Accelerant Holdings

Accelerant Holdings

Notes to Condensed Consolidated Financial Statements (unaudited)

1. Nature of business and basis of presentation

Accelerant Holdings, together with its subsidiary companies ("Accelerant", "we", "us", "our" or the "Company"), connects selected specialty insurance underwriters ("Members") with Risk Capital Partners through its data-driven risk exchange (the “Risk Exchange”). The Company, together with its Risk Capital Partners, provides property and casualty insurance to policyholders via its network of Members, which are typically MGAs. The Company focuses on small-to-medium sized commercial clients primarily in the United States ("US"), Europe ("EU"), Canada and the United Kingdom ("UK").

These unaudited condensed consolidated interim financial statements and related notes have been prepared in accordance with US GAAP for interim financial information. Accordingly, they do not include all of the financial information and note disclosures required by US GAAP for complete consolidated financial statements. The condensed consolidated interim financial statements are presented in US Dollars and all amounts are in millions, except for the number of shares, per share amounts and the number of securities. Certain prior year comparative information has been reclassified to conform to the current presentation.

In our opinion, these unaudited condensed consolidated financial statements reflect all adjustments that are normal and recurring in nature necessary to fairly state our financial position as of June 30, 2025, our results of operations for the three and six months ended June 30, 2025 and 2024 and cash flows for the six months ended June 30, 2025 and 2024. The results of operations for any interim period are not necessarily indicative of results for the full year.

These unaudited condensed consolidated financial statements and related notes should be read in conjunction with our audited consolidated financial statements and related notes included in our prospectus filed with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b)(4) under the Securities Act of 1933 (the “Prospectus”). The condensed consolidated financial information as of December 31, 2024 was derived from the audited consolidated financial statements in the Prospectus, but does not include all disclosures required by US GAAP.

Common and preference share subdivision

In connection with preparing for its initial public offering (“IPO”), the Company's Board of Directors approved amendments to the authorized share capital of the Company, which were subsequently approved by the Company's shareholders and became effective on July 14, 2025. Pursuant to these amendments:

•an 83.6690-for-1 share subdivision of the Company's common and preference shares was approved; and

•the authorized number of common shares and preference shares were increased to 252,652,430 and 39,089,474, respectively.

All share and per share amounts in the unaudited condensed consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to such share subdivision.

Initial Public Offering

The following description of the IPO and related transactions have been included herein given their significance, however, given they occurred subsequent to June 30, 2025, their effects are not reflected in these condensed consolidated financial statements. The following transactions will be reflected in our third quarter 2025 condensed consolidated financial statements.

On July 25, 2025, the Company completed its IPO and issued and sold 20,276,280 Class A common shares at a public offering price of $21.00 per share, resulting in net proceeds of $393.4 million after deducting the underwriting discounts and commissions and estimated offering costs of $9.0 million. Certain of the Company's pre-existing investors participated in the offering as selling shareholders and sold 19,354,044 Class A common shares at the IPO price for which the Company received no proceeds.

The Company used a portion of the net proceeds from the IPO to fund the redemption of the Class C convertible preference shares for $175.3 million in cash (as all holders of the Class C convertible preference shares elected to redeem their shares at the date of its IPO) and to fund a one-time $25.0 million termination fee to an affiliate of Altamont Capital Partners.

As of the closing of the IPO:

•All of our outstanding Class A convertible preference shares and Class B convertible preference shares automatically converted into Class A common shares and Class B common shares (as applicable).

•The Company hastwo classes of authorized common shares. The holders of our Class A common shares are entitled toone vote per share, and the holders of our Class B common shares are entitled toten votes per share.

•Investment funds controlled by Altamont Capital Partners, our equity sponsor, own 90,916,841 Class B common shares, representing 76.7% of the combined voting power of our common shares outstanding (given that each Class B common share is entitled to 10 votes per share as compared toone vote per share for Class A common shares).

Prior to the IPO, deferred offering costs, which consisted of accounting, legal and other fees directly related to the IPO, were capitalized within Other assets on the condensed consolidated balance sheets. In connection with the IPO, $18.9 million of deferred offering costs were reduced and reflected as a reduction of the net proceeds received from the IPO within additional paid in capital, such that in total, the increase in additional paid in capital from the IPO was $374.5 million.

Stock-Based Compensation

In connection with the IPO, stock-based compensation expense associated with certain equity award plans were impacted as follows:

Accelerant Holdings LP distribution

As discussed in Note 20 to our audited consolidated financial statements, the Company previously issued profits interest awards to certain officers and employees in the form of Accelerant Holdings LP partnership shares and incentive units (the "profit interest awards"). The profit interest awards required achievement of certain return thresholds and continuous service for the officers and employees to receive distributions (such as a significant increase in the valuation of the Company as realized through a market event, like an IPO). Compensation cost associated with these profit interest awards could only be recorded to the extent payment was reasonably estimable and probable, as well as giving consideration to service requirements. Prior to the IPO, no related compensation cost was recognized because, for accounting purposes, an IPO cannot be assessed as probable until it occurs. However, at the time of the IPO, the Company recognized $1.38 billion of non-cash stock-based compensation expenses related to the settlement of all outstanding profits interest awards through the distribution of 65,270,453 Class A common shares of the Company held by Accelerant Holdings LP to certain officers and employees of the Company that fully vested upon the IPO. The ultimate settlement of the profit interest awards was equity neutral as the contribution of the shares to officers and employees was reflected as a capital contribution to the Company by Accelerant Holdings LP in an equal and offsetting amount to the associated non-cash compensation expense.

