10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number: 001-39392

TREAN INSURANCE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	84-4512647
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

150 Lake Street West

Wayzata, MN 55391

(Address of principal executive offices and zip code)

 (952) 974-2200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	TIG	The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐    No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐    No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒	Non-accelerated filer	☐	Smaller reporting company	☐
						Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐ 

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.    ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes ☐    No ☒ 

The aggregate market value, as of June 30, 2022, of voting shares held by non-affiliates of the registrant was approximately $139,680,681.

As of March 13, 2023, there were 51,238,218 shares of the registrant's common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K are incorporated by reference from the registrant’s amendment to this Form 10-K to be filed on Form 10-K/A with the Securities and Exchange Commission no later than 120 days after the end of the registrant’s fiscal year covered by this report.

TREAN INSURANCE GROUP, INC.

TABLE OF CONTENTS

		Page
Forward-Looking Statements		3
Summary Risk Factors		4
PART I
Item 1	Business	6
Item 1A	Risk Factors	28
Item 1B	Unresolved Staff Comments	49
Item 2	Properties	49
Item 3	Legal Proceedings	50
Item 4	Mine Safety Disclosures	50
PART II
Item 5	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	51
Item 6	Reserved	52
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	53
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	73
Item 8	Financial Statements and Supplementary Data	75
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	124
Item 9A	Controls and Procedures	124
Item 9B	Other Information	124
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	124
Part III
Item 10	Directors, Executive Officers and Corporate Governance	125
Item 11	Executive Compensation	125
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	125
Item 13	Certain Relationships and Related Transactions and Director Independence	125
Item 14	Principal Accountant Fees and Services	125
PART IV
Item 15	Exhibits and Financial Statement Schedules	126
Item 16	Form 10-K Summary	128
Signatures		129

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Forward-Looking Statements

This Annual Report on Form 10-K contains forward‑looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward‑looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward‑looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "would," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These forward‑looking statements include, among others, statements relating to our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs and other similar matters. These forward‑looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected and are subject to a number of known and unknown risks and uncertainties, including: (i) the risk that the proposed Merger may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common stock, par value $0.01 per share ("Common Stock"); (ii) the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the adoption of the Merger Agreement by our stockholders and the receipt of certain regulatory approvals; (iii) the occurrence of any event, change, or other circumstance or condition that could give rise to the termination of the Merger Agreement, including in circumstances requiring us to pay a termination fee; (iv) the effect of the announcement or pendency of the proposed transaction on our business relationships, operating results, and business generally; (v) risks that the proposed transaction disrupts our current plans and operations; (vi) Our ability to retain and hire key personnel in light of the proposed transaction; (vii) risks related to diverting management’s attention from our ongoing business operations; (viii) unexpected costs, charges, or expenses resulting from the proposed transaction; (ix) potential litigation relating to the Merger that could be instituted against us, Altaris, or respective directors, managers, or officers, including the effects of any outcomes related thereto; (x) certain restrictions during the pendency of the Merger that may impact our ability to pursue certain business opportunities or strategic transactions; and (xi) unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, war or hostilities, or pandemics, including the COVID-19 pandemic, as well as management’s response to any of the aforementioned factors.

The outcome of the events described in these forward‑looking statements is subject to risks, uncertainties, assumptions and other factors, which in many cases are beyond our control, as described in "Item 1A — Risk Factors," and elsewhere in this Annual Report on Form 10-K. Our statements reflecting these risks and uncertainties are not exhaustive, and other risks and uncertainties may currently exist or may arise in the future that could have material effects on our business, operations and financial condition. We cannot assure you that the results, events and circumstances reflected in the forward‑looking statements reflected in this Annual Report on Form 10-K and our other public statements and securities filings will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward‑looking statements.

You should read this Annual Report on Form 10-K and the documents that we reference in this Annual Report on Form 10-K and have filed as exhibits to this Annual Report on Form 10-K with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we currently expect. We qualify all of our forward‑looking statements by these cautionary statements.

The forward‑looking statements made in this Annual Report on Form 10-K speak only as of the date on which such statements are made. We undertake no obligation, and do not intend, to update any forward‑looking statements after the date of this Annual Report on Form 10-K or to conform such statements to actual results or revised expectations, except as required by applicable securities laws or other rules and regulations of the SEC.

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Summary Risk Factors

Our actual results may differ materially from those expressed in, or implied by, the forward‑looking statements included in this Annual Report on Form 10-K as a result of various factors. Our business is subject to numerous risks and uncertainties, including those highlighted in "Item 1A — Risk Factors." These risks include the following:

Risks related to the Proposed Merger

•The proposed Merger may not be completed in a timely manner or at all, which may adversely affect our business and the price of our Common Stock;

•The failure to satisfy any of the conditions to the consummation of the proposed Merger, including the adoption of the Merger Agreement by our stockholders and the receipt of certain regulatory approvals;

•The occurrence of any event, change, or other circumstance or condition that could give rise to the termination of the Merger Agreement, including in circumstances requiring us to pay a termination fee;

•The effect of the announcement or pendency of the proposed Merger on our business relationships, operating results, and business generally;

•The proposed Merger may disrupt our current plans and operations;

•Our ability to retain and hire key personnel in light of the proposed Merger;

•Risks related to diverting management’s attention from our ongoing business operations;

•Unexpected costs, charges, or expenses resulting from the proposed Merger;

•Potential litigation relating to the proposed Merger that could be instituted against us, Altaris, or respective directors, managers, or officers, including the effects of any outcomes related thereto;

•Certain restrictions during the pendency of the proposed Merger that may impact our ability to pursue certain business opportunities or strategic transactions;

Risks related to our business and industry:

•Our Program Partners or our Owned MGAs may fail to properly market, underwrite or administer policies;

•We depend on a limited number of Program Partners for a substantial portion of our gross written premiums;

•Our business is subject to significant geographic concentration;

•We may suffer a downgrade in the A.M. Best financial strength ratings of our insurance company subsidiaries;

•We may be unable to accurately underwrite risks and charge competitive yet profitable rates to our clients and policyholders;

•Renewals of our existing contracts may not meet expectations;

•We may change our underwriting guidelines or our strategy without stockholder approval;

•We may act based on inaccurate or incomplete information regarding the accounts we underwrite;

•Our employees could take excessive risks;

•We may be unable to access the capital markets when needed;

•Adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity could result in the sale of fewer policies than expected or an increase in frequency or severity of claims and premium;

•Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and its financial condition and results of operations;

•Negative developments in the workers’ compensation insurance industry could adversely affect our results;

•The insurance industry is cyclical in nature;

•Our failure to accurately and timely pay claims could harm our business;

•The effects of emerging claim and coverage issues on our business are uncertain;

•Our risk management policies and procedures may prove to be ineffective;

•If we are unable to obtain reinsurance coverage at reasonable prices or on terms that adequately protect us, we may be required to bear increased risks or reduce the level of our underwriting commitments;

•We are subject to reinsurance counterparty credit risk. Our reinsurers may not pay on losses in a timely fashion, or at all;

•Some of our issuing carrier arrangements contain limits on the reinsurer's obligations to us;

•Retention of business written by our Program Partners could expose us to potential losses;

•Our loss reserves may be inadequate to cover our actual losses;

•We may not be able to manage our growth effectively;

•Our ability to grow our business will depend in part on the addition of new Program Partners, which may be unavailable;

•We could be harmed by the loss of one or more key executives or by an inability to attract and retain qualified personnel;

•Performance of our investment portfolio is subject to a variety of investment risks;

•Any shift in our investment strategy could increase the risk exposure of our investment portfolio;

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•We could be forced to sell investments to meet our liquidity requirements;

•We may face increased competition in our programs market;

•We compete with a large number of companies in the insurance industry for underwriting premium;

•Our results of operations, liquidity, financial condition and FSRs are subject to the effects of natural and man-made catastrophic events;

•Global climate change may in the future increase the frequency and severity of weather events and resulting losses;

•Because our business depends on insurance brokers, we are exposed to certain risks arising out of our reliance on these distribution channels;

•Our operating results have in the past varied from quarter to quarter and may not be indicative of our long-term prospects;

•Any failure to protect our intellectual property rights could impair our ability to protect our intellectual property, proprietary technology platform and brand, or we may be sued by third parties for alleged infringement of their proprietary rights;

Technology risks:

•Technology breaches, failures or service interruptions of our or our business partners’ systems could harm our business and/or reputation;

•We may be unable to maintain third-party software licenses or errors in their software;

Legal and regulatory risks:

•We are subject to extensive regulation;

•Regulators may challenge our use of fronting arrangements in states in which our Program Partners are not licensed.

•Regulation may become more extensive in the future;

•Increasing regulatory focus on privacy issues and expanding laws may impair our operations;

•Our ability to receive dividends and permitted payments from our subsidiaries is subject to regulatory constraints;

•We may have exposure to losses from acts of terrorism;

•Assessments and premium surcharges may reduce our profitability;

•Changes in federal, state or foreign tax laws could adversely affect our financial results or market conditions;

•The discontinuance of LIBOR may adversely affect the value of certain investments we hold, assets and liabilities;

Risks related to our Common Stock:

•Our stock price may be volatile or may decline regardless of our operating performance;

•Our principal stockholders are able to exert significant influence over us and our corporate decisions;

•Sales or issuances of a substantial amount of shares of our Common Stock may cause the market price of our Common Stock to decline and make it more difficult for investors to sell;

•We will incur significant increased costs as a result of operating as a public company;

•We currently do not anticipate declaring or paying regular dividends on our Common Stock;

•Provisions in our organizational documents, Delaware corporate law, state insurance laws and certain of our contractual agreements and compensation arrangements may prevent or delay an acquisition of us;

•Our principal stockholders have no obligation to offer us corporate opportunities;

Risks related to our status as an emerging growth company:

•We have elected to take advantage of reduced disclosure requirements and other exemptions;

•We have elected to use the extended transition period for complying with new or revised accounting standards;

General risk factors:

•We are subject to certain general risks, including, but not limited to risks related to changes in our accounting practices and future pronouncements, our inability to maintain effective internal controls, the effects of litigation on our business, and the Court of Chancery of the State of Delaware serving as the exclusive forum for certain disputes, that could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

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PART I

Item 1. Business

Trean Insurance Group, Inc. ("we" or the "Company") is an established, growth-oriented company providing products and services to the specialty insurance market. Historically, we have focused on specialty casualty markets that we believe are underserved and where our expertise allows us to achieve higher rates, such as niche workers’ compensation markets and small- to mid-sized specialty casualty insurance programs. We underwrite specialty casualty insurance products both through our program partners ("Program Partners") and Owned Managing General Agents ("Owned MGAs"). We also provide our Program Partners with a variety of services including issuing carrier services, claims administration and reinsurance brokerage, from which we generate recurring fee-based revenues.

We believe that a number of differentiating factors have contributed to our ability to achieve results and growth that historically have outperformed the broader insurance industry. We believe our multi-service value proposition represents a competitive advantage in our target markets, drives deep integration with our Program Partners and allows us to generate more diversified revenue streams. We seek to carefully identify and select our Program Partners, ensure we have closely aligned interests, and grow and expand these relationships over time. We believe we have a competitive advantage in claims management for longer-tailed lines, specifically workers’ compensation, where our in-house capabilities and differentiated philosophy enable us to have lower claims costs and to settle claims more quickly than many of our competitors. Our business strategy is supported by robust controls surrounding program design and underwriting, ongoing monitoring and reinsurance and collateral management as evidenced by our "A" (Excellent) financial strength rating, with a stable outlook, by A.M. Best Company ("A.M. Best"), a leading rating agency for the insurance industry. This rating is based on matters of concern to policyholders and is not designed or intended for use by investors in evaluating our securities. Our management team has decades of insurance industry experience across underwriting as well as program administration, reinsurance, claims and distribution.

The Company and its subsidiaries are licensed to write business across 49 states and the District of Columbia. We seek to write business in states through select distribution outlets with the potential for attractive underwriting margins, and focus on markets with higher than average premium growth trends. California, Texas and Michigan are our largest markets, representing approximately 25%, 14% and 7%, respectively, of our gross written premiums for the year ended December 31, 2022.

Pending Merger

As previously disclosed, on December 15, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Treadstone Parent Inc., a Delaware corporation (“Parent”), and Treadstone Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Parent (“Merger Sub”), providing for the acquisition of the Company by affiliates of Altaris Capital Partners, LLC, a Delaware limited liability company (“Altaris”), subject to the terms and conditions set forth in the Merger Agreement. Certain investment funds managed by Altaris control Parent and Merger Sub and affiliates of Altaris owned approximately 47% of our outstanding Common Stock as of December 31, 2022. Accordingly, the Merger is considered a “going-private” transaction under the SEC’s rules.

Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”) effective as of the effective time of the Merger (the “Effective Time”). As a result of the Merger, Merger Sub will cease to exist, and the Company will survive as a wholly-owned subsidiary of Parent. Further, following the Merger, our Common Stock will no longer be publicly traded. In addition, our Common Stock will be delisted from Nasdaq and deregistered under the Exchange Act, in each case, in accordance with applicable laws, rules and regulations, and we will no longer file periodic reports with the SEC on account of our Common Stock.

As a result of the Merger, at the Effective Time, subject to any applicable withholding taxes, each share of our Common Stock, issued and outstanding immediately prior to the Effective Time, other than Cancelled Shares (as defined in the Merger Agreement) and Dissenting Shares (as defined in the Merger Agreement), will be converted into the right to receive $6.15 in cash, without interest.

The consummation of the Merger is subject to the satisfaction or waiver of various customary conditions set forth in the Merger Agreement, including, but not limited to: (i) the adoption of the Merger Agreement and approval of the Merger and

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the other transactions by (x) the holders representing a majority of the aggregate voting power of the outstanding shares of Company Common Stock beneficially owned by the Unaffiliated Stockholders (as defined in the Merger Agreement) entitled to vote thereon as well as (y) the holders representing a majority of the aggregate voting power of the outstanding shares of Company Common Stock entitled to vote thereon; (ii) all required insurance regulatory approvals (or the applicable regulatory authorities’ non-objection to requests for exemptions in respect thereof) shall have been obtained; (iii) the expiration or termination of any applicable waiting period (or any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”); (iv) the absence of any restraint or law preventing or prohibiting the consummation of the Merger; (v) the accuracy of Parent’s, Merger Sub’s, and the Company’s representations and warranties (subject to certain materiality qualifiers); (vi) Parent’s, Merger Sub’s, and the Company’s compliance in all material respects with their respective obligations under the Merger Agreement; and (vii) the absence of any Company Material Adverse Effect (as defined in the Merger Agreement) since the date of the Merger Agreement.

Merger-related expenses recognized during the year ended December 31, 2022 were approximately $3,081 and are included in other expenses in the consolidated statements of operations.

See “Part I—Item 1A Risk Factors—Risks Related to the Proposed Merger” for a discussion of certain risks related to the Merger.

History

We were founded in 1996 as a reinsurance broker and MGA that targeted smaller, underserved insurance providers writing niche classes of business, predominantly workers’ compensation, accident and health, and medical professional liability.

In 2003, we purchased Benchmark Insurance Company ("Benchmark"), which was licensed in 41 states and the District of Columbia and provided us with an insurance carrier with a financial strength rating of "A-" from A.M. Best. Beginning in 2007, we successfully repositioned Benchmark as a specialty insurance carrier for select, high-performing small- to mid-sized Program Partners. Benchmark is now licensed in 49 states and has an "A" rating from A.M. Best.

In July 2015, we sold an equity stake of 36.4% to certain entities affiliated with Altaris Capital Partners, LLC, a private equity firm (collectively, the "Altaris Funds"). The Altaris Funds subsequently made additional equity investments and owned approximately 47% of our Common Stock as of December 31, 2022.

We have historically made equity investments in or acquired long-term partners where we believe they can add substantial value to our business. In 2013, we acquired S&C Claims Services, which, prior to the acquisition, had been handling our workers’ compensation claims for over 10 years. In 2017, we acquired American Liberty Insurance Company, Inc. ("ALIC"), a Utah-domiciled insurance company that was a former Program Partner and writes workers’ compensation insurance. ALIC is licensed or eligible to conduct insurance business, and therefore subject to regulation and supervision by insurance regulators, in 38 states and the District of Columbia. In 2018, we acquired ownership interests in two additional Program Partners: (i) a 45% common equity ownership in Compstar Holding Company LLC, the parent company of Compstar Insurance Services, LLC, an MGA underwriting workers’ compensation insurance coverage for California contractors; and (ii) a 100% ownership of Westcap, an MGA underwriting general liability insurance coverages for California contractors. In 2020, we acquired: (i) the remaining equity interest in Compstar Holding Company LLC; and (ii) a 100% ownership interest in 7710 Insurance Company ("7710"), a South Carolina-domiciled insurance company that was a former Program Partner and writes workers' compensation insurance, along with its associated program manager and agency. 7710 is licensed or eligible to conduct insurance business, and therefore subject to regulation and supervision by insurance regulators, in 9 states. In 2021, we acquired Western Integrated Care, LLC ("WIC"), a managed care organization that offers services to workers' compensation insurers to enable employees who are injured on the job to access qualified medical treatment.

On July 20, 2020, we closed the sale of 10,714,286 shares of our Common Stock in our Initial Public Offering ("IPO"), comprised of 7,142,857 shares issued and sold by us and 3,571,429 shares sold by selling stockholders pursuant to a registration statement on Form S-1 (File No. 333-239291), which was declared effective by the SEC on July 15, 2020. On July 22, 2020, we closed the sale of an additional 1,207,142 shares by certain selling stockholders in the IPO pursuant to the exercise of the underwriters’ option to purchase additional shares to cover over-allotments. The IPO terminated upon completion of the sale of the above-referenced shares.

On May 19, 2021, we closed the sale of 5,000,000 shares of our Common Stock, comprised entirely of shares sold by selling stockholders. We did not receive any proceeds from the sale of shares of our Common Stock by the selling stockholders in

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this offering. As a result of this offering, the Altaris Funds no longer beneficially own more than 50% of our Common Stock, and we are no longer a "controlled company" within the meaning of the Nasdaq listing rules.

Our structure

The chart below displays our corporate structure:

				Trean Insurance Group, Inc.
Compstar Insurance Services LLC			Trean Corporation				Benchmark Holding Company
	Trean Reinsurance Services LLC	Benchmark Administrators LLC		Western Integrated Care LLC	Westcap Insurance Services LLC	Benchmark Insurance Company		American Liberty Insurance Company, Inc.
						Benchmark Specialty Insurance Company		7710 Insurance Company

Our competitive strengths

We believe that our competitive strengths include:

Expertise and focus in underserved specialty casualty insurance markets. We focus on select markets that we believe are underserved and where we can achieve higher rates, including niche workers’ compensation markets and small- to mid-sized specialty casualty insurance programs. Historically, we have had few competitors in our target markets due to the specialized knowledge, broad licensing and filing authority requirements and complex operational systems necessary to profitably manage these traditionally longer-tailed lines of business. We believe that most other companies of our size and smaller do not possess these capabilities to the degree needed to be competitive with us, while most larger companies that do have the required expertise and capabilities in these areas tend not to participate in our target markets because their business models eschew the type of customized solutions that are needed when working with smaller, more entrepreneurial partners.

Multi-service value proposition for our partners. We believe that our focus on the needs of smaller accounts and the breadth of products and services we offer allow us to better serve the needs of our Program Partners and provide us with greater revenue and profit opportunities. We offer our Program Partners reinsurance brokerage, claims administration, underwriting capacity and, in particular, access to our A.M. Best "A" financial strength rating through issuing carrier services. Our ability to leverage our licenses across multiple products in 49 states and the District of Columbia allows us to provide a national multi-service solution for our Program Partners. Our multi-service offering enables us to develop deep relationships with our Program Partners.

Long-term, carefully selected and aligned relationships with Program Partners. We carefully select the Program Partners we choose to do business with, and design our programs to align risks between parties. We select programs with the intention of building long-term relationships, where our business philosophies align and our Program Partners can grow alongside us. Our management team carefully evaluates potential new programs in conjunction with our underwriting and actuarial departments. We only accept programs that meet our stringent underwriting and actuarial requirements. For the year ended December 31, 2022, we declined approximately 94% of the new opportunities that we evaluated. For every Program Partner we select, we work with them to appropriately align interests and to establish rigorous ongoing reporting and auditing requirements upfront.

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Differentiated in-house claims management. We believe that proactively managing our claims, while also accurately setting reserves, is a key aspect of keeping our losses low. In our workers’ compensation business, our claims philosophy is to provide an injured employee high-quality medical care as quickly as possible in order to reduce pain, accelerate healing and lead to a faster and more complete recovery.

Once an injured employee has healed, we aim to settle the claim and obtain a full and complete release of the claim at the earliest opportunity. In California, for the claim year ended December 31, 2021, valued as of December 31, 2022, our average medical cost for the workers' compensation market was $10,110 per claim compared to the California workers' compensation industry average of $30,691, as reported by the Workers' Compensation Insurance Rating Bureau ("WCIRB") at September 30, 2022. For the claim year ended December 31, 2022, we closed 41% of our workers' compensation claims in California within twelve months, compared with the industry average of 33%, as reported by the WCIRB for the year ended December 31, 2021. To provide our policyholders these processing results, we currently average 84 open claims per claims adjuster. In comparison, the 2020 Workers’ Compensation Benchmarking Study by Rising Medical Solutions found that 61% of third-party administrators ("TPAs") had over 100 open claims per claims adjuster.

Significant fee-based income. Our business model generates significant fee-based income from multiple sources including issuing carrier services, claims administration and reinsurance brokerage. For the years ended December 31, 2022, 2021 and 2020, our fee-based income accounted for approximately 2.7%, 4.7% and 5.9% of total revenue, respectively. All of our fee-based income accrues outside of our regulated insurance companies, which we believe enhances our organization’s financial flexibility and increases the visibility of our earnings. Within our insurance companies, we cede a significant portion of the risk we originate to our reinsurance partners. These agreements enable us to maintain broader relationships with our Program Partners than our current capital base would otherwise enable. We believe that our strategy has allowed us to scale our business and provides a consistent fee-based income stream to complement our underwriting business, thus providing us with greater revenue opportunities from our Program Partners than we would be able to access in a traditional insurance underwriter model.

Disciplined risk management across our organization. Our disciplined approach to risk management begins with the extensive due diligence performed during our Program Partner selection process and continues throughout the relationship. We have rigorous ongoing controls and reporting requirements, including with respect to underwriting and ongoing Program Partner diligence. Similarly, we maintain rigorous controls over our reinsurance exposures by maintaining stringent collateral requirements to limit our credit exposure. As a result of providing multiple services to our Program Partners, we have numerous touch points and are in regular communication regarding underwriting, claims handling, reinsurance placement and collateral management, which we believe enhances our ability to manage risks to our organization.

Entrepreneurial and highly experienced management team. Our management team is highly experienced with decades of experience in specialty insurance markets. In addition to this significant industry experience, our team has a long history of continuity in our business. Our business has been led by our Executive Chairman of the Board and founder Andrew M. O’Brien, who previously served as our Chief Executive Officer from our inception in 1996 through July 2022. Effective in July 2022, the role of Chief Executive Officer was assumed by Julie A. Baron, who served in previous roles as President and Chief Operating Officer, Treasurer and Chief Financial Officer, and Controller of Benchmark since joining the Company in 2007.

Our strategy

We believe that our approach will allow us to continue to achieve our goals of both growing our business and generating attractive returns. Our strategy involves:

Growing within our existing markets. We focus on lines of business that have large markets, including workers' compensation with $51 billion of premiums and all of our other lines of business written with $338 billion in premiums in the United States in 2021 according to S&P Global. By comparison, we generated $651.3 million, $634.2 million and $484.2 million of gross written premiums for the years ended December 31, 2022, 2021 and 2020, respectively. We select Program Partners operating in our target markets with whom we believe we can partner to grow within these significant markets. In addition, Benchmark Specialty Insurance Company ("BSIC"), which was created in 2021, writes specialty/niche products through separate program partners, which will provide the group with expanded geographic diversification, rate flexibility and new product offerings on a non-admitted basis opening the excess and surplus lines market.

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Given the size of our markets, we believe that we have ample room to continue to grow our business organically for the foreseeable future. Additionally, as we grow our premiums and capital, we expect to continue to optimize our reinsurance program to drive our risk-adjusted returns.

Selectively adding new Program Partners. We have been selective in choosing our current Program Partners, and will continue to ensure that new Program Partners share our business philosophy and meet our underwriting and returns criteria. We focus on specialty lines and will continue to add programs in these markets. However, we also continue to evaluate potential partnerships in additional lines of business that will leverage our core competencies and provide us with new revenue opportunities.

Opportunistically grow and maintain our Owned MGA business through acquisitions. From time to time, we may have the opportunity to deepen our relationships with our existing Program Partners by acquiring equity interests from their management teams. Since 2013, we have successfully completed nine acquisitions of companies with which we have had prior relationships. Seven of these companies write premiums which represented more than 36% of our gross written premiums for the year ended December 31, 2022.

Strengthen and harness our strong and growing capital base. Despite our relatively modest historical balance sheet, we have grown our premiums through the significant use of reinsurance. As our capital base has grown, new opportunities have emerged for us. Of particular note, in 2019, A.M. Best upgraded our insurance companies from an "A-" to an "A" (Excellent) (Outlook Stable) financial strength rating, which we believe differentiates us in the markets in which we operate. As we continue to grow, we believe that we will have the opportunity to access additional business and to retain more profitable business that we have historically ceded to the reinsurance markets.

Maintaining our focus on long-term profitability and growth. Our competitive advantages, including our focus on underserved markets, have enabled us to grow our gross written premiums to $651.3 million for 2022 at a compound annual growth rate of 24.0% since 2015, while maintaining an average return on equity of approximately 14% and an average adjusted return on equity of approximately 15% for the same time period. As we seek to grow our business, we remain disciplined in targeting classes of business and markets where we believe we can generate attractive returns. Rather than make decisions based on where we are in the market cycle, we focus on selecting high-quality programs, only pursuing opportunities that we expect to meet our pricing and risk requirements over the long-term. We will not participate in markets where we do not believe our business model can add incremental risk-adjusted value.

Maintain disciplined controls over our key business risks. In order to maintain our underwriting profitability, we have systematic underwriting and risk monitoring processes across our business. We believe our risk management is enhanced by the fact that we provide multiple services to many of our Program Partners and thus are in regular communication with them regarding underwriting, claims handling, reinsurance placement and collateral management. We seek to swiftly identify, correct and, if necessary, terminate relationships with Program Partners that are not producing targeted underwriting results, writing exposures outside of agreed upon risk tolerances or not meeting their collateral or other commitments to us.

Products and services

We have historically provided products and services to our target markets in the specialty casualty insurance market. We underwrite specialty casualty insurance products both through our Program Partners, programs where we partner with other organizations, and our Owned MGAs. Our insurance product offerings include workers’ compensation, other liability, accident and health, and other lines of business. We also provide our Program Partners with a variety of services from which we generate recurring fee-based revenues, including reinsurance brokerage and, in particular, issuing carrier or "fronting" services.

Owned MGA's and Program Partner Premiums:

The following table shows the total premiums earned on a gross and net basis for Owned MGAs and Program Partners:

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	The Year Ended December 31, 2022									The Year Ended December 31, 2021
	Owned MGAs			Program Partner			Total			Owned MGAs			Program Partner			Total
Gross written premiums	$	239,319		$	411,984		$	651,303		$	268,943		$	365,221		$	634,164
Decrease (Increase) in gross unearned premiums	9,881			(18,955)			(9,074)			(25)			(61,886)			(61,911)
Gross earned premiums	249,200			393,029			642,229			268,918			303,335			572,253
Ceded earned premiums	(79,974)			(277,631)			(357,605)			(144,375)			(229,198)			(373,573)
Net earned premiums	$	169,226		$	115,398		$	284,624		$	124,543		$	74,137		$	198,680
Direct commissions	25,002			89,864			114,866			32,351			73,614			105,965
Ceding commission	(24,265)			(78,494)			(102,759)			(44,168)			(76,520)			(120,688)
Net commissions	$	737		$	11,370		$	12,107		$	(11,817)		$	(2,906)		$	(14,723)
Direct commissions rate(1)	10.0		%	22.9		%	17.9		%	12.0		%	24.3		%	18.5		%
Ceding commissions rate(2)	30.3		%	28.3		%	28.7		%	30.6		%	33.4		%	32.3		%
(1) Direct commissions as a percentage of gross earned premiums.
(2) Ceding commissions as a percentage of ceded earned premiums.

We utilize both quota share and catastrophe XOL contracts in our reinsurance strategy for our Owned MGAs and Program Partners. Direct commissions for Program Partners include third-party agent commissions and MGA service fees, while Owned MGAs direct commissions includes only third-party agent commissions and the expenses associated with MGA services are included in general and administrative operating expenses. The ceding commission rates vary based on a number of factors including: the line of business, negotiated reinsurance terms, and program cost structures. For the year ended December 31, 2022, the Company retained 67.9% and 29.4% of gross earned premiums for Owned MGAs and Program Partners, respectively. The loss ratios for Owned MGAs and Program Partners for the year ended December 31, 2022 were 79.2% and 60.5%, respectively, resulting in a consolidated loss ratio of 71.6%. For the year ended December 31, 2021, the Company retained 46.3% and 24.4% of gross earned premiums for Owned MGAs and Program Partners, respectively. The loss ratios for Owned MGAs and Program Partners for the year ended December 31, 2021 were 67.6% and 62.9%, respectively, resulting in a consolidated loss ratio of 65.8%.

The following table shows our gross written premiums by insurance product for the years ended December 31, 2022, 2021 and 2020, in thousands.

	Year Ended December 31,
	2022		2021		2020
Workers' compensation	$	368,408	$	376,819	$	368,949
Commercial auto liability	62,849		53,959		25,301
Group accident and health	54,184		32,565		2,375
Other liability - occurrence	51,334		72,306		25,531
Commercial multiple peril	49,987		37,496		24,930
Homeowners multiple peril	32,424		38,023		17,356
Auto physical damage	19,268		13,746		7,340
Excess workers' compensation	7,654		5,587		3,986
Inland marine	3,132		1,157		25
Boiler and machinery	1,816		1,782		1,253
Fire	212		201		129
Surety	35		36		41
Products liability - occurrence	—		487		7,033
Total	$	651,303	$	634,164	$	484,249

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In total, we are licensed in 49 states and the District of Columbia. The following table shows our gross written premiums by state for the years ended December 31, 2022, 2021 and 2020, in thousands.

	Year Ended December 31,
	2022		2021		2020
California	$	162,639	$	179,426	$	203,421
Texas	93,165		85,154		28,909
Michigan	45,821		46,271		41,830
Tennessee	16,006		15,966		12,347
Florida	36,559		27,982		8,359
Georgia	30,996		25,619		12,869
Arizona	28,685		26,272		27,950
Alabama	23,198		20,991		17,549
Pennsylvania	17,167		20,375		10,498
Indiana	13,943		13,422		8,508
Other geographical areas	183,124		172,686		112,009
Total	$	651,303	$	634,164	$	484,249

Workers’ compensation

We offer workers’ compensation insurance through both our Owned MGAs and our Program Partners. California, Florida and Arizona represented 35.5%, 7.5% and 7.0%, respectively, of our workers’ compensation gross written premiums for the year ended December 31, 2022 and 41.5%, 5.3% and 6.3%, respectively, for the year ended December 31, 2021. We write business across a variety of industries and hazard classes. The construction industry is our largest industry exposure, representing 23% of premiums written for the year ended December 31, 2022. The workers’ compensation insurance industry classifies risks into hazard groups defined by the National Council on Compensation Insurance, or NCCI, and based on severity, with employers in lower groups having lower cost claims. Our premiums are spread across hazard classes. We target accounts that we believe offer greater risk-adjusted returns, such as small accounts that are less subject to competition, or accounts with high experience modification factors that our underwriters assess to be attractively priced for the potential risk. Experience modification factors are determined by state insurance regulators based on the insured’s historical loss experience.

We do not write accounts that we believe present exposure to catastrophic risk. The average workers’ compensation premium per policy written by us was $15,539 and $14,779 for the years ended December 31, 2022 and 2021, respectively.

We manage workers’ compensation claims administration for all of our Owned MGAs and for several of our Program Partners. We believe that our claims philosophy has been a key differentiating factor allowing us to maintain lower loss ratios and settle claims quickly. Our workers’ compensation programs are supported by various quota share and excess of loss reinsurance facilities, which we utilize to align risk with our Program Partners and optimize our net retention relative to our financial objectives, balance sheet size and ratings requirements. We ceded 39.8% and 57.6% of gross workers’ compensation premiums earned to third-party insurers for the year ended December 31, 2022 and 2021, respectively.

The following exhibits illustrate our business mix of workers’ compensation gross written premiums by industry and hazard class for the year ended December 31, 2022.

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Other liability

We offer other liability insurance products through both our Owned MGAs and our Program Partners. We target segments of the market that we believe are underserved or mispriced, such as California contractors with an average of five employees.

The other liability products that we offer through our Owned MGAs include admitted general liability and construction defect products offered to small contractors that protect them against claims from third parties. We distribute these products through select wholesale brokers in California. Additionally, through several of our Program Partners, we write 11 other liability insurance products in 49 states and the District of Columbia. Our claims personnel administer claims for our Owned MGA other liability products. We ceded approximately 76.9% and 79.1% of our gross other liability premiums earned to third-party insurers for the years ended December 31, 2022 and 2021, respectively.

Issuing carrier services

We provide issuing carrier services to several of our Program Partners who offer workers' compensation, commercial multi-peril, personal auto and commercial auto and other liability insurance. In these relationships, we act as the policy-issuing insurance carrier for our Program Partner and transfer all or a substantial portion of the underwriting risk to third-party reinsurers. When we enter into issuing carrier relationships, we typically receive reinsurance ceding commissions at rates that include our fronting service from our reinsurers who are both Program Partners and/or third-party reinsurers. Reinsurance ceding commissions vary based on the line of business and premium volume. We provide issuing carrier services across each of our insurance products. For the year ended December 31, 2022, 2021 and 2020, reinsurance ceding commissions from issuing carrier services were $77.6 million, $86.9 million and $71.8 million, respectively, and are recognized as a reduction of direct insurance commission expense within 'General and administrative expenses' in the consolidated statement of operations.

Reinsurance brokerage services

Our reinsurance brokerage services division provides reinsurance placement, servicing and renewal services to small- to mid-sized insurance organizations, including most of our Program Partners and additional third-party insurance organizations. We earn commissions for structuring and placing reinsurance coverage on behalf of our clients. Commissions are based on a percentage of premiums ceded to reinsurers and vary by type or complexity of reinsurance coverage. Our reinsurance brokerage services are a valuable risk management tool in our relationships with our Program Partners, as we typically require the use of our reinsurance brokerage services to place and structure reinsurance prior to the inception of a new program. For the years ended December 31, 2022, 2021 and 2020, reinsurance brokerage generated $5.7 million, $7.0 million and $9.0 million in revenue, which is included in Other revenue.

Other services

We provide a variety of other services to insurance organizations, including claims administration and insurance management services. We provide workers’ compensation insurance claims administration services to some of our Program Partners as well as to third-party insurance organizations with which we do not have additional relationships.

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Inland marine

Inland marine underwrites coverage for property that may be held in transit or instrumentalities of transportation and communication, such as builders risk, contractors equipment, transportation risk and mobile equipment.

Marketing and distribution

We market and distribute our products through several channels. Our Owned MGAs market through both retail agents and wholesale brokers, and our reinsurance brokerage services division actively markets our services directly to prospective clients. Additionally, we distribute products and services to our Program Partners, which comprise program administrators and insurance carriers. Since we focus on smaller accounts, we do not market our products and services through large insurance brokers. For the year ended December 31, 2022, our Owned MGAs represented 37% of our gross written premiums, Program Partners represented 62% of gross written premiums and national insurance pools represented 1% of gross written premiums. For the year ended December 31, 2021, our Owned MGAs represented 42% of our gross written premiums, Program Partners represented 57% of gross written premiums and national insurance pools represented 1% of gross written premiums. For the year ended December 31, 2020, our Owned MGA's represented 59% of our gross written premiums, Program Partners represented 40% of gross written premiums and national insurance pools represented 1% of gross written premiums.

Retail agents

We distribute our Owned MGA workers’ compensation products through approximately 300 retail agents. We target retail agents with experience and distribution capabilities in our target markets. Retail agents must demonstrate an ability to produce both our desired quality and quantity of business. To assist with this goal, our underwriters regularly visit our retail brokers to market and discuss the products we offer. We terminate retail agents who are unable to produce consistently profitable business or who produce unacceptably low volumes of business.

Wholesale brokers

We distribute our other liability products underwritten by our Owned MGAs through wholesale brokers that have expertise and strong track records in our niche target markets. For these products, we target small contractors in California. We use wholesale brokers to distribute these products because wholesale brokers are an important channel for commercial insurance products where they control much of the premium in these segments. We select our wholesale brokers based on our management’s review of their experience, knowledge, business plan, and track record of delivering us profitable business.

Reinsurance brokerage services

Our reinsurance brokerage services division actively markets our reinsurance services to small- and mid- sized program administrators and other insurance organizations. The primary focus of our reinsurance brokerage services division is to place reinsurance for our program partners, direct business and third parties. We are also able to leverage our reinsurance brokerage relationships to cultivate new Program Partner relationships and market our other services. The majority of our current Program Partner relationships originated as an introduction from our reinsurance brokerage services division.

Program administrators

We partner with select program administrators across each of our target markets to harness the efficiency and scale of these organizations’ marketing and distribution infrastructures. Through these relationships, we are able to access national distribution channels or write specialized risks in our target markets efficiently. Generally, policies bound by our program administrators are underwritten according to strict underwriting guidelines that we establish with each program administrator. We have long relationships with many of our program administrators and, in most cases, we have had an existing relationship with a program administrator before adding it as a new Program Partner. For example, we may have previously provided the program with reinsurance placement or consulting services, or worked with the key principals of the prospective Program Partner at their prior organization. We believe program administrators value our multi-service offering and capabilities and the flexibility with which we can offer these services. In addition to underwriting insurance products through program administrators, we provide these organizations with issuing carrier services and reinsurance brokerage services.

Carrier and other partnerships

Given our unique focus on flexible multi-service offerings, we are a partner of choice for small- to mid-sized insurance carriers seeking a specialty casualty insurance partner to satisfy insurance department requirements, provide comprehensive management solutions or transfer certain classes of risk. We have partnerships with insurance companies, risk retention groups, trusts and state insurance pools.

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Program selection, underwriting and controls

Program selection

Given our position and reputation in the market, we are presented with more new program opportunities than we choose to write, allowing us to be highly selective with respect to the Program Partners with whom we choose to partner. We decline approximately 94% of the new opportunities we are presented with prior to or through our pre-screening process. We typically source new opportunities through our reinsurance brokerage services business or through referrals from existing Program Partners. For each new opportunity that we choose to evaluate, we conduct a comprehensive pre-screening of the company, including an evaluation of its philosophy, size, past performance, future performance targets and above all, compatibility with our operating model, risk appetite and existing book of business. Our target Program Partners tend to have several, if not all, of the following traits:

•small- to mid-sized books of business (less than $30 million of annual gross premiums at the inception of the relationship);

•presence in markets where we believe we can leverage our distinctive expertise, multi-service offering and market relationships to create a competitive advantage;

•track record of underwriting success supported with credible data;

•proven ability to administer the program pursuant to agreed-upon underwriting and claims guidelines;

•ability and willingness to assume a meaningful quota share risk participation in the program, typically through ownership of an insurance company or captive;

•collaborative, entrepreneurial management team; and

•willingness and ability for us to control the structuring and placement of reinsurance.

Underwriting and program design

For opportunities that are acceptable to us through the pre-screening process, we conduct rigorous underwriting due diligence prior to entering into a partnership. As part of this process, our due diligence team collects and analyzes data relating to the organization’s operating, underwriting, financial and biographical information to prepare an initial due diligence file for our Underwriting Committee. Our Underwriting Committee is led by our CEO and consists of members with expertise in underwriting and finance. In 2022, 7 out of 118 submissions were approved by the Underwriting Committee. If the Underwriting Committee approves the submission on a provisional basis, we then conduct comprehensive underwriting, claims and financial diligence on the potential Program Partner. This includes inviting the potential Program Partner’s management for an on-site meeting at our Wayzata headquarters and on-site diligence of the potential Program Partner.

If we look to enter into a contractual relationship with a potential Program Partner, we work with them to design a program that appropriately aligns interests and establish rigorous underwriting guidelines and ongoing reporting and auditing requirements. At the inception of a new program, we typically act as an issuing carrier where we reinsure a substantial amount of risk to third parties. We also typically require the Program Partner to maintain significant underwriting risk or otherwise align incentives with the Program Partner’s underwriting performance. The amount of risk and premiums ceded to Program Partners is contractually stipulated with each Program Partner. Over time we look to optimize our net retention positions with our Program Partners once we have become comfortable with their performance through our ongoing interactions.

Ongoing monitoring and controls

Throughout the lifetime of a relationship with a Program Partner, we maintain systematic monitoring and control mechanisms to ensure each relationship meets our financial objectives. We closely monitor each Program Partner’s adherence to the agreed upon underwriting and claims guidelines and conduct regular reviews of loss experience, rate levels, reserves and the overall financial health of the Program Partner. We receive underwriting and claims data feeds from each Program Partner at least monthly. We typically conduct two underwriting, claims and accounting audits per program per year. Because we typically provide multiple services to our Program Partners, we are in regular communication with them regarding underwriting, claims handling, reinsurance placement and collateral management. As a result, we have near continuous opportunities to interact with our Program Partners and evaluate their performance.

We maintain the right to terminate relationships with our Program Partners. Reasons for us to terminate a relationship include an inability to produce targeted underwriting results, writing exposures outside of agreed upon risk tolerances, delinquency in

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meeting reporting requirements, a change of strategic direction, or failure to meet collateral or other commitments to us. Our stringent and extensive due diligence and selection process allows us the flexibility to partner with organizations with which we believe we will have successful relationships.

Claims

We actively manage claims for our Owned MGA businesses, as well as for select Program Partners that underwrite workers’ compensation insurance. Other lines of business are typically managed directly by our Program Partners, or in some cases by TPAs. When our Program Partners or TPAs administer claims, our claims personnel are responsible for overseeing the Program Partner or TPA, including the management of loss reserves, settlement, arbitration and mediation. Claims are reported directly to the applicable Program Partner or TPA, which adheres to agreed-upon service level standards.

For business where we manage the claims, our experienced claims team actively manages the claims. In our largest line of business, workers’ compensation, our philosophy is to provide an injured employee with high-quality medical care as quickly as possible to reduce pain, expedite healing and lead to a faster and more complete recovery. Once an injured employee has healed, we aim to fully settle and achieve a full and complete release of the claim at the earliest opportunity. This approach to claims management enables us to lower our claim costs and settle the ultimate claim reserves more quickly. In order to achieve these outcomes, we manage our claims organization to ensure that each of our claims personnel is responsible for lower than industry average claims files per claims adjuster.

Our claims adjusters have settlement authority that varies by the line of business and the experience of each adjuster. In the case of a catastrophic claim, we may use a third-party administrator that specializes in these types of claims to ease the burden of catastrophic claims on our organization. In addition, our claims examiners work closely with our underwriting staff to keep apprised of claims trends. Vendor management is also an important component of effective claims management and our claims examiners work closely with our vendors to manage expenses and costs.

Reinsurance

We cede a portion of the risk we accept on our balance sheet to third-party reinsurers through a variety of reinsurance arrangements. We manage these arrangements to align risks with our Program Partners, optimize our net retention relative to our financial objectives, balance sheet size and ratings requirements, as well as to limit our maximum loss resulting from a single program or a single event. We utilize both quota share and excess of loss ("XOL") reinsurance as tools in our overall risk management strategy to achieve these goals, usually in conjunction with each other. Quota share reinsurance involves the proportional sharing of premiums and losses of each defined program. We utilize quota share reinsurance for several purposes, including (i) to cede risk to Program Partners, which allows us to share economics and align incentives and (ii) to cede risk to third-party reinsurers in order to manage our net written premiums appropriately based on our financial objectives, capital base, A.M. Best financial strength rating and risk appetite. It is a core pillar of our underwriting philosophy that Program Partners retain a portion of the underwriting risk of their program. We believe this best aligns interests, attracts higher quality programs and leads to better underwriting results. Under XOL reinsurance, losses in excess of a retention level are paid by the reinsurer, subject to a limit, and are customized per program or across multiple programs. We utilize XOL reinsurance to protect against catastrophic or other unforeseen extreme loss activity that could otherwise negatively impact our profitability and capital base. The majority of our exposure to catastrophic risk stems from the workers' compensation premium we retain. Potential catastrophic events include an earthquake, terrorism or another event. We believe we mitigate risk by our focus on small-to mid-sized accounts, which means that we generally do not have concentrated employee counts at a single location that could be exposed to a catastrophic loss. The cost and limits of the reinsurance coverage we purchase vary from year to year based on the availability of quality reinsurance at an acceptable price and our desired level of retention.

Our workers' compensation XOL reinsurance structure consolidates multiple programs under a single XOL reinsurance program comprised of two excess of loss reinsurance agreements with five professional reinsurers. We believe this structure significantly decreases our cost of reinsurance compared with each program maintaining its own XOL reinsurance program. As of December 31, 2022, we had $2 million retention of which is reinsured under various quota share reinsurance agreements at a weighted average rate of 21%, based on 2022 premiums for the applicable programs. These agreements apply to programs that accounted for 87% of workers' compensation premiums for the year ended December 31, 2022. We have the following XOL coverage:

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•0% of $8 million of losses in excess of $2 million as of December 31, 2022. Gross written premiums for the applicable programs for this layer accounted for 74% of workers' compensation premiums for the year ended December 31, 2022.

•100% of $5 million of losses in excess of $10 million. Gross written premiums for the applicable programs for this layer accounted for 74% of workers' compensation premiums for the year ended December 31, 2022.

•100% of $35 million of losses in excess of $15 million. Gross written premiums for the applicable programs for this layer accounted for 87% of workers' compensation premiums for the year ended December 31, 2022.

Summary workers' compensation reinsurance program

$50,000,000
	7/1/2022 Excess of Loss Reinsurance $35M xs $15M Per Occurrence Risks Attaching
$15,000,000
	7/1/2022 Excess of Loss Reinsurance $5M xs $10M Per Occurrence Risks Attaching
$10,000,000
	$8M xs $2M  Retention: 100%
$2,000,000
	Quota Share Reinsurance First $2M Per Occurrence Risks Attaching	Quota Share Reinsurance First $2M Per Occurrence Risks Attaching - Retention: 79%1
$0

1 Quota share retention rate reflects a weighted rate based on 2022 gross written premiums for multiple contracts across multiple programs.

Collateral management

As a result of our extensive use of reinsurance in our business model, we effectively convert underwriting risk to credit risk of our Program Partners and other professional reinsurers. Accordingly, it is critical for the success of our business that we actively manage our credit exposures. We achieve this through active collateral management, including: (i) requiring our reinsurance partners who do not have an A.M. Best financial strength rating of "A-" or higher or who are not authorized

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reinsurers to post collateral equal to at least 100% of reserves for unearned premiums and losses and loss adjustment expense, including incurred but not yet reported ("IBNR") reserves, based on our assessment of expected losses; (ii) securing collateral by trust funds, letters of credit or, more frequently, funds withheld accounts; and (iii) reviewing collateral accounts on a monthly basis and secured with quarterly and annual "true-ups."

As of December 31, 2022, we had reinsurance recoverables on paid and unpaid losses of $408.5 million. Against these recoverables, we maintained $241.3 million of funds withheld and $155.4 million of other forms of collateral, for a total of approximately $396.7 million in credit protection from our reinsurers. As of December 31, 2022, we did not have any balance from reinsurers that was over 90 days old or in dispute, and we held appropriate funding or collateral from all unauthorized reinsurers.

The following table sets forth our ten largest reinsurance recoverables by reinsurer as of December 31, 2022, in thousands:

Reinsurers:	A.M. Best Rating	Reinsurance Recoverables		Collateral		Net Recoverables
Markel Global	A	$	68,619	$	10,220	$	58,399
Greenlight	A-	49,666		85,161		(35,495)
Employers National Insurance Company	NR	37,471		40,811		(3,340)
First Insurance Company of OK (FICO)	NR	22,828		22,855		(27)
Bluefin Risk Partners, Inc.	NR	20,317		38,724		(18,407)
VGM Insurance Companies of America Limited	NR	17,872		31,749		(13,877)
Arch Reinsurance Company (U.S.)	A+	17,434		3,138		14,296
Munich Reinsurance America, Inc	A+	17,255		—		17,255
Swiss Reinsurance America Corp	A+	17,199		—		17,199
Provistar Insurance Company, Limited	NR	16,730		25,721		(8,991)
Total		285,391		258,379		27,012
All other reinsurers		123,131		138,294		(15,163)
Total recoverables		$	408,522	$	396,673	$	11,849

Technology

We operate on a digital platform with a data warehouse that collects and builds a robust repository of statistical data for our workers’ compensation business and a substantial amount of our other liability business. All of our workers’ compensation business data is automated through the data warehouse. Our platform provides a high degree of efficiency, accuracy and speed across all of our processes. We are able to use the data that we collect through Application Programming Interfaces ("APIs") to quickly analyze trends across all functions in our business. The data warehouse is easily searchable and contains most of the underwriting and claims information we collect at every level. We are able to track rates, monitor historical loss experience and reserve development and measure other relevant metrics at a granular level of detail. Our technology team is continuously enhancing this system to improve its capability and expand its use across our business. We believe our systems and technology allow us to quickly collect and analyze data, thereby improving our ability to manage our business. We have scalable, standardized infrastructure technology systems built for automation, efficiency and security, and are not burdened by legacy technology systems.

Reserves

We record reserves for estimated losses of the policies that we underwrite and for loss adjustment expenses ("LAE") related to the investigation and settlement of policy claims. Our reserves for losses and LAE represent the estimated cost of all reported and unreported losses and loss adjustment expenses incurred and unpaid as of a given point in time. We evaluate the overall adequacy of gross, ceded and net losses and LAE reserves in accordance with established actuarial standards to set our reserves. We establish reserves on a line of business basis at the individual program level. Consistent with our gross and net premium breakdown, reserves for workers’ compensation losses comprise the majority of our carried reserve position.

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Due to our shorter claims process and ability to close claims faster than competitors, we believe we are able to settle our ultimate reserves more quickly as well.

When a claim is first reported, we establish an initial case reserve for the estimated amount of our loss based on our estimate of the most likely outcome of the claim at that time. Generally, a case reserve is established within 30 days after the claim is reported and consists of anticipated medical costs, indemnity costs and specific adjustment expenses. This case reserve is set to cover the life of the claim based on information available at that point in time. At any point in time, the amount paid on a claim, as well as the reserve for future amounts to be paid, represents the estimated total cost of the claim or the case incurred amount. The estimated amount of loss for a reported claim is based on various factors, including:

•type of loss;

•severity of the injury or damage;

•age and occupation of the injured employee;

•estimated length of temporary disability;

•anticipated permanent disability;

•expected medical procedures, costs and duration;

•our knowledge of the circumstances surrounding the claim;

•insurance policy provisions, including coverage, related to the claim;

•jurisdiction of the occurrence; and

•other benefits defined by applicable statute.

Reserves are estimates involving actuarial projections of the expected ultimate cost to settle and administer claims at a given time but are not expected to precisely represent the ultimate liability. Estimates are based on past loss experience modified for current trends as well as prevailing economic, legal and social conditions. Such estimates are also based on facts and circumstances then known but are subject to significant uncertainty based on the outcome of various factors, such as future events, future trends in claim severity, inflation and changes in the judicial interpretation of policy provisions relating to the determination of coverage.

Reserves are set by our Reserve Committee in consultation with an independent third-party actuarial firm. Our Reserve Committee includes our Chief Executive Officer and President, Chief Financial Officer, Chief Actuary Officer, Senior Vice President of Underwriting, Corporate Controller and Insurance Divisional Controller. The Reserve Committee meets quarterly to review the actuarial reserving recommendations made by the independent actuary. Our independent third-party actuarial firm reviews our net reserves at March 31, June 30 and September 30 of each year and performs a comprehensive review of all programs at each year-end.

As of December 31, 2022 we have had aggregate favorable development of $37.6 million on our reserve estimates since 2015, respectively.

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Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																					As of December 31, 2022
Years Ended December 31,																					Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	24,661	$	24,755	$	24,280	$	21,361	$	21,342	$	21,506	$	21,465	$	21,631	$	21,671	$	21,842	$	1,374	4,444
2014			24,580		22,777		21,726		21,571		21,095		21,054		20,897		20,183		20,154		1,913		5,021
2015					25,757		26,614		26,414		25,450		25,650		22,518		22,516		22,130		2,372		6,398
2016							35,281		33,672		32,554		30,165		27,340		26,550		25,858		2,880		11,427
2017									43,499		35,113		32,685		30,847		29,783		29,766		2,940		16,963
2018											47,263		41,630		39,880		38,108		37,923		4,528		14,704
2019													57,778		51,598		51,824		51,211		6,724		13,008
2020															63,734		64,362		66,963		10,991		13,498
2021																	127,981		132,816		27,493		14,829
2022																			181,164		66,546		12,597
																			$	589,827
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	6,799	$	12,602	$	15,984	$	17,708	$	19,246	$	19,712	$	20,129	$	20,121	$	20,617	$	20,835
2014			6,011		12,005		14,814		16,666		17,260		18,238		18,507		18,702		18,801
2015					6,275		13,785		16,512		18,046		18,923		19,340		19,685		19,982
2016							8,110		16,791		19,677		20,780		22,138		22,648		23,140
2017									8,903		17,555		20,809		22,673		23,727		24,884
2018											10,339		22,279		26,852		29,479		31,735
2019													13,215		27,174		33,678		37,766
2020															14,487		34,437		46,864
2021																	38,435		78,113
2022																			49,708
																			351,828
	All outstanding liabilities before 2013, net of reinsurance																		5,503
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	243,502

Investments

Investment income is a significant component of our earnings. We invest our reserves and maintain a conservative investment portfolio primarily comprised of highly rated fixed income securities. Our investment strategy is to preserve capital and limit our exposure to investment risk. Our portfolio is managed by New England Asset Management, Inc. ("NEAM"), an investment management firm with a focus on insurance portfolios. Under our current agreement with NEAM, which we can terminate at any time upon 30 days’ notice, we pay NEAM a quarterly fee of a percentage of our assets under management. There are no minimum amounts of assets required under our agreement with NEAM. Our Investment Committee meets periodically and reports to our board of directors.

As of December 31, 2022, we had approximately $454.0 million of total cash and invested assets, net of all collateral held on behalf of our Program Partners under reinsurance treaties. The weighted average rating of the fixed income portfolio is "AA" and the weighted average duration is approximately 4.2 years. The fixed income portfolio pre-tax book yield was 3.07%.

We hold funds withheld balances in separate accounts for the benefit of our Program Partners. The funds withheld assets and associated investment income belong to our various Program Partners. However, we require that the assets in these accounts be managed in accordance with our investment guidelines. As of December 31, 2022, we had $241.3 million of funds held under reinsurance treaties.

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	December 31,
	2022						2021
	Cost or Amortized Cost		Fair Value		% of Total Fair Value		Cost or Amortized Cost		Fair Value		% of Total Fair Value
	(in thousands, except percentages)
Fixed maturities:
U.S. government and government securities	$	65,405	$	62,552	10.6	%	$	41,490	$	41,434	8.8	%
Foreign governments	400		395		0.1	%	2,500		2,490		0.5	%
States, territories and possessions	17,310		15,854		2.7	%	10,593		10,766		2.3	%
Political subdivisions of states territories and possessions	38,167		33,904		5.8	%	39,170		40,002		8.5	%
Special revenue and special assessment obligations	115,696		103,639		17.6	%	93,664		95,991		20.3	%
Industrial and public utilities	131,769		125,540		21.4	%	100,774		103,257		21.9	%
Commercial mortgage-backed securities	145,471		128,105		21.8	%	119,378		118,218		25.0	%
Residential mortgage-backed securities	26,716		25,112		4.3	%	16,549		17,368		3.7	%
Other loan-backed securities	53,231		51,613		8.8	%	41,236		41,425		8.8	%
Hybrid securities	6,233		5,529		0.9	%	105		110		—	%
Total fixed maturities	600,398		552,243		94.0	%	465,459		471,061		99.8	%
Equity securities	39,882		35,041		6.0	%	984		969		0.2	%
Total investments	$	640,280	$	587,284	100.0	%	$	466,443	$	472,030	100.0	%

	December 31,
	2022						2021
	Cost or Amortized Cost		Fair Value		% of Total Fair Value		Cost or Amortized Cost		Fair Value		% of Total Fair Value
	(in thousands, except percentages)
Fixed maturities:
Due in one year or less	$	35,468	$	35,125	6.4	%	$	29,108	$	29,329	6.2	%
Due after one year but before five years	176,083		167,986		30.4	%	117,366		119,275		25.3	%
Due after five years but before ten years	93,107		83,769		15.2	%	78,967		81,217		17.2	%
Due after ten years	70,322		60,533		11.0	%	62,855		64,229		13.6	%
Commercial mortgage-backed securities	145,471		128,105		23.2	%	119,378		118,218		25.2	%
Residential mortgage-backed securities	26,716		25,112		4.5	%	16,549		17,368		3.7	%
Other loan-backed securities	53,231		51,613		9.3	%	41,236		41,425		8.8	%
Total	$	600,398	$	552,243	100.0	%	$	465,459	$	471,061	100.0	%

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	December 31,
	2022				2021
	Fair Value		% of Total Fair Value		Fair Value		% of Total Fair Value
	(in thousands, except percentages)
Rating
AAA	$	106,254	19.2	%	$	80,455	17.1	%
AA	312,903		56.7	%	278,557		59.1	%
A	98,963		17.9	%	77,097		16.4	%
BBB	30,122		5.5	%	33,959		7.2	%
BB	3,965		0.7	%	947		0.2	%
Below investment grade	36		—	%	46		—	%
Total	$	552,243	100.0	%	$	471,061	100.0	%

Enterprise risk management

We designed and implemented an enterprise risk management ("ERM") program to identify, manage and mitigate the risks the company is exposed to. The board of directors and its committees are supported in their oversight of our ERM process by an ERM Committee consisting of seven senior executives who each represent a critical operating unit of ours.

Our board of directors, ERM committee and senior management have identified five key risk areas for oversight within the ERM framework. The five key risk areas are credit risk, market risk, underwriting risk, strategic risk and operational risk. Within each key risk, we have identified specific risk sub-categories leading to the identification and analysis of more granular risks. Through a documented analytical process, the ERM committee continually reviews and evaluates these risks to monitor their potential impact on our businesses and periodically reports its findings to the board of directors and its committees. Our board of directors believes this overall structure and analytical process creates effective risk identification, appetite determination, controls, oversight and management for our Company.

Competition

In general, the property and casualty ("P&C") insurance market is highly competitive. Some of our competitors have greater financial, marketing and management resources and experience than we do. We may also compete with new market entrants in the future. In the workers’ compensation insurance market, our competitors include insurance companies, state insurance pools and self-insurance funds. According to the most recent market data from S&P Global, approximately 250 insurance companies participated in the workers’ compensation market in 2021. We compete against State National Companies, Inc. and AF Group in the provision of issuing carrier services to program administrators.

Competition is based on many factors, including the reputation and experience of the insurer, coverages and services offered, pricing and other terms and conditions, speed of claims payment, customer service, relationships with brokers and agents (including ease of doing business, service provided and commission rates paid), size and financial strength ratings, among other considerations.

Ratings

As of March 2023, we have an "A" (Excellent) (Outlook Stable) financial strength rating ("FSR") from A.M. Best, which rates insurance companies based on factors of concern to policyholders. A.M. Best’s FSRs reflect its opinion of an insurance company’s financial strength, operating performance and ability to meet its obligations to policyholders.

A.M. Best currently assigns 16 FSRs to insurance companies, which currently range from "A++" (Superior) to "S" (Rating Suspended). "A" (Excellent) is the third highest FSR in the A.M. Best system. In evaluating a company’s financial and operating performance, A.M. Best reviews the company’s profitability, leverage and liquidity, as well as its book of business, the adequacy and soundness of its reinsurance, the quality and estimated market value of its assets, the adequacy of its losses

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and loss expense reserves, the adequacy of its surplus, its capital structure, the experience and competence of its management and its market presence.

Human capital

Overview

As of December 31, 2022, we had 344 employees. Our employees are not subject to any collective bargaining agreements, and we are not aware of any current efforts to implement such an agreement. We believe that our employee relationships are good.

Compensation and benefits

We believe that our employees are one of our most valuable assets. In order to attract and retain talent, we offer fair, competitive compensation and benefits to support our team members’ overall well-being. Employee compensation includes base pay, annual incentive compensation and, in some cases, stock compensation.

Diversity and inclusion

We are committed to fostering a diverse and inclusive work environment free from discrimination of any kind and that supports the communities we serve. We seek to recruit the best qualified employees regardless of gender, ethnicity or other protected traits and it is our policy to fully comply with all laws applicable to discrimination in the workplace.

Regulation

Our business is subject to extensive regulation in the United States at both the state and federal level, including regulation under state insurance and federal laws. We cannot predict the impact of future state or federal laws or regulations on our business. Future laws and regulations, or the interpretation thereof, may materially adversely affect our financial condition and results of operations.

Insurance regulation - General

Our insurance subsidiaries are subject to extensive regulation and supervision by the states in which they are domiciled, particularly with respect to their financial condition. Benchmark is domiciled in Kansas where it is regulated and supervised by the Kansas Insurance Department. Additionally, Benchmark is commercially domiciled in California, where it is regulated and supervised by the California Department of Insurance. ALIC is domiciled in Utah where it is regulated and supervised by the Utah Insurance Department. 7710 is domiciled in South Carolina where it is regulated and supervised by the South Carolina Department of Insurance. BSIC is domiciled in Arkansas where it is regulated and supervised by the Arkansas Department of Insurance. Our insurance subsidiaries are also subject to regulation by all states in which they transact business, which oversight in practice often focuses on review of their market conduct. Benchmark is licensed to conduct insurance business and subject to regulation and supervision in 49 states and the District of Columbia. ALIC is licensed or eligible to conduct insurance business and therefore is subject to regulation and supervision by insurance regulators in 38 states and the District of Columbia. 7710 is licensed or eligible to conduct insurance business and is subject to regulation and supervision by insurance regulators in nine states. BSIC is licensed to conduct business in one state and is authorized to issue policies in 49 states and the District of Columbia. The extent and scope of insurance regulation varies among jurisdictions, but most jurisdictions have laws and regulations governing the financial security of insurers, including admittance of assets for purposes of calculating statutory surplus, standards of solvency, reserves, reinsurance, capital adequacy and the business conduct of insurers.

In addition, statutes and regulations usually require the licensing of insurers and their agents, the approval of policy forms and related materials and, for certain lines of insurance, the approval of rates. State statutes and regulations also prescribe the permitted types and concentrations of investments by insurers. The primary purpose of this insurance industry regulation is to protect policyholders. P&C insurance companies are required to file detailed quarterly and annual statements with insurance regulatory authorities in each of the jurisdictions in which they are licensed or eligible to do business, and their operations and accounts are subject to periodic examination by such authorities. In connection with the continued licensing of insurance companies, regulators have discretionary authority to limit or prohibit the ability to issue new policies if, in their judgment, the regulators determine that an insurer is not maintaining minimum statutory surplus or capital or if the further transaction of business will be detrimental to its policyholders.

The amount of dividends that our insurance subsidiaries may pay in any twelve-month period, without prior approval by their respective domestic insurance regulators, is restricted under the laws of Kansas, Utah, Arkansas and South Carolina.

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Under Kansas and California law, dividends payable from Benchmark without the prior approval of the applicable insurance commissioner must not exceed the greater of (i) 10% of Benchmark’s surplus as shown on the last statutory financial statement on file with the Kansas Insurance Department; or (ii) 100% of net income during the applicable twelve-month period (not including realized gains). Dividends shall not include pro rata distributions of any class of Benchmark's own securities.

Under Utah law, dividends payable from ALIC without the prior approval of the applicable insurance commissioner must not exceed the lesser of (i) 10% of ALIC’s surplus as shown on the last statutory financial statement on file with the Utah Insurance Department; or (ii) 100% of net income during the applicable twelve- month period (not including realized gains). Dividends shall not include pro rata distributions of any class of ALIC's own securities.

Under South Carolina law, dividends payable from 7710 without the prior approval of the applicable insurance commissioner are limited to the following during the preceding twelve months: (a) when paid from other than earned surplus must not exceed the lesser of: (i) 10% of 7710's surplus as regards policyholders as shown in 7710’s most recent annual statement; or (ii) the net income, not including net realized gains or losses as shown in the 7710's most recent annual statement; or (b) when paid from earned surplus must not exceed the greater of: (i) 10% of the 7710's surplus as regards policyholders as shown in 7710’s most recent annual statement; or (ii) the net income, not including net realized gains or losses as shown in the 7710's most recent annual statement. Dividends shall not include pro rata distributions of any class of 7710’s own securities.

Under Arkansas law, dividends payable from BSIC without the prior approval of the applicable insurance commissioner must not exceed the lesser of (i) 10% of BSIC’s surplus as shown on the last statutory financial statement on file with the Arkansas Insurance Department; or (ii) 100% of net income during the applicable twelve- month period (not including realized gains). Dividends shall not include pro rata distributions of any class of BSIC's own securities.

In addition, payments of dividends and advances or repayment of funds to us by our insurance subsidiaries are restricted by the applicable laws of our insurance subsidiaries’ respective jurisdictions requiring that each insurance subsidiary hold a specified amount of minimum reserves in order to meet future obligations on its outstanding policies. These regulations specify that the minimum reserves shall be calculated to be sufficient to meet future obligations, giving consideration for required future premiums to be received, which are based on certain specified interest rates and methods of valuation, which are subject to change.

Insurance holding company regulation

We are an insurance holding company and, together with our insurance subsidiaries and our other subsidiaries and affiliates, are subject to the insurance holding company system laws of Kansas, California, Utah, Arkansas and South Carolina. These laws vary across jurisdictions, but generally require an insurance holding company and insurers that are members of such insurance holding company’s system to register with the jurisdiction’s insurance regulatory authorities, to file reports disclosing certain information, including their capital structure, ownership, management, financial condition, enterprise risk and own risk and solvency assessment.

These laws also require disclosure of certain qualifying transactions between or among our insurance subsidiaries and us or any of our other subsidiaries or affiliates to which one or more of our insurance subsidiaries is a party. Such transactions could include loans, investments, sales, service agreements and reinsurance agreements among other similar inter-affiliate transactions. These laws also require that inter-company transactions be fair and reasonable. In certain circumstances, the insurance company must give prior notice of the transaction to the insurance department in its state of domicile, and the insurance department must either approve or disapprove the subject inter-company transaction within defined periods. Further, these laws require that an insurer’s contract holders’ surplus following any dividends or distributions to shareholder affiliates be reasonable in relation to the insurer’s outstanding liabilities and its financial needs.

The insurance holding company laws in some states, including Kansas, California, Utah, Arkansas and South Carolina, require regulatory approval of a direct or indirect change of control of an insurer or an insurer’s parent company. Generally, to obtain approval from the insurance commissioner for any acquisition of control of an insurance company or its parent company, the proposed acquirer must file with the applicable commissioner an application containing certain information including with respect to the participant companies in and terms of the transaction. Different jurisdictions may have requirements for prior approval of any acquisition of control of any insurance or reinsurance company licensed or authorized

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to transact business in those jurisdictions. Additional requirements may include re-licensing or subsequent approval for renewal of existing licenses upon an acquisition of control.

Credit for reinsurance

State insurance laws permit U.S. insurance companies, as ceding insurers, to take financial statement credit for reinsurance that is ceded, so long as the assuming reinsurer satisfies the state’s credit for reinsurance laws. The Nonadmitted Reinsurance Reform Act contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") provides that if the state of domicile of a ceding insurer is a National Association of Insurance Commissioners ("NAIC") accredited state, or has financial solvency requirements substantially similar to the requirements necessary for NAIC accreditation, and recognizes credit for reinsurance for the insurer’s ceded risk, then no other state may deny such credit for reinsurance. Because all states are currently accredited by the NAIC, the Dodd-Frank Act prohibits a state in which a U.S. ceding insurer is licensed but not domiciled from denying credit for reinsurance for the insurer’s ceded risk if the cedant’s domestic state regulator recognizes credit for reinsurance. The ceding company in this instance is permitted to reflect in its statutory financial statements a credit in an aggregate amount equal to the ceding company’s liability for unearned premium (which are that portion of written premiums which applies to the unexpired portion of the policy period), loss reserves and loss expense reserves to the extent ceded to the reinsurer.

Statutory examinations

We are required to file detailed quarterly and annual financial statements, in accordance with prescribed statutory accounting rules with regulatory officials in each of the jurisdictions in which we do business. As part of their routine regulatory oversight process, the Kansas Insurance Department, the California Department of Insurance, the Utah Insurance Department, the Arkansas Department of Insurance, and the South Carolina Department of Insurance conduct periodic detailed examinations, generally once every three to five years, of the books, records, accounts and operations of our insurance subsidiaries domiciled in their states.

Financial tests

The NAIC has developed a set of financial relationships or "tests," known as the Insurance Regulatory Information System or IRIS, which is designed for early identification of companies that may require special attention or action by insurance regulatory authorities. Insurance companies submit data annually to the NAIC, which in turn analyzes the data by utilizing ratios. State insurance regulators review this statistical report, which is available to the public, together with an analytical report, prepared by and available only to state insurance regulators, to identify insurance companies that appear to require immediate regulatory attention. A "usual range" of results for each ratio is used as a benchmark.

Risk-based capital requirements

In order to enhance the regulation of insurers’ solvency, the NAIC adopted a model law to implement risk-based capital ("RBC") requirements for P&C insurers. All states have adopted the NAIC’s model law or a substantively similar law. The NAIC Risk-Based Capital Model Act requires insurance companies to submit an annual RBC Report, which compares an insurer’s Total Adjusted Capital with its Authorized Control Level RBC. A company’s RBC is calculated by using a specified formula that applies factors to various specified asset, premium, claim, expense and reserve items. The factors are higher for those items with greater underlying risk and lower for items with less underlying risk.

Total Adjusted Capital is defined as the sum of an insurer’s statutory capital and surplus and asset valuation reserve and the estimated amount of all dividends declared by the insurer’s board of directors prior to the end of the statement year that are not yet paid or due at the end of the year. The RBC Report is used by regulators to initiate appropriate regulatory actions relating to insurers that show indications of weak or deteriorating conditions. RBC is an additional standard for minimum capital requirements that insurers must meet to avoid being placed in rehabilitation or liquidation by regulators. The annual RBC Report, and the information contained therein, are not intended by the NAIC as a means to rank insurers.

