Contract analysis

I. EXECUTIVE SUMMARY You have asked us to analyze Quorum Insurance Holdings Corp.'s ("QIH" or the "Company") disclosure and reporting obligations that have been triggered by the pre-suit demand letter from Pinnacle Atlantic Reinsurance Ltd. ("Pinnacle Atlantic"), dated February 14, 2026, and delivered by Pinnacle Atlantic's outside counsel, Hargrove, Fitch & Calloway LLP ("HFC"), through its lead partner Nathaniel R.

1. SEC Financial Reporting Obligations Under ASC 450 (Loss Contingencies). As a Nasdaq-listed public company, QIH must evaluate whether the Pinnacle Atlantic dispute requires accrual and/or footnote disclosure in its periodic filings with the Securities and Exchange Commission ("SEC"), including its Forms 10-K and 10-Q, under Accounting Standards Codification Topic 450-20 ("ASC 450"), formerly Statement of Financial

2. NYDFS Regulatory Notification Requirements. QIH's principal subsidiary, Quorum Casualty & Surety Company ("QC&S," NAIC No. 24891), is a New York-domiciled stock property and casualty insurer subject to the regulatory authority of the New York Department of Financial Services ("NYDFS"). We analyze the extent to which the Pinnacle Atlantic dispute triggers notification and reporting obligations under New York Insura

3. Credit Agreement Reporting Obligations. QIH maintains a $750,000,000 senior secured revolving credit facility (the "Credit Facility") with Cartwright National Bank, N.A. ("Cartwright" or the "Administrative Agent"). We analyze whether the Pinnacle Atlantic demand constitutes material litigation requiring notice under the Credit Facility's covenants and assess the impact of potential adverse outcomes on QIH's compl

II. BACKGROUND AND FACTUAL CONTEXT A. The Dispute The following summary of the underlying dispute is drawn from our review of the Treaty, QC&S's billing files, Pinnacle Atlantic's demand letter, and the Initial Case Assessment Memorandum prepared by our team and delivered to your office on March 15, 2026. We include this summary here to provide the necessary context for the disclosure analysis that follows. The Treat

1. Late Notice (Article 7): Pinnacle Atlantic contends that QC&S failed to provide timely notice of the Meridian Docks mass tort claim cluster, which Pinnacle Atlantic alleges constituted a material development affecting ceded losses under the Treaty. Pinnacle Atlantic asserts that the late notice prejudiced its ability to investigate and mitigate its exposure.

2. Misallocation of IBNR (Article 5): Pinnacle Atlantic alleges that QC&S improperly allocated $22,300,000 in incurred but not reported ("IBNR") reserves to Treaty-covered losses, inflating the ceded loss figures reported to Pinnacle Atlantic beyond what the Treaty terms permitted.

3. Follow-the-Fortunes Challenge (Article 11): Pinnacle Atlantic challenges QC&S's settlement of the Veridian Financial Services errors and omissions liability cluster for $34,500,000, contending that the settlement was unreasonable and that the follow-the-fortunes doctrine does not obligate Pinnacle Atlantic to follow QC&S's settlement decisions in this instance.

4. Ceded Earned Premium Underreporting (Article 3): Pinnacle Atlantic alleges that QC&S underreported ceded earned premiums by $6,800,000, resulting in an overpayment of ceded losses relative to the correct premium base. As detailed in the Initial Case Assessment Memorandum, we have assessed QC&S's defenses to each of these four grounds and have concluded that QC&S has strong, meritorious defenses. In particular, we

III. SEC REPORTING OBLIGATIONS — ASC 450 LOSS CONTINGENCY DISCLOSURE A. Applicable Framework As a Nasdaq-listed public company, QIH files periodic reports with the SEC, including annual reports on Form 10-K and quarterly reports on Form 10-Q. These filings include consolidated financial statements prepared in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP") and are subject to audit

IV. NYDFS NOTIFICATION REQUIREMENTS A. Applicable Regulatory Framework QC&S is a New York-domiciled stock property and casualty insurance company (NAIC No. 24891) and, as such, is subject to the regulatory authority and supervisory jurisdiction of the New York Department of Financial Services ("NYDFS"). The NYDFS exercises comprehensive oversight over domestic insurers, including the authority to examine the insurer'

V. CREDIT AGREEMENT REPORTING OBLIGATIONS — CARTWRIGHT NATIONAL BANK, N.A. A. Revolving Credit Facility Overview QIH maintains a $750,000,000 senior secured revolving credit facility (the "Credit Facility") with Cartwright National Bank, N.A. ("Cartwright"), 383 Madison Avenue, New York, NY 10179, serving as administrative agent. The Credit Facility, which matures in June 2028, provides QIH with working capital, lett

VI. ADDITIONAL DISCLOSURE CONSIDERATIONS A. Form 8-K Analysis In addition to the periodic reporting obligations discussed in Section III above, QIH should evaluate whether the Pinnacle Atlantic demand triggers a current reporting obligation on Form 8-K. Several items on Form 8-K are potentially relevant: Item 8.01 (Other Events). Item 8.01 permits (but does not require) a registrant to file a Form 8-K to report any e