LeasesThe Company’s leases consist of one operating lease on its office space in Scottsdale, Arizona that expires in 2028 and is subject to a renewal option at market rates prevailing at the time of renewal. The Company became a sublessor of the same office space when it entered into a sublease agreement effective July 1, 2022 with ZFSG. The base rent under the sublease is equal to that which the Company pays under the head lease and the lease terms are coterminous. The Company remains the primary obligor under the head lease.
The Company applies the portion of the straight-line sublease income that is equal to its head lease expense as a contra expense to head lease expense in underwriting, acquisition and insurance expenses and records the remainder in other income.
The following tables summarize details and balances associated with the Company’s operating lease and sublease:
| | | | | | | | | | | |
| December 31, 2025 | | December 31, 2024 |
| (in thousands) |
| Lease Balances: | | | |
| Operating lease right-of-use assets | $ | 1,748 | | | $ | 2,278 | |
| Operating lease liabilities | (2,117) | | | (2,738) | |
| | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | | | 2025 | | 2024 |
| | | | (in thousands) |
| Lease Cost: | | | | | | | |
| Operating lease cost | | | | | $ | 655 | | | $ | 655 | |
| Sublease income | | | | | (751) | | | (750) | |
| Net lease (income) | | | | | $ | (96) | | | $ | (95) | |
| | | | | | | |
| | | | | | | | | | | |
| December 31, 2025 | | December 31, 2024 |
| Weighted-average remaining lease term — operating leases | 2.92 years | | 3.92 years |
| | | |
| Weighted-average discount rate — operating leases | 5.25 | % | | 5.25 | % |
| | | |
Operating cash flows from the net lease were $0 for both the years ended December 31, 2025 and 2024. The remaining lease term of the operating lease was 2.92 years and 3.92 years, respectively, for the years ended December 31, 2025 and 2024. Future minimum lease payments under the operating lease as of December 31, 2025 are expected to be as follows:
| | | | | | | | |
| Future Minimum Lease Payments | | December 31, 2025 |
| | (in thousands) |
| 2026 | | $ | 765 | |
| 2027 | | 783 | |
| 2028 | | 732 | |
| 2029 | | — | |
| 2030 | | — | |
| Thereafter | | — | |
| Total lease payments | | 2,280 | |
| Less: imputed interest | | (163) | |
| Present value of lease liabilities | | $ | 2,117 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.