Item 7. Management’s Discussion and Analysis of Financia l Condition and Results of Operations
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented in this section as follows:
Overview
Results of Operations
Non-GAAP Measures and Reconciliations
Liquidity and Capital Resources
Critical Accounting Policies and Estimates
OVERVIEW
Our 2025 key highlights include:
On September 26, 2025, Tiptree entered into the Sale Agreement with Purchaser and Fortegra whereby Tiptree and Warburg will sell Fortegra to Purchaser for aggregate consideration of $1.65 billion in cash (subject to certain adjustments set forth in the Sale Agreement). As of December 31, 2025, Tiptree owns approximately 69.1% of Fortegra on a fully diluted basis. At the closing of the Sale, Purchaser will acquire complete common equity ownership of Fortegra and all of its subsidiaries. Due to the pending transaction, Fortegra is classified as held for sale and presented in discontinued operations on Tiptree’s financial statements at December 31, 2025. This pending transaction has had no impact on Tiptree’s financial statements at December 31, 2025 other than incurred transaction expenses of approximately $14.5 million for the year ended December 31, 2025. If the transaction had been completed as of December 31, 2025, Tiptree would have reflected the below:
December 31, 2025
Consideration
Less: transaction expenses
Net consideration
Tiptree diluted ownership of Fortegra
Fair value of consideration received
Estimated gain on disposal
On October 31, 2025, Tiptree entered into the Reliance Purchase Agreement with Reliance Buyer and Reliance whereby Tiptree will sell all of the issued and outstanding shares of common stock of Reliance to Reliance Buyer for aggregate consideration of 93.5% of Reliance’s tangible book value, or an estimated $50 million of gross proceeds and an after-tax loss impairment recorded of $10.7 million as of December 31, 2025 (subject to certain adjustments set forth in the Reliance Purchase Agreement).
RESULTS OF OPERATIONS
The following is a summary of our consolidated financial results for the years ended December 31, 2025, 2024 and 2023. In addition to GAAP results, management uses the Non-GAAP measure book value per share as measurement of operating performance. Management believes this measure provides supplemental information useful to investors as it is frequently used by the financial community to analyze financial performance and comparison among companies. The Company reclassified income and expenses attributable to Fortegra and Reliance to net income (loss) from discontinued operations for the years ended December 31, 2025, 2024 and 2023. Assets and liabilities attributable to Fortegra and Reliance have been reclassified to assets held for sale and liabilities held for sale, respectively, as of December 31, 2025 and 2024.
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Summary of Consolidated Results
For the Year Ended December 31,
Revenues:
Other revenue
Total revenues
Expenses:
Employee compensation and benefits
Depreciation and amortization
Other expenses
Total expenses
Operating income (loss) before taxes
Non operating income:
Net realized and unrealized gains (losses)
Other income
Income (loss) before taxes
Less: provision (benefit) for income taxes
Net income (loss) from continuing operations
Net income (loss) from discontinued operations (1)
Net income (loss)
Less: net income (loss) attributable to non-controlling interests
Net income (loss) attributable to common stockholders
Net income (loss) per common share:
Basic earnings per share
Diluted earnings per share
Weighted average number of common shares:
Basic
Diluted
Dividends declared per common share
Non-GAAP: (2)
Book value per share
See Note (3) Dispositions, Assets Held for Sale & Discontinued Operations for further details.
See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Revenues
For the year ended December 31, 2025, revenues were $0.5 million, which decreased $1.0 million, or 67.9%, compared to the prior year, driven by a decrease in vessels revenue.
For the year ended December 31, 2024, revenues were $1.5 million, which decreased $0.6 million, or 28.2%, compared to the prior year, driven by a decrease in vessels revenue.
Expenses
Total expenses include employee compensation and benefits, public company and other expenses. Employee compensation and benefits include the expense of management, legal and accounting staff. Other expenses primarily consisted of audit and professional fees, insurance, office rent, expenses for the run-off of our shipping operations and other related expenses.
