We are involved in claims-related legal actions arising in the ordinary course of business. We accrue amounts resulting from claims-related legal actions in unpaid losses and LAE during the period that we determine an unfavorable outcome becomes probable and we can estimate the amounts. Management makes revisions to our estimates based on its analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation.

On October 20, 2023, we received notice that the DFS filed a notice of claim and demand for tender of insurance policy limits under our director and officer insurance to carriers participating in the our director and officer’s insurance program (the “Claim”). The Claim alleges that former officers and directors of UPC were involved in wrongful acts that resulted in UPCs insolvency and demands immediate tender of our director and officer’s policy limit of $40,000,000 where we have a retention of $1,500,000. The former directors and officers of UPC deny the allegations. Although no litigation has arisen from the Claim, litigation is anticipated. We anticipate that directors and officers will be successful in their defense; however, due to our indemnification obligation, we accrued the policy retention amount of $1,500,000 in 2023.

We have fully funded two limited partnership investments and partially funded one additional limited partnership investment. The amount of unfunded commitments was $1,400,000 at December 31, 2024. We had no unfunded commitments at December 31, 2023.

We, as lessee, have entered into leases of commercial office space of various term lengths. In addition to office space, we lease office equipment under operating leases.


	Financial Statement Line	December 31, 2024		December 31, 2023
Assets
Operating lease assets	Other assets	$	3,209	$	562

Total lease assets		$	3,209	$	562

Liabilities
Operating lease liabilities	Operating lease liability	$	3,323	$	739

Total lease liabilities		$	3,323	$	739


	Operating Leases		Finance Leases		Total
2025	$	337	$	—	$	337
2026	398		—		398
2027	407		—		407
2028	419		—		419
2029	432		—		432
Thereafter	2,446		—		2,446
Total undiscounted future minimum lease payments	4,439		—		4,439
Less: Imputed interest	(1,116)		—		(1,116)
Present value of lease liabilities	$	3,323	$	—	$	3,323


	Years ended December 31,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities
Investing cash flows from operating leases	$	95	$	—

Right-of-use assets obtained in exchange for new operating lease liabilities	3,256		13

Financing lease amortization expenses are included in depreciation expense in our Consolidated Statements of Comprehensive Income (Loss). See Note 8 for information regarding depreciation expense. See Note 12 for information regarding commitments related to long-term debt, and Note 16 for commitments related to regulatory actions.

We previously leased and occupied office space in which we no longer operate. Effective October 1, 2022, this office space was subleased to a third party. The sublease was effective from October 1, 2022 through July 31, 2025, with no option to extend. However, on February 29, 2024, this sublease was cancelled as a part of an agreement to terminate the original lease associated with the office space. As of December 31, 2024, we recognized $33,000 of income related to this sublease, exclusive of the lease expense associated with the original lease.

A series of legislation was enacted in the United States during 2020 and 2021 in response to the COVID-19 pandemic that provided financial relief for businesses impacted by government-mandated shutdowns, work stoppages, or other losses suffered by employers. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided an employee retention credit, which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers. The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per

employee. During the second quarter of 2022, we evaluated our eligibility and filed for a $10,161,000 refund in connection with our Employee Retention Tax Credit for the tax year ended December 31, 2021. As of December 31, 2024, we have not received $4,469,000 from the IRS related to this refund and have an unrecorded gain contingency related to this balance. A gain contingency is an uncertain situation that will be resolved in the future, possibly resulting in a gain.

We will continue to monitor the matter for further developments that could affect the outcome of these contingencies and will make any appropriate adjustments each quarter.

AmCoastal participates in shared quota-share reinsurance agreements with our former subsidiary, UPC, which are subject to a variable ceding commission based on loss experience. With the receivership of UPC in 2023, we have not received data related to UPC losses that could unfavorably shift AmCoastal’s commission related to these contracts. In addition, we cannot reasonably determine how this shift will be allocated between the contracted parties. Until we receive this loss data and provide the updated calculations to both our reinsurance partners and the DFS, as receiver of UPC, we are unable to estimate the impact; however, we believe a loss contingency related to these commissions may exist as of December 31, 2024.

We will continue to monitor the matter for further developments that could affect the outcome of these contingencies and will make any appropriate adjustments each quarter.