RBC is a method of measuring the minimum amount of capital appropriate for an insurance company to support its overall business operations in light of its size and risk profile. It provides a means of setting the capital requirement in which the degree of risk taken by the insurer is the primary determinant. The value of an insurer’s Total Adjusted Capital in relation to its RBC, together with its trend in its Total Adjusted Capital, is used as a basis for determining regulatory action that a state insurance regulator may be authorized or required to take with respect to an insurer. The four determinations, potentially applicable under each jurisdiction’s laws are as follows:

•Company Action Level Event. Total Adjusted Capital is greater than or equal to 150% but less than 200% of RBC, or Total Adjusted Capital is greater than or equal to 200% but less than 250% of RBC and has a negative trend. If there

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is a Company Action Level Event, the insurer must submit a plan (an "RBC Plan") outlining, among other things, the corrective actions it intends to take in order to remedy its capital deficiency.

•Regulatory Action Level Event. Total Adjusted Capital is greater than or equal to 100% but less than 150% of RBC or the insurer has failed to comply with filing deadlines for its RBC Report or RBC Plan. If there is a Regulatory Action Level Event, the insurer is also required to submit an RBC Plan. In addition, the insurance regulator must undertake a comprehensive examination of the insurer’s financial condition and must issue any appropriate corrective orders.

•Authorized Control Level Event. Total Adjusted Capital is below RBC but greater than or equal to 70% of RBC or the insurer has failed to respond to a corrective order. As noted above, if there is an Authorized Control Level Event, the insurance regulator may seek rehabilitation or liquidation of the insurer if it deems it to be in the best interests of the policyholders and creditors of the insurer and the public.

•Mandatory Control Level Event. Total Adjusted Capital is below 70% of RBC. If there is a Mandatory Control Level Event, the insurance regulator must seek rehabilitation or liquidation of the insurer.

Market conduct

Our insurance subsidiaries are subject to periodic market conduct exams ("MCE") in any jurisdiction where they do business. An MCE typically entails review of business activities, such as operations and management, complaint handling, marketing and sales, producer licensing, policyholder service, underwriting and rating and claims handling. Regulators may impose fines and penalties upon finding violations of regulations governing such business activities.

Rate and form approvals

Our insurance subsidiaries may be subject to each state’s laws and regulations regarding rate and form approvals. The applicable laws and regulations are used by states to establish standards to ensure that rates are not excessive, inadequate or unfairly discriminatory or used to engage in unfair price competition. An insurer’s ability to increase rates and the relative timing of the process can be dependent upon each state’s respective requirements.

Claims adjusting

Generally, insurance companies, adjusting companies and individual claims adjusters are prohibited by state statutes from engaging in unfair claims practices. Unfair claims practices include, but are not limited to, misrepresenting pertinent facts or insurance policy provisions; failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies; and attempting to settle a claim for less than the amount to which a reasonable person would have believed such person was entitled.

Assessments against insurers

Under the insurance guaranty fund laws existing in each state and the District of Columbia., licensed insurers can be assessed by insurance guaranty associations for certain obligations of insolvent insurance companies to policyholders and claimants. Most of these laws provide for annual limits on the assessments and for an offset against state premium taxes. These premium tax offsets must be spread over future periods ranging from five to 20 years. Since these assessments typically are not made for several years after an insurer fails and depend upon the final outcome of liquidation or rehabilitation proceedings, we cannot accurately determine the amount or timing of any future assessments.

Regulation of investments

We are subject to state laws and regulations that require diversification of our investment portfolios and limit the amounts of investments in certain asset categories, such as below-investment grade fixed income securities, equity real estate, other equity investments and derivatives. Failure to comply with these requirements and limitations could cause affected investments to be treated as non-admitted assets for purposes of measuring statutory surplus and, in some instances, could require the divestiture of such non-qualifying investments.

Statutory accounting principles

Statutory accounting principles ("SAP") are a basis of accounting developed to assist insurance regulators in monitoring and regulating the solvency of insurance companies. SAP is primarily concerned with measuring an insurer’s solvency. Statutory accounting focuses on valuing assets and liabilities of insurers at financial reporting dates in accordance with appropriate insurance law and regulatory provisions applicable in each insurer’s domiciliary state.

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GAAP is concerned with a company’s solvency, but is also concerned with other financial measurements, principally income and cash flows. Accordingly, GAAP gives more consideration to appropriately matching revenue and expenses and accounting for management’s stewardship of assets than does SAP. As a direct result, different assets and liabilities and different amounts of assets and liabilities will be reflected in financial statements prepared in accordance with GAAP as compared to SAP.

Potential issuing carrier restrictions

In certain states, including Florida and Kentucky, the Insurance Commissioner has the authority to prohibit an authorized insurer from acting as an issuing carrier for an unauthorized insurer. In addition, insurance departments in states that have no statutory or regulatory prohibition against an authorized insurer acting as an issuing carrier for an unauthorized insurer could deem the assuming insurer to be transacting insurance business without a license and the issuing carrier to be aiding and abetting the unauthorized sale of insurance.

Enterprise risk and other developments

The NAIC, as part of its solvency modernization initiative, has engaged in a concerted effort to strengthen the ability of U.S. state insurance regulators to monitor U.S. insurance holding company groups. The NAIC’s solvency modernization initiative, among other things, aims to expand the authority and focus of state insurance regulators to encompass U.S. insurance holding company systems at the group level.

The holding company reform efforts at the NAIC culminated in December 2010 in the adoption of significant amendments to the NAIC’s Insurance Holding Company System Regulatory Act (the "Model Holding Company Act") and its Insurance Holding Company System Model Regulation (the "Model Holding Company Regulation"). Among other things, the revised Model Holding Company Act and Model Holding Company Regulation explicitly address "enterprise" risk – the risk that an activity, circumstance, event or series of events involving one or more affiliates of an insurer will, if not remedied promptly, be likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole – and require annual reporting of potential enterprise risk as well as access to information to allow the state insurance regulator to assess such risk. In addition, the Model Holding Company Act amendments include a requirement to the effect that any person divesting control over an insurer must provide 30 days’ notice to the regulator and the insurer (with an exception for cases where a Form A is being filed). The amendments direct the domestic state insurance regulator to determine those instances in which a divesting person will be required to file for and obtain approval of the transaction. Some form of the 2010 amendments to the Model Holding Company Act has been adopted in all states.

In December 2014, the NAIC adopted additional revisions to the Model Holding Company Act, updating the model to clarify the group-wide supervisor for a defined class of internationally active insurance groups. The revisions also outline the process for determining the lead state for domestic insurance groups, outline the activities the commissioner may engage in as group-wide supervisor and extend confidentiality protections to cover information received in the course of group-wide supervision. The 2014 revisions to the Model Holding Company Act have been adopted in all accredited U.S. jurisdictions.

In 2012, the NAIC adopted the Risk Management and Own Risk and Solvency Assessment ("ORSA") Model Act, which requires domestic insurers to maintain a risk management framework and establishes a legal requirement for domestic insurers to conduct an ORSA in accordance with the NAIC’s ORSA Guidance Manual. The ORSA Model Act provides that domestic insurers, or their insurance group, must regularly conduct an ORSA consistent with a process comparable to the ORSA Guidance Manual process. The ORSA Model Act also provides that, no more than once a year, an insurer’s domiciliary regulator may request that an insurer submit an ORSA summary report, or any combination of reports that together contain the information described in the ORSA Guidance Manual, with respect to the insurer and the insurance group of which it is a member. If and when the ORSA Model Act is adopted by a particular state, the ORSA Model Act would impose more extensive filing requirements on parents and other affiliates of domestic insurers. Each of Kansas, California and Utah have adopted their version of the ORSA Model Act. Our insurance company subsidiaries, Benchmark, ALIC and 7710, will be subject to the requirements of the ORSA Model Act adopted in Kansas, California, Utah and South Carolina, respectively, when their direct written premiums and unaffiliated assumed premiums, if any, exceed $500 million (Benchmark, ALIC and 7710 are currently exempt from such requirements based on the amount of their direct written premiums and unaffiliated assumed premiums).

Privacy regulation

Federal and state law and regulation require financial institutions to protect the security and confidentiality of personal information, including health-related and customer information, and to notify customers and other individuals about their policies and practices relating to their collection and disclosure of health- related and customer information and their

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practices relating to protecting the security and confidentiality of that information. State laws regulate the use and disclosure of social security numbers and federal and state laws require notice to affected individuals, law enforcement, regulators and others if there is a breach of the security of certain personal information, including social security numbers. Federal and state laws and regulations regulate the ability of financial institutions to make telemarketing calls and to send unsolicited e-mail or fax messages to consumers and customers. Federal and state lawmakers and regulatory bodies may be expected to consider additional or more detailed regulation regarding these subjects and the privacy and security of personal information.

Cybersecurity regulation

The NAIC adopted the Insurance Data Security Model Law in October 2017. As of the date of this Annual Report, 18 states, including South Carolina but not including Kansas, California, Arkansas or Utah, have adopted the model law or a variation of it. We expect that additional regulations could be enacted in other jurisdictions that could impact our cybersecurity program. Depending on these and other potential implementation requirements, we will likely incur additional costs of compliance.

Available Information

We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other information with the SEC. The SEC maintains a web site that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. The address of that site is http://www.sec.gov. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other information filed by us with the SEC are available, without charge, on our web site, http://www.trean.com, as soon as reasonably practicable after they are filed electronically with the SEC. The information on our website is not a part of this Annual Report.

Item 1A. Risk Factors

The execution of our business strategy, our results of operations and our financial condition are subject to inherent risks and uncertainties. A summary of certain material risks is provided below, and you should carefully consider these risks and uncertainties, as well as the financial and other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes, in evaluating any investment decision involving the Company. This section does not describe all risks and uncertainties applicable to us and is intended only as a summary of certain factors that could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects and the industry in which we operate. Other sections of this Annual Report on Form 10-K contain additional information about these and other risks and uncertainties. The occurrence of any of these risks and uncertainties could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects and cause the value of our stock to decline, which could cause you to lose all or part of your investment.

Risks Related to the Proposed Merger

The proposed Merger may not be completed in a timely manner or at all, which may adversely affect our business and the price of our Common Stock.

If the Merger is not completed for any reason, we will be subject to a number of material risks, including the disruption to our business resulting from the announcement of the signing of the Merger Agreement, the diversion of management’s attention from our day-to-day business, expenses incurred in connection with the proposed Merger and the restrictions imposed by the Merger Agreement on the operation of our business during the period before the completion of the Merger, any or all of which may make it difficult for us to achieve our business goals if the Merger does not occur.

In addition, in such a scenario where the Merger is not consummated, our stockholders will not receive any payment for their shares in connection with the Merger. Instead, we will remain an independent public company, and our shares of Common Stock will continue to be listed on Nasdaq. However, if the Merger is not consummated, and depending on the circumstances that would have caused the Merger not to be consummated, the price of the shares of our Common Stock may decline significantly. If that were to occur, it is uncertain when, if ever, the price of our Common Stock would return to the prices at which the shares of Common Stock currently trade. Accordingly, if the Merger is not consummated, there can be no assurance as to the effect of these risks on the future value of shares held by our stockholders.

The closing of the proposed Merger is subject to certain conditions, some of which we cannot control, including the adoption of the Merger Agreement by our stockholders and the receipt of certain regulatory approvals, and, if any of these conditions is not satisfied, the Merger may not be consummated.

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The Merger is subject to the satisfaction or waiver of certain conditions to closing, including, but not limited to, (i) the Requisite Stockholder Approvals (as defined in the Merger Agreement); (ii) all required insurance regulatory approvals (or the applicable regulatory authorities’ non-objection to requests for exemptions in respect thereof) shall have been obtained; (iii) the expiration or termination of any waiting period (and extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iv) the absence of any restraint or law preventing or prohibiting the consummation of the Merger; (v) the accuracy of Parent’s, Merger Sub’s, and the our representations and warranties (subject to certain materiality qualifiers); (vi) Parent’s, Merger Sub’s, and the our compliance in all material respects with their respective obligations under the Merger Agreement; and (vii) the absence of any Company Material Adverse Effect (as defined in the Merger Agreement) since the date of the Merger Agreement. Certain conditions to the Merger may not be satisfied or, if they are, the timing of such satisfaction is uncertain. If any conditions to the Merger are not satisfied or, where waiver is permitted by applicable law, not waived, the Merger will not be consummated.

If for any reason the Merger is not completed, or the closing of the Merger is significantly delayed, our share price, business and results of operations may be adversely affected. In addition, failure to consummate the Merger would prevent our shareholders from realizing the anticipated benefits of the Merger. We have incurred, and expect to continue to incur, significant transaction fees, professional service fees, taxes, and other costs related to the Merger, for most or all of which we will remain obligated even if the Merger is not completed.

The occurrence of any event, change, or other circumstance or condition that could give rise to the termination of the Merger Agreement, including in circumstances requiring us to pay a termination fee.

The Merger Agreement contains certain termination rights, including our right to terminate the Merger Agreement to accept a Company Superior Proposal (as defined in the Merger Agreement), subject to specified limitations, and provides that, if the Board (acting upon the recommendation of the Special Committee) or the Special Committee authorizes us to terminate the Merger Agreement in order to accept a superior proposal, we will be required to pay the Parent a termination fee of $9,450,000.

The announcement or pendency of the proposed Merger may adversely affect our business relationships, operating results, and business generally, and the proposed transaction may disrupt our current plans and operations.

Our business relationships, operating results and business generally may be subject to material risks of disruption resulting from the announcement and pendency of the Merger. Our Program Partners or other parties with whom we maintain business relationships may experience uncertainty about our future and seek alternative relationships with third parties or seek to alter their business relationships with us. Our employees may experience uncertainty about their future roles with us following the Merger. The attention of our management may be directed toward completion of the Merger, integration planning and transaction-related considerations and may be diverted from the company’s day-to-day business operations and, following the completion of the Merger, the attention of our management may also be diverted to such matters. We may experience negative reactions from our stockholders. Further, as a result of disruptions in our current business operations in connection with the Merger and the uncertainty surrounding the conduct of our business following the completion of the Merger, we may not be able to fully implement our business plan and/or may lose key Program Partners.

These disruptions could be exacerbated by a delay in the completion of the Merger or termination of the Merger Agreement. Additionally, if the Merger is not consummated, we will have incurred significant costs and diverted the time and attention of management. A failure to consummate the Merger may also result in negative publicity, reputational harm, litigation against us or our directors and officers, and a negative impression of us in the financial markets. The occurrence of any of these events individually or in combination could have a material adverse effect on our business relationships, operating results, stock price and business generally.

Our ability to retain and hire key personnel in light of the proposed Merger.

Our employees may be uncertain about their future roles and relationships with us following the completion of the Merger, which may adversely affect our ability to retain them or to hire new employees. While the Merger is pending, we may not be able to hire qualified personnel to replace any key employees that may depart to the same extent that we have been able to in the past. In addition, if the Merger is not completed, we may also encounter challenges in hiring qualified personnel to replace key employees that may depart subsequent to the Merger announcement. Because we depend on the experience and industry knowledge of our executives and other key personnel to execute our business plans, we may therefore experience difficulty in meeting our strategic objectives while the Merger is pending or after it is consummated.

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Efforts to consummate the proposed Merger may divert management’s attention from our ongoing business operations.

We have expended, and expect to continue to expend, significant management resources to consummate the Merger. While acting to consummate the Merger, the attention of our management may be diverted away from the day-to-day operations of our business, including implementing initiatives to improve performance, execution of existing business plans and pursuing other beneficial opportunities. This diversion of management resources could disrupt our operations and may have an adverse effect on the respective businesses, financial conditions, results of operations and cash flows of us or the merged entity after the effective time of the Merger.

Potential litigation relating to the proposed Merger that could be instituted against Altaris, us, or our directors, managers, or officers.

Regardless of the outcome of any litigation related to the Merger Agreement and the transactions it contemplates, such litigation may be time-consuming and expensive and may distract our management from running the day-to-day operations of our business. The litigation costs and diversion of management’s attention and resources to address the claims and counterclaims in any litigation related to the Merger Agreement and the transactions it contemplates may materially adversely affect our business, financial condition and/or operating results. Furthermore, if the Merger is not consummated, for any reason, litigation could be filed in connection with the failure to consummate the Merger. Any litigation related to the Merger may result in negative publicity or an unfavorable impression of us, which could negatively impact the trading price of our Common Stock, impair our ability to recruit or retain employees, damage our relationships with Program Partners, or otherwise materially harm our operations and financial performance.

Certain restrictions during the pendency of the proposed Merger that may impact our ability to pursue certain business opportunities or strategic transactions.

Upon our entry into the Merger Agreement, we became subject to customary exclusivity and “no shop” restrictions that restrict our ability to solicit proposals from, provide information to, and engage in discussions with, any third parties with respect to a proposed acquisition. Subject to certain customary “fiduciary out” exceptions, the Special Committee and the Board are required to recommend that our stockholders vote in favor of the adoption of the Merger Agreement and the approval of the Merger and the other transactions contemplated thereby. However, the Board (acting on the recommendation of the Special Committee) or the Special Committee may, prior to the receipt of the requisite stockholder approvals, make an adverse recommendation change in connection with a certain Company Superior Proposals (as defined in the Merger Agreement) or Intervening Event (as defined in the Merger Agreement) if we comply with certain notice and other requirements set forth in the Merger Agreement, including the payment of a termination fee.

Risks related to our business and industry

Failure of our Program Partners or our Owned MGAs to properly market, underwrite or administer policies could adversely affect us.

The marketing, underwriting, claims administration and other administration of policies in connection with our issuing carrier services and for business written directly by our Owned MGAs are the responsibility of our Program Partners and our Owned MGAs. Any failure by them to properly handle these functions could result in liability to us. Even though our Program Partners may be required to compensate us for any such liability, there are risks that such compensation may be insufficient or entirely unavailable—for example, if the relevant Program Partner becomes insolvent or is otherwise unable to pay us. Any such failures could result in monetary losses, create regulatory issues or harm our reputation, which could materially and adversely affect our business, financial condition and results of operations.

We depend on a limited number of Program Partners for a substantial portion of our gross written premiums.

We source a significant amount of our premiums from our Program Partners, which are generally MGAs and insurance companies. Historically, we have focused our business on a limited group of core Program Partners and have sought to grow the business by expanding existing Program Partner relationships and selectively adding new Program Partners. For the years ended December 31, 2022 and 2021, approximately 50% and 46% of our gross written premiums were derived from our top ten Program Partners, respectively.

A significant decrease in business from, or the entire loss of, any of our largest Program Partners or several of our other Program Partners may materially adversely affect our business, financial condition and results of operations.

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Our business is subject to significant geographic concentration, as nearly half of our gross written premiums are written in three key states.

For the year ended December 31, 2022, we derived approximately 25%, 14% and 7%, respectively, of our gross written premiums in the states of California, Texas and Michigan. As a result, our financial results are subject to prevailing regulatory, legal, economic, demographic, competitive and other conditions including any single, major catastrophic event, series of events or other condition causing significant losses in California, Texas and Michigan, could materially adversely affect our business, financial condition and results of operations.

A downgrade in the A.M. Best financial strength ratings of our insurance company subsidiaries may negatively affect our business.

Our insurance company subsidiaries are evaluated for overall financial strength by A.M. Best to receive financial strength ratings ("FSRs"), which are an important factor in establishing the competitive position of insurance companies. These FSRs reflect A.M. Best’s opinion of our insurance company subsidiaries’ financial strength, operating performance, strategic position and ability to meet obligations to policyholders, and are not evaluations directed to investors. Our insurance company subsidiaries’ FSRs are subject to periodic review, and the criteria used in the rating methodologies are subject to change. While all of our insurance company subsidiaries that are rated are currently rated "A" (Excellent), their FSRs are subject to change. In addition, a significant portion of our business is conducted through small- and mid-sized insurance carriers, program managers and other insurance organizations that do not have an A.M. Best FSR themselves or otherwise require a highly rated carrier, such as ourselves, to meet their business objectives. A downgrade in our insurance company subsidiaries’ FSRs could lead to our Program Partners doing business preferentially with other insurance companies and materially adversely affect our business, financial condition and results of operations.

If we are unable to accurately underwrite risks and charge competitive yet profitable rates to our clients and policyholders, our business, financial condition and results of operations may be materially and adversely affected.

In general, the premiums for our insurance policies are established at the time a policy is issued and, therefore, before all of our underlying costs are known. Like other insurance companies, we rely on estimates and assumptions in setting our premium rates. Establishing adequate premium rates is necessary, together with investment income, to generate sufficient revenue to offset losses and LAE and other general and administrative expenses in order to earn a profit. If we do not accurately assess the risks that we assume, we may not charge adequate premiums to cover our losses and expenses, which would adversely affect our results of operations and our profitability. Alternatively, we could set our premiums too high, which could reduce our competitiveness and lead to lower policyholder retention, resulting in lower revenues. Pricing is a highly complex exercise involving the acquisition and analysis of historical loss data and the projection of future trends, loss costs and expenses and inflation trends, among other factors, for each of our products in multiple risk tiers and many different markets. To accurately price our policies, we must:

•collect and properly analyze a substantial volume of data from our insureds;

•develop, test and apply appropriate actuarial projections and ratings formulas;

•closely monitor and timely recognize changes in trends; and

•project both frequency and severity of our insureds’ losses with reasonable accuracy.

We seek to implement our pricing accurately in accordance with our assumptions. Our ability to undertake these efforts successfully and, as a result, accurately price our policies, is subject to a number of risks and uncertainties, including:

•insufficient or unreliable data;

•incorrect or incomplete analysis of available data;

•uncertainties generally inherent in estimates and assumptions;

•our failure to implement appropriate actuarial projections and ratings formulas or other pricing methodologies;

•regulatory constraints on rate increases;

•our failure to accurately estimate investment yields and the duration of our liability for losses and LAE; and

•unanticipated court decisions, legislation or regulatory action.

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If actual renewals of our existing contracts do not meet expectations, our written premiums in future years and our future results of operations could be materially adversely affected.

Many of our contracts are written for a one-year term. In our financial forecasting process, we make assumptions about the rates of renewal of our prior year’s contracts. The insurance and reinsurance industries have historically been cyclical businesses with intense competition, often based on and highly sensitive to price. If actual renewals do not substantially meet expectations or if we choose not to write a renewal because of pricing conditions, our written premiums in future years and our future operations could be materially adversely affected.

We may change our underwriting guidelines or our strategy without stockholder approval.

Our management has the authority to change our underwriting guidelines or our strategy without notice to our stockholders and without stockholder approval. As a result, we may make fundamental changes to our operations without stockholder approval, which could result in our pursuing a strategy or implementing underwriting guidelines that may be materially different from the strategy or underwriting guidelines described in the section titled "Business" or elsewhere in this Annual Report on Form 10-K.

We may act based on inaccurate or incomplete information regarding the accounts we underwrite.

We rely on information provided by insureds or their representatives when underwriting insurance policies, and this information may be incorrect or incomplete. While we may make inquiries to validate or supplement the information provided, such inquiries cannot eliminate all risk that the information provided will be correct and complete and will include all factors and context relevant to our underwriting decisions and process. It is possible that we will misunderstand the nature or extent of the activities or facilities and the corresponding extent of the risks that we insure because of our reliance on inadequate or inaccurate information.

Our employees could take excessive risks, which could negatively affect our financial condition and business.

As an insurance enterprise, we are in the business of evaluating and binding certain risks. The employees who conduct our business, including executive officers and other members of management, underwriters, product managers and other employees, do so in part by making decisions and choices that involve exposing us to risk. These include decisions such as setting underwriting guidelines and standards, product design and pricing, determining which business opportunities to pursue and other decisions. We endeavor, in both the setting and execution of our business strategy and the design and implementation of our compensation programs and practices, to avoid giving our employees incentives to take excessive risks. Employees may, however, take such risks regardless of strategic directives or the structure of our compensation programs and practices. Similarly, although we employ controls and procedures designed to monitor employees’ business decisions and prevent them from taking excessive risks, these controls and procedures may not be effective. If our employees take excessive risks, the impact of those risks could have a material adverse effect on our financial condition and business operations.

We may be unable to access the capital markets when needed, which may adversely affect our ability to take advantage of business opportunities as they arise and to fund our operations in a cost-effective manner.

Our ability to grow our business, either organically or through acquisitions, depends, in part, on our ability to access capital when needed. Capital markets may become illiquid from time to time, and we cannot predict the extent and duration of future economic and market disruptions or the impact of any government interventions. We may not be able to obtain financing on terms acceptable to us, or at all. If we need capital but cannot raise it or cannot obtain financing on terms acceptable to us, our business, financial condition and results of operations may be materially adversely affected and we may be unable to execute our long-term growth strategy.

Adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity could result in the sale of fewer policies than expected or an increase in frequency or severity of claims and premium defaults or both, which, in turn, could affect our growth and profitability.

Factors, such as business revenue, economic conditions, the volatility and strength of the capital markets, the ongoing impacts related to economic disruptions from COVID-19 and inflation can affect the business and economic environment. These same factors affect our ability to generate revenue and profits. In an economic downturn that is characterized by higher unemployment, declining spending and reduced corporate revenues, the demand for insurance products is generally adversely affected, which directly affects our premium levels and profitability. Prolonged and high unemployment that reduces the payrolls of our insureds could reduce the premiums that we are able to collect. Negative economic factors may also affect our

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ability to receive the appropriate rate for the risk we insure and may adversely affect our opportunities to underwrite profitable business.

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and its financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank, or SVB, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, or the FDIC, as receiver. Although SVB held less than 2% of the Company’s cash and cash equivalents when placed into receivership, causing the Company to conclude that these events are not material to the Company, we may be unable to access the portion of these funds in excess of levels insured by the FDIC in a timely manner, if at all. If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be impaired and could have a material adverse effect on our business and financial condition. In addition, if any of our Program Partners or other parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.

Negative developments in the workers’ compensation insurance industry could adversely affect our business, financial condition and results of operations.

Although we engage in other businesses, 56.6% of our gross written premiums for the year ended December 31, 2022, were attributable to workers’ compensation insurance policies providing both primary and excess coverage. As a result, negative developments in the economic, competitive or regulatory conditions affecting the workers’ compensation insurance industry could have a material adverse effect on our business, financial condition and results of operations. For example, if one of our larger markets were to enact legislation to increase the scope or amount of benefits for employees under workers’ compensation insurance policies without related premium increases or loss control measures, this could materially and adversely affect our business, financial condition and results of operations.

The insurance industry is cyclical in nature.

The financial performance of the insurance industry has historically fluctuated with periods of lower premium rates and excess underwriting capacity resulting from increased competition followed by periods of higher premium rates and reduced underwriting capacity resulting from decreased competition. Although the financial performance of an individual insurance company depends on its own specific business characteristics, the profitability of many insurance companies tends to follow this cyclical market pattern. Because this market cyclicality is due in large part to the actions of our competitors and general economic factors all of which are outside of our control, we cannot predict the timing, duration or magnitude of changes in the market cycle. We expect these cyclical patterns will cause our revenues and net income to fluctuate, which may cause the market price of our Common Stock to be more volatile.

Our failure to accurately and timely pay claims could harm our business.

We must accurately and timely evaluate and pay claims to manage costs and close claims expeditiously. Many factors affect our ability to evaluate and pay claims accurately and timely, including the training and experience of our claims staff, our claims department’s culture and the effectiveness of our management, our ability to develop or select and implement appropriate procedures and systems to support our claims functions and other factors. Our failure to accurately and timely pay claims could lead to regulatory and administrative actions or material litigation, undermine our reputation in the marketplace and materially and adversely affect our business, financial condition and results of operations.

If we do not hire and train new claims staff effectively or if we lose a significant number of experienced claims staff, our claims department may be required to handle an increasing workload, which could adversely affect the quality of our claims administration, and our business could be materially and adversely affected.

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The effects of emerging claim and coverage issues on our business are uncertain.

As industry practices and economic, legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. Examples of emerging claims and coverage issues include, but are not limited to:

•judicial expansion of policy coverage and the impact of new theories of liability;

•plaintiffs targeting P&C insurers in purported class action litigation relating to claims-handling and other practices;

•medical developments that link health issues to particular causes, resulting in liability claims; and

•claims relating to unanticipated consequences of current or new technologies, including cyber-security related risks and claims relating to potentially changing climate conditions.

In some instances, these emerging issues may not become apparent for some time after we have issued the affected insurance policies. As a result, the full extent of liability under our insurance policies may not be known until many years after the policies are issued.

In addition, the potential passage of new legislation or effects of court decisions that expand the right to sue, remove limitations on recovery, extend applicable statutes of limitations or otherwise repeal or weaken tort reforms could have an adverse impact on our business.

The effects of these and other unforeseen emerging claim and coverage issues are difficult to predict and could harm our business and materially adversely affect our results of operations.

Our risk management policies and procedures may prove to be ineffective and leave us exposed to unidentified or unanticipated risk.

We have developed and continue to develop enterprise-wide risk management policies and procedures to mitigate risk and loss to which we are exposed. There are inherent limitations to risk management strategies because there may exist, or develop in the future, risks that we have not anticipated, identified or accurately assessed. If our risk management policies and procedures are ineffective, we may suffer unexpected losses and could be materially adversely affected. As our business changes and the markets in which we operate evolve, our risk management framework may not adapt at the same pace as those changes. As a result, there is a risk that new products or new business strategies may present risks that are not adequately identified, monitored or managed. In times of market stress, unanticipated market movements or unanticipated claims experience, the effectiveness of our risk management strategies may be insufficient, resulting in losses to us. In addition, we may be unable to effectively review and monitor all risks and our employees may not follow our risk management policies and procedures.

In addition, the NAIC and state legislatures and regulators have increased their focus on risks within an insurer’s holding company system that may pose enterprise risk to insurers. Our insurance company subsidiaries are subject to regulation in Kansas, California, Utah, Arkansas and South Carolina. The Kansas Insurance Department, the California Department of Insurance, the Utah Insurance Department, the Arkansas Department of Insurance and the South Carolina Department of Insurance, the primary regulators of our insurance company subsidiaries, have adopted regulations implementing a requirement under the Kansas, California, Utah, Arkansas and South Carolina insurance laws, respectively, for insurance holding companies to adopt a formal enterprise risk management ("ERM") function and to file an annual enterprise risk report. The regulations also require domestic insurers to conduct an Own Risk and Solvency Assessment ("ORSA") and to submit an ORSA summary report prepared in accordance with the NAIC’s ORSA Guidance Manual. While we operate within an ERM framework designed to assess and monitor our risks, we may not be able to effectively review and monitor all risks, our employees may not all operate within the ERM framework and our ERM framework may not result in our accurately identifying all risks and limiting our exposures based on our assessments.

If we are unable to obtain reinsurance coverage at reasonable prices or on terms that adequately protect us, we may be required to bear increased risks or reduce the level of our underwriting commitments.

Our insurance company subsidiaries purchase reinsurance as part of our overall risk management strategy. While reinsurance does not discharge our insurance company subsidiaries from their obligation to pay claims for losses insured under their insurance policies, it does make the reinsurer liable to them for the reinsured portion of the risk. As part of our strategy for our issuing carrier business, we reinsure underwriting risk to third-party reinsurers. At the inception of a new program, we typically act as an issuing carrier where we reinsure a substantial amount of such risk to third parties. For these reasons,

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reinsurance is an important tool to manage transaction and insurance risk retention and to mitigate losses. We may be unable to maintain our current reinsurance arrangements or to obtain other reinsurance in adequate amounts and at favorable rates, particularly if reinsurers become unwilling or unable to support our specialized issuing carrier model in the future. Additionally, market conditions beyond our control may impact the availability and cost of reinsurance and could have a material adverse effect on our business, financial condition and results of operations. In recent years, our Program Partners have benefited from favorable market conditions, including growth in the role of MGAs and of offshore and other alternative sources of reinsurance. A decline in the availability of reinsurance, increases in the cost of reinsurance or a decreased level of activity by MGAs could limit the amount of issuing carrier business we could write and materially and adversely affect our business, financial condition, results of operations and prospects. We may, at certain times, be forced to incur additional costs for reinsurance or may be unable to obtain sufficient reinsurance on terms acceptable to us. In the latter case, we would have to accept an increase in exposure to risk, reduce the amount of business written by our insurance company subsidiaries or seek alternatives in line with our risk limits, all of which could materially adversely affect our business, financial condition and results of operations.

We are subject to reinsurance counterparty credit risk. Our reinsurers may not pay on losses in a timely fashion, or at all.

We purchase reinsurance to transfer part of the risk we have assumed (known as ceding) to a reinsurance company in exchange for part of the premium we receive in connection with the risk. Although reinsurance makes the reinsurer liable to us to the extent the risk is transferred or ceded to the reinsurer, it does not relieve us (the reinsured) of our liability to policyholders. Accordingly, we are exposed to credit risk with respect to our reinsurers to the extent the reinsurance receivable is not sufficiently secured by collateral or does not benefit from other credit enhancements. We also bear the risk that a reinsurer may be unwilling to pay amounts we have recorded as reinsurance recoverable for any reason, including that:

•the terms of the reinsurance contract do not reflect the intent of the parties of the contract or there is a disagreement between the parties as to their intent;

•the terms of the contract cannot be legally enforced;

•the terms of the contract are interpreted by a court or arbitration panel differently than intended;

•the reinsurance transaction performs differently than we anticipated due to a flawed design of the reinsurance structure, terms or conditions; or

•a change in laws and regulations, or in the interpretation of the laws and regulations, materially affects a reinsurance transaction.

The insolvency of one or more of our reinsurers, or their inability or unwillingness to make timely payments if and when required under the terms of our contracts, could materially adversely affect our business, financial condition and results of operations.

Some of our issuing carrier arrangements contain limits on the reinsurer’s obligations to us.

While we reinsure underwriting risk in our issuing carrier business, including a substantial amount of such risk at the inception of a new program, we have in certain cases entered into programs that contain limits on our reinsurers’ obligations to us, including loss ratio caps or aggregate reinsurance limits. To the extent losses under these programs exceed the prescribed limits, we will be liable to pay the losses in excess of such limits, which could materially and adversely affect our business, financial condition and results of operations.

Retention of business written by us or our Program Partners could expose us to potential losses.

We retain risk for our own account on business underwritten by both our insurance company subsidiaries and our Program Partners. The determination to retain risk by reducing the amount of reinsurance we purchase, or by not purchasing reinsurance for a particular risk, customer segment or niche, is based on a complex variety of factors, including market conditions, pricing, availability of reinsurance, our capital levels, loss experience and tolerance. A determination by us to retain greater risk increases our financial exposure to losses and significant losses could have a material adverse effect on our business, financial condition, liquidity and results of operations.

Our loss reserves may be inadequate to cover our actual losses.

Significant periods of time often elapse between the occurrence of an insured loss, the reporting of the loss to us and our payment of that loss. To recognize liabilities for unpaid losses, we establish reserves as balance sheet liabilities representing estimates of amounts needed to pay reported and unreported losses and the related LAE. Loss reserves are estimates of the

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ultimate cost of claims and do not represent a precise calculation of any ultimate liability. These estimates are based on historical information and on estimates of future trends that may affect the frequency and severity of claims that may be reported in the future. Estimating loss reserves is a difficult, complex and inherently uncertain process involving many variables and subjective judgments. As part of the reserving process, we review historical data and consider the impact of various factors such as:

•loss emergence and cedant reporting patterns;

•underlying policy terms and conditions;

•business and exposure mix;

•trends in claim frequency and severity;

•changes in operations;

•emerging economic and social trends;

•inflation; and

•changes in the regulatory and litigation environments.

This process assumes that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting future events. It also assumes that adequate historical or other data exists upon which to make these judgments. For more information on the estimates used in the establishment of loss reserves, see "Management’s discussion and analysis of financial condition and results of operations - Critical accounting estimates - Reserves for unpaid losses and loss adjustment expenses" in this Annual Report on Form 10-K. There is, however, no precise method for evaluating the impact of any specific factor on the adequacy of reserves and actual results are likely to differ from original estimates, perhaps materially. If the actual amount of insured losses is greater than the amount we have reserved for these losses, our profitability could suffer.

We may not be able to manage our growth effectively.

We intend to grow our business in the future, which could require additional capital, systems development and skilled personnel. To affect our growth strategy, however, we must be able to meet our capital needs, expand our systems and our internal controls effectively, allocate our human resources optimally, identify and hire qualified employees or effectively incorporate any acquisitions we make in our effort to achieve growth. The failure to manage our growth effectively could have a material adverse effect on our business, financial condition and results of operations.

Our ability to grow our business will depend in part on the addition of new Program Partners, and our inability to effectively onboard such new Program Partners could have a material adverse effect on our business, financial condition and results of operations.

Our ability to grow our business will depend in part on the addition of new Program Partners. If we do not effectively onboard our new Program Partners, including assisting such Program Partners to quickly resolve any post-onboarding issues and provide effective ongoing support, our ability to add new Program Partners and our relationships with our existing Program Partners could be adversely affected. Additionally, our reputation with potential new customers could be damaged if we fail to meet the requirements of our customers as a result of any of our failure to effectively onboard new Program Partners. Such reputational damage could make it more difficult for us to attract new and retain existing Program Partners, which could have a material adverse effect on our business, financial condition and results of operations.

We could be adversely affected by the loss of one or more key executives or by an inability to attract and retain qualified personnel.

We depend on our ability to attract and retain experienced personnel and seasoned key executives who are knowledgeable about our business and industry. The pool of talent from which we actively recruit may fluctuate based on market dynamics specific to our industry and independent of overall economic conditions. As such, higher demand for employees having the desired skills and expertise could lead to increased compensation expectations for existing and prospective personnel, making it difficult for us to retain and recruit key personnel and maintain labor costs at desired levels. Should any of our executives terminate their employment with us, or if we are unable to retain and attract talented personnel, we may be unable to maintain our current competitive position in the specialized markets in which we operate, which could adversely affect our business and results of operations.

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Performance of our investment portfolio is subject to a variety of investment risks.

Our results of operations depend, in part, on the performance of our investment portfolio. We seek to hold a high-quality portfolio of investments that is managed by a professional investment advisory management firm in accordance with our investment policy and routinely reviewed by our Investment Committee. Our investments, however, are subject to general economic conditions and market risks as well as risks inherent to particular securities.

Our primary market risk exposures are to changes in interest rates. See "Item 7A — Quantitative and Qualitative Disclosures About Market Risk." A protracted low interest rate environment would place pressure on our net investment income, which, in turn, may adversely affect our profitability. Future increases in interest rates could cause the values of our fixed income securities portfolios to decline, with the magnitude of the decline depending on the duration of securities included in our portfolio and the amount by which interest rates increase. Some fixed income securities have call or prepayment options, which create possible reinvestment risk in declining rate environments. Other fixed income securities, such as mortgage-backed and asset-backed securities, carry prepayment risk or, in a rising interest rate environment, may not prepay as quickly as expected.

The value of our investment portfolio is subject to the risk that certain investments may default or become impaired due to deterioration in the financial condition of one or more issuers of the securities we hold, or due to deterioration in the financial condition of an insurer that guarantees an issuer’s payments on such investments. Downgrades in the credit ratings of fixed maturities also have a significant negative effect on the market valuation of such securities.

Such factors could reduce our net investment income and result in realized investment losses. Our investment portfolio is subject to increased valuation uncertainties when investment markets are illiquid. The valuation of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the carrying amount) of the securities we hold in our portfolio does not reflect prices at which actual transactions would occur.

Risks for all types of securities are managed through the application of our investment policy, which establishes investment parameters that include maximum percentages of investment in certain types of securities and minimum levels of credit quality, which we believe are within applicable guidelines established by the NAIC, the Kansas Insurance Department, the California Department of Insurance, the Utah Insurance Department, the Arkansas Department of Insurance, and the South Carolina Department of Insurance. Our investment objectives may not be achieved in whole or in part, and results may vary substantially over time. In addition, although we seek to employ investment strategies that are not correlated with our insurance and reinsurance exposures, losses in our investment portfolio may occur at the same time as underwriting losses.

Any shift in our investment strategy could increase the risk exposure of our investment portfolio and the volatility of our results, which, in turn, may adversely affect our profitability.

Our investment strategy has historically been focused on fixed income securities which have historically been subject to less volatility but also lower returns as compared to certain other asset classes. In the future, our investment strategy may include a greater focus on investments in equity securities, which are subject, among other things, to changes in value that may be attributable to market perception of a particular issuer or industry or to general stock market fluctuations that affect all issuers. Common stocks also generally subject their holders to greater risk of loss than preferred stocks and debt securities because common stockholders’ claims are subordinated to those of holders of preferred stocks and debt securities upon the bankruptcy of the issuer. For these reasons, among others, investments in equity securities have historically been more volatile than investments in other asset classes such as fixed income securities. An increase in the overall risk exposure of our investment portfolio could increase the volatility of our results, which, in turn, may adversely affect our profitability.

We could be forced to sell investments to meet our liquidity requirements.

We invest the premiums we receive from our insureds until they are needed to pay policyholder claims. Consequently, we seek to manage the duration of our investment portfolio based on the expected duration of our losses and loss adjustment expenses reserves to ensure sufficient liquidity and avoid having to liquidate investments to fund claims. Risks such as inadequate losses and loss adjustment expenses reserves or unfavorable trends in litigation could potentially result in the need to sell investments to fund these liabilities. We may not be able to sell our investments at favorable prices or at all and sales of our investments could result in significant realized losses depending on the conditions of the general market, interest rates and credit issues with individual securities.

We may face increased competition in our programs market.

While we believe there are relatively few competitors in the small- and mid-sized programs market that have the broad in-house expertise and wide array of services that we offer to our Program Partners, we may face increased competition if other

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companies decide to compete with us in our programs market or competitors begin to offer policy administration or other services. Any increase in competition in this market, especially by one or more companies that have greater resources than we have, could materially adversely affect our business, financial condition and results of operations.

We compete with a large number of companies in the insurance industry for underwriting premium.

We compete with a large number of other companies in the insurance industry for underwriting premium. During periods of intense competition for premium, in particular, our business may be challenged to maintain competitiveness with other companies that may seek to write policies without the same regard for risk and profitability as we have exhibited historically. During these times, it may be difficult for us to grow or maintain premium volume without lowering underwriting standards, sacrificing income, or both.

In addition, we face competition from a wide range of specialty insurance companies, underwriting agencies and intermediaries, as well as diversified financial services companies that are significantly larger than we are and that have significantly greater financial, marketing, management and other resources. Some of these competitors also have greater market recognition than we do. The greater resources or market presence that these competitors possess may enable them to avoid or defray particular costs, employ greater pricing flexibility, have a higher tolerance for risk or loss, or exploit other advantages that may make it more difficult for us to compete. We may incur increased costs in competing for underwriting revenues in this environment. If we are unable to compete effectively in the markets in which we operate or expand our operations into new markets, our underwriting revenues may decline, as well as overall business results.

Our results of operations, liquidity, financial condition and FSRs are subject to the effects of natural and man-made catastrophic events.

Events such as hurricanes, windstorms, flooding, earthquakes, wildfires, solar storms, other natural disasters, acts of terrorism, explosions and fires, cyber-crimes, public health crises, illness, epidemics or pandemic health events, product defects, mass torts and other catastrophes may adversely affect our business in the future. Such catastrophic events, and any relevant regulations, could expose us to:

•widespread claim costs associated with P&C and workers’ compensation claims;

•losses resulting from a decline in the value of our invested assets;

•losses resulting from actual policy experience that is adverse compared to the assumptions made in product pricing;

•declines in value and/or losses with respect to companies and other entities whose securities we hold and counterparties with whom we transact business to whom we have credit exposure, including reinsurers, and declines in the value of investments; and

•significant interruptions to our systems and operations.

Our business is exposed to the risk of pandemics, outbreaks, public health crises, and geopolitical and social events, and their related effects. We are closely monitoring the impact of the COVID-19 pandemic and the related economic impact on all aspects of our business. If pandemics, outbreaks and other events occur or re-occur for a significant length of time, and measures that are put into place by various governmental authorities to stabilize the economy are not effective, our business, financial condition, and results of operations may be materially adversely affected.

Natural and man-made catastrophic events are generally unpredictable. While we have structured our business and selected our niches in part to avoid catastrophic losses, our exposure to such losses depends on various factors, including the frequency and severity of the catastrophes, the rate of inflation and the value and geographic or other concentrations of insured companies and individuals. Vendor models and proprietary assumptions and processes that we use to manage catastrophe exposure may prove to be ineffective due to incorrect assumptions or estimates.

In addition, legislative and regulatory initiatives and court decisions following major catastrophes could require us to pay the insured beyond the provisions of the original insurance policy and may prohibit the application of a deductible, resulting in inflated catastrophe claims.

These and other disruptions could materially and adversely affect our business, financial condition and results of operations.

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Global climate change may in the future increase the frequency and severity of weather events and resulting losses, particularly to the extent our policies are concentrated in geographic areas where such events occur, may have an adverse effect on our business, financial condition and results of operations.

Scientific evidence indicates that man-made production of greenhouse gas has had, and will continue to have, an adverse effect on the global climate. There is a growing consensus today that climate change increases the frequency and severity of extreme weather events and, in recent years, the frequency of extreme weather events appears to have increased. We cannot predict whether or to what extent damage that may be caused by natural events, such as wild fires, severe tropical storms and hurricanes, will affect our ability to write new insurance policies and reinsurance contracts, but, to the extent our policies are concentrated in the specific geographic areas in which these events occur, the increased frequency and severity of such events and the total amount of our loss exposure in the impacted areas of such events may adversely affect our business, financial condition and results of operations. In addition, although we have historically had limited exposure to catastrophic risk, claims from catastrophic events could reduce our earnings and cause substantial volatility in our business, financial condition and results of operations for any period. However, assessing the risk of loss and damage associated with the adverse effects of climate change and the range of approaches to address loss and damage associated with the adverse effects of climate change, including impacts related to extreme weather events and slow onset events, remains a challenge and might adversely affect our business, financial condition and results of operations.

Because our business depends on insurance brokers, we are exposed to certain risks arising out of our reliance on these distribution channels that could adversely affect our results.

Certain premiums from policyholders, where the business is produced by brokers, are collected directly by the brokers and forwarded to our insurance subsidiaries. In certain jurisdictions, when the insured pays its policy premium to its broker for payment on behalf of our insurance subsidiaries, the premium may be considered to have been paid under applicable insurance laws and regulations. Accordingly, the insured would no longer be liable to us for those amounts, whether or not we have actually received the premium from that broker. Consequently, we assume a degree of credit risk associated with the brokers with whom we work. Where necessary, we review the financial condition of potential new brokers before we agree to transact business with them. Although the failure by any of our brokers to remit premiums to us has not been material to date, there may be instances where our brokers collect premiums but do not remit them to us and we may be required under applicable law to provide the coverage set forth in the policy despite the absence of related premiums being paid to us.

Because the possibility of these events occurring depends in large part on the financial condition and internal operations of our brokers, we monitor broker behavior and review financial information on an as-needed basis. If we are unable to collect premiums from our brokers in the future, our underwriting profits may decline and our financial condition and results of operations could be materially and adversely affected.

Our operating results have in the past varied from quarter to quarter and may not be indicative of our long-term prospects.

Our operating results are subject to fluctuation and have historically varied from quarter to quarter. We expect our quarterly results to continue to fluctuate in the future due to a number of factors, including the general economic conditions in the markets where we operate, the frequency of occurrence or severity of catastrophic or other insured events, fluctuating interest rates, claims exceeding our loss reserves, competition in our industry, deviations from expected renewal rates of our existing policies and contracts, adverse investment performance and the cost of reinsurance coverage.

In particular, we seek to underwrite products and make investments to achieve favorable returns on tangible stockholders’ equity over the long term. In addition, our opportunistic nature and focus on long-term growth in tangible equity may result in fluctuations in gross written premiums from period to period as we concentrate on underwriting contracts that we believe will generate better long-term, rather than short-term, results. Accordingly, our short-term results of operations may not be indicative of our long-term prospects.

Any failure to protect our intellectual property rights could impair our ability to protect our intellectual property, proprietary technology platform and brand, or we may be sued by third parties for alleged infringement of their proprietary rights.

Our success and ability to compete depend in part on our intellectual property, which includes our rights in our proprietary technology platform and our brand. We primarily rely on copyright, trade secret and trademark laws and confidentiality agreements with our employees, customers, service providers, partners and others to protect our intellectual property rights. However, the steps we take to protect our intellectual property may be inadequate. Litigation brought to protect and enforce our intellectual property rights could be costly, time consuming and distracting to management and could result in the

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impairment or loss of portions of our intellectual property. Additionally, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity, enforceability and scope of our intellectual property rights. Our failure to secure, protect and enforce our intellectual property rights could adversely affect our brand and adversely impact our business.

Our success depends also in part on our not infringing on the intellectual property rights of others. Our competitors, as well as a number of other entities and individuals, may own or claim to own intellectual property relating to our industry. In the future, third parties may claim that we are infringing on their intellectual property rights, and we may be found to be infringing on such rights. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our services, or require that we comply with other unfavorable terms. Even if we were to prevail in such a dispute, any litigation could be costly and time consuming and divert the attention of our management and key personnel from our business operations.

Technology risks

Technology breaches or failures of our or our business partners’ systems could adversely affect our business.

Global cybersecurity threats can range from uncoordinated individual attempts to gain unauthorized access to our information technology systems and those of our business partners or service providers to sophisticated and targeted measures known as advanced persistent threats. While we and our business partners and service providers employ measures designed to prevent, detect, address and mitigate these threats (including access controls, data encryption, vulnerability assessments, continuous monitoring of information technology networks and systems and maintenance of backup and protective systems), cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data (personal or otherwise) and confidential or proprietary information (our own or that of third parties) and the disruption of business operations. In 2020, we discovered that we were subject to two cybersecurity incidents that involved a third-party obtaining unauthorized access to an employee’s electronic mailbox. In conjunction with our cybersecurity insurance carrier, we engaged outside counsel and a consulting firm specializing in digital forensics. The incident did not have a significant effect on our business, financial performance or reputation. In conjunction with our internal evaluation and through consultation with outside counsel, we performed a targeted notification of the data breach to those affected individuals for which we had accurate contact information and this matter is considered closed.

In addition, cyber incidents that impact the availability, reliability, speed, accuracy or other proper functioning of our technology systems (or the data held by such systems) could affect our operations. We may not have the resources or technical sophistication to anticipate or prevent every type of cyber-attack. A significant cybersecurity incident, including system failure, security breach, disruption by malware or other damage could interrupt or delay our operations, result in a violation of applicable privacy and other laws, expose us to litigation and potential liability, damage our reputation, cause a loss of customers or give rise to monetary fines and other penalties, any or all of which could be material. It is possible that insurance coverage we have in place would not entirely protect us in the event that we experienced a cybersecurity incident, interruption or widespread failure of our information technology systems.

Any significant interruption in the operation of our computer systems could adversely affect our business, financial condition and results of operations.

We rely on multiple computer systems to interact with customers, issue policies, pay claims, run modeling functions, assess insurance risks and complete various important internal processes including accounting and bookkeeping. Our business depends on our ability to access these systems to perform necessary business functions. Additionally, some of these systems may include or rely upon third-party systems not located on our premises. Any of these systems may be exposed to unplanned interruption, unreliability or intrusion from a variety of causes, including among others, storms and other natural disasters, terrorist attacks, utility outages, security breaches or complications encountered as existing systems are replaced or upgraded.

Any such issues could materially affect us including the impairment of information availability, compromise of system integrity or accuracy, misappropriation of confidential information, reduction of our volume of transactions and interruption of our general business. Although we believe our computer systems are securely protected and continue to take steps to ensure they are protected against such risks, such problems may occur. If they do, interruption to our business and damage to our reputation, and related costs, could be significant, which could have a material adverse effect on our business, financial condition and results of operations.

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We employ third-party licensed software for use in our business and the inability to maintain these licenses or errors in the software we license, could result in increased costs, or reduced service levels, which would adversely affect our business.

Our business relies on certain third-party software obtained under licenses from other companies. We anticipate that we will continue to rely on such third-party software in the future. Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, this may not always be the case, or it may be difficult or costly to replace. In addition, integration of new third-party software may require significant work and require substantial investment of our time and resources. Our use of additional or alternative third-party software would require us to enter into license agreements with third parties, which may not be available on commercially reasonable terms or at all. Many of the risks associated with the use of third-party software cannot be eliminated, and these risks could negatively affect our business.

Legal and regulatory risks

We are subject to extensive regulation and such regulation may become more extensive in the future.

Most insurance regulations are designed to protect the interests of policyholders rather than stockholders and other investors. These regulations, generally administered by a department of insurance in each state and territory in which we do business, relate to, among other things:

•approval of policy forms and premium rates;

•standards of solvency, including risk-based capital measurements;

•licensing of insurers;

•challenging our use of fronting arrangements;

•imposing minimum capital and surplus requirements for insurance company subsidiaries;

•restrictions on agreements with our large revenue-producing agents;

•cancellation and non-renewal of policies;

•restrictions on the nature, quality and concentration of investments;

•restrictions on the ability of our insurance company subsidiaries to pay dividends to us;

•restrictions on transactions between our insurance company subsidiaries and their affiliates;

•restrictions on the size of risks insurable under a single policy;

•requiring deposits for the benefit of policyholders;

•requiring certain methods of accounting;

•periodic examinations of our operations and finances;

•prescribing the form and content of records of financial condition required to be filed; and

•requiring reserves for unearned premium, losses and other purposes.

State insurance departments also conduct periodic examinations of the conduct and affairs of insurance companies and require the filing of annual, quarterly and other reports relating to financial condition, holding company issues, ERM and ORSA and other matters. These regulatory requirements could adversely affect or inhibit our ability to achieve some or all of our business objectives, including profitable operations in our various customer segments.

In addition, regulatory authorities have relatively broad discretion to deny or revoke licenses for various reasons, including the violation of regulations. In some instances, we follow practices based on our interpretations of regulations or practices that we believe may be generally followed by the industry. These practices may turn out to be different from the interpretations of regulatory authorities. If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, insurance regulatory authorities could fine us, preclude or temporarily suspend us from carrying on some or all of our activities in certain jurisdictions or otherwise penalize us. This could adversely affect our ability to operate our business. Further, changes in the laws and regulations applicable to the insurance industry or interpretations by regulatory authorities could adversely affect our ability to operate our business as currently conducted and in accordance with our business objectives.

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In addition to regulations specific to the insurance industry, including the insurance laws of our principal state regulators (the Kansas Insurance Department, the California Department of Insurance, the Utah Insurance Department, the Arkansas Department of Insurance and the South Carolina Department of Insurance), as a public company we will also be subject to the rules and regulations of the SEC and the securities exchange on which our Common Stock is listed, each of which regulate many areas such as financial and business disclosures, corporate governance and stockholder matters. We are also subject to laws relating to federal trade restrictions, privacy/data security and terrorism risk insurance laws.

Legislators and regulators may periodically consider various proposals that may affect our business practices and product designs, how we sell or service certain products we offer or the profitability of our business. We continually monitor such proposals and assess how they may apply to us or our competitors or how they could impact our business, financial condition, results of operations and ability to compete effectively.

We monitor these laws, regulations and rules on an ongoing basis to ensure compliance and make appropriate changes as necessary. Implementing such changes may require adjustments to our business methods, increases to our costs and other changes that could cause us to be less competitive in our industry. For further information on the regulation of our business, see the "Item 1 — Business."

Regulators may challenge our use of fronting arrangements in states in which our Program Partners are not licensed.

We enter into fronting, or issuing carrier, arrangements with our Program Partners that require a broadly licensed, highly rated admitted carrier to conduct their business in states in which such Program Partner is not licensed or is not authorized to write particular lines of insurance. We typically act as the reinsurance broker to the program as well as the issuing carrier, which enables us to charge fees for the placement of reinsurance in addition to the fronting fees. We also receive ceding commissions from third-party reinsurers to which we transfer all or a portion of the underwriting risk. Some state insurance regulators may object to our issuing carrier arrangements. In certain states, including Florida and Kentucky, the insurance commissioner has the authority to prohibit an authorized insurer from acting as an issuing carrier for an unauthorized insurer. In addition, insurance departments in states in which there is no statutory or regulatory prohibition against an authorized insurer acting as an issuing carrier for an unauthorized insurer could deem the assuming insurer to be transacting insurance business without a license and the issuing carrier to be aiding and abetting the unauthorized sale of insurance.

If regulators in any of the states where we conduct our issuing carrier business were to prohibit or limit the arrangement, we would be prevented or limited from conducting that business for which a capacity provider is not authorized in those states, unless and until the capacity provider is able to obtain the necessary licenses. This could have a material and adverse effect on our business, financial condition and results of operations. See "We depend on a limited number of Program Partners for a substantial portion of our gross written premiums."

Increasing regulatory focus on privacy issues and expanding laws could affect our business model and expose us to increased liability.

The regulatory environment surrounding information security and privacy is increasingly demanding.

We are subject to numerous U.S. federal and state laws and non-U.S. regulations governing the protection of personal and confidential information of our customers or employees. On October 24, 2017, the NAIC adopted an Insurance Data Security Model Law, which requires licensed insurance entities to comply with detailed information security requirements. The NAIC model law has been adopted by certain states and is under consideration by others. It is not yet known whether or not, and to what extent, states legislatures or insurance regulators where we operate will enact the Insurance Data Security Model Law, in whole, in part, or in a modified form. Such enactments, especially if inconsistent between states or with existing laws and regulations, could raise compliance costs or increase the risk of noncompliance, with the attendant risk of being subject to regulatory enforcement actions and penalties, as well as reputational harm. Any such events could potentially have an adverse impact on our business, financial condition or results of operations.

As a holding company, we rely on dividends and payments from our insurance company subsidiaries to operate our business. Our ability to receive dividends and permitted payments from our subsidiaries is subject to regulatory constraints.

We are a holding company and, as such, have no direct operations of our own. We do not expect to have any significant assets other than our ownership of equity interests in our operating subsidiaries. We accordingly depend on the payment of funds from our subsidiaries in the form of dividends, distributions or otherwise to meet our obligations and to pay our expenses. The ability of our subsidiaries to make any payments to us depends on their earnings, the terms of their indebtedness, including the terms of any credit facilities, and legal restrictions.

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In addition, dividends payable from our insurance company subsidiaries without the prior approval of the applicable insurance commissioner are limited to the greater of 10% of (a) Benchmark’s surplus as shown on the last statutory financial statement on file with the Kansas Insurance Department and the California Department of Insurance, respectively, or (b) 100% of net income during the applicable twelve-month period (not including realized gains); in Utah, the lesser of 10% of (x) ALIC’s surplus as shown on the last statutory financial statement on file with the Utah Insurance Department, or (y) 100% of net income during the applicable twelve-month period (not including realized gains); in Arkansas, the lesser of (aa) 10% of BSIC's surplus as shown on the last statutory financial statement on file with the Arkansas Insurance Department, or (bb) 100% of net income during the applicable twelve-month period (not including realized capital gains); and in South Carolina, the greater of 10% of earned surplus or 100% of net income from operations. As of December 31, 2022, the maximum amount of unrestricted dividends that our insurance company subsidiaries could pay to us without approval was approximately $17 million. Our insurance company subsidiaries may be unable to pay dividends in the future, and the limitations of such dividends could adversely affect our business, liquidity or financial condition.

We may have exposure to losses from acts of terrorism as we are required by law to provide certain coverage for such losses.

U.S. insurers are required by state and federal law to offer coverage for acts of terrorism in certain commercial lines, including workers’ compensation. The Terrorism Risk Insurance Act, as extended by the Terrorism Risk Insurance Program Reauthorization Act of 2015 ("TRIPRA") requires commercial P&C insurance companies to offer coverage for acts of terrorism, whether foreign or domestic. On December 20, 2019, the Terrorism Risk Insurance Program Reauthorization Act of 2019 was signed into law, extending TRIPRA for seven years through December 31, 2027. The likelihood and impact of any terrorist act is unpredictable, and the ultimate impact on us would depend upon the nature, extent, location and timing of such an act. Although we reinsure a portion of the terrorism risk we retain under TRIPRA, our terrorism reinsurance does not provide full coverage for an act stemming from nuclear, biological or chemical terrorism. To the extent an act of terrorism, whether a domestic or foreign act, is certified by the Secretary of Treasury, we may be covered under TRIPRA of our losses for certain P&C lines of insurance. However, any such coverage would be subject to a mandatory deductible based on 20% of earned premium for the prior year for the covered lines of commercial P&C insurance. Based on our 2022 earned premiums, our aggregate deductible under TRIPRA during 2023 is approximately $95 million. The federal government will then reimburse us for losses in excess of our deductible, which will be 80% of losses in 2022.

Assessments and premium surcharges for state guaranty funds, secondary-injury funds, residual market programs and other mandatory pooling arrangements may reduce our profitability.

Most states require insurance companies licensed to do business in their state to participate in guaranty funds, which require the insurance companies to bear a portion of the unfunded obligations of impaired, insolvent or failed insurance companies. These obligations are funded by assessments, which are expected to continue in the future. State guaranty associations levy assessments, up to prescribed limits, on all member insurance companies in the state based on their proportionate share of premiums written in the lines of business in which the impaired, insolvent or failed insurance companies are engaged. Accordingly, the assessments levied on us may increase as we increase our written premiums. Some states also have laws that establish secondary-injury funds to reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries. These funds are supported by either assessments or premium surcharges based on incurred losses.

In addition, as a condition to conducting business in some states, insurance companies are required to participate in residual market programs to provide insurance to those who cannot procure coverage from an insurance carrier on a negotiated basis. Insurance companies generally can fulfill their residual market obligations by, among other things, participating in a reinsurance pool where the results of all policies provided through the pool are shared by the participating insurance companies. Although we price our insurance to account for our potential obligations under these pooling arrangements, we may not be able to accurately estimate our liability for these obligations. Accordingly, mandatory pooling arrangements may cause a decrease in our profits. Further, the impairment, insolvency or failure of other insurance companies in these pooling arrangements would likely increase the liability for other members in the pool. The effect of assessments and premium surcharges or increases in such assessments or surcharges could reduce our profitability in any given period or limit our ability to grow our business.

Changes in federal, state or foreign tax laws could adversely affect our business, financial condition, results of operations and liquidity.

Changes in federal, state or foreign tax laws and tax rates or regulations could have a material adverse effect on our profitability and financial condition. The Company’s federal and state tax returns reflect certain items such as tax-exempt bond interest, tax credits and insurance reserve deductions. There is an increasing risk that, in the context of deficit reduction

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or overall tax reform in the U.S., federal and/or state tax legislation could modify or eliminate these items, impacting the Company, its investments, investment strategies and/or its policyholders. In addition, the Organization for Economic Co-operation and Development’s efforts around Global Pillars I and II dealing with possible new digital taxes and global minimum taxes, if enacted, could increase the Company’s overall tax burden, adversely affecting the Company’s business, financial condition and results of operation.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the "Tax Cuts and Jobs Act" ("Tax Reform"). There is a risk that Congress could enact future legislation that may change or eliminate the provisions of that Tax Reform or affect how the provisions apply to the Company, including a federal corporate tax rate increase or other changes that may affect the manner in which insurance companies are taxed. Moreover, individual states could enact changes in state tax laws, either in response to the Tax Reform or to any changes to it that Congress may enact that, in turn, could adversely affect the Company's business and financial results.

On August 16, 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law. The IRA contains several revisions to the Internal Revenue Code, including a 15% corporate minimum income tax for corporations with average annual adjusted financial statement income over a three-tax-year period in excess of $1 billion and is effective for the tax years beginning after December 31, 2022, a 1% excise tax on stock repurchases made by publicly traded U.S. corporations after December 31, 2022 and business tax credits and incentives for the development of clean energy projects and the production of clean energy. At this time, we do not expect the IRA will have a material impact on our consolidated financial statements. We continue to evaluate its impacts as new information and guidance becomes available.

The discontinuance of LIBOR may adversely affect the value of certain investments we hold and any other assets or liabilities whose value may be tied to LIBOR.

LIBOR is an indicative measure of the average interest rate at which major global banks could borrow from one another. LIBOR is used as a benchmark or reference rate in floating rate fixed maturities that are part of our investment portfolio, as well as our secured credit facility.

Following the July 2017 announcement by the U.K. Financial Conduct Authority that it would stop persuading or compelling banks to report information used to set LIBOR by the end of 2021, the U.S. dollar LIBOR publication is scheduled to end by June 30, 2023. Since 2017, actions by regulators have resulted in efforts to establish alternative reference rates to LIBOR in several major currencies. The Alternative Reference Rate Committee, a group of private-market participants convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has recommended the Secured Overnight Funding Rate ("SOFR") as its preferred alternative rate for U.S. dollar LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. The Federal Reserve Bank of New York began publishing daily SOFR in April 2018. Development of broadly accepted methodologies for transitioning from LIBOR, an unsecured forward-looking rate, to SOFR, a secured rate based on historical transactions, is ongoing.

The Company continues to monitor and assess the potential impacts of the discontinuation of LIBOR, which will vary depending on (1) existing contract language to determine a LIBOR replacement rate, referred to as "fallback provisions," in individual contracts and (2) whether, how, and when industry participants develop and widely adopt new reference rates and fallback provisions for both existing and new products or instruments. At this time, it is not possible to predict how markets will respond to these new rates and the effect that the discontinuation of LIBOR might have on new or existing financial instruments. If LIBOR ceases to exist or is found by regulators to no longer be representative, outstanding contracts with interest rates tied to LIBOR may be adversely affected. This may impact our results of operations through a reduction in value of some of our LIBOR referenced floating rate investments and an increase in the interest we pay on our secured credit facility. Additionally, any discontinuation of or transition from LIBOR may impact pricing, valuation and risk analytic processes.

Risks related to our Common Stock

Our stock price may be volatile or may decline regardless of our operating performance.

In addition to the other risks mentioned in this section of the Annual Report, some factors that may cause the market price of our Common Stock to fluctuate are:

•our operating and financial performance and prospects;

•our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments;

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•changes in earnings estimates or recommendations by securities analysts who cover our Common Stock;

•fluctuations in our quarterly financial results or earnings guidance or the quarterly financial results or earnings guidance of companies perceived to be similar to us;

•changes in our capital structure, such as future issuances of securities, sales of large blocks of Common Stock by our stockholders, including our principal stockholders, or the incurrence of additional debt;

•departure of key personnel;

•reputational issues;

•changes in general economic and market conditions;

•changes in industry conditions or perceptions or changes in the market outlook for the insurance industry;

•changes in applicable laws, rules or regulations; and

•regulatory actions affecting us and other dynamics.

The securities markets have from time to time experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations, as well as general market, economic and political conditions, such as recessions, loss of investor confidence or interest rate changes, may negatively affect the market price of our Common Stock. In addition, price volatility may be greater if the public float and trading volume of shares of our Common Stock are low.

If securities analysts do not publish research or reports about our business or our industry or if they issue unfavorable commentary or negative recommendations with respect to our Common Stock, the price of our Common Stock could decline.

The trading market for our Common Stock will be influenced by the research and reports that equity research and other securities analysts publish about us, our business and our industry. We do not have control over these analysts, and we may be unable or slow to attract research coverage. One or more analysts could issue negative recommendations with respect to our Common Stock or publish other unfavorable commentary or cease publishing reports about us, our business or our industry. If one or more of these analysts cease coverage of us, we could lose visibility in the market. As a result of one or more of these factors, the market price of our Common Stock price could decline rapidly and our Common Stock trading volume could be adversely affected.

Our principal stockholders will be able to exert significant influence over us and our corporate decisions.

Our principal stockholders, the Altaris Funds, hold approximately 47% of our Common Stock as of December 31, 2022. As a result, our principal stockholders are able to influence matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other extraordinary transactions. Our principal stockholders may also have interests that differ from other stockholders and may vote in a way with which other stockholders disagree and which may be adverse to other stockholders' interests.

In connection with our IPO, we entered into a director nomination agreement (the "Director Nomination Agreement") with the Altaris Funds. Generally, this Director Nomination Agreement provides that: (i) so long as the Altaris Funds own 35% or more of our outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate three individuals to our board of directors; (ii) so long as the Altaris Funds own 20% or more but less than 35% of our outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate two individuals to our board of directors; (iii) and so long as the Altaris Funds own 10% or more but less than 20% of our outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate one individual to our board of directors. Subject to limited exceptions, we will include these nominees in the slate of nominees recommended to our stockholders for election as directors.

Sales or issuances of a substantial amount of shares of our Common Stock in the public market, particularly sales by directors, executive officers or our principal stockholders, or the perception that such sales of issuances may occur, of our Common Stock may cause the market price of our common stock to decline and make it more difficult for investors to sell their Common Stock at a time and price that they may deem appropriate.

If our stockholders sell a substantial number of shares of our Common Stock, or if we issue a substantial number of shares of our Common Stock in connection with future acquisitions, financings or other circumstances, the market price of shares of

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our Common Stock could decline significantly. Moreover, the perception in the public market that our stockholders—in particular, our directors, executive officers or principal stockholders—may sell shares of our Common Stock could depress the market price of our shares. Future sales or issuances of our Common Stock could also be dilutive to our stockholders and could adversely affect their voting and other rights and economic interests. These factors could also make it more difficult for us to raise additional funds through future offerings of our Common Stock or other equity-related securities.

We will incur significant increased costs as a result of operating as a public company, and operating as a public company will place additional demands on our management.

As a public company, and particularly after we are no longer an emerging growth company, we are obliged to incur significant legal, accounting and other expenses that we did not incur as a private company prior to the IPO. In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and the Nasdaq have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Compliance with these requirements will place significant additional demands on our management and have required, and will continue to require, us to enhance certain internal functions, such as investor relations, legal, financial reporting and corporate communications. Accordingly, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

We currently do not anticipate declaring or paying regular dividends on our Common Stock.

We do not currently anticipate declaring or paying regular cash dividends on our Common Stock in the near term. We currently intend to use our future earnings, if any, to fund our growth and develop our business and for general corporate purposes (which may include capital contributions to our insurance company subsidiaries). Therefore, other stockholders are not likely to receive any dividends on their Common Stock in the near term, and the success of an investment in shares of our Common Stock will depend upon any future appreciation in their value. There is no guarantee that shares of our Common Stock will appreciate in value or even maintain the price at which they are initially offered. Any future declaration and payment of dividends or other distributions of capital will be at the discretion of our board of directors and the payment of any future dividends or other distributions of capital will depend on many factors, including our financial condition, earnings, cash needs, regulatory constraints, capital requirements (including requirements of our subsidiaries) and any other factors that our board of directors deems relevant in making such a determination. In addition, the terms of the agreements governing the debt we incurred, or debt that we may incur, may limit or prohibit the payment of dividends. We may not establish a dividend policy or pay dividends in the future or continue to pay any dividend if we do commence paying dividends pursuant to a dividend policy or otherwise.

