Executive Summary / Key Takeaways

• Accelerant Holdings ($ARX) is rapidly establishing itself as a leader in specialty insurance by leveraging a proprietary, data-driven Risk Exchange that connects specialized underwriters (Members) with diverse risk capital partners.
• The company is demonstrating robust organic growth, with Exchange Written Premium surging 42% year-over-year in Q2 2025 to $1.1 billion, underpinned by a strong Net Revenue Retention of 151% and a growing Member base.
• Accelerant's core technological differentiators, including machine learning-led risk indices and advanced claims analytics, are driving tangible benefits such as a 1% increase in underwriting profitability for reinsurers through improved subrogation rates.
• Profitability is expanding significantly, with Q2 2025 Adjusted EBITDA reaching $63.5 million, reflecting increasing operating leverage and a strategic shift towards higher-margin Exchange Services and MGA Operations segments.
• The outlook for Q3 2025 remains strong, with projected Exchange Written Premiums of $1.01 billion to $1.04 billion and total Adjusted EBITDA of $66 million to $81 million, including a one-time gain from an MGA minority interest sale.

The Digital Rails of Specialty Insurance

Accelerant Holdings ($ARX), founded in 2018, is fundamentally reshaping the specialty insurance landscape. Operating from Grand Cayman, the company has built a sophisticated, data-driven Risk Exchange that seamlessly connects specialty insurance underwriters, referred to as Members, with a diverse array of Risk Capital Partners, including third-party insurers, reinsurers, and institutional investors. This innovative model primarily serves small-to-medium sized commercial clients across the United States, Europe, Canada, and the United Kingdom. Accelerant's overarching strategy is to become "the rails on which specialty insurance runs," establishing itself as the preeminent marketplace in an industry traditionally characterized by fragmentation, high friction, and information asymmetry.

The specialty insurance market is undergoing a profound transformation, becoming increasingly specialized and disaggregated. Accelerant is strategically positioned to enable this trend, offering a platform that addresses the inherent complexities of this evolution. Its foundational strength lies in treating Managing General Agents (MGAs) as true partners, a differentiated approach that has allowed the company to break through in a highly regulated and competitive environment. This partner-centric model, combined with stable, multi-year capacity for MGAs, forms the bedrock of its competitive advantage.

At the heart of Accelerant's differentiation is its proprietary Risk Exchange technology. This platform is not merely a conduit but an active intelligence layer, designed for advanced data ingestion and agency operations. The tangible benefits derived from this technology are significant and quantifiable. In the past year, Accelerant launched machine learning-led risk indices for select Members, enhancing risk assessment capabilities. Furthermore, the company has deployed large language models against its extensive claims data, specifically to identify claim reimbursement opportunities. These initiatives have already begun to improve portfolio profitability. A notable achievement includes improving claims subrogation rates by over 200%, which has directly increased the underwriting profitability of the portfolio by 1% of premium for its reinsurers. This represents a substantial operational gain. To date, Accelerant has aggregated an impressive 23,000 unique attributes across 95 million rows of data, which it leverages to enhance the performance of both its Members and Risk Capital Partners. This deep data integration enables significantly faster integration of data for underwriting and drives higher efficiency in overall risk management. Accelerant's commitment to technological leadership is evident in its investment, with over 150 employees dedicated solely to platform enhancement, a focus expected to continue. For investors, this technological moat translates into a sustainable competitive advantage, driving superior underwriting outcomes, operational efficiencies, and a pathway to long-term market leadership and sustainable profit.

A History of Growth and Strategic Expansion

Accelerant's journey since its 2018 founding is a testament to its strategic vision and execution. The company successfully navigated the initial challenge of simultaneously attracting both risk supply (Members) and risk demand (capital partners). This foundational success has propelled rapid organic growth, with Exchange Written Premium achieving a remarkable 207% compounded annual growth rate since inception. The network has expanded dramatically, growing from just two Risk Capital Partners in 2019 to 98 by mid-2025, while its Member base increased from 186 to 248 between Q2 2024 and Q2 2025.

Strategic acquisitions have further bolstered Accelerant's MGA Operations. In May 2024, the company acquired all outstanding common equity interests in Mission Underwriters, its MGA incubation platform, integrating Mission Members more deeply into its ecosystem. This was followed by the acquisition of an additional 61% of Corniche Underwriting Ltd. in January 2025, increasing Accelerant's stake to 80.50%. Post-quarter, in August 2025, Accelerant completed the purchase of the remaining 25% equity interests of Agribusiness Risk Underwriters (ARU). These moves underscore a deliberate strategy to enhance its distribution network and strengthen its MGA portfolio.

