[sheet: Cover]

Field	Value
Document Title	Damages & Exposure Summary — Best Case / Likely / Worst Case Analysis
Matter	Quorum Insurance Holdings Corp. — Pre-Suit Reinsurance Recoverable Dispute
Matter Number	1025-00005
Treaty No.	PA-QCS-2019-EXL-0044
Client	Quorum Insurance Holdings Corp. (Nasdaq: QIHC)
Cedent	Quorum Casualty & Surety Company (NAIC No. 24891)
Counterparty	Pinnacle Atlantic Reinsurance Ltd.
Opposing Counsel	Hargrove, Fitch & Calloway LLP (Nathaniel R. Calloway III)
Prepared By	Jeffrey Park, Senior Associate; Yuki Nakamura, Associate
Reviewed By	Douglas Carmichael, Responsible Partner; Francesca Morano, Billing Partner
Date	March 14, 2026
Classification	PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
Firm	Calderwood & Harkness LLP, One Liberty Plaza, 55th Floor, New York, NY 10006

[sheet: Dispute Summary]

Item	Description	Amount	Treaty Article	Notes
Dispute Ground 1 — Late Notice (Meridian Docks)	Alleged failure to provide timely notice of 31 CGL bodily injury claims (Meridian Docks mass tort cluster); QC&S first reserved March 15, 2021; notice given May 22, 2022 via Broadreach (14 months, 7 days delay). Pinnacle Atlantic argues Article 7 violation.	Article 7	QC&S defense: claims below individual $1M reporting threshold until Q1 2022 reserve increases; NY prejudice-based late-notice standard applies; burden on Pinnacle Atlantic to show actual prejudice
Dispute Ground 2 — IBNR Misallocation	Pinnacle Atlantic alleges $22.3M in IBNR reserve strengthening improperly allocated to TY 2022 (should be TY 2021)	$22,300,000	Article 5	If reallocated: TY 2022 ceded drops from $69.7M to $47.4M; TY 2021 would rise to $126.9M but was not disputed by Pinnacle Atlantic
Dispute Ground 3 — Follow-the-Fortunes / Veridian E&O Settlement	Challenge to Veridian Financial Services E&O cluster settlement of $34.5M (Claim A: $14.2M, Claim B: $12.8M, Claim C: $7.5M); Pinnacle Atlantic alleges lack of good faith / businesslike conduct	$34,500,000	Article 11	QC&S net retained after other reinsurance: $26.1M; $8.7M ceded to Treaty (full TY 2023 cession)
Dispute Ground 4 — Premium Underreporting	QC&S reported ceded earned premium of $38.4M for TY 2022; Pinnacle Atlantic calculates $45.2M (difference of $6.8M); alleged premium underpayment of $2,856,000 (at 42% provisional rate)	$2,856,000	Article 3	QC&S defense: difference from improper inclusion of run-off portfolio transfer premiums excluded under Article 3.4
Total Disputed Reinsurance Recoverable	TY 2022 ceded loss ($69.7M) + TY 2023 ceded loss ($8.7M)	$78,400,000	$69,700,000 + $8,700,000 = $78,400,000
Interest Claimed by Pinnacle Atlantic	Approx. 8% per annum on $78.4M, average 24 months from payment dates	$12,600,000	Calculated from dates of seven billing installments (Oct 2022 – Mar 2024) to demand date (Feb 14, 2026)
Total Pinnacle Atlantic Demand	Reinsurance recoverable return plus accrued interest	$91,000,000	$78,400,000 + $12,600,000 = $91,000,000
Veridian Settlement Breakdown — Claim A	Veridian Financial Services Inc. — E&O Claim A	$14,200,000	Article 11	Policy No. PL-2021-15327; settled September 8, 2023
Veridian Settlement Breakdown — Claim B	Veridian Financial Services Inc. — E&O Claim B	$12,800,000	Article 11	Policy No. PL-2021-15327; settled September 8, 2023
Veridian Settlement Breakdown — Claim C	Veridian Financial Services Inc. — E&O Claim C	$7,500,000	Article 11	Policy No. PL-2021-15327; settled September 8, 2023

[sheet: Cession Breakdown]

