1021-00003 · Verimark Hospitality Group · Pleadings & Court Filings

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EXHIBIT B

IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA

CIVIL DIVISION

Case No.: 2022-CA-031547

VERIMARK HOSPITALITY GROUP INC., a Delaware corporation,

Plaintiff,

IRONCLAD INDEMNITY CORPORATION, a Connecticut corporation;

PINNACLE SURPLUS LINES INC., a Texas corporation;

MONTCLAIR ASSURANCE COMPANY, a New York corporation; and

SOVEREIGN RE LTD., a Bermuda corporation,

Defendants.

Sworn Statement in Proof of Loss submitted by Verimark Hospitality Group Inc. to Ironclad Indemnity Corporation on November 15, 2022

SWORN STATEMENT IN PROOF OF LOSS

Date of Submission: November 15, 2022

Submitted To:

Ironclad Indemnity Corporation 55 Constitution Boulevard Hartford, CT 06103

Attn: Victor Haddon, Senior Vice President, Claims

Policy Number: IIC-PRP-2022-07541

Policy Period: July 1, 2022 – July 1, 2023

Type of Policy: All-Risk Property and Business Interruption Insurance

Insured: Verimark Hospitality Group Inc.

Address of Insured:

1900 Brickell Avenue, Suite 3200 Miami, FL 33129

Federal Employer Identification Number (EIN): 59-3841276

The undersigned, Sandra Pellegrini, Vice President of Risk Management of Verimark Hospitality Group Inc. ("VHG" or the "Insured"), hereby submits this Sworn Statement in Proof of Loss to Ironclad Indemnity Corporation ("Ironclad") pursuant to the requirements of Policy No. IIC-PRP-2022-07541 (the "Policy"). This Sworn Statement in Proof of Loss sets forth the nature and extent of the business-interruption losses sustained by VHG as a result of Hurricane Callista, which made landfall in the State of Florida on September 18, 2022, and which caused catastrophic damage to three insured resort hotel properties owned and operated by VHG. VHG submits this sworn proof of loss in compliance with the terms of the Policy and without waiving any rights, claims, or remedies available to VHG under the Policy, at law, or in equity.

Section 1: Identity of the Insured

Full Legal Name: Verimark Hospitality Group Inc.

Entity Type: Corporation organized and existing under the laws of the State of Delaware. VHG is a publicly traded company listed on the Nasdaq Stock Market under the ticker symbol "VMRK."

Principal Place of Business:

1900 Brickell Avenue, Suite 3200 Miami, FL 33129

Nature of Business: VHG is engaged in the hospitality and real estate industries. VHG owns, develops, and operates luxury resort hotels and conference centers throughout the southeastern United States and the Caribbean. As of the date of loss, VHG's portfolio included fifteen owned-and-operated resort properties. Three of these properties—the Verimark Grand Key Resort, the Verimark Harborview Hotel & Conference Center, and the Verimark Sunset Shores—are the subject of this proof of loss. VHG's business operations include room accommodations, food and beverage services, spa and wellness facilities, marina operations, conference and event hosting, and other ancillary guest services. VHG's consolidated revenue for fiscal year 2021 was approximately $412,000,000, with earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $78,000,000.

Contact Person for Claim:

Sandra Pellegrini Vice President of Risk Management Verimark Hospitality Group Inc. 1900 Brickell Avenue, Suite 3200 Miami, FL 33129 Telephone: (305) 555-8900

Email: s.pellegrini@verimarkhotels.com

Insurance Broker of Record:

Tidewater Risk Advisors LLC 2600 S. Bayshore Drive, Suite 800 Miami, FL 33133 Account Executive: Franklin Orde Telephone: (305) 555-4200

Email: f.orde@tidewaterrisk.com

Section 2: Description of the Occurrence / Cause of Loss

Date of Loss: September 18, 2022

Cause of Loss: Hurricane Callista — a Category 4 hurricane on the Saffir-Veltason Hurricane Wind Scale at the time of landfall in the State of Florida.

Hurricane Callista was designated as a named tropical storm by the National Hurricane Center of the National Oceanic and Atmospheric Administration ("NOAA") on September 12, 2022, after intensifying from a tropical depression that had formed over the central Caribbean Sea several days earlier. The storm rapidly strengthened as it tracked northward through the Straits of Florida, reaching Category 4 intensity on September 17, 2022, with maximum sustained winds of approximately 145 miles per hour.

Landfall Details: Hurricane Callista made landfall at approximately 1:30 PM Eastern Daylight Time on September 18, 2022, in the Lower Florida Keys, near the Big Pine Key area of Monroe County, Florida. At the time of landfall, the storm maintained maximum sustained winds of approximately 145 miles per hour. The hurricane produced devastating storm surge, torrential rainfall, and destructive wind gusts across a wide swath of southwestern and western Florida.

Storm Surge: The National Weather Service and post-storm survey data indicate that Hurricane Callista generated storm surge of approximately 8 to 14 feet above normally dry ground in Monroe County, Florida, and storm surge of approximately 6 to 10 feet above normally dry ground in Lee County, Florida. Significant storm surge impacts were also recorded in Pinellas County and other Gulf Coast communities.

Evacuation Orders: In advance of Hurricane Callista's landfall, the following mandatory evacuation orders were issued by local authorities:

• Monroe County, Florida: Mandatory evacuation order issued on September 16, 2022, covering all residents and visitors in evacuation zones, including all areas of the Florida Keys.

• Lee County, Florida: Mandatory evacuation order issued on September 17, 2022, covering evacuation zones A and B, including the barrier islands of Fort Myers Beach, Sanibel, Captiva, and surrounding areas.

Evacuation of VHG Properties: VHG evacuated all guests, staff, and essential personnel from all three subject properties in full compliance with the applicable mandatory evacuation orders prior to Hurricane Callista's landfall. VHG implemented its hurricane preparedness protocols at each property, including securing physical plant and equipment, protecting essential records and data systems, and coordinating with local emergency management authorities. All guests were evacuated and relocated in advance of the storm.

Summary of Damage: All three insured properties sustained significant physical loss and damage as a direct result of Hurricane Callista's wind, wind-driven rain, and storm surge. The physical damage to the properties rendered them uninhabitable and inoperable for extended periods following the hurricane, resulting in prolonged and ongoing business interruption at each location. The nature and extent of damage to each property is described in greater detail in Section 3 below, and the resulting business-interruption losses are set forth in Sections 4 and 5.

Section 3: Description of Insured Properties

3.1 Verimark Grand Key Resort

Location: Mile Marker 48, Marathon, FL 33050

Description: The Verimark Grand Key Resort is a 312-room luxury resort and full-service marina located in Marathon, Florida, in the Middle Florida Keys. The property encompasses approximately 22 acres of oceanfront land and includes guest room buildings, a main lodge and lobby structure, two restaurants, a full-service spa and wellness center, a 94-slip deep-water marina, swimming pools, meeting and event spaces, and related back-of-house and support facilities. The resort is one of the premier luxury hospitality destinations in the Florida Keys and is a significant revenue-generating asset for VHG.

Pre-Loss Operating Metrics: In the twelve months preceding the date of loss, the Verimark Grand Key Resort achieved an Average Daily Rate ("ADR") of $389 per room and an average occupancy rate of 82%. The property generated substantial ancillary revenue from its marina operations, food and beverage outlets, spa services, and resort activity programs. The property's pre-loss financial performance reflected its status as a high-demand destination, particularly during the peak winter tourist season from November through April.

Damage Sustained: The Verimark Grand Key Resort sustained severe and catastrophic damage from Hurricane Callista. The property was located within the zone of maximum storm surge impact in Monroe County, where surge levels of 8 to 14 feet above normally dry ground were recorded. The storm surge inundated the ground-floor levels of all guest room buildings, the main lodge, the restaurants, the spa facility, and the marina infrastructure. Hurricane-force winds with sustained speeds in excess of 130 miles per hour at the property's location caused extensive structural damage to roofing systems, building facades, windows, doors, and exterior cladding across the resort. Wind-driven rain caused widespread water intrusion into upper-floor guest rooms and common areas. The 94-slip marina was substantially destroyed, with docks, pilings, fueling infrastructure, and associated marine facilities suffering total or near-total loss. Mechanical, electrical, plumbing, fire suppression, and HVAC systems throughout the resort were severely damaged or rendered inoperable by the combined effects of wind, storm surge, and water intrusion.

3.2 Verimark Harborview Hotel & Conference Center

Location: 1400 Estero Boulevard, Fort Myers Beach, FL 33931

Description: The Verimark Harborview Hotel & Conference Center is a 224-room hotel with a 40,000-square-foot conference and event facility located on Fort Myers Beach in Lee County, Florida. The property is situated on the barrier island of Estero Island and includes guest room towers, restaurant and bar facilities, a rooftop pool deck, and the largest dedicated conference center on the island. The conference facility hosts corporate meetings, conventions, weddings, and other events year-round and is a significant driver of the property's revenue and profitability.

Pre-Loss Operating Metrics: In the twelve months preceding the date of loss, the Verimark Harborview Hotel & Conference Center achieved an ADR of $295 per room and an average occupancy rate of 74%. The property's conference and event business contributed significantly to overall revenue, with the 40,000-square-foot conference facility typically hosting between 180 and 220 events per year, including multi-day corporate retreats and conventions during the peak season.

