1025-00010 · Client 1025 · Correspondence

dno-notice-letter-sentinel.docx DOCUMENT M&A / Corporate

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DRAFT — PRIVILEGED & CONFIDENTIAL — SUBJECT TO AUDIT COMMITTEE APPROVAL

CALDERWOOD & HARKNESS LLP 1221 Avenue of the Americas, 38th Floor New York, New York 10020

White Collar Defense & Investigations Practice Group

Conrad Ashby, Partner Telephone: (212) 558-4100 Facsimile: (212) 558-4101 cashby@calderwoodharkness.com New York Bar No. 4417892

February __, 2026

VIA OVERNIGHT COURIER AND ELECTRONIC MAIL

Patricia L. Munroe Vice President — Executive Liability Claims Sentinel Mutual Assurance Group 200 Clarendon Street, Suite 4400 Boston, Massachusetts 02116

Re: Notice of Potential Claim / Circumstances That May Give Rise to a Claim

Policy No. SMA-EL-2025-07741 (Directors & Officers Liability Insurance — Primary; Tower A) Policy No. SMA-XS-2025-07742 (Directors & Officers Liability Insurance — Excess; Tower B)

Named Insured: Quorum Insurance Holdings Corp. and its Subsidiaries

Dear Ms. Munroe:

1. Purpose of This Letter

Calderwood & Harkness LLP represents the Audit Committee of the Board of Directors of Quorum Insurance Holdings Corp. ("QIH" or the "Company"), a Delaware corporation headquartered at 400 Atlantic Street, Suite 3200, Stamford, Connecticut 06901, and listed on the Nasdaq Stock Market under the ticker symbol QIHC. We write to you in that capacity on behalf of the Company and its Audit Committee.

The purpose of this letter is to provide timely notice to Sentinel Mutual Assurance Group ("Sentinel") under the above-referenced Directors and Officers Liability Insurance policies (collectively, the "Policies") of certain circumstances that QIH reasonably believes may give rise to a claim, as that term is defined in the Policies, against one or more of QIH's current or former directors and/or officers, as well as against the Company itself.

This notice is given in order to preserve all rights, benefits, and coverage available to the Insured Persons and the Company under both the Primary Policy and the Excess Policy. QIH intends this letter to constitute formal notice of circumstances pursuant to the notice-of-circumstances provisions contained in the Policies and to satisfy all applicable notice requirements thereunder.

We wish to emphasize at the outset that this letter is being provided as a precautionary measure at this early stage of the Company's review of the circumstances described below. As of the date of this letter, no formal claim, lawsuit, regulatory proceeding, enforcement action, or governmental investigation has been filed, commenced, or, to the Company's knowledge, initiated against QIH, any of its subsidiaries, or any of its current or former directors or officers in connection with the matters described herein. Notwithstanding the absence of any pending claim, QIH believes that prudence and its obligations under the Policies warrant the provision of this notice at the earliest practicable time so that coverage rights are fully preserved.

2. Identification of the Insured and the Policies

2.1 Named Insured

The Named Insured under both Policies is Quorum Insurance Holdings Corp., a corporation organized and existing under the laws of the State of Delaware, with its principal executive offices located at 400 Atlantic Street, Suite 3200, Stamford, Connecticut 06901. QIH's Employer Identification Number is 83-2641057.

The Policies also extend coverage to all subsidiaries of QIH as defined therein. Of particular relevance to the circumstances described in this notice is Ashgrove Equity Partners Specialty Underwriting, Inc. ("BSU"), a corporation organized and existing under the laws of the State of Connecticut, with Employer Identification Number 84-3197428, and principal offices located at 55 Elm Street, 8th Floor, Hartford, Connecticut 06103. BSU is a wholly owned subsidiary of QIH and operates as a specialty underwriting and program administration platform within the QIH corporate group.

For context, QIH is a publicly traded insurance holding company with an approximate market capitalization of $4.8 billion as of recent trading. For its fiscal year ended December 31, 2025 ("FY 2025"), QIH reported gross written premium of approximately $3.17 billion and net earned premium of approximately $2.41 billion. QIH files periodic reports with the United States Securities and Exchange Commission (the "SEC") pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

2.2 The Policies

The two Policies under which this notice is provided are as follows:

Primary Policy (Tower A)

• Policy Number: SMA-EL-2025-07741

• Insurer: Sentinel Mutual Assurance Group

• Type: Directors & Officers Liability Insurance — Primary

• Limit of Liability: $15,000,000 per policy period (subject to the terms, conditions, and exclusions of the Policy)

• Corporate Retention: $1,000,000 per claim

Excess Policy (Tower B)

• Policy Number: SMA-XS-2025-07742

• Insurer: Sentinel Mutual Assurance Group

• Type: Directors & Officers Liability Insurance — Excess

• Limit of Liability: $25,000,000 per policy period, excess of $15,000,000 (subject to the terms, conditions, and exclusions of the Policy)

Both Policies were issued by Sentinel Mutual Assurance Group and are currently in force. QIH reserves the right to provide corresponding notice to other carriers in its D&O insurance tower, as applicable, and this notice to Sentinel shall not be deemed to limit or waive any notice rights under any other policy.

3. Description of the Circumstances Giving Rise to This Notice

3.1 The Whistleblower Complaint

On February 14, 2026, QIH received an anonymous whistleblower complaint (the "Complaint") submitted through QIH's third-party ethics and compliance reporting hotline, which is operated and administered by IntegriLine Compliance Services, Inc. ("IntegriLine"). The Complaint was assigned IntegriLine Intake Reference No. IL-QIH-2026-0214-0033. The Complaint was submitted via IntegriLine's secure online reporting portal; no voice recording or telephonic intake exists in connection with this submission.

In accordance with the Company's established escalation protocol for complaints raising potential financial reporting or internal controls concerns, IntegriLine escalated the Complaint to QIH's General Counsel and Secretary, Owen R. Hargrove, on February 17, 2026. Mr. Hargrove conducted an initial review of the Complaint and its supporting materials and, on February 19, 2026, briefed the Chair of the Audit Committee of QIH's Board of Directors, Priya Subramaniam, regarding the substance of the Complaint and its potential significance. The Complaint was thereafter brought to the attention of the full Audit Committee, as described further in Section 4 below.

