~~Table of Contents~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended ~~September 30, 2021~~March 31, 2022


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ____ to ____

Commission file number 001-39754

Doma Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware						84-1956909
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

101 Mission Street, Suite 740 San Francisco, California						94105
(Address of Principal Executive Offices)						(Zip Code)

(650) 419-3827

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	DOMA	The New York Stock Exchange
Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50 per share	DOMA.WS	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Table of Contents

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The registrant had outstanding ~~322,574,242~~324,710,021 shares of common stock as of ~~November 8, 2021~~May 9, 2022.

~~Table of Contents~~

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


		Pages
Part I - Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited):	4
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Operations (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	6
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows (Unaudited)	98
	Notes to Unaudited Condensed Consolidated Financial Statements	1110
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3433
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	5351
Item 4.	Controls and Procedures	5351

Part II - Other Information		5653
Item 1.	Legal Proceedings	5653
Item 1A.	Risk Factors	5653
Item 2.	Recent Sales of Unregistered Securities and Use of Proceeds	5653
Item 3.	Defaults Upon Senior Securities	5653
Item 4.	Mine Safety Disclosures	5653
Item 5.	Other Information	5753
Item 6.	Exhibits	5855
Signatures		5956

Table of Contents

Introductory Note

On July 28, 2021 (the “Closing Date”), Capitol Investment Corp. V (“Capitol”) consummated a business combination (the “Business Combination”) with Doma Holdings, Inc., a Delaware corporation (“Old Doma”), pursuant to the agreement and plan of merger, dated March 2, 2021, by and among Capitol, Capitol V Merger Sub, Inc., a wholly owned subsidiary of Capitol (“Merger Sub”), and Old Doma (as amended on March 18, 2021, the “Agreement”). In connection with the closing of the Business Combination, Old Doma changed its name to States Title Holding, Inc. (“States Title”), Capitol changed its name to Doma Holdings, Inc. (“Doma”) and Old Doma became a wholly owned subsidiary of Doma. Doma continues the existing business operations of Old Doma as a publicly traded company.

Unless the context otherwise requires, references herein to “company,” “Company,” “Doma,” “we,” “us,” “our” and similar terms refer to Doma Holdings, Inc. (f/k/a Capitol Investment Corp. V) and its consolidated subsidiaries. References to “Capitol” refer to our predecessor company prior to the consummation of the Business Combination. References to “Old Doma” refer to Old Doma prior to the Business Combination and to States Title, the wholly owned subsidiary of Doma, upon the consummation of the Business Combination.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q ~~(“Quarterly~~(this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this Quarterly Report, about our plans, strategies and prospects, both business and financial, are forward-looking statements. Any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “goal,” “project” or the negative of such terms or other similar expressions. Moreover, the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report. We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control.

Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

•our projected financial information, anticipated growth rate and market opportunity;

•our ability to maintain the listing of our common stock on the New York Stock Exchange;

•our ability to raise financing in the future and to comply with restrictive covenants related to long-term indebtedness;

•our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

•the accounting of our warrants as liabilities and any changes in the value of our warrants having a material effect on our financial results;

•factors relating to our business, operations and financial performance, including:

Table of Contents

◦our ability to drive an increasing proportion of orders in both our Enterprise and Local channels through the Doma Intelligence platform;

◦changes in the competitive and regulated industries in which we operate, variations in technology and operating performance across competitors, and changes in laws and regulations affecting our business;

◦our ability to implement business plans, forecasts and other expectations, and identify and realize additional opportunities;

◦the impact of COVID-19 on our business;

◦~~costs related to the Business Combination and the failure to realize anticipated benefits of the Business Combination or to realize any financial projections or estimated pro forma results;~~ and

•other factors detailed under the section “Risk Factors” in our periodic filings with the Securities and Exchange Commission (the “SEC”).

Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Additional cautionary statements or discussions of risks and uncertainties that could affect our results or the achievement of the expectations described in forward-looking statements may also be contained in any subsequent periodic report.

Should one or more of the risks or uncertainties described in this Quarterly Report occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements.

