Accelerant Holdings (ARX) risk factors, FY2025 10-K

Risks Related to Our Risk Exchange and Our Members

1. 01The addition of any products to our portfolio that may result in a higher loss ratio may be less attractive for our Members and Risk Capital Partners, and may materially adversely affect our business, results of operations, financial condition and prospects
2. 02A decline in our financial strength rating may adversely affect the volume of business we can write
3. 03Certain Members may choose to leave our Risk Exchange after their contractual commitments have expired, which would adversely affect our results of operations and our ability to offer attractive risk opportunities to our Risk Capital Partners
4. 04The rapid development and implementation of artificial intelligence applications and technologies poses business, regulatory and safety risks to our business, results of operation, financial condition and prospects
5. 05If our Members do not provide the data they are contractually obligated to provide or the data provided by our Members is inaccurate or incomplete, our Risk Exchange and participating Risk Capital Partners may be unable to accurately price the risk transferred through our Risk Exchange
6. 06We have generated net losses in the past and may incur losses in the future
7. 07Our current market share and profitability may decrease as a result of disintermediation within the insurance industry, including increased competition from insurance companies, technology companies, and participants in the financial services industry, as well as the shift away from traditional insurance markets
8. 08growing number of larger financial institutions offer a wider variety of financial services, including insurance intermediary services
9. 09Our ability to add new Members to our Risk Exchange may slow over time, which would limit our growth and materially adversely affect our business, results of operations, financial condition, and prospects
10. 10Our holding of Member and Risk Capital Partner funds exposes us to complex fiduciary regulations and the potential for losses
11. 11If new regulations are enacted that affect the ability of our Members to operate, it could materially adversely affect our business, results of operations, financial condition and prospects

Risks Related to Our Risk Capital Partners

1. 12We have expanded rapidly in recent years, and we may not be able to continue to attract Risk Capital Partners at the same rate or of the same quality to facilitate similar growth in the future or continue maintaining a capital-efficient model
2. 13We may not be able to continue to attract institutional investors to Flywheel Re, or those investors may insist in the future on terms that are less economically attractive to us
3. 14Our business, and therefore our financial condition and results of operations, may be adversely affected by a reduction in insurer and reinsurer capacity
4. 15The failure of Risk Capital Partners to pay claims in an accurate and timely fashion could materially and adversely affect our business, results of operations, financial condition and prospects
5. 16We may lose Risk Capital Partners as a result of consolidation within the insurance and reinsurance industries
6. 17Changes in reinsurance regulation could limit the availability of risk capital in the future
7. 18U.S.-based activities of our Members or ceding companies on the Risk Exchange may be attributed to a non-U.S. Risk Capital Partner for tax purposes in certain circumstances, and our ability to grow the Risk Exchange may be limited as a result

Risks Related to Underwriting Activities

1. 19Our financial condition and results of operations could be materially adversely affected if we do not accurately assess the underwriting risk we retain and establish adequate premium rates. Decreases in pricing for property and casualty insurance may reduce our net income
2. 20Unexpected changes in the interpretation of the coverage or provisions of the policies we underwrite, including loss limitations and exclusions, could have a material adverse effect on our business, results of operations and financial condition
3. 21The movement in our individual Member commission structures could materially affect the commissions retained on written premiums
4. 22The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition and results of operations
5. 23Our losses and loss expense reserves may be inadequate to cover our actual losses, which could have a material adverse effect on our business, results of operations and financial condition
6. 24Our reinsurers may not reimburse us for claims on a timely basis, or at all, which may materially and adversely affect our business, results of operations and financial condition
7. 25Severe weather conditions, including the effects of climate change and catastrophes, as well as man-made events, such as terrorism, may adversely affect our business, results of operations and financial condition

General Risks

1. 26We have experienced rapid growth in recent years, and our recent growth rates may not be indicative of our future growth. As our costs increase, we may not be able to generate sufficient revenue to achieve, and if achieved, maintain, profitability
2. 27We are subject to economic and reputational harm if companies with which we do business (including our Members and our Risk Capital Partners) engage in negligent, grossly negligent, misleading or fraudulent behavior and damage to our reputation could have a material adverse effect on our business
3. 28Our business may face significant competitive pressures in the future
4. 29We rely on third parties to perform key functions of our business operations enabling our provision of services to our Members and Risk Capital Partners. These third parties may act in ways that could harm our business
5. 30There is ongoing litigation relating to COVID-19 being brought against participants in the insurance industry, and as we approach the end of statutory defined periods in which claims can be brought, our potential loss exposure becomes more clear, yet may result in significant losses
6. 31Pandemics or other outbreaks of contagious diseases and the measures to mitigate their spread could materially adversely affect our business, results of operation and financial condition and those of our Members and Risk Capital Partners
7. 32Our international operations expose us to various international risks, including exchange rate fluctuations, that could adversely affect our business
8. 33The occurrence of prolonged or severe social or political unrest may adversely affect our business, results of operations and financial condition
9. 34Geopolitical risks create uncertainty that may adversely affect our business, results of operations and financial condition
10. 35We maintain cash, cash equivalents and investments at financial institutions and are exposed to credit risk in the event of default by such financial institutions
11. 36Performance of our investment portfolio is subject to a variety of investment risks that may adversely affect our financial results and our financial condition
12. 37We could be forced to sell investments to meet our liquidity requirements
13. 38Our inability to successfully recover from a disaster or other business continuity problem, should we suffer from such an event, could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability
14. 39We depend on the ability of certain of our subsidiaries to transfer funds to us to meet our obligations, and the ability of our insurance company subsidiaries to pay dividends to us is restricted by law
15. 40If we cannot maintain the valuable aspects of our culture as we grow, our business may be harmed

