You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes and other information included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025 (as amended“2025 Form 10-K”). Unless the context requires otherwise, as used in this Form 10-Q, the terms “we”, “us”, “our”, “the Company”, “our Company”, and similar references refer to Heritage Insurance Holdings, Inc., a Delaware corporation, and its subsidiaries. Overview We are a super-regional property and casualty insurance holding company that primarily provides personal and commercial residential insurance products across our multi-state footprint. We provide personal residential insurance in Alabama, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas, and Virginia and commercial residential insurance in Florida, Hawaii, New Jersey, and New York. We provide personal residential insurance in Florida, Hawaii, and South Carolina on both an admitted and non-admitted basis and in California on a non-admitted basis only. We also provide commercial insurance in the State of Texas on an excess and surplus lines basis. As a vertically integrated insurer, we control or manage substantially all aspects of risk management, underwriting, claims processing and adjusting, actuarial rate making and reserving, customer service, and distribution. Our financial strength ratings are important to us in establishing our competitive position and can impact our ability to write policies. Recent Developments Economic and Market Factors We continue to monitor the effects of general changes in economic and market conditions on our business. As a result of general inflationary pressures, we have experienced, and may continue to experience, increased cost of materials and labor needed for repairs and to otherwise remediate claims throughout all states in which we conduct business. We mitigate the impact of inflation by implementation of rate increases and through the use of inflation guard, which ensures appropriate replacement cost values for our business to reflect the inflationary impact on costs to repair properties. Use of inflation guard impacts both premium and total insured value ("TIV"). Rising reinsurance costs may be mitigated through exposure management as well as recouping the cost of reinsurance in future rate filings. Supplemental Information The Supplemental Information table below provides insight on our personal lines, commercial lines, and other business by providing policy count, premiums-in-force and total insured value for those product lines. Policies-in-force: Q2 2026 Q2 2025 % Change Personal Residential 338,817 357,294 (5.2 ) % Commercial Residential 3,140 2,992 4.9 % Other 8,930 9,823 (9.1 ) % Total 350,887 370,109 (5.2 ) % Premiums-in-force: Personal Residential 1,162,853,241 1,148,876,238 1.2 % Commercial Residential 236,726,188 271,156,884 (12.7 ) % Other 10,010,765 9,458,112 5.8 % Total 1,409,590,194 1,429,491,234 (1.4 ) % Total Insured Value: Personal Residential 318,809,611,090 319,578,562,554 (0.2 ) % Commercial Residential 49,442,769,123 45,455,781,220 8.8 % Total 368,252,380,213 365,034,343,774 0.9 % 28 Strategic Profitability Initiatives The Company has focused on three main strategic initiatives aimed at achieving consistent long-term quarterly earnings and driving shareholder value, which initiatives will remain in place while the Company also expands its strategy to include its 2026 initiatives: •Generating underwriting profit through rate adequacy and more selective underwriting •Allocating capital to products and geographies that maximize long-term returns •Targeting a balanced and diversified portfolio To continue its progress, the Company expects to also focus on the following profitability initiatives in 2026: •Target geographies open for new business, while closely managing risk and exposure •Continue persistent underwriting discipline and focus on rate adequacy while driving prudent top line growth •Enhance data driven analytics using AI and other technology tools. •Continue the refinement of customer service and claims capabilities. •Leverage infrastructure and capabilities to foster further growth, which includes our entry to the State of Texas on an excess and surplus lines basis. •Act as opportunities emerge which will continue our diversification and expansion over the next several years. •Expand our relationship with reinsurance partners to expand capacity and manage volatility while pursuing growth. Trends Inflation, Underwriting and Pricing We address reinsurance and loss cost trends in the property insurance sector through rates and inflation guard factors. Over the last several years, we have filed and been approved by state regulators for rate increases to achieve rate adequacy. Our rates are now adequate in over 90% of our territories, which are currently open for new business. We experienced intentional growth of our commercial residential business during 2025, with in-force premium in that line of business decreasing in 2026, driven primarily by competitive market conditions. To the extent that reinsurance and loss cost trends decline, our rates may be adjusted downward in the future. New rates, which are subject to approval by our regulators, become effective when a policy is written or renewed, and the premium is earned pro rata over the policy period of one year. As a result of this timing, it can take up to twenty-four months for the complete impact of a rate change to be fully earned and impact our financial statements. We invest in data analytics, using software and experienced personnel, to continuously evaluate our underwriting criteria and manage exposure to catastrophe and other losses. Our policy retention has remained consistent in the upper 80’s to low 90’s. While we believe our rates are generally competitive with private market insurers operating in our space, we are focused on prudent growth in 2026 while managing exposure and ensuring rate adequacy throughout our book of business as well as providing high levels of customer service to our agents and policyholders. We may experience rising inflation in the form of increased labor and material costs, which drive up claim costs throughout all states in which we conduct business. However, inflation is increasing at a lower rate than what we have experienced in the last several years. We adjust for changes in inflation by increasing or decreasing the inflation factor used in our pricing. Florida personal lines claim costs associated with litigated claims have decreased over the last several years due to favorable legislation aimed to curtail claims abuse and stabilize the Florida property insurance market. This has had the intended impact and has resulted in better margins for the Company and better rates for Florida policyholders. Accordingly, we have a positive outlook for Florida and the other rate adequate states. We have a solid, consistent panel of reinsurance partners that provide reinsurance capacity at competitive pricing and sufficient levels to support our growth objectives. Additionally, we may leverage our captive reinsurer to assume risks from our insurance company affiliates. 