Provisions in our organizational documents, Delaware corporate law, state insurance laws and certain of our contractual agreements and compensation arrangements may prevent or delay an acquisition of us.

Provisions of our amended and restated certificate of incorporation and amended and restated by-laws and of state law may delay, deter, prevent or render more difficult a takeover attempt that our stockholders may consider in their best interests. For example, such provisions or laws may prevent our stockholders from receiving the benefit from any premium to the market price of our Common Stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our Common Stock if they are viewed as discouraging takeover attempts in the future.

Certain provisions of our amended and restated certificate of incorporation and amended and restated by-laws may have anti-takeover effects and may delay, deter or prevent a takeover attempt that our stockholders may consider in their best interests. The provisions provide for, among others:

•the ability of our board of directors to issue one or more series of preferred stock;

•the filling of any vacancies on our board of directors by the affirmative vote of a majority of the remaining directors, even if less than a quorum, or by a sole remaining director or by the stockholders; provided, however, that after the first time when the principal stockholders cease to beneficially own, in the aggregate, at least 50% of our outstanding Common Stock, any vacancy occurring in our board of directors may only be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director (and not by the stockholders);

•certain limitations on convening special stockholder meetings;

•advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; and

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•stockholder action by written consent only until the first time when our principal stockholders cease to beneficially own, in the aggregate, 50% or greater of our outstanding Common Stock.

Section 203 of the DGCL may affect the ability of an "interested stockholder" to engage in certain business combinations, including mergers, consolidations or acquisitions of additional shares, for a period of three years following the time that the stockholder becomes an "interested stockholder." An "interested stockholder" is defined to include persons owning directly or indirectly 15% or more of the outstanding voting stock of a corporation.

Under applicable Kansas, California, Arkansas, South Carolina and Utah insurance laws and regulations, no person may acquire control of a domestic insurer until written approval is first obtained from the state insurance commissioner following a public hearing on the proposed acquisition. Such approval would be contingent upon the state insurance commissioner’s consideration of a number of factors including, among others, the financial strength of the proposed acquirer, the acquirer’s plans for the future operations of the domestic insurer and any anti-competitive results that may arise from the consummation of the acquisition of control. Kansas, California, Arkansas, South Carolina and Utah insurance laws and regulations pertaining to changes of control apply to both the direct and indirect acquisition of ten percent or more of the voting stock of that state’s domiciled insurer. Accordingly, the acquisition of ten percent or more of our Common Stock would be considered an indirect change of control of the Company, and would trigger the applicable change of control filing requirements under Kansas, California, Arkansas South Carolina and Utah insurance laws and regulations, absent a disclaimer of control filing and its acceptance by the Kansas Insurance Department, the California Department of Insurance and the Utah Insurance Department. These requirements may discourage potential acquisition proposals and may delay, deter or prevent a change of control of the Company., including through transactions that some or all of the stockholders of the Company may consider to be desirable. See "Item 1. Business—Regulation."

These anti-takeover provisions and prior regulatory approval requirements for a change of control under applicable state insurance laws may delay, deter or prevent a takeover attempt that our stockholders may consider in their best interests. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. See "Description of capital stock — Certain anti-takeover provisions of our amended and restated certificate of incorporation, our amended and restated by-laws and applicable law."

Our amended and restated certificate of incorporation provides that our principal stockholders have no obligation to offer us corporate opportunities.

The Altaris Funds and any members of our board of directors who are affiliated with the Altaris Funds, by the terms of our amended and restated certificate of incorporation, are not required to offer us any corporate opportunity of which they become aware and can take any such opportunity for themselves or offer it to other companies in which they have an investment, unless such opportunity is expressly offered to them solely in their capacity as our directors. The Company, by the terms of our amended and restated certificate of incorporation, expressly renounces any interest in any such corporate opportunity to the extent permitted under applicable law, even if the opportunity is one that we would reasonably be deemed to have pursued if given the opportunity to do so. Our amended and restated certificate of incorporation cannot be amended to eliminate our renunciation of any such corporate opportunity arising prior to the date of any such amendment.

The Altaris Funds are in the business of making investments in portfolio companies and may from time to time acquire and hold interests in businesses that compete with us, and the Altaris Funds do not have an obligation to refrain from acquiring competing businesses. Any competition could intensify if an affiliate or subsidiary of the Altaris Funds were to enter into or acquire a business similar to ours. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations or prospects if attractive corporate opportunities are allocated by the Altaris Funds to themselves, their portfolio companies or their other affiliates instead of to us.

Risks related to our status as an emerging growth company

We are an "emerging growth company" within the meaning of the Securities Act and have elected to take advantage of reduced disclosure requirements and other exemptions applicable to emerging growth companies.

For as long as we remain an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, as amended, we will have the option to take advantage of certain exemptions from various reporting and other requirements that are applicable to other public companies that are not emerging growth companies, including reduced disclosure obligations regarding executive compensation in our registration statements, periodic reports and proxy statements, not being required to comply with the auditor attestation requirements of Section 404 being permitted to have an extended transition period for adopting any new or revised accounting standards that may be issued by the Financial Accounting Standards Board ("FASB")

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or the SEC, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We will remain an emerging growth company until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $1.07 billion or more; (ii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; (iii) the date we qualify as a "large accelerated filer," which requires that (A) the market value of our equity securities that are held by non-affiliates exceeds $700 million as of June 30 of that year, (B) we have been a public reporting company under the Securities Exchange Act of 1934, as amended ("Exchange Act") for at least twelve calendar months and (C) we have filed at least one annual report on Annual Report on Form 10-K; and (iv) the end of the fiscal year following the fifth anniversary of the completion of our initial public offering.

We expect to continue to avail ourselves of the emerging growth company exemptions described above. As a result, the information that we provide to stockholders will be less comprehensive than what you might receive from other public companies.

Because we have elected to use the extended transition period for complying with new or revised accounting standards for an "emerging growth company," our consolidated financial statements may not be comparable to companies that currently comply with these accounting standards.

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 7(a)(2)(B) of the Securities Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our consolidated financial statements may not be comparable to companies that comply with these accounting standards as of the public company effective dates. Consequently, our consolidated financial statements may not be comparable to companies that comply with public company effective dates. Because our consolidated financial statements may not be comparable to companies that comply with public company effective dates, investors may have difficulty evaluating or comparing our business, performance or prospects in comparison to other public companies, which may have a negative impact on the value and liquidity of our Common Stock. We cannot predict if investors will find our Common Stock less attractive because we plan to rely on this exemption. If some investors find our common stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile.

General Risk Factors

Changes in accounting practices and future pronouncements may materially affect our reported financial results.

Developments in accounting practices may require us to incur considerable additional expenses to comply, particularly if we are required to prepare information relating to prior periods for comparative purposes or to apply the new requirements retroactively. The impact of changes in current accounting practices and future pronouncements cannot be predicted but may affect the calculation of net income, stockholders’ equity and other relevant financial statement line items.

Our insurance subsidiaries are required to comply with statutory accounting principles ("SAP"). SAP and various components of SAP are subject to constant review by the NAIC and its task forces and committees, as well as state insurance departments, in an effort to address emerging issues and otherwise improve financial reporting. Various proposals are pending before committees and task forces of the NAIC, some of which, if adopted by the NAIC and enacted in the states in which we operate, could have negative effects on us and other insurance industry participants. The NAIC continuously examines and from time to time proposes reforms to existing insurance laws and regulations. We cannot predict whether or in what form such reforms will be adopted by the NAIC and enacted in the states in which we operate and, if so, whether the enacted reforms will positively or negatively affect us.

We are required by Section 404 of the Sarbanes-Oxley Act to evaluate the effectiveness of our internal control over financial reporting. If we are unable to achieve and maintain effective internal controls, our business, operating results and financial condition could be harmed.

As a public company with SEC reporting obligations, we are required to document and test our internal control procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires annual assessments by management of the effectiveness of our internal control over financial reporting beginning. We are an emerging growth company, and thus we are exempt from the auditor attestation requirement of Section 404(b) of Sarbanes-Oxley until such time as we no longer qualify as an emerging growth company. See also "We are an 'emerging growth company' within the meaning of the Securities Act and have elected to take advantage of reduced disclosure requirements and other exemptions applicable to emerging growth companies." Regardless of whether we qualify as an emerging growth company, we will still need to

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implement substantial internal control systems and procedures in order to satisfy the reporting requirements under the Exchange Act. During the course of our assessment, we may identify deficiencies that we are unable to remediate in a timely manner. Testing and maintaining our internal control over financial reporting may also divert management’s attention from other matters that are important to the operation of our business. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404(b) of Sarbanes-Oxley. If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or their effect on our operations. Moreover, any material weaknesses or other deficiencies in our internal control over financial reporting may impede our ability to file timely and accurate reports with the SEC. Any of the above could cause investors to lose confidence in our reported financial information or our Common Stock listing on the Nasdaq to be suspended or terminated, which could have a negative effect on the market price of our Common Stock.

The effects of litigation on our business are uncertain and could have an adverse effect on our business.

As is typical in our industry, we continually face risks associated with litigation of various types, including general commercial and corporate litigation and disputes relating to bad faith allegations which could result in us incurring losses in excess of policy limits. We are party to certain litigation matters throughout the year, mostly with respect to claims. Litigation is subject to inherent uncertainties, and if there were an outcome unfavorable to us, there exists the possibility of a material adverse impact on our results of operations and financial position in the period in which the outcome occurs. Even if an unfavorable outcome does not materialize, we still may face substantial expense and disruption associated with the litigation.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees to us or to our stockholders; (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (the "DGCL"); or (iv) any action asserting a claim governed by the internal affairs doctrine. Unless we consent in writing to the selection of an alternative forum, the exclusive forum for any action under the Securities Act or the Exchange Act shall be either the Court of Chancery of the State of Delaware or the federal district court for the District of Delaware. This exclusive forum provision will not apply to claims which are vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery of the State of Delaware, for which the Court of Chancery of the State of Delaware does not have subject matter jurisdiction or, in the case of an action under the Securities Act or the Exchange Act, for which neither the Court of Chancery of the State of Delaware nor the federal district court for the District of Delaware has subject matter jurisdiction. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder finds favorable for disputes with us or our directors, officers or other employees and may discourage these types of lawsuits. In addition, stockholders who do bring a claim in the Court of Chancery of the State of Delaware could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. Furthermore, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition and results of operations. For example, the Court of Chancery of the State of Delaware recently determined that a provision stating that federal district courts are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable. This decision may be reviewed and ultimately overturned by the Delaware Supreme Court.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We own our corporate headquarters building and land in Wayzata, Minnesota which has approximately 25,229 square feet of office space. As of December 31, 2022, we leased office space in 12 states. We believe that our existing office space is adequate for our current needs.

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Item 3. Legal Proceedings

From time to time, the Company may be involved in legal proceedings which arise in the ordinary course of business. We are not presently involved in any legal or administrative proceedings that we believe are likely to have a materially adverse effect on our business, financial condition or results of operations.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information, Holders and Stockholder Dividends

Our Common Stock is traded on the Nasdaq Global Select Market under the symbol "TIG." As of March 13, 2023, there were 36 holders of record of our Common Stock.

We do not intend to declare and pay cash dividends on shares of our Common Stock in the foreseeable future. Because we are a holding company with no business operations of our own, our ability to pay dividends to stockholders is largely dependent upon dividends and other distributions from our insurance subsidiaries. State laws, including the laws of California, Kansas, South Carolina and Utah restrict the ability of certain insurance companies, including the Company and its subsidiaries, to declare stockholder dividends.

Issuer Purchases of Equity Securities

None.

Unregistered Sales of Equity Securities

There were no equity securities sold by the Company during the period covered by this Annual Report on Form 10-K that were not registered under the Securities Act of 1933, as amended.

Performance Graph

The following performance graph compares the cumulative total stockholder return of an investment in (1) our Common Stock, (2) the cumulative total returns to the Nasdaq Composite Index and (3) the cumulative total returns to the Nasdaq Insurance Index, for the period from July 16, 2020 in our stock (the date our Common Stock began trading on Nasdaq) or June 30, 2020 for the indices through December 31, 2022.

The graph assumes an initial investment of $100. Such returns are based on historical results and are not indicative of future performance.

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	July 16, 2020		December 31, 2020		December 31, 2021		December 31, 2022
Trean Insurance Group, Inc	$	100.00	$	84.46	$	57.45	$	38.68
Nasdaq Composite Index	100.00		128.62		157.14		106.02
Nasdaq Insurance Index	100.00		98.72		79.62		74.26

Item 6. Reserved

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The objective of management's discussion and analysis is to provide material information relevant to the assessment of the financial condition and results of operations of the Company including an evaluation of the amounts and certainty of cash flows from operations and from outside sources. This discussion and analysis focuses specifically on material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future operating results or of future financial condition. This includes descriptions and amounts of matters that have had a material impact on reported operations, as well as matters that are reasonably likely based on management’s assessment to have a material impact on future operations. This discussion and analysis covers the financial statements and other statistical data that the Company believes will enhance the understanding of the Company’s financial condition, cash flows and other changes in financial condition and results of operations. This discussion and analysis will provide a view of the Company from management’s perspective.

The following discussion and analysis of financial condition and results of operations for the year ended December 31, 2022 is qualified by reference to and should be read in conjunction with the accompanying consolidated financial statements and the related notes included herein. The discussion and analysis below are based on comparisons between our historical financial data for different periods and include certain forward-looking statements about our business, operations and financial performance. These forward-looking statements are subject to risks, uncertainties, assumptions and other factors described in the section "Item 1A — Risk Factors." Our actual results may differ materially from those expressed in, or implied by, those forward-looking statements. See "Forward-Looking Statements."

All references to "we," "us," "our," "the Company," "Trean," or similar terms refer to Trean Insurance Group, Inc. and its subsidiaries, unless the context otherwise requires.

The Company defines increases or decreases greater than 200% as "NM" or not meaningful.

Overview

We are a provider of products and services to the specialty insurance market. We underwrite specialty casualty insurance products both through our Program Partners and also through our Owned MGAs. We also provide our Program Partners with a variety of services, including issuing carrier services, claims administration and reinsurance brokerage, from which we generate recurring fee-based revenues.

We have one reportable segment. We provide our insurance products and services to our Program Partners and Owned MGAs focused on specialty lines. We target a diversified portfolio of small to medium programs, typically with less than $30 million of premiums, that focus on niche segments of the specialty casualty insurance market and that we believe have strong underwriting track records.

Pending Merger

As previously disclosed, on December 15, 2022, we entered into the Merger Agreement, by and among the Company, Parent and Merger Sub providing for the acquisition of the Company by affiliates of Altaris, subject to the terms and conditions set forth in the Merger Agreement. Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company effective as of the effective time of the Merger. As a result of the Merger, Merger Sub will cease to exist, and the Company will survive as a wholly-owned subsidiary of Parent.

As a result of the Merger, at the Effective Time, subject to any applicable withholding taxes, each share of our Common Stock, issued and outstanding immediately prior to the Effective Time, other than Cancelled Shares (as defined in the Merger Agreement) and Dissenting Shares (as defined in the Merger Agreement), will be converted into the right to receive $6.15 in cash, without interest.

The consummation of the Merger is subject to the satisfaction or waiver of various customary conditions set forth in the Merger Agreement, including, but not limited to: (i) the adoption of the Merger Agreement and approval of the Merger and the other transactions by (x) the holders representing a majority of the aggregate voting power of the outstanding shares of our Common Stock beneficially owned by the Unaffiliated Stockholders (as defined in the Merger Agreement) entitled to vote thereon as well as (y) the holders representing a majority of the aggregate voting power of the outstanding shares of

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Common Stock entitled to vote thereon; (ii) all required insurance regulatory approvals (or the applicable regulatory authorities’ non-objection to requests for exemptions in respect thereof) shall have been obtained; (iii) the expiration or termination of any applicable waiting period (or any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”); (iv) the absence of any restraint or law preventing or prohibiting the consummation of the Merger; (v) the accuracy of Parent’s, Merger Sub’s, and the Company’s representations and warranties (subject to certain materiality qualifiers); (vi) Parent’s, Merger Sub’s, and the Company’s compliance in all material respects with their respective obligations under the Merger Agreement; and (vii) the absence of any Company Material Adverse Effect (as defined in the Merger Agreement) since the date of the Merger Agreement.

Merger-related expenses recognized during the year ended December 31, 2022 were approximately $3,081 and are included in other expenses in the consolidated statements of operations.

See "Part I—Item 1A Risk Factors—Risks Related to the Proposed Merger" for a discussion of certain risks related to the Merger.

Initial Public Offering and Reorganization

On July 20, 2020, Trean Insurance Group, Inc. closed the sale of 10,714,286 shares of Common Stock in the IPO, comprised of 7,142,857 shares issued and sold by Trean Insurance Group, Inc. and 3,571,429 shares sold by selling stockholders. On July 22, 2020, Trean Insurance Group, Inc. closed the sale of an additional 1,207,142 shares by certain selling stockholders in the IPO pursuant to the exercise of the underwriters’ option to purchase additional shares to cover over-allotments. The aggregate proceeds to the Company from all shares sold by the Company in the IPO were approximately $107,142 and the aggregate IPO proceeds from all shares sold by the selling stockholders in the IPO were approximately $71,678. The shares began trading on the Nasdaq Global Select Market on July 16, 2020 under the symbol "TIG."

Prior to the completion of the above IPO, the Company effected the following reorganization transactions: (i) each of Trean and BIC contributed all of their respective assets and liabilities to Trean Insurance Group, Inc., a newly formed direct subsidiary of BIC, in exchange for shares of Common Stock in Trean Insurance Group, Inc. and (ii) upon the completion of the transfers by Trean and BIC, Trean and BIC were dissolved and distributed in-kind common shares to the pre-IPO unitholders.

In conjunction with the IPO and corporate restructuring, the Company made a payment to Altaris Capital Partners, LLC in connection with the termination of the Company's consulting and advisory agreements as well as paid bonuses to employees and pre-IPO unitholders for the successful completion of the IPO. The aggregate amount of these payments totaled $11,054 and is included in other expenses on the consolidated statement of operations.

Secondary Offering of Common Stock

On May 19, 2021, we closed the sale of 5,000,000 shares of its common stock, comprised entirely of shares sold by selling stockholders. We did not receive any proceeds from the sale of shares of our Common Stock by the selling stockholders in this offering. As a result of this offering, the Altaris Funds no longer beneficially own more than 50% of our outstanding Common Stock, and we are no longer a "controlled company" within the meaning of the Nasdaq listing rules.

Acquisition of Western Integrated Care

Effective July 6, 2021, Trean Corp acquired 100% ownership of WIC for a total purchase price of $5,500. WIC is a managed care organization that offers services to workers' compensation insurers to enable employees who are injured on the job to access qualified medical treatment.

Acquisition of Compstar

Effective July 15, 2020, Trean Compstar Holdings LLC purchased the remaining 55% ownership interest in Compstar, a holding company, along with its wholly owned subsidiary Compstar Insurance Services, a managing general agent, by issuing 6,613,606 shares of our Common Stock with a market price of $15 per share on the date of acquisition. Prior to the acquisition date, the Company held a 45% ownership interest in Compstar and accounted for its investment under the equity method. As of the acquisition date, the fair value attributable to the Company’s previous equity interest was $81,167 and the carrying value was $11,321. As a result, the Company recorded a gain of $69,846 from the remeasurement of its previous

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equity interest, which is included in gain on revaluation of Compstar investment on the consolidated statement of operations. The fair value of the Company’s previous equity interest was revalued on the acquisition date using the market price of the shares issued as consideration for the acquisition.

Acquisition of 7710

Effective October 1, 2020, Benchmark Holding Company acquired 100% ownership of 7710 Insurance Company as well as its associated program manager and agency, 7710 Service Company, LLC and Creekwood Insurance Agency, LLC for a purchase price of $12,140. 7710 Insurance Company underwrites workers' compensation primarily for emergency services, including firefighters and emergency medical services (EMS). 7710 Insurance Company focuses on reducing costs and claims through the implementation of a propriety safety preparedness and loss control program, created and staffed by experienced firefighters and EMS professionals.

Significant Components of Results of Operations

Gross written premiums: Gross written premiums are the amounts received or to be received for insurance policies written or assumed by us during a specific period of time without reduction for general and administrative expenses (including policy acquisition costs), reinsurance costs or other deductions. The volume of our gross written premiums in any given period is generally influenced by:

•addition and retention of Program Partners;

•new business submissions to our Program Partners;

•binding of new business submissions into policies;

•renewals of existing policies; and

•average size and premium rate of bound policies.

Gross earned premiums: Gross earned premiums are the earned portion of gross written premiums. We earn insurance premiums on a pro rata basis over the term of the policy. Our insurance policies generally have a term of one year.

Ceded earned premiums: Ceded earned premiums are the amount of gross earned premiums ceded to reinsurers. We enter into reinsurance contracts to limit our maximum losses and diversify our exposure and provide statutory surplus relief. The volume of our ceded earned premiums is affected by the level of our gross earned premiums and any decision we make to increase or decrease limits, retention levels, and co-participations.

Net earned premiums: Net earned premiums represent the earned portion of our gross written premiums, less that portion of our gross written premiums that is earned and ceded to third-party reinsurers, including our Program Partners and professional reinsurers, under our reinsurance agreements.

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 maturities, including other equity investments and short-term investments. Our net investment income includes interest income on our invested assets, income on funds held investments as well as unrealized gains and losses on our equity portfolio.

Net realized gains/losses: Net realized gains/losses are a function of the difference between the amount received by us on the sale of a security and the security’s recorded value as well as any "other-than-temporary impairments" relating to fixed maturity investments recognized in earnings.

Other revenue: Other revenue includes brokerage, third-party administrative, management and consulting and other fee-based revenues, which are commonly based on written premiums.

Loss and loss adjustment expenses (LAE): Losses and LAE are net of reinsurance and include claims paid, estimates of future claim payments, changes in those estimates from prior reporting periods and costs associated with investigating, defending, and servicing claims. In general, our losses and LAE are affected by:

•frequency of claims associated with the particular types of insurance contacts that we write;

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•trends in the average size of losses incurred on a particular type of business;

•mix of business written by us;

•changes in the legal or regulatory environment related to the business we write;

•trends in legal defense costs;

•wage inflation; and

•inflation in medical costs.

Losses and LAE are based on an actuarial analysis of the estimated losses, including losses incurred during the period and changes in estimates from prior periods. Losses and LAE may be paid out over a period of years.

General and administrative expenses: General and administrative expenses include net commissions, insurance-related expenses and general and administrative operating expenses. Net commissions consist of policy acquisition costs and other underwriting expenses, net of ceding commissions. Policy acquisition costs are principally comprised of the commissions we pay our brokers and program managers. Policy acquisition costs that are directly related to the successful acquisition or reinsurance of those policies are deferred. All policy acquisition costs are charged to expense in proportion to premium earned over the policy life. We receive ceding commissions on business ceded under our reinsurance contracts. Insurance-related expenses largely consist of state premium taxes. General and administrative operating expenses include employee salaries and benefits, corporate business insurance costs, technology costs, office rent and professional services fees such as legal, accounting, audit, tax and actuarial services.

Intangible asset amortization: Intangible asset amortization consists of expenses incurred related to the amortization of intangible assets recorded as a result of business acquisitions and consists of trade names, customer lists and relationships and non-compete agreements.

Noncash stock compensation: Noncash stock compensation includes expenses related to the fair value and issuance of restricted stock units (time, market and performance-based) and stock options.

Gains (losses) on embedded derivatives: Gains (losses) on embedded derivatives consist of the change in fair value of derivatives, the effect of net investment income on funds held investments, and the effect of realized gains and loss on funds held investments.

Interest expense: Interest expense consists primarily of interest paid on (i) our term loan facility and (ii) our surplus notes (See "Financial Condition, Liquidity and capital resources — Debt and Credit Agreements").

Goodwill impairment: The goodwill impairment charge relates to the excess carrying amount of the Company's net assets compared to their estimated fair value. Goodwill is not amortized but is reviewed for impairment at least annually or more frequently if events occur or circumstances change that would indicate that a triggering event for a potential impairment has occurred.

Other income: Other income consists primarily of sublease revenue and other miscellaneous income items.

Key Metrics

We discuss certain key financial and operating 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 defined as income before taxes excluding net investment income, investment revaluation gains, net realized gains or losses, intangible asset amortization, goodwill impairment, noncash stock compensation, noncash changes in fair value of embedded derivatives, interest expense, other revenue and other income and expenses. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of underwriting income to income before taxes in accordance with GAAP.

Adjusted net income is a non-GAAP financial measure defined as net income excluding the impact of certain items, including noncash intangible asset amortization and stock compensation, goodwill impairment, noncash changes in fair value of embedded derivatives, other expenses and gains or losses that we believe do not reflect our core operating performance,

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which items may have a disproportionate effect in a given period, affecting comparability of our results across periods. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of adjusted net income to net income in accordance with GAAP.

Loss ratio, expressed as a percentage, is the ratio of losses and LAE to net earned premiums.

Expense ratio, expressed as a percentage, is the ratio of total general and administrative expenses to net earned premiums.

Combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.

Return on equity is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period.

Adjusted return on equity is a non-GAAP financial measure defined as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of adjusted return on equity to return on equity in accordance with GAAP.

Tangible stockholders' equity is defined as stockholders' equity less goodwill and other intangible assets.

Return on tangible equity is a non-GAAP financial measure defined as net income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders' equity during the period. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of return on tangible equity to return on equity in accordance with GAAP.

Adjusted return on tangible equity is a non-GAAP financial measure defined as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders' equity during the period. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of adjusted return on tangible equity to return on tangible equity in accordance with GAAP.

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Results of Operations

This section of Form 10-K generally discusses fiscal year 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of fiscal year 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in Item 7 of Part II of our 2020 Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the U.S. Securities and Exchange Commission on March 16, 2022 and which is available free of charge on the SEC's website at https://www.sec.gov and our website at https://www.trean.com, on the Investor Relations’ page under “Financial Info—Annual Reports.”

Consolidated Results of Operations for the Year Ended December 31, 2022 Compared to December 31, 2021

The following table summarizes our results of operations for the year ended December 31, 2022 and 2021:

	Year Ended December 31,				Change		Percentage Change (1)
(in thousands, except for percentages)	2022		2021
Revenues
Gross written premiums	$	651,303	$	634,164	$	17,139	2.7	%
Increase in gross unearned premiums	(9,074)		(61,911)		52,837		(85.3)	%
Gross earned premiums	642,229		572,253		69,976		12.2	%
Ceded earned premiums	(357,605)		(373,573)		15,968		(4.3)	%
Net earned premiums	284,624		198,680		85,944		43.3	%
Net investment income	10,087		8,721		1,366		15.7	%
Net realized gains	285		49		236		NM
Other revenue	8,246		10,240		(1,994)		(19.5)	%
Total revenue	303,242		217,690		85,552		39.3	%
Expenses
Losses and loss adjustment expenses	203,877		130,772		73,105		55.9	%
General and administrative expenses	86,210		54,706		31,504		57.6	%
Other expenses	3,349		845		2,504		NM
Intangible asset amortization	5,998		5,826		172		3.0	%
Noncash stock compensation	1,496		1,522		(26)		(1.7)	%
Interest expense	3,270		1,685		1,585		94.1	%
Goodwill impairment (2)	76,053		—		76,053		NM
Total expenses	380,253		195,356		184,897		94.6	%
Gains (losses) on embedded derivatives	12,024		2,226		9,798		NM
Other income	106		219		(113)		(51.6)	%
Income (loss) before taxes	(64,881)		24,779		(89,660)		NM
Income tax expense	1,074		5,449		(4,375)		(80.3)	%
Net income (loss)	$	(65,955)	$	19,330	$	(85,285)	NM

(1) The Company defines increases or decreases greater than 200% as "NM" or not meaningful.

(2) See "Financial Condition, Liquidity and Capital Resources—Financial Condition—Goodwill and intangible asset valuation" below for additional information.

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	Year Ended December 31,
(in thousands, except for percentages)	2022			2021
Key metrics:
Underwriting income (loss) (1)	$	(5,463)		$	13,202
Adjusted net income (1)	$	7,860		$	22,132
Loss ratio	71.6		%	65.8		%
Expense ratio	30.3		%	27.5		%
Combined ratio	101.9		%	93.3		%
Return on equity	(17.9)		%	4.6		%
Adjusted return on equity (1)	2.1		%	5.3		%
Return on tangible equity (1)	(34.0)		%	9.7		%
Adjusted return on tangible equity (1)	4.1		%	11.0		%

(1) Adjusted net income, adjusted return on equity, return on tangible equity, adjusted return on tangible equity and underwriting income are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures” below for a reconciliation to the applicable GAAP measure.

The table below shows the total premiums earned on a gross and net basis for the respective annual periods:

	Year Ended December 31,						Percentage Change (1)
(in thousands, except percentages)	2022		2021		Change
Revenues:
Gross written premiums	$	651,303	$	634,164	$	17,139	2.7	%
Increase in gross unearned premiums	(9,074)		(61,911)		52,837		(85.3)	%
Gross earned premiums	642,229		572,253		69,976		12.2	%
Ceded earned premiums	(357,605)		(373,573)		15,968		(4.3)	%
Net earned premiums	$	284,624	$	198,680	$	85,944	43.3	%

(1) The Company defines increases or decreases greater than 200% as "NM" or not meaningful.

Gross written premiums: Gross written premiums increased $17,139, or 2.7%, to $651,303 for the year ended December 31, 2022, compared to $634,164 for the year ended December 31, 2021. The increase reflects the growth in our Program Partner business. Gross written premium included the following:

Workers' compensation represented 56.6% of total gross written premiums for the year ended December 31, 2022, compared to 59.4% for the year ended December 31, 2021. Workers' compensation gross written premiums decreased $8,411, or 2.2%, to $368,408 compared with $376,819 for the year ended December 31, 2021, reflecting the intentional decrease in California business that resulted from the Company's measures undertaken to reduce certain unfavorable risks in 2021 in keeping with our overall strategy to prioritize underwriting discipline.

All other non-workers' compensation liability represented 43.4% of our gross written premiums for the year ended December 31, 2022, compared to 40.6% for the year ended December 31, 2021. All other non-workers' compensation liability gross written premiums increased $25,550, or 9.9%, to $282,895 for the year ended December 31, 2022 compared with $257,345 for the year ended December 31, 2021. The increase is due primarily to growth in our accident & health, commercial, and commercial auto lines, partially offset by decreases in our other liability and homeowners lines, which are a result of continued line of business diversification.

Gross earned premiums: Gross earned premiums increased $69,976, or 12.2%, to $642,229 for the year ended December 31, 2022, compared to $572,253 for the year ended December 31, 2021. The increase reflects the increase in gross written premiums of $17,139 and the change in the increase in gross unearned premiums of $52,837. Gross earned premiums as a percentage of gross written premiums was 98.6% for the year ended December 31, 2022, compared to 90.2%, for the year ended December 31, 2021.

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Ceded earned premiums: Ceded earned premiums decreased $15,968, or 4.3%, to $357,605 for the year ended December 31, 2022, compared to $373,573 for the year ended December 31, 2021, reflecting the Company's strategic decision to retain more gross written premiums. This resulted in total ceded earned premiums as a percentage of gross earned premiums of 55.7% for the year ended December 31, 2022, compared to 65.3% for the year ended December 31, 2021.

Net earned premiums: Net earned premiums increased $85,944, or 43.3%, to $284,624 for the year ended December 31, 2022, compared to $198,680 for the year ended December 31, 2021. The increase is primarily due to the growth in gross earned premiums as described above and the Company's strategic decision to retain more gross written premiums.

Net investment income: Net investment income increased $1,366, or 15.7%, to $10,087 for the year ended December 31, 2022, compared to $8,721 for the year ended December 31, 2021. The increase reflects the reinvestment of cash flows from lower to higher yielding investments in a rising interest rate environment and having a larger average investment balance which included the investment of the surplus notes proceeds. The increase was partially offset by unrealized losses of $4,797 on equity securities.

Net realized gains: Net realized gains were $285 for the year ended December 31, 2022, compared to $49 for the year ended December 31, 2021. Net realized gains for the year ended December 31, 2022 includes earn-out proceeds received of $1,415 related to the Company's sale of TRI in 2021. The net realized gain was offset by a repositioning strategy to sell lower-yielding assets and purchase higher-yielding investments resulting in a realized loss of $1,022 during the first quarter of 2022.

Other revenue: Other revenue decreased $1,994, or 19.5%, to $8,246 for the year ended December 31, 2022, compared to $10,240 for the year ended December 31, 2021. The decrease is primarily driven by a decrease in brokerage revenue of $1,331, due to lower placement fees reflecting the Company's increase in retention during the year. In addition, managing general agent fees, third-party administrator fees, consulting and other fee-based revenue were all lower during the year.

Losses and loss adjustment expenses: Losses and LAE increased $73,105, or 55.9%, to $203,877 for the year ended December 31, 2022, compared to $130,772 for the year ended December 31, 2021. The increase is primarily attributable to the growth in earned premiums and the increased retention experienced during 2022. The Company's retention rate increased to 44.3% in 2022 compared to 34.7% in 2021. The Company's loss ratio was 71.6% for the year ended December 31, 2022 compared to 65.8% for the year ended December 31, 2021. The loss ratio increase reflects elevated losses on our owned businesses and also reflects the impact of unfavorable development relating primarily to the 2021 accident year and its effect on expected losses for 2022.

General and administrative expenses: General and administrative expenses increased $31,504, or 57.6%, to $86,210 for the year ended December 31, 2022, compared to $54,706 for the year ended December 31, 2021. This resulted in an expense ratio of 30.3% for the year ended December 31, 2022, compared to 27.5% for the year ended December 31, 2021.

The table below shows the components of general and administrative expenses for:

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	The year ended December 31,
	2022			2021			Change
Direct commissions	$	114,866		$	105,965		$	8,901
Ceding commissions	(102,759)			(120,688)			17,929
Net commissions	12,107			(14,723)			26,830
Insurance-related expenses	22,790			20,732			2,058
General and administrative operating expenses	51,313			48,697			2,616
Total general and administrative expenses	$	86,210		$	54,706		$	31,504
General and administrative expenses — % of gross written premiums	7.9		%	7.7		%	0.2		%
Retention rate (1)	44.3		%	34.7		%	9.6		%
Direct commission rate (2)	17.9		%	18.5		%	(0.6)		%
Ceding commission rate (3)	28.7		%	32.3		%	(3.6)		%
(1) Net earned premium as a percentage of gross earned premiums.
(2) Direct commissions as a percentage of gross earned premiums.
(3) Ceding commissions as a percentage of ceded earned premiums.

Direct commissions increased $8,901 primarily due to an increase in gross earned premiums. Ceding commissions decreased $17,929 due to an increase in retention. Insurance-related expenses increased $2,058 primarily as a result of the increase in gross earned premiums. General and administrative operating expenses increased $2,616, reflecting (i) an increase in salaries and benefits of $2,945, which related primarily to a general increase in salaries and higher health insurance costs; (ii) an increase in travel expense of $429; and (iii) a decrease in professional fees of $332.

Other expenses: Other expenses were $3,349 for the year ended December 31, 2022 which primarily relates to merger-related expenses of approximately $3,081 and management transition costs of $268. Other expenses for the year ended December 31, 2021 were $845 which primarily relates to secondary offering costs of $555 and executive transition costs totaling $290.

Intangible asset amortization: Intangible asset amortization increased $172 to $5,998 for the year ended December 31, 2022, compared to $5,826 for the year ended December 31, 2021. The increase is primarily driven by the addition of intangible assets acquired in the acquisition of WIC in the third quarter of 2021.

Noncash stock compensation: Noncash stock compensation was $1,496 and $1,522 for the years ended December 31, 2022 and 2021. Expenses incurred during both periods relates to the fair value of restricted stock units and stock options granted under the Company's 2020 Omnibus Plan amortized over appropriate and applicable vesting periods.

Interest expense: Interest expense increased $1,585, or 94.1%, to $3,270 for the year ended December 31, 2022, compared to $1,685 for the year ended December 31, 2021. The increase includes additional interest expense of $1,222 related to the Surplus Notes issued during the third quarter of 2022. The remainder of the increase was due to higher interest rates on our variable rate Secured Credit Facility during the year ended December 31, 2022.

Goodwill impairment: A goodwill impairment charge of $76,053 was recognized during the year ended December 31, 2022. As a result of the Merger Agreement, the estimation of the nonrecurring fair value measurement of the Company based on the implied equity value of the Company at the negotiated purchase price of $6.15 per common share.

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Gains (losses) on embedded derivatives:

The table below shows the components of gains (losses) on embedded derivatives for the years ended December 31, 2022 and 2021.

	The Year Ended December 31,
	2022		2021		Change
Change in fair value of embedded derivatives	$	15,682	$	4,666	$	11,016
Effect of net investment income on funds held investments	(3,668)		(2,338)		(1,330)
Effect of realized losses (gains) on funds held investments	10		(102)		112
Gains on embedded derivatives	$	12,024	$	2,226	$	9,798

Gains on embedded derivatives were $12,024 for the year ended December 31, 2022, compared to $2,226 for the year ended December 31, 2021. The increased gain of $9,798 reflected the change in the fair value of the embedded derivatives of $11,016 and the effect of realized losses on funds held investments of $112, partially offset by the effect of investment income on funds held investments of $1,330.

Income tax expense: Income tax expense was $1,074 for the year ended December 31, 2022, which resulted in an effective tax rate of (1.7)%, compared to $5,449 for the year ended December 31, 2021, which resulted in an effective tax rate of 22.0%. The effective tax rate differed from the statutory rate of 21% for the year ended December 31, 2022 primarily due to the non-deductible costs incurred in connection with the Merger Agreement and the non-deductible portion of the goodwill impairment charge. The increase in the effective tax rate from the statutory rate of 21% for the year ended December 31, 2021 is primarily due to the impact of recording our 2020 tax return accrual to return true up in the third quarter.

Reconciliation of Non-GAAP Financial Measures

Underwriting income (loss)

We define underwriting income (loss) as income (loss) before taxes excluding net investment income, noncash changes in fair value of embedded derivatives, investment revaluation gains, net realized capital gains or losses, noncash intangible asset amortization, goodwill impairment, noncash stock compensation, interest expense, other revenue and other income and expenses. Underwriting income (loss) represents the pre-tax profitability of our underwriting operations and allows us to evaluate our underwriting performance without regard to the above listed items. We use this metric because we believe it gives our management and other users of our financial information useful insight into our underwriting business performance by adjusting for these expenses and sources of income. Underwriting income (loss) should not be viewed as a substitute for net income (loss) calculated in accordance with GAAP, and other companies may define underwriting income differently.

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	Year Ended December 31,				Percentage Change (1)
(in thousands, except percentages)	2022		2021
Net income (loss)	$	(65,955)	$	19,330	NM
Income tax expense	1,074		5,449		(80.3)	%
Income (loss) before taxes	(64,881)		24,779		NM
Other revenue	(8,246)		(10,240)		(19.5)	%
Change in fair value of embedded derivatives	(12,024)		(2,226)		NM
Net investment income	(10,087)		(8,721)		15.7	%
Realized gain on sale of investments	(285)		(49)		NM
Interest expense	3,270		1,685		94.1	%
Other expenses	3,349		845		NM
Goodwill impairment (2)	76,053		—		NM
Intangible asset amortization	5,998		5,826		3.0	%
Noncash stock compensation	1,496		1,522		(1.7)	%
Other income	(106)		(219)		(51.6)	%
Underwriting income (loss)	$	(5,463)	$	13,202	(141.4)	%

(1) The Company defines increases or decreases greater than 200% as "NM" or not meaningful.

(2) See "Financial Condition, Liquidity and Capital Resources—Financial Condition—Goodwill and intangible asset valuation" below for additional information.

Adjusted net income (loss)

We define adjusted net income (loss) as net income (loss) excluding the impact of certain items, including noncash intangible asset amortization, stock compensation, goodwill impairment, noncash changes in fair value of embedded derivatives, other expenses and gains or losses that we believe do not reflect our core operating performance, which items may have a disproportionate effect in a given period, affecting comparability of our results across periods. We calculate the tax impact only on adjustments that would be included in calculating our income tax expense using an expected effective tax rate for the applicable years. We use adjusted net income (loss) 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 by eliminating the effects of these items. Adjusted net income (loss) should not be viewed as a substitute for net income (loss) calculated in accordance with GAAP, and other companies may define adjusted net income (loss) differently.

	Year Ended December 31,				Percentage Change (1)
(in thousands, except percentages)	2022		2021
Net income (loss)	$	(65,955)	$	19,330	NM
Intangible asset amortization	5,998		5,826		3.0	%
Noncash stock compensation	1,496		1,522		(1.7)	%
Change in fair value of embedded derivatives	(15,682)		(4,666)		NM
Unrealized losses on equity securities	4,797		—		NM
Realized loss (gain) on sale of investment	(1,415)		112		NM
Other expenses	3,349		845		NM
Goodwill impairment (2)	76,053		—		NM
Total adjustments	74,596		3,639		NM
Tax impact of adjustments	(781)		(837)		(6.7)	%
Adjusted net income	$	7,860	$	22,132	(64.5)	%

(1) the Company defines increases or decreases greater than 200% as "NM" or not meaningful.

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(2) See "Financial Condition, Liquidity and Capital Resources—Financial Condition—Goodwill and intangible asset valuation" below for additional information.

Adjusted return on equity

We define adjusted return on equity as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period. We use adjusted return on 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 by adjusting for items that we believe do not reflect our core operating performance and that may diminish comparability across periods. Adjusted return on equity should not be viewed as a substitute for return on equity calculated in accordance with GAAP, and other companies may define adjusted return on equity differently.

	Year Ended December 31,
	2022			2021
Adjusted return on equity calculation:
Numerator: adjusted net income	$	7,860		$	22,132
Denominator: average equity	368,464			416,008
Adjusted return on equity	2.1		%	5.3		%
Return on equity	(17.9)		%	4.6		%

Return on tangible equity and adjusted return on tangible equity

We define tangible stockholders' equity as stockholders' equity less goodwill and other intangible assets. We define return on tangible equity as net income (loss) expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders' equity during the period. We define adjusted return on tangible equity as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders' equity during the period. We regularly evaluate acquisition opportunities and have historically made acquisitions that affect stockholders' equity. We use return on tangible equity and adjusted return on tangible equity as internal performance measures in the management of our operations because we believe they give our management and other users of our financial information useful insight into our results of operations and our underlying business performance by adjusting for the effects of acquisitions on our stockholders' equity and, in the case of adjusted return on tangible equity, by adjusting for the items that we believe do not reflect our core operating performance and that may diminish comparability across periods. Return on tangible equity and adjusted return on tangible equity should not be viewed as a substitute for return on equity or return on tangible equity, respectively, calculated in accordance with GAAP, and other companies may define return on tangible equity and adjusted return on tangible equity differently.

	Year Ended December 31,
	2022			2021
Return on tangible equity calculation:
Numerator: net income (loss)	$	(65,955)		$	19,330
Denominator:
Average stockholders' equity	368,464			416,008
Less: average goodwill and other intangible assets	174,436			215,709
Average tangible stockholders' equity	194,028			200,299
Return on tangible equity	(34.0)		%	9.7		%
Return on equity	(17.9)		%	4.6		%

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	Year Ended December 31,
	2022			2021
Adjusted return on tangible equity calculation:
Numerator: adjusted net income	$	7,860		$	22,132
Denominator: average tangible equity	194,028			200,299
Adjusted return on tangible equity	4.1		%	11.0		%
Return on equity	(17.9)		%	4.6		%

Financial Condition, Liquidity and Capital Resources

Sources and Uses of Funds

We are organized as a holding company with our operations conducted through our subsidiaries, including our wholly owned insurance subsidiaries: Benchmark, which is domiciled in Kansas and commercially domiciled in California; ALIC, which is domiciled in Utah; 7710, which is domiciled in South Carolina; and BSIC, which is domiciled in Arkansas. Accordingly, the holding company may receive cash through (i) loans from banks; (ii) draws on a revolving loan agreement; (iii) issuance of equity and debt securities, (iv) corporate service fees from our operating subsidiaries; (v) payments from our subsidiaries pursuant to our consolidated tax allocation agreement and other transactions; and (vi) dividends from our non-insurance subsidiaries and, subject to certain limitations discussed below, dividends from our insurance subsidiaries. We also may use the proceeds from these sources to contribute funds to the insurance subsidiaries in order to support premium growth, reduce our reliance on reinsurance, pay taxes and for other general business purposes.

State insurance laws restrict the ability of insurance companies to declare stockholder dividends without prior regulatory approval. State insurance regulators require insurance companies to maintain specified levels of statutory capital and surplus.

Under Kansas and California law, dividends payable from Benchmark without the prior approval of the applicable insurance commissioner must not exceed the greater of: (i) 10% of Benchmark’s surplus as shown on the last statutory financial statement on file with the Kansas Insurance Department and the California Department of Insurance, respectively; or (ii) 100% of net income during the applicable twelve-month period (not including realized gains). Dividends shall not include pro rata distributions of any class of Benchmark's own securities.

Under Utah law, dividends payable from ALIC without the prior approval of the applicable insurance commissioner must not exceed the lesser of (i) 10% of ALIC’s surplus as shown on the last statutory financial statement on file with the Utah Insurance Department; or (ii) 100% of net income during the applicable twelve- month period (not including realized gains). Dividends shall not include pro rata distributions of any class of ALIC's own securities.

Under South Carolina law, dividends payable from 7710 without the prior approval of the applicable insurance commissioner are limited to the following during the preceding twelve months: (a) when paid from other than earned surplus must not exceed the lesser of: (i) 10% of 7710's surplus as regards policyholders as shown in 7710’s most recent annual statement; or (ii) the net income, not including net realized gains or losses as shown in the 7710's most recent annual statement; or (b) when paid from earned surplus must not exceed the greater of: (i) 10% of 7710's surplus as regards policyholders as shown in 7710’s most recent annual statement; or (ii) the net income, not including net realized gains or losses as shown in the 7710's most recent annual statement. Dividends shall not include pro rata distributions of any class of 7710's own securities.

Under Arkansas law, dividends payable from BSIC without the prior approval of the applicable insurance commissioner must not exceed the lesser of (i) 10% of BSIC’s surplus as shown on the last statutory financial statement on file with the Arkansas Insurance Department; or (ii) 100% of net income during the applicable twelve- month period (not including realized gains). Dividends shall not include pro rata distributions of any class of BSIC's own securities.

The maximum amount of dividends the insurance subsidiaries were able to pay us during 2022 without regulatory approval is approximately $17 million. Insurance regulators have broad powers to ensure that statutory surplus remains at adequate levels, and there is no assurance that dividends of the maximum amount calculated under any applicable formula would be permitted. In the future, state insurance regulatory authorities that have jurisdiction over the payment of dividends by the insurance subsidiaries may adopt statutory provisions more restrictive than those currently in effect.

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Our insurance subsidiaries are also required by state law to maintain a minimum level of policyholder's surplus. Kansas, Utah, Arkansas and South Carolina utilize a risk-based capital requirement as promulgated by the National Association of Insurance Commissioners. Such requirements are designed to identify the various business risks (e.g., investment risk, underwriting profitability risk, etc.) of insurance companies and their subsidiaries. As of December 31, 2022 and December 31, 2021, the total adjusted capital of our insurance subsidiaries was in excess of their respective prescribed risk-based capital requirements.

As of December 31, 2022, we had $107,991 in cash and cash equivalents, compared to $129,577 as of December 31, 2021.

Management believes that we have sufficient liquidity available to meet our operating cash needs and obligations and committed capital expenditures for the next 12 months.

Cash Flows

Our most significant source of cash is from premiums received from insureds, net of the related commission amount for the policies. 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 generally earn interest and dividends. The table below summarizes our net cash flows.

	Year Ended December 31,
	2022		2021
Cash, cash equivalents and restricted cash provided by (used in):
Operating activities	$	108,947	$	94,359
Investing activities	(175,440)		(120,156)
Financing activities	45,583		(1,453)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(20,910)	$	(27,250)

Operating Activities: Net cash provided by operating activities for the year ended December 31, 2022 was $108,947 compared to $94,359 for the same period in 2021. Net cash provided by operating activities includes net income (loss) as adjusted for depreciation and amortization, stock compensation, unrealized and realized gains and losses, bond amortization and accretion, the change in deferred income taxes, amortization of deferred financing costs and goodwill impairment. Net cash provided by operating activities during the year ended December 31, 2022 reflects increases in unpaid loss and loss adjustment expenses of $88,590, funds held under reinsurance agreements of $58,191, unearned premiums of $9,172 and reinsurance premiums payable of $5,731; and decreased prepaid reinsurance premiums of $5,142; partially offset by increases in reinsurance recoverables of $31,281, premiums and other receivable of $18,362, other assets of $11,553, income taxes receivable of $5,381 and accrued investment income of $1,382. Unpaid loss and loss adjustment expenses increased primarily due to growth in gross earned premiums, an increase in our 2022 loss ratio, and an increase in our retention. Funds held under reinsurance agreements increased due to a reduction in the derivatives and an increase in gross written premiums. The increases in premiums and other receivables and reinsurance recoverables were primarily a result of an increase in gross written premiums during the period. Other assets increased as a result of increases in our deferred acquisition costs and prepaid software.

Investing Activities: Net cash used in investing activities for the year ended December 31, 2022 was $175,440 compared to $120,156 for the same period in 2021. Net cash used in investing activities for the year ended December 31, 2022 includes $175,101 net cash used in the purchase and sale of investments and $339 in capital expenditures. Net cash used in investing activities for the year ended December 31, 2021 includes $116,247 net cash used in the purchase and sale of investments,

$3,795 in cash used in the acquisition of a subsidiary, net of cash received, and $346 in capital expenditures, partially offset by $232 received for the return of capital on equity method investments.

Financing Activities: Net cash provided by financing activities for the year ended December 31, 2022 was $45,583 compared to net cash used in financing activities of $1,453 for the year ended December 31, 2021. The cash provided by financing activities in 2022 primarily includes $48,455 of net cash proceeds received from the issuance of surplus notes, partially offset by principal payment made on the Company's debt of $1,650, an earn-out payment of $750 related to our 2021 acquisition of WIC, payments for deferred financing costs of $276 and a payment for our interest rate cap of $173. Cash used in financing activities in the prior year primarily included principal payment made on the Company's debt of $1,444.

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Debt and Credit Agreements

First Horizon Credit Agreement

In April 2018, the Company entered into a credit agreement with First Horizon Bank that includes a term loan facility totaling $27.5 million and a revolving credit facility of $3.0 million. Borrowings are secured by substantially all of the assets of the Company and its subsidiaries.

On July 16, 2020, the Company entered into a new Second Amended and Restated Credit Agreement with First Horizon Bank that, among other things, extended the Company's credit facility for a period of five years through May 26, 2025 and increased its term loan facility by $11,707 resulting in a total term loan debt amount of $33,000 and a revolving credit facility of $2,000. On May 6, 2022, we entered into a First Amendment to the Credit Agreement to, among other things, facilitate the approval of certain internal distributions among the Company and certain of its subsidiaries as part of the Company’s overall capital management strategy. On September 28, 2022, we entered into a Second Amendment to the Credit Agreement that, among other things, replaced LIBOR as the benchmark rate with Term SOFR (as defined in the Credit Agreement), reduced the applicable margin under the Credit Agreement on Eurodollar loans from 4.50% to 3.50% and on ABR loans from 3.50% to 2.50%, and converted all extant Eurodollar loans under the Credit Agreement to Term SOFR loans. The loan has a variable interest rate plus applicable margin, which was 7.59%, 4.64% and 4.72% as of December 31, 2022, 2021 and 2020, respectively. The outstanding principal balance of the loan is to be repaid in quarterly installments that escalate from approximately $206 to $825 until March 2025. All equity securities of the Company's subsidiaries (other than Benchmark Holding Company and its subsidiaries) have been pledged as collateral.

In addition, and in conjunction with, the execution of the Second Amended and Restated Credit Agreement, the Company made dividend distribution payments to Trean members totaling $18,154 in May 2020.

Hedging Arrangement

In September 2022, we entered into the Interest Rate Cap Agreement that became effective September 30, 2022, to hedge cash flows associated with interest rate fluctuations on our secured credit facility, with a termination date of May 31, 2024. The Interest Rate Cap Agreement has a notional amount of $29,700 that effectively converted the outstanding balance of the secured credit facility from variable rate debt to capped variable rate debt, resulting in a change in the applicable interest rate from an interest rate of one-month SOFR plus the applicable margin (as provided by the secured credit facility) to one-month SOFR interest rate, capped at 5.00%, plus the applicable margin. The notional amount of the Interest Rate Cap Agreement decreases quarterly in proportion to the quarterly principal payments on the secured credit facility. The Interest Rate Cap Agreement is designated as a cash flow hedge and the change in fair value is recorded in accumulated other comprehensive income and is subsequently reclassified to interest expense in the period when the hedged forecasted interest payments affect earnings. The Company paid a fixed amount of $173 for the Interest Rate Cap Agreement.

Surplus Notes

On August 24, 2022, Benchmark issued Surplus Notes which consisted of $50,000 in aggregate principal amount of 6.75% surplus notes due 2042 in a private placement exempt from registration under the Securities Act. In connection with the issuance of the Surplus Notes, Benchmark entered into the Fiscal Agency Agreement with The Bank of New York Mellon, as fiscal agent, paying agent, registrar and transfer agent, providing for the terms of the Surplus Notes.

The Surplus Notes are unsecured, subordinated debt obligations of the Company and are reflected as debt on our consolidated balance sheets. All payments of principal and interest, which accrues at the rate of 6.75% per year and is payable quarterly, on the Surplus Notes are subject to prior approval by the Commissioner of the Kansas Insurance Department.

Junior Subordinated Debt

In June 2006, the Trust issued 7,500 shares of preferred capital securities to Bear Stearns Securities Corp. and 232 common securities to Trean Corporation. The proceeds of such issuances were invested by the Trust in $7,732 aggregate principal amount of the Subordinated Notes. The Subordinated Notes compromise the sole assets of the Trust. On October 7, 2020, Trean Corp redeemed all of the Subordinated Notes for a total payoff amount of $7,807.

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Oak Street Loan

In conjunction with the acquisition of Compstar, the Company acquired a loan from Oak Street Funding with a total principle of $19,740. In July 2020, upon completion of the acquisition, the Company paid this loan off in full.

PPP Loans

In conjunction with the acquisition of WIC, the Company acquired two Federal Paycheck Protection Program ("PPP Loans") with a principal balance of $243. As of December 31, 2021, both loans had been fully forgiven.

Reinsurance

We cede a portion of the risk we accept on our balance sheet to third-party reinsurers through a variety of reinsurance arrangements. We manage these arrangements to align risks with our Program Partners, optimize our net retention relative to our financial objectives, balance sheet size and ratings requirements, as well as to limit our maximum loss resulting from a single program or a single event. We utilize both quota share and excess of loss ("XOL") reinsurance as tools in our overall risk management strategy to achieve these goals, usually in conjunction with each other. Quota share reinsurance involves the proportional sharing of premiums and losses of each defined program. We utilize quota share reinsurance for several purposes, including (i) to cede risk to Program Partners, which allows us to share economics and align incentives and (ii) to cede risk to third-party reinsurers in order to manage our net written premiums appropriately based on our financial objectives, capital base, A.M. Best financial strength rating and risk appetite. It is a core pillar of our underwriting philosophy that Program Partners retain a portion of the underwriting risk of their program. We believe this best aligns interests, attracts higher quality programs, and leads to better underwriting results. Under XOL reinsurance, losses in excess of a retention level are paid by the reinsurer, subject to a limit, and are customized per program or across multiple programs. We utilize XOL reinsurance to protect against catastrophic or other unforeseen extreme loss activity that could otherwise negatively impact our profitability and capital base. The majority of our exposure to catastrophe risk stems from the workers’ compensation premium we retain. Potential catastrophic events include an earthquake, terrorism, or another event that could cause more than one covered employee working at the same location to be injured in the event. We believe we mitigate this risk by our focus on small- to mid-sized accounts, which means that we generally do not have concentrated employee counts at single locations that could be exposed to a catastrophic loss. The cost and limits of the reinsurance coverage we purchase vary from year to year based on the availability of quality reinsurance at an acceptable price and our desired level of retention.

Ratings

We 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 "S" (Rating Suspended). "A" (Excellent) is the third 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. See also "Risk factors — Risks related to our business and industry — A downgrade in the A.M. Best financial strength ratings of our insurance company subsidiaries may negatively affect our business."

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 us 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

Reserves for losses and loss adjustment expenses

The Company estimates the liability for the expected ultimate cost of unpaid loss and LAE as of the balance sheet date. Our reserves for unpaid loss and LAE represent the cost of all reported loss and LAE expenses as well as those that have been incurred but not yet reported. The estimated losses and LAE are regularly reviewed and adjusted as necessary based on historical experience and as the Company obtains new information. Actual losses and settlement expenses paid may deviate

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from the reserve estimates. Similarly, the timing for payment of our estimated losses is not fixed and is not determinable on an individual or aggregate basis due to the uncertainty inherent in the process of estimating such payments.

See Note 15 of Notes to the Consolidated Financial Statements and "Critical Accounting Estimates" below for a discussion of estimates and assumptions related to the reserves for unpaid losses and loss adjustment expenses.

Credit facility

As of December 31, 2022, we had $29,288 principal outstanding on our term loan under the Second Amended and Restated Credit Agreement with First Horizon Bank. The loan has a variable interest rate of SOFR plus 3.50%, which was 7.59% as of December 31, 2022. The outstanding principal balance of the loan is to be repaid in quarterly installments that escalate from approximately $206 to $825 until March 2025. See Note 12 of the Notes to the Consolidated Financial Statements for further details regarding our credit facility.

Surplus Notes

As of December 31, 2022, we had $50,000 principal outstanding on our Surplus Notes due 2042. Interest on the Surplus Notes accrues at the rate of 6.75% per year, and is payable quarterly. See Note 12 of the Notes to the Consolidated Financial statements for further details regarding our Surplus Notes.

Operating lease obligations

As of December 31, 2022, we leased office space and equipment in 12 states. Our leases have remaining terms ranging from one month to 54 months and some of our leases include options to extend the lease for up to 5 years. Future expected cash obligations include $1,940, $1,064, $164, $44 and $2 during the years ended December 31, 2023, 2024, 2025, 2026 and 2027, respectively. See Note 17 of the Notes to the Consolidated Financial Statements for further details regarding our leases.

Financial condition

Stockholders' Equity

As of December 31, 2022, total stockholders' equity was $315,019, compared to $421,909 as of December 31, 2021, a decrease of $106,890. The decrease in stockholders' equity over the period was driven primarily by $108,362 of comprehensive loss. We had $2,279 of unrecognized stock compensation as of December 31, 2022 related to non-vested stock compensation granted. The Company recognized $1,496 of stock compensation during the year ended December 31, 2022.

Investment Portfolio

Our invested asset portfolio consists of fixed maturities, equity securities, other investments and short-term investments. The majority of the investment portfolio was comprised of fixed maturity securities of $552,243 at December 31, 2022, that were classified as available-for-sale. Available-for-sale investments are carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of accumulated other comprehensive income.

Our investment portfolio objectives are to maintain liquidity, facilitating financial strength and stability and ensuring regulatory and legal compliance. Our investment portfolio consists of available-for-sale fixed maturities and other equity investments, all of which are carried at fair value. We seek to hold a high-quality portfolio of investments that is managed by a professional investment advisory management firm in accordance with the Company's investment policy and routinely reviewed by our management team. Our investments, however, are subject to general economic conditions and market risks as well as risks inherent to particular securities. The Company's investment portfolio has the following objectives:

•meet insurance regulatory requirements with respect to investments under the applicable insurance laws;

•maintain an appropriate level of liquidity to satisfy the cash requirements of current operations and long-term obligations;

•adjust investment risk to offset or complement insurance risk based on our total corporate risk tolerance; and

•realize the highest possible levels of investment income and after-tax total rates of return.

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The composition of our investment portfolio is shown in the following table as of December 31, 2022 and December 31, 2021.

	December 31, 2022
	Cost or Amortized Cost		Fair Value
Fixed maturities:
U.S. government and government securities	$	65,405	$	62,552
Foreign governments	400		395
States, territories and possessions	17,310		15,854
Political subdivisions of states, territories and possessions	38,167		33,904
Special revenue and special assessment obligations	115,696		103,639
Industrial and public utilities	131,769		125,540
Commercial mortgage-backed securities	145,471		128,105
Residential mortgage-backed securities	26,716		25,112
Other loan-backed securities	53,231		51,613
Hybrid securities	6,233		5,529
Total fixed maturities	600,398		552,243
Equity securities	39,882		35,041
Total investments	$	640,280	$	587,284

	December 31, 2021
	Cost or Amortized Cost		Fair Value
Fixed maturities:
U.S. government and government securities	$	41,490	$	41,434
Foreign governments	2,500		2,490
States, territories and possessions	10,593		10,766
Political subdivisions of states, territories and possessions	39,170		40,002
Special revenue and special assessment obligations	93,664		95,991
Industrial and public utilities	100,774		103,257
Commercial mortgage-backed securities	119,378		118,218
Residential mortgage-backed securities	16,549		17,368
Other loan-backed securities	41,236		41,425
Hybrid securities	105		110
Total fixed maturities	465,459		471,061
Equity securities	984		969
Total investments	$	466,443	$	472,030

The following table shows the percentage of the total estimated fair value of our fixed maturity securities as of December 31, 2022 and December 31, 2021 by credit rating category, using the lower of ratings assigned by Moody's Investor Service or S&P.

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	December 31, 2022
(in thousands, except percentages)	Fair Value		% of Total
AAA	$	106,254	19.2	%
AA	312,903		56.7	%
A	98,963		17.9	%
BBB	30,122		5.5	%
BB	3,965		0.7	%
Below investment grade	36		—	%
Total fixed maturities	$	552,243	100.0	%

	December 31, 2021
(in thousands, except percentages)	Fair Value		% of Total
AAA	$	80,455	17.1	%
AA	278,557		59.1	%
A	77,097		16.4	%
BBB	33,959		7.2	%
BB	947		0.2	%
Below investment grade	46		—	%
Total fixed maturities	$	471,061	100.0	%

Critical Accounting Estimates

The consolidated financial statements included in this Annual Report include amounts based on the use of estimates and judgments of management. The Company's accounting policies are described in the Notes to the Consolidated Financial Statements. We identified the accounting estimates that are critical to the understanding of our financial position and results of operations. Critical accounting estimates are defined as those estimates made in accordance with GAAP that are both reasonably likely to have or have had a material impact on our financial condition and results of operations and require us to exercise significant judgment. We use significant judgment concerning future results and developments in applying these critical accounting estimates and in preparing our 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. Actual results may differ materially from the estimates and assumptions used in preparing the consolidated financial statements. We evaluate our estimates regularly using information that we believe to be relevant.

Unpaid loss and loss adjustment expenses

The Company estimates the liability for the expected ultimate cost of unpaid loss and LAE as of the balance sheet date. Our reserves for unpaid loss and LAE represent the cost of all reported loss and LAE expenses as well as those that have been incurred but not yet reported. The estimated losses and LAE are regularly reviewed and adjusted as necessary based on historical experience and as the Company obtains new information.

We categorize our reserves for unpaid loss and LAE into two types: case reserves and incurred but not yet reported (IBNR). We establish our case reserves based on claims information reported to us through our claims administrator. Our case reserves include an estimate of the ultimate losses from the claims including administrative costs associated with the settlement of the claim. Our claims department uses their knowledge of the specific claim along with internal and external experts, including underwriters and independent actuaries, to estimate the expected ultimate losses.

In addition to case reserves, we establish a reserve for IBNR. With the assistance of an independent actuarial firm, we estimate the total loss and LAE related to IBNR which is comprised of: (a) future payments on claims that existed as of the balance sheet date but had not yet been reported to us; (b) a reserve for the additional development on claims that have been reported to us; and (c) a provision for additional payments on closed claims that may reopen. These estimates are based on

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historical information, industry information and estimates of trends that may impact the ultimate frequency and severity of IBNR claims.

In order to limit the Company's maximum losses and diversify its exposure, we cede a portion of our obligations for losses and LAE through reinsurance treaties with third party reinsurers. The amount of reinsurance that will be recoverable on our losses and LAE includes both the reinsurance recoverables on our excess of loss reinsurance contracts as well as reinsurance recoverables under our quota share contracts.

Our loss reserves, including the main components of such reserves, were as follows:

	December 31,
	2022		2021
Case reserves	$	288,203	$	256,383
IBNR reserves	344,707		287,937
Gross unpaid loss and loss adjustment expenses	632,910		544,320
Less: reinsurance recoverables on unpaid loss and loss adjustment expenses	(378,455)		(369,008)
Net unpaid loss and loss adjustment expenses	$	254,455	$	175,312

The process of estimating the reserves for unpaid loss and LAE expenses requires a high degree of judgment. Estimates are prepared using several generally accepted actuarial methodologies for estimating loss reserves including, but not limited to, the incurred development method, paid development method, incurred Bornhuetter-Ferguson method, hindsight IBNR/case reserve ratios, and loss ratio method. The methods used vary based on the line of business and the Partner Program or general agency that generated the business. Considering each of the alternative ultimate estimates, we determine the appropriate estimate of ultimate loss for each line of business and Program Partner.

Reinsurance recoverables

Reinsurance recoverables represent the portion of our unpaid loss and LAE that are ceded to third party reinsurers. The ceding of insurance does not relieve the Company of its primary liability to policyholders. We are required to pay claims even if a reinsurer fails to pay the Company under the terms of a reinsurance contract. We calculate the amounts recoverable from reinsurers based on our estimates of the underlying loss and LAE expenses as well as the terms and conditions of the reinsurance contracts.

Investment fair value measurements

Our investments in fixed maturity securities are classified as available-for-sale and are reported at fair value with unrealized gains and losses reported as a component of other comprehensive income, net of deferred taxes. Our investments in equity securities are reported at fair value with unrealized gains and losses reported as net investment income in the Consolidated Statement of Operations. In determining the fair value of investments, we utilize a hierarchy based on the quality of inputs used to measure the fair value. The three levels of the fair value hierarchy are as follows:

Level 1: Fair values primarily based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2: Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities.

Level 3: Fair values primarily based on valuations derived when one or more of the significant inputs are unobservable. With little or no observable market, the determination of fair value uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability.

We utilize a third-party pricing service to assist us with the valuation of our investments. The fair value of our available-for-sale fixed maturity and equity securities are based on quoted market prices, where available. These fair values are obtained primarily from our third-party pricing service, which generally include Level 1 or Level 2 inputs. Inputs often used in the valuation methodologies include, but are not limited to, transaction data, yield, quality, coupon rate, maturity, issue type, trading characteristics and market activity.

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The Company regularly reviews its investment portfolio to determine if other-than-temporary impairment exists for any fixed maturity securities. An investment is impaired when the fair value of the investment declines to an amount less than the cost or amortized cost of that investment. If a security is impaired, the Company bifurcates the impairment into (a) the amount of impairment related to credit loss and (b) the amount of impairment related to other factors. The amount of impairment related to credit loss is recorded as an impairment loss and is included in net income. The impairment related to all other factors is recorded as a reduction in the fair value of the security and is included in accumulated other comprehensive income.

Goodwill and intangible asset valuation

We prepare an impairment analysis for goodwill and other intangible assets. In evaluating for impairment, we identify whether events or circumstances have occurred that may impact the carrying value of these assets and make assumptions regarding future events such as cash flows and profitability. If the carrying amount of the assets are deemed to be not recoverable, the Company records an impairment loss. Differences in the assumptions of recoverability and actual results could materially impact the carrying amount of these assets and our operating results.

As a result of the Merger Agreement entered into on December 15, 2022, the calculated fair value of the Company exceeded the book value and resulted in an impairment charge of $76,053 recognized during the year ended December 31, 2022. The fair value measurement was based on the implied equity value of the Company at the purchase price of $6.15 per common share.

Business combinations

The Company strategically identifies opportunities to grow through acquisition. Such business combinations include the identification and valuation of certain assets acquired and liabilities assumed including the valuation of goodwill and intangible assets. Valuations are determined using a market participant assumption and generally include the following valuation approaches:

The Cost Approach is based on replacement value using the acquired company's balance sheet as the basis for valuing the business or individual assets. Under this approach, the appraiser must determine the potential value that is attainable from the sale of all assets or individual assets less the repayment of any associated debt. Separate valuations are performed for each item on the balance sheet and all tangible and intangible assets and liabilities are adjusted to their respective values.

The Income Approach measures the value of an ownership interest in a company or asset as the present value of the future economic benefits of ownership. The future ownership benefits may be represented by the expected earnings or cash flow of a company or asset over an investment period. The expected earnings or cash flow are then converted to their net present value using a rate of return suitable for the risks associated with realizing those future benefits.

The Market Approach asserts that the value of property of any kind is equal to the cost of obtaining an equally desired substitute. Under this approach, the appraisal is based on transactions of assets similar to the subject asset. Value multiples from these transactions are applied to the subject asset's data to arrive at the asset's value.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the result of changes in interest rates, equity prices, foreign currency exchange rates and commodity prices. The primary components of market risk affecting us are credit risk and interest rate risk. We do not have exposure to foreign currency exchange rate risk or commodity risk.

Credit risk

Credit risk is the potential loss resulting from adverse changes in an issuer’s ability to repay its debt obligations. We have exposure to credit risk as a holder of fixed maturity investments. Our risk management strategy and investment policy are to primarily invest in debt instruments of high credit quality issuers and to limit the amount of credit exposure with respect to particular ratings categories and any one issuer. At December 31, 2022, our fixed maturity portfolio had an average rating of "AA," with approximately 93.8% of securities in that portfolio rated "A" or better by at least one nationally recognized rating organization. We monitor the financial condition of all issuers of fixed maturity securities in our portfolio. Our policy is to manage investment risk while realizing the highest possible levels of investment income and after-tax total rates of return. As

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such, we may adjust our allocation in higher credit risk assets so long as the investments meet all applicable insurance laws, regulatory requirements and our approved investment guideline policies.

In addition, we are subject to credit risk with respect to our third-party reinsurers. Although our third-party reinsurers are obligated to reimburse us to the extent we cede risk to them, we are ultimately liable to our policyholders on all risks we have ceded. As a result, reinsurance contracts do not limit our ultimate obligations to pay claims covered under the insurance policies we issue and we might not collect amounts recoverable from our reinsurers. To address this risk, we require our reinsurance counterparties who do not have an A.M. Best Financial Strength Rating of "A-" or higher to post collateral. Additionally, we place the third-party reinsurance for the majority of our Program Partners. Controlling the reinsurance placement gives us greater influence over the structure and terms of the reinsurance.

