Direct and affiliated assumed premiums written by the Exchange increased from $2.7 billion in Q1 2024 to $3.1 billion in Q1 2025. This growth is primarily driven by increased personal lines and commercial multi-peril premiums written.

Premiums generated from renewal business increased 19.5% to $2.7 billion in Q1 2025. This indicates strong customer retention and growth within the existing customer base.

Premiums generated from new business decreased 15.0% to $382 million in Q1 2025, primarily driven by decreased premiums written in the personal auto and homeowners lines. This decrease is partially offset by a 14.3% increase in year-over-year average premium per policy on new business.

The Exchange and its wholly owned property and casualty insurance subsidiaries' year-over-year policy retention ratio continues to be high at 89.9% at March 31, 2025. This indicates effective customer relationship management and satisfaction.

Cost of operations for policy issuance and renewal services increased 14.1% to $627.8 million in the first quarter of 2025, primarily due to higher scheduled commissions driven by direct and affiliated assumed written premium growth, as well as increased agent incentive compensation due to improved profitability, technology costs and employee compensation.

Commissions increased $61.1 million in the first quarter of 2025, primarily driven by the growth in direct and affiliated assumed written premium and, to a lesser extent, an increase in agent incentive compensation. This indicates a direct correlation between revenue growth and agent performance.

On August 8, 2024, while the A+ "Superior" rating was reaffirmed, the financial strength rating outlook was revised from stable to negative. The outlook was primarily driven by the Exchange's recent profitability challenges from rising loss cost pressures and increased weather-related activity, and the related surplus impact.

Ongoing legal proceedings allege breach of fiduciary duty related to the setting of management fees. The outcome of this litigation could have a material adverse effect on the company's financial condition, results of operations, or cash flows.

Unfavorable changes in economic conditions, including declining consumer confidence, inflation, high unemployment and the threat of recession, among others, may lead the Exchange's customers to modify coverage, not renew policies or even cancel policies, which could adversely affect the premium revenue of the Exchange, and consequently our management fee revenue.

The Exchange and its wholly owned property and casualty insurance subsidiaries' year-over-year policy retention ratio continues to be high at 89.9% at March 31, 2025. This indicates a strong competitive position and customer loyalty.

Through a careful agency selection and monitoring process, the Exchange plans to continue efforts to utilize its agency force to increase market penetration in existing operating territories to contribute to future growth. This indicates a strategic focus on strengthening its distribution channels.

The Exchange generates revenue by insuring preferred and standard risks, with personal lines comprising 71% of the 2024 direct and affiliated assumed written premiums and commercial lines comprising the remaining 29%. This focus on specific risk profiles contributes to a defined market niche.

Administrative services expenses increased, reflecting the costs of claims handling, investment management, and life management services. This increase is offset by corresponding administrative services reimbursement revenue.

The company is focused on managing the costs associated with policy issuance and renewal services, which are related to sales, underwriting, and issuance of policies. This indicates a focus on streamlining operations.

The decrease in service agreement revenue reflects the continued shift to payment plans that do not incur service charges or offer a premium discount for certain payment methods. This indicates an adaptation to customer preferences.

Information technology costs increased $11.3 million primarily due to an increase in hardware and software costs and personnel costs and a decrease in capitalized professional fees related to technology initiatives. This reflects ongoing investments in technology infrastructure.

The company highlights its ability to ensure system availability and effectively manage technology initiatives as a key factor influencing its future performance. This underscores the importance of technology in its operations.

The company acknowledges the risk of difficulties with technology, data or network security breaches, including cyber attacks, as a factor that could cause actual results and future events to differ from those set forth or contemplated in the forward-looking statements.

The company has approximately $17.8 million of repurchase authority remaining under its stock repurchase program. This indicates a continued commitment to returning capital to shareholders.

The company increased both its Class A and Class B shareholder regular quarterly dividends by 7.1% for 2025, compared to 2024. This reflects a commitment to returning capital to shareholders.

The company has a significant portion of its assets invested in fixed maturity securities, reflecting a strategy of balancing risk and return. The fair value of loaned securities was $12.3 million.

The company has contingent obligations for guarantees related to certain real estate development projects supporting revitalization efforts in its community. As of March 31, 2025, the maximum potential obligation related to guarantees is $8.7 million.

The company has an agreement with a bank for an agent loan participation program, with a maximum amount of loans to be funded through this program is $150 million. This program supports the company's agents.

The company manages its pension plan investments to meet its obligations to employees, indicating a commitment to its workforce.

The uncertain tariff, inflationary and interest rate environment, ongoing geopolitical risks and a potential economic slowdown may create future volatility; however, there have been no material changes that impacted our portfolio or reshaped our periodic investment reviews of asset allocations during the three months ended March 31, 2025.

Our portfolio of fixed maturity and equity security investments is subject to market volatility, especially in periods of instability in the worldwide financial markets. Net investment income is impacted by the general level of interest rates, which impact reinvested cash flow from the portfolio and business operations.

Changes in government regulation of the insurance industry, litigation and regulatory actions are identified as factors that could cause actual results and future events to differ from those set forth or contemplated in the forward-looking statements.