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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT PREPARED AT THE DIRECTION OF COUNSEL IN ANTICIPATION OF LITIGATION

This memorandum constitutes attorney work product prepared in anticipation of litigation and is protected by the attorney-client privilege. It is intended solely for the use of the Audit Committee of the Board of Directors of Quorum Insurance Holdings Corp. and counsel. Distribution, reproduction, or disclosure to any other person or entity without the express written authorization of the Audit Committee is strictly prohibited.

MEMORANDUM

I. Purpose of This Memorandum

This memorandum has been prepared at the direction of Calderwood & Harkness LLP in connection with the firm's engagement by the Audit Committee of the Board of Directors of Quorum Insurance Holdings Corp. ("QIH" or the "Company") to conduct an independent internal investigation into the matters described herein. The Audit Committee retained Calderwood & Harkness by resolution adopted during a special telephonic meeting held on February 24, 2026, and the firm's engagement was formally opened on February 27, 2026 under matter number 1025-00010.

This memorandum summarizes and provides a preliminary analytical assessment of the anonymous whistleblower complaint received on February 14, 2026 through QIH's third-party ethics hotline, which is administered by IntegriLine Compliance Services, Inc. ("IntegriLine"). The complaint was assigned IntegriLine intake reference number IL-QIH-2026-0214-0033 and contains detailed allegations of financial fraud at Ashgrove Equity Partners Specialty Underwriting, Inc. ("BSU"), a wholly owned subsidiary of QIH. The complaint consists of a four-page typed narrative and two attached sample documents, both of which are addressed in detail below.

It should be noted at the outset that no substantive investigation has yet commenced. The analysis set forth in this memorandum is based solely on the face of the complaint narrative and the two attached sample binder-confirmation documents. No witness interviews have been conducted. No documents beyond the complaint itself have been reviewed. No forensic analysis has been performed. No searches of external databases or regulatory filings have been undertaken. The observations and assessments contained herein are therefore preliminary in nature and should be understood as a framework for guiding the initial scoping phase of the investigation rather than as findings or conclusions.

This document constitutes attorney work product prepared in anticipation of litigation and is subject to the attorney-client privilege. The privilege is controlled exclusively by the Audit Committee. This memorandum should not be shared with QIH management, BSU personnel, or any third party without the express authorization of the Audit Committee.

II. Background: Receipt and Escalation of the Complaint

A. Filing of the Complaint

On February 14, 2026, an anonymous individual submitted a complaint through the IntegriLine Compliance Services, Inc. online reporting portal. IntegriLine is the third-party ethics-hotline provider retained by QIH to administer its confidential and anonymous reporting system, pursuant to which employees, contractors, and other individuals may report concerns regarding, among other things, suspected fraud, accounting irregularities, violations of law, and breaches of the Company's Code of Business Conduct and Ethics. The IntegriLine platform is designed to permit anonymous submissions and to protect the identity of reporting individuals in compliance with the requirements of the Sarbanes-Oxley Act of 2002 ("SOX") Section 301 and related Securities and Exchange Commission ("SEC") regulations.

The complaint was assigned IntegriLine intake reference number IL-QIH-2026-0214-0033. The method of submission was exclusively through IntegriLine's online portal; no voice recording was made, and no telephonic intake interview was conducted. The submission consisted of two components: (1) a four-page typed narrative setting forth detailed allegations of financial fraud at BSU, and (2) two attached files in Portable Document Format ("PDF"), each containing a redacted sample binder confirmation for a commercial property insurance policy allegedly placed through one of the fictitious or shell retail-broker counterparties identified in the narrative. The complaint narrative is written in a structured, organized fashion with section headings and specific financial data, suggesting that the complainant prepared the submission with deliberation and care rather than on an extemporaneous basis.

B. Escalation and Referral Timeline

The complaint was escalated and referred through the following timeline:

• February 17, 2026: IntegriLine escalated the complaint to QIH General Counsel Owen R. Hargrove pursuant to the Company's standing escalation protocol. Under QIH's Whistleblower and Ethics Reporting Policy (last revised October 2024), complaints received through IntegriLine that involve allegations of financial fraud, accounting irregularities, or potential securities-law violations are escalated directly to the General Counsel within three business days of receipt. The February 14 submission date was a Friday, and the escalation on the following Monday, February 17, was therefore within the prescribed timeframe.

• February 19, 2026: General Counsel Hargrove briefed Audit Committee Chair Priya Subramaniam on the substance of the complaint in a private telephonic communication. The Audit Committee Chair's involvement at this stage was consistent with QIH's internal procedures, which provide that complaints alleging potential fraud by subsidiary-level senior management are to be brought to the attention of the Audit Committee Chair promptly.

• February 24, 2026: A special telephonic meeting of the Audit Committee was convened. All three independent members of the Audit Committee were present: Priya Subramaniam (Chair), Thomas K. Driscoll, and Angela F. Delvecchio. General Counsel Hargrove participated in the meeting to present the substance of the complaint. Following deliberation in executive session (without management present), the Audit Committee resolved to engage independent outside counsel to scope and, if warranted, conduct an internal investigation into the allegations. The Committee authorized the Chair to oversee the engagement of counsel.

• February 25, 2026: Calderwood & Harkness LLP initiated its conflicts-of-interest check, screening the firm's current and recent representations against the subject individuals, entities, and other relevant parties identified in the complaint.

• February 26, 2026: The conflicts check was cleared. No disqualifying conflicts were identified with respect to any current or former client of the firm. A summary of the conflicts-check results was communicated to Audit Committee Chair Subramaniam.

• February 27, 2026: The engagement was formally opened under Calderwood & Harkness matter number 1025-00010. This memorandum is the first work product prepared in connection with the engagement.

C. Relevant Company Context

An understanding of the corporate structure and financial profile of the relevant entities is necessary to evaluate the allegations and assess potential materiality.

Quorum Insurance Holdings Corp. ("QIH") is a corporation organized 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 common stock is publicly traded on the Nasdaq Stock Market under the ticker symbol "QIHC." As of February 2026, QIH's approximate market capitalization was $4.8 billion. QIH operates as an insurance holding company with subsidiaries engaged in property and casualty insurance underwriting, wholesale brokerage, and related financial services.

For the 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's Annual Report on Form 10-K for FY 2025 was filed with the SEC on February 21, 2026. Notably, the Form 10-K did not include any disclosure of the whistleblower complaint. This omission is not, at this stage, problematic: the complaint was still under initial review at the time of filing, and no materiality determination had yet been made. However, the disclosure question will require ongoing assessment as the investigation progresses, as discussed further in Section VII below.

Ashgrove Equity Partners Specialty Underwriting, Inc. ("BSU") is a corporation organized under the laws of the State of Connecticut, located at 55 Elm Street, 8th Floor, Hartford, Connecticut 06103. BSU is a wholly owned subsidiary of QIH. BSU operates as a wholesale insurance brokerage and managing general agent ("MGA") with a business focus on commercial property, excess casualty, and professional liability lines. In its capacity as an MGA, BSU places insurance business on behalf of retail brokers and agents with carriers, earning commission and fee income on placed premium.

For FY 2025, BSU reported placed premium of approximately $487 million and commission and fee income of approximately $63.2 million. BSU's commission and fee income constitutes a meaningful component of QIH's consolidated revenue and a significant contributor to QIH's overall operating performance. BSU has approximately 120 employees based in its Hartford office. The subsidiary is led by its President, Garrett T. Lomax, who reports directly to QIH's Chief Executive Officer, Marcus P. Galvin.

III. Summary of the Whistleblower Allegations

A. Overview

The complainant alleges a multi-year scheme orchestrated and executed by senior personnel at BSU to inflate premium revenue and underwriting income through two interrelated mechanisms:

(1) Fabrication or material inflation of binder confirmations for commercial property policies, which were purportedly placed through fictitious or shell retail-broker counterparties, resulting in the recognition of phantom commission income on BSU's books; and

(2) Manipulation of incurred-but-not-reported ("IBNR") loss-reserve releases to inflate quarterly underwriting income at the QIH consolidated level.

According to the complaint narrative, the alleged scheme spans approximately ten quarters, from approximately the third quarter of 2023 ("Q3 2023") through the fourth quarter of 2025 ("Q4 2025"). The two mechanisms described by the complainant are characterized as interrelated in the sense that the fictitious premium placements generated artificial revenue on BSU's books, while the manipulated reserve releases separately enhanced QIH's reported underwriting profitability — together creating a compounding distortion of the Company's financial results.

Each of the two core allegations is summarized in detail below, followed by a discussion of the aggregate alleged financial impact, the named subject individuals, and the documentary attachments.

B. Allegation 1: Fictitious Policy Placements

The first and primary allegation in the complaint concerns the fabrication or material inflation of binder confirmations for commercial property insurance policies. The complainant asserts that senior BSU personnel created or directed the creation of binder confirmations that purported to document the placement of commercial property coverage with carriers on behalf of retail-broker counterparties, but that these placements were either entirely fictitious (i.e., no genuine insurance transaction occurred) or were materially inflated (i.e., a genuine transaction existed but the premium amount recorded on the binder confirmation significantly exceeded the actual premium placed).

According to the complaint, these fictitious or inflated placements were made through at least three retail-broker counterparties that the complainant characterizes as fictitious or shell entities:

1. Veltrano Risk Advisors — The complainant asserts that this entity lacks valid surplus-lines licenses in any jurisdiction and that its listed business address is a virtual office with no genuine physical operations. The complainant does not provide the specific address but implies that it is readily verifiable as a virtual-office or mail-drop location.

2. Halloran & Pratt Insurance Associates — The complainant makes the same assertions with respect to this entity: absence of valid surplus-lines licenses and use of a virtual-office address rather than a genuine place of business. The complainant treats this entity as functionally identical in nature to Veltrano Risk Advisors.

3. CrestPoint Brokerage LLC — The complainant makes identical assertions regarding this third entity — no valid surplus-lines licenses and a virtual-office address. The use of an LLC structure for this entity is noted, though the complainant does not elaborate on its corporate form or the identity of its members.

The complainant estimates that approximately 147 binder confirmations were fabricated or inflated through these three entities over the course of the alleged scheme. The total estimated fictitious placed premium across these 147 binders is approximately $74 million. The complainant further estimates that BSU recognized phantom commission income of approximately $9.6 million as a result of these fictitious placements, calculated by applying an approximate average commission rate of 13% to the $74 million in fictitious placed premium (i.e., $74,000,000 × 0.13 = $9,620,000, rounded to approximately $9.6 million).

For context, the $9.6 million in alleged phantom commission income represents approximately 15.2% of BSU's total FY 2025 commission and fee income of $63.2 million. It is important to note, however, that the alleged scheme spans multiple fiscal years (FY 2023, FY 2024, and FY 2025), and the complaint does not provide a year-by-year breakdown of the phantom income. The per-year impact may therefore be somewhat lower than 15.2%, but the cumulative effect across reporting periods is nonetheless significant.

C. Allegation 2: Manipulated IBNR Reserve Releases

The second core allegation concerns the improper release of incurred-but-not-reported loss reserves. The complainant alleges that BSU personnel directed the premature release of approximately $38.5 million in IBNR loss reserves to inflate quarterly underwriting income at the QIH consolidated level. IBNR reserves represent management's estimate of claims that have been incurred but not yet reported to the insurer or reinsurer, and the release of such reserves — when supported by favorable development in actual claim experience — is a normal component of insurance-company financial reporting. The complaint alleges, however, that the reserve releases at issue were not supported by legitimate actuarial analysis or by changes in underlying claim development, and were instead directed by BSU management for the purpose of meeting earnings targets.

