Ategrity Specialty Insurance Company Holdings

08/13/2026 | Press release | Distributed by Public on 08/13/2026 06:46

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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 together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the "Risk Factors" as well as set forth in other parts of this Quarterly Report on Form 10-Q.
Overview
Ategrity Specialty Insurance Company Holdings is a specialty property and casualty insurance holding company dedicated exclusively to the excess and surplus ("E&S") market for small to medium-sized businesses ("SMBs") across the United States. Our underwriting operations are conducted through Ategrity Specialty Insurance Company, a Delaware-domiciled E&S insurer.
We underwrite small and medium-sized commercial risks across selected industry verticals, including Retail, Real Estate, Hospitality, and Construction. The SMB segment of the E&S market is characterized by a high volume of smaller-premium policies, where distribution partners expect speed, clarity, and consistency in the underwriting process. Our operating model uses a technology-driven method to standardize, simplify, and automate these transactions, which we call productionized underwriting. This method incorporates micro-segmentation, centralized underwriting governance, and automated workflows to promote consistent, disciplined execution across a high volume of E&S transactions.
We operate our business in a single segment and as one reportable segment for purposes of assessing performance, making operating decisions and allocating resources.
Components of results of operations
Gross written premiums
Gross written premiums are the amount received or to be received for insurance policies written or assumed by us during a specific period of time without reduction for policy acquisition costs, reinsurance costs, or other deductions. The volume of our gross written premiums in any given period is generally influenced by:
•New business submissions;
•Binding of new business submissions into policies;
•Renewals of existing policies; and
•Average size and premium rate of new and existing policies.
Ceded written premiums
Certain premiums and losses are ceded to other insurance and reinsurance companies under various excess of loss and quota-share reinsurance contracts. Ceded written premiums are the amount of gross written premiums ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential large losses as well as to provide additional capacity for growth. Ceded written premiums are earned over the reinsurance contract period in proportion to the period of risk covered. The volume of our ceded written premiums is impacted by the level of our gross written premiums and any decision we make to increase or decrease retention levels.
Net earned premiums
Net earned premiums represent the earned portion of our net written premiums. Written premiums are earned on a pro rata basis over the terms of the policies, which are generally 12 months. The portion of premiums written applicable to the terms of the policies that have already elapsed is recorded as earned premiums.
Fee income
Fee income includes policy fees charged to insureds and is recognized in earnings when the related premiums are written. These policy fees may be assessed as either a flat amount or a variable charge, depending on the specific policy type. The total amount of policy fee income is primarily impacted by the volume of our written policies.
Losses and loss adjustment expenses
Losses and loss adjustment expenses are a function of the amount and type of insurance contracts we write and the loss experience associated with the underlying coverage. In general, our losses and loss adjustment expenses are affected by:
•frequency of claims associated with the particular types of insurance contracts that we write;
•trends in the average size of losses incurred on a particular type of business;
•mix of business written by us;
•reinsurance agreements we have in place at the time of loss;
•changes in the legal or regulatory environment related to the business we write;
•trends in legal defense costs;
•inflation in building material costs;
•wage inflation; and
•inflation in medical costs.
Losses and loss adjustment expenses are based on actual paid losses and an actuarial analysis of the estimated losses, including losses incurred during the period and changes in estimates from prior periods. Losses and loss adjustment expenses may be paid out over a period of years.
Underwriting, acquisition, and insurance expenses
Underwriting, acquisition, and insurance expenses include policy acquisition costs and operating expenses. Policy acquisition costs are principally comprised of the commissions we pay our brokers, net of ceding commissions we receive on business ceded under certain reinsurance contracts. Policy acquisition costs also include deferred underwriting expenses that are directly related to the successful acquisition of those policies. Operating expenses represent general and administrative expenses related to our insurance business, including employee compensation, software and technology costs, travel, marketing, and professional fees.
Net investment income
We earn investment income on our portfolio of cash and invested assets. Our cash and invested assets are primarily comprised of fixed income securities, the Utility & Infrastructure Investments, loans to affiliates, and cash and cash equivalents. Net investment income related to the Utility & Infrastructure Investments includes our proportionate share of the rebate, dividend, interest and other income, net of investment expenses, and investment management fees for the funds underlying the Utility & Infrastructure Investments. The principal factors that influence net investment income are the size of our investment portfolio and the yield on that portfolio as measured by amortized cost (which excludes changes in fair market value, such as from changes in interest rates) and investment management and other related expenses. The size of our investment portfolio is mainly a function of our invested equity capital along with premiums we receive from our insureds less payments on policyholder claims.
Net realized and unrealized gains (losses) on investments
Net realized and unrealized gains (losses) on investments include realized gains and losses which are a function of the difference between the amount received by us on the sale of a security and the security's cost or
amortized cost, as applicable, as well as the change in unrealized gains (losses) on equity securities and unrealized appreciation (depreciation) on securities sold not yet purchased. Net realized and unrealized gains (losses) on investments also includes appreciation on securities, derivative contracts, and foreign currency transactions allocated from the funds underlying the Utility & Infrastructure Investments. Such allocation represents our proportionate share of the Utility & Infrastructure Investments' net realized gains (losses) of the funds underlying the Utility & Infrastructure Investments which are a function of the difference between the amount received on the sale of a security and the security's amortized cost as well as change in unrealized appreciation (depreciation) on securities, derivative contracts, and foreign currency transactions.
Interest expense
Interest expense primarily consists of fees incurred during the period related to our letters of credit issued for the benefit of Ategrity Specialty on behalf of Ategrity Limited.
