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Note 5 - Stockholders' Equity
 9 Months Ended
Sep. 30, 2025
Equity [Abstract]  
Equity [Text Block]

5. Stockholders’ Equity

As of September 30, 2025 and December 31, 2024, the Company had 5,000,000 preferred shares authorized with a par value of $0.0001 and no preferred shares issued and outstanding. As of September 30, 2025 and December 31, 2024, the Company had 500,000,000 common shares authorized and 26,494,524 and 26,529,402 common shares issued and outstanding, respectively, with a par value of $0.0001. Additional paid in capital was $516.4 million as of September 30, 2025 and $493.7 million as of December 31, 2024.

Common stock reserved for future issuance

Common stock reserved for future issuance consists of the following as of September 30, 2025:

 

Stock options outstanding under 2019 Equity Incentive Plan

 

 

508,875

 

Restricted stock units outstanding under 2019 Equity Incentive Plan

 

 

302,720

 

Performance stock units outstanding under 2019 Equity Incentive Plan, at target

 

 

502,246

 

Shares authorized for future issuance under 2019 Equity Incentive Plan

 

 

4,221,675

 

Shares authorized for future issuance under 2019 Employee Stock Purchase Plan

 

 

1,581,244

 

Total

 

 

7,116,760

 

 

Stock based compensation

The below table summarizes the Company’s stock-based compensation expense for each period presented:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(in thousands)

 

 

(in thousands)

 

Stock-based compensation

 

$

5,379

 

 

$

4,117

 

 

$

15,471

 

 

$

11,905

 

 

Stock-based compensation expense is recognized on a straight-line basis over the vesting period of equity-based awards. For performance stock units (“PSUs”), any changes to expense resulting from differences in actual performance versus target are recognized over the remaining vesting period of the awards. The Company does not apply a forfeiture rate to unvested awards and accounts for forfeitures as they occur. All stock-based compensation is included in other underwriting expenses in the Company’s unaudited condensed consolidated statement of income and comprehensive income.

2019 Equity Incentive Plan

On April 16, 2019, the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) became effective. The 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and units, and other cash-based or share-based awards. In addition, the 2019 Plan contains a mechanism through which the Company may adopt a deferred compensation arrangement in the future.

A total of 2,400,000 shares of common stock were initially authorized and reserved for issuance under the 2019 Plan. This reserve increases on January 1 of each year through 2029 by an amount equal to the smaller of: 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or an amount determined by the board of directors.

Stock Options

Recipients of stock options can purchase shares of the Company’s common stock at a price equal to the common stock’s fair market value on the grant date, determined by the closing price of the Company’s common stock on the grant date. Stock options vest over a period between two and four years with between 25% and 50% vesting on the first anniversary of the grant date and the remainder vesting monthly over the remaining period, subject to continued service to the Company. Stock options expire ten years after the grant date.

The following table summarizes stock option transactions for the nine months ended September 30, 2025:

 

 

 

Number of shares

 

 

Weighted-average exercise price

 

 

Weighted-average remaining contractual term (in years)

 

 

Aggregate intrinsic value (in thousands)

 

Outstanding at January 1, 2025

 

 

588,385

 

 

$

33.76

 

 

 

4.9

 

 

$

42,273

 

Options granted

 

 

—

 

 

 

—

 

 

 

 

 

 

 

Options exercised

 

 

(78,976

)

 

 

42.36

 

 

 

 

 

 

 

Options cancelled

 

 

(534

)

 

 

83.46

 

 

 

 

 

 

 

Outstanding at September 30, 2025

 

 

508,875

 

 

$

32.37

 

 

 

4.1

 

 

$

53,284

 

Vested and Exercisable at September 30, 2025

 

 

508,807

 

 

$

32.37

 

 

 

4.1

 

 

$

53,279

 

 

As of September 30, 2025, the Company had immaterial unrecognized stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 0.1 years.

Restricted Stock Units

RSUs are valued using the closing price of the Company’s common stock on their grant date. The Company has issued RSUs with vesting periods of one to five years. Vesting is generally subject to continued service with the Company; however, certain employees who meet the requirements of the Company’s Equity Award Retirement Policy may continue to vest their RSUs following a qualified retirement.