3.2 Nature of the Allegations

The Complaint contains detailed factual allegations asserting that senior personnel at Ashgrove Equity Partners Specialty Underwriting, Inc. engaged in a multi-year scheme to artificially inflate BSU's financial results and, by extension, the consolidated financial statements of QIH. The alleged scheme is described as spanning approximately ten fiscal quarters, from the third quarter of 2023 (Q3 2023) through the fourth quarter of 2025 (Q4 2025). The Complaint identifies three principal categories of alleged misconduct:

(a) Fictitious Policy Placements. The Complaint alleges the fabrication or material inflation of binder confirmations for commercial property insurance policies purportedly placed through at least three retail-broker counterparties that the complainant asserts are fictitious or shell entities. The three counterparties identified by name in the Complaint are: (i) "Veltrano Risk Advisors," (ii) "Halloran & Pratt Insurance Associates," and (iii) "CrestPoint Brokerage LLC." The Complaint asserts that these entities lack valid surplus-lines licenses in any jurisdiction in which they purportedly conducted business and that their registered addresses correspond to virtual-office or shared-workspace facilities with no substantive insurance brokerage operations. According to the Complaint, binder confirmations attributed to these counterparties were fabricated or materially altered to reflect premium volumes that did not correspond to actual underlying policy placements.

(b) Phantom Commission Income. The Complaint further alleges that commission and fee income was recognized by BSU on the basis of these alleged phantom policy placements. The complainant estimates that the total face value of fictitious placed premium attributable to the three identified counterparties approximates $74 million over the ten-quarter period in question. Applying an approximate average commission rate of 13% — which the complainant states is consistent with BSU's blended commission rate for its commercial property book of business — the Complaint estimates that approximately $9.6 million in phantom commission and fee income was recognized by BSU and consolidated into QIH's financial statements during the relevant period. For context, BSU reported FY 2025 placed premium of approximately $487 million and commission and fee income of approximately $63.2 million. If substantiated, the alleged phantom commission income would represent approximately 15.2% of BSU's reported FY 2025 commission and fee income and approximately 1.5% of BSU's reported FY 2025 placed premium.

(c) Improper Reserve Releases. The Complaint additionally alleges that certain senior BSU personnel directed the premature and unjustified release of approximately $38.5 million in incurred-but-not-reported ("IBNR") loss reserves during the relevant period, with the purpose and effect of inflating BSU's reported quarterly underwriting income. According to the Complaint, the improper reserve releases were concentrated in particular in the fourth quarter of 2024 (Q4 2024) and the second quarter of 2025 (Q2 2025), though smaller releases allegedly occurred in other quarters as well. The Complaint asserts that these releases were not supported by actuarial analysis or loss-development data and were undertaken at the direction of the individuals identified in Section 3.3 below.

In the aggregate, if the allegations contained in the Complaint were to be substantiated in their entirety, the total financial misstatement could approximate $48.1 million, comprising approximately $9.6 million in phantom commission and fee income and approximately $38.5 million in improper IBNR reserve releases. It is important to note that no determination has been made by QIH, the Audit Committee, or Calderwood & Harkness as to the accuracy, reliability, or completeness of these allegations, which remain subject to the internal investigation described in Section 4 below.

The Complaint references approximately 147 binder confirmations that the complainant alleges are fictitious or materially altered. The Complaint was accompanied by two sample binder-confirmation documents in PDF format, with an aggregate face-premium value of approximately $12.4 million. These sample documents are currently in the possession of Calderwood & Harkness and are being preserved as part of the investigation. No additional documentation was appended to or referenced in the Complaint beyond these two sample binder confirmations.

3.3 Individuals Named in the Complaint

The Complaint identifies by name three senior employees of BSU who are alleged to have been principally responsible for orchestrating and executing the scheme described above:

(i) Garrett T. Lomax, President, Ashgrove Equity Partners Specialty Underwriting, Inc. Mr. Lomax has served as President of BSU since its acquisition by QIH in 2019 and reports directly to the Chief Executive Officer of QIH. Mr. Lomax is alleged to have directed and supervised the overall scheme, including the selection and creation of the alleged fictitious broker counterparties.

(ii) Neil W. Stadler, Senior Vice President, Commercial Property Division, Ashgrove Equity Partners Specialty Underwriting, Inc. Mr. Stadler is alleged to have been directly responsible for the generation and approval of the fictitious binder confirmations and for overseeing the recording of phantom placed premium within BSU's underwriting management system.

(iii) Rhonda M. Kessler, Vice President, Finance & Operations, Ashgrove Equity Partners Specialty Underwriting, Inc. Ms. Kessler is alleged to have been responsible for the financial reporting aspects of the scheme, including the recognition of phantom commission income in BSU's general ledger and the direction of the improper IBNR reserve releases.

Each of these individuals is believed to qualify as an "Insured Person" as that term is defined in the Policies. The Complaint does not identify by name any current director or executive officer of QIH (as distinguished from BSU). However, as discussed in Section 3.4 below, the nature and scope of the allegations are such that claims could reasonably be asserted against directors and officers of QIH in addition to the named BSU personnel.

3.4 Potential Exposure of Directors and Officers

If the allegations contained in the Complaint are substantiated, in whole or in part, QIH's current and former directors and officers could face potential exposure from multiple sources. Without limitation, such potential claims and proceedings could include:

(i) Securities Fraud Claims. Claims by shareholders or the SEC under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, alleging that QIH's consolidated financial statements for one or more reporting periods during the Q3 2023 through Q4 2025 timeframe contained material misstatements or omissions regarding BSU's revenue, commission income, premium volumes, and/or loss reserve adequacy. In addition, potential claims under Section 13(a) of the Exchange Act and Rule 13a-14 relating to the accuracy and completeness of QIH's periodic reports filed with the SEC.

(ii) Sarbanes-Oxley Certification Exposure. Allegations that the certifications executed by QIH's Chief Executive Officer, Marcus P. Galvin, and Chief Financial Officer, Denise R. Nakamura, pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 ("SOX") for fiscal years 2023, 2024, and 2025, and for the interim quarters within those fiscal years, were inaccurate to the extent they certified the effectiveness of QIH's internal controls over financial reporting and the fair presentation of QIH's consolidated financial statements.