Damage Sustained: The Verimark Harborview Hotel & Conference Center sustained significant structural and mechanical damage from Hurricane Callista. The property was located within the zone of substantial storm surge impact in Lee County, where surge levels of 6 to 10 feet above normally dry ground were recorded on Estero Island. The conference center roof suffered catastrophic wind damage, with large sections of the roofing membrane and structural decking torn away by sustained hurricane-force winds. The building facade of the conference center and adjacent guest room tower sustained significant damage from wind-borne debris and pressure differentials. Storm surge and wind-driven rain caused extensive water intrusion into guest rooms on the lower floors of both guest room towers. The property's electrical distribution systems, emergency generators, elevator systems, and HVAC infrastructure sustained severe damage requiring full replacement. Restaurant and food service areas on the ground floor were inundated by storm surge.

3.3 Verimark Sunset Shores

Location: 7200 Gulf Boulevard, St. Pete Beach, FL 33706

Description: The Verimark Sunset Shores is a 186-room boutique luxury resort located on St. Pete Beach in Pinellas County, Florida. The property occupies a prime beachfront location on the Gulf of Mexico and includes guest room buildings, a signature restaurant, a beachside bar and grill, a wellness center, swimming pools, and curated beach service operations. The resort is known for its intimate, high-service guest experience and commands premium room rates within its competitive market.

Pre-Loss Operating Metrics: In the twelve months preceding the date of loss, the Verimark Sunset Shores achieved an ADR of $342 per room and an average occupancy rate of 79%. The property generated meaningful ancillary revenue from its food and beverage operations, wellness center services, and beach activity programs.

Damage Sustained: The Verimark Sunset Shores sustained wind damage and partial flooding as a result of Hurricane Callista. Although the property was located outside the zone of maximum storm surge impact, it experienced sustained tropical-storm-force and hurricane-force winds that caused significant damage to the roofing systems and exterior building envelope of multiple structures. Wind damage resulted in water intrusion into guest rooms and common areas on the upper floors. Ground-level facilities, including the beachside bar and grill, pool equipment rooms, laundry facilities, and portions of the wellness center, sustained partial flooding from a combination of storm surge, wind-driven tidal action, and heavy rainfall. Landscaping, outdoor furnishings, and beach service infrastructure were extensively damaged or destroyed.

Section 4: Period of Business Interruption

4.1 Verimark Grand Key Resort

Date of Closure: September 18, 2022. The property ceased all guest operations prior to landfall in compliance with the Monroe County mandatory evacuation order issued September 16, 2022.

Anticipated Reopening Date: On or about March 15, 2023 (estimated as of the date of this proof of loss). VHG notes that this reopening date is an estimate based on current information and is subject to change depending on the progress of repairs, availability of construction materials and labor, and regulatory approvals.

Total Estimated Closure Period: Approximately 178 days from the date of closure through the anticipated reopening date.

Basis for Estimated Closure Period: The extended closure period at the Verimark Grand Key Resort is necessitated by the severity and scope of the physical damage sustained during Hurricane Callista. The property requires extensive structural repairs to guest room buildings, the main lodge, and support structures. The 94-slip marina, which represents a significant component of the resort's revenue and guest experience, was substantially destroyed and requires complete reconstruction. Guest rooms, lobbies, restaurants, spa facilities, and common areas require comprehensive remediation, including demolition and removal of storm-damaged materials, mold remediation, and full interior restoration. The mechanical, electrical, plumbing, and HVAC systems throughout the resort require replacement or extensive rehabilitation. Contractor availability is severely constrained by the unprecedented regional demand for construction services in the aftermath of Hurricane Callista, and lead times for specialized construction materials have been significantly extended. VHG is working diligently to expedite repairs and has retained multiple contractor teams, but the scope of damage and regional resource constraints make a reopening date earlier than mid-March 2023 infeasible.

4.2 Verimark Harborview Hotel & Conference Center

Date of Closure: September 18, 2022. The property ceased all guest and conference operations prior to landfall in compliance with the Lee County mandatory evacuation order issued September 17, 2022.

Anticipated Reopening Date: On or about January 31, 2023 (estimated as of the date of this proof of loss). VHG notes that this reopening date is an estimate based on current information and is subject to change.

Total Estimated Closure Period: Approximately 135 days from the date of closure through the anticipated reopening date.

Basis for Estimated Closure Period: The closure period at the Verimark Harborview Hotel & Conference Center is driven primarily by the extensive structural damage to the conference center roof and building facade, which require major structural repair and partial reconstruction. Guest rooms affected by water intrusion require comprehensive remediation and restoration. The property's electrical distribution systems, emergency generators, elevator systems, and HVAC infrastructure require full replacement, which entails significant procurement lead times and specialized installation work. All cancelled conference and event bookings for the fourth quarter of 2022 and January 2023 represent irrecoverable lost revenue during the closure period. VHG is pursuing accelerated repair timelines and has engaged expedited procurement processes for critical building systems.

4.3 Verimark Sunset Shores

Date of Full Closure: September 18, 2022. The property ceased all guest operations in advance of Hurricane Callista.

Partial Reopening Date: Approximately November 30, 2022 (estimated as of the date of this proof of loss). VHG anticipates that a phased restoration process will permit partial reopening of the property with reduced room inventory and limited ancillary services on or about this date.

Full-Closure Period: Approximately 73 days from September 18, 2022, through the anticipated partial reopening on or about November 30, 2022.

Reduced-Capacity Period: From the anticipated partial reopening in late November or early December 2022 through approximately February 2023, the property is expected to operate at substantially reduced capacity as remaining repairs are completed in phases. During this reduced-capacity period, VHG estimates that only approximately 60% of guest room inventory will be available for occupancy, and certain ancillary revenue operations (including the beachside bar and grill and portions of the wellness center) will remain closed.

Basis for Estimated Closure and Reduced-Capacity Periods: The phased approach to restoration at Verimark Sunset Shores reflects the comparatively less severe nature of the damage at this property. Wind damage to roofing systems and exterior building envelope requires repair and partial replacement, which can be completed in stages while portions of the property are returned to service. Ground-level flooding damage requires remediation, demolition of affected materials, and restoration of impacted facilities. The phased restoration permits partial revenue generation while full repairs are completed.

Section 5: Claimed Business-Interruption Losses

5.1 Methodology. VHG's claimed business-interruption losses have been calculated in accordance with the coverage provided under Policy No. IIC-PRP-2022-07541, which provides coverage for net lost business income during the period of restoration, plus extra expenses reasonably and necessarily incurred to minimize the duration and extent of the business interruption.

The calculation of net lost business income is based upon VHG's historical financial performance at each of the three subject properties, including property-level revenue and expense data, occupancy and ADR trends, and seasonal operating patterns. VHG's consolidated revenue for fiscal year 2021 was $412,000,000, with consolidated EBITDA of $78,000,000. Property-level financial data, which has been produced to Ironclad and its independent adjuster, provides the granular detail necessary to calculate lost income at each affected location.

Lost business income has been calculated for each property as the sum of:

(a) Lost room revenue, calculated as the product of available rooms, the pre-loss ADR, and the pre-loss occupancy rate for the applicable period, adjusted for known seasonal variation in demand based on historical monthly operating data and forward booking reports as of September 17, 2022;

(b) Lost ancillary revenue, including revenue from food and beverage operations, spa and wellness services, marina operations (Grand Key Resort), conference and event hosting (Harborview Hotel & Conference Center), beach service operations, and other guest services, calculated based on historical revenue patterns and their established relationship to room revenue and occupancy levels;

(c) Less saved or non-continuing expenses, including reduced payroll costs for non-essential staff during closure periods, reduced utility consumption, variable food and beverage supply costs, and other operating expenses that did not continue during the period of interruption; and

(d) Plus extra expenses, including costs reasonably and necessarily incurred by VHG to mitigate the loss, accelerate restoration, and minimize the period of business interruption, including emergency remediation and stabilization costs, temporary facility expenses, expedited contractor procurement premiums, and other mitigation-related expenditures.

All projections of lost revenue incorporate adjustments for known seasonal demand patterns at each property and are informed by forward booking data as of September 17, 2022, the last business day prior to Hurricane Callista's landfall. VHG's calculations have been prepared with the assistance of its internal finance and accounting teams, its risk management department, and its outside forensic accounting advisors. Detailed supporting schedules and calculations accompany this proof of loss or will be provided as supplemental documentation.

5.2 Verimark Grand Key Resort — Claimed Business-Interruption Loss: $31,400,000

The claimed business-interruption loss for the Verimark Grand Key Resort totals $31,400,000 and is comprised of the following components:

Lost Room Revenue: Room revenue losses have been calculated based on the property's 312-room inventory, its pre-loss ADR of $389, and its pre-loss average occupancy rate of 82%, applied over the estimated 178-day closure period from September 18, 2022, through on or about March 15, 2023. The calculation incorporates seasonal adjustments reflecting the property's historical revenue patterns. The closure period encompasses the entirety of the Florida Keys' peak winter tourist season (approximately November through March), during which the property historically achieves its highest occupancy rates and ADR levels. Forward booking data as of September 17, 2022, confirmed robust reservation levels for the upcoming peak season, consistent with or exceeding prior-year performance.