The complainant alleges that the improper releases were concentrated in two specific quarters: Q4 2024 and Q2 2025. The complaint implies, but does not explicitly state, that BSU management selected these quarters for the releases because they coincided with periods in which QIH's consolidated underwriting results would otherwise have fallen short of analysts' consensus estimates or internal performance targets.

QIH's appointed actuary for purposes of loss-reserve estimation is Linden Actuarial Consulting Group, a Hartford-based firm led by principal Margaret Y. Cho, FCAS. The relationship between Linden's actuarial opinions and the alleged reserve manipulation is not addressed in the complaint. It is not clear from the face of the complaint whether the complainant is alleging that (a) Linden supported the reserve releases in its actuarial analysis (raising questions about the quality of Linden's work), (b) BSU management directed releases over Linden's objection or without Linden's involvement, or (c) Linden was not consulted regarding the specific releases at issue. This is a critical factual question that the investigation will need to resolve.

D. Aggregate Alleged Financial Misstatement

The two allegations, taken together, yield the following aggregate financial impact as alleged by the complainant:

This figure of approximately $48.1 million, if substantiated in whole or in significant part, could be material to QIH's consolidated financial statements. Because the alleged scheme spans approximately ten quarters across three fiscal years (FY 2023, FY 2024, and FY 2025), the misstatement would implicate multiple reporting periods, including annual and quarterly filings with the SEC, and could necessitate the restatement of prior-period financial statements. The materiality implications are discussed further in Section VI below.

E. Named Subject Individuals

The complaint specifically names three BSU employees as participants in the alleged scheme. The following table summarizes their positions, reporting lines, tenure, and estimated FY 2025 compensation as stated or implied in the complaint:

The complainant characterizes Garrett T. Lomax as the architect and primary beneficiary of the alleged scheme. According to the complaint narrative, Lomax conceived and directed both components of the fraud — the fictitious placements and the reserve manipulation — and was the senior-most individual at BSU responsible for the subsidiary's financial performance. The complainant asserts that Neil W. Stadler, as SVP of the Commercial Property Division, was responsible for executing the fictitious placements within his division, including the creation of fabricated binder confirmations and the coordination with the alleged shell broker counterparties. Rhonda M. Kessler, as VP of Finance & Operations, is alleged to have facilitated the financial-reporting component of the scheme, including the booking of phantom commission income and the initiation of the IBNR reserve-release entries.

It is worth noting that all three individuals' compensation structures include significant bonus components. Lomax's estimated FY 2025 bonus of $410,000 represents approximately 37.4% of his total estimated compensation; Stadler's bonus of $230,000 represents approximately 37.4%; and Kessler's bonus of $145,000 represents approximately 33.3%. While the complaint does not provide specific details regarding the metrics or formulas used to calculate these bonuses, the magnitude of the bonus component suggests that the individuals' incentive compensation may have been tied, at least in part, to BSU's revenue, placed-premium volume, or profitability metrics — all of which would have been enhanced by the alleged scheme. The specific bonus and incentive-compensation structures applicable to these individuals must be examined during the investigation.

F. Attachments to the Complaint

The complaint was accompanied by two sample binder-confirmation documents in PDF format. These two PDFs are referenced by the complainant as illustrative examples drawn from the broader population of approximately 147 allegedly fabricated or inflated binder confirmations.

The two sample binder confirmations reflect policies with an aggregate placed-premium face value of approximately $12.4 million. The specific details of the named insureds, carriers, effective dates, and other terms appearing on the face of the binder confirmations are not reproduced in this memorandum pending further authentication analysis, but are available in the original complaint file maintained by IntegriLine.

Notably, the complainant redacted the PDFs of personal metadata prior to submission. This redaction is consistent with the complainant's stated desire to remain anonymous and suggests a degree of sophistication regarding document properties and the risk of identification through metadata analysis. However, the redaction of metadata also limits the ability to immediately authenticate the documents or to identify the software, device, or user account from which they were generated or last modified.

Preliminary observations regarding the sample binder confirmations, which will require further investigation, include the following:

• The named insureds on the sample binders must be verified to determine whether they are real entities with genuine insurable interests. If the named insureds are fictitious or do not correspond to real commercial enterprises, this would corroborate the allegation that the binders themselves are fabricated.

• Corresponding policy issuances must be confirmed with the named carrier(s) appearing on the binder confirmations. If the carriers have no record of the policies purportedly bound, this would similarly corroborate fabrication.

• The premium flows associated with these binders must be traced in BSU's accounting records to determine whether premium was actually collected from a retail broker, remitted to a carrier, and recorded in a manner consistent with a genuine insurance transaction.

IV. Assessment of the Complainant's Specificity and Credibility Indicators

A. Indicia of Credibility

The complaint demonstrates a notably high degree of specificity across multiple dimensions, which enhances its credibility on its face and distinguishes it from generalized or vague complaints that lack actionable detail. The specific indicia of credibility include the following:

• Named individuals: The complaint identifies three specific BSU executives by full name and title — Garrett T. Lomax, Neil W. Stadler, and Rhonda M. Kessler — and describes each individual's alleged role in the scheme with precision.

• Named counterparties: The complaint identifies three specific alleged fictitious or shell retail-broker counterparties — Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC — and provides sufficient identifying information (virtual-office assertions, licensing assertions) to permit independent verification.

• Specific financial figures: The complaint cites specific dollar amounts throughout, including approximately $74 million in fictitious placed premium, approximately $9.6 million in phantom commission income, approximately $38.5 million in improper reserve releases, and an aggregate misstatement of approximately $48.1 million. These figures are internally consistent and are supported by arithmetic calculations (e.g., $74M × ~13% = ~$9.6M).

• Specific time period: The complaint identifies the alleged scheme period as spanning approximately ten quarters, from Q3 2023 through Q4 2025, providing temporal boundaries that can be tested against BSU's financial records.

• Specific quarters for reserve-release concentration: Within the broader time period, the complaint identifies Q4 2024 and Q2 2025 as the quarters in which the alleged improper reserve releases were concentrated, further narrowing the investigative focus.

• Specific binder count: The complaint estimates that approximately 147 binder confirmations were fabricated or inflated, providing a quantitative benchmark that can be compared against BSU's actual binder records.

• Documentary support: The complaint is accompanied by two sample binder-confirmation PDFs, which represent tangible documentary evidence that can be subjected to forensic analysis and compared against BSU's records.

The level of detail regarding BSU's internal operations, financial structure, and personnel strongly suggests that the complainant has insider access to BSU's business records and/or financial reporting systems. The specificity of the financial data — including the aggregate placed-premium figure, the commission-income calculation, the reserve-release amounts, and the identification of particular quarters — is not the type of information that would ordinarily be available to an outsider or to a casual observer of BSU's operations.

In particular, the complainant's understanding of the commission-income calculation methodology — specifically, the application of an approximate 13% average commission rate to placed premium to derive commission income — is consistent with knowledge held by someone in a finance, accounting, or brokerage-operations role at BSU or at the QIH corporate level. This specialized knowledge further supports the inference that the complainant is a current or former BSU employee with access to relevant financial data.

B. Potential Limitations and Open Questions

Notwithstanding the foregoing indicia of credibility, several limitations and open questions must be acknowledged:

The complaint is anonymous. The identity of the complainant is unknown, and the complainant's motivations cannot be assessed on the face of the submission. While the IntegriLine platform is designed to protect anonymity, the absence of an identified complainant means that it is not possible, at this stage, to evaluate the complainant's reliability, bias, or potential ulterior motives. It cannot be determined from the face of the complaint whether the complainant has a personal grievance against one or more of the named individuals, an employment dispute with BSU, a pending or anticipated termination, or any other circumstance that could color the allegations or provide a motive for fabrication or exaggeration.

The complaint does not explain how the complainant obtained or calculated the specific financial figures cited. It is unclear whether the figures are derived from direct access to BSU's books and records (e.g., general ledger entries, commission-income reports, reserve schedules), from internal reports or memoranda that the complainant reviewed, or from estimations or extrapolations based on partial information. The precision of the figures suggests direct data access, but this cannot be confirmed without further inquiry.

The complaint does not identify any corroborating witnesses. While the complaint names three subject individuals, it does not reference any other BSU or QIH employees who may have observed or been aware of the alleged conduct. The investigation will need to determine independently whether corroborating witnesses exist.

The complaint does not address whether any QIH corporate-level personnel — beyond the three named BSU individuals — had knowledge of or involvement in the alleged scheme. This is a significant gap because, if the allegations are substantiated, the question of whether the fraud was confined to the subsidiary level or extended to the corporate parent will have important implications for the scope of potential liability and remediation.

The complaint does not reference communications between the subject individuals, such as emails, text messages, instant messages, or memoranda. While the absence of such references does not undermine the complaint, the investigation should prioritize the collection and review of electronic communications among Lomax, Stadler, and Kessler to determine whether there is a documented evidentiary trail of the alleged coordination.

Finally, the redaction of metadata from the sample binder-confirmation PDFs, while consistent with the complainant's anonymity-protection measures, limits the ability to immediately authenticate the documents or to trace their provenance. Forensic analysis may be able to extract additional information from the files, but the extent of the redaction is not yet known.

C. Preliminary Assessment of Complainant's Possible Identity and Role

While the investigation must take care not to attempt to identify the complainant — consistent with SOX Section 806 and Dodd-Frank Section 922 anti-retaliation protections — a preliminary assessment of the complainant's likely role within BSU is relevant to evaluating the reliability of the information provided.

The specificity of the financial data, including aggregate placed-premium figures, commission-income amounts, IBNR reserve-release figures, and the calculation methodology, strongly suggests that the complainant has access to BSU's internal financial records. This access is most consistent with an individual in a finance, accounting, actuarial, or senior operations role at BSU. The complainant's knowledge of binder-confirmation details and the names of specific broker counterparties further suggests familiarity with BSU's brokerage operations, which could indicate a role in BSU's Commercial Property Division or in a cross-functional capacity that spans both operations and finance. The complainant's understanding of IBNR reserve mechanics — including the concept of reserve releases and their impact on underwriting income — suggests actuarial or financial-reporting knowledge that is not universally held among insurance-industry employees.

Given that BSU has approximately 120 employees, the universe of individuals with access to the full range of information reflected in the complaint is relatively narrow. The intersection of (a) finance or accounting access, (b) brokerage-operations familiarity, and (c) actuarial or reserve-related knowledge narrows the pool of potential complainants to what is likely a small number of individuals within BSU's organization.

It bears emphasis that the purpose of this assessment is solely to evaluate the reliability of the information presented and to inform the investigation's approach to witness identification. The investigation team must exercise care throughout the investigation to protect the complainant's anonymity and to ensure full compliance with the anti-retaliation protections afforded by SOX Section 806 and Dodd-Frank Section 922. Any investigative step that could tend to reveal the complainant's identity should be reviewed in advance by this team, and all interviews should be conducted in a manner that does not suggest to interviewees that the investigation was initiated by a whistleblower complaint, to the extent practicable.

V. Analysis of Key Factual Questions for Investigation

The following discussion identifies the principal factual questions that the investigation will need to address during the scoping phase and, if warranted, during a full investigation. These questions are organized by subject-matter area.

A. Existence and Legitimacy of the Three Named Retail Brokers

The threshold factual question in the investigation is whether the three named retail-broker counterparties — Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC — are legitimate business entities with valid licenses and genuine operations, or whether they are fictitious or shell entities as the complainant alleges.