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For the year ended December 31, 2025, expenses were $47.2 million, which increased $5.4 million, or 13.0%, compared to the prior year. Employee compensation and benefits, included incentive compensation expense which related to the performance of the Company’s continuing and discontinued operations. For the year ended December 31, 2025, employee compensation and benefits were $33.8 million compared to $29.2 million for the prior year, driven by the increase in accrued incentive compensation expense and one-time expenses associated with reduction in workforce. Of the incentive compensation expense in 2025, $6.7 million was stock-based compensation expense, compared to $8.7 million in 2024. Other expenses were $11.9 million, compared to $11.2 million in the prior year, driven by increased professional fees and run-off expenses associated with our shipping investments.
For the year ended December 31, 2024, expenses were $41.8 million, which decreased $3.8 million, or 8.3%, compared to the prior year. For the year ended December 31, 2024, employee compensation and benefits were $29.2 million compared to $30.7 million, driven by a decrease in accrued cash incentive compensation expense. Of the incentive compensation expense in 2024, $8.7 million was stock-based compensation expense, compared to $6.3 million in 2023. Other expenses were $11.2 million, compared to $13.5 million in the prior year, driven primarily by decreased professional fees.
Non Operating Income
For the year ended December 31, 2025, net realized and unrealized losses were $1.5 million, which increased $0.6 million, as compared to the losses of $0.9 million in the prior year, driven by the change in fair value of certain equity and other investments carried at fair value. For the year ended December 31, 2024, net realized and unrealized losses were $0.9 million, which decreased $4.4 million, as compared to the losses of $5.3 million in the prior year, driven by the change in fair value of certain equity and other investments carried at fair value. For the year ended December 31, 2025, other income was $3.6 million, as compared to $2.6 million in the prior year, with the increase driven by higher interest income on cash and cash equivalents recorded in other income. For the year ended December 31, 2024, other income was $2.6 million, as compared to $5.3 million in the prior year, with the decrease driven by lower interest income on cash and cash equivalents recorded in other income.
Income before taxes
For the year ended December 31, 2025, the Company reported a pre-tax loss of $44.6 million, as compared to a loss of $38.6 million in the prior year, primarily driven by increased operating expenses. For the year ended December 31, 2024, the Company reported a pre-tax loss of $38.6, as compared to a loss of $43.5 million in the prior year, primarily driven by decreased operating expenses.
Net Income (Loss) from continuing operations
For the year ended December 31, 2025, the Company reported a net loss from continuing operations of $38.9 million, compared to a net loss of $32.3 million in the prior year, primarily driven by increased operating expenses. For the year ended December 31, 2024, the Company reported a net loss from continuing operations $32.3 million, compared to a net loss of $38.7 million in the prior year, primarily driven by decreased operating expenses.
Net Income (Loss) from discontinued operations
For the year ended December 31, 2025, the Company reported a net income from discontinued operations of $73.8 million, compared to a net income of $85.7 million in the prior year, with the decrease driven by the after-tax loss on disposal of Reliance. For the year ended December 31, 2024, the Company reported a net income from discontinued operations of $85.7 million, compared to a net income of $52.7 million, with the increase driven by underwriting and fee income growth at Fortegra.
Book Value per share - Non-GAAP
Total stockholders’ equity was $752.4 million as of December 31, 2025 compared to $656.8 million as of December 31, 2024, with the increase driven by comprehensive income in 2025, partially offset by preferred dividends paid at Fortegra and common dividends paid by Tiptree. In 2025, Tiptree returned $9.1 million to common stockholders through dividends paid. Book value per share for the period ended December 31, 2025 was $13.45, a 9.4% increase from book value per share of $12.29 as of December 31, 2024, driven by comprehensive income per share, partially offset by dividends paid of $0.24 per share, net changes in non-controlling interests and preferred dividends paid at Fortegra.