(iii) Shareholder Litigation. Potential shareholder derivative actions asserting breach of fiduciary duty, failure of oversight (Caremark claims), waste of corporate assets, or unjust enrichment against QIH's directors and officers. Additionally, potential securities class-action litigation brought on behalf of a putative class of QIH shareholders alleging damages resulting from the purchase or sale of QIH securities during an alleged class period at artificially inflated prices.

(iv) Regulatory and Enforcement Proceedings. Potential inquiry, examination, or enforcement proceedings by the SEC's Division of Enforcement, including but not limited to proceedings relating to QIH's financial reporting, internal controls, and disclosure practices. In addition, potential regulatory action by the Connecticut Insurance Department ("CID") or other state insurance regulators relating to BSU's underwriting practices, reserve adequacy, and compliance with applicable insurance laws and regulations.

(v) Criminal Exposure and Referral. Potential criminal referral to the United States Department of Justice ("DOJ") or the relevant United States Attorney's Office for investigation and possible prosecution of wire fraud (18 U.S.C. § 1343), mail fraud (18 U.S.C. § 1341), securities fraud (18 U.S.C. § 1348), and/or other federal criminal offenses in connection with the alleged scheme.

In connection with the foregoing, QIH notes that it filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 with the SEC on February 21, 2026 (the "FY 2025 10-K"). The Complaint was received on February 14, 2026 and was under initial review by Mr. Hargrove at the time of the 10-K filing. The FY 2025 10-K does not contain any disclosure regarding the Complaint or the allegations described herein, as no materiality determination had been made at the time of filing and the Audit Committee had not yet been briefed or convened to consider the matter. The question of whether the Company may be required to file supplemental or amended disclosures with the SEC is currently under active consideration by QIH's management and its outside counsel, as described further in Section 4 below.

4. Steps Taken to Date

QIH, acting through its Audit Committee, has taken the following steps in response to receipt of the Complaint:

(a) Audit Committee Special Meeting. On February 24, 2026, the Audit Committee of QIH's Board of Directors held a special telephonic meeting to receive a briefing from the General Counsel regarding the Complaint and to deliberate upon appropriate responsive measures. The Audit Committee is composed of three independent, non-management directors: Priya Subramaniam (Chair), Thomas K. Driscoll, and Angela F. Delvecchio. At the February 24 meeting, the Audit Committee unanimously resolved to engage independent outside counsel to scope, and if warranted based on the results of that scoping, to conduct a full internal investigation of the allegations contained in the Complaint.

(b) Engagement of Independent Outside Counsel. Calderwood & Harkness LLP was formally engaged by the Audit Committee effective February 27, 2026, following completion of a comprehensive conflicts check (initiated February 25, 2026; cleared February 26, 2026). The firm's engagement team assigned to this matter includes Conrad Ashby (Responsible Partner), Victoria Chambers (Billing Partner), Steven Hollander (Lead Associate), and Jasmine Thornton (Working Associate). Calderwood & Harkness's engagement is to the Audit Committee of the Board of Directors, and the firm reports directly to the Audit Committee in connection with this investigation.

(c) Investigation Status. The investigation is currently in its prospective and scoping phase. As of the date of this letter, no custodian interviews, document collections, electronic discovery, or other substantive investigative steps have commenced. The initial scoping phase is expected to include, among other things, identification of relevant custodians and data sources, review of BSU's underwriting management systems and financial records, assessment of the two sample binder-confirmation documents appended to the Complaint, and verification of the purported existence and licensing status of the three broker counterparties named in the Complaint.

(d) Coordination with Securities Counsel. Calderwood & Harkness is coordinating closely with QIH's standing outside corporate and securities counsel, Pemberton Hale & Creighton LLP (partner contact: Elaine R. Foxworth), regarding QIH's potential SEC disclosure obligations arising from the Complaint and the investigation, including the potential need for supplemental filings or current reports on Form 8-K. The assessment of disclosure obligations is ongoing and will be informed by the progress and findings of the investigation.

(e) Engagement of Forensic Advisors. Calderwood & Harkness is in the process of engaging Claridge Forensic Advisory LLC (Managing Director: Daniel J. Petrov) to provide forensic accounting analysis and electronic discovery support in connection with the investigation. The engagement of Claridge is expected to be finalized in the near term, and Claridge's work will be conducted under the direction and at the request of Calderwood & Harkness in order to preserve applicable attorney-client privilege and work-product protections.

(f) Document Preservation. A comprehensive document-preservation notice is being prepared by Calderwood & Harkness for issuance to relevant custodians at both QIH and BSU. The preservation notice will cover electronic and hard-copy documents, including but not limited to underwriting files, binder confirmations, broker correspondence, commission and fee records, actuarial and reserve analyses, general ledger entries, and relevant communications of the individuals named in the Complaint and other potentially relevant custodians. The preservation notice is expected to be issued promptly following Audit Committee authorization.

(g) External Audit Considerations. QIH's independent registered public accounting firm, Kellner & Strauss LLP (lead engagement partner: Howard M. Bressler), issued an unqualified opinion on QIH's consolidated financial statements for the fiscal year ended December 31, 2025, which was included in the FY 2025 10-K. Calderwood & Harkness and the Audit Committee are aware that the investigation and its findings may have implications for the external audit, particularly with respect to the adequacy of BSU's loss reserves, the propriety of commission and fee revenue recognition, and the effectiveness of QIH's internal controls over financial reporting. The Audit Committee intends to communicate with Kellner & Strauss regarding the Complaint and the investigation at the appropriate time, consistent with the Audit Committee's oversight responsibilities and applicable auditing standards.

5. Formal Notice Under the Policies

By this letter, QIH hereby provides formal notice to Sentinel Mutual Assurance Group under both Policy No. SMA-EL-2025-07741 (Directors & Officers Liability Insurance — Primary; Tower A) and Policy No. SMA-XS-2025-07742 (Directors & Officers Liability Insurance — Excess; Tower B) of the circumstances described herein, which QIH reasonably believes could give rise to a claim, as that term is defined in the Policies, against one or more Insured Persons and/or the Company.