Treaty Year	Period	Aggregate Net Incurred Loss — QC&S Reported	Treaty Retention	Ceded Loss — QC&S Claim	IBNR Adjustment (Pinnacle Atlantic Position)	Adjusted Aggregate Net Incurred	Adjusted Ceded Loss	Reduction in Ceded Loss
TY 2021	Jul 1, 2021 – Jun 30, 2022	$104,600,000	$120,000,000	$0	+$22,300,000	$126,900,000	$6,900,000	N/A — TY 2021 not in dispute (Pinnacle Atlantic did not seek recovery for TY 2021)
TY 2022	Jul 1, 2022 – Jun 30, 2023	$189,700,000	$120,000,000	$69,700,000	-$22,300,000	$167,400,000	$47,400,000	$22,300,000
TY 2023	Jul 1, 2023 – Jun 30, 2024	$128,700,000	$120,000,000	$8,700,000	$0	$128,700,000	$8,700,000	$0
TOTAL	$423,000,000	$78,400,000	$423,000,000	$63,000,000	$22,300,000

[sheet: Billing Installments]

Installment No.	Treaty Year	Invoice Date	Payment Date	Amount Paid	Days to Demand (Feb 14, 2026)	Interest at 8% p.a.
1	TY 2022	2022-10-15	2022-11-01	$15,000,000	1201	$3,945,205
2	TY 2022	2023-01-15	2023-02-01	$12,500,000	1109	$3,035,616
3	TY 2022	2023-04-15	2023-05-01	$11,200,000	1020	$2,501,918
4	TY 2022	2023-07-15	2023-08-01	$10,000,000	928	$2,032,877
5	TY 2022	2023-10-15	2023-11-01	$21,000,000	836	$3,844,274
6	TY 2023	2024-01-15	2024-02-01	$5,500,000	744	$896,438
7	TY 2023	2024-03-29	2024-04-15	$3,200,000	671	$470,268
TOTAL	$78,400,000	$16,726,596

[sheet: Scenario Analysis]

Line Item	Best Case	Likely Case	Worst Case	Notes
SCENARIO DESCRIPTION	Full defense of all cessions; no liability to Pinnacle Atlantic	Partial concession on IBNR allocation (Ground 2); all other grounds defended successfully	Full disgorgement of reinsurance recoverable plus interest (all four grounds lost)

--- Exposure Components ---

Late Notice (Ground 1) — Liability	$0	$0	$69,700,000	Best/Likely: QC&S prevails on prejudice-based late-notice defense under NY law; Worst: full TY 2022 cession voided
IBNR Misallocation (Ground 2) — Liability	$0	$22,300,000	$22,300,000	Best: Velthorn methodology upheld; Likely: reallocation accepted, TY 2022 ceded reduced by $22.3M; Worst: included in full disgorgement
Follow-the-Fortunes / Veridian (Ground 3) — Liability	$0	$0	$8,700,000	Best/Likely: follow-the-fortunes doctrine protects cedent; Worst: full TY 2023 cession voided
Premium Underreporting Offset (Ground 4)	$0	$0	$2,856,000	Best/Likely: Article 3.4 exclusion applies; Worst: offset applied (but not additive to recoverable disgorgement; reduces QC&S counter-position)
Subtotal — Recoverable Disgorgement	$0	$22,300,000	$78,400,000	Sum of Grounds 1–3 liability; Ground 4 is offset, not additional recoverable
Interest on Disgorged Amounts (8% p.a.)	$0	$3,600,000	$12,600,000	Best: no interest; Likely: ~8% on $22.3M for ~24 months avg; Worst: full $12.6M per demand
Subtotal — Direct Financial Exposure	$0	$25,900,000	$91,000,000	Recoverable disgorgement + interest
Premium Underreporting — Additional Offset	$0	$0	$2,856,000	Potential separate obligation if Ground 4 proven; may be set off against future obligations
Estimated Litigation/Arbitration Costs (C&H fees)	$450,000	$2,400,000	$4,800,000	Best: Phase 1 only; Likely: through settlement post-discovery; Worst: full trial/hearing
Estimated Counterparty Legal Fee Recovery Risk	$0	$0	$0	NY law: each party bears own costs absent contract provision; Treaty silent on fee-shifting
TOTAL ESTIMATED EXPOSURE (incl. legal fees)	$450,000	$28,300,000	$95,800,000	Direct exposure + legal fees
Estimated Probability	25%	50%	25%	Based on C&H preliminary assessment of merits
Probability-Weighted Exposure	$112,500	$14,150,000	$23,950,000	Scenario exposure × probability
EXPECTED VALUE OF TOTAL EXPOSURE	$38,212,500	Sum of probability-weighted exposures: $112,500 + $14,150,000 + $23,950,000 = $38,212,500