Veltrano Risk Advisors: The investigation should search state surplus-lines license databases in Connecticut, New York, and all other states in which BSU places business, as well as the databases maintained by the Surplus Lines Stamping Office of the National Association of Insurance Commissioners ("NAIC"), to determine whether Veltrano Risk Advisors holds any valid surplus-lines or other insurance licenses. Additionally, Secretary of State corporate registries should be searched in all fifty states and the District of Columbia to determine whether the entity is validly organized and in good standing. Commercial databases, including but not limited to Dunmore Enterprises, Sundial Solutions, and state-level assumed-name filings, should be consulted to assess whether Veltrano Risk Advisors has genuine business operations, employees, and a physical office presence.

Halloran & Pratt Insurance Associates: The same inquiries should be conducted with respect to this entity.

CrestPoint Brokerage LLC: The same inquiries should be conducted with respect to this entity. Given the LLC structure, the investigation should also attempt to identify the member(s) or manager(s) of the LLC through state-filing records, to the extent such information is publicly available.

The complainant alleges that all three entities use virtual-office addresses. Physical-address verification should be conducted, which may include property-records searches, site visits, and inquiries with the operators of any virtual-office or co-working facilities identified at the listed addresses.

If any of the three entities is confirmed as fictitious, nonexistent, or lacking required surplus-lines licenses, this would strongly corroborate the core allegation of fabricated placements. Conversely, if the entities are determined to be real, licensed, and operational, this would significantly weaken the complaint's foundational premise, although it would not preclude the possibility of inflated (as opposed to entirely fabricated) binder confirmations.

Additionally, the investigation should obtain and review BSU's broker-of-record files and due-diligence records for the onboarding of these three counterparties. BSU's internal policies and procedures presumably require some level of due diligence before establishing a new broker relationship, including verification of licenses, financial condition, and reputation. The presence or absence of due-diligence documentation will be relevant to assessing both the legitimacy of the counterparties and the adequacy of BSU's internal controls.

B. Binder Confirmation Authenticity

The approximately 147 binder confirmations referenced in the complaint must be identified within BSU's policy-administration and brokerage-management systems. This will require obtaining a complete list of all binder confirmations generated by BSU during the Q3 2023 through Q4 2025 period, filtered by the three broker counterparties of interest.

For each binder confirmation identified, the investigation should trace the following elements:

(i) The named insured — to determine whether it is a real entity with a genuine insurable interest, physical operations, and assets that would support the coverage described in the binder;

(ii) The placing carrier — to confirm with the carrier directly whether a policy was actually bound and issued, and whether the carrier received and processed the premium associated with the binder;

(iii) Whether a corresponding policy was issued by the carrier — a binder without a corresponding issued policy may indicate that the binder was fabricated or that the placement was never completed;

(iv) Whether premium was actually remitted — including tracing the flow of funds from the retail broker (if any) through BSU to the carrier, with verification against bank records and accounting entries; and

(v) Whether claims were filed or reserves established against the policies purportedly bound — the absence of any claims activity or reserve activity over a multi-year period for a significant book of commercial property business could be an anomaly warranting further inquiry, although it is not conclusive standing alone.

The two sample binder-confirmation PDFs attached to the complaint should be prioritized for analysis and compared against BSU's records to determine whether they match genuine transactions recorded in BSU's systems. If the PDFs correspond to entries in BSU's brokerage-management system, the investigation should trace the full lifecycle of those particular transactions. If the PDFs do not correspond to any recorded transaction, this would suggest either that they were fabricated by the complainant (undermining credibility) or that they represent off-system transactions that were not captured in BSU's normal workflow (which could corroborate the allegation of a parallel fraudulent scheme).

Forensic analysis by Claridge Forensic Advisory LLC, which has been proposed for engagement as discussed in Section VIII below, will be critical to this workstream. Daniel J. Petrov, Managing Director at Claridge, has extensive experience in insurance-industry forensic investigations and is well-suited to lead the document-tracing and financial-flow analysis.

C. Commission Income Recognition

BSU's commission-income ledger for FY 2023 through FY 2025 must be obtained and analyzed in detail. The primary focus should be on commissions attributed to placements through Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC. This analysis will involve:

• Identifying all commission-income entries in BSU's general ledger associated with the three broker counterparties during the relevant period;

• Determining the actual commission rates applied to each transaction and comparing those rates against BSU's standard commission schedules and against rates applicable to comparable transactions with other, established broker counterparties;

• Assessing whether the commission income was recognized on a cash basis (i.e., upon receipt of actual commission payments) or on an accrual basis (i.e., upon the recording of the binder confirmation, without regard to whether cash was actually received) — a pattern of accrual-basis recognition without corresponding cash receipts would be a significant red flag;

• Tracing actual cash flows to determine whether commission payments were received from any party in connection with the allegedly fictitious placements; and

• Testing the alleged $9.6 million in phantom commissions ($74 million × approximately 13%) against actual ledger entries to determine whether the complainant's aggregate estimate is consistent with BSU's records.

D. IBNR Reserve Releases

The IBNR reserve-release allegation presents a distinct but related line of inquiry that will require coordination with actuarial expertise. The investigation should:

• Obtain and review IBNR reserve schedules maintained by QIH's appointed actuary, Linden Actuarial Consulting Group, under the direction of principal Margaret Y. Cho, FCAS, for all relevant periods from Q3 2023 through Q4 2025;

• Focus in particular on Q4 2024 and Q2 2025, the two quarters in which the complainant alleges improper reserve releases were concentrated;

• Determine whether Linden recommended the reserve releases in question as part of its regular actuarial analysis, or whether BSU or QIH management directed the releases contrary to or without actuarial support — this distinction is critical, because management-directed reserve releases that contradict actuarial recommendations would strongly suggest intentional manipulation;

• Compare the magnitude of reserve releases in the cited quarters to historical patterns over the preceding several years to assess whether $38.5 million in aggregate releases is anomalous relative to QIH's and BSU's historical reserve-development patterns;

• Assess whether the external auditor, Kellner & Strauss LLP (lead engagement partner: Howard M. Bressler), independently evaluated reserve adequacy as part of its audit procedures for FY 2023, FY 2024, and FY 2025, and if so, what conclusions it reached;

• Determine whether any correspondence, memoranda, or communications exist between BSU management and Linden regarding the specific reserve actions at issue; and

• Retain, if necessary, an independent actuarial consultant to review Linden's reserve analyses and opine on the reasonableness of the releases.

E. Internal Controls Over Financial Reporting

The investigation must assess the design and operating effectiveness of QIH's and BSU's internal controls over financial reporting ("ICFRR") as they relate to the processes implicated by the complaint. The relevant control areas include:

• Broker-counterparty onboarding and due diligence: What procedures, if any, does BSU maintain for vetting new retail-broker counterparties prior to accepting business from them? Were these procedures applied to Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC? If so, were the results documented, and were any deficiencies identified?

• Binder-confirmation generation and approval: What controls govern the creation, review, and approval of binder confirmations within BSU? Are binder confirmations subject to independent review or supervisory approval before they are entered into BSU's systems? Could 147 binder confirmations have been fabricated or inflated without triggering any control exception?

• Commission-income recognition: What controls govern the recognition of commission income on BSU's books? Is commission income recognized automatically upon binder entry, or is it subject to independent verification against cash receipts, carrier confirmations, or other corroborating evidence?

• IBNR reserve-setting and release approval processes: What controls govern the process by which IBNR reserves are established, reviewed, and released at QIH and BSU? Are reserve actions subject to actuarial sign-off? Is there a governance process requiring Audit Committee or Board approval for reserve releases above a specified threshold?

QIH's CEO Marcus P. Galvin and CFO Denise R. Nakamura certified QIH's internal controls over financial reporting for FY 2025 pursuant to SOX Sections 302 and 906 in connection with the February 21, 2026 Form 10-K filing. If the allegations are substantiated and material misstatements are confirmed, the adequacy of those certifications — and the certifications for prior fiscal years — will be called into serious question. The personal liability exposure of Galvin and Nakamura under SOX Sections 302 and 906 is discussed further in Section VII below.

Additionally, Kellner & Strauss LLP issued an unqualified audit opinion on QIH's FY 2025 consolidated financial statements, including an attestation on the effectiveness of QIH's ICFRR pursuant to PCAOB Auditing Standard No. 2201. The investigation should assess whether there were audit failures — i.e., whether Kellner & Strauss's audit procedures should have detected the alleged fraud — or whether the alleged scheme was specifically designed to evade the external audit process. This assessment has implications both for QIH's relationship with Kellner & Strauss and for potential third-party claims.

F. Knowledge and Involvement Beyond the Named Individuals

The complaint names three BSU employees but does not allege that any QIH corporate-level officer was involved in or had knowledge of the alleged scheme. The absence of such allegations does not, however, foreclose the possibility of broader involvement or awareness. The investigation should assess the following:

• CEO Marcus P. Galvin: As the direct supervisor of Garrett T. Lomax and the senior-most executive at QIH, Galvin had regular interaction with BSU's leadership. The investigation should determine whether Galvin had knowledge of the alleged activities, whether Lomax communicated information to Galvin that should have raised concerns, and whether Galvin exercised appropriate oversight of BSU's operations and financial performance.

• CFO Denise R. Nakamura: As the Company's principal financial officer, Nakamura had responsibility for consolidated financial reporting, including the reserve balances and income figures affected by the alleged scheme. The investigation should determine whether Nakamura had visibility into the reserve releases at the consolidated level, whether she received information that should have prompted further inquiry, and whether she independently analyzed or questioned BSU's financial results.

• General Counsel Owen R. Hargrove: The investigation should determine whether Hargrove received any prior complaints, concerns, or inquiries related to BSU's brokerage operations, financial reporting, or any of the named individuals, whether through IntegriLine or through other channels.

• Other BSU personnel: Given that BSU has approximately 120 employees and the alleged scheme involved the creation and processing of approximately 147 binder confirmations over ten quarters, it is likely that other BSU personnel beyond the three named individuals processed, reviewed, or had access to the allegedly fabricated binders, associated premium records, or reserve entries. The investigation should identify and interview such individuals.

VI. Preliminary Assessment of Potential Financial Materiality

The alleged aggregate misstatement of approximately $48.1 million must be evaluated against both quantitative and qualitative materiality thresholds to assess whether, if substantiated, the misstatement would be material to QIH's consolidated financial statements and trigger disclosure, restatement, and other obligations.

Quantitative Analysis:

• As a percentage of QIH's FY 2025 net earned premium ($2.41 billion): The aggregate alleged misstatement of $48.1 million represents approximately 2.0% of net earned premium. While this percentage is modest in relation to QIH's total revenue base, common quantitative materiality benchmarks for insurance companies — often in the range of 1% to 5% of revenue or net income — suggest that 2.0% of net earned premium is within the range that warrants materiality consideration, particularly in light of the qualitative factors discussed below.

• As a percentage of BSU's FY 2025 commission and fee income ($63.2 million): The phantom commission income component alone ($9.6 million) represents approximately 15.2% of BSU's total FY 2025 commission and fee income. Although BSU is a subsidiary and its financial results are consolidated into QIH's financial statements, this percentage is substantial and suggests that the commission-income fraud, if confirmed, has materially distorted BSU's reported financial performance.

• Impact of improper reserve releases: The alleged improper IBNR reserve releases of approximately $38.5 million would directly affect QIH's reported underwriting income and, depending on QIH's total underwriting income for the relevant periods, could represent a material component of the Company's profitability. The precise impact as a percentage of underwriting income or net income will need to be calculated once QIH's detailed financial data for the relevant quarters is obtained.