This notice is provided in accordance with the notice-of-circumstances provisions of the Policies and is intended to constitute timely, complete, and sufficient notice in compliance with all applicable terms, conditions, and requirements of the Policies. QIH intends that any claim that may subsequently arise out of, or in connection with, the circumstances described in this letter shall be deemed to have been first made at the time of this notice for purposes of the Policies, to the fullest extent permitted by the terms thereof.

QIH respectfully requests that Sentinel acknowledge receipt of this notice in writing and confirm the commencement of the claims-handling process, including the identification of the claims adjuster and/or claims professional assigned to this matter. QIH further requests that Sentinel confirm that this notice will be treated as timely and sufficient under both Policies.

6. Reservation of Rights

QIH expressly reserves all rights, benefits, and coverage available to it, its subsidiaries (including BSU), and all Insured Persons under both the Primary Policy and the Excess Policy, including but not limited to:

(a) Coverage for defense costs, investigation costs, and any settlements, judgments, or other amounts that may become payable in connection with any claim arising out of or related to the circumstances described herein;

(b) Coverage for all Insured Persons, including but not limited to the three individuals named in the Complaint (Garrett T. Lomax, Neil W. Stadler, and Rhonda M. Kessler), all current and former directors and officers of QIH, all current and former directors and officers of BSU, and any other individuals who may qualify as Insured Persons under the Policies;

(c) All rights under the advancement-of-defense-costs provisions of the Policies, including the right to advancement of defense costs on a current basis as such costs are incurred, to the extent provided by the Policies; and

(d) All other rights, benefits, and protections afforded to the Company, its subsidiaries, and the Insured Persons under the Policies, whether or not specifically enumerated herein.

Nothing in this notice letter shall be construed as, or deemed to constitute, an admission of liability, wrongdoing, or fault on the part of QIH, any of its subsidiaries, or any Insured Person, nor shall anything herein be deemed an admission or acknowledgment regarding the accuracy, validity, or completeness of any of the allegations contained in the Complaint. The allegations described herein are unverified and remain subject to investigation. This notice is provided solely for the purpose of preserving coverage rights under the Policies.

QIH expressly reserves the right to supplement, amend, or update this notice as additional information becomes available during the course of the internal investigation and as circumstances may warrant. Any failure to include specific facts, allegations, or circumstances in this initial notice shall not be deemed a waiver of coverage with respect to such facts, allegations, or circumstances, and QIH reserves the right to include additional information in subsequent supplemental notices.

7. Request for Cooperation and Acknowledgment

QIH respectfully requests the following from Sentinel in connection with this notice:

(a) That Sentinel acknowledge receipt of this notice in writing within ten (10) business days of receipt;

(b) That Sentinel identify and designate a dedicated claims professional for ongoing communications regarding this matter and provide the contact information for such claims professional;

(c) That Sentinel confirm in writing that this notice will be deemed timely and sufficient under both Policy No. SMA-EL-2025-07741 (Primary; Tower A) and Policy No. SMA-XS-2025-07742 (Excess; Tower B); and

(d) That Sentinel advise QIH of any additional information or documentation that Sentinel may require in order to process this notice or to evaluate coverage, so that QIH may respond promptly to any such requests.

QIH intends to provide Sentinel with periodic updates as the investigation progresses, to the extent appropriate and practicable. QIH notes, however, that the internal investigation is being conducted under the direction of the Audit Committee and under the protection of the attorney-client privilege and the work-product doctrine, and any communications with Sentinel will be subject to applicable privilege protections. The provision of information to Sentinel pursuant to this notice and any subsequent communications shall not constitute a waiver of any applicable privilege, and QIH expressly reserves all privilege protections in connection with the investigation.

8. Contact Information

All communications regarding this notice should be directed to the following:

Primary Contact: Conrad Ashby, Partner Calderwood & Harkness LLP 1221 Avenue of the Americas, 38th Floor New York, New York 10020 Telephone: (212) 558-4100 Facsimile: (212) 558-4101

Email: cashby@calderwoodharkness.com

Reference: Matter No. 1025-00010

With a copy to: Owen R. Hargrove General Counsel & Secretary Quorum Insurance Holdings Corp. 400 Atlantic Street, Suite 3200 Stamford, Connecticut 06901 Telephone: (203) 489-6000

Email: ohargrove@quoruminsurance.com

QIH requests that Sentinel not communicate directly with any Insured Person regarding this matter without first coordinating through the undersigned counsel or through Mr. Hargrove.

We appreciate Sentinel's prompt attention to this matter and look forward to receiving your acknowledgment and confirmation at your earliest convenience. QIH is committed to working cooperatively with Sentinel throughout this process while preserving the rights and interests of all Insured Persons and the Company.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Conrad Ashby Partner White Collar Defense & Investigations Practice Group

On behalf of Quorum Insurance Holdings Corp., at the direction of the Audit Committee of the Board of Directors

Enclosures: None. No enclosures are included with this notice at this time. Supporting documentation, including copies of the Complaint and the sample binder-confirmation documents referenced herein, will be provided to Sentinel as appropriate, subject to applicable attorney-client privilege and work-product protections and Audit Committee authorization.