29 We successfully completed the placement of our catastrophe excess of loss reinsurance program with higher coverage levels than the prior-year while achieving a lower total and risk-adjusted cost. As operating and reinsurance costs improve, we expect policyholders to benefit through more competitive pricing while we continue to maintain appropriate underwriting margins. This should also favorably impact the ceded premium over the next four quarters. Overview of Financial Results In the following section, we discuss our financial condition and results of operations for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The discussion of our financial condition and results of operations that follows provides information that will assist the reader in understanding our consolidated financial statements, the changes in certain key items in those financial statements from quarter to quarter, including certain key performance indicators such as net combined ratio, ceded premium ratio, net expense ratio and net loss ratio, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect our consolidated financial statements. This discussion should be read in conjunction with our consolidated financial statements and the related notes included under Item 1 of this Quarterly Report on Form 10-Q. •Second quarter 2026 net income increased to $61.7 million, or $2.05 per diluted share, compared with $48.0 million, or $1.55 per diluted share, in the prior-year quarter. The increase was primarily driven by lower losses and higher revenue. Revenue growth reflected lower ceded premiums, which increased net premiums earned, as well as higher investment income from a larger invested asset base. Losses decreased primarily due to favorable prior-year loss development and lower weather-related losses. •Gross premiums written decreased 5.5% to $388.4 million from $411.0 million in the prior-year quarter, primarily reflecting lower commercial residential premiums, partially offset by growth in personal lines. The Florida commercial residential market remains highly competitive and management continues to emphasize underwriting discipline and adequate profitability by writing business that meets our pricing and risk standards. Commercial premiums are expected to level off in the second half of the year as we continue to grow this business outside of Florida where business conditions are more favorable while leveraging our strong Florida agency network. •Gross premiums earned were $351.2 million, compared to $353.6 million earned in the prior year quarter, reflecting the decline in commercial residential business driven by the competitive market conditions described above. •Net premiums earned increased 2.4% to $201.1 million from $196.3 million in the prior-year quarter, driven by lower ceded premiums. The reduction in ceded premiums reflected the decrease in the northeast net quota share program at year-end 2025 and one month of savings driven by the improved pricing of our June 2026 catastrophe excess of loss ("CAT XOL") program. The CAT XOL placement generated treaty-year expense savings of $63.2 million, of which seven-twelfths will be recognized in 2026. •Losses and loss adjustments expenses were $61.1 million, down $14.6 million from $75.6 million in the prior-year quarter. The net loss ratio improved 8.1 points to 30.4% from 38.5% in the same quarter last year. Net weather losses for the current accident quarter were $11.5 million, compared with $12.5 million in the prior-year quarter. Net favorable prior-year loss development was $23.4 million in the second quarter of 2026, compared with $2.3 million in the prior-year quarter. The favorable reserve development recorded in the second quarter of 2026 reflects several positive trends that have become increasingly evident over the past several quarters. Key drivers include the stabilization of claims closure timelines, a sustained reduction and subsequent stabilization in claim frequency, severity trending within normal ranges and fewer late reported claims combining to result in claims closing below expectations. •The ceded premium ratio decreased to 42.7% from 44.5% in the prior-year quarter, an improvement of 1.8 percentage points, primarily driven by a reduction in the northeast net quota share reinsurance program from 46% to 40% at December 31, 2025. Additionally, the ceded premium ratio benefited from more favorable reinsurance terms of the June 2026 CAT XOL program. •Net loss ratio decreased to 30.4%, an 8.1 point improvement from 38.5% in the same quarter last year, driven by lower net losses and LAE and relatively flat net premiums earned. 30 •The net expense ratio was 34.5%, essentially flat compared with 34.4% in the prior-year quarter. Policy acquisition costs increased 5.5% from the prior year quarter, primarily due to lower ceding commissions following the 2025 year-end, reduction in the net quota share reinsurance program. General and administrative expenses decreased 2.5%, reflecting lower regulatory costs and municipality tax expenses. •The net combined ratio improved 8.0 points to 64.9% from 72.9% in the prior-year quarter, primarily driven by the lower net loss ratio discussed above. •Net investment income increased to $10.6 million, a 17.3% increase from $9.0 million in the second quarter of 2025, driven mostly by a higher balance of invested assets. We continue to manage our investment portfolio by maintaining a conservative portfolio with high quality investments and duration liability matched. •The effective tax rate was 24.9% compared to 23.8% in the prior year second quarter. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The effective tax rate is 1.1 points higher than the prior quarter, with the variance driven by pre-tax income and permanent items. The effective tax rate can fluctuate throughout the year as income changes and estimates used in each quarterly tax provision are updated with additional information. Results of Operations Comparison of the Three Months Ended June 30, 2026 and 2025 Revenue For The Three Months Ended June 30, (Unaudited) 2026 2025 $ Change % Change (in thousands) REVENUE: Gross premiums written $ 388,441 $ 410,968 $ (22,527 ) (5.5 )% Change in gross unearned premiums (37,288 ) (57,374 ) 20,086 (35.0 )% Gross premiums earned 351,153 353,594 (2,441 ) (0.7 )% Ceded premiums (150,029 ) (157,278 ) 7,249 (4.6 )% Net premiums earned 201,124 196,316 4,808 2.4 % Net investment income 10,595 9,034 1,561 17.3 % Net realized (losses) gains on debt securities and other investments (37 ) 4 (41 ) NM Other revenue 2,513 2,681 (168 ) (6.3 )% Total revenue $ 214,195 $ 208,035 $ 6,160 3.0 % *NM - Not Meaningful Total revenue Total revenue increased 3.0% to $214.2 million, reflecting higher net premiums earned and increased investment income. Net premiums earned increased as a result of the reduction of the ceded premium due to the reduction of the northeast net quota-share program effective December 31, 2025 and due to savings in the recently placed catastrophe XOL program. Net investment income rose 17.3% to $10.6 million in the second quarter of 2026 from $9.0 million in the prior-year quarter, driven by growth in invested assets. The investment portfolio remains conservatively positioned, emphasizing high-quality fixed-income investments with asset durations closely matched to liabilities. Gross premiums written Gross premiums written were $388.4 million, down 5.5% from $411.0 million in the prior-year quarter, primarily reflecting lower commercial residential premiums, partially offset by growth in personal lines business. The Florida commercial residential market remains highly competitive, and management continues to prioritize underwriting discipline and adequate profitability, writing 31 only business that meets Heritage's pricing and risk standards. We expect commercial production to flatten during the second half of the year as we continue to make progress growing this business outside of Florida and with our strong agency network within Florida. Premiums-in-force were $1.41 billion as of second quarter 2026, a decrease of 1.4% compared to $1.43 billion as of second quarter 2025, driven mostly by a reduction of commercial residential in-force premium driven by competitive pressures as described above. Gross premiums earned Gross premiums earned of $351.2 million were down 0.7% from $353.6 million in the prior year quarter, reflecting a reduction in commercial residential business driven by competitive pressures as described above, which was mostly offset by higher gross premiums earned for the personal residential business. Ceded premiums Ceded premiums were $150.0 million in the second quarter of 2026, a decrease of $7.3 million, or 4.6%, from $157.3 million in the prior-year quarter, primarily driven by the decrease in the northeast net quota share program at year-end 2025 as well as the benefit from one month of the improved pricing of the June 2026 CAT XOL program. Net premiums earned Net premiums earned were $201.1 million in the second quarter of 2026, an increase of $4.8 million, or 2.4%, from $196.3 million in the prior-year quarter. Net premiums earned benefited from the decrease in ceded premiums, which more than offset the impact of lower gross premiums earned. Net investment income Net investment income was $10.6 million in the second quarter of 2026, an increase of $1.6 million, or 17.3%, from $9.0 million in the prior-year quarter. The increase was primarily attributable to higher average cash and invested asset balances and the reinvestment of maturing assets at higher yields, partially offset by lower yields on money market funds and bank sweep accounts resulting from the current interest rate environment. For The Three Months Ended June 30, (Unaudited) 2026 2025 $ Change % Change OPERATING EXPENSES: (in thousands) Losses and loss adjustment expenses 61,057 75,620 (14,563 ) (19.3 )% Policy acquisition costs 45,510 43,146 2,364 5.5 % General and administrative expenses 23,778 24,399 (621 ) (2.5 )% Total operating expenses 130,345 143,165 (12,820 ) (9.0 )% Total expenses Total expenses decreased to $130.3 million in the second quarter of 2026 from $143.2 million in the prior-year quarter, an improvement of 9.0%. As discussed below, the decrease was primarily attributable to lower losses and loss adjustment expenses (LAE) and, to a lesser extent, lower general and administrative expenses, partially offset by higher policy acquisition costs. Losses and loss adjustment expenses ("LAE") Losses and LAE incurred were $61.1 million in the second quarter of 2026, a decrease of $14.6 million, or 19.3%, from $75.6 million in the prior-year quarter. The net loss ratio decreased 8.1 points to 30.4% from 38.5% in the prior-year quarter, primarily driven by increased favorable prior-year loss reserve development. Net favorable prior-year loss reserve development was $23.4 million, compared to $2.3 million in the prior-year quarter. Net weather losses for the current accident quarter were $11.5 million, compared to $12.5 million in the prior-year quarter. Policy acquisition costs Policy acquisition costs were $45.5 million in the second quarter of 2026, an increase of 5.5% from $43.1 million in the prior-year quarter. The increase was primarily driven by a reduction in ceding commissions and higher policy related costs. 32 General and administrative expenses General and administrative expenses were $23.8 million in second quarter 2026, an improvement of 2.5% compared to $24.4 million in the prior year quarter. The decrease was primarily attributable to lower municipal tax expense and regulatory compliance costs. For The Three Months Ended June 30, (Unaudited) 2026 2025 $ Change % Change (in thousands, except per share amounts) Operating income 83,850 64,870 18,980 29.3 % Interest expense, net 1,690 1,880 (190 ) (10.1 )% Income before income taxes 82,160 62,990 19,170 30.4 % Provision for income taxes 20,450 14,966 5,484 36.6 % Net income $ 61,710 $ 48,024 $ 13,686 28.5 % Basic earnings per share $ 2.06 $ 1.55 $ 0.51 32.9 % Diluted earnings per share $ 2.05 $ 1.55 $ 0.50 32.3 % Net income Net income increased to $61.7 million, or $2.05 per diluted share, compared with $48.0 million, or $1.55 per diluted share, in the prior-year quarter. The increase was primarily driven by higher revenue and lower losses. Revenue growth reflected lower ceded premiums, which increased net premiums earned, as well as higher investment income from a larger invested asset base. Losses decreased primarily due to favorable prior-year loss development and lower weather-related losses. Interest expense, net Interest expense, net was $1.7 million in the second quarter of 2026, slightly lower than $1.8 million for the prior year quarter, primarily due to lower debt balances outstanding. Income tax expense The income tax expense was $20.5 million in second quarter 2026 compared to $15.0 million in the prior year quarter, with the higher provision in the current quarter driven by higher pre-tax earnings compared to the prior year quarter. The effective tax rate for the current year quarter was 24.9% compared to 23.8% in the prior year quarter, an increase of 1.1 point. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The variance is driven by pre-tax income and permanent items. The effective tax rate can fluctuate throughout the year as income changes and estimates used in each quarterly tax provision are updated with additional information. The effective tax rate can fluctuate throughout the year as estimates used in the quarterly tax provision are updated with additional information. Ratios For The Three Months Ended June 30, (Unaudited) 2026 2025 Ceded premium ratio 42.7 % 44.5 % Net loss and LAE ratio 30.4 % 38.5 % Net expense ratio 34.5 % 34.4 % Net combined ratio 64.9 % 72.9 % Net combined ratio The net combined ratio was 64.9% in second quarter 2026, a 8.0 point improvement from 72.9% in the prior year quarter. The decrease primarily stems from a lower net loss and LAE ratio as described below. 33 Ceded premium ratio The ceded premium ratio was 42.7% in the second quarter of 2026, representing a modest improvement of 1.8 points from 44.5% in the prior-year quarter. Net loss and LAE ratio The net loss and LAE ratio was 30.4% in second quarter 2026, a 8.1 point improvement from 38.5% in the prior year quarter. The reduction was driven by both a reduction in losses and LAE and higher net earned premium as described above. Net expense ratio The net expense ratio was 34.5%, essentially flat compared with 34.4% in the prior-year quarter. Policy acquisition costs increased 5.5% year over year, primarily due to lower ceding commissions following the December 31, 2025, reduction in the net quota share reinsurance program. General and administrative expenses decreased 2.5%, reflecting lower regulatory costs and municipality tax expenses. Comparison of the Six Months Ended June 30, 2026 and 2025 For The Six Months Ended June 30, 2026 2025 $ Change % Change (Unaudited) (in thousands) REVENUE: Gross premiums written $ 735,187 $ 766,965 $ (31,778 ) (4.1 )% Change in gross unearned premiums (30,471 ) (59,543 ) 29,072 (48.8 )% Gross premiums earned 704,716 707,422 (2,706 ) (0.4 )% Ceded premiums (303,899 ) (311,072 ) 7,173 (2.3 )% Net premiums earned 400,817 396,350 4,467 1.1 % Net investment income 20,462 17,609 2,853 16.2 % Net realized (losses) gains on debt securities and other investments (21 ) — (21 ) NM Other revenue 5,596 5,595 1 0.0 % Total revenue $ 426,854 $ 419,554 $ 7,300 1.7 % Total Revenue Total revenue increased 1.7% to $426.9 million for the six month period ended June 30, 2026, compared to $419.6 million for the corresponding period in 2025, primarily reflecting higher net premiums earned and increased investment income. Net investment income increased 16.2% to $20.5 million for the first six months of 2026, compared to $17.6 million in the prior-year period, driven principally by growth in invested assets. Our investment portfolio remains conservatively positioned, with an emphasis on high-quality fixed-income securities and asset durations that are closely matched to our liability profile. Gross premiums written Gross premiums written were $735.2 million for the six month period ended June 30, 2026, down 4.1% from $767.0 million. The decrease primarily relates to a reduction of written premium for commercial residential business, driven by competitive market conditions. Premiums-in-force were $1.41 billion as of second quarter 2026, a decrease of 1.4% compared to $1.43 billion as of second quarter 2025, driven by the reduction on commercial residential business. Gross premiums earned Gross premiums earned were $704.7 million for the six month period ended June 30, 2026, a decrease of 0.4% from $707.4 million in the prior year period, reflecting a reduction in commercial residential business driven by competitive pressures as described above, which was mostly offset by higher gross premiums earned for the personal residential business. 34 Ceded premiums Ceded premiums were $303.9 million for the six month period ended June 30, 2026, down 2.3% from $311.1 million in the prior year period. The decrease relates primarily to the reduction in the northeast net quota share and the reduction in cost of the June 2026 CAT XOL program. Net premiums earned Net premiums earned increased 1.1% to $400.8 million for the six month period ended June 30, 2026, compared to $396.4 million for the prior-year period. The increase was primarily attributable to lower ceded premiums, which more than offset a modest decline in gross premiums earned, as discussed above. Net investment income Net investment income was $20.5 million for the six month period ended June 30, 2026, up 16.2% from $17.6 million in the prior year period, driven primarily to higher average cash and invested asset balances and the reinvestment of maturing assets at higher yields, partially offset by lower yields on money market funds and bank sweep accounts resulting from the current interest rate environment. For The Six Months Ended June 30, (Unaudited) 2026 2025 $ Change % Change OPERATING EXPENSES: (in thousands) Losses and loss adjustment expenses 152,654 175,027 (22,373 ) (12.8 )% Policy acquisition costs 90,845 88,961 1,884 2.1 % General and administrative expenses 48,687 48,260 427 0.9 % Total operating expenses 292,186 312,248 (20,062 ) (6.4 )% Total expenses Total expenses were $292.2 million for the six month period ended June 30, 2026, down 6.4% compared to $312.2 million in the prior year period. As described below, losses and LAE declined significantly, policy acquisition costs declined, and general and administrative expenses increased. Losses and loss adjustment expenses Losses and LAE incurred were $152.7 million for the six month period ended June 30, 2026, down 12.8% from $175.0 million in the prior year period. The decrease primarily stems from favorable net loss development and lower catastrophe losses, as winter storms in 2026 were lower than the California wildfire losses of during the first quarter of 2025. Net weather and catastrophe losses for the first six months of 2026 were $48.2 million, a decrease of $7.9 million from $56.1 million in the prior year period. Catastrophe losses were $24.4 million compared to $31.8 million in the prior-year period. Other weather losses totaled $23.8 million, a decrease from the prior