You should read this Quarterly Report completely and with the understanding that our actual future results, levels of activity and performance as well as other events and circumstances may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Table of Contents

Part I - Financial Information

Item 1. Financial Statements

Doma Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands, except share information)	(In thousands, except share information)	September 30, 2021		December 31, 2020		(In thousands, except share information)	March 31, 2022		December 31, 2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	411,669	$	111,893	Cash and cash equivalents	$	319,436	$	379,702
Restricted cash	Restricted cash	2,021		129		Restricted cash	2,784		4,126
Investments:	Investments:					Investments:
Fixed maturities	Fixed maturities					Fixed maturities
Held-to-maturity debt securities, at amortized cost		74,872		65,406
Available-for-sale debt securities, at fair value (amortized cost $7,139 at December 31, 2020)		—		8,057
Equity securities, at fair value (cost $2,000 at December 31, 2020)		—		2,119
Held-to-maturity debt securities, at amortized cost (net of allowance for credit losses of $382 at March 31, 2022 and $0 at December 31, 2021)						Held-to-maturity debt securities, at amortized cost (net of allowance for credit losses of $382 at March 31, 2022 and $0 at December 31, 2021)	62,416		67,164
Mortgage loans	Mortgage loans	2,920		2,980		Mortgage loans	1,141		2,022
Other invested assets		306		—
Total Investments		$	78,098	$	78,562
Receivables (net of provision for doubtful accounts of $571 at September 30, 2021 and $492 at December 31, 2020)		14,485		15,244
Other long-term investments						Other long-term investments	325		325
Total investments						Total investments	$	63,882	$	69,511
Receivables (net of allowance for credit losses of $1,226 at March 31, 2022 and $1,082 at December 31, 2021)						Receivables (net of allowance for credit losses of $1,226 at March 31, 2022 and $1,082 at December 31, 2021)	12,496		15,498
Prepaid expenses, deposits and other assets	Prepaid expenses, deposits and other assets	22,161		7,365		Prepaid expenses, deposits and other assets	10,844		15,692
Fixed assets (net of accumulated depreciation of $17,283 at September 30, 2021 and $15,065 at December 31, 2020)		35,243		21,661
Lease right-of-use assets						Lease right-of-use assets	26,701		—
Fixed assets (net of accumulated depreciation of $22,323 at March 31, 2022 and $19,543 at December 31, 2021)						Fixed assets (net of accumulated depreciation of $22,323 at March 31, 2022 and $19,543 at December 31, 2021)	52,801		45,953
Title plants	Title plants	13,952		14,008		Title plants	13,952		13,952
Goodwill	Goodwill	111,487		111,487		Goodwill	111,487		111,487
Trade names (net of accumulated amortization of $3,187 at December 31, 2020)		—		2,684
Total assets	Total assets	$	689,116	$	363,033	Total assets	$	614,383	$	655,921

Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Accounts payable	Accounts payable	$	6,651	$	6,626	Accounts payable	$	3,891	$	6,930
Accrued expenses and other liabilities	Accrued expenses and other liabilities	50,187		33,044		Accrued expenses and other liabilities	35,477		54,149
Lease liabilities						Lease liabilities	27,659		—
Senior secured credit agreement, net of debt issuance costs and original issue discount	Senior secured credit agreement, net of debt issuance costs and original issue discount	138,684		—		Senior secured credit agreement, net of debt issuance costs and original issue discount	144,858		141,769
Loan from a related party		—		65,532
Liability for loss and loss adjustment expenses	Liability for loss and loss adjustment expenses	78,671		69,800		Liability for loss and loss adjustment expenses	82,534		80,267
Warrant liabilities	Warrant liabilities	24,440		—		Warrant liabilities	6,067		16,467
Sponsor Covered Shares liability	Sponsor Covered Shares liability	8,610		—		Sponsor Covered Shares liability	1,916		5,415
Total liabilities	Total liabilities	$	307,243	$	175,002	Total liabilities	$	302,402	$	304,997

Commitments and contingencies (see Note 12)	Commitments and contingencies (see Note 12)	0		0		Commitments and contingencies (see Note 12)	0		0

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Series A preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 43,737,586 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		$	—	$	1
Series A-1 preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 48,913,906 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		—		1
Series A-2 preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 14,003,187 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		—		—
Series B preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 15,838,828 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		—		—
Series C preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 60,665,631 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		—		1
Common stock, 0.0001 par value; 2,000,000,000 shares authorized at September 30, 2021; 321,544,052 and 62,832,307 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		33		1