Total stockholders’ equity was $656.8 million as of December 31, 2024 compared to $576.6 million as of December 31, 2023, with the increase driven by comprehensive income, partially offset by net changes in non-controlling interests and dividends paid. In the year ended December 31, 2024, Tiptree returned $18.3 million to common stockholders through dividends paid. Book value per share for the period ended December 31, 2024 was $12.29, an increase from book value per share of $11.34 as of December 31, 2023, driven by comprehensive income per share, partially offset by dividends paid of $0.49 per share, net changes in non-controlling interests and preferred dividends paid at Fortegra.
HELD FOR SALE AND DISCONTINUED OPERATIONS :
During 2025, Tiptree entered into two sale transactions that have been classified as discontinued operations within its consolidated
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financial statements. See Note (3) Dispositions, Assets Held for Sale & Discontinued Operations for detailed financial information on each business sold.
Fortegra
On September 26, 2025, Tiptree entered into the Sale Agreement with Purchaser and Fortegra whereby Tiptree and Warburg will sell Fortegra to Purchaser for aggregate consideration of $1.65 billion in cash (subject to certain adjustments set forth in the Sale Agreement). As of December 31, 2025, Tiptree owns approximately 69.1% of Fortegra on a fully diluted basis. At the closing of the Sale, Purchaser will acquire complete common equity ownership of Fortegra and all of its subsidiaries. As a result of this agreement, and subsequent shareholder approval, Fortegra is now classified as held for sale and in discontinued operations on Tiptree’s financial statements as of December 31, 2025. The anticipated closing date, subject to customary regulatory approvals, is expected in the first half of 2026.
Total gross written premiums and premium equivalents for the year ended December 31, 2025 were $3.35 billion, compared to $3.07 billion in 2024, an increase of 9.1% driven by growth in specialty E&S insurance lines. Net written premiums were $1.57 billion for the year, compared to $1.44 billion in 2024, an increase of 9.4% consistent with the growth in gross written premiums and premium equivalents. Tiptree reported net income of $85.3 million from Fortegra in discontinued operations for the year ended December 31, 2025, compared to $82.1 million in 2024. Fortegra’s combined ratio for the year was 88.6%, compared to 90.0% in 2024, down 1.4 percentage points, reflecting the consistent underwriting performance and scalability of Fortegra’s operations.
Total gross written premiums and premium equivalents for the year ended December 31, 2024 were $3.07 billion, compared to $2.75 billion in 2023, an increase of 11.7% driven by expanding Fortegra’s distribution partner network and growing E&S insurance lines. Net written premiums were $1.44 billion for the year, compared to $1.32 billion in 2023, an increase of 9.0%, consistent with growth in gross written premiums. Tiptree reported net income of $82.1 million from Fortegra in discontinued operations for the year ended December 31, 2024, compared to $55.1 million in 2023, driven primarily by the growth in underwriting fee and income. Fortegra’s combined ratio for the year was 90.0%, compared to 90.3% in 2023, down 0.3 percentage points, reflecting the consistent underwriting performance and scalability of Fortegra’s operations.
The total gross written premiums and premium equivalents of $3,347.2 million, $3,068.2 million, and $2,747.9 million for the years ended December 31, 2025, 2024 and 2023, respectively, were comprised of gross written premiums of $2,573.8 million, $2,194.0 million, and $1,896.5 million, plus assumed premiums of $499.6 million, $525.5 million, and $489.1 million, plus gross service and administrative fee additions of $273.8 million, $348.7 million, and $362.3 million.
Reliance
On October 31, 2025, Tiptree entered into the Reliance Purchase Agreement with Reliance Buyer and Reliance whereby Tiptree will sell Reliance to Reliance Buyer for aggregate consideration of 93.5% of Reliance’s tangible book value, or an estimated $50 million of gross proceeds as of December 31, 2025 (subject to certain adjustments set forth in the Reliance Purchase Agreement). As a result of this agreement, Reliance is now classified as held for sale and in discontinued operations on Tiptree’s financial statements as of December 31, 2025. The anticipated closing date, subject to customary regulatory approvals, is expected in the first half of 2026.
