|
|
(2,382 |
) |
|
|
(5.2 |
)% |
Gross profit |
|
|
|
69,581 |
|
|
|
|
62,376 |
|
|
|
61.4 |
% |
|
|
57.5 |
% |
|
|
|
7,205 |
|
|
|
11.6 |
% |
Selling, general and administrative |
|
|
|
11,004 |
|
|
|
|
5,666 |
|
|
|
9.7 |
% |
|
|
5.2 |
% |
|
|
|
5,338 |
|
|
|
94.2 |
% |
Research and development |
|
|
|
4,746 |
|
|
|
|
4,575 |
|
|
|
4.2 |
% |
|
|
4.2 |
% |
|
|
|
171 |
|
|
|
3.7 |
% |
Depreciation and amortization |
|
|
|
293 |
|
|
|
|
211 |
|
|
|
0.3 |
% |
|
|
0.2 |
% |
|
|
|
82 |
|
|
|
38.9 |
% |
Total operating expenses |
|
|
|
16,043 |
|
|
|
|
10,452 |
|
|
|
14.2 |
% |
|
|
9.6 |
% |
|
|
|
5,591 |
|
|
|
53.5 |
% |
Operating income |
|
|
|
53,538 |
|
|
|
|
51,924 |
|
|
|
47.2 |
% |
|
|
47.9 |
% |
|
|
|
1,614 |
|
|
|
3.1 |
% |
Investment income |
|
|
|
5,475 |
|
|
|
|
1,161 |
|
|
|
4.8 |
% |
|
|
1.1 |
% |
|
|
|
4,314 |
|
|
|
371.6 |
% |
Income before income taxes |
|
|
|
59,013 |
|
|
|
|
53,085 |
|
|
|
52.1 |
% |
|
|
48.9 |
% |
|
|
|
5,928 |
|
|
|
11.2 |
% |
Income tax expense |
|
|
|
15,338 |
|
|
|
|
13,471 |
|
|
|
13.5 |
% |
|
|
12.4 |
% |
|
|
|
1,867 |
|
|
|
13.9 |
% |
Net income |
|
$ |
|
43,675 |
|
|
$ |
|
39,614 |
|
|
|
38.5 |
% |
|
|
36.5 |
% |
|
$ |
|
4,061 |
|
|
|
10.3 |
% |
Comparison of the Six Months Ended June 30, 2026 and 2025
Revenue
|
|
Six Months Ended June 30, |
|
|
Change |
|
||||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
($) |
|
|
(%) |
|
||||||
Underwriting and management services |
|
$ |
|
94,270 |
|
|
$ |
|
88,545 |
|
|
|
5,725 |
|
|
|
6.5 |
% |
Claim services (1) |
|
|
|
13,635 |
|
|
|
|
15,452 |
|
|
|
(1,817 |
) |
|
|
(11.8 |
)% |
Other technology services |
|
|
|
5,416 |
|
|
|
|
4,501 |
|
|
|
915 |
|
|
|
20.3 |
% |
Total revenue |
|
$ |
|
113,321 |
|
|
$ |
|
108,498 |
|
|
|
4,823 |
|
|
|
4.4 |
% |
Revenue increased by $4,823, or 4.4%, to $113,321 for the six months ended June 30, 2026, compared to $108,498 for the same period in 2025, driven primarily by new customers along with growth in underwriting and management services from our existing customer base.
Underwriting and management revenue increased by $5,725, or 6.5%, to $94,270 for the six months ended June 30, 2026, compared to $88,545 for the same period in 2025, representing 83.2% and 81.6% of total revenue, respectively. The increase was primarily driven by higher managed premiums from two new customers that were onboarded at the end of 2025, along with growth in underwriting and management services from our existing customer base. The fee rate charged as a percentage of premium managed was modestly lower in 2026 compared to 2025, reflecting changes in service mix.
Claim services revenue decreased by $1,817, or 11.8%, to $13,635 for the six months ended June 30, 2026, compared to $15,452 for the same period in 2025, representing 12.0% and 14.2% of total revenue, respectively. The decrease was primarily due to lower catastrophe-related claim activity, associated with services delivered through our outsourced claims arrangement, in the current period compared to the same period in 2025. Claim services revenue was elevated in 2025 due to higher volumes of catastrophe claims arising from prior storm events, including Hurricane Ian, Milton, and Helene. As claims associated with these events progressed toward resolution and related claim volumes normalized, claim services revenue decreased from the prior year elevated levels. The decrease was partially offset by higher managed premiums from our existing customer base, which increased related claims volume and associated service fees. Claim services revenue in future periods will continue to be influenced by the level of managed premiums and the timing and severity of weather events.
