GAAP differs in certain respects from Statutory Accounting Principles (“SAP”) as prescribed or permitted by the various U.S. state insurance departments. The principal differences between SAP and GAAP are as follows:

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Under SAP, investments in debt securities are primarily carried at amortized cost, while under GAAP the Company records its debt securities at estimated fair value.

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Under SAP, policy acquisition costs, such as commissions, premium taxes, fees and other costs of underwriting policies are charged to current operations as incurred, while under GAAP such costs are deferred and amortized on a pro rata basis over the period covered by the policy.

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Under SAP, prepaid expenses and premium receivables over 90 days old are designated as "non-admitted assets" and are charged against surplus. Premium receivables, net of allowance for expected credit losses, and prepaid expenses are recorded as assets under GAAP.

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Under SAP, net deferred income tax assets are admitted following the application of specified criteria, with the resulting admitted deferred tax amount being credited directly to surplus.

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Under SAP, the costs and related receivables for guaranty funds and other assessments are recorded based on management's estimate of the ultimate liability and related receivable settlement, while under GAAP such costs are accrued when the

liability is probable and reasonably estimable and the related receivable amount is based on future premium collections or policy surcharges from in-force policies.

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Under SAP, unpaid losses and loss adjustment expenses and unearned premiums are reported net of the effects of reinsurance transactions, whereas under GAAP, unpaid losses and loss adjustment expenses and unearned premiums are reported gross of reinsurance.

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Under SAP, a provision for reinsurance is charged to surplus based on the authorized status of reinsurers, available collateral, and certain aging criteria, whereas under GAAP, an allowance for uncollectible reinsurance is established based on Management’s best estimate of the collectability of reinsurance receivables. For statutory purposes, the Company uses a hybrid approach and will record the higher of these two methodologies.

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Under SAP, the tax impact from the change in the federal tax rate as a result of the Tax Cuts and Jobs Act enacted on December 22, 2017 is recorded through surplus, whereas under GAAP, the tax impact is recorded in the Consolidated Statements of Operations.

The National Association of Insurance Commissioners (“NAIC”) issues model laws and regulations, many of which have been adopted by state insurance regulators, relating to: (a) risk-based capital ("RBC") standards; (b) codification of insurance accounting principles; (c) investment restrictions; and (d) restrictions on the ability of insurance companies to pay dividends.

The Company’s insurance subsidiaries are required by law to maintain certain minimum surplus on a statutory basis, and are subject to regulations under which payment of a dividend from statutory surplus is restricted and may require prior approval of regulatory authorities. In 2024, Penn-Patriot Insurance Company declared a dividend in the amount of $40.0 million which will be paid in the first quarter of 2025. In addition, Penn-Patriot Insurance Company's, Penn-America Insurance Company's, and United National Insurance Company's distribution of their investment in subsidiaries at its underlying statutory value was considered an extraordinary dividend. These distributions improve the Company’s ability to manage capital and liquidity within the holding company structure Belmont Holdings GX, Inc. and increased the aggregate capital at the Global Indemnity Group Pool. The following extraordinary dividends were declared at December 31, 2024:


(Dollars in thousands)
Company	Property Distributed	Statutory Value at December 31, 2024
Penn-Patriot Insurance Company	Stock of American Insurance Services, Inc.		351,923
Penn-America Insurance Company	Stock of Penn-Star Insurance Company		108,955
United National Insurance Company	Stock of Diamond State Insurance Company and Penn Independent Corporation		129,599

As a result of these extraordinary dividends which occurred in December 2024, Penn-Patriot Insurance Company, Penn-America Insurance Company, and United National Insurance Company will require approval from their respective state insurance departments for any dividends in 2025. Applying the current regulatory restrictions as of December 31, 2024, the maximum amount of distributions that could be paid in 2025 by Diamond State Insurance Company and Penn-Star Insurance Company under applicable laws and regulations without regulatory approval is approximately $11.0 million and $13.8 million, respectively.

The NAIC's RBC model provides a tool for insurance regulators to determine the levels of statutory capital and surplus an insurer must maintain in relation to its insurance and investment risks, as well as its reinsurance exposures, to assess the potential need for regulatory attention. The model provides four levels of regulatory attention, varying with the ratio of an insurance company's total adjusted capital to its authorized control level RBC ("ACLRBC"). If a company’s total adjusted capital is:

Based on the standards currently adopted, the Company reported in its 2024 statutory filings that the capital and surplus of the insurance companies are above the prescribed Company Action Level RBC requirements.

The following is selected information for the Company’s insurance companies, net of intercompany eliminations, where applicable, as determined in accordance with SAP:


	Years Ended December 31,
(Dollars in thousands)	2024		2023		2022
Statutory capital and surplus, as of end of period	$	498,531	$	402,838	$	367,275
Statutory net income		65,865		60,976		23,044