Qualitative Analysis:

Qualitative materiality factors weigh heavily in favor of a materiality finding:

• The allegations describe intentional fraud by senior subsidiary management, as distinguished from unintentional accounting errors or reasonable differences of judgment. The intentional nature of the alleged misconduct heightens materiality under applicable SEC and PCAOB guidance.

• If substantiated, the allegations implicate the adequacy of the SOX Section 302 and Section 906 certifications made by CEO Galvin and CFO Nakamura. Material misstatements in certified financial statements raise significant legal and regulatory concerns.

• The allegations, if confirmed, would likely necessitate the restatement of prior-period financial statements for one or more fiscal years (FY 2023, FY 2024, and potentially FY 2025), with cascading effects on investor confidence, stock price, and regulatory standing.

• The nature of the alleged conduct — fabrication of fictitious insurance placements and manipulation of loss reserves — would, if substantiated, carry potential criminal exposure for the individuals involved and potentially for QIH itself, further heightening the significance of the matter.

• Disclosure of the allegations and any resulting investigation, restatement, or enforcement action would likely provoke a significant market reaction, including potential decline in QIH's stock price, analyst downgrades, and heightened scrutiny from investors and regulators.

Preliminary Assessment: Based on the foregoing quantitative and qualitative analysis, the allegations, if substantiated, are likely material to QIH's consolidated financial statements and disclosure obligations. This preliminary assessment underscores the importance of conducting a prompt and thorough investigation to determine whether the allegations have a factual basis.

VII. Regulatory and Legal Exposure Considerations (Preliminary)

This section provides a high-level identification and preliminary assessment of the potential regulatory and legal exposure areas implicated by the whistleblower complaint. A more detailed legal-exposure analysis is being prepared separately and will be provided to the Audit Committee as a standalone memorandum in the coming weeks. The following is intended to flag the principal areas of concern so that the investigation can be designed to address them.

SEC / Securities Law. If the alleged misstatements are substantiated, QIH may face potential violations of the Securities Exchange Act of 1934, including Section 10(b) (and Rule 10b-5 thereunder) prohibiting fraud in connection with the purchase or sale of securities, and Section 13(a) requiring the filing of accurate periodic reports with the SEC. Rule 10b-5 liability could extend to individual officers who made or approved materially misleading statements in QIH's SEC filings. Additionally, the investigation may reveal a need for restatement of prior-period financial statements and the filing of a Form 8-K to disclose the investigation and any preliminary findings. The SOX Section 302 and Section 906 certifications signed by CEO Galvin and CFO Nakamura for FY 2023, FY 2024, and FY 2025 may be implicated, carrying potential civil and, in the case of Section 906, criminal penalties.

State Insurance Regulation. The Connecticut Insurance Department is the domestic regulator for QIH's insurance subsidiaries, and BSU's operations as a wholesale broker and MGA are subject to Connecticut insurance-regulatory oversight. The allegation that BSU placed business through unlicensed surplus-lines brokers, if confirmed, could implicate state surplus-lines licensing requirements and give rise to regulatory proceedings, including potential sanctions against BSU's own licenses. Depending on the states in which the alleged fictitious policies were purportedly placed, insurance regulators in other jurisdictions may also have an interest in the matter.

Criminal Exposure. If the allegations of intentional fraud are substantiated, there is a potential for criminal referral to the United States Department of Justice ("DOJ"). The alleged conduct, as described in the complaint, could support charges of wire fraud (18 U.S.C. § 1343), mail fraud (18 U.S.C. § 1341), and securities fraud (18 U.S.C. § 1348), among other potential charges. Individual criminal exposure would attach to the participants in the alleged scheme, and QIH itself could face corporate criminal liability depending on the scope and nature of the conduct. The investigation should be conducted with awareness of the potential for parallel criminal proceedings.

D&O Insurance. Notice may be required under QIH's directors' and officers' liability insurance policies. QIH's D&O coverage is provided by Sentinel Mutual Assurance Group under the following policies:

• Primary Tower A: $15 million limit, $1 million retention, Policy No. SMA-EL-2025-07741

• Excess Tower B: $25 million excess of $15 million, Policy No. SMA-XS-2025-07742

The terms of these policies should be reviewed to determine the applicable notice triggers and timing requirements. Given the nature of the allegations, prompt notice is advisable to preserve coverage rights.

Whistleblower Protections. SOX Section 806 and Dodd-Frank Section 922 provide robust anti-retaliation protections for individuals who report suspected violations of federal securities laws. These provisions prohibit retaliation against whistleblowers through discharge, demotion, suspension, threats, harassment, or other adverse employment actions. The investigation must be conducted in a manner that does not compromise the complainant's anonymity or subject the complainant to adverse employment actions. Additionally, the Dodd-Frank whistleblower provisions provide for potential monetary awards to individuals who report original information leading to successful SEC enforcement actions, which may be a factor in the complainant's decision to report.

External Auditor Relationship. The investigation will need to coordinate carefully with respect to Kellner & Strauss LLP, QIH's independent registered public accounting firm. Kellner & Strauss, under lead engagement partner Howard M. Bressler, issued unqualified opinions on QIH's consolidated financial statements for FY 2023, FY 2024, and FY 2025, as well as attestation reports on QIH's ICFRR. If material misstatements attributable to fraud are identified, Kellner & Strauss may be required to withdraw or reissue one or more of its audit reports. The timing and manner of communication with Kellner & Strauss regarding the investigation must be carefully managed. Under PCAOB standards, the external auditor has obligations upon learning of potential fraud that could affect its audit opinions, and premature disclosure of investigation details to the auditor could have unintended consequences. Coordination with securities-disclosure counsel at Pemberton Hale & Creighton LLP (discussed below) will be important in managing this aspect of the process.

VIII. Recommended Next Steps

Based on the foregoing analysis, the following next steps are recommended for the Audit Committee's consideration and approval. These recommendations are organized into three categories: immediate actions (Week 1), near-term actions (Weeks 2 through 4), and scoping-phase milestones.

A. Immediate Actions (Week 1)

1. Document-Preservation / Litigation-Hold Notice: Finalize and issue a comprehensive document-preservation and litigation-hold notice to all relevant custodians at QIH and BSU. The hold notice should cover all categories of documents and electronically stored information ("ESI") potentially relevant to the allegations, including but not limited to binder confirmations, broker-of-record files, commission-income records, reserve schedules, email communications, instant messages, calendar entries, and financial-reporting workpapers. The initial custodian list should include, at a minimum, Garrett T. Lomax, Neil W. Stadler, Rhonda M. Kessler, and other BSU personnel to be identified from the BSU organizational chart. The hold notice should be issued under the direction of counsel and should be drafted to withstand scrutiny in the event of subsequent litigation or regulatory proceedings.

2. Secure Original Complaint File: Obtain and secure the original whistleblower complaint file and attachments from IntegriLine Compliance Services, Inc., including the four-page narrative, the two PDF attachments, and any metadata or submission records maintained by IntegriLine in connection with intake reference number IL-QIH-2026-0214-0033.

3. Organizational Chart and Custodian Identification: Obtain BSU's current organizational chart, reflecting all approximately 120 employees, and identify the initial universe of 8 to 12 custodians for document-hold and document-collection purposes. Custodian identification should be informed by the organizational positions most likely to have had involvement in or awareness of the activities described in the complaint.

4. Surplus-Lines License Searches: Conduct surplus-lines license database searches in Connecticut, New York, and other relevant jurisdictions for Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC. Results should be documented and provided to the investigation team promptly.

5. Corporate-Registry and Commercial-Database Searches: Conduct corporate-registry searches (Secretary of State filings) and commercial-database searches (Dunmore Enterprises, Sundial Solutions, and similar providers) for the three alleged shell brokers to determine whether they are validly organized entities with legitimate business operations. These searches should be conducted in all fifty states and the District of Columbia.

B. Near-Term Actions (Weeks 2–4)

1. Forensic Advisory Engagement: Finalize the engagement of Claridge Forensic Advisory LLC for forensic accounting and e-discovery support under the direction of Calderwood & Harkness. The proposed engagement lead is Daniel J. Petrov, Managing Director, who has extensive experience in insurance-industry financial investigations. The estimated scoping-support budget for Claridge's services during the initial phase is $85,000 to $120,000, subject to refinement as the scope of work is defined.

2. Commission-Income Ledger Collection: Commence collection of BSU's commission-income ledgers, general-ledger detail, and supporting documentation for FY 2023, FY 2024, and FY 2025, with particular attention to entries associated with the three named broker counterparties.

3. IBNR Reserve Schedule Acquisition: Obtain IBNR reserve schedules, actuarial analyses, and related correspondence from Linden Actuarial Consulting Group (Margaret Y. Cho, FCAS) for the relevant periods (Q3 2023 through Q4 2025), with particular focus on the reserve actions taken in Q4 2024 and Q2 2025.

4. Sample Binder-Confirmation Analysis: Begin forensic analysis of the two sample binder-confirmation PDFs attached to the complaint, including metadata analysis (to the extent not fully redacted by the complainant), content comparison against BSU's brokerage-management and policy-administration systems, and tracing of any associated premium flows in BSU's accounting records.

5. Upjohn Warning Templates: Prepare Upjohn/corporate Miranda warning templates for use in witness interviews. All interviews of current QIH and BSU employees must be preceded by clear warnings that Calderwood & Harkness represents the Audit Committee and the Company, not the individual being interviewed; that the conversation is privileged; and that the privilege belongs to the Company and may be waived by the Company without the individual's consent. These warnings must be carefully drafted and consistently administered.

6. SEC Disclosure Coordination: Coordinate with Pemberton Hale & Creighton LLP (Elaine R. Foxworth, partner) regarding SEC disclosure timing considerations. In particular, the team should assess whether and when a Form 8-K disclosure may be required in connection with the investigation, and should develop a framework for ongoing disclosure analysis as the investigation progresses.

C. Scoping-Phase Milestones

The scoping phase of the investigation is targeted to span four to six weeks from the date of this memorandum, i.e., through approximately early to mid-April 2026. The estimated budget for the scoping phase is as follows:

The primary deliverable at the conclusion of the scoping phase will be a report to the Audit Committee containing the following:

• A recommendation on whether to proceed with a full investigation based on the results of the scoping-phase work;

• Preliminary findings on the legitimacy of the three named broker counterparties, based on licensing, corporate-registry, and commercial-database searches;

• Preliminary analysis of the sample binder confirmations and any initial results from BSU's commission-income ledgers and reserve schedules;

• A refined scope and budget estimate for the full investigation phase, if warranted — the preliminary estimated range for a full investigation is $1.2 million to $2.5 million, subject to significant refinement based on the scoping-phase findings; and

• Identification of any issues requiring immediate attention or interim remedial action.

An initial briefing of the Audit Committee should be scheduled for the week of March 9, 2026 to provide a status update on the immediate actions and to confirm the Audit Committee's authorization for the near-term workstreams.