Common stock, 0.0001 par value; 2,000,000,000 shares authorized at March 31, 2022; 324,348,254 and 323,347,806 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively						Common stock, 0.0001 par value; 2,000,000,000 shares authorized at March 31, 2022; 324,348,254 and 323,347,806 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	$	33	$	33
Additional paid-in capital	Additional paid-in capital	530,290		266,464		Additional paid-in capital	554,552		543,070
Accumulated deficit	Accumulated deficit	(148,450)		(79,123)		Accumulated deficit	(242,604)		(192,179)
Accumulated other comprehensive income	Accumulated other comprehensive income	—		686		Accumulated other comprehensive income	—		—
Total stockholders’ equity	Total stockholders’ equity	$	381,873	$	188,031	Total stockholders’ equity	$	311,981	$	350,924
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	689,116	$	363,033	Total liabilities and stockholders’ equity	$	614,383	$	655,921

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

Table of Contents

Doma Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(In thousands, except share and per share information)	(In thousands, except share and per share information)	2021		2020		2021		2020		(In thousands, except share and per share information)	2022		2021
Revenues:	Revenues:									Revenues:
Net premiums written (1)	Net premiums written (1)	$	141,491	$	103,587	$	358,754	$	246,738	Net premiums written (1)	$	95,666	$	107,992
Escrow, other title-related fees and other	Escrow, other title-related fees and other	20,452		16,742		59,092		43,298		Escrow, other title-related fees and other	16,113		18,575
Investment, dividend and other income	Investment, dividend and other income	639		743		2,518		2,268		Investment, dividend and other income	428		1,229
Total revenues	Total revenues	$	162,582	$	121,072	$	420,364	$	292,304	Total revenues	$	112,207	$	127,796

Expenses:	Expenses:									Expenses:
Premiums retained by Third-Party Agents (2)	Premiums retained by Third-Party Agents (2)	$	91,596	$	67,024	$	227,115	$	156,132	Premiums retained by Third-Party Agents (2)	$	60,602	$	70,338
Title examination expense	Title examination expense	5,289		4,624		15,643		11,811		Title examination expense	5,981		4,853
Provision for claims	Provision for claims	6,685		5,242		16,741		10,065		Provision for claims	4,611		3,249
Personnel costs	Personnel costs	62,410		36,197		159,829		104,652		Personnel costs	77,793		43,464
Other operating expenses	Other operating expenses	21,693		10,210		53,038		31,136		Other operating expenses	22,754		14,165
Total operating expenses	Total operating expenses	$	187,673	$	123,297	$	472,366	$	313,796	Total operating expenses	$	171,741	$	136,069

Loss from operations	Loss from operations	$	(25,091)	$	(2,225)	$	(52,002)	$	(21,492)	Loss from operations	$	(59,534)	$	(8,273)

Other (expense) income:	Other (expense) income:									Other (expense) income:
Change in fair value of Warrant and Sponsor Covered Shares liabilities	Change in fair value of Warrant and Sponsor Covered Shares liabilities	(4,478)		—		(4,478)		—		Change in fair value of Warrant and Sponsor Covered Shares liabilities	13,900		—
Interest expense	Interest expense	(4,531)		(1,193)		(12,341)		(4,428)		Interest expense	(4,207)		(3,360)
Loss before income taxes	Loss before income taxes	$	(34,100)	$	(3,418)	$	(68,821)	$	(25,920)	Loss before income taxes	$	(49,841)	$	(11,633)

Income tax expense	Income tax expense	(170)		(204)		(506)		(620)		Income tax expense	(185)		(125)
Net loss	Net loss	$	(34,270)	$	(3,622)	$	(69,327)	$	(26,540)	Net loss	$	(50,026)	$	(11,758)

Earnings per share:	Earnings per share:									Earnings per share:
Net loss per share attributable to shareholders - basic and diluted		$	(0.14)	$	(0.06)	$	(0.54)	$	(0.43)
Net loss per share attributable to stockholders - basic and diluted										Net loss per share attributable to stockholders - basic and diluted	$	(0.15)	$	(0.17)
Weighted average shares outstanding common stock - basic and diluted	Weighted average shares outstanding common stock - basic and diluted	245,003,754		64,060,987		128,105,954		62,255,035		Weighted average shares outstanding common stock - basic and diluted	323,890,562		67,418,142

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

__________________

(1)Net premiums written includes revenues from a related party of ~~$30.3~~$27.7 million and ~~$22.9~~$24.7 million during the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively. Net premiums written includes revenues from a related party of $81.9 million and $64.2 million during the nine months ended September 30, 2021 and 2020,~~ respectively (see Note 11).