INTERNAL DRAFT DISTRIBUTION — NOT FOR INCLUSION ON FINAL TRANSMITTED LETTER

cc (Internal Draft Distribution Only):

Priya Subramaniam, Chair, Audit Committee — QIH Board of Directors Thomas K. Driscoll, Member, Audit Committee — QIH Board of Directors Angela F. Delvecchio, Member, Audit Committee — QIH Board of Directors Victoria Chambers, Partner, Calderwood & Harkness LLP Steven Hollander, Associate, Calderwood & Harkness LLP Jasmine Thornton, Associate, Calderwood & Harkness LLP

DRAFT — Prepared by Calderwood & Harkness LLP — Matter No. 1025-00010 NOT TO BE TRANSMITTED WITHOUT AUDIT COMMITTEE AUTHORIZATION Version: Draft 1 — February 27, 2026

DRAFT — PRIVILEGED & CONFIDENTIAL — SUBJECT TO AUDIT COMMITTEE APPROVAL
CALDERWOOD & HARKNESS LLP 1221 Avenue of the Americas, 38th Floor New York, New York 10020
White Collar Defense & Investigations Practice Group
Conrad Ashby, Partner Telephone: (212) 558-4100 Facsimile: (212) 558-4101 cashby@calderwoodharkness.com New York Bar No. 4417892
February __, 2026
VIA OVERNIGHT COURIER AND ELECTRONIC MAIL
Patricia L. Munroe Vice President — Executive Liability Claims Sentinel Mutual Assurance Group 200 Clarendon Street, Suite 4400 Boston, Massachusetts 02116
Re: Notice of Potential Claim / Circumstances That May Give Rise to a Claim
Policy No. SMA-EL-2025-07741 (Directors & Officers Liability Insurance — Primary; Tower A) Policy No. SMA-XS-2025-07742 (Directors & Officers Liability Insurance — Excess; Tower B)
Named Insured: Quorum Insurance Holdings Corp. and its Subsidiaries
Dear Ms. Munroe:
1. Purpose of This Letter
Calderwood & Harkness LLP represents the Audit Committee of the Board of Directors of Quorum Insurance Holdings Corp. ("QIH" or the "Company"), a Delaware corporation headquartered at 400 Atlantic Street, Suite 3200, Stamford, Connecticut 06901, and listed on the Nasdaq Stock Market under the ticker symbol QIHC. We write to you in that capacity on behalf of the Company and its Audit Committee.
The purpose of this letter is to provide timely notice to Sentinel Mutual Assurance Group ("Sentinel") under the above-referenced Directors and Officers Liability Insurance policies (collectively, the "Policies") of certain circumstances that QIH reasonably believes may give rise to a claim, as that term is defined in the Policies, against one or more of QIH's current or former directors and/or officers, as well as against the Company itself.
This notice is given in order to preserve all rights, benefits, and coverage available to the Insured Persons and the Company under both the Primary Policy and the Excess Policy. QIH intends this letter to constitute formal notice of circumstances pursuant to the notice-of-circumstances provisions contained in the Policies and to satisfy all applicable notice requirements thereunder.
We wish to emphasize at the outset that this letter is being provided as a precautionary measure at this early stage of the Company's review of the circumstances described below. As of the date of this letter, no formal claim, lawsuit, regulatory proceeding, enforcement action, or governmental investigation has been filed, commenced, or, to the Company's knowledge, initiated against QIH, any of its subsidiaries, or any of its current or former directors or officers in connection with the matters described herein. Notwithstanding the absence of any pending claim, QIH believes that prudence and its obligations under the Policies warrant the provision of this notice at the earliest practicable time so that coverage rights are fully preserved.
2. Identification of the Insured and the Policies
2.1 Named Insured
The Named Insured under both Policies is Quorum Insurance Holdings Corp., a corporation organized and existing under the laws of the State of Delaware, with its principal executive offices located at 400 Atlantic Street, Suite 3200, Stamford, Connecticut 06901. QIH's Employer Identification Number is 83-2641057.
The Policies also extend coverage to all subsidiaries of QIH as defined therein. Of particular relevance to the circumstances described in this notice is Ashgrove Equity Partners Specialty Underwriting, Inc. ("BSU"), a corporation organized and existing under the laws of the State of Connecticut, with Employer Identification Number 84-3197428, and principal offices located at 55 Elm Street, 8th Floor, Hartford, Connecticut 06103. BSU is a wholly owned subsidiary of QIH and operates as a specialty underwriting and program administration platform within the QIH corporate group.
For context, QIH is a publicly traded insurance holding company with an approximate market capitalization of $4.8 billion as of recent trading. For its fiscal year ended December 31, 2025 ("FY 2025"), QIH reported gross written premium of approximately $3.17 billion and net earned premium of approximately $2.41 billion. QIH files periodic reports with the United States Securities and Exchange Commission (the "SEC") pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
2.2 The Policies
The two Policies under which this notice is provided are as follows:
Primary Policy (Tower A)
• Policy Number: SMA-EL-2025-07741
• Insurer: Sentinel Mutual Assurance Group
• Type: Directors & Officers Liability Insurance — Primary
• Limit of Liability: $15,000,000 per policy period (subject to the terms, conditions, and exclusions of the Policy)
• Corporate Retention: $1,000,000 per claim
Excess Policy (Tower B)
• Policy Number: SMA-XS-2025-07742
• Insurer: Sentinel Mutual Assurance Group
• Type: Directors & Officers Liability Insurance — Excess
• Limit of Liability: $25,000,000 per policy period, excess of $15,000,000 (subject to the terms, conditions, and exclusions of the Policy)
Both Policies were issued by Sentinel Mutual Assurance Group and are currently in force. QIH reserves the right to provide corresponding notice to other carriers in its D&O insurance tower, as applicable, and this notice to Sentinel shall not be deemed to limit or waive any notice rights under any other policy.
3. Description of the Circumstances Giving Rise to This Notice
3.1 The Whistleblower Complaint
On February 14, 2026, QIH received an anonymous whistleblower complaint (the "Complaint") submitted through QIH's third-party ethics and compliance reporting hotline, which is operated and administered by IntegriLine Compliance Services, Inc. ("IntegriLine"). The Complaint was assigned IntegriLine Intake Reference No. IL-QIH-2026-0214-0033. The Complaint was submitted via IntegriLine's secure online reporting portal; no voice recording or telephonic intake exists in connection with this submission.
In accordance with the Company's established escalation protocol for complaints raising potential financial reporting or internal controls concerns, IntegriLine escalated the Complaint to QIH's General Counsel and Secretary, Owen R. Hargrove, on February 17, 2026. Mr. Hargrove conducted an initial review of the Complaint and its supporting materials and, on February 19, 2026, briefed the Chair of the Audit Committee of QIH's Board of Directors, Priya Subramaniam, regarding the substance of the Complaint and its potential significance. The Complaint was thereafter brought to the attention of the full Audit Committee, as described further in Section 4 below.
3.2 Nature of the Allegations