IX. Open Questions and Items Requiring Further Analysis

The following is a compilation of the key open questions and items identified throughout this memorandum that require further analysis as the investigation proceeds. This list is not exhaustive but is intended to provide a structured framework for the scoping phase:

1. Can the three named broker counterparties — Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC — be confirmed as fictitious through licensing and corporate-registry searches, or do they have some legitimate existence as real, licensed, an

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT PREPARED AT THE DIRECTION OF COUNSEL IN ANTICIPATION OF LITIGATION
This memorandum constitutes attorney work product prepared in anticipation of litigation and is protected by the attorney-client privilege. It is intended solely for the use of the Audit Committee of the Board of Directors of Quorum Insurance Holdings Corp. and counsel. Distribution, reproduction, or disclosure to any other person or entity without the express written authorization of the Audit Committee is strictly prohibited.
MEMORANDUM
I. Purpose of This Memorandum
This memorandum has been prepared at the direction of Calderwood & Harkness LLP in connection with the firm's engagement by the Audit Committee of the Board of Directors of Quorum Insurance Holdings Corp. ("QIH" or the "Company") to conduct an independent internal investigation into the matters described herein. The Audit Committee retained Calderwood & Harkness by resolution adopted during a special telephonic meeting held on February 24, 2026, and the firm's engagement was formally opened on February 27, 2026 under matter number 1025-00010.
This memorandum summarizes and provides a preliminary analytical assessment of the anonymous whistleblower complaint received on February 14, 2026 through QIH's third-party ethics hotline, which is administered by IntegriLine Compliance Services, Inc. ("IntegriLine"). The complaint was assigned IntegriLine intake reference number IL-QIH-2026-0214-0033 and contains detailed allegations of financial fraud at Ashgrove Equity Partners Specialty Underwriting, Inc. ("BSU"), a wholly owned subsidiary of QIH. The complaint consists of a four-page typed narrative and two attached sample documents, both of which are addressed in detail below.
It should be noted at the outset that no substantive investigation has yet commenced. The analysis set forth in this memorandum is based solely on the face of the complaint narrative and the two attached sample binder-confirmation documents. No witness interviews have been conducted. No documents beyond the complaint itself have been reviewed. No forensic analysis has been performed. No searches of external databases or regulatory filings have been undertaken. The observations and assessments contained herein are therefore preliminary in nature and should be understood as a framework for guiding the initial scoping phase of the investigation rather than as findings or conclusions.
This document constitutes attorney work product prepared in anticipation of litigation and is subject to the attorney-client privilege. The privilege is controlled exclusively by the Audit Committee. This memorandum should not be shared with QIH management, BSU personnel, or any third party without the express authorization of the Audit Committee.
II. Background: Receipt and Escalation of the Complaint
A. Filing of the Complaint
On February 14, 2026, an anonymous individual submitted a complaint through the IntegriLine Compliance Services, Inc. online reporting portal. IntegriLine is the third-party ethics-hotline provider retained by QIH to administer its confidential and anonymous reporting system, pursuant to which employees, contractors, and other individuals may report concerns regarding, among other things, suspected fraud, accounting irregularities, violations of law, and breaches of the Company's Code of Business Conduct and Ethics. The IntegriLine platform is designed to permit anonymous submissions and to protect the identity of reporting individuals in compliance with the requirements of the Sarbanes-Oxley Act of 2002 ("SOX") Section 301 and related Securities and Exchange Commission ("SEC") regulations.
The complaint was assigned IntegriLine intake reference number IL-QIH-2026-0214-0033. The method of submission was exclusively through IntegriLine's online portal; no voice recording was made, and no telephonic intake interview was conducted. The submission consisted of two components: (1) a four-page typed narrative setting forth detailed allegations of financial fraud at BSU, and (2) two attached files in Portable Document Format ("PDF"), each containing a redacted sample binder confirmation for a commercial property insurance policy allegedly placed through one of the fictitious or shell retail-broker counterparties identified in the narrative. The complaint narrative is written in a structured, organized fashion with section headings and specific financial data, suggesting that the complainant prepared the submission with deliberation and care rather than on an extemporaneous basis.
B. Escalation and Referral Timeline
The complaint was escalated and referred through the following timeline:
• February 17, 2026: IntegriLine escalated the complaint to QIH General Counsel Owen R. Hargrove pursuant to the Company's standing escalation protocol. Under QIH's Whistleblower and Ethics Reporting Policy (last revised October 2024), complaints received through IntegriLine that involve allegations of financial fraud, accounting irregularities, or potential securities-law violations are escalated directly to the General Counsel within three business days of receipt. The February 14 submission date was a Friday, and the escalation on the following Monday, February 17, was therefore within the prescribed timeframe.
• February 19, 2026: General Counsel Hargrove briefed Audit Committee Chair Priya Subramaniam on the substance of the complaint in a private telephonic communication. The Audit Committee Chair's involvement at this stage was consistent with QIH's internal procedures, which provide that complaints alleging potential fraud by subsidiary-level senior management are to be brought to the attention of the Audit Committee Chair promptly.
• February 24, 2026: A special telephonic meeting of the Audit Committee was convened. All three independent members of the Audit Committee were present: Priya Subramaniam (Chair), Thomas K. Driscoll, and Angela F. Delvecchio. General Counsel Hargrove participated in the meeting to present the substance of the complaint. Following deliberation in executive session (without management present), the Audit Committee resolved to engage independent outside counsel to scope and, if warranted, conduct an internal investigation into the allegations. The Committee authorized the Chair to oversee the engagement of counsel.
• February 25, 2026: Calderwood & Harkness LLP initiated its conflicts-of-interest check, screening the firm's current and recent representations against the subject individuals, entities, and other relevant parties identified in the complaint.
• February 26, 2026: The conflicts check was cleared. No disqualifying conflicts were identified with respect to any current or former client of the firm. A summary of the conflicts-check results was communicated to Audit Committee Chair Subramaniam.
• February 27, 2026: The engagement was formally opened under Calderwood & Harkness matter number 1025-00010. This memorandum is the first work product prepared in connection with the engagement.
C. Relevant Company Context
An understanding of the corporate structure and financial profile of the relevant entities is necessary to evaluate the allegations and assess potential materiality.
Quorum Insurance Holdings Corp. ("QIH") is a corporation organized 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 common stock is publicly traded on the Nasdaq Stock Market under the ticker symbol "QIHC." As of February 2026, QIH's approximate market capitalization was $4.8 billion. QIH operates as an insurance holding company with subsidiaries engaged in property and casualty insurance underwriting, wholesale brokerage, and related financial services.
For the 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's Annual Report on Form 10-K for FY 2025 was filed with the SEC on February 21, 2026. Notably, the Form 10-K did not include any disclosure of the whistleblower complaint. This omission is not, at this stage, problematic: the complaint was still under initial review at the time of filing, and no materiality determination had yet been made. However, the disclosure question will require ongoing assessment as the investigation progresses, as discussed further in Section VII below.
Ashgrove Equity Partners Specialty Underwriting, Inc. ("BSU") is a corporation organized under the laws of the State of Connecticut, located at 55 Elm Street, 8th Floor, Hartford, Connecticut 06103. BSU is a wholly owned subsidiary of QIH. BSU operates as a wholesale insurance brokerage and managing general agent ("MGA") with a business focus on commercial property, excess casualty, and professional liability lines. In its capacity as an MGA, BSU places insurance business on behalf of retail brokers and agents with carriers, earning commission and fee income on placed premium.
For FY 2025, BSU reported placed premium of approximately $487 million and commission and fee income of approximately $63.2 million. BSU's commission and fee income constitutes a meaningful component of QIH's consolidated revenue and a significant contributor to QIH's overall operating performance. BSU has approximately 120 employees based in its Hartford office. The subsidiary is led by its President, Garrett T. Lomax, who reports directly to QIH's Chief Executive Officer, Marcus P. Galvin.
III. Summary of the Whistleblower Allegations
A. Overview
The complainant alleges a multi-year scheme orchestrated and executed by senior personnel at BSU to inflate premium revenue and underwriting income through two interrelated mechanisms:
(1) Fabrication or material inflation of binder confirmations for commercial property policies, which were purportedly placed through fictitious or shell retail-broker counterparties, resulting in the recognition of phantom commission income on BSU's books; and
(2) Manipulation of incurred-but-not-reported ("IBNR") loss-reserve releases to inflate quarterly underwriting income at the QIH consolidated level.
According to the complaint narrative, the alleged scheme spans approximately ten quarters, from approximately the third quarter of 2023 ("Q3 2023") through the fourth quarter of 2025 ("Q4 2025"). The two mechanisms described by the complainant are characterized as interrelated in the sense that the fictitious premium placements generated artificial revenue on BSU's books, while the manipulated reserve releases separately enhanced QIH's reported underwriting profitability — together creating a compounding distortion of the Company's financial results.
Each of the two core allegations is summarized in detail below, followed by a discussion of the aggregate alleged financial impact, the named subject individuals, and the documentary attachments.
B. Allegation 1: Fictitious Policy Placements
The first and primary allegation in the complaint concerns the fabrication or material inflation of binder confirmations for commercial property insurance policies. The complainant asserts that senior BSU personnel created or directed the creation of binder confirmations that purported to document the placement of commercial property coverage with carriers on behalf of retail-broker counterparties, but that these placements were either entirely fictitious (i.e., no genuine insurance transaction occurred) or were materially inflated (i.e., a genuine transaction existed but the premium amount recorded on the binder confirmation significantly exceeded the actual premium placed).
According to the complaint, these fictitious or inflated placements were made through at least three retail-broker counterparties that the complainant characterizes as fictitious or shell entities:
1. Veltrano Risk Advisors — The complainant asserts that this entity lacks valid surplus-lines licenses in any jurisdiction and that its listed business address is a virtual office with no genuine physical operations. The complainant does not provide the specific address but implies that it is readily verifiable as a virtual-office or mail-drop location.
2. Halloran & Pratt Insurance Associates — The complainant makes the same assertions with respect to this entity: absence of valid surplus-lines licenses and use of a virtual-office address rather than a genuine place of business. The complainant treats this entity as functionally identical in nature to Veltrano Risk Advisors.
3. CrestPoint Brokerage LLC — The complainant makes identical assertions regarding this third entity — no valid surplus-lines licenses and a virtual-office address. The use of an LLC structure for this entity is noted, though the complainant does not elaborate on its corporate form or the identity of its members.
The complainant estimates that approximately 147 binder confirmations were fabricated or inflated through these three entities over the course of the alleged scheme. The total estimated fictitious placed premium across these 147 binders is approximately $74 million. The complainant further estimates that BSU recognized phantom commission income of approximately $9.6 million as a result of these fictitious placements, calculated by applying an approximate average commission rate of 13% to the $74 million in fictitious placed premium (i.e., $74,000,000 × 0.13 = $9,620,000, rounded to approximately $9.6 million).
For context, the $9.6 million in alleged phantom commission income represents approximately 15.2% of BSU's total FY 2025 commission and fee income of $63.2 million. It is important to note, however, that the alleged scheme spans multiple fiscal years (FY 2023, FY 2024, and FY 2025), and the complaint does not provide a year-by-year breakdown of the phantom income. The per-year impact may therefore be somewhat lower than 15.2%, but the cumulative effect across reporting periods is nonetheless significant.
C. Allegation 2: Manipulated IBNR Reserve Releases
The second core allegation concerns the improper release of incurred-but-not-reported loss reserves. The complainant alleges that BSU personnel directed the premature release of approximately $38.5 million in IBNR loss reserves to inflate quarterly underwriting income at the QIH consolidated level. IBNR reserves represent management's estimate of claims that have been incurred but not yet reported to the insurer or reinsurer, and the release of such reserves — when supported by favorable development in actual claim experience — is a normal component of insurance-company financial reporting. The complaint alleges, however, that the reserve releases at issue were not supported by legitimate actuarial analysis or by changes in underlying claim development, and were instead directed by BSU management for the purpose of meeting earnings targets.