(2)Premiums retained by Third-Party Agents includes expenses associated with a related party of ~~$24.8~~$22.5 million and ~~$18.4~~$19.9 million during the three months ended ~~September 30,~~March 31, 2022 and 2021, and 2020, respectively. Premiums retained by Third-Party Agents includes expenses associated with a related party of $66.6 million and $51.9 million during the nine months ended September 30, 2021 and 2020, respectively (see Note 11).

Table of Contents

Doma Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2022		2021
Net loss	Net loss	$	(34,270)	$	(3,622)	$	(69,327)	$	(26,540)	Net loss	$	(50,026)	$	(11,758)
Other comprehensive income, net of tax:	Other comprehensive income, net of tax:									Other comprehensive income, net of tax:
Unrealized gain (loss) on available-for-sale debt securities, net of tax	Unrealized gain (loss) on available-for-sale debt securities, net of tax	—		443		(179)		(53)		Unrealized gain (loss) on available-for-sale debt securities, net of tax	—		(179)
Reclassification adjustment for realized gain on sale of available-for-sale debt securities, net of tax	Reclassification adjustment for realized gain on sale of available-for-sale debt securities, net of tax	—		—		(507)		—		Reclassification adjustment for realized gain on sale of available-for-sale debt securities, net of tax	—		(507)
Comprehensive loss	Comprehensive loss	$	(34,270)	$	(3,179)	$	(70,013)	$	(26,593)	Comprehensive loss	$	(50,026)	$	(12,444)

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

Table of Contents

Doma Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

Preferred Stock
Series A
Preferred Stock
Series A-1
Preferred Stock
Series A-2
Preferred Stock
Series B
Preferred Stock
Series C
Common Stock Additional
paid-in capital Accumulated deficit Accumulated other comprehensive income (loss) Stockholders’ equity
(In thousands, except share information) Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance, January 1, 2020 7,295,759 $ 1 8,159,208 $ 1 2,335,837 $ — 2,642,036 $ — 4,270,182 $ — 10,374,044 $ 1 $ 192,852 $ (44,020) $ 510 $ 149,345
Retroactive application of recapitalization 36,441,827 — 40,754,698 — 11,667,350 — 13,196,792 — 21,329,274 — 51,817,657 — — — — —
As adjusted, beginning of period 43,737,586 $ 1 48,913,906 $ 1 14,003,187 $ — 15,838,828 $ — 25,599,456 $ — 62,191,701 $ 1 $ 192,852 $ (44,020) $ 510 $ 149,345
Issuance of Series C preferred stock, net of financing costs — — — — — — — — 35,066,175 1 — — 70,701 — — 70,702
Exercise of stock options — — — — — — — — — — 378,214 — 24 — — 24
Stock-based compensation expenses — — — — — — — — — — — — 308 — — 308
Net loss — — — — — — — — — — — — — (16,586) — (16,586)
Other comprehensive income — — — — — — — — — — — — — — 9 9
Balance, March 31, 2020 43,737,586 $ 1 48,913,906 $ 1 14,003,187 $ — 15,838,828 $ — 60,665,631 $ 1 62,569,915 $ 1 $ 263,885 $ (60,606) $ 519 $ 203,802
Exercise of stock options — — — — — — — — — — (590,309) — 27 — — 27
Stock based compensation expense — — — — — — — — — — — — 282 — — 282
Net loss — — — — — — — — — — — — — (6,332) — (6,332)
Other comprehensive loss — — — — — — — — — — — — — — (505) (505)
Balance, June 30, 2020 43,737,586 $ 1 48,913,906 $ 1 14,003,187 $ — 15,838,828 $ — 60,665,631 $ 1 61,979,606 $ 1 $ 264,194 $ (66,938) $ 14 $ 197,274
Legal costs associated with the issuance of Series C preferred stock — — — — — — — — — — 11,696 — (50) — — (50)
Exercise of stock options — — — — — — — — — — 215,356 — 15 — — 15
Stock based compensation expense — — — — — — — — — — — — 355 — — 355
Net loss — �� — — — — — — — — — — — (3,622) — (3,622)
Other comprehensive loss — — — — — — — — — — — — — — 443 443
Balance, September 30, 2020 43,737,586 $ 1 48,913,906 $ 1 14,003,187 $ — 15,838,828 $ — 60,665,631 $ 1 62,206,658 $ 1 $ 264,514 $ (70,560) $ 457 $ 194,415