Other technology services revenue increased by $915, or 20.3%, to $5,416 for the six months ended June 30, 2026, compared to $4,501 for the same period in 2025, representing 4.8% and 4.1% of total revenue, respectively. The increase was primarily driven by higher catastrophe software service revenue associated with the progression of certain catastrophe events, including Hurricane Ian, in the current period. The current period results reflect the impact of additional revenue recognized as a result of refined claims estimates in the prior year. Because catastrophe-related software activity is event driven, revenue from these services may vary between periods.
30
Table of Contents
Cost of Revenue
|
|
Six Months Ended June 30, |
|
|
Change |
|
||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
($) |
|
|
(%) |
|
||||
Policy commission and related expenses |
|
$ |
22,212 |
|
|
$ |
22,741 |
|
|
$ |
(529 |
) |
|
|
(2.3 |
)% |
Outsourced claims fees |
|
|
3,023 |
|
|
|
6,086 |
|
|
|
(3,063 |
) |
|
|
(50.3 |
)% |
Direct personnel expense |
|
|
10,371 |
|
|
|
10,079 |
|
|
|
292 |
|
|
|
2.9 |
% |
Other operating expenses |
|
|
6,985 |
|
|
|
6,011 |
|
|
|
974 |
|
|
|
16.2 |
% |
Depreciation and amortization |
|
|
1,149 |
|
|
|
1,205 |
|
|
|
(56 |
) |
|
|
(4.6 |
)% |
Total cost of revenue |
|
$ |
43,740 |
|
|
$ |
46,122 |
|
|
$ |
(2,382 |
) |
|
|
(5.2 |
)% |
Cost of revenue decreased by $2,382, or 5.2%, to $43,740 for the six months ended June 30, 2026, compared to $46,122 for the same period in 2025, representing 38.7% and 42.5% of total revenue, respectively. The decrease in the cost of revenue as a percentage of total revenue was primarily driven by a significant reduction in outsourced claim fees, partially offset by higher other operating expenses and direct personnel expense.
Policy commission and related expenses decreased by $529, or 2.3%, to $22,212 for the six months ended June 30, 2026, compared to $22,741 for the same period in 2025, representing 19.6% and 21.0% of total revenue, respectively. The decrease was primarily due to lower written premiums associated with the carrier for which we provide policy commission services. The weighted average commission rate was relatively consistent at 9.0% for 2026 and 2025.
Outsourced claims fees decreased by $3,063, or 50.3%, to $3,023 for the six months ended June 30, 2026, compared to $6,086 for the same period in 2025, representing 2.7% and 5.6% of total revenue, respectively. The decrease was primarily due to lower catastrophe claims handling activity and reduced litigation-related activity in 2026 compared with 2025, when claims handling and related litigation costs were elevated due to activity associated with storms that occurred in late 2024 and other historical storm events. The decrease in fees was attributable to this lower claim volume rather than changes in the cost per claim. Catastrophe-related activity is inherently volatile and may fluctuate significantly between periods.
Direct personnel expense increased by $292, or 2.9%, to $10,371 for the six months ended June 30, 2026, compared to $10,079 for the same period in 2025, representing 9.2% and 9.3% of total revenue, respectively. The increase was primarily driven by higher headcount to support continued business growth, partially offset by a lower portion of discretionary compensation costs being reflected in cost of revenue as accruals were recognized.
Other operating expenses increased by $974, or 16.2%, to $6,985 for the six months ended June 30, 2026, compared to $6,011 for the same period in 2025, representing 6.2% and 5.5% of total revenue, respectively. The increase was driven by higher postage and related fees resulting from higher policy volumes in 2026, higher claims management activity, and increased investment in systems and technology. These increases were partially offset by lower bank fees from a system optimization initiative implemented in mid-2025.
Depreciation and amortization remained relatively flat at $1,149 for the six months ended June 30, 2026, compared to $1,205 for the same period in 2025, representing 1.0% and 1.1% of total revenue, respectively. Depreciation and amortization were relatively unchanged year-over-year and did not materially affect our cost structure.
Operating Expenses
|
|
Six Months Ended June 30, |
|
|
Change |
|
||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
($) |
|
|
(%) |
|
||||
Selling, general and administrative |
|
$ |
11,004 |
|
|
$ |
5,666 |
|
|
$ |
5,338 |
|
|
|
94.2 |
% |
Research and development |
|
|
4,746 |
|
|
|
4,575 |
|
|
|
171 |
|
|
|
3.7 |
% |
Depreciation and amortization |
|
|
293 |
|
|
|
211 |
|
|
|
82 |
|
|
|
38.9 |
% |
Total operating expenses |
|
$ |
16,043 |
|
|
$ |
10,452 |
|
|
$ |
5,591 |
|
|
|
53.5 |
% |
Operating expenses increased by $5,591, or 53.5%, to $16,043 for the six months ended June 30, 2026, compared to $10,452 for the same period in 2025, representing 14.2% and 9.6% of total revenue, respectively. The increase was primarily driven by higher selling, general and administrative expenses.