[sheet: Statutory Surplus Impact]

Line Item	Current	Best Case	Likely Case	Worst Case	Notes
QC&S Statutory Surplus (Dec 31, 2025)	$1,420,000,000	$1,420,000,000	$1,420,000,000	$1,420,000,000	Per QC&S Schedule F, Part 3
Reinsurance Recoverable Write-Down	$0	$0	($22,300,000)	($78,400,000)	Reduction in booked recoverable
Interest / Disgorgement Payment	$0	$0	($3,600,000)	($12,600,000)	Cash outflow for interest on disgorged amounts
QC&S Adjusted Statutory Surplus	$1,420,000,000	$1,420,000,000	$1,394,100,000	$1,329,000,000	Surplus − Write-Down − Interest
Minimum Statutory Surplus Covenant (Cartwright Credit Agreement)	$1,100,000,000	$1,100,000,000	$1,100,000,000	$1,100,000,000	Per QIH $750M revolving credit facility (maturing June 2028)
Surplus Headroom Above Covenant	$320,000,000	$320,000,000	$294,100,000	$229,000,000	Adjusted Surplus − Covenant Minimum
Headroom as % of Covenant Minimum	29.1%	29.1%	26.7%	20.8%	Headroom / $1,100,000,000
Covenant Compliance	Yes	Yes	Yes	Yes — but significantly tightened	Surplus remains above $1.1B in all scenarios
Headroom Reduction from Current	$0	$0	$25,900,000	$91,000,000	Current headroom ($320M) − Scenario headroom
Headroom Reduction %	0%	0%	8.1%	28.4%	Headroom reduction / Current headroom ($320M)
A.M. Ridgeway Rating Risk	None	None	Low — monitor	Moderate — potential negative outlook	Current rating: A (Excellent), Stable outlook
Revolving Credit Facility Size	$750,000,000	$750,000,000	$750,000,000	$750,000,000	Cartwright National Bank, N.A., administrative agent (Andrew Bao)