Interest rate risk

Interest rate risk is the risk that we will incur economic losses due to adverse changes in interest rates. The primary market risk to the investment portfolio is interest rate risk associated with investments in fixed maturity securities. Fluctuations in interest rates have a direct effect on the market valuation of these securities. When market interest rates rise, the fair value of our fixed maturity securities decreases. Conversely, as interest rates fall, the fair value of our fixed maturity securities increases. We manage this interest rate risk by investing in securities with varied maturity dates and by managing the duration of our investment portfolio to the duration of our reserves. Expressed in years, duration is the weighted average payment period of cash flows, where the weighting is based on the present value of the cash flows. We set duration targets for our fixed income investment portfolios after consideration of the estimated duration of our liabilities and other factors. The effective weighted average duration of the portfolio as of December 31, 2022 was 4.2 years. We had fixed maturity securities with a fair value of $552 million at December 31, 2022 that were subject to interest rate risk. We estimate that a 100-basis point increase in interest rates would cause a 3.9% decline in the estimated fair value of our fixed maturities portfolio, while a 100-basis point decrease in interest rates would cause a 4.1% increase in the estimated fair value of that portfolio. The selected scenarios are not predictions of future events, but rather illustrate the effect that such events may have on the fair value of our fixed maturities portfolio.

Changes in interest rates will have an immediate effect on comprehensive income and stockholders’ equity but will not ordinarily have an immediate effect on net income. Actual results may differ from the hypothetical change in market rates assumed in this disclosure. This sensitivity analysis does not reflect the results of any action that we may take to mitigate such hypothetical losses in fair value.

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Item 8. Financial Statements and Supplementary Data

Trean Insurance Group, Inc. and Subsidiaries

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	76
Consolidated Balance Sheets	77
Consolidated Statements of Operations	78
Consolidated Statements of Comprehensive Income (Loss)	79
Consolidated Statements of Stockholders' Equity and Redeemable Preferred Stock	80
Consolidated Statements of Cash Flows	82
Notes to the Consolidated Financial Statements	84
Schedule II - Condensed Financial Information of Registrant - Parent Company Only	121

Pursuant to Rule 7-05 of Regulation S-X, Financial Statement Schedules I, III, IV, V and VI have been omitted as the information to be set forth therein is not applicable or has been included in the Consolidated Financial Statements or notes thereto.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Trean Insurance Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Trean Insurance Group, Inc. and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, stockholders' equity and redeemable preferred stock, and cash flows, for each of the three years in the period ended December 31, 2022, the related notes and the schedules listed in the Index at Item 8 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

March 16, 2023

We have served as the Company’s auditor since 2019.

76

Trean Insurance Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share data)

	December 31,
	2022		2021
Assets
Fixed maturities, at fair value (amortized cost of $600,398 and $465,459, respectively)	$	552,243	$	471,061
Equity securities, at fair value (cost $39,882 and $984, respectively)	35,041		969
Total investments	587,284		472,030
Cash and cash equivalents	107,991		129,577
Restricted cash	1,083		407
Accrued investment income	3,726		2,344
Premiums and other receivables	160,282		141,920
Income taxes receivable	5,841		460
Reinsurance recoverable	408,522		377,241
Prepaid reinsurance premiums	124,269		129,411
Deferred policy acquisition cost, net	18,858		13,344
Property and equipment, net	7,151		7,632
Right of use asset	2,764		4,530
Deferred tax asset, net	5,958		—
Goodwill	66,294		142,347
Intangible assets, net	67,117		73,114
Other assets	14,799		8,658
Total assets	$	1,581,939	$	1,503,015
Liabilities
Unpaid loss and loss adjustment expenses	$	632,910	$	544,320
Unearned premiums	229,112		219,940
Funds held under reinsurance agreements	241,291		199,410
Reinsurance premiums payable	50,861		45,130
Accounts payable, accrued expenses and other liabilities	32,609		29,448
Lease liability	3,063		4,976
Deferred tax liability, net	—		7,520
Debt	77,074		30,362
Total liabilities	1,266,920		1,081,106
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 par value per share (100,000,000 authorized, zero issued and outstanding)	—		—
Common stock, $0.01 par value per share (600,000,000 authorized, respectively; 51,222,485 and 51,176,887 issued and outstanding, respectively)	512		512
Additional paid-in capital	290,095		288,623
Retained earnings	62,435		128,390
Accumulated other comprehensive income (loss)	(38,023)		4,384
Total stockholders' equity	315,019		421,909
Total liabilities and stockholders' equity	$	1,581,939	$	1,503,015

See accompanying notes to the consolidated financial statements.

77

Trean Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except share and per share data)

	Year Ended December 31,
	2022		2021		2020
Revenues
Gross written premiums	$	651,303	$	634,164	$	484,249
Increase in gross unearned premiums	(9,074)		(61,911)		(52,215)
Gross earned premiums	642,229		572,253		432,034
Ceded earned premiums	(357,605)		(373,573)		(323,567)
Net earned premiums	284,624		198,680		108,467
Net investment income	10,087		8,721		11,669
Gain on revaluation of Compstar investment	—		—		69,846
Net realized gains	285		49		3,365
Other revenue	8,246		10,240		12,104
Total revenue	303,242		217,690		205,451
Expenses
Losses and loss adjustment expenses	203,877		130,772		50,774
General and administrative expenses	86,210		54,706		38,668
Other expenses	3,349		845		13,427
Intangible asset amortization	5,998		5,826		2,573
Noncash stock compensation	1,496		1,522		506
Interest expense	3,270		1,685		1,922
Goodwill impairment	76,053		—		—
Total expenses	380,253		195,356		107,870
Gains (losses) on embedded derivatives	12,024		2,226		(6,155)
Other income	106		219		1,025
Income (loss) before taxes	(64,881)		24,779		92,451
Income tax expense	1,074		5,449		6,235
Equity earnings in affiliates, net of tax	—		—		2,333
Net income (loss)	$	(65,955)	$	19,330	$	88,549
Earnings (loss) per share:
Basic	$	(1.29)	$	0.38	$	2.02
Diluted	$	(1.29)	$	0.38	$	2.02
Weighted average shares outstanding:
Basic	51,203,370		51,162,293		43,744,003
Diluted	51,203,370		51,173,450		43,744,744

See accompanying notes to the consolidated financial statements.

78

Trean Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

	Year Ended December 31,
	2022		2021		2020
Net income (loss)	$	(65,955)	$	19,330	$	88,549
Other comprehensive income (loss), net of tax:
Unrealized gains (losses):
Unrealized investment gains (losses) arising during the period	(54,720)		(11,386)		9,028
Decrease in fair value of interest rate cap	(45)		—		—
Income tax expense (benefit)	(11,488)		(2,391)		1,903
Unrealized gains (losses), net of tax	(43,277)		(8,995)		7,125
Less reclassification adjustments to:
Net realized investment gains (losses) included in net realized gains (losses)	(1,101)		59		252
Income tax expense (benefit)	(231)		12		53
Total reclassifications included in net income (loss), net of tax	(870)		47		199
Other comprehensive income (loss)	(42,407)		(9,042)		6,926
Total comprehensive income (loss)	$	(108,362)	$	10,288	$	95,475

See accompanying notes to the consolidated financial statements.

79

Trean Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity and Redeemable Preferred Stock

(in thousands, except share and unit data)

	Redeemable Preferred Stock						Members' Equity																	Accumulated Other Comprehensive Income (Loss)
				Preferred Stock			Class A - Non Voting			Class B - Voting			Class B - Non Voting			Class C - Non Voting			Common Stock			Additional Paid in Capital				Retained Earnings (Deficit)		Total Stockholders' Equity
	Shares	Amount		Shares	Amount		Units	Amount		Units	Amount		Units	Amount		Units	Amount		Shares	Amount
Balance at January 1, 2020	51	$	5,100	—	$	—	65,036,780	$	65,037	5,045,215	$	5,045	8,159,775	$	8,160	196,588	$	196	—	$	—	$	17,995	$	6,500	$	38,682	$	141,615
Issuance of Class C units	—	—		—	—		—	—		—	—		—	—		196,587	197		—	—		—		—		—		197
Distributions to members	—	—		—	—		—	—		—	—		—	—		—	—		—	—		(1,776)		—		(18,043)		(19,819)
Dividends on Series B preferred stock	—	—		—	—		—	—		—	—		—	—		—	—		—	—		—		—		(128)		(128)
Redemption of Series B Redeemable Preferred Stock	(51)	(5,100)		—	—		—	—		—	—		—	—		—	—		—	—		—		—		—		—
Corporate recapitalization	—	—		—	—		(65,036,780)	(65,037)		(5,045,215)	(5,045)		(8,159,775)	(8,160)		(393,175)	(393)		37,386,394	374		78,261		—		—		—
Issuance of common shares for acquisition of Compstar	—	—		—	—		—	—		—	—		—	—		—	—		6,613,606	66		99,138		—		—		99,204
Proceeds from common stock sold in initial public offering, net of offering costs	—	—		—	—		—	—		—	—		—	—		—	—		7,142,857	71		93,068		—		—		93,139
Common stock issuances pursuant to equity compensation awards	—	—		—	—		—	—		—	—		—	—		—	—		5,925	—		(82)		—		—		(82)
Stock compensation expense	—	—			—		—	—		—	—		—	—		—	—		—	—		506		—		—		506
Other comprehensive income	—	—		—	—		—	—		—	—		—	—		—	—		—	—		—		6,926		—		6,926
Net income	—	—		—	—		—	—		—	—		—	—		—	—		—	—		—		—		88,549		88,549
Balance at December 31, 2020	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—	51,148,782	$	511	$	287,110	$	13,426	$	109,060	$	410,107

See accompanying notes to the consolidated financial statements.

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	Preferred Stock			Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Deficit)		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	—	$	—	51,148,782	$	511	$	287,110	$	13,426	$	109,060	$	410,107
Stock compensation expense	—	—		—	—		1,522		—		—		1,522
Common stock issuances pursuant to equity compensation awards	—	—		28,105	1		(94)		—		—		(93)
Proceeds from short swing rule	—	—		—	—		85		—		—		85
Other comprehensive loss	—	—		—	—		—		(9,042)		—		(9,042)
Net income	—	—		—	—		—		—		19,330		19,330
Balance at December 31, 2021	—	—		51,176,887	$	512	$	288,623	$	4,384	$	128,390	$	421,909
Stock compensation expense	—	—		—	—		1,496		—		—		1,496
Common stock issuances pursuant to equity compensation awards	—	—		45,598	—		(24)		—		—		(24)
Other comprehensive loss	—	—		—	—		—		(42,407)		—		(42,407)
Net loss	—	—		—	—		—		—		(65,955)		(65,955)
Balance at December 31, 2022	—	$	—	51,222,485	$	512	$	290,095	$	(38,023)	$	62,435	$	315,019

See accompanying notes to the consolidated financial statements.

81

Trean Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

	Year Ended December 31,
	2022		2021		2020
Operating activities
Net income (loss)	$	(65,955)	$	19,330	$	88,549
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	6,818		6,833		3,485
Stock compensation	1,496		1,522		506
Net gains on investments	(285)		(49)		(5,155)
Unrealized (gain) loss on embedded derivatives	(15,681)		(4,666)		2,810
Unrealized losses on equity securities	4,797		—		—
Forgiveness of PPP loan	—		—		(325)
Gain on revaluation of Compstar investment	—		—		(69,846)
Bond amortization and accretion	1,050		2,297		1,915
Issuance of member units as compensation	—		—		197
Equity losses (earnings) in affiliates, net of tax	—		—		(2,333)
Distributions from equity method investments	—		—		2,953
Deferred income taxes	(2,221)		(2,405)		(1,035)
Amortization of debt discount, deferred financing costs and interest rate cap	209		168		132
Goodwill impairment	76,053		—		—
Changes in operating assets and liabilities:
Accrued investment income	(1,382)		114		17
Premiums and other receivables	(18,362)		(31,921)		(18,499)
Reinsurance recoverable on paid and unpaid losses	(31,281)		(34,028)		(30,805)
Prepaid reinsurance premiums	5,142		(21,441)		(26,963)
Right of use asset	1,766		1,942		(5,121)
Other assets	(11,553)		(13,776)		4,459
Unpaid loss and loss adjustment expenses	88,590		86,503		42,985
Unearned premiums	9,172		61,953		50,367
Funds held under reinsurance agreements	58,191		43,062		7,861
Reinsurance premiums payable	5,731		(11,939)		3,449
Accounts payable, accrued expenses and other liabilities	3,946		(7,951)		(2,976)
Lease liability	(1,913)		(2,051)		5,371
Income taxes payable and receivable	(5,381)		862		(1,986)
Net cash provided by operating activities	108,947		94,359		50,012
Investing activities
Payments for capital expenditures	(339)		(346)		(807)
Proceeds from sale of equity method investment	—		232		3,000
Return of capital on equity method investment	—		—		115
Purchase of investments, available for sale	(293,976)		(197,041)		(129,233)
Proceeds from investments sold, matured or repaid	118,875		80,794		105,322
Acquisition of subsidiary, net of cash received	—		(3,795)		(10,534)
Cash received in the acquisition of Compstar	—		—		11,891
Net cash used in investing activities	(175,440)		(120,156)		(20,246)
Financing activities
Shares redeemed for payroll taxes	(23)		(94)		(82)
Proceeds from initial public offering	—		—		99,643
Deferred offering costs	—		—		(5,839)
Proceeds from surplus notes	48,455		—		—
Proceeds from credit agreement	—		—		32,453
Principal payments on debt	(1,650)		(1,444)		(49,728)
Payment for deferred financing costs	(276)		—		—
Payment for interest rate cap	(173)		—		—
Payment for acquisition of subsidiary	(750)		—		—
Proceeds from short swing rule	—		85		—
Buyback of preferred shares	—		—		(5,100)
Distribution to members	—		—		(19,819)
Dividends paid on preferred stock	—		—		(128)
Net cash provided by (used in) financing activities	45,583		(1,453)		51,400
Net increase (decrease) in cash, cash equivalents and restricted cash	(20,910)		(27,250)		81,166
Cash, cash equivalents and restricted cash ‑ beginning of period	129,984		157,234		76,068
Cash, cash equivalents and restricted cash ‑ end of period	$	109,074	$	129,984	$	157,234

See accompanying notes to the consolidated financial statements.

82

	December 31,
Disaggregation of cash and restricted cash:	2022		2021		2020
Cash and cash equivalents	$	107,991	$	129,577	$	153,149
Restricted cash	1,083		407		4,085
Total cash, cash equivalents and restricted cash	$	109,074	$	129,984	$	157,234

	Year Ended December 31,
Supplemental disclosure of cash flow information:	2022		2021		2020
Cash paid during the year for:
Interest	$	2,704	$	1,517	$	1,790
Income taxes	8,675		6,957		9,259
Non-cash investing and financing activity:
Right-of-use assets obtained in exchange for new operating lease liabilities	307		338		8,536
Non-cash transfer of investments to settle funds held for reinsurance	2,750		13,562		—
Non-cash investments received for collateral under reinsurance agreements	2,121		—		—
Non-cash transfer of investments to settle amounts held for others in accounts payable	—		26,211		—
Contingent consideration for the acquisition of subsidiary	—		1,500		—
Shares issued for the acquisition of subsidiary	—		—		99,204
Accrued purchases of property and equipment	—		—		132
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	2,512		2,501		2,101

See accompanying notes to the consolidated financial statements.

83

Notes to the Consolidated Financial Statements

Note 1. Business and Basis of Presentation

In July 2020, Trean Insurance Group, Inc. (together with its wholly owned subsidiaries, the Company) completed its initial public offering ("IPO") of the Company's common stock, par value $0.01 ("Common Stock"). Prior to the completion of the IPO, the Company effected the following reorganization transactions: (i) each of Trean Holdings LLC ("Trean"), an insurance services company, and BIC Holdings LLC ("BIC"), a property and casualty insurance holding company, contributed all of their respective assets and liabilities to Trean Insurance Group, Inc., a newly formed direct subsidiary of BIC, in exchange for (i) shares of Common Stock; and (ii) upon the completion of the transfers by Trean and BIC, Trean and BIC were dissolved and distributed in-kind common shares to the pre-IPO unitholders.

For the purpose of financial statement disclosures, references to the consolidated financial statements for all post-IPO periods include the accounts of Trean Insurance Group, Inc., along with its wholly owned subsidiaries, after elimination of intercompany accounts and transactions. References to the consolidated financial statements for all pre-IPO periods include the combined financial statements of BIC and Trean, along with their wholly owned subsidiaries, after elimination of intercompany accounts and transactions.

The Company provides products and services to the specialty insurance market. Historically, the Company has focused on specialty casualty markets that are believed to be under served and where the Company’s expertise allows the Company to achieve higher rates, such as niche workers' compensation markets and small- to medium-sized specialty casualty insurance programs. The Company underwrites specialty-casualty insurance products both through programs, where the Company partners with other organizations (Program Partners), and also through the Company’s own managing general agencies (Owned MGAs). The Company also provides Program Partners with a variety of services, including issuing carrier services, claims administration, and reinsurance brokerage from which the Company generates fee-based revenues.

The Company's wholly owned subsidiaries include (a) Benchmark Holding Company, a property and casualty insurance holding company, which owns Benchmark Insurance Company ("Benchmark"), a property and casualty insurance company domiciled in the state of Kansas, American Liberty Insurance Company, Inc. ("ALIC"), a property and casualty insurance company domiciled in the state of Utah and 7710 Insurance Company ("7710"), a property and casualty insurance company domiciled in the state of South Carolina; (b) Compstar Insurance Services LLC, a California-based general agency; and (c) Trean Corporation ("Trean Corp"), a reinsurance intermediary manager and a managing general agent, which consists of the following wholly owned subsidiaries: Trean Reinsurance Services, LLC ("TRS"), a reinsurance intermediary broker; Benchmark Administrators LLC ("BIC Admin"), a claims third-party administrator; Western Integrated Care, LLC ("WIC"), a managed care organization; and Westcap Insurance Services, LLC ("Westcap"), a managing general agent based in California. Benchmark's wholly owned subsidiary is Benchmark Specialty Insurance Company ("BSIC"), a property and casualty insurance company domiciled in the state of Arkansas.

The accompanying consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and with the instructions to Form 10-K under the Securities Exchange Act of 1934. All dollar amounts are shown in thousands, except share and per share amounts.

Pending Merger

As previously disclosed, on December 15, 2022, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), by and among the Company, Treadstone Parent Inc., a Delaware corporation ("Parent"), and Treadstone Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Parent ("Merger Sub"), providing for the acquisition of the Company by affiliates of Altaris Capital Partners, LLC, a Delaware limited liability company ("Altaris"), subject to the terms and conditions set forth in the Merger Agreement. Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company (the "Merger") effective as of the effective time of the Merger (the "Effective Time"). As a result of the Merger, Merger Sub will cease to exist, and the Company will survive as a wholly-owned subsidiary of Parent.

As a result of the Merger, at the Effective Time, subject to any applicable withholding taxes, each share of Common Stock, issued and outstanding immediately prior to the Effective Time, other than Cancelled Shares (as defined in the Merger

84

Agreement) and Dissenting Shares (as defined in the Merger Agreement), will be converted into the right to receive $6.15 in cash, without interest.

The consummation of the Merger is subject to the satisfaction or waiver of various customary conditions set forth in the Merger Agreement, including, but not limited to: (i) the adoption of the Merger Agreement and approval of the Merger and the other transactions by (x) the holders representing a majority of the aggregate voting power of the outstanding shares of Common Stock beneficially owned by the Unaffiliated Stockholders (as defined in the Merger Agreement) entitled to vote thereon as well as (y) the holders representing a majority of the aggregate voting power of the outstanding shares of Common Stock entitled to vote thereon; (ii) all required insurance regulatory approvals (or the applicable regulatory authorities’ non-objection to requests for exemptions in respect thereof) shall have been obtained; (iii) the expiration or termination of any applicable waiting period (or any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”); (iv) the absence of any restraint or law preventing or prohibiting the consummation of the Merger; (v) the accuracy of Parent’s, Merger Sub’s, and the Company’s representations and warranties (subject to certain materiality qualifiers); (vi) Parent’s, Merger Sub’s, and the Company’s compliance in all material respects with their respective obligations under the Merger Agreement; and (vii) the absence of any Company Material Adverse Effect (as defined in the Merger Agreement) since the date of the Merger Agreement.

Merger related expenses recognized during the year ended December 31, 2022 were approximately $3,081 and are included in other expenses in the consolidated statements of operations.

See "Part I—Item 1A Risk Factors—Risks Related to the Proposed Merger" for a discussion of certain risks related to the Merger.

Use of estimates

While preparing the consolidated financial statements, the Company has made certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, as well as reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require extensive use of estimates include the reserves for unpaid losses and loss adjustment expenses ("LAE"), reinsurance recoverables, investments, goodwill and intangible assets. Except for the captions on the consolidated balance sheets and consolidated statements of comprehensive income, generally, the term loss(es) is used to collectively refer to both losses and LAE.

Accounting pronouncements

Recently adopted policies

In January 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 ("ASU 2020-01"). This update addresses the accounting for certain equity securities upon the application or discontinuation of the equity method of accounting. Further, the update addresses scope considerations for forward contracts and purchased options on certain securities. ASU 2020-01 is effective for annual periods beginning after December 15, 2021, including interim periods thereafter. The Company adopted this standard effective January 1, 2022. Adoption of this standard did not have a material impact on the consolidated financial statements.

Pending policies

The Company completed its IPO in July 2020, and is an emerging growth company as defined under federal securities laws. As such, the Company has elected to adopt pending accounting policies under the dates required for private companies. Therefore, the dates included within this section reflect the effective dates for the adoption of new accounting policies required by private companies.

In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (ASU 2020-03). This update represents changes to clarify and improve the codification to allow for easier application by eliminating inconsistencies and providing clarification on items such as (i) the application of fair value option disclosures; (ii) the accounting for fees related to modifications of debt; and (iii) aligning the contractual term of a net investment in a lease in

85

accordance with ASC Topic 326, Financial Instruments - Credit Losses, and the lease term determined in accordance with ASC Topic 842, Leases. The Company adopted items (i) and (ii) effective January 1, 2020 and will adopt item (iii) on January 1, 2023. Adoption of this standard has not had, and is not expected to have, a material impact on the consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (ASU 2016-13). This update requires financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Additionally, credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which the fair value is below the amortized cost. ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2023. Adoption of this standard is not expected to have a material impact on the consolidated financial statements.

In October 2021, the FASB issued ASU No 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). This update requires contract assets and contract liabilities acquired in a business combination to be recognized and measured at the acquisition date in accordance with Accounting Standards Codification ("ASC") Topic 606 as if the acquirer had originated the contracts. ASU 2021-08 is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2024 on a prospective basis. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

Note 2. Significant Accounting Policies

Cash and cash equivalents: Cash and cash equivalents consist of all cash accounts, money market investments, and investments with maturities, at the time of acquisition, of 90 days or less. These amounts are carried at cost, which approximates fair value. Although the Company maintains its cash accounts in a limited number of commercial banks, management of the Company believes it is not exposed to any significant credit risk on cash and short-term investments.

Restricted cash of $1,083 and $407 represents fiduciary funds held for other companies as of December 31, 2022 and 2021, respectively. There is a corresponding obligation to the other companies included in accounts payable, accrued expenses and other liabilities as of December 31, 2022 and 2021 (Note 11).

Investments: Investment securities, consisting of fixed maturities, are classified as available-for-sale and reported at fair value. The change in unrealized gain and loss on fixed maturity investments is recorded as a component of accumulated other comprehensive income in the consolidated balance sheets, net of the related deferred tax effect, until realized. The change in unrealized gain and loss on equity securities is recorded as a component of net income and is included in net investment income on the consolidated statements of operations. Realized gains and losses from the sale of available-for-sale securities are determined on a specific-identification basis and included in net realized gains (losses) on the consolidated statement of operations on the trade date. The Company amortizes any premium or discount on fixed maturities over the remaining maturity period of the related securities and reports the amortization in net investment income. Dividend and interest income is recognized when earned.

The Company regularly reviews its investment portfolio to determine if other-than-temporary impairment exists for any debt securities. An investment is impaired when the fair value of the investment declines to an amount less than the cost or amortized cost of that investment. As part of the assessment process, the Company determines whether the impairment is temporary or other-than-temporary. The assessment is based on both quantitative criteria and qualitative information, considering a number of factors including, but not limited to: how long the security has been impaired; the amount of the impairment; or whether management intends to sell the debt security or it is more likely than not that management will have to sell the security before recovery of the amortized cost; the financial condition and near-term prospects of the issuer; whether the issuer is current on contractually-obligated interest and principal payments; key corporate events pertaining to the issuer and whether the market decline was affected by macroeconomic conditions.

If a debt security is impaired and management intends to sell the security or it is more likely than not that the Company will have to sell the security before the amortized cost is recovered, then the Company recognizes impairment loss in net realized gains (losses). If it is determined that an impairment of a debt security is other-than-temporary and management neither

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intends to sell the security nor is it more likely than not that the Company will have to sell the security before it is able to recover its cost or amortized cost, then the Company separates the impairment into (a) the amount of impairment related to credit loss and (b) the amount of impairment related to all other factors. The Company records the amount of the impairment related to the credit loss as an impairment charge in net income and the amount of the impairment related to all other factors in accumulated other comprehensive income. No other-than-temporary impairment was recorded for the years ended December 31, 2022, 2021 and 2020.

A large portion of the Company’s investment portfolio consists of fixed maturities which may be adversely affected by changes in interest rates as a result of governmental monetary policies, domestic and international economic and political conditions and other factors beyond the Company’s control.

Equity method investments: The Company held certain investments where the Company does not have control but has the ability to exercise significant influence are accounted for by the equity method of accounting. Under this method, the Company's investments in certain limited liability companies are recorded at cost and the investment accounts are adjusted for the Company's share of the entities' income or loss and for the distributions and contributions. The income and losses are recorded within equity earnings (losses) in affiliates, net of tax on the consolidated statements of operations.

Premium revenue: Premiums are earned over the policy period and are stated after deduction for reinsurance. The portion of premiums that will be earned in the future is deferred and reported as unearned premiums on the consolidated balance sheets.

Revenue from contracts with customers: Other revenue recorded by the Company includes brokerage, third-party administrative ("TPA"), management and consulting fees. The Company incurs certain costs associated with obtaining contracts with customers. Such contracts are one-year contracts and the amortization periods are one year or less. The Company has elected, as a practical expedient, to expense these contract costs as incurred.

Brokerage revenue includes the fees earned on excess of loss ("XOL") and quota share reinsurance treaties. Billings for brokerage revenues generally occur monthly. Revenue for reinsurance treaties consists of a single performance obligation whereas the total amount of consideration expected to be received is recorded on the effective date of the underlying contract. For XOL treaties, revenue is estimated based on the contractually specified minimum or deposit premiums. For quota share treaties, revenue is estimated based on the projected premium income provided by the ceding insurer. Brokerage fees are received based on the performance of the specified terms of the reinsurance treaty and thus, are considered variable consideration. Therefore, revenue is estimated and constrained to the extent it is probable a significant reversal of revenue will not occur, using the expected value method. Adjustments to revenue are recorded as additional evidence is received for the ultimate amount of brokerage earned under the contract.

The Company acts as a third-party claims administrator and earns TPA fees for providing such services. The fee structures vary based on the specific contract and can be dependent upon a number of factors which typically include agreed-upon fee rates, the total amount of premium written or collected under the agreement and the total time and expense incurred for processing claims. Billings for TPA fees occur on a monthly basis. TPA services consist of a single performance obligation which is recognized over time as claims are processed throughout the contract period. The volume of claims varies throughout the contract period and, therefore, the Company has elected to record revenue in an amount that reflects the total fees that the Company has a right to invoice for during the period.

The Company acts as a managing general agent ("MGA") to provide certain administrative and underwriting services. The consideration received varies based on certain factors including the contractual MGA rate and the total amount of premium written or collected under the contract. Billings for management fees occur on a monthly basis. Management fees consist of a single performance obligation that are recognized by the Company over time as services are provided. The volume of premium written or collected for a single contract varies throughout the contract period and, therefore, the Company has elected to record revenue in an amount that reflects the total fees that the Company has a right to invoice for during the period.

The Company provides consulting services for certain reinsurance contracts which includes services such as contract consultation and review. The compensation structure for consulting services is based on fixed periodic payments, generally monthly or quarterly. Consulting services consist of a single performance obligation which is recognized over the term of the consulting agreement.

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Deferred financing costs: Deferred financing costs are amortized as interest expense over the term of the underlying debt agreement by use of the effective interest method. Unamortized deferred financing costs are recorded as a reduction to long-term debt on the consolidated balance sheets.

Premiums and other receivables: Premiums receivable are uncollateralized customer obligations due under normal terms requiring payment by the policy due date. Amounts outstanding that are deemed uncollectible are written off. When payments are received on amounts previously written off, the total premiums written off is reduced in the period in which the payment is received. Advanced premiums are recognized when payment is received prior to the beginning coverage date and are included within unearned premiums on the consolidated balance sheets.

Premiums and other receivables consist of the following:

	December 31,
	2022		2021
Premiums receivable	$	152,823	$	133,200
Trade receivables	8,395		9,511
Notes receivable	14		12
Total premiums and other receivables	161,232		142,723
Less: Allowance for doubtful accounts	(950)		(803)
Net premiums and other receivables	$	160,282	$	141,920

The Company wrote off $1,427 and $26 to bad debt during the years ended December 31, 2022 and 2020, respectively. The Company recovered $177 of previously written off receivables during the year ended December 31, 2021. Bad debt expense is included within general and administrative expenses in the consolidated statements of operations.

Deferred policy acquisition costs: The Company incurs policy acquisition costs that vary with and are directly related to the production of new and renewal business. These costs consist of underwriting costs, net commissions (including ceding commissions) paid to agents, program managers and reinsurers, and premium taxes. Proceeds from reinsurance transactions that represent recovery of acquisition costs reduce applicable unamortized acquisition costs in such a manner that net acquisition costs are capitalized and charged to expense. Amortization of such policy acquisition costs is charged to general and administrative expense in proportion to premium earned over the estimated policy term.

To the extent that unearned premiums on existing policies are not adequate to cover the sum of expected losses, unamortized acquisition costs and policy maintenance costs, unamortized deferred policy acquisition costs are expensed to eliminate the premium deficiency. If the premium deficiency is greater than the unamortized policy acquisition costs, a liability is recorded. No premium deficiency exists as of December 31, 2022 or 2021.

Property and equipment, net: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is based on the estimated useful lives of the various classes of property and equipment and is determined based on the straight-line method. The estimated useful lives of property and equipment range from three to thirty years. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. The depreciation periods by asset class are as follows:

Asset class	Depreciation period
Building and building improvements	30 years
Furniture and fixtures	7 years
Office equipment	5 years
Software and computer equipment	3 years

Long-lived assets, such as property and equipment, and purchased intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be impaired, the Company recognizes impairment to the extent that the carrying value exceeds the asset’s fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted

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cash flow models, quoted market values, and third-party independent appraisals. The Company recorded no impairments of property and equipment for the years ended December 31, 2022, 2021 and 2020.

Reserve for unpaid loss and loss adjustment expenses: The liability for unpaid losses and LAE in the consolidated balance sheets represent the Company’s estimated losses incurred that remain unpaid as of the balance sheet date. The liability is recorded on an undiscounted basis.

Reserves for unpaid losses include estimates for both claims that have been reported and those that have been incurred but not reported. The estimated losses are regularly reviewed and adjusted as necessary based on historical experience and as the Company obtains new information.

The consolidated balance sheets include reserves of unpaid losses gross of the amounts related to unpaid losses recoverable from reinsurers. The consolidated statements of operations include the losses net of amounts ceded to reinsurers.

Reinsurance: The Company cedes all, or a portion of, its insurance in order to limit its maximum losses and diversify its exposure. Ceding insurance does not relieve the Company of its primary liability to policyholders.

The reinsurance agreements are short-term, prospective contracts, typically 12-months in duration. The Company records an asset, prepaid reinsurance premiums, and a liability, reinsurance premiums payable, for the contract amount when premium is written under the reinsurance agreements. Prepaid reinsurance premiums are amortized in the same manner in which unearned premium is recognized.

The Company earns ceding commissions on certain reinsurance contracts, which reduces operating expenses. Ceding commissions are amortized over the contract period consistent with deferred policy acquisition costs.

The Company records amounts recoverable from reinsurers on paid losses and estimated amounts recoverable on unpaid losses. The estimate of amounts recoverable on unpaid losses is based on unpaid losses in conjunction with the reinsured policies.

The Company estimates uncollectible amounts receivable from reinsurers based on an assessment of factors including the credit worthiness of the reinsurers and the adequacy of collateral obtained, where applicable. The Company recorded no bad debt expense related to reinsurance during the years ended December 31, 2022, 2021 and 2020.

Guaranty funds: State guaranty associations assess insurance companies for the estimated loss resulting from insurers encountering financial difficulty. The Company records these assessments, as well as any return assessments, upon notification of the state guaranty associations. The effect on operations or financial position relating to any estimated losses are not material for the years ended December 31, 2022, 2021 and 2020.

Income taxes: The Company recognizes deferred tax assets and liabilities for the future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which it is expected to recover or settle those temporary differences. Should a change in tax rates occur, the effect on deferred tax assets and liabilities will be recognized in operations in the period that includes the enactment date.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.

The Company records any income tax penalties and income tax-related interest as income tax expense in the period incurred. The Company did not incur any material tax penalties or income-tax-related interest during the years ended December 31, 2022, 2021 and 2020.

Concentrations of risk: The Company had total gross written premiums of $651,303, $634,164 and $484,249 for the years ended December 31, 2022, 2021 and 2020, respectively, including:

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	Year Ended December 31,
	2022		2021		2020
California	$	162,639	$	179,426	$	203,421
Texas	93,165		85,154		28,909
Michigan	45,821		46,271		41,830
Tennessee	16,006		15,966		12,347
Florida	36,559		27,982		8,359
Georgia	30,996		25,619		12,869
Arizona	28,685		26,272		27,950
Alabama	23,198		20,991		17,549
Pennsylvania	17,167		20,375		10,498
Indiana	13,943		13,422		8,508
Other geographical areas	183,124		172,686		112,009
Total gross written premium	$	651,303	$	634,164	$	484,249

As of December 31, 2022, approximately 21% and 26% of the Company’s investment portfolio was comprised of securities issued in industrial and public utility bonds and mortgage-backed securities, respectively, compared to 22% and 29% as of December 31, 2021, respectively. All of these securities are investment grade. This portfolio is widely diversified among various issuers and industries and does not depend on the economic stability of one issuer and industry.

The Company, from time to time, maintains its cash position at banks in excess of federally insured limits. The Company has not experienced any losses on such accounts.

Goodwill: Goodwill represents the cost to acquire a business over the fair value of the net assets acquired. Goodwill is not amortized but is reviewed for impairment at least annually or more frequently if events occur or circumstances change that would indicate that a triggering event for a potential impairment has occurred. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The Company recorded a goodwill impairment loss of $76,053 for the year ended December 31, 2022 (see Note 9). No impairment loss was recorded for the years ended December 31, 2021 and 2020. The Company had $66,294 and $142,347 of goodwill on the consolidated balance sheets as of December 31, 2022 and 2021, respectively.

Intangible assets: Acquired intangible assets include client relationships, customer lists, non-compete agreements and trade names acquired. Intangible assets with a finite life are amortized over the estimated useful life. In valuing these assets, assumptions are made regarding useful lives and projected growth rates and significant judgment is required. The Company periodically reviews identifiable intangibles for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the carrying amounts of the assets exceed their undiscounted cash flows, an impairment loss is recorded. For the years ended December 31, 2022, 2021 and 2020, no impairment loss was recorded.

Segment reporting: Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker reviews financial information of the Company as a whole for purposes of assessing financial performance and making operating decisions. Accordingly, the Company considers itself to be operating as a single operating and reportable segment.

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Note 3. Acquisitions

Western Integrated Care

Effective July 6, 2021, Trean Corp acquired 100% ownership of Western Integrated Care, LLC ("WIC") for a total purchase price of $5,500, which included $1,500 of consideration contingent on WIC's future earnings, as defined in the agreement. WIC is a managed care organization that offers services to workers' compensation insurers to enable employees who are injured on the job to access qualified medical treatment. The following table summarizes the consideration paid and the amounts of estimated fair value of the net assets acquired and liabilities assumed at the acquisition date:

Fair value of total consideration transferred	$	5,500
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	205
Premiums and other receivables	1,025
Property and equipment, net	39
Right of use asset	135
Goodwill	1,707
Intangible assets, net	3,624
Other assets	16
Accounts payable and accrued expenses	(873)
Lease liability	(135)
Debt	(243)
Net assets acquired	$	5,500

The assessment of fair value, the determination of deferred taxes and other payables and receivables are preliminary and are based on the information that was available at the time the consolidated financial statements were prepared. Accordingly, the allocation of purchase price to intangible assets, goodwill, deferred tax assets, and liabilities and other payables and receivables is preliminary and, therefore, subject to adjustment in future periods.

The Company recorded $1,707 of goodwill associated with the business combination. The goodwill recognized is attributable to the assembled workforce, the expected growth resulting from the acquisition, and synergies gained to assist in reducing operating expenses.

The Company also recorded intangible assets totaling $3,624, which are comprised of the following:

	Useful Life	Balance
Trade name	2 years	$	28
Non-compete agreements	5 years	256
Customer relationships	12 years	3,340
Total intangible assets		$	3,624

The operating results of WIC have been included in the consolidated financial statements of the Company since July 6, 2021, the date of acquisition, and were immaterial to the consolidated financial statements. The Company made an earn-out payment of $750 during the year ended December 31, 2022.

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7710 Insurance Company

Effective October 1, 2020, Benchmark Holding Company acquired 100% ownership of 7710 Insurance Company as well as its associated program manager and agency, 7710 Service Company, LLC and Creekwood Insurance Agency, LLC for a purchase price of $12,140. 7710 Insurance Company underwrites workers' compensation primarily for emergency services, including firefighters and emergency medical services ("EMS"). 7710 Insurance Company focuses on reducing costs and claims through the implementation of a proprietary safety preparedness and loss control program, created and staffed by experienced firefighters and EMS professionals.

The Company recorded $2,873 of goodwill associated with the business combination. The goodwill recognized is attributable to the assembled workforce and the expected growth resulting from the acquisition. The Company also recorded intangible assets totaling $3,299.

Compstar Holding Company LLC

Effective July 15, 2020, Trean Compstar Holdings LLC purchased the remaining 55% ownership interest in Compstar Holding Company LLC ("Compstar"), a holding company along with its wholly owned subsidiary Compstar Insurance Services, a managing general agent, by issuing 6,613,606 shares of Common Stock with a market price of $15 per share on the date of acquisition. Prior to the acquisition date, the Company held a 45% ownership interest in Compstar and accounted for its investment under the equity method. As of the acquisition date, the fair value attributable to the Company’s previous equity interest was $81,167 and the carrying value was $11,321. As a result, the Company recorded a gain of $69,846 from the remeasurement of its previous equity interest, which is included in gain on revaluation of Compstar on the consolidated statement of operations. The acquisition-date fair value of the Company’s previous equity interest was revalued using the market price of the shares issued as consideration for the acquisition.

The Company recorded $134,428 of goodwill associated with the business combination. The goodwill recognized is attributable to the assembled workforce, the expected growth resulting from the acquisition and synergies gained to assist in the reduction of operating expenses. The Company also recorded intangible assets totaling $73,954.

LCTA Risk Services, Inc.

Effective April 1, 2020, Trean Corp purchased 100% of the operating assets and assumed the liabilities of LCTA Risk Services, Inc. The total purchase price was $1,400. The Company recorded $517 of goodwill associated with the business combination. The goodwill recognized is attributable to the expected growth resulting from the acquisition and the synergies gained to assist in reducing operating expenses. The Company also recorded intangible assets totaling $482.

Note 4. Fair Value Measurements

The Company’s financial instruments include assets and liabilities carried at fair value. The inputs to valuation techniques used to measure fair value are prioritized into a three level hierarchy. The fair value hierarchy is as follows:

Level 1: Fair values primarily based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2: Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities.

Level 3: Fair values primarily based on valuations derived when one or more of the significant inputs are unobservable. With little or no observable market, the determination of fair value uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability.

The Company classifies the financial asset or liability by level based upon the lowest level input that is significant to the determination of the fair value. The following tables present the estimated fair value of the Company’s significant financial instruments.

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	December 31, 2022
	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. government and government securities	$	62,552	$	—	$	—	$	62,552
Foreign governments	—		395		—		395
States, territories and possessions	—		15,854		—		15,854
Political subdivisions of states territories and possessions	—		33,904		—		33,904
Special revenue and special assessment obligations	—		103,639		—		103,639
Industrial and public utilities	—		125,540		—		125,540
Commercial mortgage-backed securities	—		128,105		—		128,105
Residential mortgage-backed securities	—		25,112		—		25,112
Other loan-backed securities	—		51,613		—		51,613
Hybrid securities	—		5,529		—		5,529
Total fixed maturities	62,552		489,691		—		552,243
Equity securities	12,060		22,981		—		35,041
Total investments	$	74,612	$	512,672	$	—	$	587,284
Embedded derivatives on funds held under reinsurance agreements	$	(1,953)	$	(13,458)	$	—	$	(15,411)
Interest rate cap agreement	—		102		—		102
Debt	—		29,288		50,000		79,288

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. government and government securities	$	2,392	$	39,042	$	—	$	41,434
Foreign governments	—		2,490		—		2,490
States, territories and possessions	—		10,766		—		10,766
Political subdivisions of states, territories and possessions	—		40,002		—		40,002
Special revenue and special assessment obligations	—		95,991		—		95,991
Industrial and public utilities	—		103,257		—		103,257
Commercial mortgage-backed securities	—		118,218		—		118,218
Residential mortgage-backed securities	—		17,368		—		17,368
Other loan-backed securities	—		41,425		—		41,425
Hybrid securities	—		110		—		110
Total fixed maturities	2,392		468,669		—		471,061
Equity securities	—		969		—		969
Total investments	$	2,392	$	469,638	$	—	$	472,030
Embedded derivatives on funds held under reinsurance agreements	$	(4)	$	275	$	—	$	271
Debt	—		30,938		—		30,938

Fixed maturities and equity securities: The Company, through its third-party pricing service provider, uses a variety of sources to estimate the fair value of investments such as Refinitiv (formerly Reuters), PricingDirect, ICE Data Services, and for equities, Bloomberg or S&P Capital IQ Pro. Equity securities are generally valued at the closing price on the exchange on

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which they are primarily traded as provided by a third-party pricing service. Fixed income securities are generally valued at an evaluated bid as provided by a third-party pricing service. Securities and other assets generally valued using third-party pricing services may also be valued at broker/dealer indications. Values obtained from third-party pricing services can utilize several market data sources for inputs such as transaction data, yield, quality, coupon rate, maturity, issue type, trading characteristics and other market activity. To validate the reasonableness of the prices, the Company performs various qualitative and quantitative procedures such as analysis of recent trading activity, analytical review of fair values and an evaluation of the underlying pricing methodologies. Based on these procedures, the Company did not adjust the prices or quotes from the third-party pricing service.

Embedded derivatives: The Company enters into funds held contracts under reinsurance agreements which create embedded derivatives on the underlying investments. These embedded derivatives are valued based upon the unrealized gain or loss position of the funds held portfolio, which is determined consistent with other investments using third-party pricing services. To validate the reasonableness of the quoted prices, the Company performs various qualitative and quantitative procedures such as analysis of recent activity, analytical review of fair values and an evaluation of the underlying pricing methodologies. Based on these procedures, the Company did not adjust the prices or quotes from the third-party pricing service.

Interest rate cap agreement: The Company entered into an interest cap agreement to hedge cash flows associated with interest rate fluctuations on variable rate debt. The fair value of the interest rate cap agreement is based on the terms of the agreement and commonly quoted data for forward interest rate curves and an implied market volatility. The Company also assessed the significance of credit valuation adjustments to appropriately reflect the respective nonperformance risk in the fair value measurement and determined the credit valuation adjustment is not significant to the overall valuation of the interest rate cap.

Debt: The Company holds debt related to its secured credit agreement and surplus notes, which are carried on the consolidated balance sheets at amounts other than fair value. The Company has determined that the remaining balance of the debt reflected its fair value as this would represent the total amount to repay the debt. The Company's surplus notes were issued during the year ended December 31, 2022 and are classified as Level 3.

Nonrecurring fair value measurements: In addition to assets and liabilities that are recorded at fair value on a recurring basis, impairment indicators may subject goodwill and long-lived assets to nonrecurring fair value measurements. As a result of the Merger Agreement, the estimated nonrecurring fair value measurement of the Company was based on the implied equity value of the Company at the purchase price of $6.15 per common share. The measurement resulted in an impairment charge of $76,053 recognized during the year ended December 31, 2022.

Note 5. Investments

Fixed income securities include bonds, asset-backed securities, and redeemable preferred securities. Fixed income securities, which may be sold prior to their contractual maturity, are designated as available-for-sale and are carried at fair value. Equity securities primarily include common stocks, mutual funds, and non-redeemable preferred stocks, which are carried at fair value.

The cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company's investments are as follows:

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	December 31, 2022
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed maturities:
U.S. government and government securities	$	65,405	$	11	$	(2,864)	$	62,552
Foreign governments	400		—		(5)		395
States, territories and possessions	17,310		2		(1,458)		15,854
Political subdivisions of states, territories and possessions	38,167		19		(4,282)		33,904
Special revenue and special assessment obligations	115,696		55		(12,112)		103,639
Industrial and public utilities	131,769		101		(6,330)		125,540
Commercial mortgage-backed securities	145,471		52		(17,418)		128,105
Residential mortgage-backed securities	26,716		11		(1,615)		25,112
Other loan-backed securities	53,231		13		(1,631)		51,613
Hybrid securities	6,233		2		(706)		5,529
Total fixed maturities available for sale	$	600,398	$	266	$	(48,421)	$	552,243

	December 31, 2021
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed maturities:
U.S. government and government securities	$	41,490	$	113	$	(169)	$	41,434
Foreign governments	2,500		—		(10)		2,490
States, territories and possessions	10,593		189		(16)		10,766
Political subdivisions of states, territories and possessions	39,170		975		(143)		40,002
Special revenue and special assessment obligations	93,664		2,920		(593)		95,991
Industrial and public utilities	100,774		2,835		(352)		103,257
Commercial mortgage-backed securities	119,378		591		(1,751)		118,218
Residential mortgage-backed securities	16,549		843		(24)		17,368
Other loan-backed securities	41,236		248		(59)		41,425
Hybrid securities	105		5		—		110
Total fixed maturities available for sale	$	465,459	$	8,719	$	(3,117)	$	471,061

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The following table illustrates the Company’s gross unrealized losses and fair value of fixed maturities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	December 31, 2022
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities:
U.S. government and government securities	$	38,172	$	(1,217)	$	19,199	$	(1,647)	$	57,371	$	(2,864)
Foreign governments	—		—		395		(5)		395		(5)
States, territories and possessions	13,882		(1,321)		822		(137)		14,704		(1,458)
Political subdivisions of states, territories and possessions	21,586		(2,506)		9,375		(1,776)		30,961		(4,282)
Special revenue and special assessment obligations	71,146		(6,522)		22,350		(5,590)		93,496		(12,112)
Industrial and public utilities	98,018		(4,225)		18,405		(2,105)		116,423		(6,330)
Commercial mortgage-backed securities	71,574		(5,737)		53,147		(11,681)		124,721		(17,418)
Residential mortgage-backed securities	18,051		(1,177)		4,119		(438)		22,170		(1,615)
Other loan-backed securities	38,572		(1,305)		11,303		(326)		49,875		(1,631)
Hybrid securities	5,289		(706)		—		—		5,289		(706)
Total bonds	$	376,290	$	(24,716)	$	139,115	$	(23,705)	$	515,405	$	(48,421)

	December 31, 2021
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities:
U.S. government and government securities	$	26,935	$	(168)	$	23	$	(1)	$	26,958	$	(169)
Foreign governments	2,490		(10)		—		—		2,490		(10)
States, territories and possessions	935		(16)		—		—		935		(16)
Political subdivisions of states, territories and possessions	11,115		(143)		—		—		11,115		(143)
Special revenue and special assessment obligations	29,917		(593)		—		—		29,917		(593)
Industrial and public utilities	24,042		(286)		1,058		(66)		25,100		(352)
Commercial mortgage-backed securities	80,126		(1,565)		6,212		(186)		86,338		(1,751)
Residential mortgage-backed securities	4,539		(24)		—		—		4,539		(24)
Other loan-backed securities	20,153		(36)		2,477		(23)		22,630		(59)
Hybrid securities	—		—		—		—		—		—
Total bonds	$	200,252	$	(2,841)	$	9,770	$	(276)	$	210,022	$	(3,117)

The unrealized losses on the Company’s available for sale securities as of December 31, 2022 and December 31, 2021 were primarily attributable to an increase in interest rates, which predominantly impacted fixed maturities acquired since the second quarter of 2020.

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The amortized cost and estimated fair value of fixed maturities as of December 31, 2022, by contractual maturity, are as follows:

	Cost or Amortized Cost		Fair Value
Available for sale:
Due in one year or less	$	35,468	$	35,125
Due after one year but before five years	176,083		167,986
Due after five years but before ten years	93,107		83,769
Due after ten years	70,322		60,533
Commercial mortgage-backed securities	145,471		128,105
Residential mortgage-backed securities	26,716		25,112
Other loan-backed securities	53,231		51,613
Total	$	600,398	$	552,243

Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Realized gains and losses on investments included in the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 are as follows:

	Year Ended December 31,
	2022		2021		2020
Fixed maturities:
Gains	$	134	$	153	$	259
Losses	(1,235)		(94)		(9)
Total fixed maturities	(1,101)		59		250
Funds held investments:
Gains	19		112		—
Losses	(29)		(10)		—
Total funds held investments	(10)		102		—
Equity securities and equity method investments:
Gains	1,415		—		3,115
Losses	(19)		(112)		—
Total equity securities and equity method investments	1,396		(112)		3,115
Total net investment realized gains	$	285	$	49	$	3,365

Net investment income consists of the following for the years ended December 31, 2022, 2021, and 2020:

	Year Ended December 31,
	2022		2021		2020
Fixed maturities	$	9,316	$	6,331	$	6,271
Income on funds held investments	3,668		2,338		3,345
Equity securities	1,708		48		2,028
Unrealized losses on equity securities	(4,797)		—		—
Interest earned on cash and short-term investments	192		4		25
Net investment income	$	10,087	$	8,721	$	11,669

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Net realized and unrealized gains (losses) on equity securities recognized during the years ended December 31, 2022, 2021, and 2020 are as follows:

	Year Ended December 31,
	2022		2021		2020
Equity securities:
Net realized gains (losses) on sales of equity securities	$	1,396	$	(112)	$	3,115
Change in net unrealized gains (losses) of equity securities still held as of as of December 31, 2022, 2021 and 2020	(4,797)		—		—
Net realized and unrealized gains (losses) on equity securities	$	(3,401)	$	(112)	$	3,115

Embedded derivatives

The Company enters into funds held contracts under reinsurance agreements which create embedded derivatives, which are measured at fair value. The embedded derivatives within our funds held under reinsurance agreements relate to a total return swap on the underlying investments. These embedded derivatives had no impact on total operating, investing and financing activities as presented on the Company’s consolidated statements of cash flows during the years ended December 31, 2022, 2021, and 2020. Total funds held under reinsurance agreements includes the following:

	December 31,
	2022		2021
Funds held under reinsurance agreements, at cost	$	256,702	$	199,139
Embedded derivatives, at fair value	(15,411)		271
Total funds held under reinsurance agreements	$	241,291	$	199,410

Gains (losses) on embedded derivatives consists of the following for the years ended December 31, 2022, 2021, and 2020:

	Year Ended December 31,
	2022		2021		2020
Change in fair value of embedded derivatives	$	15,682	$	4,666	$	(2,810)
Effect of net investment income on funds held investments	(3,668)		(2,338)		(3,345)
Effect of realized losses (gains) on funds held investments	10		(102)		—
Total gains (losses) on embedded derivatives	$	12,024	$	2,226	$	(6,155)

Note 6. Equity Method Investments

The Company held equity method investments in Compstar, Trean Intermediaries ("TRI") and Stop-Loss Re, LLC ("Stop-Loss"). Equity earnings and losses are reported in equity earnings in affiliates, net of tax on the consolidated statements of operations.

On July 15, 2020, the Company purchased the remaining 55% ownership interest in Compstar (See Note 3) and, as a result, Compstar is no longer recorded as an equity method investment. Prior to the acquisition, the Company owned 45% of Compstar which had a carrying value of approximately $11,831 as of December 31, 2019. The Company recorded earnings for the year ended December 31, 2020 of 2,333. Distributions received from Compstar for the year ended December 31, 2020 were $2,842.

On January 3, 2020, the Company sold 15% of its previous 25% ownership in TRI for cash proceeds of $3,000, resulting in a remaining ownership interest of 10%. As a result of its significant ownership reduction and its lack of significant influence over the operations and policies of TRI, the Company reclassified its TRI investment, at fair value, to investments in common stock in the first quarter of 2020. The Company realized a gain on the sale of $3,115, which is included in net realized gains

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(losses) on the consolidated statements of operations for the year ended December 31, 2020. The Company subsequently re-measured its TRI investment shares resulting in an unrealized gain of $2,000 which is recorded in net investment income on the consolidated statement of operations for the year ended December 31, 2020. The Company sold all of its remaining ownership interest in TRI during the year ended December 31, 2021 for $1,888, resulting in a realized loss of $112, which was included in net realized gains on the consolidated statement of operations. The Company received an earn-out payment of $1,415, which was included in net realized gains (losses) on the consolidated statements of operations for the year ended December 31, 2022. Distributions of $225 were received from TRI for the year ended December 31, 2020.

Note 7. Nonconsolidated Variable Interest Entities

In 2019, the Company was engaged with certain entities that were deemed to be variable interest entities. A variable interest entity ("VIE") is an entity that has investors that lack certain essential characteristics of a controlling financial interest, such as a simple majority equity ownership or lacks sufficient funds to finance its own activities without financial support provided by other entities. The Company performs ongoing qualitative assessments of its VIEs to determine whether the Company has a controlling financial interest in the VIE and therefore is the primary beneficiary. The Company is deemed to have a controlling financial interest when it has both the ability to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Based on the Company’s assessment, if it determines it is the primary beneficiary, the Company consolidates the VIE in the consolidated financial statements.

The Company had a variable interest in Trean Capital Trust I (the "Trust") that had mandatory redeemable preferred securities outstanding with a liquidation value of $7,500. The Trust was a variable interest entity under current accounting guidance because the Company had limited ability to make decisions about its activities. However, the Company was not the primary beneficiary of the Trust; and therefore, the Trust and the mandatory redeemable preferred securities issued by the Trust are not reported on the Company’s consolidated balance sheets. During 2020, the Company redeemed all of the redeemable preferred securities of the Trust. As of December 31, 2020, the Trust is no longer considered a VIE.

The Company had a variable interest in Compstar Holding Company LLC ("Compstar"), a limited liability company created for the purchase of an interest in Compstar Insurance Services, LLC, a California based general agent. Compstar was a variable interest entity under current accounting guidance because Compstar did not have sufficient capital at risk, as evidenced by a loan guarantee by a member. However, the Company was not the primary beneficiary of Compstar, and therefore, was not reported in the Company’s consolidated balance sheet as of December 31, 2019. During 2020, the Company purchased the remaining ownership interest in Compstar resulting in Compstar becoming a wholly-owned subsidiary of the Company. As of December 31, 2020, Compstar is no longer considered a VIE.

Note 8. Property and Equipment

Property and equipment consists of the following:

	December 31,
	2022		2021
Land	$	1,780	$	1,780
Building and building improvements	5,755		5,755
Furniture and fixtures	1,137		1,137
Office equipment	3,499		2,898
Other property, plant and equipment	101		101
Deposits on fixed assets not placed in service	15		277
Total, at cost	12,287		11,948
Less: Accumulated depreciation	(5,136)		(4,316)
Property and equipment, net	$	7,151	$	7,632

Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $820, $1,007 and $912, respectively.

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Note 9. Goodwill and Intangible Assets

Goodwill

A change in the carrying value of goodwill resulted from the Merger Agreement entered into on December 15, 2022 (see Note 1 for additional information). The Company recognized an impairment charge of $76,053, which decreased the Company's net carrying value to equal the implied equity value of the Company based on the purchase price of $6.15 per common share. All changes in the carrying value of goodwill are as follows:

	2022		2021
Balance at beginning of period	$	142,347	$	140,640
Acquisitions	—		1,707
Impairment	(76,053)		—
Balance at end of period	$	66,294	$	142,347

Intangible assets

Intangible assets subject to amortization consist of the following:

		December 31,
	Useful Life	2022		2021
Non-compete agreement	2-5 years	$	300	$	300
Trade name	2-15 years	3,710		3,710
Customer lists and relationships	10-14 years	77,624		77,624
Totals		81,634		81,634
Less: Accumulated amortization		(14,517)		(8,520)
Intangible assets, net		$	67,117	$	73,114

Amortization expense for the years ended December 31, 2022, 2021 and 2020 was $5,998, $5,826 and $2,573, respectively.

The estimated future amortization of intangible assets is as follows:

	Trade name		Customer lists and relationships		Non-Compete		Total
2023	$	248	$	5,684	$	51	$	5,983
2024	241		5,683		51		5,975
2025	241		5,683		51		5,975
2026	241		5,683		26		5,950
2027	241		5,668		—		5,909
Thereafter	1,824		35,501		—		37,325
Total	$	3,036	$	63,902	$	179	$	67,117

Note 10. Deferred Policy Acquisition Costs, Net

The Company defers costs incurred which are incremental and directly related to the successful acquisition of new or renewal insurance business, net of corresponding amounts of ceded reinsurance commissions. Net deferred policy acquisition costs are amortized in proportion to premium earned over the estimated policy term. The Company anticipates that its deferred policy acquisition costs will be fully recoverable and there were no premium deficiencies for the years ended December 31, 2022, 2021 and 2020.

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The table below depicts the activity with regard to deferred policy acquisition costs, net:

	2022		2021		2020
Balance at beginning of period	$	13,344	$	1,332	$	2,115
Policy acquisition costs deferred	28,362		22,853		7,593
Amortization charged to expense	(22,848)		(10,841)		(8,376)
Balance at end of period	$	18,858	$	13,344	$	1,332

Note 11. Accounts Payable, Accrued Expenses and Other Liabilities

Accounts payable and accrued expenses consist of the following:

	December 31,
	2022		2021
Accrued commissions and third-party administration fees	$	9,168	$	7,337
Trade payables	4,977		4,765
Accrued taxes, licenses and fees	4,316		6,710
Accrued wages and employee benefits	5,489		4,873
Amounts retained for the accounts of others	2,710		1,619
Other liabilities	5,949		4,144
Total	$	32,609	$	29,448

Note 12. Debt

Debt consisted of the following:

	December 31, 2022						December 31, 2021
	Face Value		Unamortized Discount and Issuance Costs		Carrying Value		Face Value		Unamortized Discount and Issuance Costs		Carrying Value
Secured credit facility	$	29,288	$	(408)	$	28,880	$	30,938	$	(576)	$	30,362
Surplus notes	50,000		(1,806)		48,194		—		—		—
Total debt	$	79,288	$	(2,214)	$	77,074	$	30,938	$	(576)	$	30,362

Secured Credit Facility

In July 2020, the Company entered into a Second Amended and Restated Credit Agreement (the "Credit Agreement") that, among other things, extended the Company's credit facility for a period of five years through May 26, 2025 and increased its term loan facility by $11,707 resulting in a total term loan debt amount of $33,000 and a revolving credit facility of $2,000 at the time of closing. The outstanding principal balance of the loan is to be repaid in quarterly installments which escalate from $206 to $825. All equity securities of the subsidiaries of Trean Insurance Group, Inc. (other than Benchmark Holding Company and its subsidiaries) have been pledged as collateral.

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On May 6, 2022, the Company entered into a First Amendment to the Credit Agreement to, among other things, facilitate the approval of certain internal distributions among the Company and certain of its subsidiaries as part of the Company’s overall capital management strategy. On September 28, 2022, the Company entered into a Second Amendment to the Credit Agreement that, among other things, replaced LIBOR as the benchmark rate with Term SOFR (as defined in the Credit Agreement), reduced the applicable margin under the Credit Agreement on Eurodollar loans from 4.50% to 3.50% and on ABR loans from 3.50% to 2.50%, and converted all extant Eurodollar loans under the Credit Agreement to Term SOFR loans. On December 15, 2022, the Company entered into the Third Amendment to the Credit Agreement to, among other things, modify the Credit Agreement in certain respects to permit and accommodate the Merger.

The variable interest rate plus applicable margin was 7.59%, 4.64% and 4.72% as of December 31, 2022, 2021 and 2020, respectively. During the years ended December 31, 2022, 2021 and 2020, the Company recorded $2,022, $1,517 and $1,518 of interest expense, respectively, on its credit facility including amortization of debt issuance costs.

The terms of the credit facility require the Company to maintain certain financial covenants and ratios. The Company was in compliance with all covenants and ratios as of December 31, 2022, 2021 and 2020.

Interest Rate Cap Agreement

In September 2022, the Company entered into an interest rate cap agreement that became effective September 30, 2022, to hedge cash flows associated with interest rate fluctuations on its secured credit facility, with a termination date of May 31, 2024 ("Interest Rate Cap Agreement"). The Interest Rate Cap Agreement has a notional amount of $29,700 that effectively converted the outstanding balance of the secured credit facility from variable rate debt to capped variable rate debt, resulting in a change in the applicable interest rate from an interest rate of one-month SOFR plus the applicable margin (as provided by the secured credit facility) to a one-month SOFR interest rate, capped at 5.00%, plus the applicable margin. The notional amount of the Interest Rate Cap Agreement decreases quarterly in proportion to the quarterly principal payments on the secured credit facility. The Interest Rate Cap Agreement is designated as a cash flow hedge and the change in fair value is recorded in accumulated other comprehensive income and is subsequently reclassified to interest expense in the period when the hedged forecasted interest payments affect earnings. The Company paid a fixed amount of $173 for the Interest Rate Cap Agreement.

Surplus Notes

On August 24, 2022, Benchmark, a subsidiary of the Company, issued $50,000 in aggregate principal amount of Benchmark’s 6.75% surplus notes due 2042 (the “Surplus Notes”) in a private placement exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). In connection with the issuance of the Surplus Notes, Benchmark entered into a fiscal agency agreement, dated as of August 24, 2022 (the “Fiscal Agency Agreement”), with The Bank of New York Mellon, as fiscal agent, paying agent, registrar and transfer agent, providing for the terms of the Surplus Notes.

The Surplus Notes are unsecured, subordinated debt obligations of the Company and are reflected as debt on the consolidated balance sheets of the Company. All principal and interest payments on the Surplus Notes are subject to prior approval by the Commissioner of the Kansas Insurance Department. Interest on the Surplus Notes accrues at the rate of 6.75% per year, and is payable quarterly in arrears on February 24, May 24, August 24 and November 24 of each year, commencing on November 24, 2022.

The Surplus Notes may be redeemed after 10 years, in full or in part, for 100% of the principal amount plus accrued but unpaid interest, and the Company may at any time repurchase Surplus Notes from the underlying holders thereof on the open market, after which such Surplus Notes will be cancelled and not re-issued. In addition, the Surplus Notes may be redeemed before August 24, 2032 upon the occurrence of certain changes in applicable tax laws or regulations that would require the Company to pay additional amounts necessary to reimburse the noteholders for new or changed withholding or deduction obligations.

In addition, pursuant to the Fiscal Agency Agreement, the Company made certain customary representations and warranties and made certain customary covenants. The covenants, among other things, (i) prevent Benchmark from incurring indebtedness exceeding 35% of its total surplus (as set forth in its statutory financial statements, and including the Surplus Notes), and restrict Benchmark’s ability to pay dividends to the Company if such ratio were to exceed 35% or would exceed 35% as a result of such payment; (ii) limit Benchmark’s ability to engage in a merger, sale or consolidation and require it to preserve its corporate existence; and (iii) require it to provide certain financial information and insurance regulatory filings to

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the noteholders. All of these covenants are subject to a number of important exceptions, limitations and qualifications. Notwithstanding the foregoing, noteholders do not have the right to declare the Surplus Notes to immediately mature or otherwise become immediately payable as a result of any breach of Benchmark’s covenants or under any other circumstances. Benchmark’s obligations under the Surplus Notes will only be accelerated in the event that any state or federal agency were to obtain an order or grant approval for the rehabilitation, liquidation, conservation or dissolution of Benchmark.

During the year ended December 31, 2022, the Company recorded interest expense of $1,222 on its Surplus Notes including amortization of debt issuance costs.

Junior Subordinated Debt

In June 2006, the Trust issued 7,500 shares of preferred capital securities to qualified institutional buyers and 232 common securities to Trean Corp. The proceeds of such issuances were invested by the Trust in $7,732 aggregate principal amount of Trean Corp's Junior Subordinated Debt due 2036 (the "Subordinated Notes"). The Subordinated Notes represent the sole assets of the Trust. On October 7, 2020, Trean Corp redeemed all of the Subordinated Notes for a total payoff amount of $7,807.

The interest rate was a fixed rate of 9.167% until July 7, 2011, after which a variable interest rate of LIBOR plus 3.50%. The preferred capital securities issued by the Trust in turn paid quarterly cash distributions at an annual rate of 9.167% per annum of the liquidation amount of $1 per security until July 7, 2011 and thereafter at a variable rate per annum, reset quarterly, equal to LIBOR plus 3.50%. During the years ended December 31, 2020, the Company recorded $271 of interest expense associated with the Subordinated Notes.

Oak Street Loan

In conjunction with the acquisition of Compstar (See Note 3), the Company acquired a loan from Oak Street Funding with a total principle of $19,740. In July 2020, upon completion of the acquisition, the Company paid this loan off in full.

PPP Loans

In conjunction with the acquisition of Compstar, the Company acquired a Federal Paycheck Protection Program ("PPP Loan") with a principal balance of $325. The PPP Loan was forgiven on November 6, 2020. In conjunction with the acquisition of 7710, the Company acquired a PPP Loan with a principal balance of $269. The PPP Loan was forgiven on November 12, 2020. In conjunction with the acquisition of WIC, the Company acquired two PPP Loans with a principal balance of $243. As of December 31, 2021, both loans had been fully forgiven.

Scheduled maturities of debt, excluding deferred financing costs, are as follows:

2023	$	2,888
2024	3,300
2025	23,100
2026	—
2027	—
Thereafter	50,000
Total debt	$	79,288

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Note 13. Revenue from Contracts with Customers

Revenue from contracts with customers, included in other revenue, includes brokerage, management, third-party administrative, consulting and other fee-based revenue. The following table presents the revenues recognized from contracts with customers included in the consolidated statements of operations.

	Year Ended December 31,
	2022		2021		2020
Brokerage	$	5,705	$	7,036	$	8,994
Managing general agent fees	326		603		976
Third-party administrator fees	1,358		1,608		1,630
Consulting fees	857		993		504
Total revenue from contracts with customers	$	8,246	$	10,240	$	12,104

The Company did not have any contract liabilities as of December 31, 2022 or December 31, 2021. As of December 31, 2022 and December 31, 2021, the contract assets from contracts with customers were $3,077 and $3,353, respectively, and are included within other assets on the consolidated balance sheets.

Note 14. Income Taxes

Income tax expense is comprised of the following:

	Year Ended December 31,
	2022		2021		2020
Current tax expense	$	3,308	$	7,823	$	7,291
Deferred tax expense	(2,234)		(2,374)		(1,056)
Total income tax expense	$	1,074	$	5,449	$	6,235

The income tax expense differs from the expected income tax expense computed by applying the applicable federal statutory tax rates to pretax income as a result of the following:

	2022		Effective Rate		2021		Effective Rate		2020		Effective Rate
Income tax expense computed at statutory rate	$	(13,625)	21.0	%	$	5,204	21.0	%	$	19,415	21.0	%
State taxes, net of federal benefit	(289)		0.4	%	47		0.2	%	577		0.6	%
Tax-exempt municipal income, net of proration	(240)		0.3	%	(263)		(1.1)	%	(272)		(0.3)	%
Goodwill impairment	14,365		(22.1)	%	—		—	%	—		—	%
Potential merger and other nondeductible expenses	647		(1.0)	%	10		—	%	957		1.0	%
Fair market value adjustment on Compstar investment	—		—	%	—		—	%	(14,668)		(15.9)	%
Other	216		(0.3)	%	451		1.9	%	226		0.3	%
Total income tax expense	$	1,074	(1.7)	%	$	5,449	22.0	%	$	6,235	6.7	%

As of December 31, 2022 and 2021, the Company has net operating loss ("NOL") carryforwards for federal income tax purposes of approximately $3,155 and $3,272, respectively, related to the purchases of ALIC and FCCIC. The Company has established a deferred tax asset of approximately $17 and $41 as of December 31, 2022 and 2021, respectively.

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The significant components of deferred tax assets and liabilities are as follows:

	December 31,
	2022		2021
Deferred tax assets:
Unpaid losses and LAE	$	6,256	$	4,574
Unearned premiums	4,399		3,802
Unrealized losses on investments	7,692		—
NOL carryforward	17		41
Lease liability	731		1,188
Accrued liabilities	1,286		926
Stock compensation	841		484
Other	299		51
Total deferred tax assets	21,521		11,066
Deferred tax liabilities:
Deferred acquisition costs	(4,011)		(2,802)
Loss reserve discounting TCJA transitional adjustment	(355)		(473)
Unrealized gains and losses on investments	—		(1,131)
Property and equipment	(204)		(191)
Right-of-use asset	(660)		(1,082)
Intangible assets	(10,230)		(12,715)
Prepaid expenses	(69)		(43)
Section 481(a) adjustment	—		(56)
Other	(34)		(93)
Total deferred tax liabilities	(15,563)		(18,586)
Net deferred tax assets (liabilities)	$	5,958	$	(7,520)

The Company completed its IRS examination related to the 2018 income tax return of Trean Corp. The results of the examination resulted in no changes to the 2018 Trean Corp tax return. The Company's tax years 2019 through 2021 remain open to examination by the IRS and various state authorities.

As of December 31, 2022 and 2021, the Company has not taken any uncertain tax positions with regard to its tax returns.