Income tax expense (benefit)
Currently our income tax expense (benefit) consists mainly of federal income taxes imposed on our operations. Our effective tax rates are dependent upon the components of pretax earnings and the related tax effects. The amount of income tax expense (benefit) recorded in future periods will depend on the jurisdictions in which we operate and the tax laws and regulations in effect.
Key metrics
We discuss certain key metrics, described below, which provide useful information about our business and the operational factors underlying our financial performance.
Underwriting income is a non-GAAP financial measure. We define underwriting income as income before income taxes excluding the impact of net investment income, net realized and unrealized gains (losses) on investments, other income, interest expense, and other expenses (which include expenses relating to corporate activities and expenses recorded by us in connection with the Company's Initial Public Offering or "IPO"). For a reconciliation of underwriting income to the most directly comparable GAAP financial measure, information about why we consider underwriting income useful and a discussion of the material risks and limitations of underwriting income, see "Reconciliation of non-GAAP financial measures".
Adjusted net income attributable to stockholders is a non-GAAP financial measure. We define adjusted net income attributable to stockholders as net income attributable to stockholders, excluding certain non-operating expenses, which include expenses recorded by us in connection with the Company's IPO. For a reconciliation of adjusted net income attributable to stockholders to the most directly comparable GAAP financial measure, information about why we consider adjusted net income attributable to stockholders useful and a discussion of the material risks and limitations of adjusted net income attributable to stockholders, see "Reconciliation of non-GAAP financial measures".
Loss ratio, expressed as a percentage, is the ratio of losses and loss adjustment expenses to net earned premiums.
Expense ratio, expressed as a percentage, is the ratio of underwriting, acquisition, and insurance expenses less fee income to net earned premiums.
Combined ratio is the sum of loss ratio and expense ratio. A combined ratio under 100% indicates an underwriting profit. A combined ratio over 100% indicates an underwriting loss.
Return on stockholders' equity is net income attributable to stockholders expressed as a percentage of average beginning and ending stockholders' equity during the period.
Adjusted return on stockholders' equity is a non-GAAP financial measure. We define adjusted return on stockholders' equity as adjusted net income attributable to stockholders, expressed as a percentage of average beginning and ending stockholders' equity during the period. For a reconciliation of adjusted return on stockholders' equity to the most directly comparable GAAP financial measure, information about why we consider adjusted return on stockholders' equity useful and a discussion of the material risks and limitations of adjusted net income attributable to stockholders, see "Reconciliation of non-GAAP financial measures".
Adjusted diluted earnings per share is a non-GAAP financial measure. We define adjusted diluted earnings per share as adjusted net income attributable to stockholders divided by weighted average common shares outstanding - diluted for the period. For a reconciliation of adjusted diluted earnings per share to the most directly comparable GAAP financial measure, information about why we consider adjusted diluted earnings per share useful and a discussion of the material risks and limitations of adjusted diluted earnings per share, see "Reconciliation of non-GAAP financial measures".
Results of operations
Three months ended June 30, 2026, compared to three months ended June 30, 2025
The following table sets forth a summary of our consolidated results of operations for the periods indicated.
Three Months Ended June 30,
($ in thousands, except percentages and per share data) 2026 2025 Change % Change
Gross written premiums $ 206,762 $ 167,502 $ 39,260 23.4 %
Ceded written premiums (53,325) (50,231) (3,094) 6.2 %
Net written premiums $ 153,437 $ 117,271 $ 36,166 30.8 %
Net earned premiums
113,775 86,928 26,847 30.9 %
Fee income 3,432 1,524 1,908 125.2 %
Losses and loss adjustment expenses 66,503 50,412 16,091 31.9 %
Underwriting, acquisition and insurance expenses 34,666 28,430 6,236 21.9 %
Underwriting income (1)
16,038 9,610 6,428 66.9 %
Net investment income 12,662 11,891 771 6.5 %
Net realized and unrealized gains (losses) on investments 18,591 1,409 17,182 NM
Interest expense 4 447 (443) (99.1) %
Other income 24 28 (4) (14.3) %
Other expenses 872 161 711 441.6 %
Income before income taxes 46,439 22,330 24,109 108.0 %
Income tax expense 9,267 4,713 4,554 96.6 %
Net income $ 37,172 $ 17,617 $ 19,555 111.0 %
Less: Net income (loss) attributable to non-controlling interest - General Partner 3,721 (5) 3,726 NM
Net income attributable to stockholders $ 33,451 $ 17,622 $ 15,829 89.8 %
Three Months Ended June 30,
($ in thousands, except percentages and per share data) 2026 2025 Change % Change
Key Metrics
($ in thousands)
Adjusted net income attributable to stockholders (1)
33,545 17,857
Loss ratio 58.5 % 58.0 %
Expense ratio 27.5 % 31.0 %
Combined ratio (3)
85.9 % 88.9 %
Return on stockholders' equity (2)
20.7 % 14.3 %
Adjusted return on stockholders' equity (1) (2)
20.7 % 14.5 %
Diluted earnings per share $ 0.67 $ 0.39
Adjusted diluted earnings per share(1)
$ 0.67 $ 0.41
(1) Each of these metrics is a non-GAAP financial measure. See "Reconciliation of non-GAAP financial measures" for a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure.
(2) For the three months ended June 30, 2026 and 2025, net income attributable to stockholders and adjusted net income attributable to stockholders are annualized to arrive at return on stockholders' equity and adjusted return on stockholders' equity.
(3) Ratios are calculated using unrounded figures. The sum of components may differ slightly from totals shown due to rounding.
NM = Percentage not meaningful.
