Good afternoon everyone and thank you for joining us today for Integrity's second quarter fiscal year 2025 earnings results conference call. Speaking today are Justin Cohen, Chief Executive Officer, Chris Schenck, President and Chief Underwriting Officer and Nealon Patel, Chief Financial Officer. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question and answer session. If you would like to ask a question during this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. Before we begin, I would like to mention that certain matters discussed in today's conference call are forward-looking statements relating to future events, management's plans and objectives for the business, and the future financial performance of the company that are subject to risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are referred to in our press release issued today and our IPO prospectus filed with the SEC. We do not undertake any obligation to update these forward-looking statements made today. Finally, the speakers may refer to certain adjusted or non-GAAP financial measures on this call. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is also available in our press release issued today. A copy of today's press release may be obtained by visiting the investor relations page of the website at investors.integrity.com. I'll now turn the call over to Justin Cohen.

Great, thank you and good afternoon everyone. As we kick off our first earnings call as a public company, I want to thank our new investors for their trust and support. We take very seriously our responsibility as stewards of your capital and we are committed to delivering world-class returns over time we're excited today to share our results for the quarter and a view into where integrity is headed going forward for those news to the story let me give first a quick introduction we are a specialty ens company focused on ensuring small to medium-sized businesses across the u.s we've built a proprietary underwriting platform to penetrate this high volume market with consistency speed and rigor we've developed a competitive edge in how we segment price and process risk and we deploy technology and analytics to stay ahead of the market. We call this approach productionized underwriting and we believe it will enable us to grow profits and build market share in the ENS space. We saw evidence of that in this quarter as we produced adjusted net income of $17.9 million, a 365% increase over last year. Our gross written premiums outpaced the market, growing 32% year over year, and our focus on rigorous and efficient underwriting contributed to a record combined ratio of 88.9%. Our loss ratio was strong at 58%, supported by solid loss performance in property, and our expense ratio was 31%, down 2.3 points year over year while we continued to drive efficiencies. These are balanced results that translated into a 14.5% adjusted ROE for the quarter. Now, we are certainly paying attention to the competitive pressures in ENS, and we recognize that our reported growth this quarter bucks that trend. We are benefiting from our growth initiatives and distribution strength, as well as some barriers to entry in the small and mid-sized market. With that said, we think we will continue to see competition over time, and we will also continue to win and gain market share. But you should know that we prioritize underwriting profits first and foremost. We will only grow the top line at a pace that allows us to deliver strong expected returns to our shareholders. So with that, I'll turn it over to Neelam Patel, Chief Financial Officer, to walk through our financial results. And then Chris Schenk, our President and Chief Underwriting Officer, will describe how we generated these outcomes.

Thank you Justin. This was a strong quarter for Attegrity. Adjusted net income came in at $17.9 million, up from $4.9 million in the same quarter last year. These results were driven by solid top-line growth, improving margins, and higher investment income. I'll take you through the main line items starting with premiums. As already mentioned, our gross return premiums grew by 32% in the quarter. Net return premiums grew 38%, driven by higher retention rates year over year. Net earned premiums grew at a 20% pace, reflecting the lagged recognition of quarter share reinsurance we placed in 2024. As we move through the second quarter, second half of 2025, that headwind should gradually abate. Fee income was $1.5 million versus $191,000 a year ago, reflecting increased policy fees. Historically, we hadn't implemented standard market fees, which we began doing this year. Turning to underwriting, our underwriting income in 2Q25 was $9.6 million, up 119% year over year. This translates into a combined ratio of 88.9% down from 94% due to reductions in both our loss and expense ratio. The loss ratio declined 2.8 points to 58% with strong results in our property business. In 2Q25, we had no prior year development compared to 3.5 points in 2Q24 that were related to a change in how we reserved for legal expenses. CAT losses represented 4.1 percent of net earned premiums this quarter, down from 8.8 percent last year, which had a very active tornado season. Our expense ratio declined 2.2 points to 31 percent, mainly due to lower policy acquisition costs. Policy acquisition costs as a percentage of net earned premiums declined to 18.5 percent from 21.1 percent, thanks to higher seeding commissions and a more favorable business mix. On expenses, operating expenses as a percentage of net earned premiums was 12.4 percent up marginally from last year, but roughly flat compared to first quarter of 2025. The year-over-year increase reflects the front-loaded investments we made in 2024 to support growth and transition to becoming a public company moving on to investment results net investment income was 11.9 million in the second quarter driven primarily by increased assets from our recent ipo and higher yields on our fixed income portfolio meanwhile realized and unrealized gains contributed another 1.4 million our effective tax rate for the quarter was 21.1 percent that brings us to net income of $17.6 million. Adjusted net income, which adds back IPO-related compensation costs, was $17.9 million, or $0.41 per diluted share. Turning briefly to the balance sheet, our investments grew from year-end by $180 million to $955 million, which reflects $122 million of net IPO proceeds with the remainder coming in from operating cash flow. Book value increased by $161 million with $115 million being attributable to the IPO and thus driven by retained earnings and a modest move up in AOCI. The quarter ended with book value per share of $11.64. With that, I will hand it over to Chris to talk about our underwriting and operating performance.