Capital optimization has also been a key theme. The company transitioned its global assets under management to Wellington Management Company during the first half of 2024, streamlining its investment strategy. A significant corporate restructuring occurred in March 2025, with the Board approving a change in the Holding Companies' tax residency from the Cayman Islands to the UK, anticipating operational efficiencies and lower withholding tax rates under the US-UK tax treaty. The culmination of Accelerant's early growth and strategic development was its Initial Public Offering (IPO) in July 2025. This milestone, which saw the issuance of 20.28 million Class A common shares, provided $393.4 million in net proceeds, used to redeem Class C convertible preference shares and pay a termination fee to Altamont Capital Partners. The IPO serves as validation of Accelerant's model and provides capital for continued expansion.

Financial Momentum and Segment Dynamics

Accelerant's financial performance in the second quarter of 2025 demonstrates strong momentum and expanding profitability, reflecting the effectiveness of its platform-centric strategy. The company reported a 42% year-over-year increase in Exchange Written Premium, reaching $1.1 billion for the quarter, and a trailing twelve-month Exchange Written Premium of $3.8 billion, up 61% from the prior year. This growth is largely organic, fueled by a robust 151% Net Revenue Retention among existing Members and the continuous onboarding of new high-quality underwriters. Total revenue for Q2 2025 surged 68% year-over-year to $219.1 million.

Profitability metrics show significant improvement. Adjusted EBITDA for Q2 2025 was $63.5 million, a substantial increase from $13 million in Q2 2024. On an adjusted net income basis, the company reported $29 million for the quarter, a turnaround from a net loss of $0.7 million in the prior-year period. Pre-tax net income also improved to $22.3 million from a $4.3 million loss. For the first six months of 2025, Adjusted EBITDA reached $106.3 million, up from $40.5 million in the same period last year. While net foreign exchange losses of $14.2 million were recorded in Q2 2025, these were largely offset by foreign currency translation adjustments in other comprehensive income, resulting in a minimal impact on shareholders' equity. The company also managed approximately $2 million in net catastrophe losses from Southern California wildfires during the first half of 2025, demonstrating effective risk mitigation through reinsurance and subrogation.

Segment-level performance highlights the strategic evolution of Accelerant's business model:

• Exchange Services: This segment, the "growing core" of Accelerant, saw revenue increase by 60% to $85.7 million in Q2 2025. Its Adjusted EBITDA grew 38% to $55.7 million. The segment's Adjusted EBITDA margin, while declining to 65% from 75% in the prior year, reflects deliberate investments in Risk Exchange capabilities, which management views as crucial for future margin expansion. Revenue in this segment represented 8% of Exchange Written Premiums in Q2 2025, an improvement from 7.1% in Q2 2024, driven by a mix shift towards higher-fee contracts in the U.S. and Canada.
• MGA Operations: Revenue in this segment soared 77% to $58.1 million in Q2 2025, primarily driven by the rapid scaling of Mission Underwriters and other owned Members. Adjusted EBITDA for the segment reached $24.3 million, a significant jump from $6.2 million in Q2 2024, with the Adjusted EBITDA margin expanding to 42% from 19%. This strong performance is attributed to outperformance in premium volumes and net commission margins within Mission.
• Underwriting: The Underwriting segment generated $110.2 million in revenue in Q2 2025, a 39% increase year-over-year. Adjusted EBITDA improved to $16.2 million from $5.2 million in Q2 2024, benefiting from increased revenue and improved operating leverage. The gross loss ratio for the segment improved to 50.5% in Q2 2025 from 54.7% in Q2 2024, reflecting stable claims experience compared to prior-year reserve strengthening on older European and UK lines. Management anticipates this segment to be "breakeven to mildly profitable over the medium term," as the company strategically reduces its net retention of Exchange Written Premium.

Accelerant's Accelerant-Retained Exchange Premium for the trailing twelve months ended June 30, 2025, was 6%, a reduction due to incremental quota-share reinsurance transactions. Management expects this to normalize towards its historical average of 8% to 10% in future quarters, reflecting a continuous optimization of capital use with risk capital partners.

Robust Liquidity and Strategic Capital Management

Accelerant maintains a strong liquidity position, with $2.27 billion in investments, cash, cash equivalents, and restricted cash as of June 30, 2025.

Net cash provided by operating activities for the first six months of 2025 was $309.3 million, demonstrating healthy cash generation from its growing Risk Exchange platform and expanding insurance and reinsurance operations.

The company's investment portfolio is conservatively managed, prioritizing capital preservation. It consists primarily of liquid, short- and medium-term investment-grade fixed income securities, with 97% of the total portfolio in cash, fixed income, and short-term investments. As of June 30, 2025, 88% of its fixed income and short-term investments were rated A or higher by S&P, with an effective weighted-average duration of 2.70 years. This strategy ensures that the full value of its liquid assets could be available within two to three business days under normal market conditions, providing ample flexibility to meet obligations.