Restricted Stock Units

In connection with the IPO, to align the long-term interests of certain officers and employees with those of the Company,2,381,858 restricted stock units ("RSUs") were granted, with 538,295 RSUs fully vested at issuance. The remaining 1,843,563 RSUs are backed by Class A common shares issuable based on the IPO price of $21.00 per share, vesting with respect to 25% of the Class A common shares subject to the awards on theone-year anniversary of the grant date and in 6.25% quarterly installments through thefour-year anniversary of the grant date. The total value of compensation for the RSU grants was $50.0 million, with $38.7 million associated with the unvested portion to be recognized as expense ratably over thefour-year vesting period.

Common Share Options

Similar to the RSUs, to align the long-term interests of certain officers and employees with those of the Company, as well as to settle a pre-existing bonus program (as discussed in Note 20 to the annual consolidated financial statements of the Company),26,205,555 Class A common share options were also granted. The options are backed by Class A common shares issuable upon the exercise of common share option awards in connection with the consummation of the IPO under our Share Incentive Plan, based on the IPO price of $21.00 per share and consisting of (i) common share options with respect to 9,236,398 Class A common shares with an exercise price equal to $22.49; and (ii) common share options with respect to 16,969,157 Class A common shares with an exercise price equal to the IPO price, in each case, vesting with respect to 25% of the Class A common shares subject to the awards on theone-year anniversary of the grant date and in 6.25% quarterly installments through thefour-year anniversary of the grant date. The total value of compensation for the option grants was $242.6 million (based upon a Black-Scholes model valuation) to be recognized ratably over thefour-year vesting period of the options.

2025 Employee Stock Purchase Plan

Our Board of Directors adopted, and our shareholders approved, the 2025 Employee Stock Purchase Plan (“ESPP”) that become effective upon completion of the IPO. Generally, all of our employees are eligible to participate in the ESPP. Subject to any limitations contained therein, the ESPP allows eligible employees to contribute (in the form of payroll deductions or otherwise) to purchase Class A common shares at a discounted price per share. There are currently 1,000,000 of our Class A common shares reserved for issuance under the ESPP, which will automatically increase on the first trading day in January of each calendar year, commencing in 2026 and continuing until (and including) 2035, by an amount equal to the lesser of (i)1% of the Class A common shares issued and outstanding on December 31 of the immediately preceding calendar year; (ii)1,000,000 Class A common shares; or (iii) such lesser amount as is determined by our Board of Directors.

2. Summary of significant accounting policies

There were no material changes to the Company’s significant accounting policies from those that were disclosed in our audited consolidated financial statements included in the Prospectus.

Future application of accounting standards

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03 Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) — Disaggregation of Income Statement Expenses, requiring new interim and annual disclosures that provide transparency about the components of expenses included in the income statement and enhance an investor’s ability to forecast future performance. The standard requires disclosure of:

•The amounts of employee compensation, depreciation, intangible asset amortization, and certain other costs included in each relevant expense caption as well as the inclusion of certain amounts already required to be disclosed under existing US GAAP in the same disclosure;

•A qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively; and

•The total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

The standard is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The standard will be applied on a prospective basis with the option to apply the standard retrospectively. This standard will not have any impact to the amounts recorded within our consolidated financial statements, but will result in expanded disclosures. We are assessing the impact of this standard.

Income Tax

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) — Improvements to Income Tax Disclosures, to address improvements to income tax disclosures. The standard requires disaggregated information about a company’s effective tax rate reconciliation as well as information on income taxes paid, which includes the following:

•Disclosure, on an annual basis, of specific categories in the rate reconciliation;

•Disclosure, on an annual basis, of additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate);

•Disclosure, on an annual basis, of the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes;

•Disclosure, on an annual basis, of the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received);

•Disclosure of income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign;

•Disclosure of income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign;

•Elimination of the requirement to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or make a statement that an estimate of the range cannot be made; and

•Elimination of the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures.

The standard is effective for public companies for annual periods beginning after December 15, 2024 (and December 15, 2025 for nonpublic companies), with early adoption permitted. The standard will be applied on a prospective basis with the option to apply the standard retrospectively. This standard will not have any impact to the amounts recorded within our consolidated financial statements, but will result in expanded disclosures. We are assessing the impact of this standard on our disclosures as well as the period in which we will adopt.

3. Segment information

We have three reportable segments (Exchange Services, MGA Operations, and Underwriting). Each of our reportable segments serves the specific needs of our customers based on the products and services provided and reflects the way our Chief Operating Decision Maker (CODM) assesses performance of the business and makes decisions on the allocation of resources. Our CODM is our Chief Executive Officer.

Exchange Services

Exchange Services, which is the core of Accelerant, captures the revenue and expenses associated with the Risk Exchange. The Risk Exchange is the platform that houses Accelerant technology, data ingestion, and operations that serve the needs of Members and Risk Capital Partners. Insurance companies that join the Risk Exchange pay Accelerant a fixed-percentage volume-based fee for sourcing, managing, and monitoring the business they write. The Risk Exchange pays fees to Members for the distribution services provided to both consolidated affiliates and third parties. We eliminate net fees and other income earned by the Exchange Services segment in consolidation to the extent such income is received from consolidated insurance companies within the Underwriting segment. Only income earned from third-party companies is not eliminated in consolidation.