Thanks, Neelam. This quarter, we executed our underwriting playbook with fidelity. We delivered 32% gross written premium growth and a sub-90 combined ratio. Let me walk you through how we did that. to start submission volume grew significantly well in excess of our top line the volume came from three sources activation of new partners launch of our new verticals and products and increased penetration from our Midwest strategy as submission volume grew we we maintain a conservative underwriting posture and we deployed capacity with discipline as a reminder we operate within a technical and quantitative underwriting framework and as such we were able to achieve firm-wide renewal rate increases in the high single digits with new business rate levels well above technical targets our quote-to-bind ratio on middle market business was in the high single digits this is in line with plan it is deliberately set low because of our selective risk-taking approach. On the expense side, our service delivery center absorbed higher volumes with only marginal increases in headcount. We continued to deploy automation to reduce manual work, and there was more utilization of our pre-priced and auto-quote solutions. This combination of factors lowered our unit cost, and as expected, our model is delivering economies of scale while enhancing underwriting quality a big part of what's powering our submission growth is our expanding distribution network since mid-2022 we have invested toward market access for emerging growth opportunities this has resulted in 150% increase in unique distribution relationships with submissions growing at a much faster pace our up across multiple products now and we are seeing faster and deeper engagement from our recent appointments we believe our value proposition built around a clearly articulated appetite fast quote delivery and a hassle-free digital transaction process is resonating with all of our partners in in short our growth was a function of an expanding distribution funnel our combined ratio results resulted from maintaining underwriting discipline and improving operational efficiency. These two pieces were mutually reinforcing. We are achieving lower cost at each step from submission to bind. This offsets the cost of a lower quote-to-bind ratio, which in turn empowers us to adhere to technical rates, maintain discipline, and avoid appetite creep. with that I'd like you to take a look at I want to take a look at with that let's take a look at our performance which by casualty and property which had very different growth dynamics this starting with casualty we produce 57% growth in gross written premium in casualty growth was driven by a combination of new initiatives as well as continued strength in our core segments first we we expanded into new verticals and casualty, most notably retail trades, launched in Q1 in our broker channel. This is now fully operational and scaling. We also saw strong momentum in our professional liability verticals. These new products launched in January and reached full operating potential in Q2. This line contributed to the growth and that is reflected in our professional services vertical. Second, we advanced our geographic expansion strategy through Project Heartland. As a reminder, Project Heartland is an initiative designed to win targeted business across 30 urban Midwest markets built on deeply researched underwriting plans, local partnership, and tailored offering. Project Heartland contributed meaningfully to Q2 growth. Altogether, retail, professional liability, Heartland, and a handful of other initiatives accounted for nearly half of the total casualty growth this quarter. We also performed on track or better in our established verticals like hospitality, daycare, and residential real estate. In casualty, renewal rate change was in line with our targets and well above trend, and we saw new business rates well above technical levels it is critical for our investors to understand that we hope we believe we hold a clear technical and strategic advantage we we are going deeper into each of our segment segments and finding insights that is allowing us to capitalize an opportunity emerging opportunities well before our peers see them as a result we are leaning in as our competitors are pulling back from from key casualty classes moving on to property despite contraction in the ENS sector we grew property gross premiums by 4% while there's talk of a softening market in property we we are only seeing modest pressure in a small and mid-sized space competition is still rational and far less severe than the large-ticket property than large-ticket property our four percent growth reflected proactive rate actions implemented in Q3 last year we helped firm on substantive rate increases pricing above technical levels and we granted flat or dumb renewals only when justified by performance and exposure stability we priced prospectively with an 18-month view on frequency and severity trends and accordingly we have raised our severity assumptions to reflect the pending impact of tariffs on building material and labor costs these are these factors influence overall replacement costs for property here again we're doing something different deep analysis finding insights and taking early action to protect our economics we believe we are leading proactively while rather than waiting to react react to a bad outcome we we've made a deliberate trade-off accordingly we've made a deliberate trade-off prioritizing price over volume in property and this is consistent with our forward view of lost cost we we also managed our property footprint we also took action to manage carefully manage our property footprint in cat-prone geographies raising rates to cover increasing cat reinsurance costs we expect these benefits to we expect to see these benefits and lower than anticipated costs even though in the short term it it has it has led to some it has led to growth install growth in some areas Finally, Project Heartland meaningfully contributed to our results. In the Midwest, we achieve accelerated market penetration, writing profitable business, optimizing our geographic spread, and reducing reliance on large E&S states. To wrap it up, this was a high-quality underwriting quarter marked by disciplined growth, strong pricing, and continued efficiency gains. We are scaling deliberately while maintaining technical standards and control. This is the impact of the productionized underwriting model we have built, and we believe it positions us for consistent results going forward.