Premiums
The following table presents gross written premiums by product for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30,
($ in thousands, except percentages) 2026 % of Total 2025 % of Total
Casualty $ 133,424 64.5 % $ 107,023 63.9 %
Property 73,338 35.5 % 60,479 36.1 %
Gross written premiums $ 206,762 100.0 % $ 167,502 100.0 %
Our gross written premiums were $206.8 million for the three months ended June 30, 2026 compared to $167.5 million for the three months ended June 30, 2025, an increase of approximately $39.3 million, or 23.4%. The increase in both our casualty and property lines was primarily driven by the continued execution of our growth initiatives and increased engagement across our expanding distribution network.
Net written premiums were $153.4 million for the three months ended June 30, 2026, compared to $117.3 million for the three months ended June 30, 2025, an increase of approximately $36.2 million, or 30.8%. The increase was primarily attributable to higher gross written premiums as well as a decrease in ceded written premiums as a percentage of gross written premiums, reflecting the reduction in quota share reinsurance within our casualty lines.
Net earned premiums were $113.8 million for the three months ended June 30, 2026, compared to $86.9 million for the three months ended June 30, 2025, an increase of approximately $26.8 million, or 30.9%. The increase was primarily due to growth in net written premiums.
Fee income
Fee income was $3.4 million for the three months ended June 30, 2026 compared to $1.5 million for the three months ended June 30, 2025, an increase of approximately $1.9 million. The increase was driven by the implementation of market-standard policy-related fees that occurred over the course of 2025.
Loss Ratio
Our loss ratio was 58.5% for the three months ended June 30, 2026 compared to 58.0% for the three months ended June 30, 2025. The loss ratio for the three months ended June 30, 2026 benefited from strong performance in our property portfolio. The loss ratio increased compared to the three months ended June 30, 2025, reflecting a shift in business mix toward our Brokerage channel in recent periods and lower catastrophe activity in the prior-year period.
During the three months ended June 30, 2026, prior accident years developed favorably by $1.0 million, primarily due to lower loss emergence than expected, driven by our property lines. For the three months ended June 30, 2025, there was no development on our net incurred losses for prior periods.
Our losses paid in the three months ended June 30, 2026 and 2025 were $39.5 million and $33.8 million, respectively.
Expense ratio
The following table summarizes the components of the expense ratio for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30,
2026 2025
($ in thousands, except percentages) Expenses
% of Net Earned Premiums (2)
Expenses
% of Net Earned Premiums (2)
Policy acquisition costs $ 20,370 17.9 % $ 16,088 18.5 %
Operating expenses, net of fee income (1)
10,864 9.5 % 10,818 12.4 %
Underwriting, acquisition and insurance expenses, net of fee income
$ 31,234 27.5 % $ 26,906 31.0 %
(1) Net of fee income of $3.4 million and $1.5 million for the three months ended June 30, 2026 and 2025, respectively.
(2) The sum of components differs slightly from the total shown due to rounding.
Our expense ratio was 27.5% for the three months ended June 30, 2026 compared to 31.0% for the three months ended June 30, 2025. The improvement was driven by a lower policy acquisition ratio and operating expense ratio.
The decrease in policy acquisition costs as a percentage of net earned premiums was primarily attributable to a favorable shift in our business mix.
The decrease in operating expenses as a percentage of net earned premiums was primarily due to operating expense leverage and an increase in our fee income.
Investing Results
The following tables summarize net investment income and net realized and unrealized gains on investments for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30,
($ in thousands, except percentages) 2026 2025 $ Change % Change
Investment income
Fixed-maturity securities $ 8,846 $ 6,460 $ 2,386 36.9 %
Short-term investments 1,939 1,154 785 68.0 %
Cash equivalents 290 475 (185) -38.9 %
Loans to affiliates 1,524 1,543 (19) -1.2 %
Total fixed income 12,599 9,632 2,967 30.8 %
Utility & Infrastructure Investments 210 2,422 (2,212) -91.3 %
Other expenses (147) (163) 16 -9.8 %
Net investment income (loss) $ 12,662 $ 11,891 $ 771 6.5 %
Net realized and unrealized gains (losses) on investments $ 18,591 $ 1,409 $ 17,182 NM
NM = Percentage not meaningful.
Net investment income was $12.7 million for the three months ended June 30, 2026, compared to $11.9 million for the three months ended June 30, 2025, an increase of $0.8 million, or 6.5%. This increase was driven by additional investments in fixed-maturity securities and short-term investments, as well as income from loans to affiliates. Included in net investment income is $0.2 million and $2.4 million attributable to Utility & Infrastructure Investments, net of investment management fees, for the three months ended June 30, 2026 and 2025, respectively.
Net realized and unrealized gain on investments was $18.6 million for the three months ended June 30, 2026, compared to a net realized and unrealized gain of $1.4 million for the three months ended June 30, 2025, an increase of $17.2 million. This increase was primarily driven by higher realized and unrealized gains on the Utility and Infrastructure investments compared to the prior-year period.
Interest expense
Interest expense was $4 thousand for the three months ended June 30, 2026 compared to $447 thousand for the three months ended June 30, 2025, a decrease of approximately $443 thousand, or 99.1%, driven by the termination of our letters of credit in 2025.
Income tax expense (benefit)
Income tax expense was $9.3 million for the three months ended June 30, 2026 compared to $4.7 million for the three months ended June 30, 2025, an increase of approximately $4.6 million. Our effective tax rate was 20.0% for the three months ended June 30, 2026 compared to 21.1% for the three months ended June 30, 2025. The decrease in our effective tax rate was primarily driven by an increase in non-taxable pass-through income.