MGA Operations

MGA Operations consists of our Mission Underwriters ("Mission") and Owned Members reporting units. Mission is a licensed insurance agency that functions as an MGA incubator in the US, UK and EU and represents the largest component of the segment. Mission was previously a consolidated variable interest entity ("VIE") until we acquired all the outstanding common equity interests in Mission on May 1, 2024, at which point it became a wholly-owned subsidiary (and a voting interest entity, or "VOE").

The Owned Members reporting unit comprises MGAs in which the Company has made non-controlling or controlling equity investments. Our investments in existing Members typically take the form of an initial minority stake and contractual call option for a majority stake over time. We eliminate commission income earned by MGA Operations in consolidation to the extent it is received from consolidated insurance companies within the Underwriting segment. Only commission income earned from third-party companies is not eliminated in consolidation.

Underwriting

Underwriting contains all revenue and expenses associated with the underwriting of insurance policies and assumption of reinsurance policies issued or accepted by Accelerant’s consolidated insurance companies and Accelerant Re (Cayman) Ltd. ("Accelerant Re"). Our Underwriting segment is a strategic asset that enables access to Accelerant’s portfolio for current and prospective Risk Capital Partners. The activities of these (re)insurance companies include property and casualty insurance, policy issuance, reinsurance arrangements and the payment of commission and other acquisition costs to the Exchange Services segment.

Premium revenue is earned in exchange for the property and casualty insurance policies issued and reinsurance coverage provided. For segment presentation purposes, the commission expense paid to the wholly-owned agencies is subject to deferral as DAC for the portion of insurance policies not subject to reinsurance. DAC associated with business ceded is offset by ceding commissions received from reinsurers, which is typically more than the DAC. The DAC associated with business retained, as well as the excess ceding commissions from reinsurers, are both amortized over the related policy term. Accelerant Re also cedes premium and losses to, and receives ceding commissions from, several third-party reinsurers, including Flywheel Re. Similar to the Exchange Services and MGA Operations segments, transaction activity with our consolidated affiliates is subject to elimination (and therefore the amount of DAC, deferred ceding commissions, DAC amortization and amortization of ceding commission income in consolidation will differ from that presented within the segment results). Specifically, only commission payments and other acquisition expenses paid to third parties are subject to deferral and amortization in consolidation.

We consider the segment presentations of Exchange Services, MGA Operations and Underwriting segments prior to elimination to be the best way to evaluate Accelerant's business and how these business components would be presented if they were stand-alone operations. As we generate additional third-party insurance relationships through our Risk Exchange, the standalone segment results will more closely align with the consolidated results (as such third party transactions would not be subject to elimination).

The following includes the financial results of ourthree reportable segments for the three and six months ended June 30, 2025 and 2024. Corporate functions and certain other businesses and operations are included in Corporate and Other.

Financial information by segment:

(2)Ceding commission income of our Underwriting segment includes the effect of sliding scale adjustments based on actual loss experience. For further information on sliding scale commission adjustments, refer to Note 8.

(3)General and administrative expenses is comprised of employee compensation and benefits, consulting and professional fees and all other administrative expenses. The composition of such amounts by each reportable segment was as follows:

(4)The consolidation and elimination adjustments for general and administrative expenses consist of expenses attributable to Exchange Services and MGA Operations that form components of acquisition costs of insurance policies that would be capitalized in consolidation, which are offset by adjustments as components of the other consolidation and elimination adjustments.

(5)Other expenses for the three months ended June 30, 2025 consist of $6.1 million of professional costs related to corporate development activities, $3.6 million of system development non-operating costs, $3.0 million of share-based compensation, $4.4 million of Mission profits sharing expense, as offset by a net reduction of $0.9 million of other individually insignificant items.

(2)Ceding commission income of our Underwriting segment includes the effect of sliding scale adjustments based on actual loss experience. For further information on sliding scale commission adjustments, refer to Note 8.

(3)General and administrative expenses is comprised of employee compensation and benefits, consulting and professional fees and all other administrative expenses. The composition of such amounts by each reportable segment was as follows:

(4)The consolidation and elimination adjustments for general and administrative expenses consist of expenses attributable to Exchange Services and MGA Operations that form components of acquisition costs of insurance policies that would be capitalized in consolidation, which are offset by adjustments as components of the other consolidation and elimination adjustments.

(5)Other expenses for the three months ended June 30, 2024 consist of $6.6 million of system development non-operating costs,$1.6 million of professional costs related to corporate development activities, $1.6 million of share-based compensation expense, as offset by a net reduction of $0.2 million for expenses related to other individually insignificant costs.

(2)Ceding commission income of our Underwriting segment includes the effect of sliding scale adjustments based on actual loss experience. For further information on sliding scale commission adjustments, refer to Note 8.