Lost Ancillary Revenue: In addition to lost room revenue, the Grand Key Resort's business-interruption loss includes lost income from the property's marina operations, food and beverage outlets (two restaurants, pool bar, and in-room dining), spa and wellness center services, and resort activity programs. These ancillary revenue streams have historically generated revenue equivalent to approximately 45% of room revenue at this property. The complete destruction of the 94-slip marina represents a particularly significant component of ancillary revenue loss, as marina operations—including slip fees, boat charters, dive operations, and fuel sales—are a substantial revenue driver at this location.

Less Saved Expenses: VHG has deducted from the claimed loss all expenses that ceased or were materially reduced during the closure period, including payroll costs for non-essential staff who were furloughed or reassigned, reduced utility consumption, variable food and beverage supply costs, guest amenity expenses, linen and laundry costs, and other variable operating expenses. VHG has continued to pay essential management and security personnel throughout the closure period, and those continuing costs have not been deducted.

Extra Expenses: The claimed loss includes extra expenses reasonably and necessarily incurred by VHG to minimize the period of restoration and mitigate the overall loss. These expenses include emergency stabilization and remediation costs incurred immediately following the hurricane, temporary facility costs for displaced essential personnel, expedited procurement premiums for critical construction materials and contractor services, and costs associated with accelerating the repair and restoration timeline.

5.3 Verimark Harborview Hotel & Conference Center — Claimed Business-Interruption Loss: $18,700,000

The claimed business-interruption loss for the Verimark Harborview Hotel & Conference Center totals $18,700,000 and is comprised of the following components:

Lost Room Revenue: Room revenue losses have been calculated based on the property's 224-room inventory, its pre-loss ADR of $295, and its pre-loss average occupancy rate of 74%, applied over the estimated 135-day closure period from September 18, 2022, through on or about January 31, 2023. The calculation incorporates seasonal adjustments reflecting the property's historical revenue patterns, including the ramp-up of tourist and conference business during the fourth quarter and early first quarter.

Lost Conference and Event Revenue: A significant component of the Harborview property's business-interruption loss is attributable to the loss of revenue from its 40,000-square-foot conference and event facility. As of September 17, 2022, the property had confirmed bookings for numerous corporate conferences, conventions, meetings, social events, and weddings scheduled for the fourth quarter of 2022 and January 2023. These bookings were cancelled as a direct result of the hurricane damage and the property's closure. Conference and event revenue includes room rental fees, audio-visual equipment charges, catering and banquet revenue, and associated group room block revenue. Forward booking reports reflecting cancelled events have been compiled and are available as supporting documentation.

Less Saved Expenses: VHG has deducted from the claimed loss all expenses that ceased or were materially reduced during the closure period, consistent with the methodology described in Section 5.2 above.

Extra Expenses: The claimed loss includes extra expenses incurred by VHG, including costs associated with temporary conference operations for events that could be relocated to other VHG properties, expedited repair and restoration costs, and other mitigation expenses reasonably necessary to minimize the loss.

5.4 Verimark Sunset Shores — Claimed Business-Interruption Loss: $9,900,000

The claimed business-interruption loss for the Verimark Sunset Shores totals $9,900,000 and is comprised of the following components:

Lost Room Revenue: Room revenue losses have been calculated in two phases. For the full-closure period (approximately 73 days from September 18, 2022, through on or about November 30, 2022), losses are calculated based on the property's 186-room inventory, its pre-loss ADR of $342, and its pre-loss average occupancy rate of 79%, adjusted for seasonal variation. For the reduced-capacity period (approximately December 2022 through February 2023), losses reflect the reduction in available room inventory to approximately 60% of capacity and the impact of diminished guest services on ADR and demand during the restoration period.

Lost Ancillary Revenue: The claimed loss includes lost income from the property's food and beverage operations (signature restaurant, beachside bar and grill, and in-room dining) and beach service operations. The beachside bar and grill and certain beach service operations are expected to remain closed throughout the reduced-capacity period, contributing to ongoing ancillary revenue losses beyond the full-closure period.

Less Saved Expenses: VHG has deducted from the claimed loss all expenses that ceased or were materially reduced during the full-closure period and the reduced-capacity period, consistent with the methodology described above.

Extra Expenses: The claimed loss includes extra expenses for emergency remediation, partial-operations costs associated with operating the property at reduced capacity during restoration (including guest inconvenience accommodations, noise and disruption mitigation, and phased construction management), and other mitigation expenditures.

5.5 Total Claimed Business-Interruption Loss

The aggregate business-interruption loss claimed by VHG across all three subject properties is as follows:

VHG reserves the right to supplement, amend, or revise the claimed amounts set forth herein as additional information becomes available during the ongoing restoration process, including any extension of the period of restoration beyond the currently estimated reopening dates.

Section 6: Insurance Coverage

The following sets forth the material terms of VHG's property and business-interruption insurance program applicable to the losses described in this proof of loss:

Primary Policy:

Carrier: Ironclad Indemnity Corporation Policy Number: IIC-PRP-2022-07541 Policy Period: July 1, 2022 – July 1, 2023 Coverage: All risks of physical loss or damage to insured property, including business interruption and extra expense coverage Primary Layer Limit: $25,000,000 per occurrence for business interruption Deductible: $500,000 per occurrence Annual Premium: $980,000

Excess Policies:

First Excess Layer: Carrier: Pinnacle Surplus Lines Inc. Policy Number: PSL-XS1-2022-3390 Limit: $15,000,000 excess of $25,000,000 (attaching at $25,000,000) Annual Premium: $410,000

Second Excess Layer: Carrier: Montclair Assurance Company Policy Number: MAC-XS2-2022-09817 Limit: $10,000,000 excess of $40,000,000 (attaching at $40,000,000) Annual Premium: $265,000

Third Excess Layer: Carrier: Sovereign Re Ltd. Policy Number: SRL-XS3-2022-5102 Limit: $10,000,000 excess of $50,000,000 (attaching at $50,000,000) Annual Premium: $185,000

Total Insurance Tower: $60,000,000 in aggregate limits above the $500,000 per-occurrence deductible.

Total Annual Premium (Aggregate): $1,840,000, allocated as set forth above among the four carriers in the program.

This Sworn Statement in Proof of Loss is submitted to Ironclad Indemnity Corporation as the lead and primary carrier in VHG's property and business-interruption insurance program. VHG submits this proof of loss on behalf of its claims against the entire insurance tower, including claims against the excess carriers. VHG has separately provided copies of this proof of loss to each of the excess carriers identified above. VHG expressly reserves all rights under each of the excess policies, including all rights to demand payment from each excess carrier for its respective layer limit in full upon exhaustion of the underlying layers.

Section 7: Prior Notice of Loss

VHG submitted its initial notice of loss to Ironclad Indemnity Corporation on September 22, 2022, four days after Hurricane Callista's landfall. The notice of loss identified all three subject properties, described the nature of the hurricane event and the resulting physical damage and business interruption, and requested that Ironclad promptly commence its investigation and adjustment of the claim.

Upon receipt of VHG's notice of loss, Ironclad retained Arbor Claims Services LLC as an independent adjusting firm to inspect the damaged properties and assess the losses. Arbor Claims Services LLC conducted initial property inspections at all three subject properties on October 5, 2022. The lead adjuster assigned by Arbor Claims Services LLC is Denise Whitford, who has been VHG's primary point of contact with the independent adjusting firm. VHG has cooperated fully with Arbor Claims Services LLC and Ironclad throughout the claims investigation process to date, including providing access to the damaged properties, making VHG personnel available for interviews, and producing financial records and other documentation as requested.

On October 12, 2022, Ironclad issued a Reservation of Rights letter to VHG, purporting to reserve certain rights and identify certain potential coverage defenses in connection with VHG's claim. VHG received the Reservation of Rights letter on or about October 14, 2022. VHG disputes the bases stated in the Reservation of Rights letter and does not agree that any of the coverage defenses or limitations referenced therein are applicable to VHG's claim. VHG submits this Sworn Statement in Proof of Loss without waiving any rights or claims in response to the Reservation of Rights letter, and VHG expressly reserves all rights to challenge and dispute any denial, limitation, or reduction of coverage asserted by Ironclad or any other carrier in the insurance program.

Section 8: Other Insurance

VHG states that the insurance policies identified in Section 6 above constitute VHG's complete property and business-interruption insurance program for the three subject properties described in this proof of loss. The primary policy issued by Ironclad Indemnity Corporation and the three excess policies issued by Pinnacle Surplus Lines Inc., Montclair Assurance Company, and Sovereign Re Ltd. are the only insurance policies known to the Insured that provide coverage for the business-interruption losses described herein. VHG is not aware of any other insurance policy, whether issued to VHG or to any other party, that provides coverage for the same losses claimed in this proof of loss.

VHG's insurance broker of record for the property and business-interruption program is Tidewater Risk Advisors LLC, with offices at 2600 S. Bayshore Drive, Suite 800, Miami, FL 33133. The account executive responsible for VHG's account is Franklin Orde. Tidewater Risk Advisors LLC placed the primary and excess policies on VHG's behalf and has been involved in the claims process in its capacity as VHG's broker of record.