year period amount of $24.3 million. Net favorable prior year loss development was $31.6 million for the six months of 2026 compared to net favorable loss development of $10.0 million for the prior year period, reflecting more favorable loss emergence and corresponding reserve releases on prior accident years than were recognized in the comparable 2025 period. The favorable reserve development recorded in the second quarter of 2026 reflects several positive trends that have become increasingly evident over the past several quarters. Key drivers include the stabilization of claims closure timelines, a sustained reduction and subsequent stabilization in claim frequency, severity trending within normal ranges and fewer late reported claims all combining to result in claims closing below expectations. Policy acquisition costs Policy acquisition costs increased 2.1% to $90.8 million for the six months ended June 30, 2026, compared to $89.0 million for the comparable 2025 period. The increase was primarily attributable to lower ceding commission resultant from the reduction of the northeast net quota share program. General and administrative expenses General and administrative expenses were $48.7 million for the six months ended June 30, 2026, compared with $48.3 million for the comparable period in 2025. The modest increase of 0.8% reflects stable operating expenses and was generally consistent with the prior-year period. 35 For The Six Months Ended June 30, (Unaudited) 2026 2025 $ Change % Change (in thousands, except per share amounts) Operating income 134,668 107,306 27,362 25.5 % Interest expense, net 3,468 4,306 (838 ) (19.5 )% Income before income taxes 131,200 103,000 28,200 27.4 % Provision for income taxes 33,006 24,502 8,504 34.7 % Net income $ 98,194 $ 78,498 $ 19,696 25.1 % Basic earnings per share $ 3.24 $ 2.54 $ 0.69 27.6 % Diluted earnings per share $ 3.23 $ 2.54 $ 0.69 27.2 % Net income Net income for the six months ended June 30, 2026 was $98.2 million, or $3.23 per diluted share, compared to net income of $78.5 million, or $2.54 per diluted share, for the corresponding period in 2025. The increase was primarily driven by a significant decrease in losses and loss adjustment expenses (LAE), higher net premiums earned, and relatively stable operating expenses. The improvement in results reflects the favorable impact of rate increases, underwriting actions, and exposure management initiatives implemented over the past several years, which continued to benefit operating performance during the first half of 2026. These actions contributed to a 1.1% increase in net premiums earned and a 12.8% decrease in net losses and LAE, as discussed above. Policy acquisition costs increased 2.1%, primarily due to lower ceding commission income. General and administrative expenses increased 0.8% and remained relatively consistent with the prior-year period. Interest expense, net Interest expense, net was $3.5 million for the six month period ended June 30, 2026 , a decrease of 19.5% compared to $4.3 million for the prior year period, The decrease was attributed to the impact from the reduction of debt obligations. Income tax expense The income tax expense was $33.0 million for the six month period ended June 30, 2026 compared to $24.5 million in the prior year period, with the higher income tax provision in the current period driven by higher pre-tax earnings compared to the prior year period. The effective tax rate for the current year period was 25.2% compared to 23.8% in the prior year period. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The variance is driven by pre-tax income and permanent items. The effective tax rate can fluctuate throughout the year as income changes and estimates used in each quarterly tax provision are updated with additional information. Ratios For The Six Months Ended June 30, (Unaudited) 2026 2025 Ceded premium ratio 43.1 % 44.0 % Net loss and LAE ratio 38.1 % 44.2 % Net expense ratio 34.8 % 34.6 % Net combined ratio 72.9 % 78.8 % Net combined ratio The net combined ratio was 72.9% for the six month period ended June 30, 2026, compared to 78.8% for the comparable period in 2025, representing an improvement of 5.9 points. The improvement primarily reflects a lower net loss and LAE ratio, driven by primarily by favorable loss development and lower weather losses, partially offset by a modest increase in the net expense ratio, as described below. Ceded premium ratio The ceded premium ratio was 43.1% for the six months ended June 30, 2026, compared to 44.0% for the comparable period in 2025. The 0.8 point improvement was primarily attributable to a decrease in ceded premiums related to a reduction of the northeast net quota share program. 36 Net loss and LAE ratio The net loss and LAE ratio was 38.1% for the six month period ended June 30, 2026, a 6.1 point improvement from 44.2% in the prior year period, reflecting higher net premiums earned, coupled with a decrease in net losses and LAE as described above. Net expense ratio The net expense ratio was 34.8% for the six months ended June 30, 2026, compared with 34.6% for the corresponding period in 2025, and remained generally consistent with the prior-year period. Financial Condition – June 30, 2026 compared to December 31, 2025 Cash and Cash Equivalents Cash and cash equivalents were $587.6 million at June 30, 2026, compared with $559.3 million at December 31, 2025, an increase of $28.3 million. The increase was primarily attributable to cash received from premium collections and investment income , partially offset by cash used for claim payment, reinsurance costs, debt paydowns, and stock purchases. Fixed Maturity Securities Fixed maturity securities increased by $88.7 million to $801.9 million at June 30, 2026, from $713.2 million at December 31, 2025, primarily reflecting the reinvestment of operating cash flows and excess cash into the investment portfolio. Reinsurance Recoverable on Paid and Unpaid Claims At June 30, 2026, reinsurance recoverable on paid and unpaid claims totaled $305.2 million, a decrease of $13.4 million from $318.6 million at December 31, 2025. The decrease was primarily driven by claim payments, a reduction in ultimate losses for certain catastrophic events, and collections of reinsurance recoveries. Prepaid Reinsurance Premiums At June 30, 2026, prepaid reinsurance premium increased by $153.7 million to $460.7 million from $307.0 million at December 31, 2025. This balance represents unearned ceded premium and the increase is primarily attributable to the execution of new reinsurance treaties. Unpaid Losses and Loss Adjustment Expenses At June 30, 