Risks Related to Our Technology and Intellectual Property

1. 41If we are unable to leverage our information systems to enhance the information benefits available to our Members and Risk Capital Partners through our Risk Exchange, our results may be adversely affected
2. 42Our future success depends on our ability to continue to develop and implement technology, and to maintain the confidentiality of this technology
3. 43Loss of key vendor relationships or failure of a vendor to protect our data, confidential and proprietary information could adversely affect our operations
4. 44Failure to obtain, maintain, protect, defend, or enforce our intellectual property rights, or allegations that we have infringed, misappropriated or otherwise violated the intellectual property rights of others, could harm our reputation, ability to compete effectively, business, and financial condition
5. 45We operate in many foreign jurisdictions and effective trademark, copyright, and trade secret protection may not be available in every country or jurisdiction in which we offer our services. Failure to protect our intellectual property adequately could harm our reputation and affect our ability to compete effectively
6. 46Our employees could take excessive risks, which could negatively affect our financial condition and business
7. 47Future acquisitions or investments contain inherent strategic, execution, and compliance risks that could disrupt our business and harm its financial condition
8. 48Our business and operations could suffer in the event of a system or information security failure or in the event that we are the target of a cyberattack

Risks Related to Legal and Regulatory Requirements

1. 49Our businesses are subject to significant governmental regulation, changes in which could reduce our profitability, limit our growth, or increase competition
2. 50As we continue to grow our Member base, we anticipate expanding into new geographies that could give rise to additional regulatory, risk and other issues, which may materially affect our business, results of operations, financial condition and prospects
3. 51Our business is subject to risks related to legal proceedings and governmental inquiries
4. 52We are subject to a number of, and may in the future be subject to, E&O claims as well as other contingencies and legal proceedings which, if resolved unfavorably to us, could have an adverse effect on our results of operations
5. 53Proposed tort reform legislation, if enacted, could decrease demand for casualty insurance, thereby reducing our commission revenues
6. 54Regulations affecting insurance carriers with which we place business impact how we conduct our operations
7. 55We may face increasing scrutiny and evolving expectations from investors, customers, regulators and other stakeholders regarding environmental, social and governance matters
8. 56Economic substance legislation of the Cayman Islands and other recently-enacted legislation and regulations may adversely impact us or our operations
9. 57Anti-Money Laundering Matters
10. 58Act, Exchange Act or any claim for which the federal district courts of the United States of America are, as a matter of the laws of the United States, the sole and exclusive forum for determination of such a claim

Risks Related to Taxation

1. 59U.S. tax-exempt organizations that own our Class A common shares may recognize unrelated business taxable income (“UBTI”)
2. 60As of December 31, 2025 we had net deferred tax assets of $78 million, net of a valuation allowance of $46 million, which may become devalued if either Accelerant does not generate sufficient future taxable income or applicable corporate tax rates are reduced (or applicable tax laws otherwise change)
3. 61The U.S. federal income tax laws and interpretations thereof are subject to change, which may have retroactive effect and could materially affect us
4. 62Our UK and non-UK operations may be affected by changes in UK tax law
5. 63The BEAT applies to deductions arising out of “any premium or other consideration” paid or accrued to a related foreign reinsurer
6. 64In addition, following the passage of the OBBBA, the calculation of a RPII Shareholder’s pro rata share of RPII is unclear in certain material respects. Shareholders are urged to consult their own tax advisors regarding the application of the RPII rules to them

Risks Related to Our Class A Common Shares

1. 65The dual class structure of our common shares has the effect of concentrating voting control with the shareholders affiliated with Altamont Capital, including control over decisions that require the approval of shareholders; this will limit your ability to influence corporate matters submitted to a shareholder vote
2. 66Each of our Class B common shares is entitled to ten votes, and each of our Class A common shares, which are the shares owned by the public shareholders, is entitled to one vote. Affiliates of Altamont Capital control approximately 76.7% of the combined voting power of our outstanding common shares
3. 67An active trading market for our Class A common shares may not be maintained
4. 68Applicable insurance laws could make it difficult to effect a change of control of our Company
5. 69Our operating results and share price may be volatile, or may decline regardless of our operating performance, and you could lose all or part of your investment
6. 70Sales of substantial amounts of our Class A common shares in the public market, or the perception that these sales could occur, could adversely affect the market price of our Class A common shares and could materially impair our ability to raise capital through equity offerings in the future
7. 71Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our Class A common shares for return on your investment
8. 72Our success depends on our ability to retain, attract and develop experienced and qualified personnel, including our senior management team and other personnel
9. 73We may change our underwriting guidelines or strategy without shareholder approval
10. 74Our amended and restated memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A common shares
11. 75Our principal shareholders have substantial influence over our company. Their interests may not be aligned with the interests of our other shareholders, and they could prevent or cause a change of control or other transactions
12. 76You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law
13. 77As a newly public company, we are subject to extensive regulatory and compliance requirements that place significant demands on our resources and management and may adversely affect our business and operating results
14. 78We have a history of losses, which may limit our ability to develop our Risk Exchange and inhibit us from making investments in developing and expanding our business
15. 79Changes in accounting practices and future pronouncements may materially affect our reported financial results
16. 80We are an “emerging growth company” and we expect to elect to comply with reduced public company reporting requirements, which could make our Class A common shares less attractive to investors
17. 81We are a “controlled company” and, as a result, we are exempt from obligations to comply with certain corporate governance requirements
18. 82Certain of our directors have relationships with Altamont Capital, which may cause conflicts of interest with respect to our business
19. 83Certain judgments obtained against us by our shareholders may not be enforceable