Back to Justin.

Thanks, Chris.

This was a solid quarter for Integrity. Profitable growth, disciplined underwriting, and clear progress on our strategic objectives. As we look ahead into the second half of 25, our expectations are consistent with what we shared with you during the IPO process. a mid-to-high 20s growth rate year-over-year in gross-ridden premiums and a combined ratio in the low 90s. That outcome assumes competitive dynamics stay consistent with what we've experienced to date. But even if competition intensifies beyond our expectations, we expect to continue taking share in the market. Meanwhile, behind the scenes, we are advancing our next phase of productionized underwriting. We're developing automation and pre-priced solutions that we believe will solidify our position in the market we will share more with you on that as we move closer to deployment for now we thank you again for your support and for spending time with us today and we look forward to updating you on our on our progress in the quarters ahead and with that eric you can please open it up for q a at this time i would like to remind everyone in order to ask a question please press star followed by the number one on your telephone keypad your first question comes from the line of alex scott with barclays please go ahead Hi, thanks for taking the question.

First one I wanted to ask you is on the, I guess, the makeshift towards casualty. Like, you know, if I look at the mix year over year, it is a pretty meaningful change.

And so I just wanted to understand, is that, you know, changing at all, like the duration of the liabilities and just the way you have to, you know, think about the tail on the loss reserves? that these actions of having more casualty business is extending the tail of the liabilities just in terms of to make sure that we understand the drivers the drivers is excellent performance in our casualty business and as chris was talking about we did raise rates uh in the third quarter of last year and that decelerated growth this year so that's what's driving that mix shift but we are very comfortable with it and our overall targets of casualty within the 60 to 70 percent range is on uh on a clear path now yeah that's helpful um and then can you provide us

a little more color on just the update on project heartland you know how many distributors you're adding you know how far along in that process how much more growth is there to come uh from those initiatives yeah and this project is really just getting going and chris you want to give some It is.

We are just starting to see the dividends from the investment last year come through. We have activated more than three dozen partners, and most of them are just starting to come online in terms of production. So it's just the beginning. There's a huge runway.

Got it. Thanks, Alex.