(3)General and administrative expenses is comprised of employee compensation and benefits, consulting and professional fees and all other administrative expenses. The composition of such amounts by each reportable segment was as follows:

(4)The consolidation and elimination adjustments for general and administrative expenses consist of expenses attributable to Exchange Services and MGA Operations that form components of acquisition costs of insurance policies that would be capitalized in consolidation, which are offset by adjustments as components of the other consolidation and elimination adjustments.

(5)Other expenses for the six months ended June 30, 2025 consist of $8.2 million of system development non-operating expenses, $9.7 million of professional costs related to corporate development activities, $5.4 million of share-based compensation, $6.0 million of Mission profits sharing expense and $1.1 million of individually insignificant costs.

(2)Ceding commission income of our Underwriting segment includes the effect of sliding scale adjustments based on actual loss experience. For further information on sliding scale commission adjustments, refer to Note 8.

(3)General and administrative expenses is comprised of employee compensation and benefits, consulting and professional fees and all other administrative expenses. The composition of such amounts by each reportable segment was as follows:

(4)The consolidation and elimination adjustments for general and administrative expenses consist of expenses attributable to Exchange Services and MGA Operations that form components of acquisition costs of insurance policies that would be capitalized in consolidation, which are offset by adjustments as components of the other consolidation and elimination adjustments.

(5)Other expenses for the six months ended June 30, 2024 consists of $9.3 million of system development non-operating costs, $4.2 million of professional costs related to corporate development activities, $3.8 million of share-based compensation and $0.9 million of individually insignificant costs.

We review our assets on a consolidated basis for decision making purposes since they support business operations across all our reportable segments as well as our corporate and other activities. We do not allocate assets to reportable segments as we do not use such information, except for (re)insurance balances recoverable on paid and unpaid losses and goodwill that are directly attributable to our reportable segments.

All our revenues from external customers were attributable to various geographic locations outside of the Cayman Islands, based on where the insurance policies or services were sold. There were no reportable major customers that accounted for 10% or more of our consolidated revenue for the three and six months ended June 30, 2025 and 2024.

The following table presents our revenues by geography:

(1) For further information on the impacts of sliding scale commission adjustments on our ceding commission income for the three and six months ended June 30, 2025 and 2024 resulting from the loss experience of covered insurance contracts, refer to Note 8.

4. Investments

Unrealized gains and losses on available for sale fixed maturity and short-term investments, at fair value

The amortized cost, gross unrealized gains, gross unrealized losses and fair values of fixed maturity and short-term investments, were as follows:

The following table summarizes, for all our available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position:

We did not recognize the unrealized losses in earnings on these fixed maturity and short-term investments at June 30, 2025 and December 31, 2024 because we determined that such losses were due to non-credit factors that are temporary in nature. Additionally, we neither intend to sell the securities nor do we believe that it is more likely than not that we will be required to sell these securities before recovery of their amortized cost basis.

Contractual maturity

The amortized cost and fair values of our fixed maturity and short-term investments by contractual maturity were as follows:

The expected maturities may differ from the contractual maturities because debtors may have the right to call or prepay obligations with or without call or prepayment penalties.

Equity method and other investments

We have made investments in private equity funds focused on insurance technology ventures, certain MGAs that form part of our distribution network and a technology-focused TPA that provides services to certain of our Members. Such strategic investments are generally accounted for using the equity method of accounting and are included as equity method investments in the financial statements or, in cases where we have elected the measurement alternative, accounted for at fair value based on observable price changes or impairment within Other investments.

Details regarding our equity method investments were as follows:

In applying the equity method of accounting, we record investments initially at cost and subsequently adjust their carrying value based on our proportionate share of the net income or loss of the investment. As permitted by the applicable accounting guidance, we generally record such investments on a one-to-three-month lag. Our maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in our consolidated balance sheet and any unfunded commitments. As of June 30, 2025, we had unfunded commitments of$6.6 million to our equity method investees.

For the six months ended June 30, 2025 and 2024, we received dividends from equity method investees of $0.9 million and $0.2 million, respectively.

Details regarding the carrying value of our other investments portfolio were as follows:

We have elected the measurement alternative to carry private equity investments in venture funds, ordinary stocks, warrants and stock options of MGAs and TPAs that qualify for the equity method basis of accounting and that do not have a readily determinable fair value, at cost, less any impairment. If observable prices in identical or similar investments from the same issuer are observed, we measure the equity investment at fair value as of the date that such observable transaction occurs.

For the three months ended June 30, 2025, we recognized a $0.5 million impairment charge, and there were no observable prices related to our other investments. For the six months ended June 30, 2025, we recognized an $0.5 million impairment charge, and we recognized $1.7 million of income as a component of unrealized gains following observable prices related to our other investments. For the three and six months ended June 30, 2024, there wereno impairments and no observable prices related to our other investments.

We have recognized cumulative income as a component of unrealized gains of $36.6 million, net of cumulative impairments of $0.7 million associated with investments accounted for under the measurement alternative from inception of the related investments.

As of June 30, 2025, we had unfunded commitments of $2.2 million to venture funds.

Net investment income

Investment income and expenses were as follows:

Net realized and unrealized gains (losses) on investments

The following table presents net realized and unrealized gains (losses) on our investments:

(1) Amounts correspond to income arising from our equity investments accounted for under the measurement alternative (as described above).