Results of operations
Six months ended June 30, 2026, compared to six months ended June 30, 2025
The following table sets forth a summary of our consolidated results of operations for the periods indicated.
Six Months Ended June 30,
($ in thousands, except percentages and per share data)
2026 2025 Change % Change
Gross written premiums $ 349,689 $ 283,645 $ 66,044 23.3 %
Ceded written premiums (77,545) (76,503) (1,042) 1.4 %
Net written premiums $ 272,144 $ 207,142 $ 65,002 31.4 %
Net earned premiums
218,986 165,229 53,757 32.5 %
Fee income 5,654 2,084 3,570 171.3 %
Six Months Ended June 30,
($ in thousands, except percentages and per share data)
2026 2025 Change % Change
Losses and loss adjustment expenses 128,383 97,274 31,109 32.0 %
Underwriting, acquisition and insurance expenses 66,945 53,315 13,630 25.6 %
Underwriting income (1)
29,312 16,724 12,588 75.3 %
Net investment income 24,704 19,786 4,918 24.9 %
Net realized and unrealized gains (losses) on investments 28,056 (3,190) 31,246 NM
Interest expense 8 894 (886) (99.1) %
Other income 48 993 (945) (95.2) %
Other expenses 1,444 399 1,045 261.9 %
Income before income taxes 80,668 33,020 47,648 144.3 %
Income tax expense 16,320 6,953 9,367 134.7 %
Net income $ 64,348 $ 26,067 $ 38,281 146.9 %
Less: Net income (loss) attributable to non-controlling interest - General Partner 5,431 (16) 5,447 NM
Net income attributable to stockholders $ 58,917 $ 26,083 $ 32,834 125.9 %
Key Metrics
Adjusted net income attributable to stockholders (1)
59,147 26,400
Loss ratio 58.6 % 58.9 %
Expense ratio 28.0 % 31.0 %
Combined ratio
86.6 % 89.9 %
Return on stockholders' equity
18.4 % 10.9 %
Adjusted return on stockholders' equity (1)
18.5 % 11.0 %
Diluted earnings per share $ 1.18 $ 0.60
Adjusted diluted earnings per share(1)
$ 1.19 $ 0.62
(1)Each of these metrics is a non-GAAP financial measure. See Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Reconciliation of non-GAAP financial measures" for a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure.
(2) For the six months ended June 30, 2026 and 2025, net income attributable to stockholders and adjusted net income attributable to stockholders are annualized to arrive at return on stockholders' equity and adjusted return on stockholders' equity.
NM = Percentage not meaningful.
Premiums
The following table presents gross written premiums by product for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
($ in thousands, except percentages) 2026 % of Total 2025 % of Total
Casualty $ 238,077 68.1 % $ 189,163 66.7%
Property 111,612 31.9 % 94,482 33.3%
Gross written premiums $ 349,689 100.0 % $ 283,645 100.0%
Gross written premiums were $349.7 million for the six months ended June 30, 2026 compared to $283.6 million for the six months ended June 30, 2025, an increase of approximately $66.0 million, or 23.3%. The increase in both our casualty and property lines was primarily driven by the continued execution of our growth initiatives and increased engagement across our expanding distribution network.
Net written premiums were $272.1 million for the six months ended June 30, 2026, compared to $207.1 million for the six months ended June 30, 2025, an increase of approximately $65.0 million, or 31.4%. The increase was primarily attributable to higher gross written premiums as well as a decrease in ceded written premiums as a percentage of gross written premiums, reflecting the reduction in quota share reinsurance within our casualty lines.
Net earned premiums were $219.0 million for the six months ended June 30, 2026, compared to $165.2 million for the six months ended June 30, 2025, an increase of approximately $53.8 million, or 32.5%. The increase was primarily due to growth in net written premiums.
Fee income
Fee income was $5.7 million for the six months ended June 30, 2026 compared to $2.1 million for the six months ended June 30, 2025, an increase of approximately $3.6 million. The increase was driven by implementation of market-standard policy-related fees that occurred over the course of 2025.
Loss Ratio
Our loss ratio was 58.6% for the six months ended June 30, 2026 compared to 58.9% for the six months ended June 30, 2025. The decrease in the loss ratio was primarily driven by strong performance in our property portfolio.
During the six months ended June 30, 2026, prior accident years developed favorably by $1.5 million primarily due to lower loss emergence than expected, driven by our property lines. For the six months ended June 30, 2025, there was no development on our net incurred losses for prior periods.
Our losses paid in the six months ended June 30, 2026 and 2025 were $73.7 million and $66.0 million, respectively.
Expense ratio
The following table summarizes the components of the expense ratio for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
2026 2025
($ in thousands, except percentages) Expenses % of Net Earned Premiums Expenses
% of Net Earned Premiums (2)
Policy acquisition costs $ 38,913 17.8 % $ 30,820 18.7 %
Operating expenses, net of fee income (1)
22,378 10.2 % 20,411 12.4 %
Underwriting, acquisition and insurance expenses, net of fee income $ 61,291 28.0 % $ 51,231 31.0 %
(1) Net of fee income of 5.7 million and 2.1 million for the six months ended June 30, 2026 and 2025, respectively.
(2) The sum of components differs slightly from the total shown due to rounding.
Our expense ratio was 28.0% for the six months ended June 30, 2026 compared to 31.0% for the six months ended June 30, 2025. The improvement was driven by a lower policy acquisition ratio and operating expense ratio.
The decrease in policy acquisition costs as percentage of net earned premiums was primarily attributable to a favorable shift in our business mix.
