Dividend Restrictions Statutory Surplus (Notes)

12 Months Ended

Dec. 31, 2024

Dividend Restrictions And Statutory Surplus

Dividend Restrictions and Statutory Surplus

The Company’s business operations are conducted through subsidiaries, one of which is an insurance company domiciled in New York, American Pet Insurance Company (APIC), and three of which are segregated cell businesses, Wyndham Segregated Accounts AX, Trupanion Germany, and Trupanion Switzerland, located in Bermuda. In 2022, the Company incorporated a new wholly-owned insurance subsidiary, GPIC Insurance Company (GPIC), domiciled in Canada. In 2021, the Company established two new wholly-owned insurance subsidiaries in the United States, ZPIC Insurance Company (ZPIC) and QPIC Insurance Company (QPIC), domiciled in Missouri and Nebraska, respectively. In addition to general state law restrictions on payments of dividends and other distributions to stockholders applicable to all corporations, insurance companies are subject to further regulations that, among other things, may require such companies to maintain certain levels of equity and restrict the amount of dividends and other distributions that may be paid to their parent corporations.

Applicable regulations generally restrict the ability of the insurance entities to pay dividends to its holding company parent. These restrictions are based in part on the prior year’s statutory income and surplus. In the United States, dividends up to specified levels are generally considered ordinary and may be paid without prior approval. Dividends, in larger amounts, known as extraordinary dividends, are subject to approval by the insurer's domiciliary state regulator. An extraordinary dividend or distribution is generally defined as a dividend or distribution that, in the aggregate in any 12-month period, exceeds the lesser of (i) 10% of surplus as of the preceding December 31 or (ii) the insurer’s adjusted net investment income for the 12-month period immediately preceding the declaration or distribution of the current dividend increased by the excess, if any, of net investment income over dividends declared or distributed during the period commencing thirty-six months prior to the declaration or distribution of the current dividend and ending twelve months prior thereto, and not including realized capital gains. APIC paid dividends of $4.2 million and $7.6 million to the Company during the years ended December 31, 2024 and 2023, respectively, and no dividends during the year ended December 31, 2022.

The Company's insurance subsidiaries in Bermuda are regulated by the Bermuda Monetary Authority. Under the Bermuda Companies Act of 1981, as amended, a Bermuda company may not declare or pay a dividend or make a distribution out of contributed surplus if there are reasonable grounds for believing that: (a) the company is, or would be after the payment, unable to pay its liabilities as they become due; or (b) the realizable value of the company’s assets would thereby be less than its liabilities. The Segregated Accounts Company Act of 2000 further requires that dividends out of a segregated account can only be paid to the extent that the cell remains solvent. The value of its assets must remain greater than the aggregate of its liabilities, issued share capital, and share premium accounts. Per our contractual agreements with Wyndham Insurance Company (SAC) Limited, the allowable dividend is equivalent to the positive undistributed profit attributable to the shares. Wyndham Segregated Account AX paid the Company a dividend of $8.6 million, $7.3 million, and $6.9 million during the years ended December 31, 2024, 2023 and 2022, respectfully.

The statutory net income for 2024, 2023 and 2022 and statutory capital and surplus at December 31, 2024, 2023 and 2022, for APIC were as follows (in thousands):


	As of December 31,
	2024		2023		2022
Statutory net income	$	49,007	$	40,076	$	35,227
Statutory capital and surplus	$	245,484	$	199,613	$	162,232

As of December 31, 2024, APIC maintained $245.5 million of statutory capital and surplus which was above the company action level risk-based capital requirement of $105.3 million.

During the year ended December 31, 2024, the Company funded $1.1 million and $0.2 million of statutory capital to APIC and ZPIC, respectively, and no capital to GPIC. During the year ended December 31, 2023, the Company funded $3.8 million, $0.2 million and CAD $8.5 million of statutory capital to APIC, ZPIC and GPIC, respectively. ZPIC and GPIC will each be required to maintain a level of surplus as determined by their respective domiciliary regulators. During 2024, the Company fully dissolved QPIC, which included total distributions of $7.0 million of previously required capital to Trupanion, Inc.

As of December 31, 2024, the Company had $11.5 million on deposit with various states in which it is licensed to write policies.