The Company is subject to various market risk exposures primarily due to its investing and borrowing activities. Primary market risk exposures are changes in interest rates, equity prices, and credit risk. Adverse changes to these rates and prices may occur due to changes in the liquidity of a market, or to changes in market perceptions of creditworthiness and risk tolerance. The following disclosure reflects estimates of future performance and economic conditions. Actual results may differ. Overview The Company’s investment policies define the overall framework for managing market and investment risks, including accountability and controls over risk management activities, and specify the investment limits and strategies that are appropriate given the liquidity, surplus, product profile, and regulatory requirements of the subsidiaries. Executive oversight of investment 45 Table of Contents activities is conducted primarily through the Company’s investment committee. The Company’s investment committee focuses on strategies to enhance after-tax yields, mitigate market risks, and optimize capital to improve profitability and returns. The Company manages exposures to market risk through the use of asset allocation, duration, and credit ratings. Asset allocation limits place restrictions on the total amount of funds that may be invested within an asset class. Duration limits on the fixed maturity securities portfolio place restrictions on the amount of interest rate risk that may be taken. Comprehensive day-to-day management of market risk within defined tolerance ranges occurs as portfolio managers buy and sell within their respective markets based upon the acceptable boundaries established by investment policies. Credit Risk Credit risk results from uncertainty in a counterparty’s ability to meet its obligations. Credit risk is managed by maintaining a high credit quality fixed maturity securities portfolio. The estimated weighted-average credit quality rating of the fixed maturity securities portfolio was AA- and A+, at fair value, at June 30, 2026 and December 31, 2025, respectively. The following table presents fixed maturity municipal securities by state in descending order of holdings at fair value at June 30, 2026: States Fair Value Average Rating (Amounts in thousands) Florida $ 488,639 A+ Texas 345,471 AA California 344,407 AA- New York 337,988 AA Pennsylvania 222,627 A+ Other states 2,002,193 AA- Total $ 3,741,325 At June 30, 2026, the fixed maturity municipal securities portfolio was broadly diversified among the states and the largest holdings were in populous states such as Florida and Texas. These holdings were further diversified primarily among cities, counties, schools, public works, hospitals, and state general obligations. The Company seeks to minimize overall credit risk and ensure diversification by limiting exposure to any particular issuer. Taxable fixed maturity securities represented 44.9% of the Company’s total fixed maturity securities portfolio at fair value at June 30, 2026. 0.01% of the Company’s taxable fixed maturity securities at fair value, representing 0.003% of its total fixed maturity securities portfolio at fair value, were rated below investment grade at June 30, 2026. Below investment grade issues are considered “watch list” items by the Company, and their status is evaluated within the context of the Company’s overall portfolio and its investment policy on an aggregate risk management basis, as well as their ability to recover their investment on an individual issue basis. Equity Price Risk Equity price risk is the risk that the Company will incur losses due to adverse changes in equity markets. At June 30, 2026, the Company’s primary objective for common equity investments was current income. The fair value of the equity investments consisted of $836.6 million in common stocks, $38.4 million in non-redeemable preferred stocks, $5.0 million in private equity investment, and $94.2 million in private equity funds. Common stocks are typically valued for future economic prospects as perceived by the market. Common stocks represented 11.7% of total investments at fair value at June 30, 2026. Beta is a measure of a security’s systematic (non-diversifiable) risk, which is measured by the percentage change in an individual security’s return for a 1% change in the return of the market. 46 Table of Contents Based on hypothetical reductions in the overall value of the stock market, the following table illustrates estimated reductions in the overall value of the Company’s common stock portfolio at June 30, 2026 and December 31, 2025: June 30, 2026 December 31, 2025 (Amounts in thousands, except average Beta) Average Beta 0.90 0.84 Hypothetical reduction of 25% in the overall value of the stock market $ 187,401 $ 142,205 Hypothetical reduction of 50% in the overall value of the stock market $ 374,801 $ 284,410 Interest Rate Risk Interest rate risk is the risk that the Company will incur a loss due to adverse changes in interest rates relative to the interest rate characteristics of interest bearing assets and liabilities. The Company faces interest rate risk as it invests a substantial amount of funds in interest sensitive assets and holds interest sensitive liabilities. Interest rate risk includes risks related to changes in U.S. Treasury yields and other key benchmarks, as well as changes in interest rates resulting from widening credit spreads and credit exposure to collateralized securities. The fixed maturity securities portfolio, which represented 81.2% of total investments at June 30, 2026 at fair value, is subject to interest rate risk. The change in market interest rates is inversely related to the change in the fair value of the fixed maturity securities portfolio. A common measure of the interest sensitivity of fixed maturity securities is modified duration, a calculation that utilizes maturity, coupon rate, yield and call terms to calculate an average age to receive the present value of all the cash flows produced by such assets, including reinvestment of interest. The longer the duration, the more sensitive the asset is to market interest rate fluctuations. The Company has historically invested in fixed maturity securities with a goal of maximizing after-tax yields and holding assets to the maturity or call date. Since assets with longer maturities tend to produce higher current yields, the Company’s historical investment philosophy resulted in a portfolio with a moderate duration. Fixed maturity securities purchased by the Company typically have call options attached, which further reduce the duration of the asset as interest rates decline. The modified duration of the overall fixed maturity securities portfolio reflecting anticipated early calls was 4.1 years and 4.4 years at June 30, 2026 and December 31, 2025, respectively. If interest rates were to rise by 100 and 200 basis points, the Company estimates that the fair value of its fixed maturity securities portfolio at June 30, 2026 would decrease by $255.1 million and $510.3 million, respectively. Conversely, if interest rates were to decrease, the fair value of the Company’s fixed maturity securities portfolio would rise, and it may cause a higher number of the Company's fixed maturity securities to be called away. The proceeds from the called fixed maturity securities would likely be reinvested at lower yields, which would result in lower overall investment income for the Company.