[sheet: Cover]
Field | Value
Document Title | Damages & Exposure Summary — Best Case / Likely / Worst Case Analysis
Matter | Quorum Insurance Holdings Corp. — Pre-Suit Reinsurance Recoverable Dispute
Matter Number | 1025-00005
Treaty No. | PA-QCS-2019-EXL-0044
Client | Quorum Insurance Holdings Corp. (Nasdaq: QIHC)
Cedent | Quorum Casualty & Surety Company (NAIC No. 24891)
Counterparty | Pinnacle Atlantic Reinsurance Ltd.
Opposing Counsel | Hargrove, Fitch & Calloway LLP (Nathaniel R. Calloway III)
Prepared By | Jeffrey Park, Senior Associate; Yuki Nakamura, Associate
Reviewed By | Douglas Carmichael, Responsible Partner; Francesca Morano, Billing Partner
Date | March 14, 2026
Classification | PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
Firm | Calderwood & Harkness LLP, One Liberty Plaza, 55th Floor, New York, NY 10006
[sheet: Dispute Summary]
Item | Description | Amount | Treaty Article | Notes
Dispute Ground 1 — Late Notice (Meridian Docks) | Alleged failure to provide timely notice of 31 CGL bodily injury claims (Meridian Docks mass tort cluster); QC&S first reserved March 15, 2021; notice given May 22, 2022 via Broadreach (14 months, 7 days delay). Pinnacle Atlantic argues Article 7 violation. | Article 7 | QC&S defense: claims below individual $1M reporting threshold until Q1 2022 reserve increases; NY prejudice-based late-notice standard applies; burden on Pinnacle Atlantic to show actual prejudice
Dispute Ground 2 — IBNR Misallocation | Pinnacle Atlantic alleges $22.3M in IBNR reserve strengthening improperly allocated to TY 2022 (should be TY 2021) | $22,300,000 | Article 5 | If reallocated: TY 2022 ceded drops from $69.7M to $47.4M; TY 2021 would rise to $126.9M but was not disputed by Pinnacle Atlantic
Dispute Ground 3 — Follow-the-Fortunes / Veridian E&O Settlement | Challenge to Veridian Financial Services E&O cluster settlement of $34.5M (Claim A: $14.2M, Claim B: $12.8M, Claim C: $7.5M); Pinnacle Atlantic alleges lack of good faith / businesslike conduct | $34,500,000 | Article 11 | QC&S net retained after other reinsurance: $26.1M; $8.7M ceded to Treaty (full TY 2023 cession)
Dispute Ground 4 — Premium Underreporting | QC&S reported ceded earned premium of $38.4M for TY 2022; Pinnacle Atlantic calculates $45.2M (difference of $6.8M); alleged premium underpayment of $2,856,000 (at 42% provisional rate) | $2,856,000 | Article 3 | QC&S defense: difference from improper inclusion of run-off portfolio transfer premiums excluded under Article 3.4
Total Disputed Reinsurance Recoverable | TY 2022 ceded loss ($69.7M) + TY 2023 ceded loss ($8.7M) | $78,400,000 | $69,700,000 + $8,700,000 = $78,400,000
Interest Claimed by Pinnacle Atlantic | Approx. 8% per annum on $78.4M, average 24 months from payment dates | $12,600,000 | Calculated from dates of seven billing installments (Oct 2022 – Mar 2024) to demand date (Feb 14, 2026)
Total Pinnacle Atlantic Demand | Reinsurance recoverable return plus accrued interest | $91,000,000 | $78,400,000 + $12,600,000 = $91,000,000
Veridian Settlement Breakdown — Claim A | Veridian Financial Services Inc. — E&O Claim A | $14,200,000 | Article 11 | Policy No. PL-2021-15327; settled September 8, 2023
Veridian Settlement Breakdown — Claim B | Veridian Financial Services Inc. — E&O Claim B | $12,800,000 | Article 11 | Policy No. PL-2021-15327; settled September 8, 2023
Veridian Settlement Breakdown — Claim C | Veridian Financial Services Inc. — E&O Claim C | $7,500,000 | Article 11 | Policy No. PL-2021-15327; settled September 8, 2023
[sheet: Cession Breakdown]
Treaty Year | Period | Aggregate Net Incurred Loss — QC&S Reported | Treaty Retention | Ceded Loss — QC&S Claim | IBNR Adjustment (Pinnacle Atlantic Position) | Adjusted Aggregate Net Incurred | Adjusted Ceded Loss | Reduction in Ceded Loss
TY 2021 | Jul 1, 2021 – Jun 30, 2022 | $104,600,000 | $120,000,000 | $0 | +$22,300,000 | $126,900,000 | $6,900,000 | N/A — TY 2021 not in dispute (Pinnacle Atlantic did not seek recovery for TY 2021)
TY 2022 | Jul 1, 2022 – Jun 30, 2023 | $189,700,000 | $120,000,000 | $69,700,000 | -$22,300,000 | $167,400,000 | $47,400,000 | $22,300,000
TY 2023 | Jul 1, 2023 – Jun 30, 2024 | $128,700,000 | $120,000,000 | $8,700,000 | $0 | $128,700,000 | $8,700,000 | $0
TOTAL | $423,000,000 | $78,400,000 | $423,000,000 | $63,000,000 | $22,300,000
[sheet: Billing Installments]
Installment No. | Treaty Year | Invoice Date | Payment Date | Amount Paid | Days to Demand (Feb 14, 2026) | Interest at 8% p.a.
1 | TY 2022 | 2022-10-15 | 2022-11-01 | $15,000,000 | 1201 | $3,945,205
2 | TY 2022 | 2023-01-15 | 2023-02-01 | $12,500,000 | 1109 | $3,035,616