The Complaint contains detailed factual allegations asserting that senior personnel at Ashgrove Equity Partners Specialty Underwriting, Inc. engaged in a multi-year scheme to artificially inflate BSU's financial results and, by extension, the consolidated financial statements of QIH. The alleged scheme is described as spanning approximately ten fiscal quarters, from the third quarter of 2023 (Q3 2023) through the fourth quarter of 2025 (Q4 2025). The Complaint identifies three principal categories of alleged misconduct:
(a) Fictitious Policy Placements. The Complaint alleges the fabrication or material inflation of binder confirmations for commercial property insurance policies purportedly placed through at least three retail-broker counterparties that the complainant asserts are fictitious or shell entities. The three counterparties identified by name in the Complaint are: (i) "Veltrano Risk Advisors," (ii) "Halloran & Pratt Insurance Associates," and (iii) "CrestPoint Brokerage LLC." The Complaint asserts that these entities lack valid surplus-lines licenses in any jurisdiction in which they purportedly conducted business and that their registered addresses correspond to virtual-office or shared-workspace facilities with no substantive insurance brokerage operations. According to the Complaint, binder confirmations attributed to these counterparties were fabricated or materially altered to reflect premium volumes that did not correspond to actual underlying policy placements.
(b) Phantom Commission Income. The Complaint further alleges that commission and fee income was recognized by BSU on the basis of these alleged phantom policy placements. The complainant estimates that the total face value of fictitious placed premium attributable to the three identified counterparties approximates $74 million over the ten-quarter period in question. Applying an approximate average commission rate of 13% — which the complainant states is consistent with BSU's blended commission rate for its commercial property book of business — the Complaint estimates that approximately $9.6 million in phantom commission and fee income was recognized by BSU and consolidated into QIH's financial statements during the relevant period. For context, BSU reported FY 2025 placed premium of approximately $487 million and commission and fee income of approximately $63.2 million. If substantiated, the alleged phantom commission income would represent approximately 15.2% of BSU's reported FY 2025 commission and fee income and approximately 1.5% of BSU's reported FY 2025 placed premium.
(c) Improper Reserve Releases. The Complaint additionally alleges that certain senior BSU personnel directed the premature and unjustified release of approximately $38.5 million in incurred-but-not-reported ("IBNR") loss reserves during the relevant period, with the purpose and effect of inflating BSU's reported quarterly underwriting income. According to the Complaint, the improper reserve releases were concentrated in particular in the fourth quarter of 2024 (Q4 2024) and the second quarter of 2025 (Q2 2025), though smaller releases allegedly occurred in other quarters as well. The Complaint asserts that these releases were not supported by actuarial analysis or loss-development data and were undertaken at the direction of the individuals identified in Section 3.3 below.
In the aggregate, if the allegations contained in the Complaint were to be substantiated in their entirety, the total financial misstatement could approximate $48.1 million, comprising approximately $9.6 million in phantom commission and fee income and approximately $38.5 million in improper IBNR reserve releases. It is important to note that no determination has been made by QIH, the Audit Committee, or Calderwood & Harkness as to the accuracy, reliability, or completeness of these allegations, which remain subject to the internal investigation described in Section 4 below.
The Complaint references approximately 147 binder confirmations that the complainant alleges are fictitious or materially altered. The Complaint was accompanied by two sample binder-confirmation documents in PDF format, with an aggregate face-premium value of approximately $12.4 million. These sample documents are currently in the possession of Calderwood & Harkness and are being preserved as part of the investigation. No additional documentation was appended to or referenced in the Complaint beyond these two sample binder confirmations.
3.3 Individuals Named in the Complaint
The Complaint identifies by name three senior employees of BSU who are alleged to have been principally responsible for orchestrating and executing the scheme described above:
(i) Garrett T. Lomax, President, Ashgrove Equity Partners Specialty Underwriting, Inc. Mr. Lomax has served as President of BSU since its acquisition by QIH in 2019 and reports directly to the Chief Executive Officer of QIH. Mr. Lomax is alleged to have directed and supervised the overall scheme, including the selection and creation of the alleged fictitious broker counterparties.
(ii) Neil W. Stadler, Senior Vice President, Commercial Property Division, Ashgrove Equity Partners Specialty Underwriting, Inc. Mr. Stadler is alleged to have been directly responsible for the generation and approval of the fictitious binder confirmations and for overseeing the recording of phantom placed premium within BSU's underwriting management system.
(iii) Rhonda M. Kessler, Vice President, Finance & Operations, Ashgrove Equity Partners Specialty Underwriting, Inc. Ms. Kessler is alleged to have been responsible for the financial reporting aspects of the scheme, including the recognition of phantom commission income in BSU's general ledger and the direction of the improper IBNR reserve releases.
Each of these individuals is believed to qualify as an "Insured Person" as that term is defined in the Policies. The Complaint does not identify by name any current director or executive officer of QIH (as distinguished from BSU). However, as discussed in Section 3.4 below, the nature and scope of the allegations are such that claims could reasonably be asserted against directors and officers of QIH in addition to the named BSU personnel.
3.4 Potential Exposure of Directors and Officers
If the allegations contained in the Complaint are substantiated, in whole or in part, QIH's current and former directors and officers could face potential exposure from multiple sources. Without limitation, such potential claims and proceedings could include:
(i) Securities Fraud Claims. Claims by shareholders or the SEC under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, alleging that QIH's consolidated financial statements for one or more reporting periods during the Q3 2023 through Q4 2025 timeframe contained material misstatements or omissions regarding BSU's revenue, commission income, premium volumes, and/or loss reserve adequacy. In addition, potential claims under Section 13(a) of the Exchange Act and Rule 13a-14 relating to the accuracy and completeness of QIH's periodic reports filed with the SEC.
(ii) Sarbanes-Oxley Certification Exposure. Allegations that the certifications executed by QIH's Chief Executive Officer, Marcus P. Galvin, and Chief Financial Officer, Denise R. Nakamura, pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 ("SOX") for fiscal years 2023, 2024, and 2025, and for the interim quarters within those fiscal years, were inaccurate to the extent they certified the effectiveness of QIH's internal controls over financial reporting and the fair presentation of QIH's consolidated financial statements.