2026, unpaid losses and loss adjustment expenses decreased by $97.5 million to $482.0 million from $579.5 million at December 31, 2025. The decrease primarily reflects claims payments during the period, lower losses during the quarter and a reduction of ultimate losses for certain catastrophic events. Reinsurance Payable At June 30, 2026, reinsurance payable increased by $268.2 million to $501.0 million from $232.8 million at December 31, 2025. The increase was primarily driven by the June 1, 2026 renewal of the Company's annual reinsurance programs. Total Shareholders’ Equity Total shareholders’ equity increased $62.5 million to $567.7 million at June 30, 2026 from $505.3 million at December 31, 2025, primarily reflecting net income for the quarter. This increase was partially offset by treasury stock repurchases of approximately $24.6 million, representing the repurchase of 1,001,508 shares during the first six months of 2026, as well as an increase in accumulated other comprehensive loss due to higher unrealized losses and a reduction in additional paid-in capital related to surrendered restricted stock for tax withholdings. Liquidity and Capital Resources Our principal sources of liquidity include cash flows generated from operations, existing cash and cash equivalents, our marketable securities balances and borrowings available under our Credit Facilities. As of June 30, 2026, we had $587.6 million of cash and cash equivalents and $804.0 million in investments, compared to $559.3 million and $715.6 million, respectively, as of 37 December 31, 2025. As described above, the increase was primarily attributable to cash received from premium collections and investment income earned on sweep accounts, partially offset by cash used to pay off existing debt and make stock repurchases. We generally hold substantial cash balances to meet seasonal liquidity needs including amounts to pay quarterly reinsurance installments as well as meet the collateral requirements of Osprey Re, our captive reinsurance company, which is required to maintain a collateral trust account equal to the risk that it assumes from our insurance company affiliates. We believe that our sources of liquidity are adequate to meet our cash requirements for at least the next twelve months. We may increase capital expenditures consistent with our investment plans and anticipated business strategies. Cash and cash equivalents may not be sufficient to fund such expenditures. As such, in addition to the use of our existing Credit Facilities, we may need to utilize additional debt to secure funds for such purposes. Cash Flows For The Six Months Ended June 30, 2026 2025 Change (in thousands) Net cash (used in) provided by: Operating activities $ 166,553 $ 44,129 $ 122,424 Investing activities (96,880 ) 3,256 (100,136 ) Financing activities (40,875 ) (24,098 ) (16,777 ) Net (decrease) increase in cash and cash equivalents $ 28,798 $ 23,287 $ 5,511 Operating Activities Net cash provided by operating activities was $166.6 million for the six months ended June 30, 2026 compared to net cash provided by operating activities of $44.1 million for the comparable period in 2025. The increase in cash provided by operating activities relates primarily to timing of cash flows associated with premium collection, claim and reinsurance payments as well as reinsurance reimbursements during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Investing Activities Net cash used in investing activities for the six months ended June 30, 2026 was $96.9 million as compared to net cash provided by investing activities of $3.2 million for the comparable period in 2025. The change in cash used in investing activities relates primarily to timing of investment maturities and re-investment of proceeds as well as availability of existing cash to invest in longer duration fixed income securities to lock in current interest rates. Financing Activities Net cash used in financing activities was $40.9 million for the six months ended June 30, 2026, compared to $24.1 million for the comparable period in 2025. The change was primarily driven by the repurchase of common stock of $24.6 million, the surrender of restricted stock to satisfy tax withholding obligations of $8.9 million, and the payoff of a $5.5 million FHLB loan. By comparison, cash used in financing activities during the 2025 period primarily reflected repayments of the $19.2 million FHLB‑ATL loan and $4.8 million payment on the term note agreement. Credit Facilities On July 22, 2025, the Company and its subsidiary guarantors entered into the Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) with lenders from time to time party thereto and Regions Bank, as administrative agent and collateral agent. The Amended and Restated Credit Agreement amended and restated in its entirety the Credit Agreement dated as of December 14, 2018 (as amended to date, the “Prior Credit Agreement”). The Amended and Restated Credit Agreement provides for senior secured credit facilities in the aggregate principal amount of up to $200.0 million, consisting of (1) a five-year senior secured term loan facility in an aggregate principal amount of $75 million with a maturity of July 2030 (the “Term Loan Facility”), (2) a $75 million committed delayed draw term loan that may be advanced to finance specified permitted acquisitions and investments with a maturity of July 2030 (the “Delayed Draw Term Loan Facility”) and (3) a senior secured revolving credit facility in an aggregate principal amount of $50 million with a maturity of July 2030 (inclusive of 38 a sublimit for the issuance of letters of credit equal to the unused amount of the revolving credit facility and a sublimit for swingline loans equal to the lesser of $25 million and the unused amount of the revolving credit facility) (the “Revolving Credit Facility” and together with the Term Loan Facility and the Delayed Draw Term Loan Facility, the “Credit Facilities”). Term Loan Facility. The principal amount of the Term Loan Facility under the Amended and Restated Credit Facility amortizes in quarterly installments beginning with the close of the fiscal quarter ending December 31, 2025, in an amount equal to $937,500 per quarter, payable quarterly, and increasing to approximately $1.4 million per quarter commencing with the quarter ending September 30, 2028, with the remaining balance payable at maturity in July 2030. As of June 30, 2026, there was $72.2 million in aggregate principal amount outstanding under the Term Loan Facility and as of December 31, 2025, there was $74.1 million in aggregate principal outstanding under the term loan