Note 15. Liability for Unpaid Losses and Loss Adjustment Expense

The Company establishes reserves for unpaid losses and LAE which represent the estimated ultimate cost of all losses incurred that were both reported and unreported (i.e., incurred but not reported losses, or "IBNR") and LAE incurred that remain unpaid at the balance sheet date. The Company reserves for loss after considering all information known at each reporting period. At any given point in time, loss reserves represent the best estimate of the ultimate settlement and administration cost of insured claims incurred and unpaid. Since the process of estimating loss reserves requires significant judgment due to a number of variables, such as fluctuations in inflation, judicial decisions, legislative changes and changes in claims handling procedures, the ultimate liability will likely differ from these estimates. The Company revises the reserves for unpaid losses as additional information becomes available, and reflects adjustments, if any, in earnings in the periods in which the adjustments are deemed necessary. The liability for unpaid losses is recorded on an undiscounted basis.

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The following table represents a reconciliation of changes in the liability for unpaid losses and LAE.

	Year Ended December 31,
	2022		2021		2020
Unpaid losses and LAE reserves at beginning of period	$	544,320	$	457,817	$	406,716
Less losses ceded through reinsurance	(369,008)		(335,655)		(304,005)
Net unpaid losses and LAE at beginning of period	175,312		122,162		102,711
Acquisition of subsidiary, net of losses ceded through reinsurance	—		—		7,050
Incurred losses and LAE related to:
Current period	198,996		136,191		65,587
Prior period	4,881		(5,419)		(14,813)
Total incurred losses and LAE	203,877		130,772		50,774
Paid losses and LAE, net of reinsurance, related to:
Current period	61,484		42,484		15,411
Prior period	63,250		35,138		22,962
Total paid losses and LAE	124,734		77,622		38,373
Net unpaid losses and LAE at end of period	254,455		175,312		122,162
Plus losses ceded through reinsurance	378,455		369,008		335,655
Unpaid losses and LAE reserves at end of period	$	632,910	$	544,320	$	457,817

As a result of changes in estimates of insured events in prior years, the provision for unpaid losses and LAE increased by approximately $4,881 for the year ended December 31, 2022 and decreased by $5,419 and $14,813 for the years ended December 31, 2021 and 2020, respectively.

The Company purchased annuities from life insurers under which the claimants are the payees. The purchase of these annuities allowed the Company to reduce reserves for unpaid losses by approximately $4,935 in previous years. Under the terms of settlement with the claimants, the Company remains liable for payments to the claimants of approximately $1,605 and $1,661 as of December 31, 2022 and 2021, respectively, in the event of default or insolvency of the life insurers.

Loss Development Tables

The following tables represent cumulative incurred loss and allocated loss adjustment expenses, net of reinsurance by accident year and cumulative paid loss and allocated loss adjustment expenses, net of reinsurance by accident year, for the years ended December 31, 2013 to 2022, as well as total IBNR and the cumulative number of reported claims for the year ended December 31, 2022, by reportable line of business and accident year (dollars in thousands). The Company’s primary lines of business are workers’ compensation and other liability.

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Workers' Compensation
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	22,746		22,879		22,650		19,772		19,528		19,426		19,814		19,964		19,968		20,139			$	1,134	3,539
2014			22,357		20,686		19,781		19,394		17,967		18,025		18,049		17,584		17,556			1,539		3,546
2015					22,643		23,830		23,444		21,788		22,218		19,560		19,974		19,568			1,831		4,796
2016							30,710		29,261		27,674		25,430		23,063		23,076		22,381			1,965		9,835
2017									35,683		29,107		25,713		24,439		24,581		24,515			1,877		14,550
2018											40,122		34,478		34,321		31,909		31,352			2,800		12,451
2019													48,565		45,382		44,997		45,239			4,752		11,451
2020															55,960		55,531		58,033			7,914		12,148
2021																	100,254		102,778			20,945		11,698
2022																			136,406			52,703		10,052
																			$	477,967
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	6,734		12,407		15,703		17,135		18,448		18,664		18,976		18,906		19,335		19,444
2014			5,958		11,672		14,393		16,011		16,177		16,535		16,607		16,707		16,700
2015					6,089		13,313		15,814		17,002		17,638		17,984		18,143		18,238
2016							7,260		15,329		17,904		18,728		19,856		20,551		20,918
2017									7,439		15,017		17,930		19,353		20,456		21,150
2018											8,978		19,811		24,023		26,201		27,538
2019													11,201		24,472		30,650		34,434
2020															12,141		30,646		42,349
2021																	26,623		58,916
2022																			32,880
																			292,567
	All outstanding liabilities before 2013, net of reinsurance																		5,119
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	190,519
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	26.2	%	32.8	%	15.8	%	7.5	%	6.3	%	2.5	%	2.6	%	0.3	%	1.6	%	1.0		%
* Presented as unaudited required supplementary information

107

Other Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	1,914		1,876		1,617		1,580		1,804		2,068		1,651		1,667		1,703		1,703			$	240	333
2014			2,183		1,964		1,921		2,154		3,107		3,013		2,832		2,593		2,593			374		424
2015					2,946		2,652		2,862		3,549		3,334		2,860		2,523		2,523			390		430
2016							2,689		2,794		3,135		3,180		2,735		2,423		2,423			911		303
2017									4,964		3,089		4,555		3,966		3,267		3,267			1,041		288
2018											4,256		4,278		3,010		3,679		4,052			1,679		228
2019													5,457		2,849		3,608		2,593			1,663		129
2020															2,932		3,702		4,239			2,753		215
2021																	4,362		6,117			4,707		272
2022																			6,362			5,911		345
																			$	35,872
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	65		195		281		573		798		1,048		1,153		1,215		1,282		1,391
2014			53		233		405		639		1,067		1,687		1,884		1,989		2,095
2015					123		374		600		945		1,187		1,258		1,523		1,855
2016							54		137		355		558		783		1,081		1,199
2017									52		439		676		999		1,387		1,841
2018											52		345		504		846		1,738
2019													111		170		239		387
2020															55		196		521
2021																	719		977
2022																			124
																			12,128
	All outstanding liabilities before 2013, net of reinsurance																		384
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	24,128
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	3.9	%	6.5	%	4.9	%	10.5	%	16.2	%	13.2	%	7.0	%	11.9	%	4.4	%	3.0		%
* Presented as unaudited required supplementary information

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All Other Lines
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	1		—		13		9		10		12		—		—		—		—			$	—	572
2014			40		127		24		23		21		16		16		6		5			—		1,051
2015					168		132		108		113		98		98		19		39			151		1,172
2016							1,882		1,617		1,745		1,555		1,542		1,051		1,054			4		1,289
2017									2,852		2,917		2,417		2,442		1,935		1,984			22		2,125
2018											2,885		2,874		2,549		2,520		2,519			49		2,025
2019													3,756		3,367		3,219		3,379			309		1,428
2020															4,842		5,129		4,691			324		1,135
2021																	23,365		23,921			1,841		2,859
2022																			38,396			7,932		2,200
																			$	75,988
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	—		—		—		—		—		—		—		—		—		—
2014			—		100		16		16		16		16		16		6		6
2015					63		98		98		99		98		98		19		(111)
2016							796		1,325		1,418		1,494		1,499		1,016		1,023
2017									1,412		2,099		2,203		2,321		1,884		1,893
2018											1,309		2,123		2,325		2,432		2,459
2019													1,903		2,532		2,789		2,945
2020															2,291		3,595		3,994
2021																	11,093		18,220
2022																			16,704
																			47,133
	All outstanding liabilities before 2013, net of reinsurance																		—
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	28,855
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	46.8	%	33.2	%	13.9	%	3.0	%	2.0	%	1.0	%	0.0	%	0.0	%	0.0	%	0.0		%
* Presented as unaudited required supplementary information

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Total Lines
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	24,661		24,755		24,280		21,361		21,342		21,506		21,465		21,631		21,671		21,842			$	1,374	4,444
2014			24,580		22,777		21,726		21,571		21,095		21,054		20,897		20,183		20,154			1,913		5,021
2015					25,757		26,614		26,414		25,450		25,650		22,518		22,516		22,130			2,372		6,398
2016							35,281		33,672		32,554		30,165		27,340		26,550		25,858			2,880		11,427
2017									43,499		35,113		32,685		30,847		29,783		29,766			2,940		16,963
2018											47,263		41,630		39,880		38,108		37,923			4,528		14,704
2019													57,778		51,598		51,824		51,211			6,724		13,008
2020															63,734		64,362		66,963			10,991		13,498
2021																	127,981		132,816			27,493		14,829
2022																			181,164			66,546		12,597
																			$	589,827
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	6,799		12,602		15,984		17,708		19,246		19,712		20,129		20,121		20,617		20,835
2014			6,011		12,005		14,814		16,666		17,260		18,238		18,507		18,702		18,801
2015					6,275		13,785		16,512		18,046		18,923		19,340		19,685		19,982
2016							8,110		16,791		19,677		20,780		22,138		22,648		23,140
2017									8,903		17,555		20,809		22,673		23,727		24,884
2018											10,339		22,279		26,852		29,479		31,735
2019													13,215		27,174		33,678		37,766
2020															14,487		34,437		46,864
2021																	38,435		78,113
2022																			49,708
																			351,828
	All outstanding liabilities before 2013, net of reinsurance																		5,503
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	243,502
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	27.5	%	29.9	%	13.3	%	7.3	%	6.3	%	3.2	%	3.0	%	1.2	%	2.2	%	1.5		%
* Presented as unaudited required supplementary information

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The reconciliation of the net incurred and paid claims development tables to the liability for unpaid loss and loss adjustment expense in the consolidated balance sheets is as follows:

	December 31,
	2022		2021
Net outstanding liabilities
Workers' compensation	$	190,519	$	133,811
Other liability	24,128		19,159
All other lines of business	28,855		14,481
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance	243,502		167,451
Reinsurance recoverable on unpaid claims
Workers' compensation	234,657		260,891
Other liability	52,816		50,765
All other lines of business	90,982		57,352
Total reinsurance recoverable on unpaid claims	378,455		369,008
Unallocated loss adjustment expenses	10,953		7,861
Total liability for unpaid loss and loss adjustment expenses	$	632,910	$	544,320

Note 16. Reinsurance

The Company utilizes reinsurance contracts to reduce its exposure to losses in all aspects of its insurance business. Such reinsurance permits recovery of a portion of losses from reinsurers, although it does not relieve the Company from its primary liability to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial strength of potential reinsurers and continually monitors the financial condition of its reinsurers.

Amounts recoverable from reinsurers are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. The Company has diversified its credit risk related to the reinsurance ceded. There were no disputes with reinsurers as of December 31, 2022 and 2021. The Company has no reinsurance recoverables deemed uncollectible during the years ended December 31, 2022, 2021 and 2020.

The Company holds collateral on a funds held basis or requires collateral in a trust or as a letter of credit to secure recoverable balances from reinsurers not authorized in the insurance carriers state of domicile as follows:

	December 31,
	2022		2021
Letters of credit	$	18,438	$	24,979
Trust	136,370		126,404
Funds held	211,436		156,401
Total	$	366,244	$	307,784

Funds held in the table above represents only the portion of total funds held for which we require collateral to secure recoverable balances from reinsurers that are not authorized in the respective insurance carrier's state of domicile and does not include $29,855 and $43,009 of funds held for reinsurance companies that are authorized in the respective insurance carrier's state of domicile as of December 31, 2022 and 2021, respectively.

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The Company has unsecured aggregate recoverable for losses, paid and unpaid, loss adjustment expenses and unearned premiums with the following individual reinsurers, authorized or unauthorized, exceeding 5 percent of stockholders’ equity:

	December 31,
	2022	2021
Arch Reinsurance Company (U.S.)	*	$	22,050
Markel Global	58,400	66,933
Munich Reinsurance America, Inc	17,255	*
Swiss Reinsurance America Corp	17,199	*

(*) Represents less than 5 percent of stockholders’ equity

A summary of the impact of ceded reinsurance is as follows:

	Year Ended December 31,
	2022								2021
	Gross		Assumed		Ceded		Net		Gross		Assumed		Ceded		Net
Losses and LAE liabilities	$	619,453	$	13,457	$	(378,455)	$	254,455	$	531,598	$	12,722	$	(369,008)	$	175,312
Unearned premiums	226,412		2,700		(124,269)		104,843		216,878		3,062		(129,411)		90,529
Written premiums	642,210		9,093		(352,365)		298,938		624,769		9,395		(394,888)		239,276
Earned premiums	632,677		9,552		(357,605)		284,624		563,337		8,916		(373,573)		198,680
Loss and loss adjustment expenses	441,274		11,857		(249,254)		203,877		343,134		14,287		(226,649)		130,772

Note 17. Leases

The Company's leases consist of operating leases for office space and equipment. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected, as a practical expedient, to account for lease components and any non-lease components within a contract as a single lease component, and therefore allocates all of the expected lease payments to the lease component. Some of the Company's leases include options to extend the term, which is only included in the lease liability and right-of-use assets calculation when it is reasonably certain the Company will exercise that option. Our leases have remaining terms ranging from one month to 54 months, some of which have options to extend the lease for up to 5 years. As of December 31, 2022, the lease liability and right-of-use assets did not include the impact of any lease extension options as it is not reasonably certain that the Company will exercise the extension options.

Total lease expense for the years ended December 31, 2022, 2021 and 2020 was $2,458, $2,459 and $2,501, inclusive of $93, $25 and $362 in variable lease expense, respectively. The Company also sublets some of its leased office space and recorded $98, $100 and $84 of sublease income for the years ended December 31, 2022, 2021 and 2020, respectively, which is included in other income on the consolidated statements of operations.

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Supplemental balance sheet information, the weighted average remaining lease term and weighted average discount rate related to leases were as follows:

	December 31,			December 31,
(dollars in thousands)	2022			2021
Right of use asset	$	2,764		$	4,530
Lease liability	$	3,063		$	4,976
Weighted average remaining lease term	1.79 years			2.42 years
Weighted average discount rate	6.07		%	6.33		%

Future maturities of lease liabilities as of December 31, 2022 are as follows:

	Operating Leases
2023	$	1,940
2024	1,064
2025	164
2026	44
2027	2
Total lease payments	3,214
Less: imputed interest	(151)
Total lease liabilities	$	3,063

Note 18. Equity

Initial Public Offering and Reorganization

On July 20, 2020, Trean Insurance Group, Inc. closed the sale of 10,714,286 shares of its Common Stock in its IPO, comprised of 7,142,857 shares issued and sold by Trean Insurance Group, Inc. and 3,571,429 shares sold by selling stockholders. On July 22, 2020, Trean Insurance Group, Inc. closed the sale of an additional 1,207,142 shares by certain selling stockholders in the IPO pursuant to the exercise of the underwriters’ option to purchase additional shares to cover over-allotments. The IPO price per share was $15.00. The aggregate IPO price for all shares sold in the IPO was approximately $107,142 and the aggregate initial public offering price for all shares sold by the selling stockholders in the IPO was approximately $71,678. The shares began trading on the Nasdaq Global Select Market on July 16, 2020 under the symbol "TIG". The offer and sale was pursuant to a registration statement on Form S-1 (File No. 333-239291), which was declared effective by the SEC on July 15, 2020.

Trean Insurance Group, Inc. received net proceeds from the sale of shares in the IPO of approximately $93,139 after deducting underwriting discounts and commissions of $7,500 and offering expenses of $6,503. Trean Insurance Group, Inc. did not receive any proceeds from the sale of shares by the selling stockholders. In addition, and in conjunction with its IPO, Trean Insurance Group, Inc. issued 6,613,606 shares of Common Stock, with a purchase price value of $99,204, to acquire the remaining 55% ownership in Compstar Holding Company LLC. See "Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities" for a detailed discussion of use of proceeds associated with the IPO.

In conjunction with the IPO and corporate restructuring, the Company paid a termination payment to Altaris Capital Partners, LLC in connection with the termination of the Company's consulting and advisory agreements as well as paid bonuses to employees and pre-IPO unitholders for the successful completion of the IPO. The aggregate amount of these payments totaled $11,054 and is included in other expenses on the consolidated statement of operations.

Prior to the completion of the above offering, the Company effected the following reorganization transactions: (i) each of Trean and BIC contributed all of their respective assets and liabilities to Trean Insurance Group, Inc., a newly formed direct subsidiary of BIC, in exchange for shares of Common Stock in Trean Insurance Group, Inc.; and (ii) upon the completion of

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the transfers by Trean and BIC, Trean and BIC were dissolved and distributed in-kind common shares to the pre-IPO unitholders.

Preferred Stock

The Company currently has authorized 100,000,000 shares of preferred stock with a par value of $0.01. No shares of preferred stock were issued or outstanding as of December 31, 2022, and 2021.

Common Stock

The Company currently has authorized 600,000,000 shares of Common Stock with a par value of $0.01. As of December 31, 2022, and 2021 there were 51,222,485 and 51,176,887, respectively, shares of common stock issued and outstanding.

Members' Equity

Prior to the IPO, the Company had three classes of ownership units, each with its respective rights, preferences and privileges as follows:

1)Class A Units: Received an allocation of profits and losses incurred by the Company as well as maintained the right to receive distributions, along with Class B Units, on a pro rata basis prior to distributions made to other classes of ownership units.

2)Class B Units: Received an allocation of profits and losses incurred by the Company as well as maintained the right to receive distributions, along with Class A Units, on a pro rata basis prior to distributions made to other classes of ownership units. Class B maintained both voting and non-voting units. Each Class B Voting Unit is entitled to one vote per Class B Voting Unit on each matter to which the members are entitled to vote. Class B Non-Voting Units maintained all rights, preferences and privileges allowed to Class B Voting Units with the exception of voting rights.

3)Class C Units: Received an allocation of profits and losses incurred by the Company. Participating Class C Units maintained the right to receive distributions after any Class A or Class B units based on the unit holders’ pro rata share.

As part of the corporate reorganization performed in conjunction with the IPO of Trean Insurance Group, all ownership units were exchanged for a total of 37,386,394 shares of Common Stock.

Note 19. Earnings Per Share

Basic earnings per share ("EPS") is computed by dividing net income by the weighted average number of shares outstanding during reported periods. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock during reported periods and is calculated using the treasury stock method.

114

The following table presents the calculation of basic and diluted EPS of Common Stock:

	Year Ended December 31,
(in thousands, except share and per share amounts)	2022		2021		2020
Net income - basic and diluted	$	(65,955)	$	19,330	$	88,549
Weighted average number of shares outstanding - basic	51,203,370		51,162,293		43,744,003
Effect of dilutive securities:
Restricted stock units	—		11,157		741
Dilutive shares	—		11,157		741
Weighted average number of shares outstanding - diluted	51,203,370		51,173,450		43,744,744
Earnings per share:
Basic	$	(1.29)	$	0.38	$	2.02
Diluted	$	(1.29)	$	0.38	$	2.02

At December 31, 2022, 2021 and 2020, there were restricted stock units and stock options outstanding totaling 567,537, 389,905 and 179,840, respectively, excluded from the computation of diluted weighted-average shares outstanding because their inclusion would have been anti-dilutive.

Note 20. Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income (loss):

	Year Ended December 31,
	2022		2021		2020
Balance at beginning of period	$	4,384	$	13,426	$	6,500
Other comprehensive income (loss), net of tax:
Unrealized investment gains (losses):
Unrealized investment gains (losses) arising during the period	(54,720)		(11,386)		9,028
Change in fair value of interest rate cap	(45)		—		—
Income tax expense (benefit)	(11,488)		(2,391)		1,903
Unrealized investment gains (losses), net of tax	(43,277)		(8,995)		7,125
Less: reclassification adjustments to:
Net realized investment gains (losses) included in net realized gains	(1,101)		59		252
Income tax expense (benefit)	(231)		12		53
Total reclassifications included in net income, net of tax	(870)		47		199
Other comprehensive income (loss)	(42,407)		(9,042)		6,926
Balance at end of period	$	(38,023)	$	4,384	$	13,426

Note 21. Stock Compensation

As of December 31, 2022, the Company has one incentive plan, the Trean Insurance Group, Inc. 2020 Omnibus Incentive Plan, (the "2020 Omnibus Plan"). The purposes of the 2020 Omnibus Plan are to provide additional incentive to selected officers, employees, non-employee directors, independent contractors and consultants of the Company whose contributions are essential to the growth and success of the business of the Company and its affiliates, in order to strengthen the commitment and motivate such individuals to faithfully and diligently perform their responsibilities and attract competent

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and dedicated individuals whose efforts will result in the long-term growth and profitability of the Company and its affiliates. The 2020 Omnibus Plan is administered by the Company’s board of directors and provides for the issuance of up to 5,058,085 shares of Common Stock granted in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses, other stock awards or any combination of the foregoing. As provided in the Merger Agreement, the Company will not issue or authorize any new awards during the pendency of the Merger, subject to certain exceptions.

Stock Options

Compensation expense is recognized for all stock compensation arrangements by the Company. Stock compensation expense related to stock option awards was $203, $164 and $61 for the years ended December 31, 2022, 2021, and 2020, respectively.

Employee stock option awards granted set forth, among other things, the option exercise price, the option term, provisions regarding option exercisability and whether the option is intended to be an incentive stock option ("ISO") or a nonqualified stock option ("NQSO"). Stock options may be granted to employees at such exercise prices as the Company’s board of directors may determine but not less than 100% of the fair market value of the underlying stock as of the date of grant. Employee options vest one third annually over a period of three years and have contractual terms of 10 years from the date of grant.

The fair value of each time-based vesting option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions noted in the following table. The Company’s expected volatility for the period was based on a weighted average expected volatility of an industry peer group of insurance companies of similar size, life cycle and lines of business. Expected term is calculated using the simplified method taking into consideration the option's contractual life and vesting terms. The Company’s stock option grants qualify as plain vanilla options and as such the Company uses the simplified method in estimating its expected option term as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its common shares have been publicly traded. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yields were not used in the fair value computations as the Company has never declared or paid dividends on its Common Stock and currently intends to retain earnings for use in operations.

	2022	2021	2020
Expected volatility	29.8%	29.8%	29.8%
Expected term	6 years	6 years	6 years
Risk-free interest rate	1.92%	1.32%	0.47%

A summary of the status of the Company's stock option activity as of December 31, 2022 and changes during the year then ended are as follows:

	Stock Options	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contract Term
Balance outstanding, December 31, 2021	120,187	$	16.06
Granted	64,694	$	7.04
Forfeited or cancelled	(20,158)	$	14.76
Balance outstanding, December 31, 2022	164,723	$	12.68	$	—	8.34 years
Options exercisable, December 31, 2022	53,956	$	15.68	$	—	7.73 years

The weighted average grant-date fair value of options granted for the years ended December 31, 2022, 2021 and 2020 was $2.30, $5.49 and $4.43, respectively. As of December 31, 2022, total unrecognized compensation cost related to stock options was $250 and is expected to be recognized over a weighted average period of approximately 0.9 years.

Restricted Stock Units

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Compensation expense relating to restricted stock unit grants was $1,293, $1,358 and $445 for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022 there was $2,029 of total unrecognized compensation cost related to non-vested restricted stock unit grants. That cost is expected to be recognized over a weighted average expected life of 1.5 years. The total fair value of restricted stock units vested during the years ended December 31, 2022, 2021, and 2020 was $262, $498 and $174, respectively.

The Company has granted time-based restricted stock units ("RSUs"), performance stock units ("PSUs"), and market-based stock units ("MSUs") to certain key employees as part of the Company's long-term incentive program. The estimated fair value of restricted stock units is based on the grant date closing price of the Company's stock for time-based and performance-based vesting awards. A Monte Carlo valuation model is used to estimate the fair value for market-based vesting awards. RSUs generally vest in three equal annual installments beginning one year from the grant date and are amortized as compensation expense over the three-year vesting period. The Company has also granted time-based restricted stock units to non-employee directors as part of the Company's annual director compensation program. Each time-based restricted stock grant to non-employee directors vests on the day immediately preceding the next annual meeting of stockholders following the date of grant. The grants are amortized as director compensation expense over the vesting period. The Company recognizes compensation expense on PSUs ratably over the requisite performance period of the award and to the extent management views the performance goal attainment as probable. The Company recognizes compensation expense on MSUs ratably over the requisite performance period of the award.

For the 2022 and 2021 fiscal years, the Company granted PSUs to certain key employees pursuant to the Company's 2020 Omnibus Plan. The number of shares earned is based on the Company’s achievement of pre-established target threshold goals for total gross written premiums over a three-year performance measurement period. The performance goals allow for a payout ranging from 0% to 200% of the target award. If performance satisfies minimum requirements to result in shares being awarded, the number of shares will be determined between 50% and 200% of target thresholds, as defined in the applicable award agreements. Any earned PSU will vest if the employee’s service has been continuous through the vesting date. Any PSU not earned because of failure to achieve the minimum performance goal at the end of the performance period will be immediately forfeited. The grant date fair value of the PSUs was determined based on the grant date closing price of the Company’s stock.

For the 2022 and 2021 fiscal years, the Company granted MSUs to certain key employees pursuant to the Company's 2020 Omnibus Plan. The number of restricted stock units earned is based on the Company’s cumulative total shareholder return ("TSR"), as defined in the applicable award agreement, over a three-year performance measurement period. If TSR satisfies minimum requirements to result in shares being awarded, the number of shares will be determined between 50% and 200% shown in the table below. Any MSU not earned because of failure to achieve the minimum performance goal at the end of the performance period will be immediately forfeited. Grant date fair values were determined using a Monte Carlo valuation model based on the following assumptions:

	Fiscal 2022	Fiscal 2021
Total grant date fair value	$391	$845
Total grant date fair value per share	$6.04	$13.92
Expected volatility	40.0%	35.0%
Weighted average expected life	2.81 years	2.77 years
Risk-free interest rate	1.79%	0.27%

The percent of the target MSU that will be earned based on the Company’s TSR is as follows:

Cumulative TSR %
Fiscal 2022	Fiscal 2021	Percent of Units Vested
Below 29.2%	Below 25.1%	—%
29.2%	25.1%	50%
52.1%	47.2%	100%
74.9% and above	69.3% and above	200%

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A summary of the status of the Company’s non-vested restricted stock unit activity as of December 31, 2022 and changes during the year then ended is as follows:

	RSUs			MSUs			PSUs			Total
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Non-vested outstanding, December 31, 2021	117,109	$	15.53	50,861	$	13.92	101,748	$	17.50	269,718	$	15.97
Granted	97,808	$	6.67	64,709	$	6.04	64,693	$	7.04	227,210	$	6.60
Vested	(50,236)	$	14.89	—	$	—	—	$	—	(50,236)	$	14.89
Forfeited or cancelled	(17,129)	$	13.43	(9,854)	$	11.67	(16,895)	$	15.76	(43,878)	$	13.93
Non-vested outstanding, December 31, 2022	147,552	10.12		105,716	9.31		149,546	13.17		402,814	11.04

Note 22. Regulatory Matters

U.S. state insurance laws and regulations prescribe accounting practices for determining statutory net income and capital and surplus for insurance companies. In addition, state regulators may permit statutory accounting practices that differ from prescribed practices. Statutory accounting practices prescribed or permitted by regulatory authorities for the Company’s insurance company subsidiaries, Benchmark, ALIC, 7710 & BSIC differ from GAAP. The principal differences between statutory accounting practices ("SAP") and GAAP as they relate to the financial statements of Benchmark, ALIC, 7710 and BSIC are (i) policy acquisition costs are expensed as incurred under SAP, whereas they are deferred and amortized under GAAP, (ii) deferred tax assets are subject to more limitations regarding what amounts can be recorded under SAP and (iii) bonds are recorded at amortized cost under SAP and fair value under GAAP. Benchmark is domiciled in Kansas, ALIC is domiciled in Utah, 7710 is domiciled in South Carolina and BSIC is domiciled in Arkansas. As of December 31, 2022 and 2021, and during the years then ended, Benchmark, ALIC, 7710 and BSIC met all regulatory requirements of the states in which they operate.

Risk-based capital ("RBC") requirements as promulgated by the National Association of Insurance Commissioners ("NAIC") require property and casualty insurers to maintain minimum capitalization levels determined based on formulas incorporating various business risks (e.g., investment risk, underwriting profitability, etc.) of the insurance company subsidiaries. As of December 31, 2022 and 2021, the insurance company subsidiaries’ adjusted capital and surplus exceeded their authorized control level as determined by the NAIC’s risk-based capital models.

Summarized statutory basis information, which differs from GAAP, is shown below for Benchmark, ALIC, 7710 and BSIC.

	2022
(in thousands, except percentages)	Benchmark			ALIC			7710			BSIC
Statutory capital and surplus	$	222,340		$	6,270		$	6,210		$	48,655
RBC authorized control level	31,350			436			225			315
Statutory net income (loss)	(2,270)			108			(21)			695
RBC percentage	709		%	1,438		%	2,760		%	15,446		%

	2021
(in thousands, except percentages)	Benchmark			ALIC			7710			BSIC
Statutory capital and surplus	$	170,686		$	6,321		$	6,395		$	19,977
RBC authorized control level	24,279			567			382			129
Statutory net income	(782)			128			76			(23)
RBC percentage	703		%	1,115		%	1,674		%	15,486		%

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The amount of dividends that our insurance subsidiaries may pay in any twelve-month period, without prior approval by their respective domestic insurance regulators, is restricted under the laws of Kansas, California, Utah, South Carolina and Arkansas.

Under Kansas and California law, dividends payable from Benchmark without the prior approval of the applicable insurance commissioner must not exceed the greater of (i) 10% of Benchmark’s surplus as shown on the last statutory financial statement on file with the Kansas Insurance Department and the California Department of Insurance, respectively, or (ii) 100% of net income during the applicable twelve-month period (not including realized gains). Dividends shall not include pro rata distributions of any class of Benchmark's own securities. For the years ended December 31, 2022 and 2021 the Company could approve dividends without the approval of the state up to $17,068 and $20,474, respectively. The Kansas Insurance Department does not have any limitations on the total amount of dividends paid.

Under Utah law, dividends payable from ALIC without the prior approval of the applicable insurance commissioner must not exceed the lesser of (i) 10% of ALIC’s surplus as shown on the last statutory financial statement on file with the Utah Insurance Department (ii) 100% of net income during the applicable twelve- month period (not including realized gains). Dividends shall not include pro rata distributions of any class of ALIC's own securities. For the years ended December 31, 2022 and 2021 the Company could approve dividends without the approval of the state up to $128 and $11, respectively.

Under South Carolina law, dividends payable from 7710 without the prior approval of the applicable insurance commissioner are limited to the following during the preceding twelve months: (a) when paid from other than earned surplus must not exceed the lesser of: (i) 10% of 7710's surplus as regards policyholders as shown in 7710’s most recent annual statement; or (ii) the net income, not including net realized gains or losses as shown in the 7710's most recent annual statement; or (b) when paid from earned surplus must not exceed the greater of: (i) 10% of 7710's surplus as regards policyholders as shown in 7710’s most recent annual statement; or (ii) the net income, not including net realized gains or losses as shown in the 7710's most recent annual statement. Dividends shall not include pro rata distributions of any class of 7710’s own securities. For the years ended December 31, 2022 and 2021 the Company could approve dividends without the approval of the state up to $75 and $519, respectively.

Under Arkansas law, dividends payable from BSIC without the prior approval of the applicable insurance commissioner must not exceed the lesser of (i) 10% of BSIC’s surplus as shown on the last statutory financial statement on file with the Arkansas Insurance Department; or (ii) 100% of net income during the applicable twelve- month period (not including realized gains). Dividends shall not include pro rata distributions of any class of BSIC's own securities. For the years ended December 31, 2022 and 2021 the Company could not approve dividends without the approval of the state.

The insurance laws of Kansas require Benchmark to maintain minimum capital and surplus of $1,500. The insurance laws of Utah require ALIC to maintain minimum capital in the amount of $300. The insurance laws of South Carolina require 7710 to maintain minimum capital and surplus of $1,200. The insurance laws of Arkansas require BSIC to maintain minimum capital and surplus of $20,000.

Note 23. Employee Benefit Plan

The Company has a 401(k) Plan and Trust. This Plan covers all eligible employees of the Company. An employee becomes eligible on the first day of each calendar quarter if they are at least 21 years old. Participants may elect to contribute from 1 percent up to 15 percent of their salary annually. The Company matches 50 percent of each dollar an employee contributes on the first 5 percent of compensation. In addition, under the safe-harbor plan, the Company contributes 3 percent of each participant's gross wages regardless of the employee's contributions. The Company may also make discretionary profit sharing contributions. The employees vest 25 percent per year of service beginning in the second full year of service. The Company contributed approximately $1,444, $1,373 and $942 to the plan for the years ended December 31, 2022, 2021 and 2020, respectively.

Note 24. Commitments and Contingencies

From time to time, the Company is subject to litigation related to its insurance business. Management does not believe that the Company is a party to any such pending litigation that would have a material adverse effect on its future operations.

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Note 25. Transactions with Related Parties

In connection with our IPO, we entered into a director nomination agreement with the Altaris Funds, the Company's principal stockholder. So long as the Altaris Funds own 35% or more of outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate three individuals to our board of directors; so long as the Altaris Funds own 20% or more but less than 35% of our outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate two individuals to our board of directors; and so long as the Altaris Funds own 10% or more but less than 20% of outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate one individual to our board of directors. Prior to the IPO, the Company paid a management fee to the Altaris Funds totaling $500 for the year ended December 31, 2020 which is included in general and administrative expenses on the consolidated statement of operations. In conjunction with the IPO in 2020, the Company paid a termination fee to the Altaris Funds totaling $7,639, which is included in other expenses on the consolidated statement of operations.

On December 15, 2022, the Company entered into a merger agreement, providing for the acquisition of the Company by Altaris. See Note 1 for additional information.

On July 6, 2021, Trean Corp purchased 100% ownership of WIC. Prior to the acquisition, WIC was partially owned by two employees of the Company. The total purchase price was $5,500, which includes $1,500 that is contingent on WIC's future earnings, as defined in the agreement. The Company made an earn-out payment of $750 during the year ended December 31, 2022. As of December 31, 2022 and December 31, 2021, $750 and $1,500, respectively, of the total purchase price is outstanding and included within accounts payable and accrued expenses on the consolidated balance sheet.

The Company recorded $100, $200 and $200 of revenue for consulting services provided to TRI for the years ended December 31, 2022, 2021 and 2020, respectively. See Note 6 for information on the sale of the Company's previous ownership in TRI.

Effective July 15, 2020, Trean Compstar Holdings LLC purchased the remaining ownership interest in Compstar (See Note 3). Prior to the acquisition, the Company owned a 45% interest in Compstar, a program manager that handles the underwriting, premium collection and servicing of insurance policies for the Company. The Company recorded $90,199 of gross earned premiums resulting in gross commissions of $17,709 for the year ended December 31, 2020 prior to the acquisition. The Company recorded $176,083 of gross earned premiums resulting in gross commissions of $37,034 due to Compstar for the year ended December 31, 2020.

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Schedule II. Condensed Financial Information of Registrant

Trean Insurance Group, Inc.

Condensed Balance Sheets

(in thousands, except share data)

	December 31,
	2022		2021
Assets
Investment in subsidiaries	$	283,600	$	267,643
Total investments	283,600		267,643
Cash and cash equivalents	3,066		4,242
Income taxes receivable	5,841		12,360
Intercompany receivables	22,645		135,369
Deferred tax asset	1,051		671
Other assets	1,859		1,930
Total assets	$	318,062	$	422,215
Liabilities
Accounts payable and accrued expenses	$	3,043	$	306
Total liabilities	3,043		306
Stockholders' equity
Preferred stock, $0.01 par value per share (100,000,000 authorized, zero issued and outstanding)	—		—
Common stock, $0.01 par value per share (600,000,000 authorized; 51,222,485 and 51,176,887 issued and outstanding)	512		512
Additional paid-in capital	290,095		288,623
Retained earnings	62,435		128,390
Accumulated other comprehensive income	(38,023)		4,384
Total stockholders' equity	315,019		421,909
Total liabilities and stockholders' equity	$	318,062	$	422,215

This condensed financial information should be read in conjunction with the consolidated financial statements and notes included in Part II, Item 8.

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Schedule II. Condensed Financial Information of Registrant - (Continued)

Trean Insurance Group, Inc.

Condensed Statements of Operations

(in thousands)

	Year Ended December 31,
	2022		2021
Revenues
Net investment income	$	—	$	9
Other revenue	—		—
Total revenue	—		9
Expenses
General and administrative expenses	5,591		4,103
Other expenses	3,081		845
Noncash stock compensation	1,496		1,522
Total expenses	10,168		6,470
Loss before taxes	(10,168)		(6,461)
Income tax benefit	(1,650)		(1,712)
Loss before equity earnings of subsidiaries	(8,518)		(4,749)
Equity earnings (loss) of subsidiaries	(57,437)		24,079
Net income (loss)	$	(65,955)	$	19,330

This condensed financial information should be read in conjunction with the consolidated financial statements and notes included in Part II, Item 8.

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Schedule II. Condensed Financial Information of Registrant - (Continued)

Trean Insurance Group, Inc.

Condensed Statements of Cash Flows

(in thousands)

	Year Ended December 31,
	2022		2021
Operating activities
Net income (loss)	$	(65,955)	$	19,330
Adjustments to reconcile net income to net cash from operating activities:
Stock compensation	1,496		1,522
Equity (earnings) losses in subsidiaries	57,437		(24,079)
Dividends received from subsidiaries	1,150		—
Deferred income taxes	(379)		(414)
Changes in operating assets and liabilities:
Premiums and other receivables	—		—
Other assets	70		(1,930)
Accounts payable and accrued expenses	2,737		(357)
Income taxes payable and receivable	6,520		(7,781)
Intercompany receivables	(3,079)		17,277
Net cash provided by (used in) operating activities	(3)		3,568
Investing activities
Distribution from subsidiaries	8,850		—
Capital contributions to subsidiaries	(10,000)		—
Net cash used for investing activities	(1,150)		—
Financing activities
Shares redeemed for payroll taxes	(23)		(94)
Proceeds from short swing rule	—		85
Net cash provided by (used in) financing activities	(23)		(9)
Net increase in cash, cash equivalents and restricted cash	(1,176)		3,559
Cash, cash equivalents and restricted cash ‑ beginning of period	4,242		683
Cash, cash equivalents and restricted cash ‑ end of period	$	3,066	$	4,242

This condensed financial information should be read in conjunction with the consolidated financial statements and notes included in Part II, Item 8.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, management conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2022 to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms specified by the SEC.

Management's Report on Internal Control Over Financial Reporting

As of the end of the period covered by this report, management conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s internal control over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2022 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP.

As we are an "emerging growth company" under the JOBS Act of 2012, the Company's registered public accounting firm, Deloitte & Touche LLP, is not required to attest to the effectiveness of our internal control over financial reporting and no attestation report has been included in this annual report on Form 10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

Not applicable.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by Item 10 will be set forth in an amendment to this Form 10-K to be filed on Form 10-K/A with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference.

Our Code of Business Conduct and Ethics, as amended (the “Code”) is applicable to all officers, directors and employees. The Code is posted on our website at https://www.trean.com. Information contained on our website is not part of this Annual Report. We will satisfy any disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, any provision of the Code with respect to our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions by disclosing the nature of such amendment or waiver on our website or in a Current Report on Form 8-K.

Item 11. Executive Compensation

The information required by Item 11 will be set forth in an amendment to this Form 10-K to be filed on Form 10-K/A with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 will be set forth in an amendment to this Form 10-K to be filed on Form 10-K/A with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions and Director Independence

The information required by Item 13 will be set forth in an amendment to this Form 10-K to be filed on Form 10-K/A with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information required by Item 14 will be set forth in an amendment to this Form 10-K to be filed on Form 10-K/A with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference. Deloitte & Touche LLP (PCAOB ID no. 34) is our principal accountant.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

Financial Statements

The following consolidated financial statements and supplementary data of the Company and its subsidiaries, required by Part II, Item 8 are filed herewith:

•Report of Independent Registered Public Accounting Firm

•Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021

•Consolidated Statements of Operations for the years ended December 31, 2022, December 31, 2021 and December 31, 2020

•Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, December 31, 2021 and December 31, 2020

•Consolidated Statements of Stockholders’ Equity and Redeemable Preferred Stock for the years ended December 31, 2022, December 31, 2021 and December 31, 2020

•Consolidated Statements of Cash Flows for the years ended December 31, 2022, December 31, 2021 and December 31, 2020

• Notes to Consolidated Financial Statements

Exhibits

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated as of December 15, 2022, by and among Trean Insurance Group, Inc., Treadstone Parent Inc., and Treadstone Merger Sub Inc. (filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on December 19, 2022 and incorporated by reference herein)
3.1	Amended and Restated Certificate of Incorporation of Trean Insurance Group, Inc. (filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 28, 2020 and incorporated by reference herein)
3.2	Amended and Restated By-Laws of Trean Insurance Group, Inc. (filed as Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 28, 2020 and incorporated by reference herein)
4.1	Description of Securities
10.1	Registration Rights Agreement, dated as of July 20, 2020, among Trean Insurance Group, Inc. and the parties named therein (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 28, 2020 and incorporated by reference herein)
10.2	Reorganization Agreement, dated as of July 16, 2020, among Trean Insurance Group, Inc. and the parties named therein (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 28, 2020 and incorporated by reference herein)
10.3	Contribution Agreement, dated as of July 16, 2020, among Trean Insurance Group, Inc., BIC Holdings LLC and Trean Holdings LLC (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 28, 2020 and incorporated by reference herein)
10.4	Contribution Agreement, dated as of July 16, 2020, between Trean Insurance Group, Inc. and Trean Compstar Holdings LLC (filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on August 28, 2020 and incorporated by reference herein)
10.5	Director Nomination Agreement, dated as of July 16, 2020, among Trean Insurance Group, Inc., AHP-BHC LLC, AHP-TH LLC, ACP-BHC LLC and ACP-TH LLC (filed as Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed on August 28, 2020 and incorporated by reference herein)
10.6**	Trean Insurance Group, Inc. 2020 Omnibus Incentive Plan (filed as Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed on August 28, 2020 and incorporated by reference herein)
10.7	Termination Agreement, dated as of July 16, 2020, among Altaris Capital Partners, LLC, BIC Holdings LLC, Trean Holdings LLC and Trean Insurance Group, Inc. (filed as Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed on August 28, 2020 and incorporated by reference herein)
10.8	Agreement, dated as of June 3, 2020, among Blake Baker Enterprises I, Inc., Blake Baker Enterprises II, Inc., Blake Baker Enterprises III, Inc., Blake Baker, Compstar Holding Company LLC, Trean Holdings LLC and Trean Compstar Holdings LLC (filed as Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 filed on June 19, 2020 and incorporated by reference herein)

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Exhibit Number	Description
10.9	Amendment No. 1 to Agreement, dated as of July 6, 2020, among Blake Baker Enterprises I, Inc., Blake Baker Enterprises II, Inc., Blake Baker Enterprises III, Inc., Blake Baker, Compstar Holding Company LLC, Trean Holdings LLC and Trean Compstar Holdings LLC (filed as Exhibit 10.5b to the Registrant’s Registration Statement on Form S-1A filed on July 9, 2020 and incorporated by reference herein)
10.10	Director Nomination Agreement among Trean Insurance Group, Inc. and the Altaris Funds (filed as Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 filed on June 19, 2020 and incorporated by reference herein)
10.11**	Restricted Stock Unit Award Agreement (filed as Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1A filed on July 9, 2020 and incorporated by reference herein)
10.12**	Non-Qualified Stock Option Award Agreement (filed as Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1A filed on July 9, 2020 and incorporated by reference herein)
10.13**	Form of Performance Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on May 13, 2021)
10.14**	Form of Market Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on May 13, 2021)
10.15	Indemnification Agreement between Trean Insurance Group, Inc. and each of its directors and executive officers (filed as Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 filed on June 19, 2020 and incorporated by reference herein)
10.16	Voting and Support Agreement, dated as of December 15, 2022, by and among Trean Insurance Group, Inc., AHP-BHC LLC, AHP-TH LLC, ACP-BHC LLC, ACP-TH LLC and Altaris Partners, LLC (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 19, 2022 and incorporated by reference herein)
10.17	Fiscal Agency Agreement, dated as of August 24, 2022, by and between Benchmark Insurance Company and The Bank of New York Mellon (filed as exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on August 30, 2022 and incorporated by reference herein)
10.18	Amended and Restated Credit Agreement, dated as of May 26, 2020, among Trean Holdings LLC, Trean Corporation, Trean Compstar Holdings LLC, Benchmark Administrators, LLC and First Horizon Bank, N.A. (filed as Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 filed on June 19, 2020 and incorporated by reference herein)
10.19	Second Amended and Restated Credit Agreement, dated as of July 16, 2020, among Trean Insurance Group, Inc., Trean Corporation, Trean Compstar Holdings LLC, Benchmark Administrators, LLC and First Horizon Bank, N.A. (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K filed March 26, 2021)
10.20	First Amendment to Second Amended and Restated Credit Agreement by and among Trean Insurance Group, Inc., Trean Corporation, Trean Compstar Holdings LLC, Benchmark Administrators, LLC, the lenders party thereto and First Horizon Bank, N.A., as administrative agent, dated May 6, 2022 (filed as exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on October 4, 2022 and incorporated by reference herein)
10.21	Second Amendment to Second Amended and Restated Credit Agreement by and among Trean Insurance Group, Inc., Trean Corporation, Benchmark Administrators, LLC, the lenders party thereto and First Horizon Bank, N.A., as administrative agent, dated September 28, 2022 (filed as exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on October 4, 2022 and incorporated by reference herein)
10.22	Third Amendment to Second Amended and Restated Credit Agreement by and among Trean Insurance Group, Inc., Trean Corporation, Benchmark Administrators, LLC, the lenders party thereto and First Horizon Bank, as administrative agent, dated December 15, 2022 (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 19, 2022 and incorporated by reference herein)
21.1+	Subsidiaries of Trean Insurance Group, Inc.
23.1+	Consent of Independent Registered Public Accounting Firm
24.1+	Power of Attorney (included on the signature pages hereto)
31.1+	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2+	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

127

Exhibit Number	Description
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference to any filing under the Securities Act of 1933, as amended, or the Exchange Act.
** Represents management contracts and compensatory plans or arrangements.
+ Filed herewith.

Item 16. Form 10-K Summary

None.

128

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 16, 2023.

TREAN INSURANCE GROUP, INC.
By:	/s/ Julie A. Baron
	Julie A. Baron
	Chief Executive Officer and President

129

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENT, that undersigned hereby constitute and appoint each of Julie A. Baron, Nicholas J. Vassallo and Patricia A. Ryan, and each of them, as true and lawful attorneys-in-fact and agents with full power of substitution, in any and all capacities, to, sign Trean Insurance Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2022, and any and all amendments and supplements thereto and all other instruments necessary or desirable in connection therewith, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, and take any other action or any type whatsoever in connection with the foregoing which in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact’s discretion. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming any of the undersigned’s responsibilities to comply with the Securities Exchange Act of 1934.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Julie A. Baron	Chief Executive Officer, President and Director	March 16, 2023
Julie A. Baron	(Principal Executive Officer)
/s/ Nicholas J. Vassallo	Chief Financial Officer and Treasurer	March 16, 2023
Nicholas J. Vassallo	(Principal Financial and Accounting Officer)
/s/ Andrew M. O'Brien	Executive Chairman of the Board and Director	March 16, 2023
Andrew M. O'Brien
/s/ Daniel G. Tully	Director	March 16, 2023
Daniel G. Tully
/s/ Mary A. Chaput	Director	March 16, 2023
Mary A. Chaput
/s/ Randall D. Jones	Director	March 16, 2023
Randall D. Jones
/s/ Steven B. Lee	Director	March 16, 2023
Steven B. Lee
/s/ Terry P. Mayotte	Director	March 16, 2023
Terry P. Mayotte
/s/ Phillip I. Smith	Director	March 16, 2023
Phillip I. Smith

130

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF TREAN INSURANCE GROUP, INC.

Subsidiary	Jurisdiction
Benchmark Holding Company	Minnesota
•Benchmark Insurance Company	Kansas
•American Liberty Insurance Company, Inc.	Utah
•7710 Insurance Company	South Carolina
•Benchmark Specialty Insurance Company	Arkansas
Trean Corporation	Minnesota
•Benchmark Administrators, LLC	California
•Trean Reinsurance Services, LLC	Minnesota
•Westcap Insurance Services, LLC	California
•Western Integrated Care, LLC	Nevada
Compstar Insurance Services, LLC	California

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333- 239291 and 333- 256220 on Form S-1 of our report dated March 16, 2023, relating to the financial statements of Trean Insurance Group appearing in this Annual Report on Form 10-K for the year ended December 31, 2022.

/s/ Deloitte & Touche LLP

Minneapolis, MN

March 16, 2023

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Julie A. Baron, certify that:

1.I have reviewed this Annual Report on Form 10-K of Trean Insurance Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 16, 2023	/s/ Julie A. Baron
		Julie A. Baron
		Chief Executive Officer and President
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Nicholas J. Vassallo, certify that:

1.I have reviewed this Annual Report on Form 10-K of Trean Insurance Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 16, 2023	/s/ Nicholas J. Vassallo
		Nicholas J. Vassallo
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Trean Insurance Group, Inc. (the Company) for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned hereby, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March 16, 2023	/s/ Julie A. Baron
		Julie A. Baron
		Chief Executive Officer and President
		(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Trean Insurance Group, Inc. (the Company) for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned hereby, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to her knowledge:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March 16, 2023	/s/ Nicholas J. Vassallo
		Nicholas J. Vassallo
		Chief Financial Officer
		(Principal Financial Officer)

XML

Cover Page - USD ($)	12 Months Ended
	Dec. 31, 2022	Mar. 13, 2023	Jun. 30, 2022
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-39392
Entity Registrant Name	TREAN INSURANCE GROUP, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	84-4512647
Entity Address, Address Line One	150 Lake Street West
Entity Address, City or Town	Wayzata
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55391
City Area Code	952
Local Phone Number	974-2200
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	TIG
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 139,680,681
Entity Common Stock, Shares Outstanding		51,238,218
Documents Incorporated by Reference	Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K are incorporated by reference from the registrant’s amendment to this Form 10-K to be filed on Form 10-K/A with the Securities and Exchange Commission no later than 120 days after the end of the registrant’s fiscal year covered by this report.
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Entity Central Index Key	0001801754

XML

Audit Information	12 Months Ended
	Dec. 31, 2022
Audit Information [Abstract]
Auditor Name	Deloitte & Touche LLP
Auditor Location	Minneapolis, Minnesota
Auditor Firm ID	34

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Investments [Abstract]
Fixed maturities, at fair value (amortized cost of $600,398 and $465,459, respectively)	$ 552,243	$ 471,061
Equity securities, at fair value (cost $39,882 and $984, respectively)	35,041	969
Total investments	587,284	472,030
Cash and cash equivalents	107,991	129,577
Restricted cash	1,083	407
Accrued investment income	3,726	2,344
Premiums and other receivables	160,282	141,920
Income taxes receivable	5,841	460
Reinsurance recoverable	408,522	377,241
Prepaid reinsurance premiums	124,269	129,411
Deferred policy acquisition cost, net	18,858	13,344
Property and equipment, net	7,151	7,632
Right of use asset	2,764	4,530
Deferred tax asset, net	5,958	0
Goodwill	66,294	142,347
Intangible assets, net	67,117	73,114
Other assets	14,799	8,658
Total assets	1,581,939	1,503,015
Liabilities
Unpaid loss and loss adjustment expenses	632,910	544,320
Unearned premiums	229,112	219,940
Funds held under reinsurance agreements	241,291	199,410
Reinsurance premiums payable	50,861	45,130
Accounts payable, accrued expenses and other liabilities	32,609	29,448
Lease liability	3,063	4,976
Deferred tax liability, net	0	7,520
Debt	77,074	30,362
Total liabilities	1,266,920	1,081,106
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 par value per share (100,000,000 authorized, zero issued and outstanding)	0	0
Common stock, $0.01 par value per share (600,000,000 authorized, respectively; 51,222,485 and 51,176,887 issued and outstanding, respectively)	512	512
Additional paid-in capital	290,095	288,623
Retained earnings	62,435	128,390
Accumulated other comprehensive income (loss)	(38,023)	4,384
Total stockholders' equity	315,019	421,909
Total liabilities and stockholders' equity	$ 1,581,939	$ 1,503,015

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Amortized cost	$ 600,398	$ 465,459
Equity securities, cost	$ 39,882	$ 984
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	100,000,000	100,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	600,000,000	600,000,000
Common stock, issued (in shares)	51,222,485	51,176,887
Common stock, outstanding (in shares)	51,222,485	51,176,887

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Revenues
Gross written premiums	$ 651,303,000	$ 634,164,000	$ 484,249,000
Increase in gross unearned premiums	(9,074,000)	(61,911,000)	(52,215,000)
Gross earned premiums	642,229,000	572,253,000	432,034,000
Ceded earned premiums	(357,605,000)	(373,573,000)	(323,567,000)
Net earned premiums	284,624,000	198,680,000	108,467,000
Net investment income	10,087,000	8,721,000	11,669,000
Gain on revaluation of Compstar investment	0	0	69,846,000
Net realized gains	285,000	49,000	3,365,000
Other revenue	8,246,000	10,240,000	12,104,000
Total revenue	303,242,000	217,690,000	205,451,000
Expenses
Losses and loss adjustment expenses	203,877,000	130,772,000	50,774,000
General and administrative expenses	86,210,000	54,706,000	38,668,000
Other expenses	3,349,000	845,000	13,427,000
Intangible asset amortization	5,998,000	5,826,000	2,573,000
Noncash stock compensation	1,496,000	1,522,000	506,000
Interest expense	3,270,000	1,685,000	1,922,000
Goodwill impairment	76,053,000	0	0
Total expenses	380,253,000	195,356,000	107,870,000
Gains (losses) on embedded derivatives	12,024,000	2,226,000	(6,155,000)
Other income	106,000	219,000	1,025,000
Income (loss) before taxes	(64,881,000)	24,779,000	92,451,000
Income tax expense	1,074,000	5,449,000	6,235,000
Equity earnings in affiliates, net of tax	0	0	2,333,000
Net income (loss)	$ (65,955,000)	$ 19,330,000	$ 88,549,000
Earnings (loss) per share:
Basic (in dollars per share)	$ (1.29)	$ 0.38	$ 2.02
Diluted (in dollars per share)	$ (1.29)	$ 0.38	$ 2.02
Weighted average shares outstanding:
Weighted average number of shares outstanding - basic (in shares)	51,203,370	51,162,293	43,744,003
Weighted average number of shares outstanding - diluted (in shares)	51,203,370	51,173,450	43,744,744

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (65,955)	$ 19,330	$ 88,549
Unrealized gains (losses):
Unrealized investment gains (losses) arising during the period	(54,720)	(11,386)	9,028
Decrease in fair value of interest rate cap	(45)	0	0
Income tax expense (benefit)	(11,488)	(2,391)	1,903
Unrealized gains (losses), net of tax	(43,277)	(8,995)	7,125
Less reclassification adjustments to:
Net realized investment gains (losses) included in net realized gains (losses)	(1,101)	59	252
Income tax expense (benefit)	(231)	12	53
Total reclassifications included in net income (loss), net of tax	(870)	47	199
Other comprehensive income (loss)	(42,407)	(9,042)	6,926
Total comprehensive income (loss)	$ (108,362)	$ 10,288	$ 95,475

XML

Consolidated Statements of Stockholders’ Equity and Redeemable Preferred Stock - USD ($) $ in Thousands	Total	Compstar Holding Company LLC	Initial Public Offering	Class C - Non Voting	Series B Preferred Stock	Preferred Stock	Common Stock	Common Stock Compstar Holding Company LLC	Common Stock Initial Public Offering	Common Stock Class A - Non Voting	Common Stock Class B - Voting	Common Stock Class B - Non Voting	Common Stock Class C - Non Voting	Additional Paid in Capital	Additional Paid in Capital Compstar Holding Company LLC	Additional Paid in Capital Initial Public Offering	Accumulated Other Comprehensive Income (Loss)	Retained Earnings (Deficit)	Retained Earnings (Deficit) Series B Preferred Stock
Redeemable preferred stock beginning balance (in shares) at Dec. 31, 2019	51
Redeemable preferred stock beginning balance at Dec. 31, 2019	$ 5,100
Redeemable Preferred Stock
Issuance of Preferred Stock (in shares)									7,142,857				196,587
Issuance of preferred stock			$ 93,139	$ 197					$ 71				$ 197			$ 93,068
Redemption of Series B redeemable preferred stock (in shares)					(51)
Redemption of Series B Redeemable Preferred Stock	$ 0				$ (5,100)
Redeemable preferred stock ending balance (in shares) at Dec. 31, 2020	0
Redeemable preferred stock ending balance at Dec. 31, 2020	$ 0
Preferred stock beginning balance (in shares) at Dec. 31, 2019						0
Preferred stock beginning balance at Dec. 31, 2019						$ 0
Preferred stock ending balance (in shares) at Dec. 31, 2020						0
Preferred stock ending balance at Dec. 31, 2020						$ 0
Beginning balance (in shares) at Dec. 31, 2019							0			65,036,780	5,045,215	8,159,775	196,588
Members' equity beginning balance at Dec. 31, 2019										$ 65,037	$ 5,045	$ 8,160	$ 196
Stockholders' equity beginning balance at Dec. 31, 2019	141,615						$ 0							$ 17,995			$ 6,500	$ 38,682
Preferred Stock
Issuance of shares (in shares)									7,142,857				196,587
Shares issued during period			$ 93,139	$ 197					$ 71				$ 197			$ 93,068
Distribution to members	(19,819)													(1,776)				(18,043)
Dividends on Series B preferred stock					(128)														$ (128)
Redemption of Series B Redeemable Preferred Stock	0				$ (5,100)
Corporate recapitalization (in shares)							37,386,394			(65,036,780)	(5,045,215)	(8,159,775)	(393,175)
Corporate recapitalization	0						$ 374			$ (65,037)	$ (5,045)	$ (8,160)	$ (393)	78,261
Issuance of common shares for acquisition of Compstar (in shares)								6,613,606
Issuance of common shares for acquisition of Compstar	99,204	$ 99,204						$ 66							$ 99,138
Stock compensation expense	506													506
Common stock issuances pursuant to equity compensation awards (in shares)							5,925
Common stock issuances pursuant to equity compensation awards	(82)													(82)
Other comprehensive income (loss)	6,926																6,926
Net income (loss)	88,549																	88,549
Ending balance (in shares) at Dec. 31, 2020							51,148,782			0	0	0	0
Members' equity ending balance at Dec. 31, 2020										$ 0	$ 0	$ 0	$ 0
Stockholders' equity ending balance at Dec. 31, 2020	$ 410,107						$ 511							287,110			13,426	109,060
Preferred stock ending balance (in shares) at Dec. 31, 2021	0					0
Preferred stock ending balance at Dec. 31, 2021						$ 0
Preferred Stock
Distribution to members	$ 0
Issuance of common shares for acquisition of Compstar	0
Stock compensation expense	1,522													1,522
Common stock issuances pursuant to equity compensation awards (in shares)							28,105
Common stock issuances pursuant to equity compensation awards	(93)						$ 1							(94)
Proceeds from short swing rule	85													85
Other comprehensive income (loss)	(9,042)																(9,042)
Net income (loss)	$ 19,330																	19,330
Ending balance (in shares) at Dec. 31, 2021	51,176,887						51,176,887
Stockholders' equity ending balance at Dec. 31, 2021	$ 421,909						$ 512							288,623			4,384	128,390
Preferred stock ending balance (in shares) at Dec. 31, 2022	0					0
Preferred stock ending balance at Dec. 31, 2022						$ 0
Preferred Stock
Distribution to members	$ 0
Issuance of common shares for acquisition of Compstar	0
Stock compensation expense	1,496													1,496
Common stock issuances pursuant to equity compensation awards (in shares)							45,598
Common stock issuances pursuant to equity compensation awards	(24)													(24)
Other comprehensive income (loss)	(42,407)																(42,407)
Net income (loss)	$ (65,955)																	(65,955)
Ending balance (in shares) at Dec. 31, 2022	51,222,485						51,222,485
Stockholders' equity ending balance at Dec. 31, 2022	$ 315,019						$ 512							$ 290,095			$ (38,023)	$ 62,435

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Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Operating activities
Net income (loss)	$ (65,955,000)	$ 19,330,000	$ 88,549,000
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	6,818,000	6,833,000	3,485,000
Stock compensation	1,496,000	1,522,000	506,000
Net gains on investments	(285,000)	(49,000)	(5,155,000)
Unrealized (gain) loss on embedded derivatives	(15,681,000)	(4,666,000)	2,810,000
Unrealized losses on equity securities	4,797,000	0	0
Forgiveness of PPP loan	0	0	(325,000)
Gain on revaluation of Compstar investment	0	0	(69,846,000)
Bond amortization and accretion	1,050,000	2,297,000	1,915,000
Issuance of member units as compensation	0	0	197,000
Equity losses (earnings) in affiliates, net of tax	0	0	(2,333,000)
Distributions from equity method investments	0	0	2,953,000
Deferred income taxes	(2,221,000)	(2,405,000)	(1,035,000)
Amortization of debt discount, deferred financing costs and interest rate cap	209,000	168,000	132,000
Goodwill impairment	76,053,000	0	0
Changes in operating assets and liabilities:
Accrued investment income	(1,382,000)	114,000	17,000
Premiums and other receivables	(18,362,000)	(31,921,000)	(18,499,000)
Reinsurance recoverable on paid and unpaid losses	(31,281,000)	(34,028,000)	(30,805,000)
Prepaid reinsurance premiums	5,142,000	(21,441,000)	(26,963,000)
Right of use asset	1,766,000	1,942,000	(5,121,000)
Other assets	(11,553,000)	(13,776,000)	4,459,000
Unpaid loss and loss adjustment expenses	88,590,000	86,503,000	42,985,000
Unearned premiums	9,172,000	61,953,000	50,367,000
Funds held under reinsurance agreements	58,191,000	43,062,000	7,861,000
Reinsurance premiums payable	5,731,000	(11,939,000)	3,449,000
Accounts payable, accrued expenses and other liabilities	3,946,000	(7,951,000)	(2,976,000)
Lease liability	(1,913,000)	(2,051,000)	5,371,000
Income taxes payable and receivable	(5,381,000)	862,000	(1,986,000)
Net cash provided by operating activities	108,947,000	94,359,000	50,012,000
Investing activities
Payments for capital expenditures	(339,000)	(346,000)	(807,000)
Proceeds from sale of equity method investment	0	232,000	3,000,000
Return of capital on equity method investment	0	0	115,000
Purchase of investments, available for sale	(293,976,000)	(197,041,000)	(129,233,000)
Proceeds from investments sold, matured or repaid	118,875,000	80,794,000	105,322,000
Acquisition of subsidiary, net of cash received	0	(3,795,000)	(10,534,000)
Cash received in the acquisition of Compstar	0	0	11,891,000
Net cash used in investing activities	(175,440,000)	(120,156,000)	(20,246,000)
Financing activities
Shares redeemed for payroll taxes	(23,000)	(94,000)	(82,000)
Proceeds from initial public offering	0	0	99,643,000
Deferred offering costs	0	0	(5,839,000)
Proceeds from surplus notes	48,455,000	0	0
Proceeds from credit agreement	0	0	32,453,000
Principal payments on debt	(1,650,000)	(1,444,000)	(49,728,000)
Payment for deferred financing costs	(276,000)	0	0
Payment for interest rate cap	(173,000)	0	0
Payment for acquisition of subsidiary	(750,000)	0	0
Proceeds from short swing rule	0	85,000	0
Buyback of preferred shares	0	0	(5,100,000)
Distribution to members	0	0	(19,819,000)
Dividends paid on preferred stock	0	0	(128,000)
Net cash provided by (used in) financing activities	45,583,000	(1,453,000)	51,400,000
Net increase (decrease) in cash, cash equivalents and restricted cash	(20,910,000)	(27,250,000)	81,166,000
Cash, cash equivalents and restricted cash ‑ beginning of period	129,984,000	157,234,000	76,068,000
Cash, cash equivalents and restricted cash ‑ end of period	109,074,000	129,984,000	157,234,000
Disaggregation of cash and restricted cash:
Cash and cash equivalents	107,991,000	129,577,000	153,149,000
Restricted cash	1,083,000	407,000	4,085,000
Total cash, cash equivalents and restricted cash	109,074,000	129,984,000	157,234,000
Supplemental disclosure of cash flow information:
Interest	2,704,000	1,517,000	1,790,000
Income taxes	8,675,000	6,957,000	9,259,000
Right-of-use assets obtained in exchange for new operating lease liabilities	307,000	338,000	8,536,000
Non-cash transfer of investments to settle funds held for reinsurance	2,750,000	13,562,000	0
Non-cash investments received for collateral under reinsurance agreements	2,121,000	0	0
Non-cash transfer of investments to settle amounts held for others in accounts payable	0	26,211,000	0
Contingent consideration for the acquisition of subsidiary	0	1,500,000	0
Shares issued for the acquisition of subsidiary	0	0	99,204,000
Accrued purchases of property and equipment	0	0	132,000
Operating cash flows from operating leases	$ 2,512,000	$ 2,501,000	$ 2,101,000

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Business and Basis of Presentation

12 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business and Basis of Presentation

Business and Basis of Presentation

In July 2020, Trean Insurance Group, Inc. (together with its wholly owned subsidiaries, the Company) completed its initial public offering ("IPO") of the Company's common stock, par value $0.01 ("Common Stock"). Prior to the completion of the IPO, the Company effected the following reorganization transactions: (i) each of Trean Holdings LLC ("Trean"), an insurance services company, and BIC Holdings LLC ("BIC"), a property and casualty insurance holding company, contributed all of their respective assets and liabilities to Trean Insurance Group, Inc., a newly formed direct subsidiary of BIC, in exchange for (i) shares of Common Stock; and (ii) upon the completion of the transfers by Trean and BIC, Trean and BIC were dissolved and distributed in-kind common shares to the pre-IPO unitholders.

For the purpose of financial statement disclosures, references to the consolidated financial statements for all post-IPO periods include the accounts of Trean Insurance Group, Inc., along with its wholly owned subsidiaries, after elimination of intercompany accounts and transactions. References to the consolidated financial statements for all pre-IPO periods include the combined financial statements of BIC and Trean, along with their wholly owned subsidiaries, after elimination of intercompany accounts and transactions.

The Company provides products and services to the specialty insurance market. Historically, the Company has focused on specialty casualty markets that are believed to be under served and where the Company’s expertise allows the Company to achieve higher rates, such as niche workers' compensation markets and small- to medium-sized specialty casualty insurance programs. The Company underwrites specialty-casualty insurance products both through programs, where the Company partners with other organizations (Program Partners), and also through the Company’s own managing general agencies (Owned MGAs). The Company also provides Program Partners with a variety of services, including issuing carrier services, claims administration, and reinsurance brokerage from which the Company generates fee-based revenues.

The Company's wholly owned subsidiaries include (a) Benchmark Holding Company, a property and casualty insurance holding company, which owns Benchmark Insurance Company ("Benchmark"), a property and casualty insurance company domiciled in the state of Kansas, American Liberty Insurance Company, Inc. ("ALIC"), a property and casualty insurance company domiciled in the state of Utah and 7710 Insurance Company ("7710"), a property and casualty insurance company domiciled in the state of South Carolina; (b) Compstar Insurance Services LLC, a California-based general agency; and (c) Trean Corporation ("Trean Corp"), a reinsurance intermediary manager and a managing general agent, which consists of the following wholly owned subsidiaries: Trean Reinsurance Services, LLC ("TRS"), a reinsurance intermediary broker; Benchmark Administrators LLC ("BIC Admin"), a claims third-party administrator; Western Integrated Care, LLC ("WIC"), a managed care organization; and Westcap Insurance Services, LLC ("Westcap"), a managing general agent based in California. Benchmark's wholly owned subsidiary is Benchmark Specialty Insurance Company ("BSIC"), a property and casualty insurance company domiciled in the state of Arkansas.

The accompanying consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and with the instructions to Form 10-K under the Securities Exchange Act of 1934. All dollar amounts are shown in thousands, except share and per share amounts.

Pending Merger

As previously disclosed, on December 15, 2022, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), by and among the Company, Treadstone Parent Inc., a Delaware corporation ("Parent"), and Treadstone Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Parent ("Merger Sub"), providing for the acquisition of the Company by affiliates of Altaris Capital Partners, LLC, a Delaware limited liability company ("Altaris"), subject to the terms and conditions set forth in the Merger Agreement. Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company (the "Merger") effective as of the effective time of the Merger (the "Effective Time"). As a result of the Merger, Merger Sub will cease to exist, and the Company will survive as a wholly-owned subsidiary of Parent.

As a result of the Merger, at the Effective Time, subject to any applicable withholding taxes, each share of Common Stock, issued and outstanding immediately prior to the Effective Time, other than Cancelled Shares (as defined in the Merger

Agreement) and Dissenting Shares (as defined in the Merger Agreement), will be converted into the right to receive $6.15 in cash, without interest.

The consummation of the Merger is subject to the satisfaction or waiver of various customary conditions set forth in the Merger Agreement, including, but not limited to: (i) the adoption of the Merger Agreement and approval of the Merger and the other transactions by (x) the holders representing a majority of the aggregate voting power of the outstanding shares of Common Stock beneficially owned by the Unaffiliated Stockholders (as defined in the Merger Agreement) entitled to vote thereon as well as (y) the holders representing a majority of the aggregate voting power of the outstanding shares of Common Stock entitled to vote thereon; (ii) all required insurance regulatory approvals (or the applicable regulatory authorities’ non-objection to requests for exemptions in respect thereof) shall have been obtained; (iii) the expiration or termination of any applicable waiting period (or any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”); (iv) the absence of any restraint or law preventing or prohibiting the consummation of the Merger; (v) the accuracy of Parent’s, Merger Sub’s, and the Company’s representations and warranties (subject to certain materiality qualifiers); (vi) Parent’s, Merger Sub’s, and the Company’s compliance in all material respects with their respective obligations under the Merger Agreement; and (vii) the absence of any Company Material Adverse Effect (as defined in the Merger Agreement) since the date of the Merger Agreement.

Merger related expenses recognized during the year ended December 31, 2022 were approximately $3,081 and are included in other expenses in the consolidated statements of operations.

See "Part I—Item 1A Risk Factors—Risks Related to the Proposed Merger" for a discussion of certain risks related to the Merger.

Use of estimates

While preparing the consolidated financial statements, the Company has made certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, as well as reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require extensive use of estimates include the reserves for unpaid losses and loss adjustment expenses ("LAE"), reinsurance recoverables, investments, goodwill and intangible assets. Except for the captions on the consolidated balance sheets and consolidated statements of comprehensive income, generally, the term loss(es) is used to collectively refer to both losses and LAE.