Selling, general and administrative expenses increased by $5,338 or 94.2%, to $11,004 for the six months ended June 30, 2026, compared to $5,666 for the same period in 2025, representing 9.7% and 5.2% of total revenue, respectively. Employee-related costs accounted for approximately half of the increase, primarily due to a higher portion of discretionary compensation costs being reflected in selling, general and administrative expenses rather than in cost of revenue as accruals were finalized, along with salary and wage expenses resulting from higher headcount to support continued business growth. In addition, the increase reflects lower overhead allocations to TTIC following the sale of TTIC to HCI in July 2024. The corporate overhead allocation to TTIC included shared services such as HR, IT, legal, accounting, and lease-related costs which were allocated using methodologies appropriate to each cost type and applied consistently for all periods presented. We ceased providing corporate services, and therefore ceased allocating related expenses, to TTIC
31
Table of Contents
as of July 1, 2025. The remaining increase reflects higher operating costs associated with being a publicly traded Company and as a result of continued business growth.
Research and development expenses remained relatively flat at $4,746 for the six months ended June 30, 2026, compared to $4,575 for the same period in 2025, representing 4.2% of total revenue in both periods. Research and development were relatively unchanged year-over-year and did not materially affect our cost structure.
Depreciation and amortization remained relatively flat at $293, for the six months ended June 30, 2026, compared to $211 for the same period in 2025, representing 0.3% and 0.2% of total revenue, respectively. Depreciation and amortization were relatively unchanged year-over-year and did not materially affect our cost structure.
Investment Income
|
|
Six Months Ended June 30, |
|
|
Change |
|
||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
($) |
|
|
(%) |
|
||||
Investment income |
|
$ |
5,475 |
|
|
$ |
1,161 |
|
|
$ |
4,314 |
|
|
|
371.6 |
% |
Investment income increased by $4,314, or 371.6%, to $5,475 for the six months ended June 30, 2026, compared to $1,161 for the same period in 2025. The increase was primarily driven by a combination of interest income earned on U.S. Treasury available-for-sale fixed-maturity securities acquired during the first half of 2026 and increased income earned on cash and cash equivalents, reflecting higher average invested balances and higher overall investment yields.
Income Tax
|
|
Six Months Ended June 30, |
|
|
Change |
|
||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
($) |
|
|
(%) |
|
||||
Income before income taxes |
|
$ |
59,013 |
|
|
$ |
53,085 |
|
|
$ |
5,928 |
|
|
|
11.2 |
% |
Income tax expense |
|
$ |
15,338 |
|
|
$ |
13,471 |
|
|
$ |
1,867 |
|
|
|
13.9 |
% |
Effective tax rate |
|
|
26.0 |
% |
|
|
25.4 |
% |
|
|
|
|
|
|
||
Income tax expense increased by $1,867, or 13.9%, to $15,338 for the six months ended June 30, 2026, compared to $13,471 for the same period in 2025. Our effective tax rate was 26.0% for the six months ended June 30, 2026, compared to 25.4% for the same period in 2025.
Our effective tax rate for both periods differed from the U.S. federal statutory rate of 21.0%, primarily due to state and foreign income taxes, net of federal tax benefits, and other nondeductible expenses. We expect our effective tax rate to continue to differ from the statutory rate due to state and foreign tax obligations and other permanent differences. There were no material changes in our income tax estimation methodologies during the periods presented, and the year-over-year change in our effective tax rate was not material. The year-over-year increase in income tax expense was primarily driven by higher income before income taxes.
Non-GAAP Financial Measures
In addition to results determined in accordance with GAAP, we use certain non-GAAP financial measures to evaluate our operating performance and make strategic decisions. These non-GAAP financial measures include Adjusted EBITDA, Adjusted Revenue, Adjusted EBITDA Margin, and Free Cash Flow. Management believes these measures provide useful supplemental information for investors by facilitating comparisons of performance across reporting periods and with other companies in the industry, many of which use similar non-GAAP financial measures.
However, these non-GAAP financial measures are not prepared in accordance with GAAP, are not based on a standardized methodology, and may not be comparable to similarly titled measures used by other companies. They should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. These measures exclude items that may be significant to an understanding of our financial condition and results of operations under GAAP. The use of non-GAAP financial measures involves management judgment regarding which items to exclude or include. Accordingly, these measures have limitations and should be viewed as a supplement to, not a replacement for, our GAAP results. Management urges investors to review the reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures included in this report and not to rely on any single financial measure to evaluate our business.
Adjusted EBITDA
We define Adjusted EBITDA as net income adjusted to exclude income tax expense, interest expense, investment income, depreciation and amortization, and share-based compensation expense. Management uses Adjusted EBITDA as a key measure of operating performance and to assess the results of the business excluding certain items that are not considered indicative of core operating results.