The revenues were $61.5 million for the year ended December 31, 2025, compared to $65.9 million in 2024, a decrease of 6.7%. Tiptree reported a net loss of $11.4 million from Reliance in discontinued operations for the year ended December 31, 2025, compared to a net income of $3.6 million in the prior year, with the decrease driven by after-tax loss on disposal of Reliance, lower origination volumes, and unrealized losses on the mortgage servicing asset.
The revenues were $65.9 million for the year ended December 31, 2024, compared to $53.9 million in 2023, an increase of 22.4%. Tiptree reported a net income of $3.6 million from Reliance in discontinued operations for the year ended December 31, 2024, compared to a net loss of $2.4 million in the prior year, with the increase driven by higher origination volumes and loan servicing fees, and unrealized gains on the mortgage servicing asset.
Provision for Income Taxes
The income tax benefit from continuing operations of $5.7 million and $6.2 million for the years ended December 31, 2025 and 2024, respectively, was reflected as components of net income (loss) from continuing operations. For the years ended December 31, 2025 and 2024, the Company’s effective tax rate related to pre-tax income from continuing operations was equal to 12.8% and 16.1%, respectively, with both lower than the U.S. statutory income tax rate of 21.0%, primarily due to the impacts of nontaxable and nondeductible items.
As of December 31, 2025, Tiptree had approximately $146.1 million in gross capital and operating loss carryforwards, primarily driven by the sale of 14.05 million shares of Invesque in 2024 for $0.5 million of proceeds.
Tiptree signed agreements to sell its insurance and mortgage subsidiaries and recorded deferred taxes on the outside basis on those investments which represents the tax that would be due, before consideration of loss carryforwards, when Tiptree sells its shares in these subsidiaries at their carrying values on Tiptree’s balance sheet. As of December 31, 2025, the deferred tax liability relating to these investments, which remains on Tiptree’s balance since it is a parent-level tax attribute, was $117.9 million, an increase of $33.2 million
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from the year ended December 31, 2024, of which $5.8 million of expense was recorded in OCI, and $27.4 million of expense was recorded as a provision for income taxes in discontinued operations. As of December 31, 2024, the deferred tax liability relating to these investments was $84.7 million, an increase of $23.0 million from the year ended December 31, 2023, of which a $0.5 million benefit was recorded in OCI, and $23.5 million of expense was recorded as a provision for income taxes in discontinued operations.
Balance Sheet Information
Tiptree’s total assets were $6,840.1 million as of December 31, 2025, compared to $5,694.8 million as of December 31, 2024. Tiptree's assets from continuing operations were $71.7 million and $59.1 million as of December 31, 2025 and 2024, respectively, an increase of $12.5 million, driven by higher cash and cash equivalents. Assets held for sale were $6,768.4 million and $5,635.7 million as of December 31, 2025 and 2024, respectively, an increase of $1,132.7 million, primarily driven by growth in Fortegra.
Total stockholders’ equity was $752.4 million as of December 31, 2025, compared to $656.8 million as of December 31, 2024, with the increase primarily driven by comprehensive income for the year ended December 31, 2025. As of December 31, 2025, there were 37,824,472 shares of common stock outstanding as compared to 37,255,838 shares as of December 31, 2024, with the increase driven by the issuance and vesting of share-based incentive compensation and exercise of options.
NON-GAAP MEASURES AND RECONCILIATIONS
Book Value per share - Non-GAAP
Management believes the use of this financial measure provides supplemental information useful to investors as book value is frequently used by the financial community to analyze company growth on a relative per share basis. The following table provides a reconciliation between total stockholders’ equity and total shares outstanding, net of treasury shares.