Accounting pronouncements

Recently adopted policies

In January 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 ("ASU 2020-01"). This update addresses the accounting for certain equity securities upon the application or discontinuation of the equity method of accounting. Further, the update addresses scope considerations for forward contracts and purchased options on certain securities. ASU 2020-01 is effective for annual periods beginning after December 15, 2021, including interim periods thereafter. The Company adopted this standard effective January 1, 2022. Adoption of this standard did not have a material impact on the consolidated financial statements.

Pending policies

The Company completed its IPO in July 2020, and is an emerging growth company as defined under federal securities laws. As such, the Company has elected to adopt pending accounting policies under the dates required for private companies. Therefore, the dates included within this section reflect the effective dates for the adoption of new accounting policies required by private companies.

In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (ASU 2020-03). This update represents changes to clarify and improve the codification to allow for easier application by eliminating inconsistencies and providing clarification on items such as (i) the application of fair value option disclosures; (ii) the accounting for fees related to modifications of debt; and (iii) aligning the contractual term of a net investment in a lease in

accordance with ASC Topic 326, Financial Instruments - Credit Losses, and the lease term determined in accordance with ASC Topic 842, Leases. The Company adopted items (i) and (ii) effective January 1, 2020 and will adopt item (iii) on January 1, 2023. Adoption of this standard has not had, and is not expected to have, a material impact on the consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (ASU 2016-13). This update requires financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Additionally, credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which the fair value is below the amortized cost. ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2023. Adoption of this standard is not expected to have a material impact on the consolidated financial statements.

In October 2021, the FASB issued ASU No 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). This update requires contract assets and contract liabilities acquired in a business combination to be recognized and measured at the acquisition date in accordance with Accounting Standards Codification ("ASC") Topic 606 as if the acquirer had originated the contracts. ASU 2021-08 is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2024 on a prospective basis. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Cash and cash equivalents: Cash and cash equivalents consist of all cash accounts, money market investments, and investments with maturities, at the time of acquisition, of 90 days or less. These amounts are carried at cost, which approximates fair value. Although the Company maintains its cash accounts in a limited number of commercial banks, management of the Company believes it is not exposed to any significant credit risk on cash and short-term investments.

Restricted cash of $1,083 and $407 represents fiduciary funds held for other companies as of December 31, 2022 and 2021, respectively. There is a corresponding obligation to the other companies included in accounts payable, accrued expenses and other liabilities as of December 31, 2022 and 2021 (Note 11).

Investments: Investment securities, consisting of fixed maturities, are classified as available-for-sale and reported at fair value. The change in unrealized gain and loss on fixed maturity investments is recorded as a component of accumulated other comprehensive income in the consolidated balance sheets, net of the related deferred tax effect, until realized. The change in unrealized gain and loss on equity securities is recorded as a component of net income and is included in net investment income on the consolidated statements of operations. Realized gains and losses from the sale of available-for-sale securities are determined on a specific-identification basis and included in net realized gains (losses) on the consolidated statement of operations on the trade date. The Company amortizes any premium or discount on fixed maturities over the remaining maturity period of the related securities and reports the amortization in net investment income. Dividend and interest income is recognized when earned.

The Company regularly reviews its investment portfolio to determine if other-than-temporary impairment exists for any debt securities. An investment is impaired when the fair value of the investment declines to an amount less than the cost or amortized cost of that investment. As part of the assessment process, the Company determines whether the impairment is temporary or other-than-temporary. The assessment is based on both quantitative criteria and qualitative information, considering a number of factors including, but not limited to: how long the security has been impaired; the amount of the impairment; or whether management intends to sell the debt security or it is more likely than not that management will have to sell the security before recovery of the amortized cost; the financial condition and near-term prospects of the issuer; whether the issuer is current on contractually-obligated interest and principal payments; key corporate events pertaining to the issuer and whether the market decline was affected by macroeconomic conditions.

If a debt security is impaired and management intends to sell the security or it is more likely than not that the Company will have to sell the security before the amortized cost is recovered, then the Company recognizes impairment loss in net realized gains (losses). If it is determined that an impairment of a debt security is other-than-temporary and management neither

intends to sell the security nor is it more likely than not that the Company will have to sell the security before it is able to recover its cost or amortized cost, then the Company separates the impairment into (a) the amount of impairment related to credit loss and (b) the amount of impairment related to all other factors. The Company records the amount of the impairment related to the credit loss as an impairment charge in net income and the amount of the impairment related to all other factors in accumulated other comprehensive income. No other-than-temporary impairment was recorded for the years ended December 31, 2022, 2021 and 2020.

A large portion of the Company’s investment portfolio consists of fixed maturities which may be adversely affected by changes in interest rates as a result of governmental monetary policies, domestic and international economic and political conditions and other factors beyond the Company’s control.

Equity method investments: The Company held certain investments where the Company does not have control but has the ability to exercise significant influence are accounted for by the equity method of accounting. Under this method, the Company's investments in certain limited liability companies are recorded at cost and the investment accounts are adjusted for the Company's share of the entities' income or loss and for the distributions and contributions. The income and losses are recorded within equity earnings (losses) in affiliates, net of tax on the consolidated statements of operations.

Premium revenue: Premiums are earned over the policy period and are stated after deduction for reinsurance. The portion of premiums that will be earned in the future is deferred and reported as unearned premiums on the consolidated balance sheets.

Revenue from contracts with customers: Other revenue recorded by the Company includes brokerage, third-party administrative ("TPA"), management and consulting fees. The Company incurs certain costs associated with obtaining contracts with customers. Such contracts are one-year contracts and the amortization periods are one year or less. The Company has elected, as a practical expedient, to expense these contract costs as incurred.

Brokerage revenue includes the fees earned on excess of loss ("XOL") and quota share reinsurance treaties. Billings for brokerage revenues generally occur monthly. Revenue for reinsurance treaties consists of a single performance obligation whereas the total amount of consideration expected to be received is recorded on the effective date of the underlying contract. For XOL treaties, revenue is estimated based on the contractually specified minimum or deposit premiums. For quota share treaties, revenue is estimated based on the projected premium income provided by the ceding insurer. Brokerage fees are received based on the performance of the specified terms of the reinsurance treaty and thus, are considered variable consideration. Therefore, revenue is estimated and constrained to the extent it is probable a significant reversal of revenue will not occur, using the expected value method. Adjustments to revenue are recorded as additional evidence is received for the ultimate amount of brokerage earned under the contract.

The Company acts as a third-party claims administrator and earns TPA fees for providing such services. The fee structures vary based on the specific contract and can be dependent upon a number of factors which typically include agreed-upon fee rates, the total amount of premium written or collected under the agreement and the total time and expense incurred for processing claims. Billings for TPA fees occur on a monthly basis. TPA services consist of a single performance obligation which is recognized over time as claims are processed throughout the contract period. The volume of claims varies throughout the contract period and, therefore, the Company has elected to record revenue in an amount that reflects the total fees that the Company has a right to invoice for during the period.

The Company acts as a managing general agent ("MGA") to provide certain administrative and underwriting services. The consideration received varies based on certain factors including the contractual MGA rate and the total amount of premium written or collected under the contract. Billings for management fees occur on a monthly basis. Management fees consist of a single performance obligation that are recognized by the Company over time as services are provided. The volume of premium written or collected for a single contract varies throughout the contract period and, therefore, the Company has elected to record revenue in an amount that reflects the total fees that the Company has a right to invoice for during the period.

The Company provides consulting services for certain reinsurance contracts which includes services such as contract consultation and review. The compensation structure for consulting services is based on fixed periodic payments, generally monthly or quarterly. Consulting services consist of a single performance obligation which is recognized over the term of the consulting agreement.

Deferred financing costs: Deferred financing costs are amortized as interest expense over the term of the underlying debt agreement by use of the effective interest method. Unamortized deferred financing costs are recorded as a reduction to long-term debt on the consolidated balance sheets.

Premiums and other receivables: Premiums receivable are uncollateralized customer obligations due under normal terms requiring payment by the policy due date. Amounts outstanding that are deemed uncollectible are written off. When payments are received on amounts previously written off, the total premiums written off is reduced in the period in which the payment is received. Advanced premiums are recognized when payment is received prior to the beginning coverage date and are included within unearned premiums on the consolidated balance sheets.

Premiums and other receivables consist of the following:

	December 31,
	2022		2021
Premiums receivable	$	152,823	$	133,200
Trade receivables	8,395		9,511
Notes receivable	14		12
Total premiums and other receivables	161,232		142,723
Less: Allowance for doubtful accounts	(950)		(803)
Net premiums and other receivables	$	160,282	$	141,920

The Company wrote off $1,427 and $26 to bad debt during the years ended December 31, 2022 and 2020, respectively. The Company recovered $177 of previously written off receivables during the year ended December 31, 2021. Bad debt expense is included within general and administrative expenses in the consolidated statements of operations.

Deferred policy acquisition costs: The Company incurs policy acquisition costs that vary with and are directly related to the production of new and renewal business. These costs consist of underwriting costs, net commissions (including ceding commissions) paid to agents, program managers and reinsurers, and premium taxes. Proceeds from reinsurance transactions that represent recovery of acquisition costs reduce applicable unamortized acquisition costs in such a manner that net acquisition costs are capitalized and charged to expense. Amortization of such policy acquisition costs is charged to general and administrative expense in proportion to premium earned over the estimated policy term.

To the extent that unearned premiums on existing policies are not adequate to cover the sum of expected losses, unamortized acquisition costs and policy maintenance costs, unamortized deferred policy acquisition costs are expensed to eliminate the premium deficiency. If the premium deficiency is greater than the unamortized policy acquisition costs, a liability is recorded. No premium deficiency exists as of December 31, 2022 or 2021.

Property and equipment, net: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is based on the estimated useful lives of the various classes of property and equipment and is determined based on the straight-line method. The estimated useful lives of property and equipment range from three to thirty years. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. The depreciation periods by asset class are as follows:

Asset class	Depreciation period
Building and building improvements	30 years
Furniture and fixtures	7 years
Office equipment	5 years
Software and computer equipment	3 years

Long-lived assets, such as property and equipment, and purchased intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be impaired, the Company recognizes impairment to the extent that the carrying value exceeds the asset’s fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted

cash flow models, quoted market values, and third-party independent appraisals. The Company recorded no impairments of property and equipment for the years ended December 31, 2022, 2021 and 2020.

Reserve for unpaid loss and loss adjustment expenses: The liability for unpaid losses and LAE in the consolidated balance sheets represent the Company’s estimated losses incurred that remain unpaid as of the balance sheet date. The liability is recorded on an undiscounted basis.

Reserves for unpaid losses include estimates for both claims that have been reported and those that have been incurred but not reported. The estimated losses are regularly reviewed and adjusted as necessary based on historical experience and as the Company obtains new information.

The consolidated balance sheets include reserves of unpaid losses gross of the amounts related to unpaid losses recoverable from reinsurers. The consolidated statements of operations include the losses net of amounts ceded to reinsurers.

Reinsurance: The Company cedes all, or a portion of, its insurance in order to limit its maximum losses and diversify its exposure. Ceding insurance does not relieve the Company of its primary liability to policyholders.

The reinsurance agreements are short-term, prospective contracts, typically 12-months in duration. The Company records an asset, prepaid reinsurance premiums, and a liability, reinsurance premiums payable, for the contract amount when premium is written under the reinsurance agreements. Prepaid reinsurance premiums are amortized in the same manner in which unearned premium is recognized.

The Company earns ceding commissions on certain reinsurance contracts, which reduces operating expenses. Ceding commissions are amortized over the contract period consistent with deferred policy acquisition costs.

The Company records amounts recoverable from reinsurers on paid losses and estimated amounts recoverable on unpaid losses. The estimate of amounts recoverable on unpaid losses is based on unpaid losses in conjunction with the reinsured policies.

The Company estimates uncollectible amounts receivable from reinsurers based on an assessment of factors including the credit worthiness of the reinsurers and the adequacy of collateral obtained, where applicable. The Company recorded no bad debt expense related to reinsurance during the years ended December 31, 2022, 2021 and 2020.

Guaranty funds: State guaranty associations assess insurance companies for the estimated loss resulting from insurers encountering financial difficulty. The Company records these assessments, as well as any return assessments, upon notification of the state guaranty associations. The effect on operations or financial position relating to any estimated losses are not material for the years ended December 31, 2022, 2021 and 2020.

Income taxes: The Company recognizes deferred tax assets and liabilities for the future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which it is expected to recover or settle those temporary differences. Should a change in tax rates occur, the effect on deferred tax assets and liabilities will be recognized in operations in the period that includes the enactment date.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.

The Company records any income tax penalties and income tax-related interest as income tax expense in the period incurred. The Company did not incur any material tax penalties or income-tax-related interest during the years ended December 31, 2022, 2021 and 2020.

Concentrations of risk: The Company had total gross written premiums of $651,303, $634,164 and $484,249 for the years ended December 31, 2022, 2021 and 2020, respectively, including:

	Year Ended December 31,
	2022		2021		2020
California	$	162,639	$	179,426	$	203,421
Texas	93,165		85,154		28,909
Michigan	45,821		46,271		41,830
Tennessee	16,006		15,966		12,347
Florida	36,559		27,982		8,359
Georgia	30,996		25,619		12,869
Arizona	28,685		26,272		27,950
Alabama	23,198		20,991		17,549
Pennsylvania	17,167		20,375		10,498
Indiana	13,943		13,422		8,508
Other geographical areas	183,124		172,686		112,009
Total gross written premium	$	651,303	$	634,164	$	484,249

As of December 31, 2022, approximately 21% and 26% of the Company’s investment portfolio was comprised of securities issued in industrial and public utility bonds and mortgage-backed securities, respectively, compared to 22% and 29% as of December 31, 2021, respectively. All of these securities are investment grade. This portfolio is widely diversified among various issuers and industries and does not depend on the economic stability of one issuer and industry.

The Company, from time to time, maintains its cash position at banks in excess of federally insured limits. The Company has not experienced any losses on such accounts.

Goodwill: Goodwill represents the cost to acquire a business over the fair value of the net assets acquired. Goodwill is not amortized but is reviewed for impairment at least annually or more frequently if events occur or circumstances change that would indicate that a triggering event for a potential impairment has occurred. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The Company recorded a goodwill impairment loss of $76,053 for the year ended December 31, 2022 (see Note 9). No impairment loss was recorded for the years ended December 31, 2021 and 2020. The Company had $66,294 and $142,347 of goodwill on the consolidated balance sheets as of December 31, 2022 and 2021, respectively.

Intangible assets: Acquired intangible assets include client relationships, customer lists, non-compete agreements and trade names acquired. Intangible assets with a finite life are amortized over the estimated useful life. In valuing these assets, assumptions are made regarding useful lives and projected growth rates and significant judgment is required. The Company periodically reviews identifiable intangibles for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the carrying amounts of the assets exceed their undiscounted cash flows, an impairment loss is recorded. For the years ended December 31, 2022, 2021 and 2020, no impairment loss was recorded.

Segment reporting: Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker reviews financial information of the Company as a whole for purposes of assessing financial performance and making operating decisions. Accordingly, the Company considers itself to be operating as a single operating and reportable segment.

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Acquisitions

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Acquisitions

Western Integrated Care

Effective July 6, 2021, Trean Corp acquired 100% ownership of Western Integrated Care, LLC ("WIC") for a total purchase price of $5,500, which included $1,500 of consideration contingent on WIC's future earnings, as defined in the agreement. WIC is a managed care organization that offers services to workers' compensation insurers to enable employees who are injured on the job to access qualified medical treatment. The following table summarizes the consideration paid and the amounts of estimated fair value of the net assets acquired and liabilities assumed at the acquisition date:

Fair value of total consideration transferred	$	5,500
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	205
Premiums and other receivables	1,025
Property and equipment, net	39
Right of use asset	135
Goodwill	1,707
Intangible assets, net	3,624
Other assets	16
Accounts payable and accrued expenses	(873)
Lease liability	(135)
Debt	(243)
Net assets acquired	$	5,500

The assessment of fair value, the determination of deferred taxes and other payables and receivables are preliminary and are based on the information that was available at the time the consolidated financial statements were prepared. Accordingly, the allocation of purchase price to intangible assets, goodwill, deferred tax assets, and liabilities and other payables and receivables is preliminary and, therefore, subject to adjustment in future periods.

The Company recorded $1,707 of goodwill associated with the business combination. The goodwill recognized is attributable to the assembled workforce, the expected growth resulting from the acquisition, and synergies gained to assist in reducing operating expenses.

The Company also recorded intangible assets totaling $3,624, which are comprised of the following:

	Useful Life	Balance
Trade name	2 years	$	28
Non-compete agreements	5 years	256
Customer relationships	12 years	3,340
Total intangible assets		$	3,624

The operating results of WIC have been included in the consolidated financial statements of the Company since July 6, 2021, the date of acquisition, and were immaterial to the consolidated financial statements. The Company made an earn-out payment of $750 during the year ended December 31, 2022.

7710 Insurance Company

Effective October 1, 2020, Benchmark Holding Company acquired 100% ownership of 7710 Insurance Company as well as its associated program manager and agency, 7710 Service Company, LLC and Creekwood Insurance Agency, LLC for a purchase price of $12,140. 7710 Insurance Company underwrites workers' compensation primarily for emergency services, including firefighters and emergency medical services ("EMS"). 7710 Insurance Company focuses on reducing costs and claims through the implementation of a proprietary safety preparedness and loss control program, created and staffed by experienced firefighters and EMS professionals.

The Company recorded $2,873 of goodwill associated with the business combination. The goodwill recognized is attributable to the assembled workforce and the expected growth resulting from the acquisition. The Company also recorded intangible assets totaling $3,299.

Compstar Holding Company LLC

Effective July 15, 2020, Trean Compstar Holdings LLC purchased the remaining 55% ownership interest in Compstar Holding Company LLC ("Compstar"), a holding company along with its wholly owned subsidiary Compstar Insurance Services, a managing general agent, by issuing 6,613,606 shares of Common Stock with a market price of $15 per share on the date of acquisition. Prior to the acquisition date, the Company held a 45% ownership interest in Compstar and accounted for its investment under the equity method. As of the acquisition date, the fair value attributable to the Company’s previous equity interest was $81,167 and the carrying value was $11,321. As a result, the Company recorded a gain of $69,846 from the remeasurement of its previous equity interest, which is included in gain on revaluation of Compstar on the consolidated statement of operations. The acquisition-date fair value of the Company’s previous equity interest was revalued using the market price of the shares issued as consideration for the acquisition.

The Company recorded $134,428 of goodwill associated with the business combination. The goodwill recognized is attributable to the assembled workforce, the expected growth resulting from the acquisition and synergies gained to assist in the reduction of operating expenses. The Company also recorded intangible assets totaling $73,954.

LCTA Risk Services, Inc.

Effective April 1, 2020, Trean Corp purchased 100% of the operating assets and assumed the liabilities of LCTA Risk Services, Inc. The total purchase price was $1,400. The Company recorded $517 of goodwill associated with the business combination. The goodwill recognized is attributable to the expected growth resulting from the acquisition and the synergies gained to assist in reducing operating expenses. The Company also recorded intangible assets totaling $482.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company’s financial instruments include assets and liabilities carried at fair value. The inputs to valuation techniques used to measure fair value are prioritized into a three level hierarchy. The fair value hierarchy is as follows:

Level 1: Fair values primarily based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2: Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities.

Level 3: Fair values primarily based on valuations derived when one or more of the significant inputs are unobservable. With little or no observable market, the determination of fair value uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability.

The Company classifies the financial asset or liability by level based upon the lowest level input that is significant to the determination of the fair value. The following tables present the estimated fair value of the Company’s significant financial instruments.

	December 31, 2022
	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. government and government securities	$	62,552	$	—	$	—	$	62,552
Foreign governments	—		395		—		395
States, territories and possessions	—		15,854		—		15,854
Political subdivisions of states territories and possessions	—		33,904		—		33,904
Special revenue and special assessment obligations	—		103,639		—		103,639
Industrial and public utilities	—		125,540		—		125,540
Commercial mortgage-backed securities	—		128,105		—		128,105
Residential mortgage-backed securities	—		25,112		—		25,112
Other loan-backed securities	—		51,613		—		51,613
Hybrid securities	—		5,529		—		5,529
Total fixed maturities	62,552		489,691		—		552,243
Equity securities	12,060		22,981		—		35,041
Total investments	$	74,612	$	512,672	$	—	$	587,284
Embedded derivatives on funds held under reinsurance agreements	$	(1,953)	$	(13,458)	$	—	$	(15,411)
Interest rate cap agreement	—		102		—		102
Debt	—		29,288		50,000		79,288

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. government and government securities	$	2,392	$	39,042	$	—	$	41,434
Foreign governments	—		2,490		—		2,490
States, territories and possessions	—		10,766		—		10,766
Political subdivisions of states, territories and possessions	—		40,002		—		40,002
Special revenue and special assessment obligations	—		95,991		—		95,991
Industrial and public utilities	—		103,257		—		103,257
Commercial mortgage-backed securities	—		118,218		—		118,218
Residential mortgage-backed securities	—		17,368		—		17,368
Other loan-backed securities	—		41,425		—		41,425
Hybrid securities	—		110		—		110
Total fixed maturities	2,392		468,669		—		471,061
Equity securities	—		969		—		969
Total investments	$	2,392	$	469,638	$	—	$	472,030
Embedded derivatives on funds held under reinsurance agreements	$	(4)	$	275	$	—	$	271
Debt	—		30,938		—		30,938

Fixed maturities and equity securities: The Company, through its third-party pricing service provider, uses a variety of sources to estimate the fair value of investments such as Refinitiv (formerly Reuters), PricingDirect, ICE Data Services, and for equities, Bloomberg or S&P Capital IQ Pro. Equity securities are generally valued at the closing price on the exchange on

which they are primarily traded as provided by a third-party pricing service. Fixed income securities are generally valued at an evaluated bid as provided by a third-party pricing service. Securities and other assets generally valued using third-party pricing services may also be valued at broker/dealer indications. Values obtained from third-party pricing services can utilize several market data sources for inputs such as transaction data, yield, quality, coupon rate, maturity, issue type, trading characteristics and other market activity. To validate the reasonableness of the prices, the Company performs various qualitative and quantitative procedures such as analysis of recent trading activity, analytical review of fair values and an evaluation of the underlying pricing methodologies. Based on these procedures, the Company did not adjust the prices or quotes from the third-party pricing service.

Embedded derivatives: The Company enters into funds held contracts under reinsurance agreements which create embedded derivatives on the underlying investments. These embedded derivatives are valued based upon the unrealized gain or loss position of the funds held portfolio, which is determined consistent with other investments using third-party pricing services. To validate the reasonableness of the quoted prices, the Company performs various qualitative and quantitative procedures such as analysis of recent activity, analytical review of fair values and an evaluation of the underlying pricing methodologies. Based on these procedures, the Company did not adjust the prices or quotes from the third-party pricing service.

Interest rate cap agreement: The Company entered into an interest cap agreement to hedge cash flows associated with interest rate fluctuations on variable rate debt. The fair value of the interest rate cap agreement is based on the terms of the agreement and commonly quoted data for forward interest rate curves and an implied market volatility. The Company also assessed the significance of credit valuation adjustments to appropriately reflect the respective nonperformance risk in the fair value measurement and determined the credit valuation adjustment is not significant to the overall valuation of the interest rate cap.

Debt: The Company holds debt related to its secured credit agreement and surplus notes, which are carried on the consolidated balance sheets at amounts other than fair value. The Company has determined that the remaining balance of the debt reflected its fair value as this would represent the total amount to repay the debt. The Company's surplus notes were issued during the year ended December 31, 2022 and are classified as Level 3.

Nonrecurring fair value measurements: In addition to assets and liabilities that are recorded at fair value on a recurring basis, impairment indicators may subject goodwill and long-lived assets to nonrecurring fair value measurements. As a result of the Merger Agreement, the estimated nonrecurring fair value measurement of the Company was based on the implied equity value of the Company at the purchase price of $6.15 per common share. The measurement resulted in an impairment charge of $76,053 recognized during the year ended December 31, 2022.

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Investments

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

Fixed income securities include bonds, asset-backed securities, and redeemable preferred securities. Fixed income securities, which may be sold prior to their contractual maturity, are designated as available-for-sale and are carried at fair value. Equity securities primarily include common stocks, mutual funds, and non-redeemable preferred stocks, which are carried at fair value.

The cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company's investments are as follows:

	December 31, 2022
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed maturities:
U.S. government and government securities	$	65,405	$	11	$	(2,864)	$	62,552
Foreign governments	400		—		(5)		395
States, territories and possessions	17,310		2		(1,458)		15,854
Political subdivisions of states, territories and possessions	38,167		19		(4,282)		33,904
Special revenue and special assessment obligations	115,696		55		(12,112)		103,639
Industrial and public utilities	131,769		101		(6,330)		125,540
Commercial mortgage-backed securities	145,471		52		(17,418)		128,105
Residential mortgage-backed securities	26,716		11		(1,615)		25,112
Other loan-backed securities	53,231		13		(1,631)		51,613
Hybrid securities	6,233		2		(706)		5,529
Total fixed maturities available for sale	$	600,398	$	266	$	(48,421)	$	552,243

	December 31, 2021
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed maturities:
U.S. government and government securities	$	41,490	$	113	$	(169)	$	41,434
Foreign governments	2,500		—		(10)		2,490
States, territories and possessions	10,593		189		(16)		10,766
Political subdivisions of states, territories and possessions	39,170		975		(143)		40,002
Special revenue and special assessment obligations	93,664		2,920		(593)		95,991
Industrial and public utilities	100,774		2,835		(352)		103,257
Commercial mortgage-backed securities	119,378		591		(1,751)		118,218
Residential mortgage-backed securities	16,549		843		(24)		17,368
Other loan-backed securities	41,236		248		(59)		41,425
Hybrid securities	105		5		—		110
Total fixed maturities available for sale	$	465,459	$	8,719	$	(3,117)	$	471,061

The following table illustrates the Company’s gross unrealized losses and fair value of fixed maturities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	December 31, 2022
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities:
U.S. government and government securities	$	38,172	$	(1,217)	$	19,199	$	(1,647)	$	57,371	$	(2,864)
Foreign governments	—		—		395		(5)		395		(5)
States, territories and possessions	13,882		(1,321)		822		(137)		14,704		(1,458)
Political subdivisions of states, territories and possessions	21,586		(2,506)		9,375		(1,776)		30,961		(4,282)
Special revenue and special assessment obligations	71,146		(6,522)		22,350		(5,590)		93,496		(12,112)
Industrial and public utilities	98,018		(4,225)		18,405		(2,105)		116,423		(6,330)
Commercial mortgage-backed securities	71,574		(5,737)		53,147		(11,681)		124,721		(17,418)
Residential mortgage-backed securities	18,051		(1,177)		4,119		(438)		22,170		(1,615)
Other loan-backed securities	38,572		(1,305)		11,303		(326)		49,875		(1,631)
Hybrid securities	5,289		(706)		—		—		5,289		(706)
Total bonds	$	376,290	$	(24,716)	$	139,115	$	(23,705)	$	515,405	$	(48,421)

	December 31, 2021
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities:
U.S. government and government securities	$	26,935	$	(168)	$	23	$	(1)	$	26,958	$	(169)
Foreign governments	2,490		(10)		—		—		2,490		(10)
States, territories and possessions	935		(16)		—		—		935		(16)
Political subdivisions of states, territories and possessions	11,115		(143)		—		—		11,115		(143)
Special revenue and special assessment obligations	29,917		(593)		—		—		29,917		(593)
Industrial and public utilities	24,042		(286)		1,058		(66)		25,100		(352)
Commercial mortgage-backed securities	80,126		(1,565)		6,212		(186)		86,338		(1,751)
Residential mortgage-backed securities	4,539		(24)		—		—		4,539		(24)
Other loan-backed securities	20,153		(36)		2,477		(23)		22,630		(59)
Hybrid securities	—		—		—		—		—		—
Total bonds	$	200,252	$	(2,841)	$	9,770	$	(276)	$	210,022	$	(3,117)

The unrealized losses on the Company’s available for sale securities as of December 31, 2022 and December 31, 2021 were primarily attributable to an increase in interest rates, which predominantly impacted fixed maturities acquired since the second quarter of 2020.

The amortized cost and estimated fair value of fixed maturities as of December 31, 2022, by contractual maturity, are as follows:

	Cost or Amortized Cost		Fair Value
Available for sale:
Due in one year or less	$	35,468	$	35,125
Due after one year but before five years	176,083		167,986
Due after five years but before ten years	93,107		83,769
Due after ten years	70,322		60,533
Commercial mortgage-backed securities	145,471		128,105
Residential mortgage-backed securities	26,716		25,112
Other loan-backed securities	53,231		51,613
Total	$	600,398	$	552,243

Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Realized gains and losses on investments included in the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 are as follows:

	Year Ended December 31,
	2022		2021		2020
Fixed maturities:
Gains	$	134	$	153	$	259
Losses	(1,235)		(94)		(9)
Total fixed maturities	(1,101)		59		250
Funds held investments:
Gains	19		112		—
Losses	(29)		(10)		—
Total funds held investments	(10)		102		—
Equity securities and equity method investments:
Gains	1,415		—		3,115
Losses	(19)		(112)		—
Total equity securities and equity method investments	1,396		(112)		3,115
Total net investment realized gains	$	285	$	49	$	3,365

Net investment income consists of the following for the years ended December 31, 2022, 2021, and 2020:

	Year Ended December 31,
	2022		2021		2020
Fixed maturities	$	9,316	$	6,331	$	6,271
Income on funds held investments	3,668		2,338		3,345
Equity securities	1,708		48		2,028
Unrealized losses on equity securities	(4,797)		—		—
Interest earned on cash and short-term investments	192		4		25
Net investment income	$	10,087	$	8,721	$	11,669

Net realized and unrealized gains (losses) on equity securities recognized during the years ended December 31, 2022, 2021, and 2020 are as follows:

	Year Ended December 31,
	2022		2021		2020
Equity securities:
Net realized gains (losses) on sales of equity securities	$	1,396	$	(112)	$	3,115
Change in net unrealized gains (losses) of equity securities still held as of as of December 31, 2022, 2021 and 2020	(4,797)		—		—
Net realized and unrealized gains (losses) on equity securities	$	(3,401)	$	(112)	$	3,115

Embedded derivatives

The Company enters into funds held contracts under reinsurance agreements which create embedded derivatives, which are measured at fair value. The embedded derivatives within our funds held under reinsurance agreements relate to a total return swap on the underlying investments. These embedded derivatives had no impact on total operating, investing and financing activities as presented on the Company’s consolidated statements of cash flows during the years ended December 31, 2022, 2021, and 2020. Total funds held under reinsurance agreements includes the following:

	December 31,
	2022		2021
Funds held under reinsurance agreements, at cost	$	256,702	$	199,139
Embedded derivatives, at fair value	(15,411)		271
Total funds held under reinsurance agreements	$	241,291	$	199,410

Gains (losses) on embedded derivatives consists of the following for the years ended December 31, 2022, 2021, and 2020:

	Year Ended December 31,
	2022		2021		2020
Change in fair value of embedded derivatives	$	15,682	$	4,666	$	(2,810)
Effect of net investment income on funds held investments	(3,668)		(2,338)		(3,345)
Effect of realized losses (gains) on funds held investments	10		(102)		—
Total gains (losses) on embedded derivatives	$	12,024	$	2,226	$	(6,155)

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Equity Method Investments

12 Months Ended

Dec. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity Method Investments

The Company held equity method investments in Compstar, Trean Intermediaries ("TRI") and Stop-Loss Re, LLC ("Stop-Loss"). Equity earnings and losses are reported in equity earnings in affiliates, net of tax on the consolidated statements of operations.

On July 15, 2020, the Company purchased the remaining 55% ownership interest in Compstar (See Note 3) and, as a result, Compstar is no longer recorded as an equity method investment. Prior to the acquisition, the Company owned 45% of Compstar which had a carrying value of approximately $11,831 as of December 31, 2019. The Company recorded earnings for the year ended December 31, 2020 of 2,333. Distributions received from Compstar for the year ended December 31, 2020 were $2,842.

On January 3, 2020, the Company sold 15% of its previous 25% ownership in TRI for cash proceeds of $3,000, resulting in a remaining ownership interest of 10%. As a result of its significant ownership reduction and its lack of significant influence over the operations and policies of TRI, the Company reclassified its TRI investment, at fair value, to investments in common stock in the first quarter of 2020. The Company realized a gain on the sale of $3,115, which is included in net realized gains

(losses) on the consolidated statements of operations for the year ended December 31, 2020. The Company subsequently re-measured its TRI investment shares resulting in an unrealized gain of $2,000 which is recorded in net investment income on the consolidated statement of operations for the year ended December 31, 2020. The Company sold all of its remaining ownership interest in TRI during the year ended December 31, 2021 for $1,888, resulting in a realized loss of $112, which was included in net realized gains on the consolidated statement of operations. The Company received an earn-out payment of $1,415, which was included in net realized gains (losses) on the consolidated statements of operations for the year ended December 31, 2022. Distributions of $225 were received from TRI for the year ended December 31, 2020.

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Nonconsolidated Variable Interest Entities

12 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nonconsolidated Variable Interest Entities

Nonconsolidated Variable Interest Entities

In 2019, the Company was engaged with certain entities that were deemed to be variable interest entities. A variable interest entity ("VIE") is an entity that has investors that lack certain essential characteristics of a controlling financial interest, such as a simple majority equity ownership or lacks sufficient funds to finance its own activities without financial support provided by other entities. The Company performs ongoing qualitative assessments of its VIEs to determine whether the Company has a controlling financial interest in the VIE and therefore is the primary beneficiary. The Company is deemed to have a controlling financial interest when it has both the ability to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Based on the Company’s assessment, if it determines it is the primary beneficiary, the Company consolidates the VIE in the consolidated financial statements.

The Company had a variable interest in Trean Capital Trust I (the "Trust") that had mandatory redeemable preferred securities outstanding with a liquidation value of $7,500. The Trust was a variable interest entity under current accounting guidance because the Company had limited ability to make decisions about its activities. However, the Company was not the primary beneficiary of the Trust; and therefore, the Trust and the mandatory redeemable preferred securities issued by the Trust are not reported on the Company’s consolidated balance sheets. During 2020, the Company redeemed all of the redeemable preferred securities of the Trust. As of December 31, 2020, the Trust is no longer considered a VIE.

The Company had a variable interest in Compstar Holding Company LLC ("Compstar"), a limited liability company created for the purchase of an interest in Compstar Insurance Services, LLC, a California based general agent. Compstar was a variable interest entity under current accounting guidance because Compstar did not have sufficient capital at risk, as evidenced by a loan guarantee by a member. However, the Company was not the primary beneficiary of Compstar, and therefore, was not reported in the Company’s consolidated balance sheet as of December 31, 2019. During 2020, the Company purchased the remaining ownership interest in Compstar resulting in Compstar becoming a wholly-owned subsidiary of the Company. As of December 31, 2020, Compstar is no longer considered a VIE.

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Property and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and equipment consists of the following:

	December 31,
	2022		2021
Land	$	1,780	$	1,780
Building and building improvements	5,755		5,755
Furniture and fixtures	1,137		1,137
Office equipment	3,499		2,898
Other property, plant and equipment	101		101
Deposits on fixed assets not placed in service	15		277
Total, at cost	12,287		11,948
Less: Accumulated depreciation	(5,136)		(4,316)
Property and equipment, net	$	7,151	$	7,632

Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $820, $1,007 and $912, respectively.

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Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill

A change in the carrying value of goodwill resulted from the Merger Agreement entered into on December 15, 2022 (see Note 1 for additional information). The Company recognized an impairment charge of $76,053, which decreased the Company's net carrying value to equal the implied equity value of the Company based on the purchase price of $6.15 per common share. All changes in the carrying value of goodwill are as follows:

	2022		2021
Balance at beginning of period	$	142,347	$	140,640
Acquisitions	—		1,707
Impairment	(76,053)		—
Balance at end of period	$	66,294	$	142,347

Intangible assets

Intangible assets subject to amortization consist of the following:

		December 31,
	Useful Life	2022		2021
Non-compete agreement	2-5 years	$	300	$	300
Trade name	2-15 years	3,710		3,710
Customer lists and relationships	10-14 years	77,624		77,624
Totals		81,634		81,634
Less: Accumulated amortization		(14,517)		(8,520)
Intangible assets, net		$	67,117	$	73,114

Amortization expense for the years ended December 31, 2022, 2021 and 2020 was $5,998, $5,826 and $2,573, respectively.

The estimated future amortization of intangible assets is as follows:

	Trade name		Customer lists and relationships		Non-Compete		Total
2023	$	248	$	5,684	$	51	$	5,983
2024	241		5,683		51		5,975
2025	241		5,683		51		5,975
2026	241		5,683		26		5,950
2027	241		5,668		—		5,909
Thereafter	1,824		35,501		—		37,325
Total	$	3,036	$	63,902	$	179	$	67,117

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Deferred Policy Acquisition Costs, Net

12 Months Ended

Dec. 31, 2022

Insurance [Abstract]

Deferred Policy Acquisition Costs, Net

Deferred Policy Acquisition Costs, NetThe Company defers costs incurred which are incremental and directly related to the successful acquisition of new or renewal insurance business, net of corresponding amounts of ceded reinsurance commissions. Net deferred policy acquisition costs are amortized in proportion to premium earned over the estimated policy term. The Company anticipates that its deferred policy acquisition costs will be fully recoverable and there were no premium deficiencies for the years ended December 31, 2022, 2021 and 2020.

The table below depicts the activity with regard to deferred policy acquisition costs, net:

	2022		2021		2020
Balance at beginning of period	$	13,344	$	1,332	$	2,115
Policy acquisition costs deferred	28,362		22,853		7,593
Amortization charged to expense	(22,848)		(10,841)		(8,376)
Balance at end of period	$	18,858	$	13,344	$	1,332

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Accounts Payable, Accrued Expenses, and Other Liabilities

12 Months Ended

Dec. 31, 2022

Payables and Accruals [Abstract]

Accounts Payable, Accrued Expenses, and Other Liabilities

Accounts Payable, Accrued Expenses and Other Liabilities

Accounts payable and accrued expenses consist of the following:

	December 31,
	2022		2021
Accrued commissions and third-party administration fees	$	9,168	$	7,337
Trade payables	4,977		4,765
Accrued taxes, licenses and fees	4,316		6,710
Accrued wages and employee benefits	5,489		4,873
Amounts retained for the accounts of others	2,710		1,619
Other liabilities	5,949		4,144
Total	$	32,609	$	29,448

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Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

Debt

Debt consisted of the following:

	December 31, 2022						December 31, 2021
	Face Value		Unamortized Discount and Issuance Costs		Carrying Value		Face Value		Unamortized Discount and Issuance Costs		Carrying Value
Secured credit facility	$	29,288	$	(408)	$	28,880	$	30,938	$	(576)	$	30,362
Surplus notes	50,000		(1,806)		48,194		—		—		—
Total debt	$	79,288	$	(2,214)	$	77,074	$	30,938	$	(576)	$	30,362

Secured Credit Facility

In July 2020, the Company entered into a Second Amended and Restated Credit Agreement (the "Credit Agreement") that, among other things, extended the Company's credit facility for a period of five years through May 26, 2025 and increased its term loan facility by $11,707 resulting in a total term loan debt amount of $33,000 and a revolving credit facility of $2,000 at the time of closing. The outstanding principal balance of the loan is to be repaid in quarterly installments which escalate from $206 to $825. All equity securities of the subsidiaries of Trean Insurance Group, Inc. (other than Benchmark Holding Company and its subsidiaries) have been pledged as collateral.

On May 6, 2022, the Company entered into a First Amendment to the Credit Agreement to, among other things, facilitate the approval of certain internal distributions among the Company and certain of its subsidiaries as part of the Company’s overall capital management strategy. On September 28, 2022, the Company entered into a Second Amendment to the Credit Agreement that, among other things, replaced LIBOR as the benchmark rate with Term SOFR (as defined in the Credit Agreement), reduced the applicable margin under the Credit Agreement on Eurodollar loans from 4.50% to 3.50% and on ABR loans from 3.50% to 2.50%, and converted all extant Eurodollar loans under the Credit Agreement to Term SOFR loans. On December 15, 2022, the Company entered into the Third Amendment to the Credit Agreement to, among other things, modify the Credit Agreement in certain respects to permit and accommodate the Merger.

The variable interest rate plus applicable margin was 7.59%, 4.64% and 4.72% as of December 31, 2022, 2021 and 2020, respectively. During the years ended December 31, 2022, 2021 and 2020, the Company recorded $2,022, $1,517 and $1,518 of interest expense, respectively, on its credit facility including amortization of debt issuance costs.

The terms of the credit facility require the Company to maintain certain financial covenants and ratios. The Company was in compliance with all covenants and ratios as of December 31, 2022, 2021 and 2020.

Interest Rate Cap Agreement

In September 2022, the Company entered into an interest rate cap agreement that became effective September 30, 2022, to hedge cash flows associated with interest rate fluctuations on its secured credit facility, with a termination date of May 31, 2024 ("Interest Rate Cap Agreement"). The Interest Rate Cap Agreement has a notional amount of $29,700 that effectively converted the outstanding balance of the secured credit facility from variable rate debt to capped variable rate debt, resulting in a change in the applicable interest rate from an interest rate of one-month SOFR plus the applicable margin (as provided by the secured credit facility) to a one-month SOFR interest rate, capped at 5.00%, plus the applicable margin. The notional amount of the Interest Rate Cap Agreement decreases quarterly in proportion to the quarterly principal payments on the secured credit facility. The Interest Rate Cap Agreement is designated as a cash flow hedge and the change in fair value is recorded in accumulated other comprehensive income and is subsequently reclassified to interest expense in the period when the hedged forecasted interest payments affect earnings. The Company paid a fixed amount of $173 for the Interest Rate Cap Agreement.

Surplus Notes

On August 24, 2022, Benchmark, a subsidiary of the Company, issued $50,000 in aggregate principal amount of Benchmark’s 6.75% surplus notes due 2042 (the “Surplus Notes”) in a private placement exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). In connection with the issuance of the Surplus Notes, Benchmark entered into a fiscal agency agreement, dated as of August 24, 2022 (the “Fiscal Agency Agreement”), with The Bank of New York Mellon, as fiscal agent, paying agent, registrar and transfer agent, providing for the terms of the Surplus Notes.

The Surplus Notes are unsecured, subordinated debt obligations of the Company and are reflected as debt on the consolidated balance sheets of the Company. All principal and interest payments on the Surplus Notes are subject to prior approval by the Commissioner of the Kansas Insurance Department. Interest on the Surplus Notes accrues at the rate of 6.75% per year, and is payable quarterly in arrears on February 24, May 24, August 24 and November 24 of each year, commencing on November 24, 2022.

The Surplus Notes may be redeemed after 10 years, in full or in part, for 100% of the principal amount plus accrued but unpaid interest, and the Company may at any time repurchase Surplus Notes from the underlying holders thereof on the open market, after which such Surplus Notes will be cancelled and not re-issued. In addition, the Surplus Notes may be redeemed before August 24, 2032 upon the occurrence of certain changes in applicable tax laws or regulations that would require the Company to pay additional amounts necessary to reimburse the noteholders for new or changed withholding or deduction obligations.

In addition, pursuant to the Fiscal Agency Agreement, the Company made certain customary representations and warranties and made certain customary covenants. The covenants, among other things, (i) prevent Benchmark from incurring indebtedness exceeding 35% of its total surplus (as set forth in its statutory financial statements, and including the Surplus Notes), and restrict Benchmark’s ability to pay dividends to the Company if such ratio were to exceed 35% or would exceed 35% as a result of such payment; (ii) limit Benchmark’s ability to engage in a merger, sale or consolidation and require it to preserve its corporate existence; and (iii) require it to provide certain financial information and insurance regulatory filings to

the noteholders. All of these covenants are subject to a number of important exceptions, limitations and qualifications. Notwithstanding the foregoing, noteholders do not have the right to declare the Surplus Notes to immediately mature or otherwise become immediately payable as a result of any breach of Benchmark’s covenants or under any other circumstances. Benchmark’s obligations under the Surplus Notes will only be accelerated in the event that any state or federal agency were to obtain an order or grant approval for the rehabilitation, liquidation, conservation or dissolution of Benchmark.

During the year ended December 31, 2022, the Company recorded interest expense of $1,222 on its Surplus Notes including amortization of debt issuance costs.

Junior Subordinated Debt

In June 2006, the Trust issued 7,500 shares of preferred capital securities to qualified institutional buyers and 232 common securities to Trean Corp. The proceeds of such issuances were invested by the Trust in $7,732 aggregate principal amount of Trean Corp's Junior Subordinated Debt due 2036 (the "Subordinated Notes"). The Subordinated Notes represent the sole assets of the Trust. On October 7, 2020, Trean Corp redeemed all of the Subordinated Notes for a total payoff amount of $7,807.

The interest rate was a fixed rate of 9.167% until July 7, 2011, after which a variable interest rate of LIBOR plus 3.50%. The preferred capital securities issued by the Trust in turn paid quarterly cash distributions at an annual rate of 9.167% per annum of the liquidation amount of $1 per security until July 7, 2011 and thereafter at a variable rate per annum, reset quarterly, equal to LIBOR plus 3.50%. During the years ended December 31, 2020, the Company recorded $271 of interest expense associated with the Subordinated Notes.

Oak Street Loan

In conjunction with the acquisition of Compstar (See Note 3), the Company acquired a loan from Oak Street Funding with a total principle of $19,740. In July 2020, upon completion of the acquisition, the Company paid this loan off in full.

PPP Loans

In conjunction with the acquisition of Compstar, the Company acquired a Federal Paycheck Protection Program ("PPP Loan") with a principal balance of $325. The PPP Loan was forgiven on November 6, 2020. In conjunction with the acquisition of 7710, the Company acquired a PPP Loan with a principal balance of $269. The PPP Loan was forgiven on November 12, 2020. In conjunction with the acquisition of WIC, the Company acquired two PPP Loans with a principal balance of $243. As of December 31, 2021, both loans had been fully forgiven.

Scheduled maturities of debt, excluding deferred financing costs, are as follows:

2023	$	2,888
2024	3,300
2025	23,100
2026	—
2027	—
Thereafter	50,000
Total debt	$	79,288

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Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

Revenue from contracts with customers, included in other revenue, includes brokerage, management, third-party administrative, consulting and other fee-based revenue. The following table presents the revenues recognized from contracts with customers included in the consolidated statements of operations.

	Year Ended December 31,
	2022		2021		2020
Brokerage	$	5,705	$	7,036	$	8,994
Managing general agent fees	326		603		976
Third-party administrator fees	1,358		1,608		1,630
Consulting fees	857		993		504
Total revenue from contracts with customers	$	8,246	$	10,240	$	12,104

The Company did not have any contract liabilities as of December 31, 2022 or December 31, 2021. As of December 31, 2022 and December 31, 2021, the contract assets from contracts with customers were $3,077 and $3,353, respectively, and are included within other assets on the consolidated balance sheets.

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Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense is comprised of the following:

	Year Ended December 31,
	2022		2021		2020
Current tax expense	$	3,308	$	7,823	$	7,291
Deferred tax expense	(2,234)		(2,374)		(1,056)
Total income tax expense	$	1,074	$	5,449	$	6,235

The income tax expense differs from the expected income tax expense computed by applying the applicable federal statutory tax rates to pretax income as a result of the following:

	2022		Effective Rate		2021		Effective Rate		2020		Effective Rate
Income tax expense computed at statutory rate	$	(13,625)	21.0	%	$	5,204	21.0	%	$	19,415	21.0	%
State taxes, net of federal benefit	(289)		0.4	%	47		0.2	%	577		0.6	%
Tax-exempt municipal income, net of proration	(240)		0.3	%	(263)		(1.1)	%	(272)		(0.3)	%
Goodwill impairment	14,365		(22.1)	%	—		—	%	—		—	%
Potential merger and other nondeductible expenses	647		(1.0)	%	10		—	%	957		1.0	%
Fair market value adjustment on Compstar investment	—		—	%	—		—	%	(14,668)		(15.9)	%
Other	216		(0.3)	%	451		1.9	%	226		0.3	%
Total income tax expense	$	1,074	(1.7)	%	$	5,449	22.0	%	$	6,235	6.7	%

As of December 31, 2022 and 2021, the Company has net operating loss ("NOL") carryforwards for federal income tax purposes of approximately $3,155 and $3,272, respectively, related to the purchases of ALIC and FCCIC. The Company has established a deferred tax asset of approximately $17 and $41 as of December 31, 2022 and 2021, respectively.

The significant components of deferred tax assets and liabilities are as follows:

	December 31,
	2022		2021
Deferred tax assets:
Unpaid losses and LAE	$	6,256	$	4,574
Unearned premiums	4,399		3,802
Unrealized losses on investments	7,692		—
NOL carryforward	17		41
Lease liability	731		1,188
Accrued liabilities	1,286		926
Stock compensation	841		484
Other	299		51
Total deferred tax assets	21,521		11,066
Deferred tax liabilities:
Deferred acquisition costs	(4,011)		(2,802)
Loss reserve discounting TCJA transitional adjustment	(355)		(473)
Unrealized gains and losses on investments	—		(1,131)
Property and equipment	(204)		(191)
Right-of-use asset	(660)		(1,082)
Intangible assets	(10,230)		(12,715)
Prepaid expenses	(69)		(43)
Section 481(a) adjustment	—		(56)
Other	(34)		(93)
Total deferred tax liabilities	(15,563)		(18,586)
Net deferred tax assets (liabilities)	$	5,958	$	(7,520)

The Company completed its IRS examination related to the 2018 income tax return of Trean Corp. The results of the examination resulted in no changes to the 2018 Trean Corp tax return. The Company's tax years 2019 through 2021 remain open to examination by the IRS and various state authorities.

As of December 31, 2022 and 2021, the Company has not taken any uncertain tax positions with regard to its tax returns.

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Liability for Unpaid Losses and Loss Adjustment Expense

12 Months Ended

Dec. 31, 2022

Insurance [Abstract]

Liability for Unpaid Losses and Loss Adjustment Expense

Liability for Unpaid Losses and Loss Adjustment ExpenseThe Company establishes reserves for unpaid losses and LAE which represent the estimated ultimate cost of all losses incurred that were both reported and unreported (i.e., incurred but not reported losses, or "IBNR") and LAE incurred that remain unpaid at the balance sheet date. The Company reserves for loss after considering all information known at each reporting period. At any given point in time, loss reserves represent the best estimate of the ultimate settlement and administration cost of insured claims incurred and unpaid. Since the process of estimating loss reserves requires significant judgment due to a number of variables, such as fluctuations in inflation, judicial decisions, legislative changes and changes in claims handling procedures, the ultimate liability will likely differ from these estimates. The Company revises the reserves for unpaid losses as additional information becomes available, and reflects adjustments, if any, in earnings in the periods in which the adjustments are deemed necessary. The liability for unpaid losses is recorded on an undiscounted basis.

The following table represents a reconciliation of changes in the liability for unpaid losses and LAE.

	Year Ended December 31,
	2022		2021		2020
Unpaid losses and LAE reserves at beginning of period	$	544,320	$	457,817	$	406,716
Less losses ceded through reinsurance	(369,008)		(335,655)		(304,005)
Net unpaid losses and LAE at beginning of period	175,312		122,162		102,711
Acquisition of subsidiary, net of losses ceded through reinsurance	—		—		7,050
Incurred losses and LAE related to:
Current period	198,996		136,191		65,587
Prior period	4,881		(5,419)		(14,813)
Total incurred losses and LAE	203,877		130,772		50,774
Paid losses and LAE, net of reinsurance, related to:
Current period	61,484		42,484		15,411
Prior period	63,250		35,138		22,962
Total paid losses and LAE	124,734		77,622		38,373
Net unpaid losses and LAE at end of period	254,455		175,312		122,162
Plus losses ceded through reinsurance	378,455		369,008		335,655
Unpaid losses and LAE reserves at end of period	$	632,910	$	544,320	$	457,817

As a result of changes in estimates of insured events in prior years, the provision for unpaid losses and LAE increased by approximately $4,881 for the year ended December 31, 2022 and decreased by $5,419 and $14,813 for the years ended December 31, 2021 and 2020, respectively.

The Company purchased annuities from life insurers under which the claimants are the payees. The purchase of these annuities allowed the Company to reduce reserves for unpaid losses by approximately $4,935 in previous years. Under the terms of settlement with the claimants, the Company remains liable for payments to the claimants of approximately $1,605 and $1,661 as of December 31, 2022 and 2021, respectively, in the event of default or insolvency of the life insurers.

Loss Development Tables

The following tables represent cumulative incurred loss and allocated loss adjustment expenses, net of reinsurance by accident year and cumulative paid loss and allocated loss adjustment expenses, net of reinsurance by accident year, for the years ended December 31, 2013 to 2022, as well as total IBNR and the cumulative number of reported claims for the year ended December 31, 2022, by reportable line of business and accident year (dollars in thousands). The Company’s primary lines of business are workers’ compensation and other liability.

Workers' Compensation
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	22,746		22,879		22,650		19,772		19,528		19,426		19,814		19,964		19,968		20,139			$	1,134	3,539
2014			22,357		20,686		19,781		19,394		17,967		18,025		18,049		17,584		17,556			1,539		3,546
2015					22,643		23,830		23,444		21,788		22,218		19,560		19,974		19,568			1,831		4,796
2016							30,710		29,261		27,674		25,430		23,063		23,076		22,381			1,965		9,835
2017									35,683		29,107		25,713		24,439		24,581		24,515			1,877		14,550
2018											40,122		34,478		34,321		31,909		31,352			2,800		12,451
2019													48,565		45,382		44,997		45,239			4,752		11,451
2020															55,960		55,531		58,033			7,914		12,148
2021																	100,254		102,778			20,945		11,698
2022																			136,406			52,703		10,052
																			$	477,967
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	6,734		12,407		15,703		17,135		18,448		18,664		18,976		18,906		19,335		19,444
2014			5,958		11,672		14,393		16,011		16,177		16,535		16,607		16,707		16,700
2015					6,089		13,313		15,814		17,002		17,638		17,984		18,143		18,238
2016							7,260		15,329		17,904		18,728		19,856		20,551		20,918
2017									7,439		15,017		17,930		19,353		20,456		21,150
2018											8,978		19,811		24,023		26,201		27,538
2019													11,201		24,472		30,650		34,434
2020															12,141		30,646		42,349
2021																	26,623		58,916
2022																			32,880
																			292,567
	All outstanding liabilities before 2013, net of reinsurance																		5,119
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	190,519
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	26.2	%	32.8	%	15.8	%	7.5	%	6.3	%	2.5	%	2.6	%	0.3	%	1.6	%	1.0		%
* Presented as unaudited required supplementary information

Other Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	1,914		1,876		1,617		1,580		1,804		2,068		1,651		1,667		1,703		1,703			$	240	333
2014			2,183		1,964		1,921		2,154		3,107		3,013		2,832		2,593		2,593			374		424
2015					2,946		2,652		2,862		3,549		3,334		2,860		2,523		2,523			390		430
2016							2,689		2,794		3,135		3,180		2,735		2,423		2,423			911		303
2017									4,964		3,089		4,555		3,966		3,267		3,267			1,041		288
2018											4,256		4,278		3,010		3,679		4,052			1,679		228
2019													5,457		2,849		3,608		2,593			1,663		129
2020															2,932		3,702		4,239			2,753		215
2021																	4,362		6,117			4,707		272
2022																			6,362			5,911		345
																			$	35,872
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	65		195		281		573		798		1,048		1,153		1,215		1,282		1,391
2014			53		233		405		639		1,067		1,687		1,884		1,989		2,095
2015					123		374		600		945		1,187		1,258		1,523		1,855
2016							54		137		355		558		783		1,081		1,199
2017									52		439		676		999		1,387		1,841
2018											52		345		504		846		1,738
2019													111		170		239		387
2020															55		196		521
2021																	719		977
2022																			124
																			12,128
	All outstanding liabilities before 2013, net of reinsurance																		384
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	24,128
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	3.9	%	6.5	%	4.9	%	10.5	%	16.2	%	13.2	%	7.0	%	11.9	%	4.4	%	3.0		%
* Presented as unaudited required supplementary information

All Other Lines
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	1		—		13		9		10		12		—		—		—		—			$	—	572
2014			40		127		24		23		21		16		16		6		5			—		1,051
2015					168		132		108		113		98		98		19		39			151		1,172
2016							1,882		1,617		1,745		1,555		1,542		1,051		1,054			4		1,289
2017									2,852		2,917		2,417		2,442		1,935		1,984			22		2,125
2018											2,885		2,874		2,549		2,520		2,519			49		2,025
2019													3,756		3,367		3,219		3,379			309		1,428
2020															4,842		5,129		4,691			324		1,135
2021																	23,365		23,921			1,841		2,859
2022																			38,396			7,932		2,200
																			$	75,988
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	—		—		—		—		—		—		—		—		—		—
2014			—		100		16		16		16		16		16		6		6
2015					63		98		98		99		98		98		19		(111)
2016							796		1,325		1,418		1,494		1,499		1,016		1,023
2017									1,412		2,099		2,203		2,321		1,884		1,893
2018											1,309		2,123		2,325		2,432		2,459
2019													1,903		2,532		2,789		2,945
2020															2,291		3,595		3,994
2021																	11,093		18,220
2022																			16,704
																			47,133
	All outstanding liabilities before 2013, net of reinsurance																		—
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	28,855
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	46.8	%	33.2	%	13.9	%	3.0	%	2.0	%	1.0	%	0.0	%	0.0	%	0.0	%	0.0		%
* Presented as unaudited required supplementary information

Total Lines
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	24,661		24,755		24,280		21,361		21,342		21,506		21,465		21,631		21,671		21,842			$	1,374	4,444
2014			24,580		22,777		21,726		21,571		21,095		21,054		20,897		20,183		20,154			1,913		5,021
2015					25,757		26,614		26,414		25,450		25,650		22,518		22,516		22,130			2,372		6,398
2016							35,281		33,672		32,554		30,165		27,340		26,550		25,858			2,880		11,427
2017									43,499		35,113		32,685		30,847		29,783		29,766			2,940		16,963
2018											47,263		41,630		39,880		38,108		37,923			4,528		14,704
2019													57,778		51,598		51,824		51,211			6,724		13,008
2020															63,734		64,362		66,963			10,991		13,498
2021																	127,981		132,816			27,493		14,829
2022																			181,164			66,546		12,597
																			$	589,827
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	6,799		12,602		15,984		17,708		19,246		19,712		20,129		20,121		20,617		20,835
2014			6,011		12,005		14,814		16,666		17,260		18,238		18,507		18,702		18,801
2015					6,275		13,785		16,512		18,046		18,923		19,340		19,685		19,982
2016							8,110		16,791		19,677		20,780		22,138		22,648		23,140
2017									8,903		17,555		20,809		22,673		23,727		24,884
2018											10,339		22,279		26,852		29,479		31,735
2019													13,215		27,174		33,678		37,766
2020															14,487		34,437		46,864
2021																	38,435		78,113
2022																			49,708
																			351,828
	All outstanding liabilities before 2013, net of reinsurance																		5,503
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	243,502
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	27.5	%	29.9	%	13.3	%	7.3	%	6.3	%	3.2	%	3.0	%	1.2	%	2.2	%	1.5		%
* Presented as unaudited required supplementary information

The reconciliation of the net incurred and paid claims development tables to the liability for unpaid loss and loss adjustment expense in the consolidated balance sheets is as follows:

	December 31,
	2022		2021
Net outstanding liabilities
Workers' compensation	$	190,519	$	133,811
Other liability	24,128		19,159
All other lines of business	28,855		14,481
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance	243,502		167,451
Reinsurance recoverable on unpaid claims
Workers' compensation	234,657		260,891
Other liability	52,816		50,765
All other lines of business	90,982		57,352
Total reinsurance recoverable on unpaid claims	378,455		369,008
Unallocated loss adjustment expenses	10,953		7,861
Total liability for unpaid loss and loss adjustment expenses	$	632,910	$	544,320

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Reinsurance

12 Months Ended

Dec. 31, 2022

Reinsurance Disclosures [Abstract]

Reinsurance

Reinsurance

The Company utilizes reinsurance contracts to reduce its exposure to losses in all aspects of its insurance business. Such reinsurance permits recovery of a portion of losses from reinsurers, although it does not relieve the Company from its primary liability to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial strength of potential reinsurers and continually monitors the financial condition of its reinsurers.

Amounts recoverable from reinsurers are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. The Company has diversified its credit risk related to the reinsurance ceded. There were no disputes with reinsurers as of December 31, 2022 and 2021. The Company has no reinsurance recoverables deemed uncollectible during the years ended December 31, 2022, 2021 and 2020.

The Company holds collateral on a funds held basis or requires collateral in a trust or as a letter of credit to secure recoverable balances from reinsurers not authorized in the insurance carriers state of domicile as follows:

	December 31,
	2022		2021
Letters of credit	$	18,438	$	24,979
Trust	136,370		126,404
Funds held	211,436		156,401
Total	$	366,244	$	307,784

Funds held in the table above represents only the portion of total funds held for which we require collateral to secure recoverable balances from reinsurers that are not authorized in the respective insurance carrier's state of domicile and does not include $29,855 and $43,009 of funds held for reinsurance companies that are authorized in the respective insurance carrier's state of domicile as of December 31, 2022 and 2021, respectively.

The Company has unsecured aggregate recoverable for losses, paid and unpaid, loss adjustment expenses and unearned premiums with the following individual reinsurers, authorized or unauthorized, exceeding 5 percent of stockholders’ equity:

	December 31,
	2022	2021
Arch Reinsurance Company (U.S.)	*	$	22,050
Markel Global	58,400	66,933
Munich Reinsurance America, Inc	17,255	*
Swiss Reinsurance America Corp	17,199	*

(*) Represents less than 5 percent of stockholders’ equity

A summary of the impact of ceded reinsurance is as follows:

	Year Ended December 31,
	2022								2021
	Gross		Assumed		Ceded		Net		Gross		Assumed		Ceded		Net
Losses and LAE liabilities	$	619,453	$	13,457	$	(378,455)	$	254,455	$	531,598	$	12,722	$	(369,008)	$	175,312
Unearned premiums	226,412		2,700		(124,269)		104,843		216,878		3,062		(129,411)		90,529
Written premiums	642,210		9,093		(352,365)		298,938		624,769		9,395		(394,888)		239,276
Earned premiums	632,677		9,552		(357,605)		284,624		563,337		8,916		(373,573)		198,680
Loss and loss adjustment expenses	441,274		11,857		(249,254)		203,877		343,134		14,287		(226,649)		130,772

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Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

The Company's leases consist of operating leases for office space and equipment. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected, as a practical expedient, to account for lease components and any non-lease components within a contract as a single lease component, and therefore allocates all of the expected lease payments to the lease component. Some of the Company's leases include options to extend the term, which is only included in the lease liability and right-of-use assets calculation when it is reasonably certain the Company will exercise that option. Our leases have remaining terms ranging from one month to 54 months, some of which have options to extend the lease for up to 5 years. As of December 31, 2022, the lease liability and right-of-use assets did not include the impact of any lease extension options as it is not reasonably certain that the Company will exercise the extension options.

Total lease expense for the years ended December 31, 2022, 2021 and 2020 was $2,458, $2,459 and $2,501, inclusive of $93, $25 and $362 in variable lease expense, respectively. The Company also sublets some of its leased office space and recorded $98, $100 and $84 of sublease income for the years ended December 31, 2022, 2021 and 2020, respectively, which is included in other income on the consolidated statements of operations.

Supplemental balance sheet information, the weighted average remaining lease term and weighted average discount rate related to leases were as follows:

	December 31,			December 31,
(dollars in thousands)	2022			2021
Right of use asset	$	2,764		$	4,530
Lease liability	$	3,063		$	4,976
Weighted average remaining lease term	1.79 years			2.42 years
Weighted average discount rate	6.07		%	6.33		%

Future maturities of lease liabilities as of December 31, 2022 are as follows:

	Operating Leases
2023	$	1,940
2024	1,064
2025	164
2026	44
2027	2
Total lease payments	3,214
Less: imputed interest	(151)
Total lease liabilities	$	3,063

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Equity

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Equity

Equity

Initial Public Offering and Reorganization

On July 20, 2020, Trean Insurance Group, Inc. closed the sale of 10,714,286 shares of its Common Stock in its IPO, comprised of 7,142,857 shares issued and sold by Trean Insurance Group, Inc. and 3,571,429 shares sold by selling stockholders. On July 22, 2020, Trean Insurance Group, Inc. closed the sale of an additional 1,207,142 shares by certain selling stockholders in the IPO pursuant to the exercise of the underwriters’ option to purchase additional shares to cover over-allotments. The IPO price per share was $15.00. The aggregate IPO price for all shares sold in the IPO was approximately $107,142 and the aggregate initial public offering price for all shares sold by the selling stockholders in the IPO was approximately $71,678. The shares began trading on the Nasdaq Global Select Market on July 16, 2020 under the symbol "TIG". The offer and sale was pursuant to a registration statement on Form S-1 (File No. 333-239291), which was declared effective by the SEC on July 15, 2020.

Trean Insurance Group, Inc. received net proceeds from the sale of shares in the IPO of approximately $93,139 after deducting underwriting discounts and commissions of $7,500 and offering expenses of $6,503. Trean Insurance Group, Inc. did not receive any proceeds from the sale of shares by the selling stockholders. In addition, and in conjunction with its IPO, Trean Insurance Group, Inc. issued 6,613,606 shares of Common Stock, with a purchase price value of $99,204, to acquire the remaining 55% ownership in Compstar Holding Company LLC. See "Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities" for a detailed discussion of use of proceeds associated with the IPO.

In conjunction with the IPO and corporate restructuring, the Company paid a termination payment to Altaris Capital Partners, LLC in connection with the termination of the Company's consulting and advisory agreements as well as paid bonuses to employees and pre-IPO unitholders for the successful completion of the IPO. The aggregate amount of these payments totaled $11,054 and is included in other expenses on the consolidated statement of operations.

Prior to the completion of the above offering, the Company effected the following reorganization transactions: (i) each of Trean and BIC contributed all of their respective assets and liabilities to Trean Insurance Group, Inc., a newly formed direct subsidiary of BIC, in exchange for shares of Common Stock in Trean Insurance Group, Inc.; and (ii) upon the completion of

the transfers by Trean and BIC, Trean and BIC were dissolved and distributed in-kind common shares to the pre-IPO unitholders.

Preferred Stock

The Company currently has authorized 100,000,000 shares of preferred stock with a par value of $0.01. No shares of preferred stock were issued or outstanding as of December 31, 2022, and 2021.

Common Stock

The Company currently has authorized 600,000,000 shares of Common Stock with a par value of $0.01. As of December 31, 2022, and 2021 there were 51,222,485 and 51,176,887, respectively, shares of common stock issued and outstanding.

Members' Equity

Prior to the IPO, the Company had three classes of ownership units, each with its respective rights, preferences and privileges as follows:

1)Class A Units: Received an allocation of profits and losses incurred by the Company as well as maintained the right to receive distributions, along with Class B Units, on a pro rata basis prior to distributions made to other classes of ownership units.

2)Class B Units: Received an allocation of profits and losses incurred by the Company as well as maintained the right to receive distributions, along with Class A Units, on a pro rata basis prior to distributions made to other classes of ownership units. Class B maintained both voting and non-voting units. Each Class B Voting Unit is entitled to one vote per Class B Voting Unit on each matter to which the members are entitled to vote. Class B Non-Voting Units maintained all rights, preferences and privileges allowed to Class B Voting Units with the exception of voting rights.

3)Class C Units: Received an allocation of profits and losses incurred by the Company. Participating Class C Units maintained the right to receive distributions after any Class A or Class B units based on the unit holders’ pro rata share.

As part of the corporate reorganization performed in conjunction with the IPO of Trean Insurance Group, all ownership units were exchanged for a total of 37,386,394 shares of Common Stock.

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Earnings Per Share

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per ShareBasic earnings per share ("EPS") is computed by dividing net income by the weighted average number of shares outstanding during reported periods. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock during reported periods and is calculated using the treasury stock method.

The following table presents the calculation of basic and diluted EPS of Common Stock:

	Year Ended December 31,
(in thousands, except share and per share amounts)	2022		2021		2020
Net income - basic and diluted	$	(65,955)	$	19,330	$	88,549
Weighted average number of shares outstanding - basic	51,203,370		51,162,293		43,744,003
Effect of dilutive securities:
Restricted stock units	—		11,157		741
Dilutive shares	—		11,157		741
Weighted average number of shares outstanding - diluted	51,203,370		51,173,450		43,744,744
Earnings per share:
Basic	$	(1.29)	$	0.38	$	2.02
Diluted	$	(1.29)	$	0.38	$	2.02

At December 31, 2022, 2021 and 2020, there were restricted stock units and stock options outstanding totaling 567,537, 389,905 and 179,840, respectively, excluded from the computation of diluted weighted-average shares outstanding because their inclusion would have been anti-dilutive.

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Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income (loss):

	Year Ended December 31,
	2022		2021		2020
Balance at beginning of period	$	4,384	$	13,426	$	6,500
Other comprehensive income (loss), net of tax:
Unrealized investment gains (losses):
Unrealized investment gains (losses) arising during the period	(54,720)		(11,386)		9,028
Change in fair value of interest rate cap	(45)		—		—
Income tax expense (benefit)	(11,488)		(2,391)		1,903
Unrealized investment gains (losses), net of tax	(43,277)		(8,995)		7,125
Less: reclassification adjustments to:
Net realized investment gains (losses) included in net realized gains	(1,101)		59		252
Income tax expense (benefit)	(231)		12		53
Total reclassifications included in net income, net of tax	(870)		47		199
Other comprehensive income (loss)	(42,407)		(9,042)		6,926
Balance at end of period	$	(38,023)	$	4,384	$	13,426

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Stock Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock Compensation

Stock CompensationAs of December 31, 2022, the Company has one incentive plan, the Trean Insurance Group, Inc. 2020 Omnibus Incentive Plan, (the "2020 Omnibus Plan"). The purposes of the 2020 Omnibus Plan are to provide additional incentive to selected officers, employees, non-employee directors, independent contractors and consultants of the Company whose contributions are essential to the growth and success of the business of the Company and its affiliates, in order to strengthen the commitment and motivate such individuals to faithfully and diligently perform their responsibilities and attract competent

and dedicated individuals whose efforts will result in the long-term growth and profitability of the Company and its affiliates. The 2020 Omnibus Plan is administered by the Company’s board of directors and provides for the issuance of up to 5,058,085 shares of Common Stock granted in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses, other stock awards or any combination of the foregoing. As provided in the Merger Agreement, the Company will not issue or authorize any new awards during the pendency of the Merger, subject to certain exceptions.