Regulated deposits and restricted assets

Certain subsidiaries of the Company are required to maintain assets on deposit with various regulatory authorities to support our insurance and reinsurance operations. Securities on deposit for regulatory and other purposes were $5.0 million and $4.9 million as of June 30, 2025 and December 31, 2024, respectively, which are included in the "Fixed maturity securities available for sale, at fair value" in our condensed consolidated balance sheets.

The following table represents the restricted assets we have pledged in favor of certain ceding companies to collateralized obligations:

5. Fair value measurements

Assets recorded at fair value in our condensed consolidated balance sheets are measured and classified in accordance with a fair value hierarchy consisting of three “levels” based on the observability of valuation inputs:

•Level 1: Financial assets and liabilities for which inputs are observable and are obtained from reliable quoted prices in active markets for identical assets and liabilities;

•Level 2: Financial assets and liabilities for which values are based on quoted prices in markets that are not active or for which values are based on similar assets and liabilities that are actively traded. This also includes pricing models for which the inputs are corroborated by market data; and

•Level 3: Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. The valuation of Level 3 assets and liabilities requires the greatest degree of judgment. These measurements may be made when there is little, if any, market activity for the asset or liability. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment. In making the assessment, we consider factors specific to the asset. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

There were no material changes to valuation methodologies of assets measured at fair value from those that were disclosed in our audited consolidated financial statements included in the Prospectus.

Fair value measurements on a recurring basis

Our financial assets and liabilities measured at fair value on a recurring basis by level were as follows:

There were no transfers between Level 1, Level 2, or Level 3 for the six months ended June 30, 2025 and for the year ended December 31, 2024.

Fair value measurements on a non-recurring basis

We measure the fair value of certain assets on a non-recurring basis, or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include our investments in limited partnerships reported in "Other investments" in our condensed consolidated balance sheets.

The following table presents assets measured at fair value on a non-recurring basis:

Fair value information about financial instruments not measured at fair value

Our estimation of fair value for financial instruments not carried at fair value (excluding insurance contracts) is discussed below:

Debt: As further described in Note 9, given the frequency with which the variable interest rates on our senior unsecured debt reset, the carrying value of our debt measured at amortized cost approximates its fair value as of June 30, 2025 and December 31, 2024. The debt is classified as Level 2.

Remaining financial assets and liabilities: Our remaining financial assets and liabilities were generally carried at cost or amortized cost, which due to their short-term nature, approximates their fair value as of June 30, 2025 and December 31, 2024.

6. Unpaid losses and loss adjustment expenses

Activity in unpaid losses and LAE reserve is summarized as follows:

Reserves for losses and LAE represent our estimated indemnity cost and related adjustment expenses necessary to administer and settle claims. Our estimates are based upon individual case estimates for reported claims set by our claims specialists, adjusted with actuarial estimates for any further expected development on reported claims and for losses that have been incurred, but not yet reported.

The increase in incurred losses and LAE attributable to prior accident years of $8.3 million for the six months ended June 30, 2024 primarily related to the EU and UK general liability portfolio for members that have either been discontinued or are now subject to significant responsive underwriting actions.

7. Reinsurance

We enter into reinsurance agreements to limit our exposure to large losses and to enable us to underwrite policies with sufficient limits to meet policyholder needs. In a reinsurance transaction, an insurance company transfers, or cedes, part or all of its exposure to the reinsurer in exchange for all or a portion of the premiums.

We use extensive reinsurance arrangements, including quota share and excess of loss contracts, to manage our exposure under issued insurance contracts. Such reinsurance provides loss coverage subject to certain limits and may include sliding scale ceding commissions, premium caps, loss ratio limits and other features, which align our interests with those of our reinsurers. We consider these features when evaluating risk transfer and whether such contracts qualify as reinsurance or must be treated as deposits.

Flywheel Re is an unconsolidated reinsurance sidecar that provides multi-year collateralized quota share capacity backed by institutional investors. We formed Flywheel Re to facilitate the participation of institutional investors in the Risk Exchange portfolio. During the second quarter of 2025, Flywheel Re completed a capital raise from new and existing institutional investors to extend and upsize its capacity to support business assumed.

The impacts of reinsurance on earned premiums and loss and loss adjustment expenses were as follows:

Reinsurance recoverables

Amounts recoverable from reinsurers on paid and unpaid losses and LAE are recognized in a manner consistent with the unpaid losses and LAE associated with the reinsurance and presented as reinsurance recoverables. The balances were as follows:

For the six months ended June 30, 2025, we reduced the deposit assets by $8.6 million attributed to actual recoveries. The deposit assets reported as of June 30, 2025, are comprised of expected recoveries, net of accretion, calculated using the interest method.

Credit risk exists with reinsurance ceded to the extent that any reinsurer is unable to meet the obligation assumed under the reinsurance agreements. An allowance is established for amounts deemed uncollectible. We evaluate the financial condition of our reinsurers and monitor concentration of credit risk arising from our exposure to individual reinsurers. To further reduce credit exposure to reinsurance recoverables balances, we have received letters of credit from certain reinsurers that are not authorized as reinsurers under US state insurance regulations.