The complainant alleges that the improper releases were concentrated in two specific quarters: Q4 2024 and Q2 2025. The complaint implies, but does not explicitly state, that BSU management selected these quarters for the releases because they coincided with periods in which QIH's consolidated underwriting results would otherwise have fallen short of analysts' consensus estimates or internal performance targets.
QIH's appointed actuary for purposes of loss-reserve estimation is Linden Actuarial Consulting Group, a Hartford-based firm led by principal Margaret Y. Cho, FCAS. The relationship between Linden's actuarial opinions and the alleged reserve manipulation is not addressed in the complaint. It is not clear from the face of the complaint whether the complainant is alleging that (a) Linden supported the reserve releases in its actuarial analysis (raising questions about the quality of Linden's work), (b) BSU management directed releases over Linden's objection or without Linden's involvement, or (c) Linden was not consulted regarding the specific releases at issue. This is a critical factual question that the investigation will need to resolve.
D. Aggregate Alleged Financial Misstatement
The two allegations, taken together, yield the following aggregate financial impact as alleged by the complainant:
This figure of approximately $48.1 million, if substantiated in whole or in significant part, could be material to QIH's consolidated financial statements. Because the alleged scheme spans approximately ten quarters across three fiscal years (FY 2023, FY 2024, and FY 2025), the misstatement would implicate multiple reporting periods, including annual and quarterly filings with the SEC, and could necessitate the restatement of prior-period financial statements. The materiality implications are discussed further in Section VI below.
E. Named Subject Individuals
The complaint specifically names three BSU employees as participants in the alleged scheme. The following table summarizes their positions, reporting lines, tenure, and estimated FY 2025 compensation as stated or implied in the complaint:
The complainant characterizes Garrett T. Lomax as the architect and primary beneficiary of the alleged scheme. According to the complaint narrative, Lomax conceived and directed both components of the fraud — the fictitious placements and the reserve manipulation — and was the senior-most individual at BSU responsible for the subsidiary's financial performance. The complainant asserts that Neil W. Stadler, as SVP of the Commercial Property Division, was responsible for executing the fictitious placements within his division, including the creation of fabricated binder confirmations and the coordination with the alleged shell broker counterparties. Rhonda M. Kessler, as VP of Finance & Operations, is alleged to have facilitated the financial-reporting component of the scheme, including the booking of phantom commission income and the initiation of the IBNR reserve-release entries.
It is worth noting that all three individuals' compensation structures include significant bonus components. Lomax's estimated FY 2025 bonus of $410,000 represents approximately 37.4% of his total estimated compensation; Stadler's bonus of $230,000 represents approximately 37.4%; and Kessler's bonus of $145,000 represents approximately 33.3%. While the complaint does not provide specific details regarding the metrics or formulas used to calculate these bonuses, the magnitude of the bonus component suggests that the individuals' incentive compensation may have been tied, at least in part, to BSU's revenue, placed-premium volume, or profitability metrics — all of which would have been enhanced by the alleged scheme. The specific bonus and incentive-compensation structures applicable to these individuals must be examined during the investigation.
F. Attachments to the Complaint
The complaint was accompanied by two sample binder-confirmation documents in PDF format. These two PDFs are referenced by the complainant as illustrative examples drawn from the broader population of approximately 147 allegedly fabricated or inflated binder confirmations.
The two sample binder confirmations reflect policies with an aggregate placed-premium face value of approximately $12.4 million. The specific details of the named insureds, carriers, effective dates, and other terms appearing on the face of the binder confirmations are not reproduced in this memorandum pending further authentication analysis, but are available in the original complaint file maintained by IntegriLine.
Notably, the complainant redacted the PDFs of personal metadata prior to submission. This redaction is consistent with the complainant's stated desire to remain anonymous and suggests a degree of sophistication regarding document properties and the risk of identification through metadata analysis. However, the redaction of metadata also limits the ability to immediately authenticate the documents or to identify the software, device, or user account from which they were generated or last modified.
Preliminary observations regarding the sample binder confirmations, which will require further investigation, include the following:
• The named insureds on the sample binders must be verified to determine whether they are real entities with genuine insurable interests. If the named insureds are fictitious or do not correspond to real commercial enterprises, this would corroborate the allegation that the binders themselves are fabricated.
• Corresponding policy issuances must be confirmed with the named carrier(s) appearing on the binder confirmations. If the carriers have no record of the policies purportedly bound, this would similarly corroborate fabrication.
• The premium flows associated with these binders must be traced in BSU's accounting records to determine whether premium was actually collected from a retail broker, remitted to a carrier, and recorded in a manner consistent with a genuine insurance transaction.
IV. Assessment of the Complainant's Specificity and Credibility Indicators
A. Indicia of Credibility
The complaint demonstrates a notably high degree of specificity across multiple dimensions, which enhances its credibility on its face and distinguishes it from generalized or vague complaints that lack actionable detail. The specific indicia of credibility include the following:
• Named individuals: The complaint identifies three specific BSU executives by full name and title — Garrett T. Lomax, Neil W. Stadler, and Rhonda M. Kessler — and describes each individual's alleged role in the scheme with precision.
• Named counterparties: The complaint identifies three specific alleged fictitious or shell retail-broker counterparties — Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC — and provides sufficient identifying information (virtual-office assertions, licensing assertions) to permit independent verification.
• Specific financial figures: The complaint cites specific dollar amounts throughout, including approximately $74 million in fictitious placed premium, approximately $9.6 million in phantom commission income, approximately $38.5 million in improper reserve releases, and an aggregate misstatement of approximately $48.1 million. These figures are internally consistent and are supported by arithmetic calculations (e.g., $74M × ~13% = ~$9.6M).
• Specific time period: The complaint identifies the alleged scheme period as spanning approximately ten quarters, from Q3 2023 through Q4 2025, providing temporal boundaries that can be tested against BSU's financial records.
• Specific quarters for reserve-release concentration: Within the broader time period, the complaint identifies Q4 2024 and Q2 2025 as the quarters in which the alleged improper reserve releases were concentrated, further narrowing the investigative focus.
• Specific binder count: The complaint estimates that approximately 147 binder confirmations were fabricated or inflated, providing a quantitative benchmark that can be compared against BSU's actual binder records.
• Documentary support: The complaint is accompanied by two sample binder-confirmation PDFs, which represent tangible documentary evidence that can be subjected to forensic analysis and compared against BSU's records.
The level of detail regarding BSU's internal operations, financial structure, and personnel strongly suggests that the complainant has insider access to BSU's business records and/or financial reporting systems. The specificity of the financial data — including the aggregate placed-premium figure, the commission-income calculation, the reserve-release amounts, and the identification of particular quarters — is not the type of information that would ordinarily be available to an outsider or to a casual observer of BSU's operations.
In particular, the complainant's understanding of the commission-income calculation methodology — specifically, the application of an approximate 13% average commission rate to placed premium to derive commission income — is consistent with knowledge held by someone in a finance, accounting, or brokerage-operations role at BSU or at the QIH corporate level. This specialized knowledge further supports the inference that the complainant is a current or former BSU employee with access to relevant financial data.
B. Potential Limitations and Open Questions
Notwithstanding the foregoing indicia of credibility, several limitations and open questions must be acknowledged:
The complaint is anonymous. The identity of the complainant is unknown, and the complainant's motivations cannot be assessed on the face of the submission. While the IntegriLine platform is designed to protect anonymity, the absence of an identified complainant means that it is not possible, at this stage, to evaluate the complainant's reliability, bias, or potential ulterior motives. It cannot be determined from the face of the complaint whether the complainant has a personal grievance against one or more of the named individuals, an employment dispute with BSU, a pending or anticipated termination, or any other circumstance that could color the allegations or provide a motive for fabrication or exaggeration.
The complaint does not explain how the complainant obtained or calculated the specific financial figures cited. It is unclear whether the figures are derived from direct access to BSU's books and records (e.g., general ledger entries, commission-income reports, reserve schedules), from internal reports or memoranda that the complainant reviewed, or from estimations or extrapolations based on partial information. The precision of the figures suggests direct data access, but this cannot be confirmed without further inquiry.
The complaint does not identify any corroborating witnesses. While the complaint names three subject individuals, it does not reference any other BSU or QIH employees who may have observed or been aware of the alleged conduct. The investigation will need to determine independently whether corroborating witnesses exist.
The complaint does not address whether any QIH corporate-level personnel — beyond the three named BSU individuals — had knowledge of or involvement in the alleged scheme. This is a significant gap because, if the allegations are substantiated, the question of whether the fraud was confined to the subsidiary level or extended to the corporate parent will have important implications for the scope of potential liability and remediation.
The complaint does not reference communications between the subject individuals, such as emails, text messages, instant messages, or memoranda. While the absence of such references does not undermine the complaint, the investigation should prioritize the collection and review of electronic communications among Lomax, Stadler, and Kessler to determine whether there is a documented evidentiary trail of the alleged coordination.
Finally, the redaction of metadata from the sample binder-confirmation PDFs, while consistent with the complainant's anonymity-protection measures, limits the ability to immediately authenticate the documents or to trace their provenance. Forensic analysis may be able to extract additional information from the files, but the extent of the redaction is not yet known.
C. Preliminary Assessment of Complainant's Possible Identity and Role
While the investigation must take care not to attempt to identify the complainant — consistent with SOX Section 806 and Dodd-Frank Section 922 anti-retaliation protections — a preliminary assessment of the complainant's likely role within BSU is relevant to evaluating the reliability of the information provided.
The specificity of the financial data, including aggregate placed-premium figures, commission-income amounts, IBNR reserve-release figures, and the calculation methodology, strongly suggests that the complainant has access to BSU's internal financial records. This access is most consistent with an individual in a finance, accounting, actuarial, or senior operations role at BSU. The complainant's knowledge of binder-confirmation details and the names of specific broker counterparties further suggests familiarity with BSU's brokerage operations, which could indicate a role in BSU's Commercial Property Division or in a cross-functional capacity that spans both operations and finance. The complainant's understanding of IBNR reserve mechanics — including the concept of reserve releases and their impact on underwriting income — suggests actuarial or financial-reporting knowledge that is not universally held among insurance-industry employees.
Given that BSU has approximately 120 employees, the universe of individuals with access to the full range of information reflected in the complaint is relatively narrow. The intersection of (a) finance or accounting access, (b) brokerage-operations familiarity, and (c) actuarial or reserve-related knowledge narrows the pool of potential complainants to what is likely a small number of individuals within BSU's organization.
It bears emphasis that the purpose of this assessment is solely to evaluate the reliability of the information presented and to inform the investigation's approach to witness identification. The investigation team must exercise care throughout the investigation to protect the complainant's anonymity and to ensure full compliance with the anti-retaliation protections afforded by SOX Section 806 and Dodd-Frank Section 922. Any investigative step that could tend to reveal the complainant's identity should be reviewed in advance by this team, and all interviews should be conducted in a manner that does not suggest to interviewees that the investigation was initiated by a whistleblower complaint, to the extent practicable.