The decrease in operating expenses as a percentage of net earned premiums was primarily driven by the continued scaling of our business, where net earned premiums grew at a higher rate than our operating expenses, and by the benefit of an increase in our fee income.
Investing Results
Six Months Ended June 30,
($ in thousands, except percentages) 2026 2025 $ Change % Change
Investment income
Fixed-maturity securities $ 17,201 $ 12,725 $ 4,476 35.2 %
Short-term investments 3,568 1,724 1,844 107.0 %
Cash equivalents 705 911 (206) (22.6) %
Loans to affiliates 3,053 1,793 1,260 70.3 %
Total fixed income 24,527 17,153 7,374 43.0 %
Utility & Infrastructure Investments 452 2,931 (2,479) (84.6) %
Other expenses (275) (298) 23 (7.7) %
Net investment income $ 24,704 $ 19,786 $ 4,918 24.9 %
Net realized and unrealized gains (losses) on investments $ 28,056 $ (3,190) $ 31,246 NM
NM = Percentage not meaningful.
Net investment income was $24.7 million for the six months ended June 30, 2026, compared to $19.8 million for the six months ended June 30, 2025, an increase of $4.9 million, or 24.9%. This increase was driven by additional investments in fixed-maturity securities and short-term investments, including the investment of the proceeds from our IPO, as well as income from loans to affiliates. Included in net investment income were $0.5 million and $2.9 million attributable to Utility & Infrastructure Investments, net of investment management fees for the six months ended June 30, 2026 and 2025, respectively.
Net realized and unrealized gains on investments were $28.1 million for the six months ended June 30, 2026, compared to net realized and unrealized loss of $3.2 million for the six months ended June 30, 2025, an increase of $31.2 million. This change was primarily driven by higher net realized and unrealized gains related to the Utility & Infrastructure Investments compared to the prior year period.
Interest expense
Interest expense was $8 thousand for the six months ended June 30, 2026 compared to $894 thousand for the six months ended June 30, 2025, a decrease of $886 thousand, or 99.1% primarily driven by the termination of our letter of credit agreements in September and October 2025.
Income tax expense (benefit)
Income tax expense was $16.3 million for the six months ended June 30, 2026 compared to $7.0 million for the six months ended June 30, 2025, an increase of approximately $9.4 million. Our effective tax rate was 20.2% for the six months ended June 30, 2026 compared to 21.1% for the six months ended June 30, 2025. The decrease in our effective tax rate was primarily driven by an increase in non-taxable pass-through income.
Reconciliation of non-GAAP financial measures
We report our financial results in accordance with GAAP. However, we believe that certain non-GAAP financial measures provide investors in our common stock with additional useful information in evaluating our performance. Management believes that excluding certain items that are not indicative of core performance assists in evaluating our ability to generate earnings and to more readily compare these metrics between past
and future periods. These non-GAAP financial measures may be different than similarly titled measures used by other companies.
These non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are limitations related to the use of these non-GAAP financial measures as compared to the most directly comparable GAAP financial measures.
Underwriting income
We define underwriting income as income before income taxes excluding the impact of net investment income, net realized and unrealized gains (losses) on investments, other income, interest expense, and other expenses (which include expenses related to corporate activities and expenses recorded by us in connection with the Company's IPO). Underwriting income is a measure of the pre-tax profitability of our underwriting operations and allows us to evaluate our underwriting performance without regard to net investment income among other things. We use this metric as we believe it gives our management and other users of our financial information useful insight into our underlying business performance. Underwriting income should not be viewed as a substitute for income before income taxes calculated in accordance with GAAP and other companies may define underwriting income differently.
Underwriting income for the three and six months ended June 30, 2026 and 2025 reconciles to income before income taxes as follows:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2026 2025 2026 2025
Income before income taxes $ 46,439 $ 22,330 $ 80,668 $ 33,020
Less:
Net investment income (12,662) (11,891) (24,704) (19,786)
Net realized and unrealized (gains) losses on investments (18,591) (1,409) (28,056) 3,190
Other income (24) (28) (48) (993)
Add:
Interest expense 4 447 8 894
Other expenses 872 161 1,444 399
Underwriting income $ 16,038 $ 9,610 $ 29,312 $ 16,724
Adjusted net income attributable to stockholders
We define adjusted net income attributable to stockholders as net income attributable to stockholders excluding certain other non-operating expenses, which include expenses recorded by us in connection with the Company's IPO. Adjusted net income attributable to stockholders excludes the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. We use adjusted net income attributable to stockholders as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Adjusted net income attributable to stockholders should not be viewed as a substitute for net income attributable to stockholders calculated in accordance with GAAP, and other companies may define adjusted net income differently.
Adjusted net income attributable to stockholders for the three and six months ended June 30, 2026 and 2025 reconciles to net income attributable to stockholders as follows:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2026 2025 2026 2025
Net income attributable to stockholders $ 33,451 $ 17,622 $ 58,917 $ 26,083
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2026 2025 2026 2025
Adjustments:
Other non-operating expenses (1)
119 298 291 401
Tax impact (25) (63) (61) (84)
Adjusted net income attributable to stockholders $ 33,545 $ 17,857 $ 59,147 $ 26,400
(1)In the three and six months ended June 30, 2026 and 2025, other non-operating expenses includes share-based compensation expenses recorded by us related to our IPO.
Adjusted return on stockholders' equity
We define adjusted return on stockholders' equity as adjusted net income attributable to stockholders, expressed as a percentage of average beginning and ending stockholders' equity during the period. We use adjusted return on stockholders' equity as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Adjusted return on stockholders' equity should not be viewed as a substitute for return on stockholders' equity calculated in accordance with GAAP, and other companies may define adjusted return on stockholders' equity and adjusted net income differently.