Accelerant's debt structure includes a $125 million senior unsecured syndicated US dollar denominated loan facility maturing in September 2029, alongside a $50 million revolving credit facility, of which $45 million remained unutilized as of June 30, 2025. The company remains in compliance with all customary restrictive and maintenance covenants associated with its debt. Furthermore, capital maintenance agreements with its insurance subsidiaries ensure surplus levels are prudently maintained above minimum statutory and regulatory requirements, with $41 million in capital contributions made during the first half of 2025. The company also actively manages foreign currency exchange-rate risk by seeking to match foreign currency liabilities with assets denominated in those currencies.

Competitive Landscape and Differentiated Approach

Accelerant operates in a competitive environment, facing both large, established insurance brokers and emerging insurtech firms. Its direct competitors include global professional services firms like Aon plc (AON), Marsh & McLennan Companies, Inc. (MMC), Willis Towers Watson plc (WTW), and Arthur J. Gallagher & Co. (AJG). These larger players benefit from extensive global networks, diversified service offerings, and established brand recognition, which historically support strong revenue growth and profitability.

However, Accelerant carves out a distinct competitive niche through its technology-centric, partner-first approach. Unlike the more consultative models of traditional brokers, Accelerant's Risk Exchange offers a specialized, integrated platform that provides superior market access for both its Members and Risk Capital Partners. The company's unique value proposition of treating MGAs as true partners, rather than mere distribution channels, is a key differentiator that management believes "nobody else does." This fosters stronger network effects among niche players and allows Accelerant to capture market share in underserved segments.

Accelerant's technological advantages, such as its machine learning-led risk indices and advanced claims analytics, provide a significant edge in operational efficiency and underwriting outcomes. This contrasts with some larger competitors who may face integration challenges from past acquisitions or rely on broader, less specialized technological solutions. While larger firms like Aon and Marsh & McLennan may lead in overall market share and financial scale, Accelerant's innovation speed in platform-based services and its operational adaptability for specialty insurance position it as a "notable contender" capable of exploiting market inefficiencies. The company's volume-based fee model for risk capital partners also offers a transparent and potentially more cost-effective structure compared to traditional fee-for-service models. Regulatory licenses and capital requirements in the insurance industry serve as significant barriers to entry, helping Accelerant defend its specialized market position.

Outlook and Forward-Looking Trajectory

Accelerant's management has provided a confident outlook for the third quarter of 2025, projecting continued robust growth and expanding profitability. Exchange Written Premiums are estimated to be in the range of $1.01 billion to $1.04 billion, representing a year-over-year growth of 14% to 17%. This growth is expected to be driven by the continued expansion of its existing Member base and the successful onboarding of new Members, underscoring the strength of its organic growth machine.

Adjusted EBITDA from underlying business performance, excluding a one-time transaction, is forecast to be between $41 million and $51 million for Q3 2025, an impressive increase of 58% to 95% over the prior-year period, assuming normalized underwriting portfolio performance. Including an anticipated $25 million to $30 million from the sale of a minority interest in an owned MGA, total Adjusted EBITDA for Q3 2025 is projected to be in the range of $66 million to $81 million, representing a substantial increase of 154% to 210% year-over-year. Management emphasizes that while such sales are generally considered one-off events, they represent positive outcomes for the Members involved.

Looking ahead, Accelerant expects its net retention levels to normalize and trend back towards its historical average of approximately 10% in future quarters, following a temporary reduction in Q2 2025 due to strategic reinsurance transactions. The Underwriting segment is anticipated to achieve breakeven to mildly profitable results over the medium term, as the company continues to optimize its capital deployment and shifts more business to third-party insurers directly. This strategic moderation in the Underwriting segment's revenue growth is expected to further enhance overall margins as the higher-growth Exchange Services and MGA Operations segments take a larger share of the revenue mix. The company also anticipates elevated non-cash stock-based compensation expenses in Q3 2025 related to IPO-granted RSUs and options, which will be expensed over the next four years. Accelerant's focus on expanding its Member pipeline, deepening relationships with Risk Capital Partners, and continuous investment in its technology platform are key drivers for its long-term growth trajectory.

Conclusion

Accelerant Holdings is executing a compelling strategy to redefine the specialty insurance market. Its data-driven Risk Exchange, built on a foundation of proprietary technology and a unique partner-centric approach, is generating significant organic growth and demonstrating expanding profitability. The company's ability to attract and grow its Member base, coupled with a diversified and increasing pool of Risk Capital Partners, validates its two-sided platform model. While facing competition from established industry giants, Accelerant's technological edge, evidenced by its advanced analytics and improved claims outcomes, provides a strong competitive moat. The recent IPO and strategic capital management initiatives further strengthen its position. With a clear growth trajectory and a commitment to continuous innovation, Accelerant Holdings presents a compelling investment thesis for those seeking exposure to a modernizing and rapidly expanding segment of the insurance industry. The company's focus on long-term shareholder value, driven by market leadership and sustainable profit, positions it as a significant player to watch.