The following table summarizes RSU transactions for the nine months ended September 30, 2025:

 

 

 

Number of shares

 

 

Weighted-average grant date fair value

 

Outstanding at January 1, 2025

 

 

320,411

 

 

$

65.03

 

Granted

 

 

130,320

 

 

 

115.65

 

Released

 

 

(140,737

)

 

 

62.68

 

Forfeited

 

 

(7,274

)

 

 

85.58

 

Non-vested outstanding at September 30, 2025

 

 

302,720

 

 

$

87.42

 

 

As of September 30, 2025, the Company had approximately $20.0 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 1.6 years.

Performance Stock Units

The Company issues PSUs with a combination of service, performance, and market conditions.

The majority of PSUs were issued via grants made to certain executives during 2021 and are earned based on the achievement of stock price milestones. If the Company’s stock price reaches and remains at certain milestones for 30 days, the PSUs shall become earned units and will vest upon completion of a requisite service period of approximately five years from the date of grant. As of September 30, 2025, four stock price milestones have been achieved solely with respect to the PSU award granted to the Chief Executive Officer. Additionally, two stock price milestones have been achieved with respect to each of the PSU awards granted to four other executives. These PSUs have been earned, but will not vest until the fifth anniversary of the grant date, subject to continued service.

For other PSUs outstanding, vesting of PSUs requires a period of future service and the number of shares that vest depends on performance relative to predetermined targets of the Company’s gross written premiums and adjusted return on equity as set by the Compensation Committee. The PSU’s performance period is primarily a three-year period beginning with the grant date. At the end of the performance period, the actual results are measured against the predetermined targets to determine the number of PSUs to be earned as compensation. The earned PSUs are also subject to a required service period of approximately three years from the grant date before vesting and being issued as common stock.

Effective starting with 2025 grants, PSUs issued to executives include a relative total shareholder return (“RTSR”) modifier. The RTSR modifier adjusts PSU payouts up or down based on the Company’s shareholder return relative to the S&P 1500 Property & Casualty Insurance Index (the “Index”) over a three-year measurement period.

The following table summarizes PSU transactions for the nine months ended September 30, 2025:

 

 

 

Number of shares

 

 

Weighted-average grant date fair value

 

Outstanding at January 1, 2025

 

 

460,450

 

 

$

40.43

 

Granted

 

 

86,844

 

 

 

99.61

 

Vested

 

 

(41,400

)

 

 

50.35

 

Forfeited

 

 

(3,648

)

 

 

73.15

 

Non-vested outstanding at September 30, 2025

 

 

502,246

 

 

$

49.60

 

 

The PSU grants above represent the number of shares that would vest based on achievement of all stock price milestones in the 2021 executive stock grants and the 100% achievement of the predetermined performance conditions for the other PSU grants. The actual number of PSUs which will vest is subject to adjustment based on the Company’s actual stock price performance and financial performance relative to the predetermined targets. As of September 30, 2025, the Company had approximately $10.9 million of total

unrecognized stock-based compensation expense related to PSUs expected to be recognized over a weighted-average period of 1.1 years.

2019 Employee Stock Purchase Plan

On April 16, 2019, the Company’s 2019 Employee Stock Purchase Plan (the “2019 ESPP”) became effective. A total of 240,000 shares of common stock were initially authorized and reserved for issuance under the 2019 ESPP. In addition, the 2019 ESPP provides for annual increases in the number of shares available for issuance on January 1 of each year through 2029, equal to the smaller of 240,000 shares of the Company’s common stock or such other amount as may be determined by the board of directors.

Under the 2019 ESPP, employees can purchase Company stock at a discount via payroll withholdings. The 2019 ESPP is administered through employee participation in discrete offering periods. During each discrete offering period employee funds are withheld, and the stock purchase occurs upon the conclusion of the offering period. The Company issued 12,426 shares pursuant to the ESPP during the nine months ended September 30, 2025.

Share repurchases

In July 2025, the Company’s Board of Directors approved a share repurchase program authorizing the repurchase of up to $150 million of outstanding shares of common stock through July 31, 2027.

The Company repurchased 308,417 shares for $37.3 million at an average price of $120.85 per share under this program during the nine months ended September 30, 2025. Approximately $112.7 million remains available for future repurchases under this program. The Company accounts for share repurchases by charging the excess of repurchase price over the common stock’s par value entirely to retained earnings. All repurchased shares are retired and become authorized but unissued shares.