Stock Options

Compensation expense is recognized for all stock compensation arrangements by the Company. Stock compensation expense related to stock option awards was $203, $164 and $61 for the years ended December 31, 2022, 2021, and 2020, respectively.

Employee stock option awards granted set forth, among other things, the option exercise price, the option term, provisions regarding option exercisability and whether the option is intended to be an incentive stock option ("ISO") or a nonqualified stock option ("NQSO"). Stock options may be granted to employees at such exercise prices as the Company’s board of directors may determine but not less than 100% of the fair market value of the underlying stock as of the date of grant. Employee options vest one third annually over a period of three years and have contractual terms of 10 years from the date of grant.

The fair value of each time-based vesting option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions noted in the following table. The Company’s expected volatility for the period was based on a weighted average expected volatility of an industry peer group of insurance companies of similar size, life cycle and lines of business. Expected term is calculated using the simplified method taking into consideration the option's contractual life and vesting terms. The Company’s stock option grants qualify as plain vanilla options and as such the Company uses the simplified method in estimating its expected option term as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its common shares have been publicly traded. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yields were not used in the fair value computations as the Company has never declared or paid dividends on its Common Stock and currently intends to retain earnings for use in operations.

	2022	2021	2020
Expected volatility	29.8%	29.8%	29.8%
Expected term	6 years	6 years	6 years
Risk-free interest rate	1.92%	1.32%	0.47%

A summary of the status of the Company's stock option activity as of December 31, 2022 and changes during the year then ended are as follows:

	Stock Options	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contract Term
Balance outstanding, December 31, 2021	120,187	$	16.06
Granted	64,694	$	7.04
Forfeited or cancelled	(20,158)	$	14.76
Balance outstanding, December 31, 2022	164,723	$	12.68	$	—	8.34 years
Options exercisable, December 31, 2022	53,956	$	15.68	$	—	7.73 years

The weighted average grant-date fair value of options granted for the years ended December 31, 2022, 2021 and 2020 was $2.30, $5.49 and $4.43, respectively. As of December 31, 2022, total unrecognized compensation cost related to stock options was $250 and is expected to be recognized over a weighted average period of approximately 0.9 years.

Restricted Stock Units

Compensation expense relating to restricted stock unit grants was $1,293, $1,358 and $445 for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022 there was $2,029 of total unrecognized compensation cost related to non-vested restricted stock unit grants. That cost is expected to be recognized over a weighted average expected life of 1.5 years. The total fair value of restricted stock units vested during the years ended December 31, 2022, 2021, and 2020 was $262, $498 and $174, respectively.

The Company has granted time-based restricted stock units ("RSUs"), performance stock units ("PSUs"), and market-based stock units ("MSUs") to certain key employees as part of the Company's long-term incentive program. The estimated fair value of restricted stock units is based on the grant date closing price of the Company's stock for time-based and performance-based vesting awards. A Monte Carlo valuation model is used to estimate the fair value for market-based vesting awards. RSUs generally vest in three equal annual installments beginning one year from the grant date and are amortized as compensation expense over the three-year vesting period. The Company has also granted time-based restricted stock units to non-employee directors as part of the Company's annual director compensation program. Each time-based restricted stock grant to non-employee directors vests on the day immediately preceding the next annual meeting of stockholders following the date of grant. The grants are amortized as director compensation expense over the vesting period. The Company recognizes compensation expense on PSUs ratably over the requisite performance period of the award and to the extent management views the performance goal attainment as probable. The Company recognizes compensation expense on MSUs ratably over the requisite performance period of the award.

For the 2022 and 2021 fiscal years, the Company granted PSUs to certain key employees pursuant to the Company's 2020 Omnibus Plan. The number of shares earned is based on the Company’s achievement of pre-established target threshold goals for total gross written premiums over a three-year performance measurement period. The performance goals allow for a payout ranging from 0% to 200% of the target award. If performance satisfies minimum requirements to result in shares being awarded, the number of shares will be determined between 50% and 200% of target thresholds, as defined in the applicable award agreements. Any earned PSU will vest if the employee’s service has been continuous through the vesting date. Any PSU not earned because of failure to achieve the minimum performance goal at the end of the performance period will be immediately forfeited. The grant date fair value of the PSUs was determined based on the grant date closing price of the Company’s stock.

For the 2022 and 2021 fiscal years, the Company granted MSUs to certain key employees pursuant to the Company's 2020 Omnibus Plan. The number of restricted stock units earned is based on the Company’s cumulative total shareholder return ("TSR"), as defined in the applicable award agreement, over a three-year performance measurement period. If TSR satisfies minimum requirements to result in shares being awarded, the number of shares will be determined between 50% and 200% shown in the table below. Any MSU not earned because of failure to achieve the minimum performance goal at the end of the performance period will be immediately forfeited. Grant date fair values were determined using a Monte Carlo valuation model based on the following assumptions:

	Fiscal 2022	Fiscal 2021
Total grant date fair value	$391	$845
Total grant date fair value per share	$6.04	$13.92
Expected volatility	40.0%	35.0%
Weighted average expected life	2.81 years	2.77 years
Risk-free interest rate	1.79%	0.27%

The percent of the target MSU that will be earned based on the Company’s TSR is as follows:

Cumulative TSR %
Fiscal 2022	Fiscal 2021	Percent of Units Vested
Below 29.2%	Below 25.1%	—%
29.2%	25.1%	50%
52.1%	47.2%	100%
74.9% and above	69.3% and above	200%

A summary of the status of the Company’s non-vested restricted stock unit activity as of December 31, 2022 and changes during the year then ended is as follows:

	RSUs			MSUs			PSUs			Total
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Non-vested outstanding, December 31, 2021	117,109	$	15.53	50,861	$	13.92	101,748	$	17.50	269,718	$	15.97
Granted	97,808	$	6.67	64,709	$	6.04	64,693	$	7.04	227,210	$	6.60
Vested	(50,236)	$	14.89	—	$	—	—	$	—	(50,236)	$	14.89
Forfeited or cancelled	(17,129)	$	13.43	(9,854)	$	11.67	(16,895)	$	15.76	(43,878)	$	13.93
Non-vested outstanding, December 31, 2022	147,552	10.12		105,716	9.31		149,546	13.17		402,814	11.04

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Regulatory Matters

12 Months Ended

Dec. 31, 2022

Regulated Operations [Abstract]

Regulatory Matters

Regulatory Matters

U.S. state insurance laws and regulations prescribe accounting practices for determining statutory net income and capital and surplus for insurance companies. In addition, state regulators may permit statutory accounting practices that differ from prescribed practices. Statutory accounting practices prescribed or permitted by regulatory authorities for the Company’s insurance company subsidiaries, Benchmark, ALIC, 7710 & BSIC differ from GAAP. The principal differences between statutory accounting practices ("SAP") and GAAP as they relate to the financial statements of Benchmark, ALIC, 7710 and BSIC are (i) policy acquisition costs are expensed as incurred under SAP, whereas they are deferred and amortized under GAAP, (ii) deferred tax assets are subject to more limitations regarding what amounts can be recorded under SAP and (iii) bonds are recorded at amortized cost under SAP and fair value under GAAP. Benchmark is domiciled in Kansas, ALIC is domiciled in Utah, 7710 is domiciled in South Carolina and BSIC is domiciled in Arkansas. As of December 31, 2022 and 2021, and during the years then ended, Benchmark, ALIC, 7710 and BSIC met all regulatory requirements of the states in which they operate.

Risk-based capital ("RBC") requirements as promulgated by the National Association of Insurance Commissioners ("NAIC") require property and casualty insurers to maintain minimum capitalization levels determined based on formulas incorporating various business risks (e.g., investment risk, underwriting profitability, etc.) of the insurance company subsidiaries. As of December 31, 2022 and 2021, the insurance company subsidiaries’ adjusted capital and surplus exceeded their authorized control level as determined by the NAIC’s risk-based capital models.

Summarized statutory basis information, which differs from GAAP, is shown below for Benchmark, ALIC, 7710 and BSIC.

	2022
(in thousands, except percentages)	Benchmark			ALIC			7710			BSIC
Statutory capital and surplus	$	222,340		$	6,270		$	6,210		$	48,655
RBC authorized control level	31,350			436			225			315
Statutory net income (loss)	(2,270)			108			(21)			695
RBC percentage	709		%	1,438		%	2,760		%	15,446		%

	2021
(in thousands, except percentages)	Benchmark			ALIC			7710			BSIC
Statutory capital and surplus	$	170,686		$	6,321		$	6,395		$	19,977
RBC authorized control level	24,279			567			382			129
Statutory net income	(782)			128			76			(23)
RBC percentage	703		%	1,115		%	1,674		%	15,486		%

The amount of dividends that our insurance subsidiaries may pay in any twelve-month period, without prior approval by their respective domestic insurance regulators, is restricted under the laws of Kansas, California, Utah, South Carolina and Arkansas.

Under Kansas and California law, dividends payable from Benchmark without the prior approval of the applicable insurance commissioner must not exceed the greater of (i) 10% of Benchmark’s surplus as shown on the last statutory financial statement on file with the Kansas Insurance Department and the California Department of Insurance, respectively, or (ii) 100% of net income during the applicable twelve-month period (not including realized gains). Dividends shall not include pro rata distributions of any class of Benchmark's own securities. For the years ended December 31, 2022 and 2021 the Company could approve dividends without the approval of the state up to $17,068 and $20,474, respectively. The Kansas Insurance Department does not have any limitations on the total amount of dividends paid.

Under Utah law, dividends payable from ALIC without the prior approval of the applicable insurance commissioner must not exceed the lesser of (i) 10% of ALIC’s surplus as shown on the last statutory financial statement on file with the Utah Insurance Department (ii) 100% of net income during the applicable twelve- month period (not including realized gains). Dividends shall not include pro rata distributions of any class of ALIC's own securities. For the years ended December 31, 2022 and 2021 the Company could approve dividends without the approval of the state up to $128 and $11, respectively.

Under South Carolina law, dividends payable from 7710 without the prior approval of the applicable insurance commissioner are limited to the following during the preceding twelve months: (a) when paid from other than earned surplus must not exceed the lesser of: (i) 10% of 7710's surplus as regards policyholders as shown in 7710’s most recent annual statement; or (ii) the net income, not including net realized gains or losses as shown in the 7710's most recent annual statement; or (b) when paid from earned surplus must not exceed the greater of: (i) 10% of 7710's surplus as regards policyholders as shown in 7710’s most recent annual statement; or (ii) the net income, not including net realized gains or losses as shown in the 7710's most recent annual statement. Dividends shall not include pro rata distributions of any class of 7710’s own securities. For the years ended December 31, 2022 and 2021 the Company could approve dividends without the approval of the state up to $75 and $519, respectively.

Under Arkansas law, dividends payable from BSIC without the prior approval of the applicable insurance commissioner must not exceed the lesser of (i) 10% of BSIC’s surplus as shown on the last statutory financial statement on file with the Arkansas Insurance Department; or (ii) 100% of net income during the applicable twelve- month period (not including realized gains). Dividends shall not include pro rata distributions of any class of BSIC's own securities. For the years ended December 31, 2022 and 2021 the Company could not approve dividends without the approval of the state.

The insurance laws of Kansas require Benchmark to maintain minimum capital and surplus of $1,500. The insurance laws of Utah require ALIC to maintain minimum capital in the amount of $300. The insurance laws of South Carolina require 7710 to maintain minimum capital and surplus of $1,200. The insurance laws of Arkansas require BSIC to maintain minimum capital and surplus of $20,000.

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Employee Benefit Plan	12 Months Ended
	Dec. 31, 2022
Retirement Benefits [Abstract]
Employee Benefit Plan	Employee Benefit PlanThe Company has a 401(k) Plan and Trust. This Plan covers all eligible employees of the Company. An employee becomes eligible on the first day of each calendar quarter if they are at least 21 years old. Participants may elect to contribute from 1 percent up to 15 percent of their salary annually. The Company matches 50 percent of each dollar an employee contributes on the first 5 percent of compensation. In addition, under the safe-harbor plan, the Company contributes 3 percent of each participant's gross wages regardless of the employee's contributions. The Company may also make discretionary profit sharing contributions. The employees vest 25 percent per year of service beginning in the second full year of service. The Company contributed approximately $1,444, $1,373 and $942 to the plan for the years ended December 31, 2022, 2021 and 2020, respectively.

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Commitment and Contingencies	12 Months Ended
	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesFrom time to time, the Company is subject to litigation related to its insurance business. Management does not believe that the Company is a party to any such pending litigation that would have a material adverse effect on its future operations.

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Transactions with Related Parties

12 Months Ended

Dec. 31, 2022

Related Party Transactions [Abstract]

Transactions with Related Parties

Transactions with Related Parties

In connection with our IPO, we entered into a director nomination agreement with the Altaris Funds, the Company's principal stockholder. So long as the Altaris Funds own 35% or more of outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate three individuals to our board of directors; so long as the Altaris Funds own 20% or more but less than 35% of our outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate two individuals to our board of directors; and so long as the Altaris Funds own 10% or more but less than 20% of outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate one individual to our board of directors. Prior to the IPO, the Company paid a management fee to the Altaris Funds totaling $500 for the year ended December 31, 2020 which is included in general and administrative expenses on the consolidated statement of operations. In conjunction with the IPO in 2020, the Company paid a termination fee to the Altaris Funds totaling $7,639, which is included in other expenses on the consolidated statement of operations.

On December 15, 2022, the Company entered into a merger agreement, providing for the acquisition of the Company by Altaris. See Note 1 for additional information.

On July 6, 2021, Trean Corp purchased 100% ownership of WIC. Prior to the acquisition, WIC was partially owned by two employees of the Company. The total purchase price was $5,500, which includes $1,500 that is contingent on WIC's future earnings, as defined in the agreement. The Company made an earn-out payment of $750 during the year ended December 31, 2022. As of December 31, 2022 and December 31, 2021, $750 and $1,500, respectively, of the total purchase price is outstanding and included within accounts payable and accrued expenses on the consolidated balance sheet.

The Company recorded $100, $200 and $200 of revenue for consulting services provided to TRI for the years ended December 31, 2022, 2021 and 2020, respectively. See Note 6 for information on the sale of the Company's previous ownership in TRI.

Effective July 15, 2020, Trean Compstar Holdings LLC purchased the remaining ownership interest in Compstar (See Note 3). Prior to the acquisition, the Company owned a 45% interest in Compstar, a program manager that handles the underwriting, premium collection and servicing of insurance policies for the Company. The Company recorded $90,199 of gross earned premiums resulting in gross commissions of $17,709 for the year ended December 31, 2020 prior to the acquisition. The Company recorded $176,083 of gross earned premiums resulting in gross commissions of $37,034 due to Compstar for the year ended December 31, 2020.

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Schedule II. Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2022

Condensed Financial Information Disclosure [Abstract]

Schedule II. Condensed Financial Information of Registrant

Schedule II. Condensed Financial Information of Registrant

Trean Insurance Group, Inc.

Condensed Balance Sheets

(in thousands, except share data)

	December 31,
	2022		2021
Assets
Investment in subsidiaries	$	283,600	$	267,643
Total investments	283,600		267,643
Cash and cash equivalents	3,066		4,242
Income taxes receivable	5,841		12,360
Intercompany receivables	22,645		135,369
Deferred tax asset	1,051		671
Other assets	1,859		1,930
Total assets	$	318,062	$	422,215
Liabilities
Accounts payable and accrued expenses	$	3,043	$	306
Total liabilities	3,043		306
Stockholders' equity
Preferred stock, $0.01 par value per share (100,000,000 authorized, zero issued and outstanding)	—		—
Common stock, $0.01 par value per share (600,000,000 authorized; 51,222,485 and 51,176,887 issued and outstanding)	512		512
Additional paid-in capital	290,095		288,623
Retained earnings	62,435		128,390
Accumulated other comprehensive income	(38,023)		4,384
Total stockholders' equity	315,019		421,909
Total liabilities and stockholders' equity	$	318,062	$	422,215

Schedule II. Condensed Financial Information of Registrant - (Continued)

Trean Insurance Group, Inc.

Condensed Statements of Operations

(in thousands)

	Year Ended December 31,
	2022		2021
Revenues
Net investment income	$	—	$	9
Other revenue	—		—
Total revenue	—		9
Expenses
General and administrative expenses	5,591		4,103
Other expenses	3,081		845
Noncash stock compensation	1,496		1,522
Total expenses	10,168		6,470
Loss before taxes	(10,168)		(6,461)
Income tax benefit	(1,650)		(1,712)
Loss before equity earnings of subsidiaries	(8,518)		(4,749)
Equity earnings (loss) of subsidiaries	(57,437)		24,079
Net income (loss)	$	(65,955)	$	19,330

Schedule II. Condensed Financial Information of Registrant - (Continued)

Trean Insurance Group, Inc.

Condensed Statements of Cash Flows

(in thousands)

	Year Ended December 31,
	2022		2021
Operating activities
Net income (loss)	$	(65,955)	$	19,330
Adjustments to reconcile net income to net cash from operating activities:
Stock compensation	1,496		1,522
Equity (earnings) losses in subsidiaries	57,437		(24,079)
Dividends received from subsidiaries	1,150		—
Deferred income taxes	(379)		(414)
Changes in operating assets and liabilities:
Premiums and other receivables	—		—
Other assets	70		(1,930)
Accounts payable and accrued expenses	2,737		(357)
Income taxes payable and receivable	6,520		(7,781)
Intercompany receivables	(3,079)		17,277
Net cash provided by (used in) operating activities	(3)		3,568
Investing activities
Distribution from subsidiaries	8,850		—
Capital contributions to subsidiaries	(10,000)		—
Net cash used for investing activities	(1,150)		—
Financing activities
Shares redeemed for payroll taxes	(23)		(94)
Proceeds from short swing rule	—		85
Net cash provided by (used in) financing activities	(23)		(9)
Net increase in cash, cash equivalents and restricted cash	(1,176)		3,559
Cash, cash equivalents and restricted cash ‑ beginning of period	4,242		683
Cash, cash equivalents and restricted cash ‑ end of period	$	3,066	$	4,242

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Use of estimates

Use of estimates

While preparing the consolidated financial statements, the Company has made certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, as well as reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require extensive use of estimates include the reserves for unpaid losses and loss adjustment expenses ("LAE"), reinsurance recoverables, investments, goodwill and intangible assets. Except for the captions on the consolidated balance sheets and consolidated statements of comprehensive income, generally, the term loss(es) is used to collectively refer to both losses and LAE.

Accounting pronouncements

Accounting pronouncements

Recently adopted policies

In January 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 ("ASU 2020-01"). This update addresses the accounting for certain equity securities upon the application or discontinuation of the equity method of accounting. Further, the update addresses scope considerations for forward contracts and purchased options on certain securities. ASU 2020-01 is effective for annual periods beginning after December 15, 2021, including interim periods thereafter. The Company adopted this standard effective January 1, 2022. Adoption of this standard did not have a material impact on the consolidated financial statements.

Pending policies

The Company completed its IPO in July 2020, and is an emerging growth company as defined under federal securities laws. As such, the Company has elected to adopt pending accounting policies under the dates required for private companies. Therefore, the dates included within this section reflect the effective dates for the adoption of new accounting policies required by private companies.

In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (ASU 2020-03). This update represents changes to clarify and improve the codification to allow for easier application by eliminating inconsistencies and providing clarification on items such as (i) the application of fair value option disclosures; (ii) the accounting for fees related to modifications of debt; and (iii) aligning the contractual term of a net investment in a lease in

accordance with ASC Topic 326, Financial Instruments - Credit Losses, and the lease term determined in accordance with ASC Topic 842, Leases. The Company adopted items (i) and (ii) effective January 1, 2020 and will adopt item (iii) on January 1, 2023. Adoption of this standard has not had, and is not expected to have, a material impact on the consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (ASU 2016-13). This update requires financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Additionally, credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which the fair value is below the amortized cost. ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2023. Adoption of this standard is not expected to have a material impact on the consolidated financial statements.

In October 2021, the FASB issued ASU No 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). This update requires contract assets and contract liabilities acquired in a business combination to be recognized and measured at the acquisition date in accordance with Accounting Standards Codification ("ASC") Topic 606 as if the acquirer had originated the contracts. ASU 2021-08 is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2024 on a prospective basis. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

Cash and cash equivalents

Cash and cash equivalents: Cash and cash equivalents consist of all cash accounts, money market investments, and investments with maturities, at the time of acquisition, of 90 days or less. These amounts are carried at cost, which approximates fair value. Although the Company maintains its cash accounts in a limited number of commercial banks, management of the Company believes it is not exposed to any significant credit risk on cash and short-term investments.

Investments

Investments: Investment securities, consisting of fixed maturities, are classified as available-for-sale and reported at fair value. The change in unrealized gain and loss on fixed maturity investments is recorded as a component of accumulated other comprehensive income in the consolidated balance sheets, net of the related deferred tax effect, until realized. The change in unrealized gain and loss on equity securities is recorded as a component of net income and is included in net investment income on the consolidated statements of operations. Realized gains and losses from the sale of available-for-sale securities are determined on a specific-identification basis and included in net realized gains (losses) on the consolidated statement of operations on the trade date. The Company amortizes any premium or discount on fixed maturities over the remaining maturity period of the related securities and reports the amortization in net investment income. Dividend and interest income is recognized when earned.

The Company regularly reviews its investment portfolio to determine if other-than-temporary impairment exists for any debt securities. An investment is impaired when the fair value of the investment declines to an amount less than the cost or amortized cost of that investment. As part of the assessment process, the Company determines whether the impairment is temporary or other-than-temporary. The assessment is based on both quantitative criteria and qualitative information, considering a number of factors including, but not limited to: how long the security has been impaired; the amount of the impairment; or whether management intends to sell the debt security or it is more likely than not that management will have to sell the security before recovery of the amortized cost; the financial condition and near-term prospects of the issuer; whether the issuer is current on contractually-obligated interest and principal payments; key corporate events pertaining to the issuer and whether the market decline was affected by macroeconomic conditions.

If a debt security is impaired and management intends to sell the security or it is more likely than not that the Company will have to sell the security before the amortized cost is recovered, then the Company recognizes impairment loss in net realized gains (losses). If it is determined that an impairment of a debt security is other-than-temporary and management neither

intends to sell the security nor is it more likely than not that the Company will have to sell the security before it is able to recover its cost or amortized cost, then the Company separates the impairment into (a) the amount of impairment related to credit loss and (b) the amount of impairment related to all other factors. The Company records the amount of the impairment related to the credit loss as an impairment charge in net income and the amount of the impairment related to all other factors in accumulated other comprehensive income. No other-than-temporary impairment was recorded for the years ended December 31, 2022, 2021 and 2020.A large portion of the Company’s investment portfolio consists of fixed maturities which may be adversely affected by changes in interest rates as a result of governmental monetary policies, domestic and international economic and political conditions and other factors beyond the Company’s control.

Equity method investments

Equity method investments: The Company held certain investments where the Company does not have control but has the ability to exercise significant influence are accounted for by the equity method of accounting. Under this method, the Company's investments in certain limited liability companies are recorded at cost and the investment accounts are adjusted for the Company's share of the entities' income or loss and for the distributions and contributions. The income and losses are recorded within equity earnings (losses) in affiliates, net of tax on the consolidated statements of operations.

Premium revenue

Premium revenue: Premiums are earned over the policy period and are stated after deduction for reinsurance. The portion of premiums that will be earned in the future is deferred and reported as unearned premiums on the consolidated balance sheets.

Revenue from contracts with customers

Revenue from contracts with customers: Other revenue recorded by the Company includes brokerage, third-party administrative ("TPA"), management and consulting fees. The Company incurs certain costs associated with obtaining contracts with customers. Such contracts are one-year contracts and the amortization periods are one year or less. The Company has elected, as a practical expedient, to expense these contract costs as incurred.

Brokerage revenue includes the fees earned on excess of loss ("XOL") and quota share reinsurance treaties. Billings for brokerage revenues generally occur monthly. Revenue for reinsurance treaties consists of a single performance obligation whereas the total amount of consideration expected to be received is recorded on the effective date of the underlying contract. For XOL treaties, revenue is estimated based on the contractually specified minimum or deposit premiums. For quota share treaties, revenue is estimated based on the projected premium income provided by the ceding insurer. Brokerage fees are received based on the performance of the specified terms of the reinsurance treaty and thus, are considered variable consideration. Therefore, revenue is estimated and constrained to the extent it is probable a significant reversal of revenue will not occur, using the expected value method. Adjustments to revenue are recorded as additional evidence is received for the ultimate amount of brokerage earned under the contract.

The Company acts as a third-party claims administrator and earns TPA fees for providing such services. The fee structures vary based on the specific contract and can be dependent upon a number of factors which typically include agreed-upon fee rates, the total amount of premium written or collected under the agreement and the total time and expense incurred for processing claims. Billings for TPA fees occur on a monthly basis. TPA services consist of a single performance obligation which is recognized over time as claims are processed throughout the contract period. The volume of claims varies throughout the contract period and, therefore, the Company has elected to record revenue in an amount that reflects the total fees that the Company has a right to invoice for during the period.

The Company acts as a managing general agent ("MGA") to provide certain administrative and underwriting services. The consideration received varies based on certain factors including the contractual MGA rate and the total amount of premium written or collected under the contract. Billings for management fees occur on a monthly basis. Management fees consist of a single performance obligation that are recognized by the Company over time as services are provided. The volume of premium written or collected for a single contract varies throughout the contract period and, therefore, the Company has elected to record revenue in an amount that reflects the total fees that the Company has a right to invoice for during the period.

The Company provides consulting services for certain reinsurance contracts which includes services such as contract consultation and review. The compensation structure for consulting services is based on fixed periodic payments, generally monthly or quarterly. Consulting services consist of a single performance obligation which is recognized over the term of the consulting agreement.

Deferred financing costs

Deferred financing costs: Deferred financing costs are amortized as interest expense over the term of the underlying debt agreement by use of the effective interest method. Unamortized deferred financing costs are recorded as a reduction to long-term debt on the consolidated balance sheets.

Premiums and other receivables

Premiums and other receivables: Premiums receivable are uncollateralized customer obligations due under normal terms requiring payment by the policy due date. Amounts outstanding that are deemed uncollectible are written off. When payments are received on amounts previously written off, the total premiums written off is reduced in the period in which the payment is received. Advanced premiums are recognized when payment is received prior to the beginning coverage date and are included within unearned premiums on the consolidated balance sheets.

Deferred policy acquisition costs

Deferred policy acquisition costs: The Company incurs policy acquisition costs that vary with and are directly related to the production of new and renewal business. These costs consist of underwriting costs, net commissions (including ceding commissions) paid to agents, program managers and reinsurers, and premium taxes. Proceeds from reinsurance transactions that represent recovery of acquisition costs reduce applicable unamortized acquisition costs in such a manner that net acquisition costs are capitalized and charged to expense. Amortization of such policy acquisition costs is charged to general and administrative expense in proportion to premium earned over the estimated policy term.

To the extent that unearned premiums on existing policies are not adequate to cover the sum of expected losses, unamortized acquisition costs and policy maintenance costs, unamortized deferred policy acquisition costs are expensed to eliminate the premium deficiency. If the premium deficiency is greater than the unamortized policy acquisition costs, a liability is recorded. No premium deficiency exists as of December 31, 2022 or 2021.

Property and equipment, net

Property and equipment, net: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is based on the estimated useful lives of the various classes of property and equipment and is determined based on the straight-line method. The estimated useful lives of property and equipment range from three to thirty years. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. The depreciation periods by asset class are as follows:

Asset class	Depreciation period
Building and building improvements	30 years
Furniture and fixtures	7 years
Office equipment	5 years
Software and computer equipment	3 years

Long-lived assets, such as property and equipment, and purchased intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be impaired, the Company recognizes impairment to the extent that the carrying value exceeds the asset’s fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted

cash flow models, quoted market values, and third-party independent appraisals.

Reserve for unpaid loss and loss adjustment expenses

Reserve for unpaid loss and loss adjustment expenses: The liability for unpaid losses and LAE in the consolidated balance sheets represent the Company’s estimated losses incurred that remain unpaid as of the balance sheet date. The liability is recorded on an undiscounted basis.

Reserves for unpaid losses include estimates for both claims that have been reported and those that have been incurred but not reported. The estimated losses are regularly reviewed and adjusted as necessary based on historical experience and as the Company obtains new information.

The consolidated balance sheets include reserves of unpaid losses gross of the amounts related to unpaid losses recoverable from reinsurers. The consolidated statements of operations include the losses net of amounts ceded to reinsurers.

Reinsurance

Reinsurance: The Company cedes all, or a portion of, its insurance in order to limit its maximum losses and diversify its exposure. Ceding insurance does not relieve the Company of its primary liability to policyholders.

The reinsurance agreements are short-term, prospective contracts, typically 12-months in duration. The Company records an asset, prepaid reinsurance premiums, and a liability, reinsurance premiums payable, for the contract amount when premium is written under the reinsurance agreements. Prepaid reinsurance premiums are amortized in the same manner in which unearned premium is recognized.

The Company earns ceding commissions on certain reinsurance contracts, which reduces operating expenses. Ceding commissions are amortized over the contract period consistent with deferred policy acquisition costs.

The Company records amounts recoverable from reinsurers on paid losses and estimated amounts recoverable on unpaid losses. The estimate of amounts recoverable on unpaid losses is based on unpaid losses in conjunction with the reinsured policies.

The Company estimates uncollectible amounts receivable from reinsurers based on an assessment of factors including the credit worthiness of the reinsurers and the adequacy of collateral obtained, where applicable. The Company recorded no bad debt expense related to reinsurance during the years ended December 31, 2022, 2021 and 2020.

Income taxes

Income taxes: The Company recognizes deferred tax assets and liabilities for the future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which it is expected to recover or settle those temporary differences. Should a change in tax rates occur, the effect on deferred tax assets and liabilities will be recognized in operations in the period that includes the enactment date.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.

The Company records any income tax penalties and income tax-related interest as income tax expense in the period incurred. The Company did not incur any material tax penalties or income-tax-related interest during the years ended December 31, 2022, 2021 and 2020.

Concentration of risk

Concentrations of risk: The Company had total gross written premiums of $651,303, $634,164 and $484,249 for the years ended December 31, 2022, 2021 and 2020, respectively, including:

	Year Ended December 31,
	2022		2021		2020
California	$	162,639	$	179,426	$	203,421
Texas	93,165		85,154		28,909
Michigan	45,821		46,271		41,830
Tennessee	16,006		15,966		12,347
Florida	36,559		27,982		8,359
Georgia	30,996		25,619		12,869
Arizona	28,685		26,272		27,950
Alabama	23,198		20,991		17,549
Pennsylvania	17,167		20,375		10,498
Indiana	13,943		13,422		8,508
Other geographical areas	183,124		172,686		112,009
Total gross written premium	$	651,303	$	634,164	$	484,249

As of December 31, 2022, approximately 21% and 26% of the Company’s investment portfolio was comprised of securities issued in industrial and public utility bonds and mortgage-backed securities, respectively, compared to 22% and 29% as of December 31, 2021, respectively. All of these securities are investment grade. This portfolio is widely diversified among various issuers and industries and does not depend on the economic stability of one issuer and industry.

The Company, from time to time, maintains its cash position at banks in excess of federally insured limits. The Company has not experienced any losses on such accounts.

Goodwill

Goodwill: Goodwill represents the cost to acquire a business over the fair value of the net assets acquired. Goodwill is not amortized but is reviewed for impairment at least annually or more frequently if events occur or circumstances change that would indicate that a triggering event for a potential impairment has occurred. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The Company recorded a goodwill impairment loss of $76,053 for the year ended December 31, 2022 (see Note 9). No impairment loss was recorded for the years ended December 31, 2021 and 2020. The Company had $66,294 and $142,347 of goodwill on the consolidated balance sheets as of December 31, 2022 and 2021, respectively.

Intangible assets

Intangible assets: Acquired intangible assets include client relationships, customer lists, non-compete agreements and trade names acquired. Intangible assets with a finite life are amortized over the estimated useful life. In valuing these assets, assumptions are made regarding useful lives and projected growth rates and significant judgment is required. The Company periodically reviews identifiable intangibles for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the carrying amounts of the assets exceed their undiscounted cash flows, an impairment loss is recorded. For the years ended December 31, 2022, 2021 and 2020, no impairment loss was recorded.

Segment reporting

Segment reporting: Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker reviews financial information of the Company as a whole for purposes of assessing financial performance and making operating decisions. Accordingly, the Company considers itself to be operating as a single operating and reportable segment.

Fair value measurements

Fair Value Measurements

The Company’s financial instruments include assets and liabilities carried at fair value. The inputs to valuation techniques used to measure fair value are prioritized into a three level hierarchy. The fair value hierarchy is as follows:

Level 1: Fair values primarily based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2: Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities.

Level 3: Fair values primarily based on valuations derived when one or more of the significant inputs are unobservable. With little or no observable market, the determination of fair value uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability.

The Company classifies the financial asset or liability by level based upon the lowest level input that is significant to the determination of the fair value. The following tables present the estimated fair value of the Company’s significant financial instruments.

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Summary of Premiums and Other Receivables

Premiums and other receivables consist of the following:

	December 31,
	2022		2021
Premiums receivable	$	152,823	$	133,200
Trade receivables	8,395		9,511
Notes receivable	14		12
Total premiums and other receivables	161,232		142,723
Less: Allowance for doubtful accounts	(950)		(803)
Net premiums and other receivables	$	160,282	$	141,920

Summary of Property and Equipment

The depreciation periods by asset class are as follows:

Asset class	Depreciation period
Building and building improvements	30 years
Furniture and fixtures	7 years
Office equipment	5 years
Software and computer equipment	3 years

Property and equipment consists of the following:

	December 31,
	2022		2021
Land	$	1,780	$	1,780
Building and building improvements	5,755		5,755
Furniture and fixtures	1,137		1,137
Office equipment	3,499		2,898
Other property, plant and equipment	101		101
Deposits on fixed assets not placed in service	15		277
Total, at cost	12,287		11,948
Less: Accumulated depreciation	(5,136)		(4,316)
Property and equipment, net	$	7,151	$	7,632

Schedules of Concentration of Risk, by Geography

The Company had total gross written premiums of $651,303, $634,164 and $484,249 for the years ended December 31, 2022, 2021 and 2020, respectively, including:

	Year Ended December 31,
	2022		2021		2020
California	$	162,639	$	179,426	$	203,421
Texas	93,165		85,154		28,909
Michigan	45,821		46,271		41,830
Tennessee	16,006		15,966		12,347
Florida	36,559		27,982		8,359
Georgia	30,996		25,619		12,869
Arizona	28,685		26,272		27,950
Alabama	23,198		20,991		17,549
Pennsylvania	17,167		20,375		10,498
Indiana	13,943		13,422		8,508
Other geographical areas	183,124		172,686		112,009
Total gross written premium	$	651,303	$	634,164	$	484,249

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Acquisitions (Tables)

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of Assets Acquired and Liabilities Assumed

The following table summarizes the consideration paid and the amounts of estimated fair value of the net assets acquired and liabilities assumed at the acquisition date:

Fair value of total consideration transferred	$	5,500
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	205
Premiums and other receivables	1,025
Property and equipment, net	39
Right of use asset	135
Goodwill	1,707
Intangible assets, net	3,624
Other assets	16
Accounts payable and accrued expenses	(873)
Lease liability	(135)
Debt	(243)
Net assets acquired	$	5,500

Schedule of Acquired Finite-Lived Intangible Assets by Major Class

The Company also recorded intangible assets totaling $3,624, which are comprised of the following:

	Useful Life	Balance
Trade name	2 years	$	28
Non-compete agreements	5 years	256
Customer relationships	12 years	3,340
Total intangible assets		$	3,624

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Summary of Fair Value Options

The following tables present the estimated fair value of the Company’s significant financial instruments.

	December 31, 2022
	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. government and government securities	$	62,552	$	—	$	—	$	62,552
Foreign governments	—		395		—		395
States, territories and possessions	—		15,854		—		15,854
Political subdivisions of states territories and possessions	—		33,904		—		33,904
Special revenue and special assessment obligations	—		103,639		—		103,639
Industrial and public utilities	—		125,540		—		125,540
Commercial mortgage-backed securities	—		128,105		—		128,105
Residential mortgage-backed securities	—		25,112		—		25,112
Other loan-backed securities	—		51,613		—		51,613
Hybrid securities	—		5,529		—		5,529
Total fixed maturities	62,552		489,691		—		552,243
Equity securities	12,060		22,981		—		35,041
Total investments	$	74,612	$	512,672	$	—	$	587,284
Embedded derivatives on funds held under reinsurance agreements	$	(1,953)	$	(13,458)	$	—	$	(15,411)
Interest rate cap agreement	—		102		—		102
Debt	—		29,288		50,000		79,288

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. government and government securities	$	2,392	$	39,042	$	—	$	41,434
Foreign governments	—		2,490		—		2,490
States, territories and possessions	—		10,766		—		10,766
Political subdivisions of states, territories and possessions	—		40,002		—		40,002
Special revenue and special assessment obligations	—		95,991		—		95,991
Industrial and public utilities	—		103,257		—		103,257
Commercial mortgage-backed securities	—		118,218		—		118,218
Residential mortgage-backed securities	—		17,368		—		17,368
Other loan-backed securities	—		41,425		—		41,425
Hybrid securities	—		110		—		110
Total fixed maturities	2,392		468,669		—		471,061
Equity securities	—		969		—		969
Total investments	$	2,392	$	469,638	$	—	$	472,030
Embedded derivatives on funds held under reinsurance agreements	$	(4)	$	275	$	—	$	271
Debt	—		30,938		—		30,938

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Investments (Tables)

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Debt Securities, Available-for-sale

The cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company's investments are as follows:

	December 31, 2022
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed maturities:
U.S. government and government securities	$	65,405	$	11	$	(2,864)	$	62,552
Foreign governments	400		—		(5)		395
States, territories and possessions	17,310		2		(1,458)		15,854
Political subdivisions of states, territories and possessions	38,167		19		(4,282)		33,904
Special revenue and special assessment obligations	115,696		55		(12,112)		103,639
Industrial and public utilities	131,769		101		(6,330)		125,540
Commercial mortgage-backed securities	145,471		52		(17,418)		128,105
Residential mortgage-backed securities	26,716		11		(1,615)		25,112
Other loan-backed securities	53,231		13		(1,631)		51,613
Hybrid securities	6,233		2		(706)		5,529
Total fixed maturities available for sale	$	600,398	$	266	$	(48,421)	$	552,243

	December 31, 2021
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed maturities:
U.S. government and government securities	$	41,490	$	113	$	(169)	$	41,434
Foreign governments	2,500		—		(10)		2,490
States, territories and possessions	10,593		189		(16)		10,766
Political subdivisions of states, territories and possessions	39,170		975		(143)		40,002
Special revenue and special assessment obligations	93,664		2,920		(593)		95,991
Industrial and public utilities	100,774		2,835		(352)		103,257
Commercial mortgage-backed securities	119,378		591		(1,751)		118,218
Residential mortgage-backed securities	16,549		843		(24)		17,368
Other loan-backed securities	41,236		248		(59)		41,425
Hybrid securities	105		5		—		110
Total fixed maturities available for sale	$	465,459	$	8,719	$	(3,117)	$	471,061

Schedule of Continuous Unrealized Loss Position

The following table illustrates the Company’s gross unrealized losses and fair value of fixed maturities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	December 31, 2022
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities:
U.S. government and government securities	$	38,172	$	(1,217)	$	19,199	$	(1,647)	$	57,371	$	(2,864)
Foreign governments	—		—		395		(5)		395		(5)
States, territories and possessions	13,882		(1,321)		822		(137)		14,704		(1,458)
Political subdivisions of states, territories and possessions	21,586		(2,506)		9,375		(1,776)		30,961		(4,282)
Special revenue and special assessment obligations	71,146		(6,522)		22,350		(5,590)		93,496		(12,112)
Industrial and public utilities	98,018		(4,225)		18,405		(2,105)		116,423		(6,330)
Commercial mortgage-backed securities	71,574		(5,737)		53,147		(11,681)		124,721		(17,418)
Residential mortgage-backed securities	18,051		(1,177)		4,119		(438)		22,170		(1,615)
Other loan-backed securities	38,572		(1,305)		11,303		(326)		49,875		(1,631)
Hybrid securities	5,289		(706)		—		—		5,289		(706)
Total bonds	$	376,290	$	(24,716)	$	139,115	$	(23,705)	$	515,405	$	(48,421)

	December 31, 2021
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities:
U.S. government and government securities	$	26,935	$	(168)	$	23	$	(1)	$	26,958	$	(169)
Foreign governments	2,490		(10)		—		—		2,490		(10)
States, territories and possessions	935		(16)		—		—		935		(16)
Political subdivisions of states, territories and possessions	11,115		(143)		—		—		11,115		(143)
Special revenue and special assessment obligations	29,917		(593)		—		—		29,917		(593)
Industrial and public utilities	24,042		(286)		1,058		(66)		25,100		(352)
Commercial mortgage-backed securities	80,126		(1,565)		6,212		(186)		86,338		(1,751)
Residential mortgage-backed securities	4,539		(24)		—		—		4,539		(24)
Other loan-backed securities	20,153		(36)		2,477		(23)		22,630		(59)
Hybrid securities	—		—		—		—		—		—
Total bonds	$	200,252	$	(2,841)	$	9,770	$	(276)	$	210,022	$	(3,117)

Summary of Investments by Contractual Maturity

The amortized cost and estimated fair value of fixed maturities as of December 31, 2022, by contractual maturity, are as follows:

	Cost or Amortized Cost		Fair Value
Available for sale:
Due in one year or less	$	35,468	$	35,125
Due after one year but before five years	176,083		167,986
Due after five years but before ten years	93,107		83,769
Due after ten years	70,322		60,533
Commercial mortgage-backed securities	145,471		128,105
Residential mortgage-backed securities	26,716		25,112
Other loan-backed securities	53,231		51,613
Total	$	600,398	$	552,243

Summary of Realized Gain (Loss) on Investments

Realized gains and losses on investments included in the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 are as follows:

	Year Ended December 31,
	2022		2021		2020
Fixed maturities:
Gains	$	134	$	153	$	259
Losses	(1,235)		(94)		(9)
Total fixed maturities	(1,101)		59		250
Funds held investments:
Gains	19		112		—
Losses	(29)		(10)		—
Total funds held investments	(10)		102		—
Equity securities and equity method investments:
Gains	1,415		—		3,115
Losses	(19)		(112)		—
Total equity securities and equity method investments	1,396		(112)		3,115
Total net investment realized gains	$	285	$	49	$	3,365

Summary of Net Investment Income

Net investment income consists of the following for the years ended December 31, 2022, 2021, and 2020:

	Year Ended December 31,
	2022		2021		2020
Fixed maturities	$	9,316	$	6,331	$	6,271
Income on funds held investments	3,668		2,338		3,345
Equity securities	1,708		48		2,028
Unrealized losses on equity securities	(4,797)		—		—
Interest earned on cash and short-term investments	192		4		25
Net investment income	$	10,087	$	8,721	$	11,669

Unrealized Gain (Loss) on Investments

Net realized and unrealized gains (losses) on equity securities recognized during the years ended December 31, 2022, 2021, and 2020 are as follows:

	Year Ended December 31,
	2022		2021		2020
Equity securities:
Net realized gains (losses) on sales of equity securities	$	1,396	$	(112)	$	3,115
Change in net unrealized gains (losses) of equity securities still held as of as of December 31, 2022, 2021 and 2020	(4,797)		—		—
Net realized and unrealized gains (losses) on equity securities	$	(3,401)	$	(112)	$	3,115

Schedule of Funds Held Under Reinsurance Agreements

Total funds held under reinsurance agreements includes the following:

	December 31,
	2022		2021
Funds held under reinsurance agreements, at cost	$	256,702	$	199,139
Embedded derivatives, at fair value	(15,411)		271
Total funds held under reinsurance agreements	$	241,291	$	199,410

Embedded Derivatives, Gain (Loss)

Gains (losses) on embedded derivatives consists of the following for the years ended December 31, 2022, 2021, and 2020:

	Year Ended December 31,
	2022		2021		2020
Change in fair value of embedded derivatives	$	15,682	$	4,666	$	(2,810)
Effect of net investment income on funds held investments	(3,668)		(2,338)		(3,345)
Effect of realized losses (gains) on funds held investments	10		(102)		—
Total gains (losses) on embedded derivatives	$	12,024	$	2,226	$	(6,155)

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Summary of Property and Equipment

The depreciation periods by asset class are as follows:

Asset class	Depreciation period
Building and building improvements	30 years
Furniture and fixtures	7 years
Office equipment	5 years
Software and computer equipment	3 years

Property and equipment consists of the following:

	December 31,
	2022		2021
Land	$	1,780	$	1,780
Building and building improvements	5,755		5,755
Furniture and fixtures	1,137		1,137
Office equipment	3,499		2,898
Other property, plant and equipment	101		101
Deposits on fixed assets not placed in service	15		277
Total, at cost	12,287		11,948
Less: Accumulated depreciation	(5,136)		(4,316)
Property and equipment, net	$	7,151	$	7,632

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

All changes in the carrying value of goodwill are as follows:

	2022		2021
Balance at beginning of period	$	142,347	$	140,640
Acquisitions	—		1,707
Impairment	(76,053)		—
Balance at end of period	$	66,294	$	142,347

Schedule of Finite-Lived Intangible Assets

Intangible assets subject to amortization consist of the following:

		December 31,
	Useful Life	2022		2021
Non-compete agreement	2-5 years	$	300	$	300
Trade name	2-15 years	3,710		3,710
Customer lists and relationships	10-14 years	77,624		77,624
Totals		81,634		81,634
Less: Accumulated amortization		(14,517)		(8,520)
Intangible assets, net		$	67,117	$	73,114

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The estimated future amortization of intangible assets is as follows:

	Trade name		Customer lists and relationships		Non-Compete		Total
2023	$	248	$	5,684	$	51	$	5,983
2024	241		5,683		51		5,975
2025	241		5,683		51		5,975
2026	241		5,683		26		5,950
2027	241		5,668		—		5,909
Thereafter	1,824		35,501		—		37,325
Total	$	3,036	$	63,902	$	179	$	67,117

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Deferred Policy Acquisition Costs, Net (Tables)

12 Months Ended

Dec. 31, 2022

Insurance [Abstract]

Summary of Deferred Policy Acquisition Costs

The table below depicts the activity with regard to deferred policy acquisition costs, net:

	2022		2021		2020
Balance at beginning of period	$	13,344	$	1,332	$	2,115
Policy acquisition costs deferred	28,362		22,853		7,593
Amortization charged to expense	(22,848)		(10,841)		(8,376)
Balance at end of period	$	18,858	$	13,344	$	1,332

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Accounts Payable and Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2022

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

	December 31,
	2022		2021
Accrued commissions and third-party administration fees	$	9,168	$	7,337
Trade payables	4,977		4,765
Accrued taxes, licenses and fees	4,316		6,710
Accrued wages and employee benefits	5,489		4,873
Amounts retained for the accounts of others	2,710		1,619
Other liabilities	5,949		4,144
Total	$	32,609	$	29,448

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Debt (Tables)

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Schedule of Debt

Debt consisted of the following:

	December 31, 2022						December 31, 2021
	Face Value		Unamortized Discount and Issuance Costs		Carrying Value		Face Value		Unamortized Discount and Issuance Costs		Carrying Value
Secured credit facility	$	29,288	$	(408)	$	28,880	$	30,938	$	(576)	$	30,362
Surplus notes	50,000		(1,806)		48,194		—		—		—
Total debt	$	79,288	$	(2,214)	$	77,074	$	30,938	$	(576)	$	30,362

Schedule of Maturities of Debt

Scheduled maturities of debt, excluding deferred financing costs, are as follows:

2023	$	2,888
2024	3,300
2025	23,100
2026	—
2027	—
Thereafter	50,000
Total debt	$	79,288

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Revenue from Contracts with Customers (Tables)

12 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Summary of Disaggregation of Revenue

The following table presents the revenues recognized from contracts with customers included in the consolidated statements of operations.

	Year Ended December 31,
	2022		2021		2020
Brokerage	$	5,705	$	7,036	$	8,994
Managing general agent fees	326		603		976
Third-party administrator fees	1,358		1,608		1,630
Consulting fees	857		993		504
Total revenue from contracts with customers	$	8,246	$	10,240	$	12,104

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense is comprised of the following:

	Year Ended December 31,
	2022		2021		2020
Current tax expense	$	3,308	$	7,823	$	7,291
Deferred tax expense	(2,234)		(2,374)		(1,056)
Total income tax expense	$	1,074	$	5,449	$	6,235

Schedule of Effective Income Tax Rate Reconciliation

The income tax expense differs from the expected income tax expense computed by applying the applicable federal statutory tax rates to pretax income as a result of the following:

	2022		Effective Rate		2021		Effective Rate		2020		Effective Rate
Income tax expense computed at statutory rate	$	(13,625)	21.0	%	$	5,204	21.0	%	$	19,415	21.0	%
State taxes, net of federal benefit	(289)		0.4	%	47		0.2	%	577		0.6	%
Tax-exempt municipal income, net of proration	(240)		0.3	%	(263)		(1.1)	%	(272)		(0.3)	%
Goodwill impairment	14,365		(22.1)	%	—		—	%	—		—	%
Potential merger and other nondeductible expenses	647		(1.0)	%	10		—	%	957		1.0	%
Fair market value adjustment on Compstar investment	—		—	%	—		—	%	(14,668)		(15.9)	%
Other	216		(0.3)	%	451		1.9	%	226		0.3	%
Total income tax expense	$	1,074	(1.7)	%	$	5,449	22.0	%	$	6,235	6.7	%

Schedule of Deferred Tax Assets and Liabilities

The significant components of deferred tax assets and liabilities are as follows:

	December 31,
	2022		2021
Deferred tax assets:
Unpaid losses and LAE	$	6,256	$	4,574
Unearned premiums	4,399		3,802
Unrealized losses on investments	7,692		—
NOL carryforward	17		41
Lease liability	731		1,188
Accrued liabilities	1,286		926
Stock compensation	841		484
Other	299		51
Total deferred tax assets	21,521		11,066
Deferred tax liabilities:
Deferred acquisition costs	(4,011)		(2,802)
Loss reserve discounting TCJA transitional adjustment	(355)		(473)
Unrealized gains and losses on investments	—		(1,131)
Property and equipment	(204)		(191)
Right-of-use asset	(660)		(1,082)
Intangible assets	(10,230)		(12,715)
Prepaid expenses	(69)		(43)
Section 481(a) adjustment	—		(56)
Other	(34)		(93)
Total deferred tax liabilities	(15,563)		(18,586)
Net deferred tax assets (liabilities)	$	5,958	$	(7,520)

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Liability for Unpaid Losses and Loss Adjustment Expense (Tables)

12 Months Ended

Dec. 31, 2022

Insurance [Abstract]

Schedule of Liability for Unpaid Losses and Loss Adjustment Expense

The following table represents a reconciliation of changes in the liability for unpaid losses and LAE.

	Year Ended December 31,
	2022		2021		2020
Unpaid losses and LAE reserves at beginning of period	$	544,320	$	457,817	$	406,716
Less losses ceded through reinsurance	(369,008)		(335,655)		(304,005)
Net unpaid losses and LAE at beginning of period	175,312		122,162		102,711
Acquisition of subsidiary, net of losses ceded through reinsurance	—		—		7,050
Incurred losses and LAE related to:
Current period	198,996		136,191		65,587
Prior period	4,881		(5,419)		(14,813)
Total incurred losses and LAE	203,877		130,772		50,774
Paid losses and LAE, net of reinsurance, related to:
Current period	61,484		42,484		15,411
Prior period	63,250		35,138		22,962
Total paid losses and LAE	124,734		77,622		38,373
Net unpaid losses and LAE at end of period	254,455		175,312		122,162
Plus losses ceded through reinsurance	378,455		369,008		335,655
Unpaid losses and LAE reserves at end of period	$	632,910	$	544,320	$	457,817

Summary of Loss Development

The following tables represent cumulative incurred loss and allocated loss adjustment expenses, net of reinsurance by accident year and cumulative paid loss and allocated loss adjustment expenses, net of reinsurance by accident year, for the years ended December 31, 2013 to 2022, as well as total IBNR and the cumulative number of reported claims for the year ended December 31, 2022, by reportable line of business and accident year (dollars in thousands). The Company’s primary lines of business are workers’ compensation and other liability.

Workers' Compensation
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	22,746		22,879		22,650		19,772		19,528		19,426		19,814		19,964		19,968		20,139			$	1,134	3,539
2014			22,357		20,686		19,781		19,394		17,967		18,025		18,049		17,584		17,556			1,539		3,546
2015					22,643		23,830		23,444		21,788		22,218		19,560		19,974		19,568			1,831		4,796
2016							30,710		29,261		27,674		25,430		23,063		23,076		22,381			1,965		9,835
2017									35,683		29,107		25,713		24,439		24,581		24,515			1,877		14,550
2018											40,122		34,478		34,321		31,909		31,352			2,800		12,451
2019													48,565		45,382		44,997		45,239			4,752		11,451
2020															55,960		55,531		58,033			7,914		12,148
2021																	100,254		102,778			20,945		11,698
2022																			136,406			52,703		10,052
																			$	477,967
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	6,734		12,407		15,703		17,135		18,448		18,664		18,976		18,906		19,335		19,444
2014			5,958		11,672		14,393		16,011		16,177		16,535		16,607		16,707		16,700
2015					6,089		13,313		15,814		17,002		17,638		17,984		18,143		18,238
2016							7,260		15,329		17,904		18,728		19,856		20,551		20,918
2017									7,439		15,017		17,930		19,353		20,456		21,150
2018											8,978		19,811		24,023		26,201		27,538
2019													11,201		24,472		30,650		34,434
2020															12,141		30,646		42,349
2021																	26,623		58,916
2022																			32,880
																			292,567
	All outstanding liabilities before 2013, net of reinsurance																		5,119
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	190,519
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	26.2	%	32.8	%	15.8	%	7.5	%	6.3	%	2.5	%	2.6	%	0.3	%	1.6	%	1.0		%
* Presented as unaudited required supplementary information

Other Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	1,914		1,876		1,617		1,580		1,804		2,068		1,651		1,667		1,703		1,703			$	240	333
2014			2,183		1,964		1,921		2,154		3,107		3,013		2,832		2,593		2,593			374		424
2015					2,946		2,652		2,862		3,549		3,334		2,860		2,523		2,523			390		430
2016							2,689		2,794		3,135		3,180		2,735		2,423		2,423			911		303
2017									4,964		3,089		4,555		3,966		3,267		3,267			1,041		288
2018											4,256		4,278		3,010		3,679		4,052			1,679		228
2019													5,457		2,849		3,608		2,593			1,663		129
2020															2,932		3,702		4,239			2,753		215
2021																	4,362		6,117			4,707		272
2022																			6,362			5,911		345
																			$	35,872
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	65		195		281		573		798		1,048		1,153		1,215		1,282		1,391
2014			53		233		405		639		1,067		1,687		1,884		1,989		2,095
2015					123		374		600		945		1,187		1,258		1,523		1,855
2016							54		137		355		558		783		1,081		1,199
2017									52		439		676		999		1,387		1,841
2018											52		345		504		846		1,738
2019													111		170		239		387
2020															55		196		521
2021																	719		977
2022																			124
																			12,128
	All outstanding liabilities before 2013, net of reinsurance																		384
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	24,128
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	3.9	%	6.5	%	4.9	%	10.5	%	16.2	%	13.2	%	7.0	%	11.9	%	4.4	%	3.0		%
* Presented as unaudited required supplementary information

All Other Lines
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	1		—		13		9		10		12		—		—		—		—			$	—	572
2014			40		127		24		23		21		16		16		6		5			—		1,051
2015					168		132		108		113		98		98		19		39			151		1,172
2016							1,882		1,617		1,745		1,555		1,542		1,051		1,054			4		1,289
2017									2,852		2,917		2,417		2,442		1,935		1,984			22		2,125
2018											2,885		2,874		2,549		2,520		2,519			49		2,025
2019													3,756		3,367		3,219		3,379			309		1,428
2020															4,842		5,129		4,691			324		1,135
2021																	23,365		23,921			1,841		2,859
2022																			38,396			7,932		2,200
																			$	75,988
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	—		—		—		—		—		—		—		—		—		—
2014			—		100		16		16		16		16		16		6		6
2015					63		98		98		99		98		98		19		(111)
2016							796		1,325		1,418		1,494		1,499		1,016		1,023
2017									1,412		2,099		2,203		2,321		1,884		1,893
2018											1,309		2,123		2,325		2,432		2,459
2019													1,903		2,532		2,789		2,945
2020															2,291		3,595		3,994
2021																	11,093		18,220
2022																			16,704
																			47,133
	All outstanding liabilities before 2013, net of reinsurance																		—
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	28,855
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	46.8	%	33.2	%	13.9	%	3.0	%	2.0	%	1.0	%	0.0	%	0.0	%	0.0	%	0.0		%
* Presented as unaudited required supplementary information

Total Lines
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						As of December 31, 2022
Years Ended December 31,																						Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	24,661		24,755		24,280		21,361		21,342		21,506		21,465		21,631		21,671		21,842			$	1,374	4,444
2014			24,580		22,777		21,726		21,571		21,095		21,054		20,897		20,183		20,154			1,913		5,021
2015					25,757		26,614		26,414		25,450		25,650		22,518		22,516		22,130			2,372		6,398
2016							35,281		33,672		32,554		30,165		27,340		26,550		25,858			2,880		11,427
2017									43,499		35,113		32,685		30,847		29,783		29,766			2,940		16,963
2018											47,263		41,630		39,880		38,108		37,923			4,528		14,704
2019													57,778		51,598		51,824		51,211			6,724		13,008
2020															63,734		64,362		66,963			10,991		13,498
2021																	127,981		132,816			27,493		14,829
2022																			181,164			66,546		12,597
																			$	589,827
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
Accident Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013	6,799		12,602		15,984		17,708		19,246		19,712		20,129		20,121		20,617		20,835
2014			6,011		12,005		14,814		16,666		17,260		18,238		18,507		18,702		18,801
2015					6,275		13,785		16,512		18,046		18,923		19,340		19,685		19,982
2016							8,110		16,791		19,677		20,780		22,138		22,648		23,140
2017									8,903		17,555		20,809		22,673		23,727		24,884
2018											10,339		22,279		26,852		29,479		31,735
2019													13,215		27,174		33,678		37,766
2020															14,487		34,437		46,864
2021																	38,435		78,113
2022																			49,708
																			351,828
	All outstanding liabilities before 2013, net of reinsurance																		5,503
	Liabilities for claims and claim adjustment expenses, net of reinsurance																		$	243,502
	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance*
Years	1		2		3		4		5		6		7		8		9		10
	27.5	%	29.9	%	13.3	%	7.3	%	6.3	%	3.2	%	3.0	%	1.2	%	2.2	%	1.5		%
* Presented as unaudited required supplementary information

Summary of Reconciliation of Claims Development to Liability

The reconciliation of the net incurred and paid claims development tables to the liability for unpaid loss and loss adjustment expense in the consolidated balance sheets is as follows:

	December 31,
	2022		2021
Net outstanding liabilities
Workers' compensation	$	190,519	$	133,811
Other liability	24,128		19,159
All other lines of business	28,855		14,481
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance	243,502		167,451
Reinsurance recoverable on unpaid claims
Workers' compensation	234,657		260,891
Other liability	52,816		50,765
All other lines of business	90,982		57,352
Total reinsurance recoverable on unpaid claims	378,455		369,008
Unallocated loss adjustment expenses	10,953		7,861
Total liability for unpaid loss and loss adjustment expenses	$	632,910	$	544,320

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Reinsurance (Tables)

12 Months Ended

Dec. 31, 2022

Reinsurance Disclosures [Abstract]

Summary of Reinsurance Recoverable

The Company holds collateral on a funds held basis or requires collateral in a trust or as a letter of credit to secure recoverable balances from reinsurers not authorized in the insurance carriers state of domicile as follows:

	December 31,
	2022		2021
Letters of credit	$	18,438	$	24,979
Trust	136,370		126,404
Funds held	211,436		156,401
Total	$	366,244	$	307,784

The Company has unsecured aggregate recoverable for losses, paid and unpaid, loss adjustment expenses and unearned premiums with the following individual reinsurers, authorized or unauthorized, exceeding 5 percent of stockholders’ equity:

	December 31,
	2022	2021
Arch Reinsurance Company (U.S.)	*	$	22,050
Markel Global	58,400	66,933
Munich Reinsurance America, Inc	17,255	*
Swiss Reinsurance America Corp	17,199	*

(*) Represents less than 5 percent of stockholders’ equity

Summary of Effects of Reinsurance

A summary of the impact of ceded reinsurance is as follows:

	Year Ended December 31,
	2022								2021
	Gross		Assumed		Ceded		Net		Gross		Assumed		Ceded		Net
Losses and LAE liabilities	$	619,453	$	13,457	$	(378,455)	$	254,455	$	531,598	$	12,722	$	(369,008)	$	175,312
Unearned premiums	226,412		2,700		(124,269)		104,843		216,878		3,062		(129,411)		90,529
Written premiums	642,210		9,093		(352,365)		298,938		624,769		9,395		(394,888)		239,276
Earned premiums	632,677		9,552		(357,605)		284,624		563,337		8,916		(373,573)		198,680
Loss and loss adjustment expenses	441,274		11,857		(249,254)		203,877		343,134		14,287		(226,649)		130,772

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Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Schedule of Supplemental Balance Sheet Information

Supplemental balance sheet information, the weighted average remaining lease term and weighted average discount rate related to leases were as follows:

	December 31,			December 31,
(dollars in thousands)	2022			2021
Right of use asset	$	2,764		$	4,530
Lease liability	$	3,063		$	4,976
Weighted average remaining lease term	1.79 years			2.42 years
Weighted average discount rate	6.07		%	6.33		%

Schedule of Future Maturities of Lease Liabilities

Future maturities of lease liabilities as of December 31, 2022 are as follows:

	Operating Leases
2023	$	1,940
2024	1,064
2025	164
2026	44
2027	2
Total lease payments	3,214
Less: imputed interest	(151)
Total lease liabilities	$	3,063

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table presents the calculation of basic and diluted EPS of Common Stock:

	Year Ended December 31,
(in thousands, except share and per share amounts)	2022		2021		2020
Net income - basic and diluted	$	(65,955)	$	19,330	$	88,549
Weighted average number of shares outstanding - basic	51,203,370		51,162,293		43,744,003
Effect of dilutive securities:
Restricted stock units	—		11,157		741
Dilutive shares	—		11,157		741
Weighted average number of shares outstanding - diluted	51,203,370		51,173,450		43,744,744
Earnings per share:
Basic	$	(1.29)	$	0.38	$	2.02
Diluted	$	(1.29)	$	0.38	$	2.02

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Accumulated Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income

The following table presents the changes in accumulated other comprehensive income (loss):

	Year Ended December 31,
	2022		2021		2020
Balance at beginning of period	$	4,384	$	13,426	$	6,500
Other comprehensive income (loss), net of tax:
Unrealized investment gains (losses):
Unrealized investment gains (losses) arising during the period	(54,720)		(11,386)		9,028
Change in fair value of interest rate cap	(45)		—		—
Income tax expense (benefit)	(11,488)		(2,391)		1,903
Unrealized investment gains (losses), net of tax	(43,277)		(8,995)		7,125
Less: reclassification adjustments to:
Net realized investment gains (losses) included in net realized gains	(1,101)		59		252
Income tax expense (benefit)	(231)		12		53
Total reclassifications included in net income, net of tax	(870)		47		199
Other comprehensive income (loss)	(42,407)		(9,042)		6,926
Balance at end of period	$	(38,023)	$	4,384	$	13,426

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Stock Compensation (Tables)

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

	2022	2021	2020
Expected volatility	29.8%	29.8%	29.8%
Expected term	6 years	6 years	6 years
Risk-free interest rate	1.92%	1.32%	0.47%

Summary of Stock Option Activity

A summary of the status of the Company's stock option activity as of December 31, 2022 and changes during the year then ended are as follows:

	Stock Options	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contract Term
Balance outstanding, December 31, 2021	120,187	$	16.06
Granted	64,694	$	7.04
Forfeited or cancelled	(20,158)	$	14.76
Balance outstanding, December 31, 2022	164,723	$	12.68	$	—	8.34 years
Options exercisable, December 31, 2022	53,956	$	15.68	$	—	7.73 years

Summary of Options, Vested and Expected to Vest, Outstanding

Schedule of Share-based Payment Award, Restricted Stock Units, Valuation Assumptions

Grant date fair values were determined using a Monte Carlo valuation model based on the following assumptions:

	Fiscal 2022	Fiscal 2021
Total grant date fair value	$391	$845
Total grant date fair value per share	$6.04	$13.92
Expected volatility	40.0%	35.0%
Weighted average expected life	2.81 years	2.77 years
Risk-free interest rate	1.79%	0.27%

Summary of Share-based Payment Award, Total Shareholder Return

The percent of the target MSU that will be earned based on the Company’s TSR is as follows:

Cumulative TSR %
Fiscal 2022	Fiscal 2021	Percent of Units Vested
Below 29.2%	Below 25.1%	—%
29.2%	25.1%	50%
52.1%	47.2%	100%
74.9% and above	69.3% and above	200%

Summary of Nonvested Restricted Stock Unit Activity

A summary of the status of the Company’s non-vested restricted stock unit activity as of December 31, 2022 and changes during the year then ended is as follows:

	RSUs			MSUs			PSUs			Total
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Non-vested outstanding, December 31, 2021	117,109	$	15.53	50,861	$	13.92	101,748	$	17.50	269,718	$	15.97
Granted	97,808	$	6.67	64,709	$	6.04	64,693	$	7.04	227,210	$	6.60
Vested	(50,236)	$	14.89	—	$	—	—	$	—	(50,236)	$	14.89
Forfeited or cancelled	(17,129)	$	13.43	(9,854)	$	11.67	(16,895)	$	15.76	(43,878)	$	13.93
Non-vested outstanding, December 31, 2022	147,552	10.12		105,716	9.31		149,546	13.17		402,814	11.04

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Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2022

Regulated Operations [Abstract]

Summary of Statutory Basis Information

Summarized statutory basis information, which differs from GAAP, is shown below for Benchmark, ALIC, 7710 and BSIC.

	2022
(in thousands, except percentages)	Benchmark			ALIC			7710			BSIC
Statutory capital and surplus	$	222,340		$	6,270		$	6,210		$	48,655
RBC authorized control level	31,350			436			225			315
Statutory net income (loss)	(2,270)			108			(21)			695
RBC percentage	709		%	1,438		%	2,760		%	15,446		%

	2021
(in thousands, except percentages)	Benchmark			ALIC			7710			BSIC
Statutory capital and surplus	$	170,686		$	6,321		$	6,395		$	19,977
RBC authorized control level	24,279			567			382			129
Statutory net income	(782)			128			76			(23)
RBC percentage	703		%	1,115		%	1,674		%	15,486		%

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Schedule II. Condensed Financial Information of Registrant (Tables)

12 Months Ended

Dec. 31, 2022

Condensed Financial Information Disclosure [Abstract]

Condensed Balance Sheet

Trean Insurance Group, Inc.

Condensed Balance Sheets

(in thousands, except share data)

	December 31,
	2022		2021
Assets
Investment in subsidiaries	$	283,600	$	267,643
Total investments	283,600		267,643
Cash and cash equivalents	3,066		4,242
Income taxes receivable	5,841		12,360
Intercompany receivables	22,645		135,369
Deferred tax asset	1,051		671
Other assets	1,859		1,930
Total assets	$	318,062	$	422,215
Liabilities
Accounts payable and accrued expenses	$	3,043	$	306
Total liabilities	3,043		306
Stockholders' equity
Preferred stock, $0.01 par value per share (100,000,000 authorized, zero issued and outstanding)	—		—
Common stock, $0.01 par value per share (600,000,000 authorized; 51,222,485 and 51,176,887 issued and outstanding)	512		512
Additional paid-in capital	290,095		288,623
Retained earnings	62,435		128,390
Accumulated other comprehensive income	(38,023)		4,384
Total stockholders' equity	315,019		421,909
Total liabilities and stockholders' equity	$	318,062	$	422,215

Condensed Statement of Operations

Trean Insurance Group, Inc.

Condensed Statements of Operations

(in thousands)

	Year Ended December 31,
	2022		2021
Revenues
Net investment income	$	—	$	9
Other revenue	—		—
Total revenue	—		9
Expenses
General and administrative expenses	5,591		4,103
Other expenses	3,081		845
Noncash stock compensation	1,496		1,522
Total expenses	10,168		6,470
Loss before taxes	(10,168)		(6,461)
Income tax benefit	(1,650)		(1,712)
Loss before equity earnings of subsidiaries	(8,518)		(4,749)
Equity earnings (loss) of subsidiaries	(57,437)		24,079
Net income (loss)	$	(65,955)	$	19,330

Condensed Statement of Cash Flows

Trean Insurance Group, Inc.