V. Analysis of Key Factual Questions for Investigation
The following discussion identifies the principal factual questions that the investigation will need to address during the scoping phase and, if warranted, during a full investigation. These questions are organized by subject-matter area.
A. Existence and Legitimacy of the Three Named Retail Brokers
The threshold factual question in the investigation is whether the three named retail-broker counterparties — Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC — are legitimate business entities with valid licenses and genuine operations, or whether they are fictitious or shell entities as the complainant alleges.
Veltrano Risk Advisors: The investigation should search state surplus-lines license databases in Connecticut, New York, and all other states in which BSU places business, as well as the databases maintained by the Surplus Lines Stamping Office of the National Association of Insurance Commissioners ("NAIC"), to determine whether Veltrano Risk Advisors holds any valid surplus-lines or other insurance licenses. Additionally, Secretary of State corporate registries should be searched in all fifty states and the District of Columbia to determine whether the entity is validly organized and in good standing. Commercial databases, including but not limited to Dunmore Enterprises, Sundial Solutions, and state-level assumed-name filings, should be consulted to assess whether Veltrano Risk Advisors has genuine business operations, employees, and a physical office presence.
Halloran & Pratt Insurance Associates: The same inquiries should be conducted with respect to this entity.
CrestPoint Brokerage LLC: The same inquiries should be conducted with respect to this entity. Given the LLC structure, the investigation should also attempt to identify the member(s) or manager(s) of the LLC through state-filing records, to the extent such information is publicly available.
The complainant alleges that all three entities use virtual-office addresses. Physical-address verification should be conducted, which may include property-records searches, site visits, and inquiries with the operators of any virtual-office or co-working facilities identified at the listed addresses.
If any of the three entities is confirmed as fictitious, nonexistent, or lacking required surplus-lines licenses, this would strongly corroborate the core allegation of fabricated placements. Conversely, if the entities are determined to be real, licensed, and operational, this would significantly weaken the complaint's foundational premise, although it would not preclude the possibility of inflated (as opposed to entirely fabricated) binder confirmations.
Additionally, the investigation should obtain and review BSU's broker-of-record files and due-diligence records for the onboarding of these three counterparties. BSU's internal policies and procedures presumably require some level of due diligence before establishing a new broker relationship, including verification of licenses, financial condition, and reputation. The presence or absence of due-diligence documentation will be relevant to assessing both the legitimacy of the counterparties and the adequacy of BSU's internal controls.
B. Binder Confirmation Authenticity
The approximately 147 binder confirmations referenced in the complaint must be identified within BSU's policy-administration and brokerage-management systems. This will require obtaining a complete list of all binder confirmations generated by BSU during the Q3 2023 through Q4 2025 period, filtered by the three broker counterparties of interest.
For each binder confirmation identified, the investigation should trace the following elements:
(i) The named insured — to determine whether it is a real entity with a genuine insurable interest, physical operations, and assets that would support the coverage described in the binder;
(ii) The placing carrier — to confirm with the carrier directly whether a policy was actually bound and issued, and whether the carrier received and processed the premium associated with the binder;
(iii) Whether a corresponding policy was issued by the carrier — a binder without a corresponding issued policy may indicate that the binder was fabricated or that the placement was never completed;
(iv) Whether premium was actually remitted — including tracing the flow of funds from the retail broker (if any) through BSU to the carrier, with verification against bank records and accounting entries; and
(v) Whether claims were filed or reserves established against the policies purportedly bound — the absence of any claims activity or reserve activity over a multi-year period for a significant book of commercial property business could be an anomaly warranting further inquiry, although it is not conclusive standing alone.
The two sample binder-confirmation PDFs attached to the complaint should be prioritized for analysis and compared against BSU's records to determine whether they match genuine transactions recorded in BSU's systems. If the PDFs correspond to entries in BSU's brokerage-management system, the investigation should trace the full lifecycle of those particular transactions. If the PDFs do not correspond to any recorded transaction, this would suggest either that they were fabricated by the complainant (undermining credibility) or that they represent off-system transactions that were not captured in BSU's normal workflow (which could corroborate the allegation of a parallel fraudulent scheme).
Forensic analysis by Claridge Forensic Advisory LLC, which has been proposed for engagement as discussed in Section VIII below, will be critical to this workstream. Daniel J. Petrov, Managing Director at Claridge, has extensive experience in insurance-industry forensic investigations and is well-suited to lead the document-tracing and financial-flow analysis.
C. Commission Income Recognition
BSU's commission-income ledger for FY 2023 through FY 2025 must be obtained and analyzed in detail. The primary focus should be on commissions attributed to placements through Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC. This analysis will involve:
• Identifying all commission-income entries in BSU's general ledger associated with the three broker counterparties during the relevant period;
• Determining the actual commission rates applied to each transaction and comparing those rates against BSU's standard commission schedules and against rates applicable to comparable transactions with other, established broker counterparties;
• Assessing whether the commission income was recognized on a cash basis (i.e., upon receipt of actual commission payments) or on an accrual basis (i.e., upon the recording of the binder confirmation, without regard to whether cash was actually received) — a pattern of accrual-basis recognition without corresponding cash receipts would be a significant red flag;
• Tracing actual cash flows to determine whether commission payments were received from any party in connection with the allegedly fictitious placements; and
• Testing the alleged $9.6 million in phantom commissions ($74 million × approximately 13%) against actual ledger entries to determine whether the complainant's aggregate estimate is consistent with BSU's records.
D. IBNR Reserve Releases
The IBNR reserve-release allegation presents a distinct but related line of inquiry that will require coordination with actuarial expertise. The investigation should:
• Obtain and review IBNR reserve schedules maintained by QIH's appointed actuary, Linden Actuarial Consulting Group, under the direction of principal Margaret Y. Cho, FCAS, for all relevant periods from Q3 2023 through Q4 2025;
• Focus in particular on Q4 2024 and Q2 2025, the two quarters in which the complainant alleges improper reserve releases were concentrated;
• Determine whether Linden recommended the reserve releases in question as part of its regular actuarial analysis, or whether BSU or QIH management directed the releases contrary to or without actuarial support — this distinction is critical, because management-directed reserve releases that contradict actuarial recommendations would strongly suggest intentional manipulation;
• Compare the magnitude of reserve releases in the cited quarters to historical patterns over the preceding several years to assess whether $38.5 million in aggregate releases is anomalous relative to QIH's and BSU's historical reserve-development patterns;
• Assess whether the external auditor, Kellner & Strauss LLP (lead engagement partner: Howard M. Bressler), independently evaluated reserve adequacy as part of its audit procedures for FY 2023, FY 2024, and FY 2025, and if so, what conclusions it reached;
• Determine whether any correspondence, memoranda, or communications exist between BSU management and Linden regarding the specific reserve actions at issue; and
• Retain, if necessary, an independent actuarial consultant to review Linden's reserve analyses and opine on the reasonableness of the releases.
E. Internal Controls Over Financial Reporting
The investigation must assess the design and operating effectiveness of QIH's and BSU's internal controls over financial reporting ("ICFRR") as they relate to the processes implicated by the complaint. The relevant control areas include:
• Broker-counterparty onboarding and due diligence: What procedures, if any, does BSU maintain for vetting new retail-broker counterparties prior to accepting business from them? Were these procedures applied to Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC? If so, were the results documented, and were any deficiencies identified?
• Binder-confirmation generation and approval: What controls govern the creation, review, and approval of binder confirmations within BSU? Are binder confirmations subject to independent review or supervisory approval before they are entered into BSU's systems? Could 147 binder confirmations have been fabricated or inflated without triggering any control exception?
• Commission-income recognition: What controls govern the recognition of commission income on BSU's books? Is commission income recognized automatically upon binder entry, or is it subject to independent verification against cash receipts, carrier confirmations, or other corroborating evidence?
• IBNR reserve-setting and release approval processes: What controls govern the process by which IBNR reserves are established, reviewed, and released at QIH and BSU? Are reserve actions subject to actuarial sign-off? Is there a governance process requiring Audit Committee or Board approval for reserve releases above a specified threshold?
QIH's CEO Marcus P. Galvin and CFO Denise R. Nakamura certified QIH's internal controls over financial reporting for FY 2025 pursuant to SOX Sections 302 and 906 in connection with the February 21, 2026 Form 10-K filing. If the allegations are substantiated and material misstatements are confirmed, the adequacy of those certifications — and the certifications for prior fiscal years — will be called into serious question. The personal liability exposure of Galvin and Nakamura under SOX Sections 302 and 906 is discussed further in Section VII below.
Additionally, Kellner & Strauss LLP issued an unqualified audit opinion on QIH's FY 2025 consolidated financial statements, including an attestation on the effectiveness of QIH's ICFRR pursuant to PCAOB Auditing Standard No. 2201. The investigation should assess whether there were audit failures — i.e., whether Kellner & Strauss's audit procedures should have detected the alleged fraud — or whether the alleged scheme was specifically designed to evade the external audit process. This assessment has implications both for QIH's relationship with Kellner & Strauss and for potential third-party claims.
F. Knowledge and Involvement Beyond the Named Individuals
The complaint names three BSU employees but does not allege that any QIH corporate-level officer was involved in or had knowledge of the alleged scheme. The absence of such allegations does not, however, foreclose the possibility of broader involvement or awareness. The investigation should assess the following:
• CEO Marcus P. Galvin: As the direct supervisor of Garrett T. Lomax and the senior-most executive at QIH, Galvin had regular interaction with BSU's leadership. The investigation should determine whether Galvin had knowledge of the alleged activities, whether Lomax communicated information to Galvin that should have raised concerns, and whether Galvin exercised appropriate oversight of BSU's operations and financial performance.
• CFO Denise R. Nakamura: As the Company's principal financial officer, Nakamura had responsibility for consolidated financial reporting, including the reserve balances and income figures affected by the alleged scheme. The investigation should determine whether Nakamura had visibility into the reserve releases at the consolidated level, whether she received information that should have prompted further inquiry, and whether she independently analyzed or questioned BSU's financial results.
• General Counsel Owen R. Hargrove: The investigation should determine whether Hargrove received any prior complaints, concerns, or inquiries related to BSU's brokerage operations, financial reporting, or any of the named individuals, whether through IntegriLine or through other channels.
• Other BSU personnel: Given that BSU has approximately 120 employees and the alleged scheme involved the creation and processing of approximately 147 binder confirmations over ten quarters, it is likely that other BSU personnel beyond the three named individuals processed, reviewed, or had access to the allegedly fabricated binders, associated premium records, or reserve entries. The investigation should identify and interview such individuals.
VI. Preliminary Assessment of Potential Financial Materiality
The alleged aggregate misstatement of approximately $48.1 million must be evaluated against both quantitative and qualitative materiality thresholds to assess whether, if substantiated, the misstatement would be material to QIH's consolidated financial statements and trigger disclosure, restatement, and other obligations.
Quantitative Analysis:
• As a percentage of QIH's FY 2025 net earned premium ($2.41 billion): The aggregate alleged misstatement of $48.1 million represents approximately 2.0% of net earned premium. While this percentage is modest in relation to QIH's total revenue base, common quantitative materiality benchmarks for insurance companies — often in the range of 1% to 5% of revenue or net income — suggest that 2.0% of net earned premium is within the range that warrants materiality consideration, particularly in light of the qualitative factors discussed below.