32
Table of Contents
Adjusted EBITDA should not be viewed in isolation or as a substitute for net income calculated in accordance with GAAP, and other companies may define Adjusted EBITDA differently.
The reconciliation of net income to Adjusted EBITDA for the periods presented is as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(Unaudited, in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net income |
|
$ |
23,269 |
|
|
$ |
21,663 |
|
|
$ |
43,675 |
|
|
$ |
39,614 |
|
Income tax expense |
|
|
8,157 |
|
|
|
7,227 |
|
|
|
15,338 |
|
|
|
13,471 |
|
Investment income |
|
|
(2,963 |
) |
|
|
(763 |
) |
|
|
(5,475 |
) |
|
|
(1,161 |
) |
Depreciation and amortization |
|
|
726 |
|
|
|
718 |
|
|
|
1,442 |
|
|
|
1,416 |
|
Share-based compensation |
|
|
759 |
|
|
|
706 |
|
|
|
1,499 |
|
|
|
1,429 |
|
Adjusted EBITDA (1) |
|
$ |
29,948 |
|
|
$ |
29,551 |
|
|
$ |
56,479 |
|
|
$ |
54,769 |
|
Adjusted Revenue
We define Adjusted Revenue as the portion of revenue earned through services delivered directly via our proprietary platform technology. This metric excludes revenue associated with services primarily within claims management that are outsourced to a subsidiary of HCI. Although this revenue is recognized on a gross basis under GAAP because we are considered the principal in the transaction, the economics are largely neutral, as the related costs incurred from outsourced service providers closely match the revenue recognized. Management believes Adjusted Revenue provides investors with useful insight into the performance and scalability of our core platform services and reflects the revenue generated from internally delivered operations, excluding variability associated with outsourced service arrangements. This non-GAAP measure should not be considered in isolation or as a substitute for total revenue or any other performance measure calculated in accordance with GAAP.
The reconciliation of the Adjusted Revenue for the periods presented is as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(Unaudited, in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Revenue |
|
$ |
57,787 |
|
|
$ |
56,091 |
|
|
$ |
113,321 |
|
|
$ |
108,498 |
|
Less: Outsourced claims fees |
|
|
1,494 |
|
|
|
3,831 |
|
|
|
3,023 |
|
|
|
6,086 |
|
Adjusted Revenue |
|
$ |
56,293 |
|
|
$ |
52,260 |
|
|
$ |
110,298 |
|
|
$ |
102,412 |
|
Adjusted EBITDA Margin
We define Adjusted EBITDA Margin as Adjusted EBITDA expressed as a percentage of Adjusted Revenue. This non-GAAP measure provides management and investors with additional insight into the Company's operating efficiency and the scalability of our business model, as it reflects our progress toward long-term profitability. The most directly comparable GAAP measure is net income margin, which is calculated as net income divided by GAAP revenue.
The calculation of Adjusted EBITDA Margin for the periods presented is as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(Unaudited, in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: Adjusted EBITDA |
|
$ |
29,948 |
|
|
$ |
29,551 |
|
|
$ |
56,479 |
|
|
$ |
54,769 |
|
Denominator: Adjusted Revenue |
|
|
56,293 |
|
|
|
52,260 |
|
|
|
110,298 |
|
|
|
102,412 |
|
Adjusted EBITDA Margin (1) |
|
|
53.2 |
% |
|
|
56.5 |
% |
|
|
51.2 |
% |
|
|
53.5 |
% |
33
Table of Contents
Free Cash Flow
We define Free Cash Flow as net cash provided by operating activities less capital expenditures during the period. We believe information regarding Free Cash Flow provides useful information to management and investors because it is an indicator of strength and performance of our business operations after funding capital expenditures. Capital expenditures consist of capitalized software development costs and costs relating to property and equipment, such as computer hardware, office furniture and equipment, and leasehold improvements. Free Cash Flow should not be considered an alternative to net cash provided by operating activities, which is the most directly comparable GAAP measure, or as a measure of liquidity prepared in accordance with GAAP and may not be comparable to similar measures used by other companies.