Adjusted return on stockholders' equity for the three and six months ended June 30, 2026 and 2025 reconciles to return on stockholders' equity as follows:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands, except percentages) 2026 2025 2026 2025
Numerator: Adjusted net income attributable to stockholders, annualized (1)
$ 134,180 $ 71,428 $ 118,294 $ 52,800
Denominator: Average stockholders' equity 647,709 493,253 639,352 478,998
Adjusted return on stockholders' equity 20.7 % 14.5 % 18.5 % 11.0 %
(1) For the three and six months ended June 30, 2026 and 2025, net income and adjusted net income are annualized to arrive at return on stockholders' equity and adjusted return on stockholders' equity.
Adjusted diluted earnings per share
We define adjusted diluted earnings per share as adjusted net income attributable to stockholders divided by weighted average common shares outstanding - diluted for the period. We use adjusted diluted earnings per share as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Adjusted diluted earnings per share should not be viewed as a substitute for diluted earnings per share calculated in accordance with GAAP, and other companies may define adjusted diluted earnings per share differently.
Adjusted diluted earnings per share for the three and six months ended June 30, 2026 and 2025 reconciles to diluted earnings per share as follows:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands, except share and per share data) 2026 2025 2026 2025
Numerator: Adjusted net income attributable to stockholders $ 33,545 $ 17,857 $ 59,147 $ 26,400
Denominator: Weighted-average shares outstanding - diluted 49,864,919 43,584,999 49,839,370 42,246,997
Adjusted diluted earnings per share $ 0.67 $ 0.41 $ 1.19 $ 0.62
Liquidity and capital resources
Sources and uses of funds
We are organized as a holding company, and conduct our operations primarily through our insurance subsidiaries, Ategrity Specialty and Ategrity Limited. We depend on distributions from our insurance subsidiaries and other sources of liquidity.
We may receive cash through (1) loans from banks, (2) issuance of equity or debt securities, (3) corporate service fees from Ategrity Specialty, (4) payments from our subsidiaries pursuant to the Tax Agreement and other transactions, and (5) dividends from our insurance subsidiaries, subject to regulatory approval. We may use these sources to support premium growth, reduce reliance on reinsurance, pay dividends and taxes, fund operating expenses and meet other holding company obligations.
On a consolidated basis, our primary source of cash is premiums received from our insureds, and our primary uses of cash are payments of losses and loss adjustment expenses and operating expenses. The timing and amount of claim payments can vary significantly depending on claim severity, frequency and catastrophic events. As a result, liquidity management is an important consideration in our business, particularly at our insurance subsidiaries, where claims are paid. Our material cash requirements include payments of insurance claims and loss adjustment expenses, operating expenses, reinsurance premiums, and taxes payable under the Tax Agreement.
Management believes that the Company has sufficient liquidity available at our holding company and subsidiaries to meet our operating cash needs and obligations for the next twelve months.
Share repurchase program
On February 12, 2026, our Board of Directors authorized a share repurchase program under which the Company may repurchase up to $50 million worth of its outstanding common stock. The timing and amount of repurchases, if any, will depend on market conditions, capital requirements, and other factors. The authorization does not obligate the Company to repurchase any specific number of shares and may be suspended or discontinued at any time. During the three months ended June 30, 2026, the Company repurchased 142,686 shares of common stock under its share repurchase program for $2.8 million. The average cost per share repurchased was $19.87. The cost of treasury stock acquired pursuant to common share repurchases includes the 1% excise tax imposed on common share repurchase activity, net of common share issuances, under the Inflation Reduction Act of 2022. As of June 30, 2026, the Company had $47.2 million of capacity remaining under its share repurchase program.
Cash flows
Our most significant source of cash is from premiums received from our insureds, which, for most policies, we receive at the beginning of the coverage period. Our most significant cash outflow is for claims that arise when a policyholder incurs an insured loss. Because the payment of claims occurs after the receipt of the premium, often years later, we invest the cash in various investment securities that earn interest and dividends. We also use cash to pay commissions to brokers, as well as to pay for ongoing operating expenses such as employee compensation and benefits, technology costs, taxes, and professional services. We use reinsurance to manage the risk that we take on our policies. We cede, or pay out, part of the premiums we receive to our reinsurers and collect cash back when losses subject to our reinsurance coverage are paid.
The timing of our cash flows from operating activities can vary among periods due to the timing by which payments are made or received. Some of our payments and receipts, including loss settlements and subsequent reinsurance receipts, can be significant, so their timing can influence cash flows from operating activities in any
given period. Management believes that cash receipts from premiums, proceeds from investment sales and redemptions, and investment income are sufficient to cover cash outflows in the foreseeable future.
The following table sets forth a summary of our cash flows for the periods indicated:
Six Months Ended June 30,
($ in thousands) 2026 2025
Net cash provided by operating activities $ 80,940 $ 50,796
Net cash used in investing activities (72,422) (185,887)
Net cash provided by (used in) financing activities (4,912) 132,047
Net change in cash and cash equivalents $ 3,606 $ (3,044)
Operating activities
Our net cash provided by operating activities was approximately $80.9 million for the six months ended June 30, 2026, compared to $50.8 million for the six months ended June 30, 2025. The increase was primarily driven by growth of our business and the timing of premium receipts, claim payments, reinsurance recoveries and operating payables.
Investing activities
Net cash used in investing activities was approximately $72.4 million for the six months ended June 30, 2026, compared to $185.9 million for the six months ended June 30, 2025. In both periods, cash used in investing activities reflected the continued deployment of cash generated from operating activities into investments. Cash used in investing activities during the six months ended June 30, 2025 also reflected the investment of proceeds from our initial public offering.