Section 9: Supporting Documentation

The following documents accompany this Sworn Statement in Proof of Loss or will be provided to Ironclad Indemnity Corporation as supplemental documentation in support of VHG's claim. Certain documents listed below have been previously produced to Ironclad and/or Arbor Claims Services LLC during the claims investigation process; such documents are referenced here for completeness.

1. Financial Statements and Property-Level Profit & Loss Data — Audited consolidated financial statements of Verimark Hospitality Group Inc. for fiscal years 2019, 2020, and 2021, and unaudited interim financial statements for the year-to-date period ending August 31, 2022. Property-level profit and loss statements for the Verimark Grand Key Resort, Verimark Harborview Hotel & Conference Center, and Verimark Sunset Shores for the same periods.

2. Monthly Revenue Reports by Property — Monthly revenue reports for each subject property, broken down by revenue category (rooms, food and beverage, conference and event, marina, spa and wellness, and other ancillary revenue streams), for fiscal years 2019, 2020, 2021, and year-to-date 2022.

3. Occupancy and ADR Data — Monthly occupancy rates and Average Daily Rate data for each subject property for fiscal years 2019, 2020, 2021, and year-to-date 2022, including daily data for the three months preceding the date of loss.

4. Forward Booking Reports — Forward reservation and booking reports for each subject property as of September 17, 2022, the last business day prior to Hurricane Callista's landfall, including individual reservation data, group booking contracts, and conference and event booking confirmations.

5. Damage Assessment Reports and Photographs — Property condition assessments, damage inspection reports, and photographic documentation for each subject property, prepared by VHG's engineering and facilities teams, independent structural engineers, and Arbor Claims Services LLC following Hurricane Callista.

6. Contractor Estimates and Repair Timelines — Bid proposals, cost estimates, and projected repair timelines submitted by general contractors, specialty subcontractors, and marine construction firms retained or solicited by VHG for the restoration of each subject property.

7. Extra Expense Documentation — Invoices, purchase orders, contracts, and receipts documenting extra expenses incurred by VHG in connection with emergency remediation, temporary facilities, expedited procurement, and other mitigation efforts at each subject property.

8. Payroll Records — Pre-loss and post-loss payroll records for each subject property, documenting staffing levels, compensation, and the calculation of saved expenses attributable to furloughed or reassigned personnel during the periods of closure and reduced-capacity operations.

9. Correspondence with Ironclad Indemnity Corporation and Arbor Claims Services LLC — Copies of all written correspondence, including emails, letters, and claim forms, exchanged between VHG and Ironclad Indemnity Corporation and/or Arbor Claims Services LLC in connection with VHG's claim, including the initial notice of loss dated September 22, 2022, and the Reservation of Rights letter dated October 12, 2022.

10. Evacuation Orders — Copies of the mandatory evacuation orders issued by Monroe County, Florida, on September 16, 2022, and Lee County, Florida, on September 17, 2022.

VHG reserves the right to supplement this Sworn Statement in Proof of Loss and the supporting documentation listed above as additional information becomes available during the ongoing restoration process, including updated repair cost estimates, revised reopening timelines, additional financial data, and any other information relevant to the quantification of VHG's business-interruption losses.

Section 10: Demand for Payment

VHG hereby demands payment of business-interruption losses totaling $60,000,000 under Policy No. IIC-PRP-2022-07541 and the excess policies identified in Section 6 of this Sworn Statement in Proof of Loss, less the applicable per-occurrence deductible of $500,000.

Net Amount Demanded: $59,500,000 (after application of the $500,000 deductible).

Specifically, VHG demands:

(a) That Ironclad Indemnity Corporation promptly commence payment of its primary layer obligation in the amount of $24,500,000 (representing the $25,000,000 primary layer limit less the $500,000 per-occurrence deductible);

(b) That Pinnacle Surplus Lines Inc. pay its first excess layer obligation in the full amount of $15,000,000 upon exhaustion of the primary layer;

(c) That Montclair Assurance Company pay its second excess layer obligation in the full amount of $10,000,000 upon exhaustion of the first excess layer; and

(d) That Sovereign Re Ltd. pay its third excess layer obligation in the full amount of $10,000,000 upon exhaustion of the second excess layer.

VHG requests that Ironclad Indemnity Corporation make payment of the primary layer obligation within the time required by the terms of Policy No. IIC-PRP-2022-07541 and applicable Florida law, including but not limited to the requirements of Section 627.70131, Florida Statutes. VHG further requests that each excess carrier make prompt payment of its respective layer limit upon proper tender and exhaustion of the underlying layers.

VHG expressly reserves all rights and remedies available under the policies, at law, and in equity in the event that any carrier fails to make timely and full payment of the amounts demanded herein, including but not limited to claims for breach of contract, interest, statutory penalties, and bad faith.

Section 11: Reservation of Rights by Insured

VHG expressly reserves all rights, claims, demands, and remedies available to it under the Policy, the excess policies, at law, and in equity, including but not limited to the following:

(a) All claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and statutory bad faith under applicable Florida law, including Section 624.155, Florida Statutes;

(b) All rights to recover interest, statutory penalties, attorneys' fees, and costs of litigation as permitted by the policies and applicable law;

(d) All rights to pursue any and all other remedies available at law or in equity.

This Sworn Statement in Proof of Loss is submitted without prejudice to VHG's right to supplement, amend, or revise the claimed amounts set forth herein as additional information becomes available, including but not limited to updated repair cost estimates, revised restoration timelines, additional financial and operational data, and any other information bearing on the nature and extent of VHG's business-interruption losses.

VHG does not waive any rights, claims, or defenses by submitting this Sworn Statement in Proof of Loss, and nothing herein shall be construed as an election of remedies, a limitation on VHG's claims, or an acknowledgment of the applicability of any coverage defense, exclusion, or limitation asserted by Ironclad Indemnity Corporation or any other carrier.

Verification / Sworn Oath

VERIFICATION

STATE OF FLORIDA COUNTY OF MIAMI-DADE

The undersigned, Sandra Pellegrini, being duly sworn, deposes and says:

I am the Vice President of Risk Management of Verimark Hospitality Group Inc. I am authorized to submit this Sworn Statement in Proof of Loss on behalf of the Insured. I have reviewed the foregoing Sworn Statement in Proof of Loss and the information and documentation upon which it is based. The foregoing statements are true and correct to the best of the undersigned's knowledge, information, and belief. No material fact has been concealed or misrepresented. The amounts claimed herein represent the genuine business-interruption losses sustained by Verimark Hospitality Group Inc. as a result of the occurrence described herein.

________________________________________

Sandra Pellegrini Vice President of Risk Management Verimark Hospitality Group Inc.

Date: November 15, 2022

NOTARY ACKNOWLEDGMENT

STATE OF FLORIDA COUNTY OF MIAMI-DADE

Subscribed and sworn to (or affirmed) before me on this 15th day of November, 2022, by Sandra Pellegrini, who is personally known to me or who has produced a valid Florida driver's license as identification.

________________________________________

Notary Public, State of Florida

Print Name: ________

My Commission Number: ________

My Commission Expires: ________

[NOTARY SEAL]

Certificate of Service / Transmittal

CERTIFICATE OF SERVICE AND TRANSMITTAL

I hereby certify that on November 15, 2022, a true and correct copy of the foregoing Sworn Statement in Proof of Loss, together with all accompanying supporting documentation, was transmitted to the following recipients by the methods indicated:

Primary Carrier:

Victor Haddon Senior Vice President, Claims Ironclad Indemnity Corporation 55 Constitution Boulevard Hartford, CT 06103

Transmitted via United States Postal Service Certified Mail, Return Receipt Requested, and via electronic mail.

Copies to:

Pinnacle Surplus Lines Inc. 200 Congress Avenue, Suite 1400 Austin, TX 78701

Transmitted via United States Postal Service Certified Mail, Return Receipt Requested.

Montclair Assurance Company 1 Liberty Plaza, 38th Floor New York, NY 10006

Transmitted via United States Postal Service Certified Mail, Return Receipt Requested.

Sovereign Re Ltd. 14 Front Street Hamilton HM 11, Bermuda

Transmitted via international courier service (Crestline Industries Priority) and via electronic mail.

Tidewater Risk Advisors LLC 2600 S. Bayshore Drive, Suite 800 Miami, FL 33133

Attn: Franklin Orde, Account Executive

Transmitted via electronic mail and hand delivery.

Date of Transmittal: November 15, 2022

________________________________________

Sandra Pellegrini Vice President of Risk Management Verimark Hospitality Group Inc.