The reconciliation of Free Cash Flow for the periods presented is as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(Unaudited, in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Cash provided by operating activities |
|
$ |
15,415 |
|
|
$ |
37,754 |
|
|
$ |
40,887 |
|
|
$ |
57,526 |
|
Less: Capital expenditures |
|
|
209 |
|
|
|
483 |
|
|
|
536 |
|
|
|
1,252 |
|
Free Cash Flow |
|
$ |
15,206 |
|
|
$ |
37,271 |
|
|
$ |
40,351 |
|
|
$ |
56,274 |
|
Liquidity and Capital Resources
General
Our principal sources of liquidity, consisting of cash and cash equivalents and cash generated from operations, are presented as follows:
|
|
June 30, |
|
|
December 31, |
|
||
(Unaudited, in thousands) |
|
2026 |
|
|
2025 |
|
||
Cash and cash equivalents |
|
$ |
136,731 |
|
|
$ |
305,372 |
|
Working capital |
|
$ |
77,968 |
|
|
$ |
241,432 |
|
Cash and cash equivalents decreased during the six months ended June 30, 2026, primarily due to purchases of fixed-maturity securities classified as available-for-sale, partially offset by cash generated from operating activities. Working capital also decreased during the period, primarily reflecting the same investment activity; as the available-for-sale fixed-maturity securities were classified as non-current based on management's intent not to use the investments for current operating purposes.
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our liquidity, capital resources, or financial condition.
We believe that our existing cash and cash equivalents, together with expected operating cash flows, will be sufficient to meet working capital, capital expenditures, and other liquidity requirements for at least the next 12 months. We have no material long-term contractual obligations other than standard vendor agreements and lease commitments.
Our primary cash requirements include employee compensation and outsourced fees, cloud hosting and infrastructure costs, and ongoing investment in product development. At current operating levels, these requirements are expected to be supported by operating cash flows.
In May 2026, the Board of Directors authorized a Share Repurchase Program to repurchase up to $12.0 million of the Company’s common stock. The Share Repurchase Program permits the Company to repurchase shares periodically through open market purchases, block transactions, privately negotiated transactions or other means. During the six months ended June 30, 2026, the Company used $10,029 of cash to repurchase shares of its common stock, excluding broker commissions and excise tax. As of June 30, 2026, approximately $1,971 remained available under the Share Repurchase Program. The timing and amount of any share repurchases are discretionary and may vary based on the Company’s liquidity position, capital requirements, business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices and other considerations. The Share Repurchase Program does not obligate the Company to repurchase any specific number of shares of common stock and may be suspended or discontinued at any time without notice.
Based on our current financial position, we also believe that our liquidity sources will be adequate to meet our long-term needs beyond the next twelve months. Over the longer term, our liquidity will depend primarily on our ability to generate cash from operations as our managed premium base scales and we continue to expand our technology and service offerings.
Investments
The primary objective of our investment policy is to maximize our after-tax investment income with a reasonable level of risk given the current financial market. Our excess cash is invested primarily in money market accounts and available-for-sale fixed-maturity securities.
As of June 30, 2026, we had $197,072 of available-for-sale fixed-maturity investments, which are carried at fair value. Changes in the general interest rate environment affect the returns available on new available-for-sale fixed-maturity investments. While a rising interest
34
Table of Contents
rate environment enhances the returns available on new investments, it reduces the market value of existing available-for-sale fixed-maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new available-for-sale fixed-maturity investments but increases the market value of existing available-for-sale fixed-maturity investments, creating the opportunity for realized investment gains on disposition.
Sources of Liquidity
Our capital requirements depend on several factors, including the volume of insurance policies managed on our platform, the level of claims related services we provide, operating expenses, investments in information technology systems, and the expansion of sales and marketing activities.
Our current liquidity sources consist primarily of existing cash and cash equivalents and cash generated from operations.
Cash Flow Summary
A summary of cash flows is as follows:
|
|
Six Months Ended June 30, |
|
|||||
(Unaudited, in thousands) |
|
2026 |
|
|
2025 |
|
||
Net cash provided by (used in): |
|
|
|
|
|
|
||
Operating activities |
|
$ |
40,887 |
|
|
$ |
57,526 |
|
Investing activities |
|
$ |
(198,931 |
) |
|
$ |
(1,252 |
) |
Financing activities |
|
$ |
(10,418 |
) |
|
$ |
— |
|
Operating Activities
Net cash provided by operating activities for the six months ended June 30, 2026 was $40,887, a decrease of $16,639 from $57,526 for the same period in 2025. The decrease was primarily due to changes in the timing of business growth and associated cash collections, partially offset by higher net income. Operating cash flows may vary from period to period based on the timing of customer receipts, vendor payments, and other operating activities.
Investing Activities
Net cash used in investing activities for the six months ended June 30, 2026 was $198,931, compared to $1,252 for the same period in 2025, an increase in cash used of $197,679. The increase was primarily due to purchases of available-for-sale fixed-maturity securities during the 2026 period. Capital expenditures also continued in support of software development and infrastructure, consistent with our strategy to support and enhance core operations.
Financing Activities
Net cash used in financing for the six months ended June 30, 2026 was $10,418, compared to $0 for the same period in 2025. Net cash used in financing activities for 2026 was primarily driven by payments made under the Share Repurchase Program, as well as payments of offering costs related to the Company’s November 2025 IPO. Certain IPO-related costs were paid in 2026 due to the timing of invoice receipt and settlement.