($ in thousands, except per share information)
As of December 31,
Total stockholders’ equity
Less: Non-controlling interests
Total stockholders’ equity, net of non-controlling interests
Total common shares outstanding
Book value per share
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are unrestricted cash, cash equivalents and other liquid investments, the Tiptree Credit Agreement and distributions from operating subsidiaries, including income from our investment portfolio and sales of assets, investments and operating businesses. We intend to use our cash resources to continue to fund our operations, grow our businesses and pursue new acquisition opportunities. We may seek additional sources of cash to fund acquisitions or investments. These additional sources of cash may take the form of debt or equity and may be at the parent, subsidiary or asset level. We are a holding company, and our liquidity needs are primarily for compensation, professional fees, office rent and insurance costs.
As of December 31, 2025, cash and cash equivalents were $30.8 million, compared to $19.4 million as of December 31, 2024, an increase of $11.4 million, primarily driven by the issuance of debt at the holding company. In addition, the Company holds marketable securities of $21.7 million as of December 31, 2025, compared to $15.0 million in 2024.
We believe that cash and cash equivalents, marketable securities, cash flow from operations and the proceeds of the Sale and Purchase Agreement will provide sufficient capital to continue to grow the business and pay down the outstanding debt, capital expenditures and other general corporate needs over the next several years. As we continue to expand our business, including by any acquisitions we may make in the future, require additional working capital for increased costs.
On February 7, 2025, we entered into the Tiptree Credit Agreement, pursuant to which Tiptree Holdings borrowed $75.0 million to, among other things, fund working capital and general corporate purposes. The principal of, and all accrued and unpaid interest on, all credit agreements under the Tiptree Credit Agreement will mature on February 7, 2028. A covenant of the credit agreement requires full repayment from the proceeds of the sale of Fortegra.
Consolidated Comparison of Cash Flows
The following table summarizes cash flows from continuing operations.
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($ in thousands)
For the Year Ended December 31,
Cash and cash equivalents provided by (used in):
Operating activities
Investing activities
Financing activities
Change in cash, cash equivalents and restricted cash
Refer to the Consolidated Statement of Cash Flow and Note (3) Dispositions, Assets Held for Sale & Discontinued Operations for additional details on cash flows related to discontinued operations.
Operating Activities from Continuing Operations
Cash used in operating activities for continuing operations the years ended December 31, 2025, 2024 and 2023 was $27.2 million, $25.0 million and $11.3 million, respectively. This reflects the use of funds to support centralized management and ongoing corporate-level operating requirements. For the year ended December 31, 2023, tax refunds were received in the amount of $15.8 million, offsetting the cash used in operating activities.
Investing Activities from Continuing Operations
Investing activities from continuing operations the year ended December 31, 2025, resulted in cash used of $6.2 million driven by purchases of investments outpacing the proceeds from sales and maturities of investments. For December 31, 2024 cash provided by investing activities was $58.1 million due to proceeds from sales and maturities of investments, outpacing purchases of investments. For December 31, 2023 cash used of $62.6 million was attributable to purchases of investments outpacing the proceeds from sales and maturities of investments.
Financing Activities from Continuing Operations
Cash provided by financing activities was $55.5 million for the year ended December 31, 2025 primarily attributable to proceeds from issuance of debt at the holding company, partially offset by the payment of dividends, cash paid in connection with vested or exercised stock awards, and payment of debt issuance costs. Cash used in financing activities for the year ended December 31, 2024 and 2023, of $19.6 and $13.0 million, respectively, was primarily attributable to the payment of common dividends and cash paid in connection with vested or exercised stock awards. December 31, 2023, was also inclusive of non-controlling redemptions contributions.
Cash Flows from Discontinued Operations
Cash flows pertaining to discontinued operations are reported separately on the Consolidated Statements of Cash Flows.
Cash provided by operating activities was $195.4 million, compared to $265.8 million and $82.8 million for the years ended December 31, 2025, 2024 and 2023 respectively. The cash used by investing activities was $195.9 million, compared to $381.1 million and $182.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. The cash used in financing activities was $44.0 million, for the year ended December 31, 2025. The cash provided by financing activities was $25.9 million and $126.4 million for the years ended December 31, 2024, and 2023, respectively.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company’s significant accounting policies are described in Note (2) Summary of Significant Accounting Policies. As disclosed in Note (2), the preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates.