The next question comes from the line of Andrew Klitgerman with TD. Please go ahead.

Hey, thanks a lot. Apologize if I go over something. I had a little technical difficulty, but just getting a sense on the property component growing 3.7%, could you clarify how much pricing was down, if at all? and then how much of that kind of lower premium level was due to you more effectively managing your PMLs for catastrophe exposures?

Yep. We actually achieved meaningful rate increases in property. I'll pass it over to Chris to talk about that.

So our property rate increases were in the low teens. We stay firm on rates. We were targeting a higher number, but we made concessions to protect our renewal base. That was prudent. And on new business, we have firm. We are seeing attractive rating opportunities, not just from the new Midwest business coming in, But we, you know, generally most of our peers are concentrating on the big E&S states. The opportunities elsewhere seems to be somewhat unaffected. Beyond just the geography, there is also the size element. You know, smaller business, it tends to be a lot more sticky. There's less of a desire to dislocate those accounts. and part of our philosophy of pricing the account right in year one so that we can maintain maintain it part of that involves pricing you know discipline upfront and making sure that we made the process simple downstream so by making the process simple it somewhat insulates you from if we hadn't taken our view on tariffs which we did we could have grown more meaningfully in that area and then And there were certain geographic zones, coastal zones, coastal states, I should say, where we did reduce exposure.

And that did drive down policy count, but it will improve our cap XOL costs.

Thank you for that. And, you know, Justin, you just mentioned tariffs. How are you thinking about the impact now that it looks like we've gotten a little more clarity there?

Yep. We are anticipating that the inflationary environment still does come through on building costs, and we've done the analytics to do that. If we were to find out that we were ahead of the curve and the tariffs didn't have as much of a bite, that would be a bigger opportunity for us, given that we've priced for it.

Yeah. So we are anticipating around mid-single digits increases due to tariffs cost. That's a combination of building materials or dynamics.

Maybe if I could sneak a last one in. Does QQ kind of feel like kind of a snapshot of what we may see in the next quarter or two in terms of premium growth? I mean, I know casualty is super robust and you seem a bit more cautious on the property, but are these numbers that might be in the ballpark for the upcoming quarters?

Yeah, Andrew, at the end of those prepared remarks, we gave a confirmation of what we had previously talked about, which was mid to high 20s growth for 2H. So that gives you a sense of what we're expecting. And we also said that that assumes that we do not see a change in the competitive intensity in the environment, that it remains what we are seeing today which is uh modest it's it's different in in the small and medium-sized space but that's that's the premise there so that is the uh that is the outlook that we confirmed that that makes a lot of sense i'm sorry i had a little technical difficulty at the beginning yep and overall we're just to say that we're not as i said in the beginning of the remarks we are not top line focused we really are focused on delivering alpha you've heard that in way that we've done that throughout this call we are finding unique situations and opportunities that are driving out growth in excess of the market but they are not based on the beta of the market growth so that's really what we're focused on and that's what we're endeavoring to deliver thank you thanks andrew your next question comes from the line of pablo singzon with jp morgan please go ahead um hi thank you um so for my teeth it's always hard to parse the drivers of growth for companies such as yourself, right?

You're going fast, pursuing a bunch of initiatives. And I realize this might be an unfair question, but I was wondering if you could provide some perspective on some metric for team store sales growth, right? Whether it's growth from existing agencies without considering recent additions, or maybe freezing verticals or products deserves some sense of what growth is coming from what's already in the book versus what you're actively pursuing quarter to quarter.

Yeah. One of the things that was mentioned in the call, but just reiterate here is that almost half of our growth came from the new initiatives and so if you back that out you get a sense of what the same store looks like but we are seeing compounding of our existing cohort the older the more recent and the older cohorts of brokers and agents because you want to add anything there yeah it is it is hard to fully dissect it because initiatives overlap so for example in heartland um in the midwest as part of project heartland uh we are gaining significant market share in our legacy verticals so those are you know residential realist thank you and then second question as you think about the

current economic environment and perhaps a more permanent impact from tariffs which of your small business and markets are you most concerned about and if the economy that's slow what kind of impact are you expecting on your growth trajectory you talked about the inflation piece but you know from an economic fundamental perspective are you assuming some headwinds there so just Just to add some context around this, we are continuously studying the environment and observing new trends that are emerging.