Property	Claimed BI Loss
Verimark Grand Key Resort	$31,400,000
Verimark Harborview Hotel & Conference Center	$18,700,000
Verimark Sunset Shores	$9,900,000
Aggregate Total	$60,000,000

EXHIBIT B
IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA
CIVIL DIVISION
Case No.: 2022-CA-031547
VERIMARK HOSPITALITY GROUP INC., a Delaware corporation,
Plaintiff,
v.
IRONCLAD INDEMNITY CORPORATION, a Connecticut corporation;
PINNACLE SURPLUS LINES INC., a Texas corporation;
MONTCLAIR ASSURANCE COMPANY, a New York corporation; and
SOVEREIGN RE LTD., a Bermuda corporation,
Defendants.
Sworn Statement in Proof of Loss submitted by Verimark Hospitality Group Inc. to Ironclad Indemnity Corporation on November 15, 2022
SWORN STATEMENT IN PROOF OF LOSS
Date of Submission: November 15, 2022
Submitted To:
Ironclad Indemnity Corporation 55 Constitution Boulevard Hartford, CT 06103
Attn: Victor Haddon, Senior Vice President, Claims
Policy Number: IIC-PRP-2022-07541
Policy Period: July 1, 2022 – July 1, 2023
Type of Policy: All-Risk Property and Business Interruption Insurance
Insured: Verimark Hospitality Group Inc.
Address of Insured:
1900 Brickell Avenue, Suite 3200 Miami, FL 33129
Federal Employer Identification Number (EIN): 59-3841276
The undersigned, Sandra Pellegrini, Vice President of Risk Management of Verimark Hospitality Group Inc. ("VHG" or the "Insured"), hereby submits this Sworn Statement in Proof of Loss to Ironclad Indemnity Corporation ("Ironclad") pursuant to the requirements of Policy No. IIC-PRP-2022-07541 (the "Policy"). This Sworn Statement in Proof of Loss sets forth the nature and extent of the business-interruption losses sustained by VHG as a result of Hurricane Callista, which made landfall in the State of Florida on September 18, 2022, and which caused catastrophic damage to three insured resort hotel properties owned and operated by VHG. VHG submits this sworn proof of loss in compliance with the terms of the Policy and without waiving any rights, claims, or remedies available to VHG under the Policy, at law, or in equity.
Section 1: Identity of the Insured
Full Legal Name: Verimark Hospitality Group Inc.
Entity Type: Corporation organized and existing under the laws of the State of Delaware. VHG is a publicly traded company listed on the Nasdaq Stock Market under the ticker symbol "VMRK."
Principal Place of Business:
1900 Brickell Avenue, Suite 3200 Miami, FL 33129
Nature of Business: VHG is engaged in the hospitality and real estate industries. VHG owns, develops, and operates luxury resort hotels and conference centers throughout the southeastern United States and the Caribbean. As of the date of loss, VHG's portfolio included fifteen owned-and-operated resort properties. Three of these properties—the Verimark Grand Key Resort, the Verimark Harborview Hotel & Conference Center, and the Verimark Sunset Shores—are the subject of this proof of loss. VHG's business operations include room accommodations, food and beverage services, spa and wellness facilities, marina operations, conference and event hosting, and other ancillary guest services. VHG's consolidated revenue for fiscal year 2021 was approximately $412,000,000, with earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $78,000,000.
Contact Person for Claim:
Sandra Pellegrini Vice President of Risk Management Verimark Hospitality Group Inc. 1900 Brickell Avenue, Suite 3200 Miami, FL 33129 Telephone: (305) 555-8900
Email: s.pellegrini@verimarkhotels.com
Insurance Broker of Record:
Tidewater Risk Advisors LLC 2600 S. Bayshore Drive, Suite 800 Miami, FL 33133 Account Executive: Franklin Orde Telephone: (305) 555-4200
Email: f.orde@tidewaterrisk.com
Section 2: Description of the Occurrence / Cause of Loss
Date of Loss: September 18, 2022
Cause of Loss: Hurricane Callista — a Category 4 hurricane on the Saffir-Veltason Hurricane Wind Scale at the time of landfall in the State of Florida.
Hurricane Callista was designated as a named tropical storm by the National Hurricane Center of the National Oceanic and Atmospheric Administration ("NOAA") on September 12, 2022, after intensifying from a tropical depression that had formed over the central Caribbean Sea several days earlier. The storm rapidly strengthened as it tracked northward through the Straits of Florida, reaching Category 4 intensity on September 17, 2022, with maximum sustained winds of approximately 145 miles per hour.
Landfall Details: Hurricane Callista made landfall at approximately 1:30 PM Eastern Daylight Time on September 18, 2022, in the Lower Florida Keys, near the Big Pine Key area of Monroe County, Florida. At the time of landfall, the storm maintained maximum sustained winds of approximately 145 miles per hour. The hurricane produced devastating storm surge, torrential rainfall, and destructive wind gusts across a wide swath of southwestern and western Florida.
Storm Surge: The National Weather Service and post-storm survey data indicate that Hurricane Callista generated storm surge of approximately 8 to 14 feet above normally dry ground in Monroe County, Florida, and storm surge of approximately 6 to 10 feet above normally dry ground in Lee County, Florida. Significant storm surge impacts were also recorded in Pinellas County and other Gulf Coast communities.
Evacuation Orders: In advance of Hurricane Callista's landfall, the following mandatory evacuation orders were issued by local authorities:
•  Monroe County, Florida: Mandatory evacuation order issued on September 16, 2022, covering all residents and visitors in evacuation zones, including all areas of the Florida Keys.
•  Lee County, Florida: Mandatory evacuation order issued on September 17, 2022, covering evacuation zones A and B, including the barrier islands of Fort Myers Beach, Sanibel, Captiva, and surrounding areas.
Evacuation of VHG Properties: VHG evacuated all guests, staff, and essential personnel from all three subject properties in full compliance with the applicable mandatory evacuation orders prior to Hurricane Callista's landfall. VHG implemented its hurricane preparedness protocols at each property, including securing physical plant and equipment, protecting essential records and data systems, and coordinating with local emergency management authorities. All guests were evacuated and relocated in advance of the storm.
Summary of Damage: All three insured properties sustained significant physical loss and damage as a direct result of Hurricane Callista's wind, wind-driven rain, and storm surge. The physical damage to the properties rendered them uninhabitable and inoperable for extended periods following the hurricane, resulting in prolonged and ongoing business interruption at each location. The nature and extent of damage to each property is described in greater detail in Section 3 below, and the resulting business-interruption losses are set forth in Sections 4 and 5.
Section 3: Description of Insured Properties
3.1 Verimark Grand Key Resort
Location: Mile Marker 48, Marathon, FL 33050
Description: The Verimark Grand Key Resort is a 312-room luxury resort and full-service marina located in Marathon, Florida, in the Middle Florida Keys. The property encompasses approximately 22 acres of oceanfront land and includes guest room buildings, a main lodge and lobby structure, two restaurants, a full-service spa and wellness center, a 94-slip deep-water marina, swimming pools, meeting and event spaces, and related back-of-house and support facilities. The resort is one of the premier luxury hospitality destinations in the Florida Keys and is a significant revenue-generating asset for VHG.
Pre-Loss Operating Metrics: In the twelve months preceding the date of loss, the Verimark Grand Key Resort achieved an Average Daily Rate ("ADR") of $389 per room and an average occupancy rate of 82%. The property generated substantial ancillary revenue from its marina operations, food and beverage outlets, spa services, and resort activity programs. The property's pre-loss financial performance reflected its status as a high-demand destination, particularly during the peak winter tourist season from November through April.
Damage Sustained: The Verimark Grand Key Resort sustained severe and catastrophic damage from Hurricane Callista. The property was located within the zone of maximum storm surge impact in Monroe County, where surge levels of 8 to 14 feet above normally dry ground were recorded. The storm surge inundated the ground-floor levels of all guest room buildings, the main lodge, the restaurants, the spa facility, and the marina infrastructure. Hurricane-force winds with sustained speeds in excess of 130 miles per hour at the property's location caused extensive structural damage to roofing systems, building facades, windows, doors, and exterior cladding across the resort. Wind-driven rain caused widespread water intrusion into upper-floor guest rooms and common areas. The 94-slip marina was substantially destroyed, with docks, pilings, fueling infrastructure, and associated marine facilities suffering total or near-total loss. Mechanical, electrical, plumbing, fire suppression, and HVAC systems throughout the resort were severely damaged or rendered inoperable by the combined effects of wind, storm surge, and water intrusion.
3.2 Verimark Harborview Hotel & Conference Center
Location: 1400 Estero Boulevard, Fort Myers Beach, FL 33931
Description: The Verimark Harborview Hotel & Conference Center is a 224-room hotel with a 40,000-square-foot conference and event facility located on Fort Myers Beach in Lee County, Florida. The property is situated on the barrier island of Estero Island and includes guest room towers, restaurant and bar facilities, a rooftop pool deck, and the largest dedicated conference center on the island. The conference facility hosts corporate meetings, conventions, weddings, and other events year-round and is a significant driver of the property's revenue and profitability.
Pre-Loss Operating Metrics: In the twelve months preceding the date of loss, the Verimark Harborview Hotel & Conference Center achieved an ADR of $295 per room and an average occupancy rate of 74%. The property's conference and event business contributed significantly to overall revenue, with the 40,000-square-foot conference facility typically hosting between 180 and 220 events per year, including multi-day corporate retreats and conventions during the peak season.