Critical Accounting Policies and Estimates
The preparation of our unaudited interim Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. These estimates are inherently uncertain and require significant judgment, particularly in areas that involve complex or subjective assumptions and often involve matters that are inherently unpredictable.
We regularly evaluate these estimates based on historical experience, current business conditions, and other relevant factors, including inputs from third-party specialists where applicable. Our estimates are subject to change as new events occur, additional information becomes available, or operating environments evolve. Actual results could differ materially from those estimates, and such differences may have a material impact on our financial condition or results of operations.
We believe the following accounting policies involve significant judgment and estimates and are critical to an understanding of our financial condition and results of operations: Revenue recognition, Share-based compensation, Income taxes.
The above and other accounting estimates and their related risks that we consider to be our critical accounting estimates are discussed further in our 2025 Annual Report, filed with the SEC on February 26, 2026. For the six months ended June 30, 2026, there have been no other material changes with respect to any of our critical accounting policies.
Revenue Recognition
We recognize revenue from contracts with customers in accordance with ASC 606. We determine the appropriate amount of revenue to be recognized by applying the five-step model: (i) identifying the contract with customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations, and (v) recognizing revenue when, or as, the performance obligations are satisfied. Our revenue is primarily usage-based and derived from fees
35
Table of Contents
calculated as a percentage of premiums written by our insurance customers. The nature of our usage-based arrangements and related judgments did not change materially during the periods presented.
We allocate the transaction price to performance obligations based on their relative standalone selling prices. For most performance obligations, we estimate standalone selling prices using an expected cost-plus-margin approach, which requires significant judgment regarding forecasted fulfillment costs and appropriate market-based margins. Changes in these estimates, including changes in product or service mix, or revisions to our assessment of the market-based margins, could affect the standalone selling prices used to allocate consideration in new or renewal of existing contracts and thus result in the impact of the amount and timing of revenue recognized for each performance obligation. Our approach to determining standalone selling prices, including the underlying assumptions regarding fulfillment costs forecasts and margin estimates, remained consistent and did not change materially over the periods presented.
Because our fees are generally usage-based and tied to the underlying insurance policies written by our customers, the transaction price often includes variable consideration. While our customer contracts typically span multiple years, the underlying insurance policies can be canceled by policyholders without penalty. As a result, the uncertainty related to underlying policy volume, not termination of the MGA or customer agreement itself, drives our application of the ASC 606 constraint. We therefore constrain variable consideration to the amounts that are not probable of significant reversal. This assessment requires judgment and involves assumptions about policyholder behavior, seasonality, expected policy retention, and inherent volatility of premiums written. We update these estimates quarterly based on the most recent available information. The assumptions used to evaluate and constrain variable consideration, including expected volume and retention behavior, were applied consistently and did not change materially during the periods presented.
Share-Based Compensation
We account for share-based compensation awards under our shareholder-approved incentive plans in accordance with the fair value recognition provisions of GAAP, recognizing expense based on grant-date fair value over the requisite service period. Our share-based awards primarily consist of restricted stock awards and stock options with service-based or market-based vesting conditions. Restricted stock awards are granted with either time-based or market-based vesting conditions tied to our stock price (e.g., share price thresholds sustained over a defined period) and are expensed over the requisite service period based on grant-date fair value. For awards with market-based vesting conditions, the grant-date fair value incorporates the probability of achieving the market condition and is not subsequently adjusted.
For stock options, we determine grant-date fair value using a Monte Carlo simulation technique and other option pricing models. These methods estimate the fair value of the option by modeling a range of potential future stock prices and associated outcomes and rely on assumptions such as expected volatility, risk-free interest rates, expected term, and dividend yield. These assumptions require significant judgment and can materially impact recognized compensation expense.
For awards granted while we were a private company, we determined the fair value of our common stock using third-party valuations under Internal Revenue Code Section 409A. These valuations incorporated assumptions regarding future performance, market conditions, and comparable company data. Inputs such as estimated stock price and expected price volatility used in these valuation methods were derived from analyses of public peer companies with similar characteristics. For awards granted after our IPO, the grant-date fair value of our common stock is based on the quoted market price of our common stock on the date of grant.
Income Taxes
We account for income taxes in accordance with GAAP, resulting in two components of income tax expense (benefit): current and deferred. The current income tax expense (benefit) reflects taxes payable or refundable for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues.
The realizability of deferred tax assets is evaluated quarterly, and judgment is required in assessing both positive and negative evidence, including recent financial performance, forecasted future earnings, and relevant tax planning strategies.
As a member of a consolidated U.S. federal income tax return with HCI, we are subject to the group's tax-sharing arrangements. Our estimate of tax expense is sensitive to changes in the effective rate applied to our standalone results, which may differ from statutory rates due to business mix or transaction-related effects.