Of the total reinsurance recoverables on paid and unpaid losses and LAE outstanding as of June 30, 2025,59% were with reinsurers having an A.M. Best rating of "A-" (excellent) or better, and we require reinsurance recoverables with reinsurers that are not rated by A.M. Best to be subject to collateral arrangements through a combination of letters of credit, funds withheld arrangements or trust agreements. We consider such collateral arrangements, credit ratings assigned to reinsurers by A.M. Best and other historical default rate information in estimating the credit valuation allowance for reinsurance recoverables. The credit valuation allowance was $0.6 million and $0.4 million as of June 30, 2025 and December 31, 2024, respectively.

8. Deferred acquisition costs and deferred ceding commissions

The following table presents the amounts of policy acquisition costs deferred and amortized for insurance business retained by Accelerant:

The following table presents the amounts of ceding commissions deferred and amortized:

We cede a significant portion of our premiums written to reinsurance companies. The ceding commissions are offset against DAC related to the insurance contracts that are subject to such reinsurance. Any excess ceding commissions over the related DAC are subject to deferral over the insurance premiums earning period.

Our contractual acquisition costs are expressed as a percentage of the underlying premiums by type of insurance policy. Certain agreements with our Members include sliding scale adjustments to acquisition cost based on the actual loss experience of the insurance contracts they write, such that our ultimate acquisition cost inversely changes relative to the loss ratio (i.e., adverse experience in the loss ratio will result in a reduction in the related acquisition cost and, conversely, any favorable experience in the loss ratio will result in an increase in the acquisition cost).

Certain of our reinsurance arrangements are subject to sliding scale adjustments pursuant to the agreements with various reinsurers based on the actual loss experience of covered insurance contracts. The contractual ceding commission amounts are expressed as a percentage of the underlying premiums by type of insurance policy. Further, the amount of ceding commissions will vary based on the volume of ceded premium and may be adjusted for changes in the loss ratio. As that loss ratio changes from the original expected contractual amount, the amount of ceding commission inversely changes (such that adverse experience in the subject loss ratio will result in a reduction in ceding commissions and, conversely, any favorable experience in the subject loss ratio will result in an increase in ceding commissions). Such changes in ceding commission will result in a change to the deferred ceding commissions liability to the extent that the underlying premiums are unearned and, conversely, will result in a direct change to income to the extent that the underlying premium has been earned. As such, the sliding scale commissions act as our substantive participation in the underlying loss experience of the underlying insurance contracts.

Ceding commission income recognized for the three and six months ended June 30, 2025 included increases of $12.5 million due to net sliding scale commission adjustments resulting from the favorable loss experience of covered insurance contracts. For the three and six months ended June 30, 2024, ceding commission income recognized included reductions of $4.8 million and $7.3 million, respectively due to net sliding scale commission adjustments resulting from the loss experience of covered insurance contracts.

9. Debt

We had the following debt outstanding as of June 30, 2025 and December 31, 2024:

We have a senior unsecured syndicated US dollar denominated loan facility with a September 2029 maturity date with an aggregate outstanding principal balance of $125 million. The credit agreement includes a $50 million revolving credit facility. As of June 30, 2025, we had $5 million outstanding under our revolving credit facility and $45 million unutilized and available. Each borrowing under the revolving credit facility may have a maturity of one, three or six months, at the Company’s election, but may not extend beyond the credit agreement’s maturity date. Such borrowings may be repaid early.

The senior notes are senior unsecured obligations and include a delayed draw term loan ("DDTL") feature that allows us to withdraw predefined amounts. Incremental facilities up to an additional $75 million are available to draw upon request, subject to the agreement of the lenders.

Partial quarterly repayments of the aggregate principal amount are required until the maturity date. Interest payments on the senior notes are due at the end of each period, being a certain month or quarter during which the applicable interest rate has been reset. The interest rate is subject to a sliding scale based on our consolidated senior debt to capitalization ratio and varies between a 3.4% and 4.0% spread in addition to the Secured Overnight Financing Rate ("SOFR"). Interest is calculated based on a 360-day year of twelve 30-day months. Interest expense for the three months ended June 30, 2025 and 2024 was $2.5 million and $3.0 million, respectively. Interest expense for the six months ended June 30, 2025 and 2024 was $5.1 million and $6.0 million, respectively.

Subject to conditions of optional prepayment, we may voluntarily prepay the senior notes at any time and from time to time, prior to the maturity date without penalty. Any prepayment, in whole or in part, shall include any accrued and unpaid interest thereon to, but excluding, the prepayment date. Any amounts we prepay may not be reborrowed.

The senior notes contain certain restrictive and maintenance covenants customary for facilities of this type, including restrictions on minimum consolidated net worth, maximum leverage levels and a minimum interest coverage ratio. As of June 30, 2025, we were in compliance with all such covenants.

10. Business acquisition

In January 2025, our consolidated subsidiary Corniche Acquisition Co. Ltd. acquired an additional 61% of the outstanding share capital of Corniche Underwriting Ltd. ("Corniche"), a UK based MGA that specializes in the insurance of risks related to the recycling industry, in exchange for $56.2 million of consideration consisting of i) $17.1 million of cash paid at acquisition, and an additional $17.1 million of cash to be paid overtwo equal installments due in July 2025 and January 2026 that is reflected as a payable within "Accounts payable and other liabilities" in our condensed consolidated balance sheets as of June 30, 2025); ii) our previously held equity interest of $11.0 million; and iii) the non-controlling interests of $11.0 million. The acquisition of the additional 61% interest increased our ownership in Corniche from 19.5% to 80.5%. Previously, we accounted for the investment in Corniche as an equity method investment. Following the completion of the step acquisition, we remeasured our previously held equity interest to fair value at the step acquisition date. Accordingly, we recorded a revaluation gain of $2.0 million within "Net realized gains on investments" in our condensed consolidated statements of operations.