Damage Sustained: The Verimark Harborview Hotel & Conference Center sustained significant structural and mechanical damage from Hurricane Callista. The property was located within the zone of substantial storm surge impact in Lee County, where surge levels of 6 to 10 feet above normally dry ground were recorded on Estero Island. The conference center roof suffered catastrophic wind damage, with large sections of the roofing membrane and structural decking torn away by sustained hurricane-force winds. The building facade of the conference center and adjacent guest room tower sustained significant damage from wind-borne debris and pressure differentials. Storm surge and wind-driven rain caused extensive water intrusion into guest rooms on the lower floors of both guest room towers. The property's electrical distribution systems, emergency generators, elevator systems, and HVAC infrastructure sustained severe damage requiring full replacement. Restaurant and food service areas on the ground floor were inundated by storm surge.
3.3 Verimark Sunset Shores
Location: 7200 Gulf Boulevard, St. Pete Beach, FL 33706
Description: The Verimark Sunset Shores is a 186-room boutique luxury resort located on St. Pete Beach in Pinellas County, Florida. The property occupies a prime beachfront location on the Gulf of Mexico and includes guest room buildings, a signature restaurant, a beachside bar and grill, a wellness center, swimming pools, and curated beach service operations. The resort is known for its intimate, high-service guest experience and commands premium room rates within its competitive market.
Pre-Loss Operating Metrics: In the twelve months preceding the date of loss, the Verimark Sunset Shores achieved an ADR of $342 per room and an average occupancy rate of 79%. The property generated meaningful ancillary revenue from its food and beverage operations, wellness center services, and beach activity programs.
Damage Sustained: The Verimark Sunset Shores sustained wind damage and partial flooding as a result of Hurricane Callista. Although the property was located outside the zone of maximum storm surge impact, it experienced sustained tropical-storm-force and hurricane-force winds that caused significant damage to the roofing systems and exterior building envelope of multiple structures. Wind damage resulted in water intrusion into guest rooms and common areas on the upper floors. Ground-level facilities, including the beachside bar and grill, pool equipment rooms, laundry facilities, and portions of the wellness center, sustained partial flooding from a combination of storm surge, wind-driven tidal action, and heavy rainfall. Landscaping, outdoor furnishings, and beach service infrastructure were extensively damaged or destroyed.
Section 4: Period of Business Interruption
4.1 Verimark Grand Key Resort
Date of Closure: September 18, 2022. The property ceased all guest operations prior to landfall in compliance with the Monroe County mandatory evacuation order issued September 16, 2022.
Anticipated Reopening Date: On or about March 15, 2023 (estimated as of the date of this proof of loss). VHG notes that this reopening date is an estimate based on current information and is subject to change depending on the progress of repairs, availability of construction materials and labor, and regulatory approvals.
Total Estimated Closure Period: Approximately 178 days from the date of closure through the anticipated reopening date.
Basis for Estimated Closure Period: The extended closure period at the Verimark Grand Key Resort is necessitated by the severity and scope of the physical damage sustained during Hurricane Callista. The property requires extensive structural repairs to guest room buildings, the main lodge, and support structures. The 94-slip marina, which represents a significant component of the resort's revenue and guest experience, was substantially destroyed and requires complete reconstruction. Guest rooms, lobbies, restaurants, spa facilities, and common areas require comprehensive remediation, including demolition and removal of storm-damaged materials, mold remediation, and full interior restoration. The mechanical, electrical, plumbing, and HVAC systems throughout the resort require replacement or extensive rehabilitation. Contractor availability is severely constrained by the unprecedented regional demand for construction services in the aftermath of Hurricane Callista, and lead times for specialized construction materials have been significantly extended. VHG is working diligently to expedite repairs and has retained multiple contractor teams, but the scope of damage and regional resource constraints make a reopening date earlier than mid-March 2023 infeasible.
4.2 Verimark Harborview Hotel & Conference Center
Date of Closure: September 18, 2022. The property ceased all guest and conference operations prior to landfall in compliance with the Lee County mandatory evacuation order issued September 17, 2022.
Anticipated Reopening Date: On or about January 31, 2023 (estimated as of the date of this proof of loss). VHG notes that this reopening date is an estimate based on current information and is subject to change.
Total Estimated Closure Period: Approximately 135 days from the date of closure through the anticipated reopening date.
Basis for Estimated Closure Period: The closure period at the Verimark Harborview Hotel & Conference Center is driven primarily by the extensive structural damage to the conference center roof and building facade, which require major structural repair and partial reconstruction. Guest rooms affected by water intrusion require comprehensive remediation and restoration. The property's electrical distribution systems, emergency generators, elevator systems, and HVAC infrastructure require full replacement, which entails significant procurement lead times and specialized installation work. All cancelled conference and event bookings for the fourth quarter of 2022 and January 2023 represent irrecoverable lost revenue during the closure period. VHG is pursuing accelerated repair timelines and has engaged expedited procurement processes for critical building systems.
4.3 Verimark Sunset Shores
Date of Full Closure: September 18, 2022. The property ceased all guest operations in advance of Hurricane Callista.
Partial Reopening Date: Approximately November 30, 2022 (estimated as of the date of this proof of loss). VHG anticipates that a phased restoration process will permit partial reopening of the property with reduced room inventory and limited ancillary services on or about this date.
Full-Closure Period: Approximately 73 days from September 18, 2022, through the anticipated partial reopening on or about November 30, 2022.
Reduced-Capacity Period: From the anticipated partial reopening in late November or early December 2022 through approximately February 2023, the property is expected to operate at substantially reduced capacity as remaining repairs are completed in phases. During this reduced-capacity period, VHG estimates that only approximately 60% of guest room inventory will be available for occupancy, and certain ancillary revenue operations (including the beachside bar and grill and portions of the wellness center) will remain closed.
Basis for Estimated Closure and Reduced-Capacity Periods: The phased approach to restoration at Verimark Sunset Shores reflects the comparatively less severe nature of the damage at this property. Wind damage to roofing systems and exterior building envelope requires repair and partial replacement, which can be completed in stages while portions of the property are returned to service. Ground-level flooding damage requires remediation, demolition of affected materials, and restoration of impacted facilities. The phased restoration permits partial revenue generation while full repairs are completed.
Section 5: Claimed Business-Interruption Losses
5.1 Methodology.  VHG's claimed business-interruption losses have been calculated in accordance with the coverage provided under Policy No. IIC-PRP-2022-07541, which provides coverage for net lost business income during the period of restoration, plus extra expenses reasonably and necessarily incurred to minimize the duration and extent of the business interruption.
The calculation of net lost business income is based upon VHG's historical financial performance at each of the three subject properties, including property-level revenue and expense data, occupancy and ADR trends, and seasonal operating patterns. VHG's consolidated revenue for fiscal year 2021 was $412,000,000, with consolidated EBITDA of $78,000,000. Property-level financial data, which has been produced to Ironclad and its independent adjuster, provides the granular detail necessary to calculate lost income at each affected location.
Lost business income has been calculated for each property as the sum of:
(a) Lost room revenue, calculated as the product of available rooms, the pre-loss ADR, and the pre-loss occupancy rate for the applicable period, adjusted for known seasonal variation in demand based on historical monthly operating data and forward booking reports as of September 17, 2022;
(b) Lost ancillary revenue, including revenue from food and beverage operations, spa and wellness services, marina operations (Grand Key Resort), conference and event hosting (Harborview Hotel & Conference Center), beach service operations, and other guest services, calculated based on historical revenue patterns and their established relationship to room revenue and occupancy levels;
(c) Less saved or non-continuing expenses, including reduced payroll costs for non-essential staff during closure periods, reduced utility consumption, variable food and beverage supply costs, and other operating expenses that did not continue during the period of interruption; and
(d) Plus extra expenses, including costs reasonably and necessarily incurred by VHG to mitigate the loss, accelerate restoration, and minimize the period of business interruption, including emergency remediation and stabilization costs, temporary facility expenses, expedited contractor procurement premiums, and other mitigation-related expenditures.
All projections of lost revenue incorporate adjustments for known seasonal demand patterns at each property and are informed by forward booking data as of September 17, 2022, the last business day prior to Hurricane Callista's landfall. VHG's calculations have been prepared with the assistance of its internal finance and accounting teams, its risk management department, and its outside forensic accounting advisors. Detailed supporting schedules and calculations accompany this proof of loss or will be provided as supplemental documentation.
5.2 Verimark Grand Key Resort — Claimed Business-Interruption Loss: $31,400,000
The claimed business-interruption loss for the Verimark Grand Key Resort totals $31,400,000 and is comprised of the following components:
Lost Room Revenue: Room revenue losses have been calculated based on the property's 312-room inventory, its pre-loss ADR of $389, and its pre-loss average occupancy rate of 82%, applied over the estimated 178-day closure period from September 18, 2022, through on or about March 15, 2023. The calculation incorporates seasonal adjustments reflecting the property's historical revenue patterns. The closure period encompasses the entirety of the Florida Keys' peak winter tourist season (approximately November through March), during which the property historically achieves its highest occupancy rates and ADR levels. Forward booking data as of September 17, 2022, confirmed robust reservation levels for the upcoming peak season, consistent with or exceeding prior-year performance.