The Company believes that the following discussion addresses the Company’s most critical accounting policies, which are those that are most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective and complex judgments.
Fair Value Measurement
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels, from highest to lowest, are defined as follows:
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Level 1 – Unadjusted, quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 – Significant inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. The types of financial assets and liabilities carried at Level 2 are valued based on one or more of the following:
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in non-active markets;
Pricing models whose inputs are observable for substantially the full term of the asset or liability;
Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.
Level 3 – Significant inputs that are unobservable inputs for the asset or liability, including the Company’s own data and assumptions that are used in pricing the asset or liability.
The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of instrument, whether the instrument is new, whether the instrument is traded on an active exchange or in the secondary market, and the current market conditions. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized within Level 3 of the fair value hierarchy. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Tiptree’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and the consideration of factors specific to the instrument. From time to time, Tiptree’s assets and liabilities will transfer between one level to another level. It is Tiptree’s policy to recognize transfers between different levels at the end of each reporting period.
Tiptree utilizes both observable and unobservable inputs in its valuation methodologies. Observable inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data. In addition, specific issuer information and other market data is used. For broker quotes, quotes are obtained from sources recognized to be market participants. Unobservable inputs may include expected cash flow streams, default rates, supply and demand considerations and market volatility.
Fair Value Option
In addition to the financial instruments that the Company is required to measure at fair value, the Company has elected to make an irrevocable election to utilize fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in Net realized and unrealized gains (losses) within the consolidated statements of operations. The decision to elect the fair value option is determined on an instrument-by-instrument basis and must be applied to an entire instrument and is irrevocable once elected.
Income Taxes
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in earnings in the period that includes the enactment date. Additionally, taxing jurisdictions could retroactively disagree with our tax treatment of certain items, and some historical transactions have income tax effects going forward. Accounting guidance requires these future effects to be evaluated using current laws, rules and regulations, each of which can change at any time and in an unpredictable manner.
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The Company establishes valuation allowances for deferred tax assets when, in its judgment, it concludes that it is more likely than not that the deferred tax assets will not be realized. These judgments are based on projections of future income, including tax-planning strategies, by individual tax jurisdictions. Changes in economic conditions and the competitive environment may impact the accuracy of the Company’s projections. On a quarterly basis, the Company assesses the likelihood that its deferred tax assets will be realized and determines if adjustments to the Company’s valuation allowance is appropriate.
Recently Issued Accounting Standards
For a discussion of recently issued accounting standards, see Note (2) Summary of Significant Accounting Policies, in the accompanying consolidated financial statements.
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Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk
Interest Rate Risk
We are exposed to interest rate risk related to borrowings. These risks result primarily from changes in SOFR rates and the spread over SOFR rates related to the credit risks of our businesses. For general purpose floating rate debt, interest rate fluctuations primarily affect interest expense and cash flows. If market interest rates rise, our earnings could be adversely affected by an increase in interest expense. In contrast, lower interest rates may reduce our interest expense and improve our earnings, except to the extent that our borrowings are subject to interest rate floors. As of December 31, 2025, Tiptree’s holding company had $74.3 million general purpose floating rate debt.
Credit Risk
Credit risk within the Company’s investments represents the exposure to the adverse changes in the creditworthiness of individual investment holdings, issuers, groups of issuers, industries, and countries. Our policy is to invest in high-quality securities and to limit investments in the instruments that are either unrated or rated below investment grade. As of December 31, 2025 and 2024, we had no instruments with credit risk exposure.
See Note (4) Marketable Securities to the consolidated financial statements for more information regarding our credit risk investments.
Market Risk
We are primarily exposed to market risk related to our investments in equity securities.
A 10% increase or decrease in the fair value of such investments would result in $0.5 million and $0.4 million of unrealized gains and losses as of December 31, 2025 and 2024, respectively.
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