7. Reinsurance

In the normal course of business, the Company participates in reinsurance agreements in order to limit losses that may arise from catastrophes or other individually severe events.

Effective June 1, 2025, the Company was party to a new quota share reinsurance agreement wherein it cedes 50% of premiums as of the effective date, on substantially all of its homeowners business. This agreement generated $4.2 million of ceded written premiums for the three months ended March 31, 2026. The agreement allows for a sliding-scale ceding commission depending on the performance of the underlying business. We calculated the ceding commission based on a 36.2% rate.

Effective June 1, 2025, the Company was party to a property catastrophe reinsurance treaty for aggregate losses up to $56.0 million in excess of a $4.0 million retention.

The Company no longer writes commercial lines business and thus has no reinsurance for specific commercial property and liability risks in 2026. The Company ceded primarily all specific commercial property and liability risks in excess of $400,000 in 2025. The Company ceded homeowners specific risks in excess of $500,000 in 2026 and 2025, respectively. The

homeowners quota share effectively reduces the net retention of the specific loss coverage from $500,000 to $250,000, and reduces the retention of the catastrophe reinsurance coverage from $4.0 million to $2.0 million.

Reinsurance does not discharge the direct insurer from liability to its policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors the concentration of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. To date, the Company has not experienced any significant difficulties in collecting reinsurance recoverables, other than the loss portfolio transfer discussed below.

On November 1, 2022, the Company entered into a loss portfolio transfer (“LPT”) reinsurance agreement. The LPT provides adverse reserve development coverage of up to $20.0 million for accident years 2019 and prior. As of March 31, 2026, the Company ceded an aggregate of $17.1 million of losses to the LPT. As of December 31, 2025, the Company ceded an aggregate of $16.5 million of losses to the LPT. Due to the insolvency of the reinsurer, we do not expect any additional recoveries from the loss portfolio transfer.

As of March 31, 2026, the Condensed Consolidated Balance Sheets included $205,000 and $3.0 million of fully collateralized reinsurance recoverables on paid and unpaid losses related to the LPT, respectively. As of December 31, 2025, the Consolidated Balance Sheets included $3.4 million of fully collateralized reinsurance recoverables on unpaid losses related to the LPT, respectively.