JOBS Act
We are an EGC as defined under the JOBS Act. As an EGC, we may delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to not take advantage of the extended transition period that allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies, which means that the financial statements included in this Quarterly Report on Form 10-Q, as well as financial statements we file in the future, will be subject to all new or revised accounting standards generally applicable to public companies. Our election not to take advantage of the extended transition period is irrevocable.
We will remain an EGC until the earliest to occur of the following: (i) the last day of the fiscal year in which our total annual gross revenues first meet or exceed at least $1.235 billion (as adjusted for inflation), (ii) the date on which we have, during the prior three-year period, issued more than $1.00 billion in non-convertible debt, (iii) the last day of the fiscal year in which we (a) have an aggregate worldwide market value of common stock held by non-affiliates of $700.0 million or more (measured at the end of each fiscal year) as of the last business day of our most recently completed second fiscal quarter and (b) have been a reporting company under the Exchange
36
Table of Contents
Act for at least one year (and have filed at least one annual report under the Exchange Act), or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act.
New Accounting Guidance
Refer to Note 2. Summary of Significant Accounting Policies to the Consolidated Financial Statements for a discussion of new accounting standards.
37
Table of Contents
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to limited market risks in the ordinary course of our business, primarily related to interest-rate movements affecting cash balances and fixed-maturity securities, inflationary cost pressures, and credit concentrations arising from cash deposits and customer receivables. We maintain a conservative capital structure with no significant outstanding debt, and we do not engage in trading or speculative investment activities. Because our revenues are derived primarily from fixed-fee service arrangements rather than market-sensitive instruments, our direct exposure to changes in market prices, interest rates, or foreign-currency exchange rates is not material other than the impact of interest-rate changes on the fair value of our investment portfolio.
As of June 30, 2026, our investment portfolio included available-for-sale fixed-maturity securities that are not for trading or speculation. We consider factors including credit ratings, investment concentrations, regulatory requirements, anticipated fluctuation of interest rates, durations and market conditions in developing our investment strategies. The portfolio consists entirely of high-credit quality U.S. Treasury securities. We classify our fixed-maturity securities as available-for-sale and report unrealized gains or losses, net of deferred income taxes, as a component of other comprehensive income within shareholders’ equity. As such, changes in fair value may impact shareholders’ equity.
Interest Rate Risk
We are exposed to interest rate risk primarily through cash and cash equivalents and available-for-sale fixed-maturities. Our fixed-maturities consist of U.S. Treasury securities, which are carried at fair value. As these securities are carried at fair value, increases in market interest rates would generally result in decreases in their fair value, while decreases in market interest rates would result in increases in the fair value. Accordingly, changes in market interest rates may result in unrealized gains or losses recorded in other comprehensive income. We have no variable-rate borrowings outstanding.
Inflationary Risk
Inflationary pressures, such as increases in cost of revenue and operating expenses, may adversely affect our operating results. Although we do not believe inflation has had a material impact on our financial condition, results of operations or cash flows to date, a sustained high rate of inflation in the future could adversely affect our ability to maintain or increase our gross margin or decrease our operating expenses as a percentage of our revenues if the selling prices of our services do not increase proportionately with our costs. In addition, inflationary pressures affecting our insurance carrier customers could impact the level of managed premiums and the timing of policy renewals.
Credit and Liquidity-Risk Concentrations
Our cash is held in deposit demand accounts at a large financial institution in amounts that exceed the Federal Deposit Insurance Corporation ("FDIC") insurance coverage limit of $250,000 per depositor, per FDIC-insured bank, per ownership category. We monitor the credit ratings and financial condition of these counterparties on an ongoing basis and have not experienced any losses on such deposits. We believe the credit risk associated with these institutions is not material.
Credit risk also arises from potential adverse changes in the financial condition of issuers of our available-for-sale fixed-maturity securities. Because our investment portfolio consists entirely of U.S. Treasury securities, exposure to credit losses is considered minimal.
Financial instruments that potentially subject us to concentrations of credit risk principally consist of accounts receivable. We limit our exposure by performing credit evaluations when deemed necessary but do not require collateral to secure amounts owed by customers. Refer to Note 7. Concentrations of Risk for additional details.
Foreign Currency Risk
We conduct certain operations through a wholly-owned subsidiary in India that provides product research and development, operational and administrative support services. Because the subsidiary's functional currency is in the U.S. dollar, we are not exposed to material foreign-currency translation risk. We may experience minor transaction gains or losses on Indian-rupee-denominated expenses or payables, but such amounts have not been material. We do not currently use hedging instruments and believe our exposure to foreign-currency fluctuations is not material.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Exchange Act, under the supervision and with the participation of our CEO (who is our principal executive officer) and CFO (who is our principal financial officer), management evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2026 at a reasonable level of assurance.