3 | TY 2022 | 2023-04-15 | 2023-05-01 | $11,200,000 | 1020 | $2,501,918
4 | TY 2022 | 2023-07-15 | 2023-08-01 | $10,000,000 | 928 | $2,032,877
5 | TY 2022 | 2023-10-15 | 2023-11-01 | $21,000,000 | 836 | $3,844,274
6 | TY 2023 | 2024-01-15 | 2024-02-01 | $5,500,000 | 744 | $896,438
7 | TY 2023 | 2024-03-29 | 2024-04-15 | $3,200,000 | 671 | $470,268
TOTAL | $78,400,000 | $16,726,596
[sheet: Scenario Analysis]
Line Item | Best Case | Likely Case | Worst Case | Notes
SCENARIO DESCRIPTION | Full defense of all cessions; no liability to Pinnacle Atlantic | Partial concession on IBNR allocation (Ground 2); all other grounds defended successfully | Full disgorgement of reinsurance recoverable plus interest (all four grounds lost)
--- Exposure Components ---
Late Notice (Ground 1) — Liability | $0 | $0 | $69,700,000 | Best/Likely: QC&S prevails on prejudice-based late-notice defense under NY law; Worst: full TY 2022 cession voided
IBNR Misallocation (Ground 2) — Liability | $0 | $22,300,000 | $22,300,000 | Best: Velthorn methodology upheld; Likely: reallocation accepted, TY 2022 ceded reduced by $22.3M; Worst: included in full disgorgement
Follow-the-Fortunes / Veridian (Ground 3) — Liability | $0 | $0 | $8,700,000 | Best/Likely: follow-the-fortunes doctrine protects cedent; Worst: full TY 2023 cession voided
Premium Underreporting Offset (Ground 4) | $0 | $0 | $2,856,000 | Best/Likely: Article 3.4 exclusion applies; Worst: offset applied (but not additive to recoverable disgorgement; reduces QC&S counter-position)
Subtotal — Recoverable Disgorgement | $0 | $22,300,000 | $78,400,000 | Sum of Grounds 1–3 liability; Ground 4 is offset, not additional recoverable
Interest on Disgorged Amounts (8% p.a.) | $0 | $3,600,000 | $12,600,000 | Best: no interest; Likely: ~8% on $22.3M for ~24 months avg; Worst: full $12.6M per demand
Subtotal — Direct Financial Exposure | $0 | $25,900,000 | $91,000,000 | Recoverable disgorgement + interest
Premium Underreporting — Additional Offset | $0 | $0 | $2,856,000 | Potential separate obligation if Ground 4 proven; may be set off against future obligations
Estimated Litigation/Arbitration Costs (C&H fees) | $450,000 | $2,400,000 | $4,800,000 | Best: Phase 1 only; Likely: through settlement post-discovery; Worst: full trial/hearing
Estimated Counterparty Legal Fee Recovery Risk | $0 | $0 | $0 | NY law: each party bears own costs absent contract provision; Treaty silent on fee-shifting
TOTAL ESTIMATED EXPOSURE (incl. legal fees) | $450,000 | $28,300,000 | $95,800,000 | Direct exposure + legal fees
Estimated Probability | 25% | 50% | 25% | Based on C&H preliminary assessment of merits
Probability-Weighted Exposure | $112,500 | $14,150,000 | $23,950,000 | Scenario exposure × probability
EXPECTED VALUE OF TOTAL EXPOSURE | $38,212,500 | Sum of probability-weighted exposures: $112,500 + $14,150,000 + $23,950,000 = $38,212,500
[sheet: Statutory Surplus Impact]
Line Item | Current | Best Case | Likely Case | Worst Case | Notes
QC&S Statutory Surplus (Dec 31, 2025) | $1,420,000,000 | $1,420,000,000 | $1,420,000,000 | $1,420,000,000 | Per QC&S Schedule F, Part 3
Reinsurance Recoverable Write-Down | $0 | $0 | ($22,300,000) | ($78,400,000) | Reduction in booked recoverable
Interest / Disgorgement Payment | $0 | $0 | ($3,600,000) | ($12,600,000) | Cash outflow for interest on disgorged amounts
QC&S Adjusted Statutory Surplus | $1,420,000,000 | $1,420,000,000 | $1,394,100,000 | $1,329,000,000 | Surplus − Write-Down − Interest
Minimum Statutory Surplus Covenant (Cartwright Credit Agreement) | $1,100,000,000 | $1,100,000,000 | $1,100,000,000 | $1,100,000,000 | Per QIH $750M revolving credit facility (maturing June 2028)
Surplus Headroom Above Covenant | $320,000,000 | $320,000,000 | $294,100,000 | $229,000,000 | Adjusted Surplus − Covenant Minimum
Headroom as % of Covenant Minimum | 29.1% | 29.1% | 26.7% | 20.8% | Headroom / $1,100,000,000
Covenant Compliance | Yes | Yes | Yes | Yes — but significantly tightened | Surplus remains above $1.1B in all scenarios
Headroom Reduction from Current | $0 | $0 | $25,900,000 | $91,000,000 | Current headroom ($320M) − Scenario headroom
Headroom Reduction % | 0% | 0% | 8.1% | 28.4% | Headroom reduction / Current headroom ($320M)
A.M. Ridgeway Rating Risk | None | None | Low — monitor | Moderate — potential negative outlook | Current rating: A (Excellent), Stable outlook
Revolving Credit Facility Size | $750,000,000 | $750,000,000 | $750,000,000 | $750,000,000 | Cartwright National Bank, N.A., administrative agent (Andrew Bao)

[sheet: Cover]

Record

Parties

Dates

Amounts