The fair value of the assets acquired and liabilities assumed and non-controlling interest was estimated using an income approach. Key assumptions included market-observable inputs and management's estimates of nominal cash flows. The purchase consideration was allocated to the estimated fair value of the tangible and identifiable intangible assets acquired less liabilities assumed at the date of the acquisition. Our purchase price allocation related to the acquisition is provisional and could change in subsequent periods to reflect new information obtained about the facts and circumstances that existed as of the acquisition date, which if known, would have affected the measurement of the amounts recognized as of the acquisition date. We may recognize measurement period adjustments to the provisional amounts in future periods, but no later than one year from the closing date (referred to as the "measurement period"). We recorded goodwill from this acquisition, primarily attributable to expected growth and profitability, none of which is expected to be deductible for income tax purposes.

Our consolidated financial statements include the results of our acquisitions after their respective closing dates. Revenue, net income, as well as pro forma information is not presented for the Corniche acquisition as such results of operations would not be materially different to the actual results of operations of the Company. Acquisition-related costs pertaining to Corniche incurred during the six months ended June 30, 2025 were $0.7 million.

The following table provides our preliminary purchase accounting financial information for the Corniche acquisition:

(1) Total net cash paid to date for the interest in Corniche was $0.9 million, net of cash acquired (consisting of the $17.1 million initial payment at acquisition date net of the $16.2 million cash acquired). As noted above, this does not include cash payments of $17.1 million that will be due intwo installments through January 2026.

A roll forward of goodwill and other intangible assets, net, including Corniche and an additional immaterial acquisition as of and for the six months ended June 30, 2025 is as follows:

11. Share-based compensation

Share options granted to employees

During the six months ended June 30, 2025, we granted 3,368,596 options to certain of our employees under our employee share incentive plan. The contractual term of the option awards isten years from the grant date. The vesting terms of the option awards varied based on the date of the respective employee’s date of service commencement such that a portion of the awards was, in certain instances, vested as of the grant date. The vesting periods per each of the awards varied fromtwo tofour years (with either quarterly or annual partial vesting periods over thosetwo tofour year full vesting periods).

The fair value of each share option award granted during the six months ended June 30, 2025 and 2024 was estimated on the date of grant using the following option pricing model assumptions:

Based on application of the Hull-White valuation method (widely used in the determination of option fair value), we estimate the expected term of the share options granted, assuming that employees exercise their options, on average, when the stock price over strike price reaches a threshold of 2.2. The risk-free interest rate is based on observed interest rates appropriate for the term of our stock options. Expected volatility is based on companies at a comparable stage, as well as companies in the same or similar industry. The dividend yield assumption is based on the Company’s historical and expected future dividend payouts and may be subject to change in the future.

The following table summarizes the activity related to share option awards for the six months ended June 30, 2025:

The weighted average grant-date fair value of share options granted during the six months ended June 30, 2025 and 2024 was $7.12 and $3.52 per option, respectively.

For the three months ended June 30, 2025 and 2024, share-based compensation expense from share option awards granted was $3.0 million and $1.6 million, respectively, which is included in "Other expenses" in our condensed consolidated statements of operations. For the six months ended June 30, 2025 and 2024, share-based compensation expense from share option awards granted was $5.4 million and $3.8 million, respectively,

The unrecognized compensation cost related to unvested share option awards as of June 30, 2025 and December 31, 2024 was $46.9 million and $29.6 million, respectively. The weighted average remaining requisite service period as of June 30, 2025 is 1.6 years, over which period the total cost will be amortized as compensation expense within the financial statements.

12. Earnings per share

The following table sets forth the computation of basic and diluted net earnings per common share:

(1)Potential dilutive common shares consist of all of our convertible preference shares and certain of our share-based compensation options described in Note 11. The potential common shares excluded from the calculation of potential diluted shares outstanding were 17,382,748 and 17,418,027 shares for the three and six months ended June 30, 2025, respectively, because the effect of including those common shares in the calculation would have been anti-dilutive. The potential common shares excluded from the calculation of potential diluted shares outstanding were 11,478,379 shares for the three and six months ended June 30, 2024, respectively. Such potential common shares solely related to share options granted and outstanding described in Note 11.

13. Income taxes

For the three months ended June 30, 2025 and 2024, our effective tax rates were 41.3% and (114.0)%, respectively. For the six months ended June 30, 2025 and 2024, our effective tax rates were 44.7% and 192.2%, respectively. We use the estimated annual effective tax rate method for calculating our tax provision in interim periods, which reflects our best estimate of the effective tax rate expected for the full year. The effective tax rates in both periods were impacted by taxable income subject to tax in certain jurisdictions, losses incurred in zero tax rate jurisdictions and valuation allowances offsetting available carry-forward losses in certain jurisdictions.