Lost Ancillary Revenue: In addition to lost room revenue, the Grand Key Resort's business-interruption loss includes lost income from the property's marina operations, food and beverage outlets (two restaurants, pool bar, and in-room dining), spa and wellness center services, and resort activity programs. These ancillary revenue streams have historically generated revenue equivalent to approximately 45% of room revenue at this property. The complete destruction of the 94-slip marina represents a particularly significant component of ancillary revenue loss, as marina operations—including slip fees, boat charters, dive operations, and fuel sales—are a substantial revenue driver at this location.
Less Saved Expenses: VHG has deducted from the claimed loss all expenses that ceased or were materially reduced during the closure period, including payroll costs for non-essential staff who were furloughed or reassigned, reduced utility consumption, variable food and beverage supply costs, guest amenity expenses, linen and laundry costs, and other variable operating expenses. VHG has continued to pay essential management and security personnel throughout the closure period, and those continuing costs have not been deducted.
Extra Expenses: The claimed loss includes extra expenses reasonably and necessarily incurred by VHG to minimize the period of restoration and mitigate the overall loss. These expenses include emergency stabilization and remediation costs incurred immediately following the hurricane, temporary facility costs for displaced essential personnel, expedited procurement premiums for critical construction materials and contractor services, and costs associated with accelerating the repair and restoration timeline.
5.3 Verimark Harborview Hotel & Conference Center — Claimed Business-Interruption Loss: $18,700,000
The claimed business-interruption loss for the Verimark Harborview Hotel & Conference Center totals $18,700,000 and is comprised of the following components:
Lost Room Revenue: Room revenue losses have been calculated based on the property's 224-room inventory, its pre-loss ADR of $295, and its pre-loss average occupancy rate of 74%, applied over the estimated 135-day closure period from September 18, 2022, through on or about January 31, 2023. The calculation incorporates seasonal adjustments reflecting the property's historical revenue patterns, including the ramp-up of tourist and conference business during the fourth quarter and early first quarter.
Lost Conference and Event Revenue: A significant component of the Harborview property's business-interruption loss is attributable to the loss of revenue from its 40,000-square-foot conference and event facility. As of September 17, 2022, the property had confirmed bookings for numerous corporate conferences, conventions, meetings, social events, and weddings scheduled for the fourth quarter of 2022 and January 2023. These bookings were cancelled as a direct result of the hurricane damage and the property's closure. Conference and event revenue includes room rental fees, audio-visual equipment charges, catering and banquet revenue, and associated group room block revenue. Forward booking reports reflecting cancelled events have been compiled and are available as supporting documentation.
Less Saved Expenses: VHG has deducted from the claimed loss all expenses that ceased or were materially reduced during the closure period, consistent with the methodology described in Section 5.2 above.
Extra Expenses: The claimed loss includes extra expenses incurred by VHG, including costs associated with temporary conference operations for events that could be relocated to other VHG properties, expedited repair and restoration costs, and other mitigation expenses reasonably necessary to minimize the loss.
5.4 Verimark Sunset Shores — Claimed Business-Interruption Loss: $9,900,000
The claimed business-interruption loss for the Verimark Sunset Shores totals $9,900,000 and is comprised of the following components:
Lost Room Revenue: Room revenue losses have been calculated in two phases. For the full-closure period (approximately 73 days from September 18, 2022, through on or about November 30, 2022), losses are calculated based on the property's 186-room inventory, its pre-loss ADR of $342, and its pre-loss average occupancy rate of 79%, adjusted for seasonal variation. For the reduced-capacity period (approximately December 2022 through February 2023), losses reflect the reduction in available room inventory to approximately 60% of capacity and the impact of diminished guest services on ADR and demand during the restoration period.
Lost Ancillary Revenue: The claimed loss includes lost income from the property's food and beverage operations (signature restaurant, beachside bar and grill, and in-room dining) and beach service operations. The beachside bar and grill and certain beach service operations are expected to remain closed throughout the reduced-capacity period, contributing to ongoing ancillary revenue losses beyond the full-closure period.
Less Saved Expenses: VHG has deducted from the claimed loss all expenses that ceased or were materially reduced during the full-closure period and the reduced-capacity period, consistent with the methodology described above.
Extra Expenses: The claimed loss includes extra expenses for emergency remediation, partial-operations costs associated with operating the property at reduced capacity during restoration (including guest inconvenience accommodations, noise and disruption mitigation, and phased construction management), and other mitigation expenditures.
5.5 Total Claimed Business-Interruption Loss
The aggregate business-interruption loss claimed by VHG across all three subject properties is as follows:
VHG reserves the right to supplement, amend, or revise the claimed amounts set forth herein as additional information becomes available during the ongoing restoration process, including any extension of the period of restoration beyond the currently estimated reopening dates.
Section 6: Insurance Coverage
The following sets forth the material terms of VHG's property and business-interruption insurance program applicable to the losses described in this proof of loss:
Primary Policy:
Carrier: Ironclad Indemnity Corporation Policy Number: IIC-PRP-2022-07541 Policy Period: July 1, 2022 – July 1, 2023 Coverage: All risks of physical loss or damage to insured property, including business interruption and extra expense coverage Primary Layer Limit: $25,000,000 per occurrence for business interruption Deductible: $500,000 per occurrence Annual Premium: $980,000
Excess Policies:
First Excess Layer: Carrier: Pinnacle Surplus Lines Inc. Policy Number: PSL-XS1-2022-3390 Limit: $15,000,000 excess of $25,000,000 (attaching at $25,000,000) Annual Premium: $410,000
Second Excess Layer: Carrier: Montclair Assurance Company Policy Number: MAC-XS2-2022-09817 Limit: $10,000,000 excess of $40,000,000 (attaching at $40,000,000) Annual Premium: $265,000
Third Excess Layer: Carrier: Sovereign Re Ltd. Policy Number: SRL-XS3-2022-5102 Limit: $10,000,000 excess of $50,000,000 (attaching at $50,000,000) Annual Premium: $185,000
Total Insurance Tower: $60,000,000 in aggregate limits above the $500,000 per-occurrence deductible.
Total Annual Premium (Aggregate): $1,840,000, allocated as set forth above among the four carriers in the program.
This Sworn Statement in Proof of Loss is submitted to Ironclad Indemnity Corporation as the lead and primary carrier in VHG's property and business-interruption insurance program. VHG submits this proof of loss on behalf of its claims against the entire insurance tower, including claims against the excess carriers. VHG has separately provided copies of this proof of loss to each of the excess carriers identified above. VHG expressly reserves all rights under each of the excess policies, including all rights to demand payment from each excess carrier for its respective layer limit in full upon exhaustion of the underlying layers.
Section 7: Prior Notice of Loss
VHG submitted its initial notice of loss to Ironclad Indemnity Corporation on September 22, 2022, four days after Hurricane Callista's landfall. The notice of loss identified all three subject properties, described the nature of the hurricane event and the resulting physical damage and business interruption, and requested that Ironclad promptly commence its investigation and adjustment of the claim.
Upon receipt of VHG's notice of loss, Ironclad retained Arbor Claims Services LLC as an independent adjusting firm to inspect the damaged properties and assess the losses. Arbor Claims Services LLC conducted initial property inspections at all three subject properties on October 5, 2022. The lead adjuster assigned by Arbor Claims Services LLC is Denise Whitford, who has been VHG's primary point of contact with the independent adjusting firm. VHG has cooperated fully with Arbor Claims Services LLC and Ironclad throughout the claims investigation process to date, including providing access to the damaged properties, making VHG personnel available for interviews, and producing financial records and other documentation as requested.
On October 12, 2022, Ironclad issued a Reservation of Rights letter to VHG, purporting to reserve certain rights and identify certain potential coverage defenses in connection with VHG's claim. VHG received the Reservation of Rights letter on or about October 14, 2022. VHG disputes the bases stated in the Reservation of Rights letter and does not agree that any of the coverage defenses or limitations referenced therein are applicable to VHG's claim. VHG submits this Sworn Statement in Proof of Loss without waiving any rights or claims in response to the Reservation of Rights letter, and VHG expressly reserves all rights to challenge and dispute any denial, limitation, or reduction of coverage asserted by Ironclad or any other carrier in the insurance program.
Section 8: Other Insurance
VHG states that the insurance policies identified in Section 6 above constitute VHG's complete property and business-interruption insurance program for the three subject properties described in this proof of loss. The primary policy issued by Ironclad Indemnity Corporation and the three excess policies issued by Pinnacle Surplus Lines Inc., Montclair Assurance Company, and Sovereign Re Ltd. are the only insurance policies known to the Insured that provide coverage for the business-interruption losses described herein. VHG is not aware of any other insurance policy, whether issued to VHG or to any other party, that provides coverage for the same losses claimed in this proof of loss.