Financing activities
Net cash used in financing activities was approximately $4.9 million for the six months ended June 30, 2026, which consisted of $2.8 million of share repurchases and the payment of a $2.1 million capital distribution to the Utility General Partner. The distribution was accrued as a withdrawal payable as of December 31, 2025 and accordingly is not reflected as a reduction of non-controlling interest during the six months ended June 30, 2026. Net cash provided by financing activities of $132.0 million for the six months ended June 30, 2025 primarily consisted of net proceeds from our IPO as well as a capital contribution from ZFSG, partially offset by the payment of capital distribution to the Utility General Partner.
Reinsurance
We enter into reinsurance contracts to limit our exposure to potential large losses and to provide additional capacity for growth. Our reinsurance is primarily contracted under quota-share reinsurance treaties and excess of loss treaties. In quota-share reinsurance, the reinsurer agrees to assume a specified percentage of the ceding company's losses arising out of a defined class of business in exchange for a corresponding percentage of premiums, net of a ceding commission. In excess of loss reinsurance, the reinsurer agrees to assume all or a portion of the ceding company's losses, in excess of a specified amount. In excess of loss reinsurance, the premium payable to the reinsurer is negotiated by the parties based on their assessment of the amount of risk being ceded to the reinsurer because the reinsurer does not share proportionately in the ceding company's losses.
For the six months ended June 30, 2026, property insurance represented 31.9% of our gross written premiums. When we write property insurance, we buy reinsurance to significantly mitigate our risk to large losses. We use sophisticated computer models to analyze the risk of severe losses from weather-related events and earthquakes. We measure exposure to these catastrophe losses in terms of Probable Maximum Loss ("PML"), which is an estimate of what level of loss we would expect to experience in a windstorm or earthquake event occurring once in every 100 or 250 years. We manage this PML by purchasing catastrophe reinsurance coverage. As of June
30, 2026, we maintained catastrophe reinsurance coverage of $43 million per event in excess of our $12 million per event retention. Our property catastrophe reinsurance includes a reinstatement provision which requires us to pay reinstatement premiums after a loss has occurred in order to preserve coverage. Including the reinstatement provision, the maximum aggregate loss recovery limit is $86 million and is in addition to the coverage provided by our other property reinsurance.
Reinsurance contracts do not relieve us from our obligations to policyholders. Failure of the reinsurer to honor its obligation could result in losses to us, and therefore, we evaluate the need for an allowance for expected credit losses based on historical analysis of credit losses for highly rated companies in the insurance industry. The Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from its exposure to individual reinsurers.
As of June 30, 2026, Ategrity Specialty has only contracted with reinsurers with A.M. Best financial strength ratings of "A-" (Excellent) or better. Reinsurers who do not meet the Company's rating criteria are required to post collateral. As of June 30, 2026, we recorded no allowance for credit losses related to our reinsurance balances.
Ratings
Ategrity Specialty and Ategrity Limited both have a financial strength rating of "A-" (Excellent) from A.M. Best. A.M. Best assigns 16 ratings to insurance companies, which currently range from "A++" (Superior) to "F" (In Liquidation). "A-" (Excellent) is the fourth highest rating issued by A.M. Best. The "A-" (Excellent) rating is assigned to insurers that have, in A.M. Best's opinion, an excellent ability to meet their ongoing obligations to policyholders. This rating is intended to provide an independent opinion of an insurer's ability to meet its obligation to policyholders and is not an evaluation directed at investors.
The financial strength ratings assigned by A.M. Best have an impact on the ability of the insurance companies to attract and retain agents and brokers and on the risk profiles of the submissions for insurance that the insurance companies receive. The "A-" (Excellent) rating obtained by Ategrity Specialty is consistent with our business plan and allows us to actively pursue relationships with the agents and brokers identified in our marketing plan.
Contractual obligations and commitments
As of June 30, 2026, there has been no material change to our contractual obligations and commitments from the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Financial condition
Stockholders' equity
As of June 30, 2026, total stockholders' equity was $664.4 million compared to $614.3 million total stockholders' equity as of December 31, 2025. The $50.1 million increase in total stockholders' equity over the prior year end balance was primarily driven by net profits generated during the period which were partially offset by a reduction in unrealized gains in fixed maturity securities and common stock repurchases under the Company's share repurchase program.
Investment portfolio
Our cash and invested assets consist of fixed-maturity securities, cash and cash equivalents, short-term investments, loans to affiliates, and the Utility & Infrastructure Investments.
The table below presents our cash and invested assets as of June 30, 2026 and December 31, 2025:
June 30, 2026 December 31, 2025
($ in thousands, except percentages) Fair value % of total Fair value % of total
Cash and cash equivalents $ 33,327 2.8 % $ 29,721 2.7 %
Fixed-maturity securities 611,314 50.6 % 558,428 50.5 %
Short-term investments 228,919 18.9 % 220,241 19.9 %
Utility & Infrastructure Investments 227,267 18.8 % 189,859 17.3 %
Loans to affiliates 106,500 8.8 % 106,500 9.6 %
Other invested assets 1,766 0.1 % 280 NM
Total cash and invested assets $ 1,209,093 100.0% $ 1,105,029 100.0%
NM = Percentage not meaningful.
As of June 30, 2026 and December 31, 2025, $33.3 million and $29.7 million, respectively, represented the cash and cash equivalents portion of our total cash and invested assets of $1.2 billion and $1.1 billion, respectively.