In March 2025, the Board of Directors of Accelerant Holdings and certain intermediary holding companies (together, the "Holding Companies") approved a change in the Holding Companies' tax residency from the Cayman Islands to the UK. Upon becoming UK tax residents, the Holding Companies began to benefit from operational efficiencies including, but not limited to, lower withholding tax rates applicable to dividend distributions from certain US subsidiaries under the US-UK tax treaty. In addition, the aggregate income (loss) of the Holding Companies became subject to UK income tax effective as of the March 2025 date of change to UK tax residency. To the extent that the Holding Companies have incremental income it will generate additional UK tax expense and, conversely, to the extent that there are any incremental losses, income tax benefits will be generated to the extent that there is current or projected taxable income available in our UK operations. Over the remainder of 2025, we expect incremental benefits to emerge due to the Holding Companies’ projected expense base and, therefore, our effective tax rate for the year ended December 31, 2025 is expected to fall below those reported in previous years when such expenses were incurred in the Cayman Islands (a zero tax rate jurisdiction).

The relationship of our income tax expense to pre-tax income (loss) is atypical because our taxable income has predominately been generated in the US, UK, Ireland, and Puerto Rico resulting in income tax expense in those jurisdictions (entities in such jurisdictions are referred to as “tax-paying entities”).

Meanwhile, we have incurred operating losses in zero tax rate jurisdictions (such as in our corporate and reinsurance entities in the Cayman Islands) resulting in no income tax benefit. We have also incurred pre-tax operating losses in Belgium and other jurisdictions where we have generated cumulative operating losses; however, in each of those cases, a valuation allowance has been recorded against the corresponding deferred tax assets (entities in these two types of jurisdictions are referred to as “non-tax paying entities”).

Taxable losses in one jurisdiction generally cannot be applied to offset earnings in another. In certain other jurisdictions, losses in one entity may not be used to offset taxable income generated by another entity in that same jurisdiction.

The composition of our effective tax rates among our tax-paying and non-tax paying entities, which demonstrates the non-tax paying entities' effect on the total effective tax rate, were as follows:

14. Other assets

Other assets consisted of the following:

(1) These costs were deferred pending the completion of the Company’s IPO which was completed on July 25, 2025. Such amounts will be reclassified and offset from the net proceeds resulting from the IPO within additional paid in capital in the third quarter 2025 financial statements.

15. Accounts payable and other liabilities

Accounts payable and other liabilities consisted of the following:

16. Related party transactions

As of June 30, 2025 and December 31, 2024, the outstanding balance of short-term financing by the Company to Accelerant Holdings LP was $7.3 million and $7.6 million, respectively. This balance is unsecured, interest free, has no fixed date of repayment and is repayable on demand.

As of June 30, 2025 and December 31, 2024, we had accounts payable of $0.5 million and $0.9 million, respectively, to Accelerant Holdings LP, primarily related to legal costs.

For the three months ended June 30, 2025, we had an income statement benefit of $1.4 million related to the contractual adjustment of previously accrued expenses incurred with Altamont Capital Management LLC ("ACM"), an affiliate. For the six months ended June 30, 2025, we incurred $0.7 million of advisory fees and expenses with ACM. For the three months ended June 30, 2024, we had an income statement benefit of $0.8 million related to a reversal of previously accrued expenses incurred with ACM. This adjustment fully offset fees of $0.8 million incurred for the three months ended March 31, 2024.

As referenced in Note 1, the Company agreed to terminate the existing management services agreement between Accelerant Holdings LP and Altamont Capital Management, LLC, dated February 19, 2019 (the “MSA”), which previously set out terms on which, among other things, the Company had compensated Altamont Capital Management, LLC for its services. During July 2025, the Company agreed to pay Altamont Capital a one-time termination fee of $25 million upon the successful consummation of its IPO, at which point the MSA was terminated. Such fee and related expense will be reflected in the Company’s third quarter 2025 financial statements.

17. Commitments and contingencies

Litigation

We are occasionally a party to routine contractual disputes impacting receivables, claims (re)insurance contracts or litigation incidental to our business. We do not believe that we are a party to any pending legal proceeding that is likely to have a material adverse effect on our business, financial condition, or results of operations.

Contingencies arise in the normal conduct of our operations and are not expected to have a material effect on our financial condition or results of operations. However, adverse outcomes are possible and could negatively affect our financial condition and results of operations.

Unfunded investment commitments

As of June 30, 2025, we had unfunded commitments of $8.8 million in respect of our limited partnership investments. Refer to Note 4 for additional information.

18. Subsequent events

Initial Public Offering

As further described in Note 1, the Company completed its IPO on July 25, 2025.

Step acquisition of Agribusiness Risk Underwriters

On July 22, 2025, we executed an agreement to purchase the remaining 25% equity interests of Agribusiness Risk Underwriters ("ARU") that we did not previously own for consideration of 1,833,481 of our Class A common shares. The transaction closed on August 26, 2025 and will be recorded in our third quarter 2025 financial statements as a step acquisition that will be reflected as an equity transaction since we previously consolidated the results of ARU. The excess of the purchase consideration compared to the recorded value of the non-controlling interests will be reflected as a reduction to additional paid-in capital.

Enactment of new US tax legislation

On July 4, 2025, the US enacted the budget reconciliation package H.R.1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), which includes a number of income tax provisions, among others. The Company is still analyzing any potential impact of the tax provisions in the OBBBA but does not expect these provisions to have a material impact on the Company's results from operations.