facility under the Prior Credit Agreement. Revolving Credit Facility. The Revolving Credit Facility allows for borrowings of up to $50 million inclusive of a sublimit for the issuance of letters of credit equal to the unused amount of the Revolving Credit Facility and a sublimit for swingline loans equal to the lesser of $25.0 million and the unused amount of the Revolving Credit Facility. Immediately prior to entering into the Amended and Restated Credit Agreement the outstanding balance under the revolving credit facility under the Prior Credit Agreement was $10.0 million, which amount was repaid in connection with the Amended and Restated Credit Agreement. During 2024, the Company secured letters of credit in aggregate of $24.4 million with a maturity date of March 16, 2025. There were no draws on the letters of credit during 2025, which were cancelled effective on their maturity date of March 16, 2025. On December 3, 2025, the Company secured letters of credit in aggregate of $32.0 million with a maturity date of December 31, 2026, with no draws as of December 31, 2025. In June 2026, the Company cancelled all outstanding letters of credit issued under the Revolving Credit Facility and paid $331,767 of letter of credit issuance fees. As of June 30, 2026, the Company had no outstanding letters of credit issued under the Revolving Credit Facility. At our option, borrowings under the Credit Facilities, bear interest at rates equal to either (1) a rate determined by reference to SOFR, plus an applicable margin (described below) or (2) a base rate determined by reference to the highest of (a) the “prime rate” of Regions Bank, (b) the federal funds rate plus 0.50%, and (c) the adjusted term SOFR in effect on such day for an interest period of one month plus 1.00%, plus an applicable margin (described below). The applicable margin for loans under the Credit Facilities varies from 2.50% per annum to 3.00% per annum (for SOFR loans) and 1.50% to 2.00% per annum (for base rate loans) based on our consolidated leverage ratio ranging from less than or equal to 1-to-1 to greater than 1.5-to-1. Interest payments with respect to the Credit Facilities are required either on a quarterly basis (for base rate loans) or at the end of each interest period (for SOFR loans) or, if the duration of the applicable interest period exceeds three months, then every three months. As of June 30, 2026, the borrowings under the Term Loan Facility were accruing interest at a rate of 6.370% per annum. In addition to paying interest on outstanding borrowings under the Revolving Credit Facility, we are required to pay a quarterly commitment fee based on the unused portion of the Revolving Credit Facility, which is determined by our consolidated leverage ratio. As of June 30, 2026, the Company paid in commitment fees in aggregate of $166,641 as it relates to the unused portion of the Revolving Credit Facility. The Company may prepay the loans under the Credit Facilities, in whole or in part, at any time without premium or penalty, subject to certain conditions including minimum amounts and reimbursement of certain costs in the case of prepayments of SOFR loans. In addition, we are required to prepay the loan under the Term Loan Facility with the proceeds from certain financing transactions, involuntary dispositions or asset sales (subject, in the case of asset sales, to reinvestment rights). All obligations under the Credit Facilities are or will be guaranteed by each existing and future direct and indirect wholly owned domestic subsidiary of the Company, other than all of the Company’s current and future regulated insurance subsidiaries (collectively, the “Guarantors”). The Company and the Guarantors are party to a Pledge and Security Agreement, (as amended from time to time the “Security Agreement”), in favor of a collateral agent. Pursuant to the Security Agreement, amounts borrowed under the Credit Facilities are secured on a first priority basis by a perfected security interest in substantially all of the present and future assets of the Company and each Guarantor (subject to certain exceptions), including all of the capital stock of the Company’s domestic subsidiaries, other than its regulated insurance subsidiaries. 39 The Amended and Restated Credit Agreement contains, among other things, covenants, representations and warranties and events of default customary for facilities of this type. The Amended and Restated Credit Agreement requires the Company to maintain, as of each fiscal quarter (1) a maximum consolidated leverage ratio of 2.00 to 1.00, (2) a minimum consolidated fixed charge coverage ratio of 1.20 to 1.00 and (3) a minimum consolidated tangible net worth for the Company and its subsidiaries, which is required to be not less than the sum of 75% of consolidated tangible net worth measured as of the fiscal quarter ended September 30, 2025 plus 25% of positive consolidated net income (including its subsidiaries and regulated subsidiaries) plus the net cash proceeds of any equity transactions. Events of default include, among other events, (i) nonpayment of principal, interest, fees or other amounts; (ii) failure to perform or observe certain covenants set forth in the Credit Agreement; (iii) breach of any representation or warranty; (iv) cross-default to other indebtedness; (v) bankruptcy and insolvency defaults; (vi) monetary judgment defaults and material nonmonetary judgment defaults; (vii) customary ERISA defaults; (viii) a change of control of the Company; and (ix) failure to maintain specified catastrophe retentions in each of the Company’s regulated insurance subsidiaries or observe specified reinsurer concentration limits. Convertible Notes On August 10, 2017, the Company and Heritage MGA, LLC (the “Notes Guarantor”) entered into a purchase agreement (the “Purchase Agreement”) with the initial purchaser party thereto (the “Initial Purchaser”), pursuant to which the Company agreed to issue and sell, and the Initial Purchaser agreed to purchase, $136.8 million aggregate principal amount of the Company’s 5.875% Convertible Senior Notes due 2037 (the “Convertible Notes”) in a private placement transaction pursuant to Rule 144A under the Securities Act, as amended (the “Securities Act”). The net proceeds from the offering of the Convertible Notes, after deducting discounts and commissions and estimated offering expenses payable by the Company, were approximately $120.5 million. The offering of the Convertible Notes was completed on August 16, 2017. The Company issued the Convertible Notes under an Indenture (the “Convertible Note Indenture”), dated August 16, 2017, by