As of June 30, 2026 and December 31, 2025, $611.3 million and $558.4 million, respectively, of our total cash and invested assets was comprised of fixed-maturity securities that are classified as available-for-sale and carried at fair value with unrealized gains and losses on these securities, net of any deferred taxes, reported as a separate component of accumulated other comprehensive income. Also included in our investment portfolio as of June 30, 2026 and December 31, 2025, were $228.9 million and $220.2 million of short-term investments. Our fixed-maturity and short-term securities had a weighted average duration of 3.9 years and 3.8 years as of June 30, 2026 and December 31, 2025, respectively, and an average rating of "A-" as of both June 30, 2026 and December 31, 2025. Our fixed-maturity and short-term securities portfolio had a book yield of 5.4% as of June 30, 2026 and 5.2% as of December 31, 2025.
As of June 30, 2026, the amortized cost and fair value of our fixed-maturity securities and short-term investments were as follows:
June 30, 2026
($ in thousands, except percentages) Amortized Cost Estimated Fair Value % of Total Fair Value
Fixed-maturity securities:
U.S. Treasury securities and obligations guaranteed by the U.S. government $ 9,229 $ 9,246 1.1 %
Corporate 598,508 602,068 71.7 %
Total fixed-maturity securities 607,737 611,314 72.8 %
Short-term investments 228,919 228,919 27.2 %
Total $ 836,656 $ 840,233 100.0 %
As of December 31, 2025, the amortized cost and fair value of our fixed-maturity securities and short-term investments were as follows:
December 31, 2025
($ in thousands, except percentages) Amortized Cost Estimated Fair Value % of Total Fair Value
Fixed-maturity securities:
U.S. Treasury securities and obligations guaranteed by the U.S. government $ 2,073 $ 2,117 0.3 %
Corporate 544,682 556,311 71.4 %
Total fixed-maturity securities 546,755 558,428 71.7 %
Short-term investments 220,241 220,241 28.3 %
Total $ 766,996 $ 778,669 100.0 %
The amortized cost and fair value of our available-for-sale investments in fixed-maturity securities summarized by contractual maturity as of June 30, 2026, were as follows:
June 30, 2026
($ in thousands, except percentages) Amortized Cost Estimated Fair Value % of Total Fair Value
One year or less $ 500 $ 504 0.1 %
After one year through five years 141,920 143,556 23.5 %
After five years through ten years 309,565 311,798 51.0 %
After ten years 155,752 155,456 25.4 %
Total $ 607,737 $ 611,314 100.0 %
Actual maturities may differ from contractual maturities because some borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
As of June 30, 2026 and December 31, 2025, $215.9 million and $178.9 million, respectively, represented the investments in the Absolute Return Utility & Infrastructure Fund with fair values measured using our interest in the unadjusted net asset value ("NAV") as reported by the Investment Manager as of June 30, 2026. The Utility Limited Partnership operates as a feeder fund in a "master-feeder" structure, in which the Utility Limited Partnership invests substantially all of its assets in the Absolute Return Utility & Infrastructure Fund. As of June 30, 2026 and December 31, 2025, we invested 17.9% and 16.2%, respectively, of our total cash and invested assets in the Absolute Return Utility & Infrastructure Fund through the Utility Limited Partnership.
The Absolute Return Utility & Infrastructure Fund investment objective is to employ an energy and infrastructure- focused long/short strategy which seeks to deliver absolute returns in all market conditions with minimal correlation to energy sector indices and broader market indices. The Absolute Return Utility & Infrastructure Fund invests primarily in the equities of electric and gas utilities, integrated utilities, water utilities, telecommunication companies, independent power producers and pipelines, exploration and production companies, oilfield service companies, and more broadly in energy and infrastructure-related industries (such as chemicals, materials, transportation infrastructure, and real estate equities). We value our investment in the Absolute Return Utility & Infrastructure Fund at fair value, which is estimated based on our share of the NAV of the Absolute Return Utility & Infrastructure Fund, as provided by the Investment Manager.
The Absolute Return Utility & Infrastructure Fund invests in equity securities and related instruments and derivatives, and fixed income, comprising and 98.9% and 1.1%, and 95.8% and 4.2% of gross investments, respectively, as of June 30, 2026 and December 31, 2025. The following table summarizes the sectors of the Absolute Return Utility & Infrastructure Fund's gross assets as of June 30, 2026 and December 31, 2025:
June 30, 2026 December 31, 2025
% of total % of total
Utilities 57.6 % 64.3 %
Pipelines 29.9 % 26.9 %
Real Estate 10.7 % 6.1 %
Other Sectors 1.8 % 2.7 %
Total 100.0 % 100.0 %
Off-balance sheet arrangements
As of June 30, 2026, there has been no material change to our off-balance sheet arrangements from the disclosure included in "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Off-balance sheet arrangements" in our Annual Report on Form 10-K for the year ended December 31, 2025.
Critical accounting policies and estimates
We identified accounting policies and estimates that involve a high degree of judgment and complexity which we believe are the most critical to understanding and evaluating our financial condition and results of our operations. We use significant judgment concerning future results and developments in applying these critical accounting policies and estimates and in preparing our condensed consolidated financial statements. These judgments and estimates affect our reported amounts of assets, liabilities, revenues and expenses, and the disclosure of our material contingent assets and liabilities. The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. We evaluate our estimates regularly using information that we believe to be relevant.
There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Accounting pronouncements
See Note 2 to our condensed consolidated financial statements for further discussion regarding our recent accounting pronouncements.
Regulatory Developments
There were no material regulatory developments during the three months ended June 30, 2026.
Emerging growth company
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and we may remain an emerging growth company for up to five years following the IPO. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved.
Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
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