(iii) Shareholder Litigation. Potential shareholder derivative actions asserting breach of fiduciary duty, failure of oversight (Caremark claims), waste of corporate assets, or unjust enrichment against QIH's directors and officers. Additionally, potential securities class-action litigation brought on behalf of a putative class of QIH shareholders alleging damages resulting from the purchase or sale of QIH securities during an alleged class period at artificially inflated prices.
(iv) Regulatory and Enforcement Proceedings. Potential inquiry, examination, or enforcement proceedings by the SEC's Division of Enforcement, including but not limited to proceedings relating to QIH's financial reporting, internal controls, and disclosure practices. In addition, potential regulatory action by the Connecticut Insurance Department ("CID") or other state insurance regulators relating to BSU's underwriting practices, reserve adequacy, and compliance with applicable insurance laws and regulations.
(v) Criminal Exposure and Referral. Potential criminal referral to the United States Department of Justice ("DOJ") or the relevant United States Attorney's Office for investigation and possible prosecution of wire fraud (18 U.S.C. § 1343), mail fraud (18 U.S.C. § 1341), securities fraud (18 U.S.C. § 1348), and/or other federal criminal offenses in connection with the alleged scheme.
In connection with the foregoing, QIH notes that it filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 with the SEC on February 21, 2026 (the "FY 2025 10-K"). The Complaint was received on February 14, 2026 and was under initial review by Mr. Hargrove at the time of the 10-K filing. The FY 2025 10-K does not contain any disclosure regarding the Complaint or the allegations described herein, as no materiality determination had been made at the time of filing and the Audit Committee had not yet been briefed or convened to consider the matter. The question of whether the Company may be required to file supplemental or amended disclosures with the SEC is currently under active consideration by QIH's management and its outside counsel, as described further in Section 4 below.
4. Steps Taken to Date
QIH, acting through its Audit Committee, has taken the following steps in response to receipt of the Complaint:
(a) Audit Committee Special Meeting. On February 24, 2026, the Audit Committee of QIH's Board of Directors held a special telephonic meeting to receive a briefing from the General Counsel regarding the Complaint and to deliberate upon appropriate responsive measures. The Audit Committee is composed of three independent, non-management directors: Priya Subramaniam (Chair), Thomas K. Driscoll, and Angela F. Delvecchio. At the February 24 meeting, the Audit Committee unanimously resolved to engage independent outside counsel to scope, and if warranted based on the results of that scoping, to conduct a full internal investigation of the allegations contained in the Complaint.
(b) Engagement of Independent Outside Counsel. Calderwood & Harkness LLP was formally engaged by the Audit Committee effective February 27, 2026, following completion of a comprehensive conflicts check (initiated February 25, 2026; cleared February 26, 2026). The firm's engagement team assigned to this matter includes Conrad Ashby (Responsible Partner), Victoria Chambers (Billing Partner), Steven Hollander (Lead Associate), and Jasmine Thornton (Working Associate). Calderwood & Harkness's engagement is to the Audit Committee of the Board of Directors, and the firm reports directly to the Audit Committee in connection with this investigation.
(c) Investigation Status. The investigation is currently in its prospective and scoping phase. As of the date of this letter, no custodian interviews, document collections, electronic discovery, or other substantive investigative steps have commenced. The initial scoping phase is expected to include, among other things, identification of relevant custodians and data sources, review of BSU's underwriting management systems and financial records, assessment of the two sample binder-confirmation documents appended to the Complaint, and verification of the purported existence and licensing status of the three broker counterparties named in the Complaint.
(d) Coordination with Securities Counsel. Calderwood & Harkness is coordinating closely with QIH's standing outside corporate and securities counsel, Pemberton Hale & Creighton LLP (partner contact: Elaine R. Foxworth), regarding QIH's potential SEC disclosure obligations arising from the Complaint and the investigation, including the potential need for supplemental filings or current reports on Form 8-K. The assessment of disclosure obligations is ongoing and will be informed by the progress and findings of the investigation.
(e) Engagement of Forensic Advisors. Calderwood & Harkness is in the process of engaging Claridge Forensic Advisory LLC (Managing Director: Daniel J. Petrov) to provide forensic accounting analysis and electronic discovery support in connection with the investigation. The engagement of Claridge is expected to be finalized in the near term, and Claridge's work will be conducted under the direction and at the request of Calderwood & Harkness in order to preserve applicable attorney-client privilege and work-product protections.
(f) Document Preservation. A comprehensive document-preservation notice is being prepared by Calderwood & Harkness for issuance to relevant custodians at both QIH and BSU. The preservation notice will cover electronic and hard-copy documents, including but not limited to underwriting files, binder confirmations, broker correspondence, commission and fee records, actuarial and reserve analyses, general ledger entries, and relevant communications of the individuals named in the Complaint and other potentially relevant custodians. The preservation notice is expected to be issued promptly following Audit Committee authorization.
(g) External Audit Considerations. QIH's independent registered public accounting firm, Kellner & Strauss LLP (lead engagement partner: Howard M. Bressler), issued an unqualified opinion on QIH's consolidated financial statements for the fiscal year ended December 31, 2025, which was included in the FY 2025 10-K. Calderwood & Harkness and the Audit Committee are aware that the investigation and its findings may have implications for the external audit, particularly with respect to the adequacy of BSU's loss reserves, the propriety of commission and fee revenue recognition, and the effectiveness of QIH's internal controls over financial reporting. The Audit Committee intends to communicate with Kellner & Strauss regarding the Complaint and the investigation at the appropriate time, consistent with the Audit Committee's oversight responsibilities and applicable auditing standards.
5. Formal Notice Under the Policies
By this letter, QIH hereby provides formal notice to Sentinel Mutual Assurance Group under both Policy No. SMA-EL-2025-07741 (Directors & Officers Liability Insurance — Primary; Tower A) and Policy No. SMA-XS-2025-07742 (Directors & Officers Liability Insurance — Excess; Tower B) of the circumstances described herein, which QIH reasonably believes could give rise to a claim, as that term is defined in the Policies, against one or more Insured Persons and/or the Company.
