12. Reinsurance

The Company utilizes reinsurance in order to limit its exposure to losses and enable it to underwrite policies with sufficient limits to meet policyholder needs. The Company utilizes both excess of loss (XOL) and quota share reinsurance.

As of June 30, 2026, the Company’s catastrophe event retention is $20.0 million for earthquake events and $11.0 million for continental hurricane events and all other perils. Laulima maintains Hawaii hurricane reinsurance coverage through a standalone XOL treaty, which provides per-occurrence coverage up to $865.0 million with a retention of $1.5 million. As of June 30, 2026, the Company’s XOL reinsurance structure provides protection up to $3.9 billion for earthquake events and $135.0 million for continental U.S. hurricane events.

In addition to reinsurance purchased from traditional reinsurers, the Company utilizes collateralized protection from the insurance-linked securities market through catastrophe bonds issued via Torrey Pines Re Ltd., a Bermuda-domiciled special purpose insurer. The Company closed a $360 million catastrophe bond in the second quarter of 2026, effective June 1, 2026 through June 1, 2029; a $525 million catastrophe bond in the second quarter of 2025, effective June 1, 2025 through June 1, 2028; a $420 million catastrophe bond in the second quarter of 2024, effective June 1, 2024 through June 1, 2027; and a $200 million catastrophe bond in the second quarter of 2023, effective June 1, 2023 through June 1, 2026. These catastrophe bonds provide indemnity-based reinsurance coverage for catastrophe events.