38
Table of Contents
Changes in Internal Control Over Financial Reporting
Management, together with our CEO and CFO, evaluated changes in our internal control over financial reporting during the quarter ended June 30, 2026. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Management recognizes that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The design of a control system must reflect the fact that there are resource constraints, and the benefits must be considered relative to their associated costs.
39
Table of Contents
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be subject to claims and legal actions arising in the ordinary course of business. Based on information currently available, we are not involved in any legal proceedings that, in our judgment, are likely to have a material adverse effect on our unaudited interim consolidated financial position, results of operations, or cash flows. Refer to Note 16. Commitments and Contingencies for additional details.
Item 1A. Risk Factors.
There have been no material changes in the risk factors previously disclosed in the section entitled "Risk Factors" in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which was filed with the SEC on February 26, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
We did not sell or issue any unregistered equity securities during the three months ended June 30, 2026.
Our registration statement on Form S-1, as amended (File No. 333-290500), for our IPO offering became effective under Section 8(a) of the Securities Act of 1933, as amended, on November 4, 2025. On November 6, 2025, we completed the IPO offering of 8.0 million shares of our common stock at a public offering price of $21.00 for an aggregate offering price of $168 million. There has been no material change in the planned use of proceeds from our IPO offering as described in the prospectus filed on November 5, 2025, under Rule 424(b)(4) of the Securities Act of 1933, as amended.
The following table summarizes the Company's share repurchase activity for the three months ended June 30, 2026 and the approximate dollar value of shares that may yet be purchased under the program.
Issuer Purchases of Equity Securities |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Approximate |
|
|||||
|
|
|
|
|
|
|
|
|
Total Number of |
|
|
Dollar Value of |
|
|||||
|
|
|
|
|
|
|
|
|
Shares Purchased |
|
|
Shares That May |
|
|||||
|
|
Total Number |
|
|
|
|
|
|
as Part of Publicly |
|
|
Yet Be Purchased |
|
|||||
|
|
of Shares |
|
|
Average Price |
|
|
Announced Plans |
|
|
under the Plans |
|
||||||
Period |
|
Purchased (1) |
|
|
Paid Per Share (2) |
|
|
or Programs (1) |
|
|
or Program (1) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
||||
April 1, 2026 - April 30, 2026 |
|
|
— |
|
|
$ |
|
— |
|
|
|
— |
|
|
$ |
|
— |
|
May 1, 2026 - May 31, 2026 |
|
|
123,466 |
|
|
$ |
|
13.65 |
|
|
|
123,466 |
|
|
$ |
|
10,315 |
|
June 1, 2026 - June 30, 2026 |
|
|
603,362 |
|
|
$ |
|
13.83 |
|
|
|
603,362 |
|
|
$ |
|
1,971 |
|
Total |
|
|
726,828 |
|
|
|
|
|
|
|
726,828 |
|
|
|
|
|
||
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
Trading Arrangements Under Item 408 of Regulation S-K
During the three months ended June 30, 2026, no director or officer of the Company
40
Table of Contents
Item 6. Exhibits.
Exhibit |
|
|
|
Incorporated by Reference |
||||
Number |
|
Description of Exhibit |
|
Form |
|
Exhibit |
|
Filing Date |
3.1 |
|
Fourth Amended and Restated Articles of Incorporation of Exzeo Group, Inc. |
|
8-K |
|
3.1 |
|
11/6/2025 |
3.2 |
|
Amended and Restated Bylaws of Exzeo Group, Inc. |
|
8-K |
|
3.2 |
|
11/6/2025 |
31.1* |
|
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
31.2* |
|
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
32.1** |
|
Certification of the Chief Executive Officer Pursuant to 18 U.S.C.ss 1350 |
|
|
|
|
|
|
32.2** |
|
Certification of the Chief Financial Officer Pursuant to 18 U.S.C.ss 1350 |
|
|
|
|
|
|
101* |
|
The following materials from Exzeo Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 formatted in iXBRL (Inline eXtensible Business Reporting Language) include (i) the Consolidated Balance Sheets (ii) the Consolidated Statements of Income (iii) the Consolidated Statements of Comprehensive Income (iv) the Consolidated Statements of Shareholders' Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to the Consolidated Financial Statements. |
|
|
|
|
|
|
104* |
|
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
|
* |
|
Filed herewith |
** |
|
Furnished herewith |
41
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Exzeo Group, Inc. |
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Date: August 7, 2026 |
By: |
/s/ Paresh Patel |
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Paresh Patel |
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Chief Executive Officer |
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(Principal Executive Officer) |
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Date: August 7, 2026 |
By: |
/s/ Suela Bulku |
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Suela Bulku |
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Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
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