This notice is provided in accordance with the notice-of-circumstances provisions of the Policies and is intended to constitute timely, complete, and sufficient notice in compliance with all applicable terms, conditions, and requirements of the Policies. QIH intends that any claim that may subsequently arise out of, or in connection with, the circumstances described in this letter shall be deemed to have been first made at the time of this notice for purposes of the Policies, to the fullest extent permitted by the terms thereof.
QIH respectfully requests that Sentinel acknowledge receipt of this notice in writing and confirm the commencement of the claims-handling process, including the identification of the claims adjuster and/or claims professional assigned to this matter. QIH further requests that Sentinel confirm that this notice will be treated as timely and sufficient under both Policies.
6. Reservation of Rights
QIH expressly reserves all rights, benefits, and coverage available to it, its subsidiaries (including BSU), and all Insured Persons under both the Primary Policy and the Excess Policy, including but not limited to:
(a) Coverage for defense costs, investigation costs, and any settlements, judgments, or other amounts that may become payable in connection with any claim arising out of or related to the circumstances described herein;
(b) Coverage for all Insured Persons, including but not limited to the three individuals named in the Complaint (Garrett T. Lomax, Neil W. Stadler, and Rhonda M. Kessler), all current and former directors and officers of QIH, all current and former directors and officers of BSU, and any other individuals who may qualify as Insured Persons under the Policies;
(c) All rights under the advancement-of-defense-costs provisions of the Policies, including the right to advancement of defense costs on a current basis as such costs are incurred, to the extent provided by the Policies; and
(d) All other rights, benefits, and protections afforded to the Company, its subsidiaries, and the Insured Persons under the Policies, whether or not specifically enumerated herein.
Nothing in this notice letter shall be construed as, or deemed to constitute, an admission of liability, wrongdoing, or fault on the part of QIH, any of its subsidiaries, or any Insured Person, nor shall anything herein be deemed an admission or acknowledgment regarding the accuracy, validity, or completeness of any of the allegations contained in the Complaint. The allegations described herein are unverified and remain subject to investigation. This notice is provided solely for the purpose of preserving coverage rights under the Policies.
QIH expressly reserves the right to supplement, amend, or update this notice as additional information becomes available during the course of the internal investigation and as circumstances may warrant. Any failure to include specific facts, allegations, or circumstances in this initial notice shall not be deemed a waiver of coverage with respect to such facts, allegations, or circumstances, and QIH reserves the right to include additional information in subsequent supplemental notices.
7. Request for Cooperation and Acknowledgment
QIH respectfully requests the following from Sentinel in connection with this notice:
(a) That Sentinel acknowledge receipt of this notice in writing within ten (10) business days of receipt;
(b) That Sentinel identify and designate a dedicated claims professional for ongoing communications regarding this matter and provide the contact information for such claims professional;
(c) That Sentinel confirm in writing that this notice will be deemed timely and sufficient under both Policy No. SMA-EL-2025-07741 (Primary; Tower A) and Policy No. SMA-XS-2025-07742 (Excess; Tower B); and
(d) That Sentinel advise QIH of any additional information or documentation that Sentinel may require in order to process this notice or to evaluate coverage, so that QIH may respond promptly to any such requests.
QIH intends to provide Sentinel with periodic updates as the investigation progresses, to the extent appropriate and practicable. QIH notes, however, that the internal investigation is being conducted under the direction of the Audit Committee and under the protection of the attorney-client privilege and the work-product doctrine, and any communications with Sentinel will be subject to applicable privilege protections. The provision of information to Sentinel pursuant to this notice and any subsequent communications shall not constitute a waiver of any applicable privilege, and QIH expressly reserves all privilege protections in connection with the investigation.
8. Contact Information
All communications regarding this notice should be directed to the following:
Primary Contact: Conrad Ashby, Partner Calderwood & Harkness LLP 1221 Avenue of the Americas, 38th Floor New York, New York 10020 Telephone: (212) 558-4100 Facsimile: (212) 558-4101
Email: cashby@calderwoodharkness.com
Reference: Matter No. 1025-00010
With a copy to: Owen R. Hargrove General Counsel & Secretary Quorum Insurance Holdings Corp. 400 Atlantic Street, Suite 3200 Stamford, Connecticut 06901 Telephone: (203) 489-6000
Email: ohargrove@quoruminsurance.com
QIH requests that Sentinel not communicate directly with any Insured Person regarding this matter without first coordinating through the undersigned counsel or through Mr. Hargrove.
We appreciate Sentinel's prompt attention to this matter and look forward to receiving your acknowledgment and confirmation at your earliest convenience. QIH is committed to working cooperatively with Sentinel throughout this process while preserving the rights and interests of all Insured Persons and the Company.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Conrad Ashby Partner White Collar Defense & Investigations Practice Group
On behalf of Quorum Insurance Holdings Corp., at the direction of the Audit Committee of the Board of Directors
Enclosures: None. No enclosures are included with this notice at this time. Supporting documentation, including copies of the Complaint and the sample binder-confirmation documents referenced herein, will be provided to Sentinel as appropriate, subject to applicable attorney-client privilege and work-product protections and Audit Committee authorization.
INTERNAL DRAFT DISTRIBUTION — NOT FOR INCLUSION ON FINAL TRANSMITTED LETTER
cc (Internal Draft Distribution Only):
Priya Subramaniam, Chair, Audit Committee — QIH Board of Directors Thomas K. Driscoll, Member, Audit Committee — QIH Board of Directors Angela F. Delvecchio, Member, Audit Committee — QIH Board of Directors Victoria Chambers, Partner, Calderwood & Harkness LLP Steven Hollander, Associate, Calderwood & Harkness LLP Jasmine Thornton, Associate, Calderwood & Harkness LLP
DRAFT — Prepared by Calderwood & Harkness LLP — Matter No. 1025-00010 NOT TO BE TRANSMITTED WITHOUT AUDIT COMMITTEE AUTHORIZATION Version: Draft 1 — February 27, 2026

DRAFT — PRIVILEGED & CONFIDENTIAL — SUBJECT TO AUDIT COMMITTEE APPROVAL

VIA OVERNIGHT COURIER AND ELECTRONIC MAIL

CALDERWOOD & HARKNESS LLP

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