• As a percentage of BSU's FY 2025 commission and fee income ($63.2 million): The phantom commission income component alone ($9.6 million) represents approximately 15.2% of BSU's total FY 2025 commission and fee income. Although BSU is a subsidiary and its financial results are consolidated into QIH's financial statements, this percentage is substantial and suggests that the commission-income fraud, if confirmed, has materially distorted BSU's reported financial performance.
• Impact of improper reserve releases: The alleged improper IBNR reserve releases of approximately $38.5 million would directly affect QIH's reported underwriting income and, depending on QIH's total underwriting income for the relevant periods, could represent a material component of the Company's profitability. The precise impact as a percentage of underwriting income or net income will need to be calculated once QIH's detailed financial data for the relevant quarters is obtained.
Qualitative Analysis:
Qualitative materiality factors weigh heavily in favor of a materiality finding:
• The allegations describe intentional fraud by senior subsidiary management, as distinguished from unintentional accounting errors or reasonable differences of judgment. The intentional nature of the alleged misconduct heightens materiality under applicable SEC and PCAOB guidance.
• If substantiated, the allegations implicate the adequacy of the SOX Section 302 and Section 906 certifications made by CEO Galvin and CFO Nakamura. Material misstatements in certified financial statements raise significant legal and regulatory concerns.
• The allegations, if confirmed, would likely necessitate the restatement of prior-period financial statements for one or more fiscal years (FY 2023, FY 2024, and potentially FY 2025), with cascading effects on investor confidence, stock price, and regulatory standing.
• The nature of the alleged conduct — fabrication of fictitious insurance placements and manipulation of loss reserves — would, if substantiated, carry potential criminal exposure for the individuals involved and potentially for QIH itself, further heightening the significance of the matter.
• Disclosure of the allegations and any resulting investigation, restatement, or enforcement action would likely provoke a significant market reaction, including potential decline in QIH's stock price, analyst downgrades, and heightened scrutiny from investors and regulators.
Preliminary Assessment: Based on the foregoing quantitative and qualitative analysis, the allegations, if substantiated, are likely material to QIH's consolidated financial statements and disclosure obligations. This preliminary assessment underscores the importance of conducting a prompt and thorough investigation to determine whether the allegations have a factual basis.
VII. Regulatory and Legal Exposure Considerations (Preliminary)
This section provides a high-level identification and preliminary assessment of the potential regulatory and legal exposure areas implicated by the whistleblower complaint. A more detailed legal-exposure analysis is being prepared separately and will be provided to the Audit Committee as a standalone memorandum in the coming weeks. The following is intended to flag the principal areas of concern so that the investigation can be designed to address them.
SEC / Securities Law. If the alleged misstatements are substantiated, QIH may face potential violations of the Securities Exchange Act of 1934, including Section 10(b) (and Rule 10b-5 thereunder) prohibiting fraud in connection with the purchase or sale of securities, and Section 13(a) requiring the filing of accurate periodic reports with the SEC. Rule 10b-5 liability could extend to individual officers who made or approved materially misleading statements in QIH's SEC filings. Additionally, the investigation may reveal a need for restatement of prior-period financial statements and the filing of a Form 8-K to disclose the investigation and any preliminary findings. The SOX Section 302 and Section 906 certifications signed by CEO Galvin and CFO Nakamura for FY 2023, FY 2024, and FY 2025 may be implicated, carrying potential civil and, in the case of Section 906, criminal penalties.
State Insurance Regulation. The Connecticut Insurance Department is the domestic regulator for QIH's insurance subsidiaries, and BSU's operations as a wholesale broker and MGA are subject to Connecticut insurance-regulatory oversight. The allegation that BSU placed business through unlicensed surplus-lines brokers, if confirmed, could implicate state surplus-lines licensing requirements and give rise to regulatory proceedings, including potential sanctions against BSU's own licenses. Depending on the states in which the alleged fictitious policies were purportedly placed, insurance regulators in other jurisdictions may also have an interest in the matter.
Criminal Exposure. If the allegations of intentional fraud are substantiated, there is a potential for criminal referral to the United States Department of Justice ("DOJ"). The alleged conduct, as described in the complaint, could support charges of wire fraud (18 U.S.C. § 1343), mail fraud (18 U.S.C. § 1341), and securities fraud (18 U.S.C. § 1348), among other potential charges. Individual criminal exposure would attach to the participants in the alleged scheme, and QIH itself could face corporate criminal liability depending on the scope and nature of the conduct. The investigation should be conducted with awareness of the potential for parallel criminal proceedings.
D&O Insurance. Notice may be required under QIH's directors' and officers' liability insurance policies. QIH's D&O coverage is provided by Sentinel Mutual Assurance Group under the following policies:
• Primary Tower A: $15 million limit, $1 million retention, Policy No. SMA-EL-2025-07741
• Excess Tower B: $25 million excess of $15 million, Policy No. SMA-XS-2025-07742
The terms of these policies should be reviewed to determine the applicable notice triggers and timing requirements. Given the nature of the allegations, prompt notice is advisable to preserve coverage rights.
Whistleblower Protections. SOX Section 806 and Dodd-Frank Section 922 provide robust anti-retaliation protections for individuals who report suspected violations of federal securities laws. These provisions prohibit retaliation against whistleblowers through discharge, demotion, suspension, threats, harassment, or other adverse employment actions. The investigation must be conducted in a manner that does not compromise the complainant's anonymity or subject the complainant to adverse employment actions. Additionally, the Dodd-Frank whistleblower provisions provide for potential monetary awards to individuals who report original information leading to successful SEC enforcement actions, which may be a factor in the complainant's decision to report.
External Auditor Relationship. The investigation will need to coordinate carefully with respect to Kellner & Strauss LLP, QIH's independent registered public accounting firm. Kellner & Strauss, under lead engagement partner Howard M. Bressler, issued unqualified opinions on QIH's consolidated financial statements for FY 2023, FY 2024, and FY 2025, as well as attestation reports on QIH's ICFRR. If material misstatements attributable to fraud are identified, Kellner & Strauss may be required to withdraw or reissue one or more of its audit reports. The timing and manner of communication with Kellner & Strauss regarding the investigation must be carefully managed. Under PCAOB standards, the external auditor has obligations upon learning of potential fraud that could affect its audit opinions, and premature disclosure of investigation details to the auditor could have unintended consequences. Coordination with securities-disclosure counsel at Pemberton Hale & Creighton LLP (discussed below) will be important in managing this aspect of the process.
VIII. Recommended Next Steps
Based on the foregoing analysis, the following next steps are recommended for the Audit Committee's consideration and approval. These recommendations are organized into three categories: immediate actions (Week 1), near-term actions (Weeks 2 through 4), and scoping-phase milestones.
A. Immediate Actions (Week 1)
1. Document-Preservation / Litigation-Hold Notice: Finalize and issue a comprehensive document-preservation and litigation-hold notice to all relevant custodians at QIH and BSU. The hold notice should cover all categories of documents and electronically stored information ("ESI") potentially relevant to the allegations, including but not limited to binder confirmations, broker-of-record files, commission-income records, reserve schedules, email communications, instant messages, calendar entries, and financial-reporting workpapers. The initial custodian list should include, at a minimum, Garrett T. Lomax, Neil W. Stadler, Rhonda M. Kessler, and other BSU personnel to be identified from the BSU organizational chart. The hold notice should be issued under the direction of counsel and should be drafted to withstand scrutiny in the event of subsequent litigation or regulatory proceedings.
2. Secure Original Complaint File: Obtain and secure the original whistleblower complaint file and attachments from IntegriLine Compliance Services, Inc., including the four-page narrative, the two PDF attachments, and any metadata or submission records maintained by IntegriLine in connection with intake reference number IL-QIH-2026-0214-0033.
3. Organizational Chart and Custodian Identification: Obtain BSU's current organizational chart, reflecting all approximately 120 employees, and identify the initial universe of 8 to 12 custodians for document-hold and document-collection purposes. Custodian identification should be informed by the organizational positions most likely to have had involvement in or awareness of the activities described in the complaint.
4. Surplus-Lines License Searches: Conduct surplus-lines license database searches in Connecticut, New York, and other relevant jurisdictions for Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC. Results should be documented and provided to the investigation team promptly.
5. Corporate-Registry and Commercial-Database Searches: Conduct corporate-registry searches (Secretary of State filings) and commercial-database searches (Dunmore Enterprises, Sundial Solutions, and similar providers) for the three alleged shell brokers to determine whether they are validly organized entities with legitimate business operations. These searches should be conducted in all fifty states and the District of Columbia.
B. Near-Term Actions (Weeks 2–4)
1. Forensic Advisory Engagement: Finalize the engagement of Claridge Forensic Advisory LLC for forensic accounting and e-discovery support under the direction of Calderwood & Harkness. The proposed engagement lead is Daniel J. Petrov, Managing Director, who has extensive experience in insurance-industry financial investigations. The estimated scoping-support budget for Claridge's services during the initial phase is $85,000 to $120,000, subject to refinement as the scope of work is defined.
2. Commission-Income Ledger Collection: Commence collection of BSU's commission-income ledgers, general-ledger detail, and supporting documentation for FY 2023, FY 2024, and FY 2025, with particular attention to entries associated with the three named broker counterparties.
3. IBNR Reserve Schedule Acquisition: Obtain IBNR reserve schedules, actuarial analyses, and related correspondence from Linden Actuarial Consulting Group (Margaret Y. Cho, FCAS) for the relevant periods (Q3 2023 through Q4 2025), with particular focus on the reserve actions taken in Q4 2024 and Q2 2025.
4. Sample Binder-Confirmation Analysis: Begin forensic analysis of the two sample binder-confirmation PDFs attached to the complaint, including metadata analysis (to the extent not fully redacted by the complainant), content comparison against BSU's brokerage-management and policy-administration systems, and tracing of any associated premium flows in BSU's accounting records.
5. Upjohn Warning Templates: Prepare Upjohn/corporate Miranda warning templates for use in witness interviews. All interviews of current QIH and BSU employees must be preceded by clear warnings that Calderwood & Harkness represents the Audit Committee and the Company, not the individual being interviewed; that the conversation is privileged; and that the privilege belongs to the Company and may be waived by the Company without the individual's consent. These warnings must be carefully drafted and consistently administered.
6. SEC Disclosure Coordination: Coordinate with Pemberton Hale & Creighton LLP (Elaine R. Foxworth, partner) regarding SEC disclosure timing considerations. In particular, the team should assess whether and when a Form 8-K disclosure may be required in connection with the investigation, and should develop a framework for ongoing disclosure analysis as the investigation progresses.
C. Scoping-Phase Milestones
The scoping phase of the investigation is targeted to span four to six weeks from the date of this memorandum, i.e., through approximately early to mid-April 2026. The estimated budget for the scoping phase is as follows:
The primary deliverable at the conclusion of the scoping phase will be a report to the Audit Committee containing the following:
• A recommendation on whether to proceed with a full investigation based on the results of the scoping-phase work;
• Preliminary findings on the legitimacy of the three named broker counterparties, based on licensing, corporate-registry, and commercial-database searches;
• Preliminary analysis of the sample binder confirmations and any initial results from BSU's commission-income ledgers and reserve schedules;
• A refined scope and budget estimate for the full investigation phase, if warranted — the preliminary estimated range for a full investigation is $1.2 million to $2.5 million, subject to significant refinement based on the scoping-phase findings; and
• Identification of any issues requiring immediate attention or interim remedial action.
An initial briefing of the Audit Committee should be scheduled for the week of March 9, 2026 to provide a status update on the immediate actions and to confirm the Audit Committee's authorization for the near-term workstreams.
IX. Open Questions and Items Requiring Further Analysis
The following is a compilation of the key open questions and items identified throughout this memorandum that require further analysis as the investigation proceeds. This list is not exhaustive but is intended to provide a structured framework for the scoping phase:
1. Can the three named broker counterparties — Veltrano Risk Advisors, Halloran & Pratt Insurance Associates, and CrestPoint Brokerage LLC — be confirmed as fictitious through licensing and corporate-registry searches, or do they have some legitimate existence as real, licensed, an

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