and among the Company, as issuer, the Notes Guarantor, as guarantor, and the trustee party thereto (the “Trustee”). The Convertible Notes bear interest at a rate of 5.875% per year. Interest is payable semi-annually in arrears, on February 1 and August 1 of each year. The Convertible Notes are senior unsecured obligations of the Company that rank senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to the Company’s unsecured indebtedness that is not so subordinated; effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness or other liabilities incurred by the Company’s subsidiaries other than the Notes Guarantor, which fully and unconditionally guarantee the Convertible Notes on a senior unsecured basis. The Convertible Notes mature on August 1, 2037, unless earlier repurchased, redeemed or converted. Holders may convert their Convertible Notes at any time prior to the close of business on the business day immediately preceding February 1, 2037, under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2017, if the closing sale price of the Company’s common stock, for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on the last trading day of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs, is more than 130% of the conversion price of the Convertible Notes in effect on each applicable trading day; (2) during the ten consecutive business-day period following any five consecutive trading-day period in which the trading price for the Convertible Notes for each such trading day was less than 98% of the closing sale price of the Company’s common stock on such date multiplied by the then-current conversion rate; (3) if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the third business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. Based on the closing sale price of the Company’s common stock during the 20 trading days leading up to June 30, 2026, the Convertible Notes are convertible for the calendar quarter commencing July 1, 2026 and ending on September 30, 2026. On or after February 1, 2037 until the close of business on the second business day immediately preceding August 1, 2037, holders may surrender their Convertible Notes for conversion at any time, regardless of the foregoing circumstances. 40 Upon the occurrence of a fundamental change (as defined in the Convertible Note Indenture) (but not, at the Company’s election, a public acquirer change of control (as defined in the Convertible Note Indenture)), holders of the Convertible Notes may require the Company to repurchase for cash all or a portion of their Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. At any time prior to February 1, 2037, the Company may redeem for cash all or any portion of the Convertible Notes, at the Company’s option, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes, which means that the Company is not required to redeem or retire the Convertible Notes periodically. Holders of the Convertible Notes are able to cause the Company to repurchase their Convertible Notes for cash on any of August 1, 2022, August 1, 2027 and August 1, 2032, in each case at 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. The Convertible Note Indenture contains customary terms and covenants and events of default. If an Event of Default (as defined in the Convertible Note Indenture) occurs and is continuing, the Trustee by notice to the Company, or the holders of at least 25% in aggregate principal amount of the Convertible Notes then outstanding by notice to the Company and the Trustee, may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the Convertible Notes to be immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization (as set forth in the Convertible Note Indenture) with respect to the Company, 100% of the principal of, and accrued and unpaid interest, if any, on, the Convertible Notes automatically become immediately due and payable. As of June 30, 2026 and December 31, 2025, there was $885,000 principal amount of outstanding Convertible Notes, net of $21.1 million of Convertible Notes held by an insurance company subsidiary. FHLB Loan Agreements In December 2018, a subsidiary of the Company received a 3.094% fixed interest rate cash loan of $19.2 million from the Federal Home Loan Bank Atlanta (“FHLB-ATL”). On September 29, 2023, the Company restructured the December 2018 agreement to extend the maturity date to March 28, 2025, with a 5.109% fixed interest rate payable quarterly commencing on December 28, 2023. Membership in the FHLB-ATL required an investment in FHLB-ATL’s common stock which was purchased in December 2018 and valued at $1.4 million. In March 2025, the FHLB-ATL agreement was repaid and the securities were released from pledged collateral. As of June 30, 2026, the subsidiary continues to be a member in FHLB-ATL with its common stock valued at $561,416. In December 2018, a subsidiary of the Company became a member of the FHLB Des Moines (“FHLB-DM”). Membership in the FHLB-DM required an investment in FHLB-DM’s common stock which was purchased in December 2018 and valued at $133,200. In January 2024, the insurance subsidiary of the Company received a 4.23% fixed interest rate cash loan of $5.5 million from the FHLB-DM. Additionally, the transaction required the acquired FHLB-DM common stock and certain other investments to be pledged as collateral. In June 2026, the Company repaid the loan and released the investments from pledged collateral. As of June 30, 2026, the equity investment in FHLB-DM common stock was $77,200. Critical Accounting Policies and Estimates When we prepare our condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (GAAP), we must make estimates and assumptions about future events that affect the amounts we report. Certain of these estimates result from judgments that can be subjective and complex. As a result of that subjectivity and complexity, and because we continuously evaluate these estimates and assumptions based on a variety of factors, actual results could materially differ from our estimates and assumptions if changes in one or more factors require us to make accounting adjustments. We have made no material changes or additions with regard to those policies and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025. Recent Accounting Pronouncements The information set forth under Note 1 to the condensed consolidated financial statements under the caption “Basis of Presentation and Significant Accounting Policies” is incorporated herein by reference. We do not expect any recently issued accounting pronouncements to have a material effect on our condensed consolidated financial statements. 41