Condensed Statements of Cash Flows

(in thousands)

	Year Ended December 31,
	2022		2021
Operating activities
Net income (loss)	$	(65,955)	$	19,330
Adjustments to reconcile net income to net cash from operating activities:
Stock compensation	1,496		1,522
Equity (earnings) losses in subsidiaries	57,437		(24,079)
Dividends received from subsidiaries	1,150		—
Deferred income taxes	(379)		(414)
Changes in operating assets and liabilities:
Premiums and other receivables	—		—
Other assets	70		(1,930)
Accounts payable and accrued expenses	2,737		(357)
Income taxes payable and receivable	6,520		(7,781)
Intercompany receivables	(3,079)		17,277
Net cash provided by (used in) operating activities	(3)		3,568
Investing activities
Distribution from subsidiaries	8,850		—
Capital contributions to subsidiaries	(10,000)		—
Net cash used for investing activities	(1,150)		—
Financing activities
Shares redeemed for payroll taxes	(23)		(94)
Proceeds from short swing rule	—		85
Net cash provided by (used in) financing activities	(23)		(9)
Net increase in cash, cash equivalents and restricted cash	(1,176)		3,559
Cash, cash equivalents and restricted cash ‑ beginning of period	4,242		683
Cash, cash equivalents and restricted cash ‑ end of period	$	3,066	$	4,242

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Business and Basis of Presentation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Jul. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Cash portion, cash per share of common stock converted (in dollars per share)	$ 6.15
Merger related expenses	$ 3,081

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Significant Accounting Policies - Narrative (Details)	12 Months Ended
	Dec. 31, 2022 USD ($) segment	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Accounting Policies [Abstract]
Restricted cash	$ 1,083,000	$ 407,000
Other than temporary impairment losses, investments	0	0	$ 0
Bad debt writeoff	1,427,000		26,000
Receivables recovered		177,000
Bad debt expense related to reinsurance	0	0	0
Goodwill	66,294,000	142,347,000	140,640,000
Goodwill impairment	76,053,000	0	0
Impairment of intangible assets	$ 0	$ 0	$ 0
Number of operating segments | segment	1
Number of reportable segments | segment	1

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Significant Accounting Policies - Summary of Premiums and Other Receivables (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Financing Receivable, Allowance for Credit Loss [Line Items]
Total premiums and other receivables	$ 161,232	$ 142,723
Less: Allowance for doubtful accounts	(950)	(803)
Net premiums and other receivables	160,282	141,920
Premiums receivable
Financing Receivable, Allowance for Credit Loss [Line Items]
Total premiums and other receivables	152,823	133,200
Trade receivables
Financing Receivable, Allowance for Credit Loss [Line Items]
Total premiums and other receivables	8,395	9,511
Notes receivable
Financing Receivable, Allowance for Credit Loss [Line Items]
Total premiums and other receivables	$ 14	$ 12

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Significant Accounting Policies - Summary of Property, Plant and Equipment (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Impairments of property and equipment	$ 0	$ 0	$ 0
Minimum
Property, Plant and Equipment [Line Items]
Useful life	3 years
Maximum
Property, Plant and Equipment [Line Items]
Useful life	30 years
Building and building improvements
Property, Plant and Equipment [Line Items]
Useful life	30 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Useful life	7 years
Office equipment
Property, Plant and Equipment [Line Items]
Useful life	5 years
Software and computer equipment
Property, Plant and Equipment [Line Items]
Useful life	3 years

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Significant Accounting Policies - Schedules of Concentration of Risk, by Geography (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Concentration Risk [Line Items]
Total gross written premium	$ 651,303	$ 634,164	$ 484,249
Geographic Concentration Risk | Revenue Benchmark | California
Concentration Risk [Line Items]
Total gross written premium	162,639	179,426	203,421
Geographic Concentration Risk | Revenue Benchmark | Texas
Concentration Risk [Line Items]
Total gross written premium	93,165	85,154	28,909
Geographic Concentration Risk | Revenue Benchmark | Michigan
Concentration Risk [Line Items]
Total gross written premium	45,821	46,271	41,830
Geographic Concentration Risk | Revenue Benchmark | Tennessee
Concentration Risk [Line Items]
Total gross written premium	16,006	15,966	12,347
Geographic Concentration Risk | Revenue Benchmark | Florida
Concentration Risk [Line Items]
Total gross written premium	36,559	27,982	8,359
Geographic Concentration Risk | Revenue Benchmark | Georgia
Concentration Risk [Line Items]
Total gross written premium	30,996	25,619	12,869
Geographic Concentration Risk | Revenue Benchmark | Arizona
Concentration Risk [Line Items]
Total gross written premium	28,685	26,272	27,950
Geographic Concentration Risk | Revenue Benchmark | Alabama
Concentration Risk [Line Items]
Total gross written premium	23,198	20,991	17,549
Geographic Concentration Risk | Revenue Benchmark | Pennsylvania
Concentration Risk [Line Items]
Total gross written premium	17,167	20,375	10,498
Geographic Concentration Risk | Revenue Benchmark | Indiana
Concentration Risk [Line Items]
Total gross written premium	13,943	13,422	8,508
Geographic Concentration Risk | Revenue Benchmark | Other geographical areas
Concentration Risk [Line Items]
Total gross written premium	$ 183,124	$ 172,686	$ 112,009
Product Concentration Risk | Revenue Benchmark | Public Utility Bonds
Concentration Risk [Line Items]
Concentration risk, percentage	21.00%	22.00%
Product Concentration Risk | Revenue Benchmark | Mortgage Backed Securities
Concentration Risk [Line Items]
Concentration risk, percentage	26.00%	29.00%

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Acquisitions - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands					12 Months Ended
	Jul. 06, 2021	Oct. 01, 2020	Jul. 15, 2020	Apr. 01, 2020	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Jul. 14, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Goodwill					$ 66,294	$ 142,347	$ 140,640
Earn-out payment					750	0	0
Intangible assets, net					67,117	73,114
Gain on revaluation of Compstar investment					0	0	69,846
Compstar Holding Company LLC
Business Acquisition [Line Items]
Ownership percentage								45.00%
Equity method investments									$ 11,831
Western Integrated Care, LLC
Business Acquisition [Line Items]
Percentage of voting interests acquired	100.00%
Consideration transferred	$ 5,500
Contingent consideration liability	1,500
Goodwill	1,707
Intangible assets, net	3,624
Earn-out payment					$ 750	$ 750	$ 1,500
Intangible assets, net	$ 3,624
7710 Insurance Company
Business Acquisition [Line Items]
Percentage of voting interests acquired		100.00%
Consideration transferred		$ 12,140
Goodwill		2,873
Intangible assets, net		$ 3,299
Compstar Holding Company LLC
Business Acquisition [Line Items]
Percentage of voting interests acquired			55.00%
Consideration transferred			$ 99,204
Goodwill			134,428
Intangible assets, net			73,954
Fair value amount of equity method investment			81,167
Equity method investments			11,321
Gain on revaluation of Compstar investment			$ 69,846
Compstar Holding Company LLC | Common Stock
Business Acquisition [Line Items]
Stock issued during period (in shares)			6,613,606				6,613,606
Stock issued, price per share (in dollars per share)			$ 15
LCTA Risk Services, Inc.
Business Acquisition [Line Items]
Percentage of voting interests acquired				100.00%
Consideration transferred				$ 1,400
Goodwill				517
Intangible assets, net				$ 482

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Acquisitions - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jul. 06, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Recognized amounts of identifiable assets acquired and liabilities assumed:
Goodwill		$ 66,294	$ 142,347	$ 140,640
Western Integrated Care, LLC
Business Acquisition [Line Items]
Fair value of total consideration transferred	$ 5,500
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	205
Premiums and other receivables	1,025
Property and equipment, net	39
Right of use asset	135
Goodwill	1,707
Intangible assets, net	3,624
Other assets	16
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract]
Accounts payable and accrued expenses	(873)
Lease liability	(135)
Debt	(243)
Net assets acquired	$ 5,500

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Acquisitions - Schedule of Acquired Finite-Lived Intangible Assets by Major Class (Details) - USD ($) $ in Thousands	Jul. 06, 2021	Dec. 31, 2022	Dec. 31, 2021	Jul. 15, 2020
Business Acquisition [Line Items]
Intangible assets, net		$ 67,117	$ 73,114
Trade name
Business Acquisition [Line Items]
Intangible assets, net		3,036
Non-compete agreement
Business Acquisition [Line Items]
Intangible assets, net		179
Customer lists and relationships
Business Acquisition [Line Items]
Intangible assets, net		$ 63,902
Western Integrated Care, LLC
Business Acquisition [Line Items]
Intangible assets, net	$ 3,624
Western Integrated Care, LLC | Trade name
Business Acquisition [Line Items]
Useful Life	2 years
Intangible assets, net	$ 28
Western Integrated Care, LLC | Non-compete agreement
Business Acquisition [Line Items]
Useful Life	5 years
Intangible assets, net	$ 256
Western Integrated Care, LLC | Customer lists and relationships
Business Acquisition [Line Items]
Useful Life	12 years
Intangible assets, net	$ 3,340
Compstar Holding Company LLC
Business Acquisition [Line Items]
Intangible assets, net				$ 73,954

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Fair Value Measurements - Summary of Fair Value Options (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	$ 552,243	$ 471,061
Equity securities	35,041	969
Total investments	587,284	472,030
Embedded derivatives on funds held under reinsurance agreements	(15,411)	271
Interest rate cap agreement	102
Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total debt	79,288	30,938
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	62,552	2,392
Embedded derivatives on funds held under reinsurance agreements	(1,953)	(4)
Interest rate cap agreement	0
Level 1 | Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total debt	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	489,691	468,669
Embedded derivatives on funds held under reinsurance agreements	(13,458)	275
Interest rate cap agreement	102
Level 2 | Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total debt	29,288	30,938
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Embedded derivatives on funds held under reinsurance agreements	0	0
Interest rate cap agreement	0
Level 3 | Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total debt	50,000	0
Available-For-Sale and Equity Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	587,284	472,030
Available-For-Sale and Equity Securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	74,612	2,392
Available-For-Sale and Equity Securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	512,672	469,638
Available-For-Sale and Equity Securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	0	0
U.S. government and government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	62,552	41,434
U.S. government and government securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	62,552	2,392
U.S. government and government securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	39,042
U.S. government and government securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Foreign governments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	395	2,490
Foreign governments | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Foreign governments | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	395	2,490
Foreign governments | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
States, territories and possessions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	15,854	10,766
States, territories and possessions | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
States, territories and possessions | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	15,854	10,766
States, territories and possessions | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Political subdivisions of states territories and possessions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	33,904	40,002
Political subdivisions of states territories and possessions | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Political subdivisions of states territories and possessions | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	33,904	40,002
Political subdivisions of states territories and possessions | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Special revenue and special assessment obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	103,639	95,991
Special revenue and special assessment obligations | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Special revenue and special assessment obligations | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	103,639	95,991
Special revenue and special assessment obligations | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Industrial and public utilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	125,540	103,257
Industrial and public utilities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Industrial and public utilities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	125,540	103,257
Industrial and public utilities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Commercial mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	128,105	118,218
Commercial mortgage-backed securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Commercial mortgage-backed securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	128,105	118,218
Commercial mortgage-backed securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	25,112	17,368
Residential mortgage-backed securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Residential mortgage-backed securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	25,112	17,368
Residential mortgage-backed securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Other loan-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	51,613	41,425
Other loan-backed securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Other loan-backed securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	51,613	41,425
Other loan-backed securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Hybrid securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	5,529	110
Hybrid securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Hybrid securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	5,529	110
Hybrid securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0	0
Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	35,041	969
Equity securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	12,060	0
Equity securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	22,981	969
Equity securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	$ 0	$ 0

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Fair Value Measurements - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Fair Value Disclosures [Abstract]
Cash portion, cash per share of common stock converted (in dollars per share)	$ 6.15
Goodwill impairment	$ 76,053,000	$ 0	$ 0

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Investments - Schedule of Debt Securities, Available-for-sale (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fixed maturities:
Cost or Amortized Cost	$ 600,398	$ 465,459
Gross Unrealized Gains	266	8,719
Gross Unrealized Losses	(48,421)	(3,117)
Fair Value	552,243	471,061
U.S. government and government securities
Fixed maturities:
Cost or Amortized Cost	65,405	41,490
Gross Unrealized Gains	11	113
Gross Unrealized Losses	(2,864)	(169)
Fair Value	62,552	41,434
Foreign governments
Fixed maturities:
Cost or Amortized Cost	400	2,500
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(5)	(10)
Fair Value	395	2,490
States, territories and possessions
Fixed maturities:
Cost or Amortized Cost	17,310	10,593
Gross Unrealized Gains	2	189
Gross Unrealized Losses	(1,458)	(16)
Fair Value	15,854	10,766
Political subdivisions of states territories and possessions
Fixed maturities:
Cost or Amortized Cost	38,167	39,170
Gross Unrealized Gains	19	975
Gross Unrealized Losses	(4,282)	(143)
Fair Value	33,904	40,002
Special revenue and special assessment obligations
Fixed maturities:
Cost or Amortized Cost	115,696	93,664
Gross Unrealized Gains	55	2,920
Gross Unrealized Losses	(12,112)	(593)
Fair Value	103,639	95,991
Industrial and public utilities
Fixed maturities:
Cost or Amortized Cost	131,769	100,774
Gross Unrealized Gains	101	2,835
Gross Unrealized Losses	(6,330)	(352)
Fair Value	125,540	103,257
Commercial mortgage-backed securities
Fixed maturities:
Cost or Amortized Cost	145,471	119,378
Gross Unrealized Gains	52	591
Gross Unrealized Losses	(17,418)	(1,751)
Fair Value	128,105	118,218
Residential mortgage-backed securities
Fixed maturities:
Cost or Amortized Cost	26,716	16,549
Gross Unrealized Gains	11	843
Gross Unrealized Losses	(1,615)	(24)
Fair Value	25,112	17,368
Other loan-backed securities
Fixed maturities:
Cost or Amortized Cost	53,231	41,236
Gross Unrealized Gains	13	248
Gross Unrealized Losses	(1,631)	(59)
Fair Value	51,613	41,425
Hybrid securities
Fixed maturities:
Cost or Amortized Cost	6,233	105
Gross Unrealized Gains	2	5
Gross Unrealized Losses	(706)	0
Fair Value	$ 5,529	$ 110

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Investments - Schedule of Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	$ 376,290	$ 200,252
Unrealized Loss, less than 12 months	(24,716)	(2,841)
Fair Value, 12 months or more	139,115	9,770
Unrealized Loss, 12 months or more	(23,705)	(276)
Fair Value	515,405	210,022
Unrealized Loss	(48,421)	(3,117)
U.S. government and government securities
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	38,172	26,935
Unrealized Loss, less than 12 months	(1,217)	(168)
Fair Value, 12 months or more	19,199	23
Unrealized Loss, 12 months or more	(1,647)	(1)
Fair Value	57,371	26,958
Unrealized Loss	(2,864)	(169)
Foreign governments
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	0	2,490
Unrealized Loss, less than 12 months	0	(10)
Fair Value, 12 months or more	395	0
Unrealized Loss, 12 months or more	(5)	0
Fair Value	395	2,490
Unrealized Loss	(5)	(10)
States, territories and possessions
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	13,882	935
Unrealized Loss, less than 12 months	(1,321)	(16)
Fair Value, 12 months or more	822	0
Unrealized Loss, 12 months or more	(137)	0
Fair Value	14,704	935
Unrealized Loss	(1,458)	(16)
Political subdivisions of states territories and possessions
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	21,586	11,115
Unrealized Loss, less than 12 months	(2,506)	(143)
Fair Value, 12 months or more	9,375	0
Unrealized Loss, 12 months or more	(1,776)	0
Fair Value	30,961	11,115
Unrealized Loss	(4,282)	(143)
Special revenue and special assessment obligations
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	71,146	29,917
Unrealized Loss, less than 12 months	(6,522)	(593)
Fair Value, 12 months or more	22,350	0
Unrealized Loss, 12 months or more	(5,590)	0
Fair Value	93,496	29,917
Unrealized Loss	(12,112)	(593)
Industrial and public utilities
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	98,018	24,042
Unrealized Loss, less than 12 months	(4,225)	(286)
Fair Value, 12 months or more	18,405	1,058
Unrealized Loss, 12 months or more	(2,105)	(66)
Fair Value	116,423	25,100
Unrealized Loss	(6,330)	(352)
Commercial mortgage-backed securities
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	71,574	80,126
Unrealized Loss, less than 12 months	(5,737)	(1,565)
Fair Value, 12 months or more	53,147	6,212
Unrealized Loss, 12 months or more	(11,681)	(186)
Fair Value	124,721	86,338
Unrealized Loss	(17,418)	(1,751)
Residential mortgage-backed securities
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	18,051	4,539
Unrealized Loss, less than 12 months	(1,177)	(24)
Fair Value, 12 months or more	4,119	0
Unrealized Loss, 12 months or more	(438)	0
Fair Value	22,170	4,539
Unrealized Loss	(1,615)	(24)
Other loan-backed securities
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	38,572	20,153
Unrealized Loss, less than 12 months	(1,305)	(36)
Fair Value, 12 months or more	11,303	2,477
Unrealized Loss, 12 months or more	(326)	(23)
Fair Value	49,875	22,630
Unrealized Loss	(1,631)	(59)
Hybrid securities
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value, less than 12 months	5,289	0
Unrealized Loss, less than 12 months	(706)	0
Fair Value, 12 months or more	0	0
Unrealized Loss, 12 months or more	0	0
Fair Value	5,289	0
Unrealized Loss	$ (706)	$ 0

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Investments - Summary of Investments by Contractual Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Cost or Amortized Cost
Due in one year or less	$ 35,468
Due after one year but before five years	176,083
Due after five years but before ten years	93,107
Due after ten years	70,322
Cost or Amortized Cost	600,398	$ 465,459
Fair Value
Due in one year or less	35,125
Due after one year but before five years	167,986
Due after five years but before ten years	83,769
Due after ten years	60,533
Fair Value	552,243	471,061
Commercial mortgage-backed securities
Cost or Amortized Cost
Cost or Amortized Cost	145,471	119,378
Fair Value
Fair Value	128,105	118,218
Residential mortgage-backed securities
Cost or Amortized Cost
Cost or Amortized Cost	26,716	16,549
Fair Value
Fair Value	25,112	17,368
Other loan-backed securities
Cost or Amortized Cost
Cost or Amortized Cost	53,231	41,236
Fair Value
Fair Value	$ 51,613	$ 41,425

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Investments - Summary of Realized Gain (Loss) on Investments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Fixed maturities:
Gains	$ 134	$ 153	$ 259
Losses	(1,235)	(94)	(9)
Total fixed maturities	(1,101)	59	250
Funds held investments:
Gains	19	112	0
Losses	(29)	(10)	0
Total funds held investments	(10)	102	0
Funds held investments:
Gains	1,415	0	3,115
Losses	(19)	(112)	0
Total equity securities and equity method investments	1,396	(112)	3,115
Total net investment realized gains	$ 285	$ 49	$ 3,365

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Investments - Summary of Net Investment Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Net Investment Income [Line Items]
Net investment income	$ 10,087	$ 8,721	$ 11,669
Fixed maturities
Net Investment Income [Line Items]
Net investment income	9,316	6,331	6,271
Interest earned on cash and short-term investments
Net Investment Income [Line Items]
Net investment income	192	4	25
Equity securities
Net Investment Income [Line Items]
Net investment income	1,708	48	2,028
Unrealized losses on equity securities
Net Investment Income [Line Items]
Net investment income	(4,797)	0	0
Income on funds held investments
Net Investment Income [Line Items]
Net investment income	$ 3,668	$ 2,338	$ 3,345

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Investments - Unrealized Gain (Loss) on Investments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Net realized gains (losses) on sales of equity securities	$ 1,396	$ (112)	$ 3,115
Change in net unrealized gains (losses) of equity securities still held as of as of December 31, 2022, 2021 and 2020	(4,797)	0	0
Net realized and unrealized gains (losses) on equity securities	$ (3,401)	$ (112)	$ 3,115

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Investments- Schedule of Funds Held Under Reinsurance Agreements (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Investments, Debt and Equity Securities [Abstract]
Funds held under reinsurance agreements, at cost	$ 256,702	$ 199,139
Embedded derivatives, at fair value	(15,411)	271
Total funds held under reinsurance agreements	$ 241,291	$ 199,410

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Investments- Embedded Derivatives, Gain (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Net Investment Income [Line Items]
Change in fair value of embedded derivatives	$ 15,682	$ 4,666	$ (2,810)
Effect of realized losses (gains) on funds held investments	10	(102)	0
Total gains (losses) on embedded derivatives	12,024	2,226	(6,155)
Income on funds held investments
Net Investment Income [Line Items]
Effect of net investment income on funds held investments	$ (3,668)	$ (2,338)	$ (3,345)

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Equity Method Investments (Details) - USD ($) $ in Thousands		12 Months Ended
	Jan. 03, 2020	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Jul. 15, 2020	Jul. 14, 2020	Jan. 02, 2020	Dec. 31, 2019
Schedule of Equity Method Investments [Line Items]
Equity earnings in affiliates, net of tax		$ 0	$ 0	$ 2,333
Distributions from equity method investments		0	0	2,953
Proceeds from sale of equity method investment		0	232	3,000
Unrealized gain on sale of equity method investment		10,087	8,721	11,669
Earn-out payment		750	0	0
Compstar Holding Company LLC
Schedule of Equity Method Investments [Line Items]
Percentage of voting interests acquired					55.00%
Carrying value of equity method investments					$ 11,321
Compstar Holding Company LLC
Schedule of Equity Method Investments [Line Items]
Ownership percentage						45.00%
Carrying value of equity method investments								$ 11,831
Equity earnings in affiliates, net of tax				2,333
Distributions from equity method investments				2,842
Trean Intermediaries
Schedule of Equity Method Investments [Line Items]
Ownership percentage							25.00%
Distributions from equity method investments				$ 225
Ownership percentage sold	15.00%
Proceeds from sale of equity method investment	$ 3,000		1,888
Cumulative percentage ownership after all transactions	10.00%
Realized gain (loss) on sale	$ 3,115		$ (112)
Unrealized gain on sale of equity method investment	$ 2,000
Earn-out payment		$ 1,415

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Nonconsolidated Variable Interest Entities (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Trean Capital Trust I
Variable Interest Entity [Line Items]
Liquidation value	$ 7,500

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Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Total, at cost	$ 12,287	$ 11,948
Less: Accumulated depreciation	(5,136)	(4,316)
Property and equipment, net	7,151	7,632
Depreciation	820	1,007	$ 912
Land
Property, Plant and Equipment [Line Items]
Total, at cost	1,780	1,780
Building and building improvements
Property, Plant and Equipment [Line Items]
Total, at cost	5,755	5,755
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total, at cost	1,137	1,137
Office equipment
Property, Plant and Equipment [Line Items]
Total, at cost	3,499	2,898
Other property, plant and equipment
Property, Plant and Equipment [Line Items]
Total, at cost	101	101
Deposits on fixed assets not placed in service
Property, Plant and Equipment [Line Items]
Total, at cost	$ 15	$ 277

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Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 142,347,000	$ 140,640,000
Acquisitions	0	1,707,000
Impairment	76,053,000	0	$ 0
Goodwill, ending balance	$ 66,294,000	$ 142,347,000	$ 140,640,000

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Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Totals	$ 81,634	$ 81,634
Less: Accumulated amortization	(14,517)	(8,520)
Total	67,117	73,114
Intangible asset amortization	5,998	5,826	$ 2,573
Non-compete agreement
Finite-Lived Intangible Assets [Line Items]
Totals	300	300
Total	$ 179
Non-compete agreement | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful Life	2 years
Non-compete agreement | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful Life	5 years
Trade name
Finite-Lived Intangible Assets [Line Items]
Totals	$ 3,710	3,710
Total	$ 3,036
Trade name | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful Life	2 years
Trade name | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful Life	15 years
Customer lists and relationships
Finite-Lived Intangible Assets [Line Items]
Totals	$ 77,624	$ 77,624
Total	$ 63,902
Customer lists and relationships | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful Life	10 years
Customer lists and relationships | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful Life	14 years

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Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
2023	$ 5,983
2024	5,975
2025	5,975
2026	5,950
2027	5,909
Thereafter	37,325
Total	67,117	$ 73,114
Trade name
Finite-Lived Intangible Assets [Line Items]
2023	248
2024	241
2025	241
2026	241
2027	241
Thereafter	1,824
Total	3,036
Customer lists and relationships
Finite-Lived Intangible Assets [Line Items]
2023	5,684
2024	5,683
2025	5,683
2026	5,683
2027	5,668
Thereafter	35,501
Total	63,902
Non-compete agreement
Finite-Lived Intangible Assets [Line Items]
2023	51
2024	51
2025	51
2026	26
2027	0
Thereafter	0
Total	$ 179

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Deferred Policy Acquisition Costs, Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Insurance [Abstract]
Premium deficiency	$ 0	$ 0	$ 0
Movement Analysis of Deferred Policy Acquisition Costs and Present Value of Future Profits [Roll Forward]
Deferred policy acquisition cost, beginning balance	13,344	1,332	2,115
Policy acquisition costs deferred	28,362	22,853	7,593
Amortization charged to expense	(22,848)	(10,841)	(8,376)
Deferred policy acquisition cost, ending balance	$ 18,858	$ 13,344	$ 1,332

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Accounts Payable, Accrued Expenses, and Other Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accrued commissions and third-party administration fees	$ 9,168	$ 7,337
Trade payables	4,977	4,765
Accrued taxes, licenses and fees	4,316	6,710
Accrued wages and employee benefits	5,489	4,873
Amounts retained for the accounts of others	2,710	1,619
Other liabilities	5,949	4,144
Total	$ 32,609	$ 29,448

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Debt - Schedule of Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Face Value	$ 79,288	$ 30,938
Unamortized Discount and Issuance Costs	(2,214)	(576)
Carrying Value	77,074	30,362
Secured credit facility
Debt Instrument [Line Items]
Face Value	29,288	30,938
Unamortized Discount and Issuance Costs	(408)	(576)
Carrying Value	28,880	30,362
Surplus notes
Debt Instrument [Line Items]
Face Value	50,000	0
Unamortized Discount and Issuance Costs	(1,806)	0
Carrying Value	$ 48,194	$ 0

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Debt - Narrative (Details) $ / shares in Units, $ in Thousands								1 Months Ended	12 Months Ended			138 Months Ended
	Sep. 28, 2022	Aug. 24, 2022 USD ($)	Jul. 06, 2021 USD ($) loan	Oct. 07, 2020 USD ($)	Jul. 16, 2020 USD ($)	Jul. 07, 2011	Jun. 21, 2006 USD ($) shares	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) $ / shares	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2022 USD ($) $ / shares	Oct. 01, 2020 USD ($)	Jul. 15, 2020 USD ($)
Debt Instrument [Line Items]
Long-term debt, gross									$ 79,288	$ 30,938		$ 79,288
Interest Rate Cap
Debt Instrument [Line Items]
Notional amount								$ 29,700
Derivative, capped interest rate								5.00%
Fixed payment relating to agreement								$ 173
Secured credit facility
Debt Instrument [Line Items]
Long-term debt, gross									29,288	$ 30,938		$ 29,288
Secured credit facility | Second Amended And Restated Credit Agreement
Debt Instrument [Line Items]
Extension term					5 years
Increase to term loan debt amount					$ 11,707
Maximum borrowing capacity					33,000
Secured credit facility | Second Amended And Restated Credit Agreement | Minimum
Debt Instrument [Line Items]
Quarterly installment payments									206
Secured credit facility | Second Amended And Restated Credit Agreement | Maximum
Debt Instrument [Line Items]
Quarterly installment payments									$ 825
Secured credit facility | Second Amended And Restated Credit Agreement | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate									7.59%	4.64%	4.72%
Secured credit facility | Eurodollar | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate	4.50%
Secured credit facility | Eurodollar | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis spread on variable rate	3.50%
Secured credit facility | ABR Loans | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate	3.50%
Secured credit facility | ABR Loans | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis spread on variable rate	2.50%
Junior subordinated debt
Debt Instrument [Line Items]
Debt interest expense											$ 271
Long-term debt, gross							$ 7,732
Proceeds from subordinated debt				$ 7,807
Junior subordinated debt | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate												3.50%
Oak Street Loan
Debt Instrument [Line Items]
Long-term debt, gross									$ 19,740			$ 19,740
Federal Paycheck Protection Program Loan (PPP Loan)
Debt Instrument [Line Items]
Number of loans acquired | loan			2
Federal Paycheck Protection Program Loan (PPP Loan) | Compstar Holding Company LLC
Debt Instrument [Line Items]
Long-term debt, gross														$ 325
Federal Paycheck Protection Program Loan (PPP Loan) | 7710 Insurance Company
Debt Instrument [Line Items]
Long-term debt, gross													$ 269
Federal Paycheck Protection Program Loan (PPP Loan) | Western Integrated Care, LLC
Debt Instrument [Line Items]
Long-term debt, gross			$ 243
Notes Payable, Other Payables | 6.75% Surplus Notes Due 2042
Debt Instrument [Line Items]
Debt interest expense									$ 1,222
Aggregate principal amount		$ 50,000
Interest rate, stated percentage		6.75%
Notes, term		10 years
Redemption price, percentage		100.00%
Maximum indebtedness percentage of total surplus		35.00%
Preferred Capital Securities | Junior subordinated debt
Debt Instrument [Line Items]
Shares issued during period (in shares) | shares							7,500
Preferred capital securities interest rate						9.167%
Liquidation preference per share (in dollars per share) | $ / shares									$ 1,000			$ 1,000
Common Securities | Junior subordinated debt
Debt Instrument [Line Items]
Shares issued during period (in shares) | shares							232
Debt | Secured credit facility
Debt Instrument [Line Items]
Debt interest expense									$ 2,022	$ 1,517	$ 1,518
Debt | Secured credit facility | Second Amended And Restated Credit Agreement
Debt Instrument [Line Items]
Maximum borrowing capacity					$ 2,000

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Debt - Schedule of Maturities of Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
2023	$ 2,888
2024	3,300
2025	23,100
2026	0
2027	0
Thereafter	50,000
Total debt	$ 79,288	$ 30,938

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Revenue from Contracts with Customers - Summary of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	$ 8,246	$ 10,240	$ 12,104
Brokerage
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	5,705	7,036	8,994
Managing general agent fees
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	326	603	976
Third-party administrator fees
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	1,358	1,608	1,630
Consulting fees
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	$ 857	$ 993	$ 504

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Revenue from Contracts with Customers - Schedule of Contract with Customer, Contract Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Contract with customer, contract assets	$ 3,077	$ 3,353

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Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Current tax expense	$ 3,308	$ 7,823	$ 7,291
Deferred tax expense	(2,234)	(2,374)	(1,056)
Total income tax expense	$ 1,074	$ 5,449	$ 6,235

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Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Effective Income Tax Rate Reconciliation, Amount [Abstract]
Income tax expense computed at statutory rate	$ (13,625)	$ 5,204	$ 19,415
State taxes, net of federal benefit	(289)	47	577
Tax-exempt municipal income, net of proration	(240)	(263)	(272)
Goodwill impairment	14,365	0	0
Potential merger and other nondeductible expenses	647	10	957
Fair market value adjustment on Compstar investment	0	0	(14,668)
Other	216	451	226
Total income tax expense	$ 1,074	$ 5,449	$ 6,235
Effective Income Tax Rate Reconciliation, Percent [Abstract]
Income tax expense computed at statutory rate, percent	21.00%	21.00%	21.00%
State taxes, net of federal benefit, percent	0.40%	0.20%	0.60%
Tax-exempt municipal income, net of proration, percent	0.30%	(1.10%)	(0.30%)
Goodwill impairment, percent	(22.10%)	0.00%	0.00%
Potential merger and other nondeductible expenses, percent	(1.00%)	0.00%	1.00%
Fair market value adjustment on Compstar investment, percent	0.00%	0.00%	(15.90%)
Other, percent	(0.30%)	1.90%	0.30%
Effective income tax rate, percent	(1.70%)	22.00%	6.70%

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Income Taxes - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Income Tax Examination [Line Items]
Deferred tax assets	$ 17	$ 41
Federal Income Tax
Income Tax Examination [Line Items]
Operating loss carryforwards	$ 3,155	$ 3,272

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Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets:
Unpaid losses and LAE	$ 6,256	$ 4,574
Unearned premiums	4,399	3,802
Unrealized losses on investments	7,692	0
NOL carryforward	17	41
Lease liability	731	1,188
Accrued liabilities	1,286	926
Stock compensation	841	484
Other	299	51
Total deferred tax assets	21,521	11,066
Deferred tax liabilities:
Deferred acquisition costs	(4,011)	(2,802)
Loss reserve discounting TCJA transitional adjustment	(355)	(473)
Unrealized gains and losses on investments	0	(1,131)
Property and equipment	(204)	(191)
Right-of-use asset	(660)	(1,082)
Intangible assets	(10,230)	(12,715)
Prepaid expenses	(69)	(43)
Section 481(a) adjustment	0	(56)
Other	(34)	(93)
Total deferred tax liabilities	(15,563)	(18,586)
Net deferred tax assets	$ 5,958
Net deferred tax (liabilities)		$ (7,520)

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Liability for Unpaid Losses and Loss Adjustment Expense - Schedule of Liability for Unpaid Losses and Loss Adjustment Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward]
Unpaid losses and LAE reserves at beginning of period	$ 544,320	$ 457,817	$ 406,716
Less losses ceded through reinsurance	(369,008)	(335,655)	(304,005)
Net unpaid losses and LAE at beginning of period	254,455	175,312	122,162	$ 102,711
Acquisition of subsidiary, net of losses ceded through reinsurance	0	0	7,050
Incurred losses and LAE related to:
Current period	198,996	136,191	65,587
Prior period	4,881	(5,419)	(14,813)
Total incurred losses and LAE	203,877	130,772	50,774
Paid losses and LAE, net of reinsurance, related to:
Current period	61,484	42,484	15,411
Prior period	63,250	35,138	22,962
Total paid losses and LAE	124,734	77,622	38,373
Net unpaid losses and LAE at end of period	254,455	175,312	122,162
Plus losses ceded through reinsurance	378,455	369,008	335,655
Unpaid losses and LAE reserves at end of period	632,910	544,320	457,817
Incurred losses and LAE related to prior years	4,881	(5,419)	$ (14,813)
Unallocated loss adjustment expenses	(10,953)	(7,861)
Total liability for unpaid loss and loss adjustment expenses	1,605	$ 1,661
Life and Annuity Insurance Product Line
Paid losses and LAE, net of reinsurance, related to:
Unallocated loss adjustment expenses	$ 4,935

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Liability for Unpaid Losses and Loss Adjustment Expense - Summary of Loss Development (Details) $ in Thousands	Dec. 31, 2022 USD ($) claim	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 589,827
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	351,828
Liabilities for claims and claim adjustment expenses, net of reinsurance	$ 243,502	$ 167,451
Short-duration Insurance Contracts, Historical Claims Duration
1	27.50%
2	29.90%
3	13.30%
4	7.30%
5	6.30%
6	3.20%
7	3.00%
8	1.20%
9	2.20%
10	1.50%
Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 477,967
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	292,567
Liabilities for claims and claim adjustment expenses, net of reinsurance	$ 190,519	133,811
Short-duration Insurance Contracts, Historical Claims Duration
1	26.20%
2	32.80%
3	15.80%
4	7.50%
5	6.30%
6	2.50%
7	2.60%
8	0.30%
9	1.60%
10	1.00%
Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 35,872
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	12,128
Liabilities for claims and claim adjustment expenses, net of reinsurance	$ 24,128	19,159
Short-duration Insurance Contracts, Historical Claims Duration
1	3.90%
2	6.50%
3	4.90%
4	10.50%
5	16.20%
6	13.20%
7	7.00%
8	11.90%
9	4.40%
10	3.00%
All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 75,988
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	47,133
Liabilities for claims and claim adjustment expenses, net of reinsurance	$ 28,855	14,481
Short-duration Insurance Contracts, Historical Claims Duration
1	46.80%
2	33.20%
3	13.90%
4	3.00%
5	2.00%
6	1.00%
7	0.00%
8	0.00%
9	0.00%
10	0.00%
2013
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 21,842	21,671	$ 21,631	$ 21,465	$ 21,506	$ 21,342	$ 21,361	$ 24,280	$ 24,755	$ 24,661
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	20,835	20,617	20,121	20,129	19,712	19,246	17,708	15,984	12,602	6,799
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,374
Cumulative Number of Reported Claims | claim	4,444
2013 | Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 20,139	19,968	19,964	19,814	19,426	19,528	19,772	22,650	22,879	22,746
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	19,444	19,335	18,906	18,976	18,664	18,448	17,135	15,703	12,407	6,734
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,134
Cumulative Number of Reported Claims | claim	3,539
2013 | Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 1,703	1,703	1,667	1,651	2,068	1,804	1,580	1,617	1,876	1,914
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	1,391	1,282	1,215	1,153	1,048	798	573	281	195	65
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 240
Cumulative Number of Reported Claims | claim	333
2013 | All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 0	0	0	0	12	10	9	13	0	1
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	0	0	0	0	0	0	0	0	0	$ 0
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 0
Cumulative Number of Reported Claims | claim	572
2014
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 20,154	20,183	20,897	21,054	21,095	21,571	21,726	22,777	24,580
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	18,801	18,702	18,507	18,238	17,260	16,666	14,814	12,005	6,011
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,913
Cumulative Number of Reported Claims | claim	5,021
2014 | Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 17,556	17,584	18,049	18,025	17,967	19,394	19,781	20,686	22,357
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	16,700	16,707	16,607	16,535	16,177	16,011	14,393	11,672	5,958
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,539
Cumulative Number of Reported Claims | claim	3,546
2014 | Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 2,593	2,593	2,832	3,013	3,107	2,154	1,921	1,964	2,183
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	2,095	1,989	1,884	1,687	1,067	639	405	233	53
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 374
Cumulative Number of Reported Claims | claim	424
2014 | All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 5	6	16	16	21	23	24	127	40
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	6	6	16	16	16	16	16	100	$ 0
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 0
Cumulative Number of Reported Claims | claim	1,051
2015
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 22,130	22,516	22,518	25,650	25,450	26,414	26,614	25,757
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	19,982	19,685	19,340	18,923	18,046	16,512	13,785	6,275
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 2,372
Cumulative Number of Reported Claims | claim	6,398
2015 | Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 19,568	19,974	19,560	22,218	21,788	23,444	23,830	22,643
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	18,238	18,143	17,984	17,638	17,002	15,814	13,313	6,089
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,831
Cumulative Number of Reported Claims | claim	4,796
2015 | Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 2,523	2,523	2,860	3,334	3,549	2,862	2,652	2,946
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	1,855	1,523	1,258	1,187	945	600	374	123
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 390
Cumulative Number of Reported Claims | claim	430
2015 | All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 39	19	98	98	113	108	132	168
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	(111)	19	98	98	99	98	98	$ 63
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 151
Cumulative Number of Reported Claims | claim	1,172
2016
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 25,858	26,550	27,340	30,165	32,554	33,672	35,281
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	23,140	22,648	22,138	20,780	19,677	16,791	8,110
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 2,880
Cumulative Number of Reported Claims | claim	11,427
2016 | Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 22,381	23,076	23,063	25,430	27,674	29,261	30,710
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	20,918	20,551	19,856	18,728	17,904	15,329	7,260
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,965
Cumulative Number of Reported Claims | claim	9,835
2016 | Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 2,423	2,423	2,735	3,180	3,135	2,794	2,689
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	1,199	1,081	783	558	355	137	54
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 911
Cumulative Number of Reported Claims | claim	303
2016 | All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 1,054	1,051	1,542	1,555	1,745	1,617	1,882
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	1,023	1,016	1,499	1,494	1,418	1,325	$ 796
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 4
Cumulative Number of Reported Claims | claim	1,289
2017
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 29,766	29,783	30,847	32,685	35,113	43,499
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	24,884	23,727	22,673	20,809	17,555	8,903
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 2,940
Cumulative Number of Reported Claims | claim	16,963
2017 | Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 24,515	24,581	24,439	25,713	29,107	35,683
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	21,150	20,456	19,353	17,930	15,017	7,439
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,877
Cumulative Number of Reported Claims | claim	14,550
2017 | Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 3,267	3,267	3,966	4,555	3,089	4,964
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	1,841	1,387	999	676	439	52
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,041
Cumulative Number of Reported Claims | claim	288
2017 | All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 1,984	1,935	2,442	2,417	2,917	2,852
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	1,893	1,884	2,321	2,203	2,099	$ 1,412
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 22
Cumulative Number of Reported Claims | claim	2,125
2018
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 37,923	38,108	39,880	41,630	47,263
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	31,735	29,479	26,852	22,279	10,339
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 4,528
Cumulative Number of Reported Claims | claim	14,704
2018 | Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 31,352	31,909	34,321	34,478	40,122
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	27,538	26,201	24,023	19,811	8,978
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 2,800
Cumulative Number of Reported Claims | claim	12,451
2018 | Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 4,052	3,679	3,010	4,278	4,256
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	1,738	846	504	345	52
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,679
Cumulative Number of Reported Claims | claim	228
2018 | All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 2,519	2,520	2,549	2,874	2,885
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	2,459	2,432	2,325	2,123	$ 1,309
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 49
Cumulative Number of Reported Claims | claim	2,025
2019
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 51,211	51,824	51,598	57,778
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	37,766	33,678	27,174	13,215
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 6,724
Cumulative Number of Reported Claims | claim	13,008
2019 | Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 45,239	44,997	45,382	48,565
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	34,434	30,650	24,472	11,201
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 4,752
Cumulative Number of Reported Claims | claim	11,451
2019 | Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 2,593	3,608	2,849	5,457
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	387	239	170	111
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,663
Cumulative Number of Reported Claims | claim	129
2019 | All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 3,379	3,219	3,367	3,756
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	2,945	2,789	2,532	$ 1,903
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 309
Cumulative Number of Reported Claims | claim	1,428
2020
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 66,963	64,362	63,734
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	46,864	34,437	14,487
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 10,991
Cumulative Number of Reported Claims | claim	13,498
2020 | Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 58,033	55,531	55,960
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	42,349	30,646	12,141
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 7,914
Cumulative Number of Reported Claims | claim	12,148
2020 | Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 4,239	3,702	2,932
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	521	196	55
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 2,753
Cumulative Number of Reported Claims | claim	215
2020 | All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 4,691	5,129	4,842
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	3,994	3,595	$ 2,291
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 324
Cumulative Number of Reported Claims | claim	1,135
2021
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 132,816	127,981
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	78,113	38,435
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 27,493
Cumulative Number of Reported Claims | claim	14,829
2021 | Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 102,778	100,254
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	58,916	26,623
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 20,945
Cumulative Number of Reported Claims | claim	11,698
2021 | Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 6,117	4,362
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	977	719
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 4,707
Cumulative Number of Reported Claims | claim	272
2021 | All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 23,921	23,365
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	18,220	$ 11,093
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 1,841
Cumulative Number of Reported Claims | claim	2,859
2022
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 181,164
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	49,708
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 66,546
Cumulative Number of Reported Claims | claim	12,597
2022 | Workers' Compensation
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 136,406
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	32,880
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 52,703
Cumulative Number of Reported Claims | claim	10,052
2022 | Other liability
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 6,362
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	124
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 5,911
Cumulative Number of Reported Claims | claim	345
2022 | All other lines of business
Claims Development [Line Items]
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 38,396
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	16,704
Total of IBNR Liabilities Plus Expected Development on Reported Claims	$ 7,932
Cumulative Number of Reported Claims | claim	2,200
All outstanding liabilities before 2013, net of reinsurance
Claims Development [Line Items]
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 5,503
All outstanding liabilities before 2013, net of reinsurance | Workers' Compensation
Claims Development [Line Items]
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	5,119
All outstanding liabilities before 2013, net of reinsurance | Other liability
Claims Development [Line Items]
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	384
All outstanding liabilities before 2013, net of reinsurance | All other lines of business
Claims Development [Line Items]
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance	$ 0

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Liability for Unpaid Losses and Loss Adjustment Expense - Summary of Reconciliation of Claims Development to Liability (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Liability for Claims and Claims Adjustment Expense [Line Items]
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance	$ 243,502	$ 167,451
Total reinsurance recoverable on unpaid claims	378,455	369,008	$ 335,655	$ 304,005
Unallocated loss adjustment expenses	10,953	7,861
Total liability for unpaid loss and loss adjustment expenses	632,910	544,320	$ 457,817	$ 406,716
Workers' Compensation
Liability for Claims and Claims Adjustment Expense [Line Items]
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance	190,519	133,811
Total reinsurance recoverable on unpaid claims	234,657	260,891
Other liability
Liability for Claims and Claims Adjustment Expense [Line Items]
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance	24,128	19,159
Total reinsurance recoverable on unpaid claims	52,816	50,765
All other lines of business
Liability for Claims and Claims Adjustment Expense [Line Items]
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance	28,855	14,481
Total reinsurance recoverable on unpaid claims	$ 90,982	$ 57,352

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Reinsurance - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Effects of Reinsurance [Line Items]
Bad debt expense related to reinsurance	$ 0	$ 0	$ 0
Reinsurance recoverable	$ 408,522	377,241
Ceded Credit Risk, Unsecured | Reinsurance Recoverable Including Reinsurance Premium Paid | Reinsurer Concentration Risk
Effects of Reinsurance [Line Items]
Concentration risk, percentage (exceeding)	5.00%
Reinsurers Authorized in Respective Insurance Carrier's State of Domicile
Effects of Reinsurance [Line Items]
Reinsurance recoverable	$ 29,855	$ 43,009

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Reinsurance - Summary of Reinsurance Recoverable (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Effects of Reinsurance [Line Items]
Reinsurance recoverable	$ 408,522	$ 377,241
Ceded Credit Risk, Secured | Reinsurance Recoverable for Paid and Unpaid Claims and Claims Adjustments | Reinsurers Not Authorized in Respective Insurance Carrier's State of Domicile
Effects of Reinsurance [Line Items]
Reinsurance recoverable	366,244	307,784
Ceded Credit Risk, Secured | Reinsurance Recoverable for Paid and Unpaid Claims and Claims Adjustments | Reinsurers Not Authorized in Respective Insurance Carrier's State of Domicile | Letters of credit
Effects of Reinsurance [Line Items]
Reinsurance recoverable	18,438	24,979
Ceded Credit Risk, Secured | Reinsurance Recoverable for Paid and Unpaid Claims and Claims Adjustments | Reinsurers Not Authorized in Respective Insurance Carrier's State of Domicile | Trust
Effects of Reinsurance [Line Items]
Reinsurance recoverable	136,370	126,404
Ceded Credit Risk, Secured | Reinsurance Recoverable for Paid and Unpaid Claims and Claims Adjustments | Reinsurers Not Authorized in Respective Insurance Carrier's State of Domicile | Funds held
Effects of Reinsurance [Line Items]
Reinsurance recoverable	211,436	156,401
Ceded Credit Risk, Unsecured | Reinsurance Recoverable Including Reinsurance Premium Paid | Arch Reinsurance Company (U.S.)
Effects of Reinsurance [Line Items]
Reinsurance recoverable		22,050
Ceded Credit Risk, Unsecured | Reinsurance Recoverable Including Reinsurance Premium Paid | Markel Global
Effects of Reinsurance [Line Items]
Reinsurance recoverable	58,400	$ 66,933
Ceded Credit Risk, Unsecured | Reinsurance Recoverable Including Reinsurance Premium Paid | Munich Reinsurance America, Inc
Effects of Reinsurance [Line Items]
Reinsurance recoverable	17,255
Ceded Credit Risk, Unsecured | Reinsurance Recoverable Including Reinsurance Premium Paid | Swiss Reinsurance America Corp
Effects of Reinsurance [Line Items]
Reinsurance recoverable	$ 17,199

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Reinsurance - Summary of Effects of Reinsurance (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Losses and LAE liabilities
Gross	$ 619,453	$ 531,598
Assumed	13,457	12,722
Ceded	(378,455)	(369,008)
Net unpaid losses and LAE at beginning of period	254,455	175,312
Unearned premiums
Gross	226,412	216,878
Assumed	2,700	3,062
Ceded	(124,269)	(129,411)
Net	104,843	90,529
Written premiums
Gross	642,210	624,769
Assumed	9,093	9,395
Ceded	(352,365)	(394,888)
Net	298,938	239,276
Earned premiums
Gross	632,677	563,337
Assumed	9,552	8,916
Ceded	(357,605)	(373,573)	$ (323,567)
Net earned premiums	284,624	198,680	108,467
Loss and loss adjustment expenses
Gross	441,274	343,134
Assumed	11,857	14,287
Ceded	(249,254)	(226,649)
Net	$ 203,877	$ 130,772	$ 50,774

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Leases - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Lessee, Lease, Description [Line Items]
Renewal term	5 years
Lease expense	$ 2,458	$ 2,459	$ 2,501
Variable lease expense	93	25	362
Sublease income, post-adoption	$ 98	$ 100
Sublease income, pre-adoption			$ 84
Minimum
Lessee, Lease, Description [Line Items]
Term of contract	1 month
Maximum
Lessee, Lease, Description [Line Items]
Term of contract	54 months

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Leases - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
Right of use asset	$ 2,764	$ 4,530
Lease liability	$ 3,063	$ 4,976
Weighted average remaining lease term	1 year 9 months 14 days	2 years 5 months 1 day
Weighted average discount rate	6.07%	6.33%

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Leases - Schedule of Future Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
2023	$ 1,940
2024	1,064
2025	164
2026	44
2027	2
Total lease payments	3,214
Less: imputed interest	(151)
Total lease liabilities	$ 3,063	$ 4,976

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Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands				12 Months Ended
	Jul. 22, 2020	Jul. 20, 2020	Jul. 15, 2020	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Jul. 31, 2020	Dec. 31, 2019
Class of Stock [Line Items]
Proceeds from initial public offering		$ 93,139		$ 0	$ 0	$ 99,643
Payments for underwriting discounts and commissions		7,500
Payments of offering expenses		6,503
Preferred stock, authorized (in shares)				100,000,000	100,000,000
Preferred stock, par value (in dollars per share)				$ 0.01	$ 0.01
Preferred stock, issued (in shares)				0	0
Preferred stock, outstanding (in shares)				0	0
Common stock, authorized (in shares)				600,000,000	600,000,000
Common stock, par value (in dollars per share)				$ 0.01	$ 0.01		$ 0.01
Common stock, issued (in shares)				51,222,485	51,176,887
Common stock, outstanding (in shares)				51,222,485	51,176,887
Other Expense | Altaris Capital Partners
Class of Stock [Line Items]
Initial public offering bonuses, contract buyout fee, and executive severance		$ 11,054
Initial Public Offering
Class of Stock [Line Items]
Sale of stock, number of shares issued in transaction (in shares)		10,714,286
Sale of stock, price per share (in dollars per share)		$ 15.00
IPO - Shares Issued and Sold By Trean Corporation
Class of Stock [Line Items]
Sale of stock, number of shares issued in transaction (in shares)		7,142,857
Consideration received on IPO		$ 107,142
IPO - Shares Sold by Selling Stockholders
Class of Stock [Line Items]
Sale of stock, number of shares issued in transaction (in shares)	1,207,142	3,571,429
Consideration received on IPO		$ 71,678
Compstar Holding Company LLC
Class of Stock [Line Items]
Consideration transferred			$ 99,204
Percentage of voting interests acquired			55.00%
Common Stock
Class of Stock [Line Items]
Common stock, outstanding (in shares)				51,222,485	51,176,887	51,148,782		0
Corporate recapitalization shares exchanged (in shares)						37,386,394
Common Stock | Compstar Holding Company LLC
Class of Stock [Line Items]
Stock issued during period (in shares)			6,613,606			6,613,606

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net Income (Loss) Attributable to Parent	$ (65,955)	$ 19,330	$ 88,549
Weighted average number of shares outstanding - basic
Weighted average number of shares outstanding - basic (in shares)	51,203,370	51,162,293	43,744,003
Effect of dilutive securities:
Dilutive securities (in shares)	0	11,157	741
Weighted average number of shares outstanding - diluted
Weighted average number of shares outstanding - diluted (in shares)	51,203,370	51,173,450	43,744,744
Excluded: Antidilutive common stock equivalents (in shares)	567,537	389,905	179,840
Earnings per share:
Basic (in dollars per share)	$ (1.29)	$ 0.38	$ 2.02
Diluted (in dollars per share)	$ (1.29)	$ 0.38	$ 2.02
Restricted Stock Units (RSUs)
Effect of dilutive securities:
Dilutive securities (in shares)	0	11,157	741

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Stockholders' equity beginning balance	$ 421,909	$ 410,107	$ 141,615
Unrealized gains (losses):
Decrease in fair value of interest rate cap	(45)	0	0
Less reclassification adjustments to:
Other comprehensive income (loss)	(42,407)	(9,042)	6,926
Stockholders' equity ending balance	315,019	421,909	410,107
Accumulated Other Comprehensive Income (Loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Stockholders' equity beginning balance	4,384	13,426	6,500
Less reclassification adjustments to:
Other comprehensive income (loss)	(42,407)	(9,042)	6,926
Stockholders' equity ending balance	(38,023)	4,384	13,426
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-sale, Parent
Unrealized gains (losses):
Unrealized investment gains (losses) arising during the period	(54,720)	(11,386)	9,028
Decrease in fair value of interest rate cap	(45)	0	0
Income tax expense (benefit)	(11,488)	(2,391)	1,903
Unrealized investment gains (losses), net of tax	(43,277)	(8,995)	7,125
Less reclassification adjustments to:
Net realized investment gains (losses) included in net realized gains	(1,101)	59	252
Income tax expense (benefit)	(231)	12	53
Total reclassifications included in net income, net of tax	(870)	47	199
Other comprehensive income (loss)	$ (42,407)	$ (9,042)	$ 6,926

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Stock Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	$ 1,496	$ 1,522	$ 506
Cost not yet recognized, weighted average period for recognition	8 years 4 months 2 days
2020 Omnibus Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized (in shares)	5,058,085
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	$ 203	$ 164	$ 61
Weighted average grant-date fair value of options granted (in dollars per share)	$ 2.30	$ 5.49	$ 4.43
Unrecognized compensation cost related to stock options	$ 250
Cost not yet recognized, weighted average period for recognition	10 months 24 days
Stock Options | Share-based Payment Arrangement, Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Contractual term from date of grant (in years)	10 years
Stock Options | Share-based Payment Arrangement, Employee | Share-based Payment Arrangement, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage	33.00%
Stock Options | Share-based Payment Arrangement, Employee | Share-based Payment Arrangement, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage	33.00%
Stock Options | Share-based Payment Arrangement, Employee | Share-based Payment Arrangement, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage	33.00%
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	$ 1,293	$ 1,358	$ 445
Vesting period (in years)	3 years
Cost not yet recognized, weighted average period for recognition	1 year 6 months
Non-vested non-option stock-based compensation expense	$ 2,029
Fair value of restricted stock units vested	$ 262	$ 498	$ 174
Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage	33.00%
Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage	33.00%
Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage	33.00%
Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Performance Stock Units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payout rate (percentage)	0.00%
Performance Stock Units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payout rate (percentage)	200.00%
Performance Stock Units | 25.1% | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payout rate (percentage)	50.00%
Performance Stock Units | 69.3% and above | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payout rate (percentage)	200.00%
Market-Based Stock Units (MSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance period (in years)	3 years
Market-Based Stock Units (MSUs) | 25.1%
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage	50.00%
Market-Based Stock Units (MSUs) | 69.3% and above
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage	200.00%

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Stock Compensation - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share-Based Payment Arrangement [Abstract]
Expected volatility	29.80%	29.80%	29.80%
Expected term	6 years	6 years	6 years
Risk-free interest rate	1.92%	1.32%	0.47%

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Stock Compensation - Summary of Stock Option Activity (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) $ / shares shares
Stock Options
Forfeited or cancelled (in shares) | shares	(20,158)
Weighted Average Exercise Price
Forfeited or cancelled, weighted average exercise price (in dollars per share) | $ / shares	$ 14.76
Options outstanding, aggregate intrinsic value | $	$ 0
Options vested or expected to vest, aggregate intrinsic value | $	$ 0
Options outstanding, weighted average outstanding (in years)	8 years 4 months 2 days
Options vested or expected to vest, weighted average remaining (in years)	7 years 8 months 23 days
Stock Options
Stock Options
Options outstanding, beginning balance (in shares) | shares	120,187
Granted (in shares) | shares	64,694
Options outstanding, ending balance (in shares) | shares	164,723
Options exercisable (in shares) | shares	53,956
Weighted Average Exercise Price
Options outstanding, weighted average exercise price, beginning balance (in dollars per share) | $ / shares	$ 16.06
Grants in period, weighted average exercise price (in dollars per share) | $ / shares	7.04
Options outstanding, weighted average exercise price, ending balance (in dollars per share) | $ / shares	12.68
Options exercisable, weighted average exercise price (in dollars per share) | $ / shares	$ 15.68
Options outstanding, weighted average outstanding (in years)	10 months 24 days

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Stock Compensation - Schedule of Share-based Payment Award, Restricted Stock Units, Valuation Assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	29.80%	29.80%	29.80%
Weighted average expected life	6 years	6 years	6 years
Risk-free interest rate	1.92%	1.32%	0.47%
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total grant date fair value	$ 391	$ 845
Total grant date fair value per share (in dollars per share)	$ 6.04	$ 13.92
Expected volatility	40.00%	35.00%
Weighted average expected life	2 years 9 months 21 days	2 years 9 months 7 days
Risk-free interest rate	1.79%	0.27%

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Stock Compensation - Summary of Share-based Payment Award, Total Shareholder Return (Details) - Market-Based Stock Units (MSUs)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Below 25.1%
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cumulative TSR %	29.20%	25.10%
Annual vesting percentage	0.00%
25.1%
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cumulative TSR %	29.20%	25.10%
Annual vesting percentage	50.00%
47.2%
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cumulative TSR %	52.10%	47.20%
Annual vesting percentage	100.00%
69.3% and above
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cumulative TSR %	74.90%	69.30%
Annual vesting percentage	200.00%

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Stock Compensation - Summary of Nonvested Restricted Stock Unit Activity (Details)	12 Months Ended
	Dec. 31, 2022 $ / shares shares
Shares
Non-vested outstanding, beginning balance (in shares) | shares	269,718
Granted (in shares) | shares	227,210
Vested (in shares) | shares	(50,236)
Forfeited or cancelled (in shares) | shares	(43,878)
Non-vested outstanding, ending balance (in shares) | shares	402,814
Weighted Average Grant Date Fair Value
Non-vested outstanding, weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares	$ 15.97
Grants in period, weighted average exercise price (in dollars per share) | $ / shares	6.60
Vested in period, weighted average exercise price (in dollars per share) | $ / shares	14.89
Forfeited or cancelled in period, weighted average exercise price (in dollars per share) | $ / shares	13.93
Non-vested outstanding, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares	$ 11.04
Restricted Stock Units (RSUs)
Shares
Non-vested outstanding, beginning balance (in shares) | shares	117,109
Granted (in shares) | shares	97,808
Vested (in shares) | shares	(50,236)
Forfeited or cancelled (in shares) | shares	(17,129)
Non-vested outstanding, ending balance (in shares) | shares	147,552
Weighted Average Grant Date Fair Value
Non-vested outstanding, weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares	$ 15.53
Grants in period, weighted average exercise price (in dollars per share) | $ / shares	6.67
Vested in period, weighted average exercise price (in dollars per share) | $ / shares	14.89
Forfeited or cancelled in period, weighted average exercise price (in dollars per share) | $ / shares	13.43
Non-vested outstanding, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares	$ 10.12
Market-Based Stock Units (MSUs)
Shares
Non-vested outstanding, beginning balance (in shares) | shares	50,861
Granted (in shares) | shares	64,709
Vested (in shares) | shares	0
Forfeited or cancelled (in shares) | shares	(9,854)
Non-vested outstanding, ending balance (in shares) | shares	105,716
Weighted Average Grant Date Fair Value
Non-vested outstanding, weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares	$ 13.92
Grants in period, weighted average exercise price (in dollars per share) | $ / shares	6.04
Vested in period, weighted average exercise price (in dollars per share) | $ / shares	0
Forfeited or cancelled in period, weighted average exercise price (in dollars per share) | $ / shares	11.67
Non-vested outstanding, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares	$ 9.31
Performance Stock Units (PSUs)
Shares
Non-vested outstanding, beginning balance (in shares) | shares	101,748
Granted (in shares) | shares	64,693
Vested (in shares) | shares	0
Forfeited or cancelled (in shares) | shares	(16,895)
Non-vested outstanding, ending balance (in shares) | shares	149,546
Weighted Average Grant Date Fair Value
Non-vested outstanding, weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares	$ 17.50
Grants in period, weighted average exercise price (in dollars per share) | $ / shares	7.04
Vested in period, weighted average exercise price (in dollars per share) | $ / shares	0
Forfeited or cancelled in period, weighted average exercise price (in dollars per share) | $ / shares	15.76
Non-vested outstanding, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares	$ 13.17

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Regulatory Matters - Summary of Statutory Basis Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Benchmark
Statutory Accounting Practices [Line Items]
Statutory capital and surplus	$ 222,340	$ 170,686
RBC authorized control level	31,350	24,279
Statutory net income (loss)	$ (2,270)	$ (782)
RBC percentage	709.00%	703.00%
ALIC
Statutory Accounting Practices [Line Items]
Statutory capital and surplus	$ 6,270	$ 6,321
RBC authorized control level	436	567
Statutory net income (loss)	$ 108	$ 128
RBC percentage	1438.00%	1115.00%
7710
Statutory Accounting Practices [Line Items]
Statutory capital and surplus	$ 6,210	$ 6,395
RBC authorized control level	225	382
Statutory net income (loss)	$ (21)	$ 76
RBC percentage	2760.00%	1674.00%
BSIC
Statutory Accounting Practices [Line Items]
Statutory capital and surplus	$ 48,655	$ 19,977
RBC authorized control level	315	129
Statutory net income (loss)	$ 695	$ (23)
RBC percentage	15446.00%	15486.00%

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Regulatory Matters - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Benchmark
Statutory Accounting Practices [Line Items]
Statutory capital and surplus	$ 222,340	$ 170,686
Benchmark | KANSAS
Statutory Accounting Practices [Line Items]
Future dividend payments percentage	10.00%
Statutory amount available for dividend payments without regulatory approval	$ 17,068	20,474
Statutory capital and surplus	1,500
ALIC
Statutory Accounting Practices [Line Items]
Statutory capital and surplus	$ 6,270	6,321
ALIC | UTAH
Statutory Accounting Practices [Line Items]
Future dividend payments percentage	10.00%
Statutory amount available for dividend payments without regulatory approval	$ 128	11
Statutory capital and surplus	300
7710
Statutory Accounting Practices [Line Items]
Statutory capital and surplus	$ 6,210	6,395
7710 | SOUTH CAROLINA
Statutory Accounting Practices [Line Items]
Future dividend payments percentage	10.00%
Statutory amount available for dividend payments without regulatory approval	$ 75	519
Statutory capital and surplus	1,200
BSIC
Statutory Accounting Practices [Line Items]
Statutory capital and surplus	$ 48,655	$ 19,977
BSIC | ARKANSAS
Statutory Accounting Practices [Line Items]
Future dividend payments percentage	10.00%
Statutory capital and surplus	$ 20,000

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Employee Benefit Plan (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Defined Contribution Plan Disclosure [Line Items]
Minimum annual contributions per employee, percent	100.00%
Maximum annual contributions per employee, percent	15.00%
Vesting percentage	25.00%
Contributions by employer	$ 1,444	$ 1,373	$ 942
First 5% of Compensation
Defined Contribution Plan Disclosure [Line Items]
Maximum annual contributions per employee, percent	5.00%
Employer matching contribution, percent of match	50.00%
Safe-Harbor Plan
Defined Contribution Plan Disclosure [Line Items]
Employer matching contribution, percent of match	3.00%

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Transactions with Related Parties (Details) $ in Thousands		12 Months Ended
	Jul. 06, 2021 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Jul. 15, 2020 individual	Jul. 14, 2020	Jan. 02, 2020
Related Party Transaction [Line Items]
Earn-out payment		$ 750	$ 0	$ 0
Gross earned premiums		642,229	572,253	432,034
Western Integrated Care, LLC
Related Party Transaction [Line Items]
Percentage of voting interests acquired	100.00%
Consideration transferred	$ 5,500
Contingent consideration liability	$ 1,500
Earn-out payment		750	750	1,500
Affiliated Entity | Program Manager Agreement
Related Party Transaction [Line Items]
Gross earned premiums				90,199
Gross commissions				17,709
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 35% Or More
Related Party Transaction [Line Items]
Percentage of outstanding common stock owned					35.00%
Number of individuals that can be nominated | individual					3
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 20% Or More But Less Than 35%
Related Party Transaction [Line Items]
Number of individuals that can be nominated | individual					2
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 20% Or More But Less Than 35% | Minimum
Related Party Transaction [Line Items]
Percentage of outstanding common stock owned					20.00%
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 20% Or More But Less Than 35% | Maximum
Related Party Transaction [Line Items]
Percentage of outstanding common stock owned					35.00%
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 10% Or More But Less Than 20%
Related Party Transaction [Line Items]
Number of individuals that can be nominated | individual					1
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 10% Or More But Less Than 20% | Minimum
Related Party Transaction [Line Items]
Percentage of outstanding common stock owned					10.00%
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 10% Or More But Less Than 20% | Maximum
Related Party Transaction [Line Items]
Percentage of outstanding common stock owned					20.00%
Altaris Capital Partners | Affiliated Entity | Management Fees
Related Party Transaction [Line Items]
Payment for management fee				500
Altaris Capital Partners | Affiliated Entity | Termination Fee
Related Party Transaction [Line Items]
Payment of termination fee		7,639
Trean Intermediaries
Related Party Transaction [Line Items]
Earn-out payment		1,415
Ownership percentage							25.00%
Trean Intermediaries | Affiliated Entity
Related Party Transaction [Line Items]
Revenue from related parties		$ 100	$ 200	200
Compstar Holding Company LLC
Related Party Transaction [Line Items]
Ownership percentage						45.00%
Compstar Holding Company LLC | Affiliated Entity | Program Manager Agreement
Related Party Transaction [Line Items]
Gross earned premiums				176,083
Gross commissions				$ 37,034

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Schedule II. Condensed Financial Information of Registrant - Condensed Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Assets
Total investments	$ 587,284	$ 472,030
Cash and cash equivalents	107,991	129,577	$ 153,149
Income taxes receivable	5,841	460
Deferred tax asset	5,958	0
Other assets	14,799	8,658
Total assets	1,581,939	1,503,015
Liabilities
Accounts payable and accrued expenses	32,609	29,448
Total liabilities	1,266,920	1,081,106
Stockholders' equity
Preferred stock, $0.01 par value per share (100,000,000 authorized, zero issued and outstanding)	0	0
Common stock, $0.01 par value per share (600,000,000 authorized; 51,222,485 and 51,176,887 issued and outstanding)	512	512
Additional paid-in capital	290,095	288,623
Retained earnings	62,435	128,390
Accumulated other comprehensive income (loss)	(38,023)	4,384
Total stockholders' equity	315,019	421,909	$ 410,107	$ 141,615
Total liabilities and stockholders' equity	1,581,939	1,503,015
Parent Company
Assets
Investment in subsidiaries	283,600	267,643
Total investments	283,600	267,643
Cash and cash equivalents	3,066	4,242
Income taxes receivable	5,841	12,360
Intercompany receivables	22,645	135,369
Deferred tax asset	1,051	671
Other assets	1,859	1,930
Total assets	318,062	422,215
Liabilities
Accounts payable and accrued expenses	3,043	306
Total liabilities	3,043	306
Stockholders' equity
Common stock, $0.01 par value per share (600,000,000 authorized; 51,222,485 and 51,176,887 issued and outstanding)	512	512
Additional paid-in capital	290,095	288,623
Retained earnings	62,435	128,390
Accumulated other comprehensive income (loss)	(38,023)	4,384
Total stockholders' equity	315,019	421,909
Total liabilities and stockholders' equity	$ 318,062	$ 422,215

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Schedule II. Condensed Financial Information of Registrant - Condensed Balance Sheets Parenthetical (Details) - $ / shares	Dec. 31, 2022	Dec. 31, 2021	Jul. 31, 2020
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	100,000,000	100,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Common stock, authorized (in shares)	600,000,000	600,000,000
Common stock, issued (in shares)	51,222,485	51,176,887
Common stock, outstanding (in shares)	51,222,485	51,176,887
Parent Company
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	100,000,000	100,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	600,000,000	600,000,000
Common stock, issued (in shares)	51,222,485	51,176,887
Common stock, outstanding (in shares)	51,222,485	51,176,887

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Schedule II. Condensed Financial Information of Registrant - Condensed Statements of Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Revenues
Net investment income	$ 10,087	$ 8,721	$ 11,669
Other revenue	8,246	10,240	12,104
Total revenue	303,242	217,690	205,451
Expenses
General and administrative expenses	86,210	54,706	38,668
Noncash stock compensation	1,496	1,522	506
Total expenses	380,253	195,356	107,870
Loss before taxes	(64,881)	24,779	92,451
Income tax benefit	1,074	5,449	6,235
Equity earnings (loss) of subsidiaries	0	0	2,333
Net income (loss)	(65,955)	19,330	$ 88,549
Parent Company
Revenues
Net investment income	0	9
Other revenue	0	0
Total revenue	0	9
Expenses
General and administrative expenses	5,591	4,103
Other expenses	3,081	845
Noncash stock compensation	1,496	1,522
Total expenses	10,168	6,470
Loss before taxes	(10,168)	(6,461)
Income tax benefit	(1,650)	(1,712)
Loss before equity earnings of subsidiaries	(8,518)	(4,749)
Equity earnings (loss) of subsidiaries	(57,437)	24,079
Net income (loss)	$ (65,955)	$ 19,330

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Schedule II. Condensed Financial Information of Registrant - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Operating activities
Net income (loss)	$ (65,955)	$ 19,330	$ 88,549
Adjustments to reconcile net income to net cash from operating activities:
Stock compensation	1,496	1,522	506
Equity (earnings) losses in subsidiaries	0	0	(2,333)
Deferred income taxes	(2,221)	(2,405)	(1,035)
Changes in operating assets and liabilities:
Premiums and other receivables	(18,362)	(31,921)	(18,499)
Other assets	(11,553)	(13,776)	4,459
Accounts payable, accrued expenses and other liabilities	3,946	(7,951)	(2,976)
Net cash provided by operating activities	108,947	94,359	50,012
Investing activities
Net cash used in investing activities	(175,440)	(120,156)	(20,246)
Financing activities
Shares redeemed for payroll taxes	23	94	82
Proceeds from short swing rule	0	85	0
Net cash provided by (used in) financing activities	45,583	(1,453)	51,400
Net increase (decrease) in cash, cash equivalents and restricted cash	(20,910)	(27,250)	81,166
Cash, cash equivalents and restricted cash ‑ beginning of period	129,984	157,234	76,068
Cash, cash equivalents and restricted cash ‑ end of period	109,074	129,984	157,234
Parent Company
Operating activities
Net income (loss)	(65,955)	19,330
Adjustments to reconcile net income to net cash from operating activities:
Stock compensation	1,496	1,522
Equity (earnings) losses in subsidiaries	57,437	(24,079)
Dividends received from subsidiaries	1,150	0
Deferred income taxes	(379)	(414)
Changes in operating assets and liabilities:
Premiums and other receivables	0	0
Other assets	70	(1,930)
Accounts payable, accrued expenses and other liabilities	2,737	(357)
Income taxes payable and receivable	6,520	(7,781)
Intercompany receivables	(3,079)	17,277
Net cash provided by operating activities	(3)	3,568
Investing activities
Distribution from subsidiaries	8,850	0
Capital contributions to subsidiaries	(10,000)	0
Net cash used in investing activities	(1,150)	0
Financing activities
Shares redeemed for payroll taxes	(23)	(94)
Proceeds from short swing rule	0	85
Net cash provided by (used in) financing activities	(23)	(9)
Net increase (decrease) in cash, cash equivalents and restricted cash	(1,176)	3,559
Cash, cash equivalents and restricted cash ‑ beginning of period	4,242	683
Cash, cash equivalents and restricted cash ‑ end of period	$ 3,066	$ 4,242	$ 683