VHG's insurance broker of record for the property and business-interruption program is Tidewater Risk Advisors LLC, with offices at 2600 S. Bayshore Drive, Suite 800, Miami, FL 33133. The account executive responsible for VHG's account is Franklin Orde. Tidewater Risk Advisors LLC placed the primary and excess policies on VHG's behalf and has been involved in the claims process in its capacity as VHG's broker of record.
Section 9: Supporting Documentation
The following documents accompany this Sworn Statement in Proof of Loss or will be provided to Ironclad Indemnity Corporation as supplemental documentation in support of VHG's claim. Certain documents listed below have been previously produced to Ironclad and/or Arbor Claims Services LLC during the claims investigation process; such documents are referenced here for completeness.
1.  Financial Statements and Property-Level Profit & Loss Data — Audited consolidated financial statements of Verimark Hospitality Group Inc. for fiscal years 2019, 2020, and 2021, and unaudited interim financial statements for the year-to-date period ending August 31, 2022. Property-level profit and loss statements for the Verimark Grand Key Resort, Verimark Harborview Hotel & Conference Center, and Verimark Sunset Shores for the same periods.
2.  Monthly Revenue Reports by Property — Monthly revenue reports for each subject property, broken down by revenue category (rooms, food and beverage, conference and event, marina, spa and wellness, and other ancillary revenue streams), for fiscal years 2019, 2020, 2021, and year-to-date 2022.
3.  Occupancy and ADR Data — Monthly occupancy rates and Average Daily Rate data for each subject property for fiscal years 2019, 2020, 2021, and year-to-date 2022, including daily data for the three months preceding the date of loss.
4.  Forward Booking Reports — Forward reservation and booking reports for each subject property as of September 17, 2022, the last business day prior to Hurricane Callista's landfall, including individual reservation data, group booking contracts, and conference and event booking confirmations.
5.  Damage Assessment Reports and Photographs — Property condition assessments, damage inspection reports, and photographic documentation for each subject property, prepared by VHG's engineering and facilities teams, independent structural engineers, and Arbor Claims Services LLC following Hurricane Callista.
6.  Contractor Estimates and Repair Timelines — Bid proposals, cost estimates, and projected repair timelines submitted by general contractors, specialty subcontractors, and marine construction firms retained or solicited by VHG for the restoration of each subject property.
7.  Extra Expense Documentation — Invoices, purchase orders, contracts, and receipts documenting extra expenses incurred by VHG in connection with emergency remediation, temporary facilities, expedited procurement, and other mitigation efforts at each subject property.
8.  Payroll Records — Pre-loss and post-loss payroll records for each subject property, documenting staffing levels, compensation, and the calculation of saved expenses attributable to furloughed or reassigned personnel during the periods of closure and reduced-capacity operations.
9.  Correspondence with Ironclad Indemnity Corporation and Arbor Claims Services LLC — Copies of all written correspondence, including emails, letters, and claim forms, exchanged between VHG and Ironclad Indemnity Corporation and/or Arbor Claims Services LLC in connection with VHG's claim, including the initial notice of loss dated September 22, 2022, and the Reservation of Rights letter dated October 12, 2022.
10.  Evacuation Orders — Copies of the mandatory evacuation orders issued by Monroe County, Florida, on September 16, 2022, and Lee County, Florida, on September 17, 2022.
VHG reserves the right to supplement this Sworn Statement in Proof of Loss and the supporting documentation listed above as additional information becomes available during the ongoing restoration process, including updated repair cost estimates, revised reopening timelines, additional financial data, and any other information relevant to the quantification of VHG's business-interruption losses.
Section 10: Demand for Payment
VHG hereby demands payment of business-interruption losses totaling $60,000,000 under Policy No. IIC-PRP-2022-07541 and the excess policies identified in Section 6 of this Sworn Statement in Proof of Loss, less the applicable per-occurrence deductible of $500,000.
Net Amount Demanded: $59,500,000 (after application of the $500,000 deductible).
Specifically, VHG demands:
(a) That Ironclad Indemnity Corporation promptly commence payment of its primary layer obligation in the amount of $24,500,000 (representing the $25,000,000 primary layer limit less the $500,000 per-occurrence deductible);
(b) That Pinnacle Surplus Lines Inc. pay its first excess layer obligation in the full amount of $15,000,000 upon exhaustion of the primary layer;
(c) That Montclair Assurance Company pay its second excess layer obligation in the full amount of $10,000,000 upon exhaustion of the first excess layer; and
(d) That Sovereign Re Ltd. pay its third excess layer obligation in the full amount of $10,000,000 upon exhaustion of the second excess layer.
VHG requests that Ironclad Indemnity Corporation make payment of the primary layer obligation within the time required by the terms of Policy No. IIC-PRP-2022-07541 and applicable Florida law, including but not limited to the requirements of Section 627.70131, Florida Statutes. VHG further requests that each excess carrier make prompt payment of its respective layer limit upon proper tender and exhaustion of the underlying layers.
VHG expressly reserves all rights and remedies available under the policies, at law, and in equity in the event that any carrier fails to make timely and full payment of the amounts demanded herein, including but not limited to claims for breach of contract, interest, statutory penalties, and bad faith.
Section 11: Reservation of Rights by Insured
VHG expressly reserves all rights, claims, demands, and remedies available to it under the Policy, the excess policies, at law, and in equity, including but not limited to the following:
(a) All claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and statutory bad faith under applicable Florida law, including Section 624.155, Florida Statutes;
(b) All rights to recover interest, statutory penalties, attorneys' fees, and costs of litigation as permitted by the policies and applicable law;
(c) All claims for consequential, incidental, and punitive damages to the extent permitted by applicable law; and
(d) All rights to pursue any and all other remedies available at law or in equity.
This Sworn Statement in Proof of Loss is submitted without prejudice to VHG's right to supplement, amend, or revise the claimed amounts set forth herein as additional information becomes available, including but not limited to updated repair cost estimates, revised restoration timelines, additional financial and operational data, and any other information bearing on the nature and extent of VHG's business-interruption losses.
VHG does not waive any rights, claims, or defenses by submitting this Sworn Statement in Proof of Loss, and nothing herein shall be construed as an election of remedies, a limitation on VHG's claims, or an acknowledgment of the applicability of any coverage defense, exclusion, or limitation asserted by Ironclad Indemnity Corporation or any other carrier.
Verification / Sworn Oath
VERIFICATION
STATE OF FLORIDA COUNTY OF MIAMI-DADE
The undersigned, Sandra Pellegrini, being duly sworn, deposes and says:
I am the Vice President of Risk Management of Verimark Hospitality Group Inc. I am authorized to submit this Sworn Statement in Proof of Loss on behalf of the Insured. I have reviewed the foregoing Sworn Statement in Proof of Loss and the information and documentation upon which it is based. The foregoing statements are true and correct to the best of the undersigned's knowledge, information, and belief. No material fact has been concealed or misrepresented. The amounts claimed herein represent the genuine business-interruption losses sustained by Verimark Hospitality Group Inc. as a result of the occurrence described herein.
________________________________________
Sandra Pellegrini Vice President of Risk Management Verimark Hospitality Group Inc.
Date: November 15, 2022
NOTARY ACKNOWLEDGMENT
STATE OF FLORIDA COUNTY OF MIAMI-DADE
Subscribed and sworn to (or affirmed) before me on this 15th day of November, 2022, by Sandra Pellegrini, who is personally known to me or who has produced a valid Florida driver's license as identification.
________________________________________
Notary Public, State of Florida
Print Name: ________
My Commission Number: ________
My Commission Expires: ________
[NOTARY SEAL]
Certificate of Service / Transmittal
CERTIFICATE OF SERVICE AND TRANSMITTAL
I hereby certify that on November 15, 2022, a true and correct copy of the foregoing Sworn Statement in Proof of Loss, together with all accompanying supporting documentation, was transmitted to the following recipients by the methods indicated:
Primary Carrier:
Victor Haddon Senior Vice President, Claims Ironclad Indemnity Corporation 55 Constitution Boulevard Hartford, CT 06103
Transmitted via United States Postal Service Certified Mail, Return Receipt Requested, and via electronic mail.
Copies to:
Pinnacle Surplus Lines Inc. 200 Congress Avenue, Suite 1400 Austin, TX 78701
Transmitted via United States Postal Service Certified Mail, Return Receipt Requested.
Montclair Assurance Company 1 Liberty Plaza, 38th Floor New York, NY 10006
Transmitted via United States Postal Service Certified Mail, Return Receipt Requested.
Sovereign Re Ltd. 14 Front Street Hamilton HM 11, Bermuda
Transmitted via international courier service (Crestline Industries Priority) and via electronic mail.
Tidewater Risk Advisors LLC 2600 S. Bayshore Drive, Suite 800 Miami, FL 33133
Attn: Franklin Orde, Account Executive
Transmitted via electronic mail and hand delivery.
Date of Transmittal: November 15, 2022
________________________________________
Sandra Pellegrini Vice President of Risk Management Verimark Hospitality Group Inc.
Property | Claimed BI Loss
Verimark Grand Key Resort | $31,400,000
Verimark Harborview Hotel & Conference Center | $18,700,000
Verimark Sunset Shores | $9,900,000
Aggregate Total | $60,000,000

EXHIBIT B

CIVIL DIVISION

SWORN STATEMENT IN PROOF OF LOSS

VERIFICATION

STATE OF FLORIDA COUNTY OF MIAMI-DADE

NOTARY ACKNOWLEDGMENT

STATE OF FLORIDA COUNTY OF MIAMI-DADE

CERTIFICATE OF SERVICE AND TRANSMITTAL

Record

Parties

Dates

Amounts