We're monitoring a number of trends. So it is a – whatever we – a few things to take action on inflation in 2022. What we experienced there is initially we took the same – we did the same – executed the same playbook. we saw that severities were going to increase we price on a prospective basis so we're looking 18 months out expecting higher severities we implemented rate increases that were meaningful now what happens is initially the market doesn't fully understand why we're an outlier we are we are willing to be an outlier in that case but the market contemplates it for a while and then eventually our competitors catches back up it catches up to us and they you know they push their rate increases so we're we and what we experienced there is the

margin it's a you know we've had a few cycles like that so that's what we are expecting here yep in terms of the defensiveness of our portfolio we may have talked about that in the past we have a fairly defensive set of industries that we focus on multi-family the nonprofits and certain certain others as well. Gas stations and grocery stores, the ones that would have an impact would be potentially contractors where there are, but the contractors we focus on are of a smaller scale and less economically sensitive and then hospitality. Those would be the areas if there were to be an economic shift.

Thank you both.

Thank you.

Your last question comes from the line of Elise Greenspan with Wells Fargo. Please go ahead.

Hi, thanks. Good evening. My first question, you know, on the 20%, sorry, mid to high 20s growth rate that, you know, you highlighted for the second half of the year, reaffirming your outlook, what's embedded within that for property versus casualty growth?

So we have, at least we have not broken that down in terms of the guidance, But what we'll say is that we are somewhat optimistic on the property book in that we applied our rate increases in 3Q of last year, but that was opportunistic in nature. And what happened this year was we maintained those rate increases because of our view on And so as we get towards the back end of this year, there's some potential for us to not be changing rates on those accounts. and therefore we may see some potential some potential additional benefit there but we're not breaking down that the projected growth by product yet and then you know as part of the guy just and you said just you know that it's based on consistent competitive dynamics you know if you guys did you guys see any pricing changes in July relative to what you saw and observed in the Q2 in either property or casualty lines no it's been consistently marginally tightening pressure but nothing material to talk about so there's nothing embedded within that other than to say that we can't predict where we're not we're not in the business of predicting the beta of this market you know competitors will do what they're gonna do we are we're trying to lay out that we have these initiatives and these approaches that we take that are truly differentiated so even in a tougher market we're gonna still keep winning and so that's really where we want to focus we know the top line strong and we're just caveating with all that more generally our peers you know there's chatter there's discussions around that but we're not necessarily focused in the

same geographies they are that is coming out of the three big DNS states a lot of the talk of our property so you know in a way we are where we are going is you you know, fairly overlooked by the market and opportunities there are still great.

Yeah, and overall, as you know, we're technical underwriting firms, so we have a technical rate and we are not going to go below that. So that is also important to keep in mind.

And then one last one. I think the pay to incurred ratio did go up in the quarter. Was there something, you know, related to business fixed or something else that impacted that in the second quarter?

Are you talking sequentially or year over year?

I think it went up both, so any color you could provide would be helpful.

Overall, the pay-to-encouraged were actually lower than our internal expectations. And on a year-over-year basis, it's partly due to just the maturation of a casualty book. And also, there is, as you're describing, there is some shift in the having had more property previously. We were growing property pretty quickly previously, and so that may be contributing to the higher that we're seeing today. but now you'll see that transition going forward as you're seeing this deceleration in property going forward. So a little bit of mix, but more just the casualty reserves, which we have been accelerating higher because of our growth rate, just starting to pay.

Thank you.

Great. There are no further questions at this time. I would now like to turn the call back over to management for closing remarks.

Well, thank you all very much. We appreciate your support again and we look forward to being in touch with you uh in the months and quarters ahead thank you very much ladies and gentlemen this concludes today's call thank you all for joining