	Preferred Stock Series A			Preferred Stock Series A-1			Preferred Stock Series A-2			Preferred Stock Series B			Preferred Stock Series C			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Stockholders’ Equity
(In thousands, except share information)	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance, January 1, 2021	43,737,586	$	1	48,913,906	$	1	14,003,187	$	—	15,838,828	$	—	60,665,631	$	1	62,832,307	$	1	$	266,464	$	(79,123)	$	686	$	188,031
Exercise of stock options	—	—		—	—		—	—		—	—		—	—		2,637,441	—		1,267		—		—		1,267
Stock-based compensation expenses	—	—		—	—		—	—		—	—		—	—		—	—		2,289		—		—		2,289
Original issue discount on senior secured credit agreement	—	—		—	—		—	—		—	—		—	—		—	—		18,519		—		—		18,519
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(11,758)		—		(11,758)
Other comprehensive income	—	—		—	—		—	—		—	—		—	—		—	—		—		—		(686)		(686)
Balance, March 31, 2021	43,737,586	$	1	48,913,906	$	1	14,003,187	$	—	15,838,828	$	—	60,665,631	$	1	65,469,748	$	1	$	288,539	$	(90,881)	$	—	$	197,662

~~Table of Contents~~

Preferred Stock
Series A
Preferred Stock
Series A-1
Preferred Stock
Series A-2
Preferred Stock
Series B
Preferred Stock
Series C
Common Stock Additional
paid-in capital Accumulated deficit Accumulated other comprehensive income (loss) Stockholders’ equity
(In thousands, except share information) Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance, January 1, 2021 7,295,759 $ 1 8,159,208 $ 1 2,335,837 $ — 2,642,036 $ — 10,119,484 $ 1 10,480,902 $ 1 $ 266,464 $ (79,123) $ 686 $ 188,031
Retroactive application of recapitalization 36,441,827 — 40,754,698 — 11,667,350 — 13,196,792 — 50,546,147 — 52,351,405 — — — — —
As adjusted, beginning of period 43,737,586 $ 1 48,913,906 $ 1 14,003,187 $ — 15,838,828 $ — 60,665,631 $ 1 62,832,307 $ 1 $ 266,464 $ (79,123) $ 686 $ 188,031
Exercise of stock options — — — — — — — — — — 2,637,441 — 1,267 — — 1,267
Stock-based compensation expense — — — — — — — — — — — — 2,289 — — 2,289
Original issue discount on senior secured credit agreement — — — — — — — — — — — — 18,519 — — 18,519
Net loss — — — — — — — — — — — — — (11,758) — (11,758)
Other comprehensive loss — — — — — — — — — — — — — — (686) (686)
Balance, March, 31, 2021 43,737,586 $ 1 48,913,906 $ 1 14,003,187 $ — 15,838,828 $ — 60,665,631 $ 1 65,469,748 $ 1 $ 288,539 $ (90,881) $ — $ 197,662
Exercise of stock options — — — — — — — — — — 535,551 — 109 — — 109
Stock based compensation expense — — — — — — — — — — — — 2,967 — — 2,967
Exercise of stock warrants — — 28,870,387 — — — — — — — — — 187 — — 187
Net loss — — — — — — — — — — — — — (23,299) — (23,299)
Balance, June 30, 2021 43,737,586 $ 1 77,784,293 $ 1 14,003,187 $ — 15,838,828 $ — 60,665,631 $ 1 66,005,299 $ 1 $ 291,802 $ (114,180) $ — $ 177,626
Exercise of stock options — — — — — — — — — — 82,230 — 38 — — 38
Stock based compensation expense — — — — — — — — — — — — 3,191 — — 3,191
Net loss — — — — — — — — — — — — — (34,270) — (34,270)
Conversion of preferred stock to common stock (43,737,586) (1) (77,784,293) (1) (14,003,187) — (15,838,828) — (60,665,631) (1) 212,029,525 21 4 — — 22
Conversion of common stock — — — — — — — — — — (1,227,451) — 30,080 — 30,080
Issuance of common stock in connection with Business Combination and PIPE Investment — — — — — — — — — — 44,654,449 5 259,392 — — 259,397
Par value change for Old Doma Common Stock — — — — — — — — — — — 6 — — — 6
Costs directly attributable to the issuance of common stock in connection with Business Combination and PIPE Investment — — — — — — — — — — — — (54,217) — — (54,217)
Balance, September 30, 2021 — $ — — $ — — $ — — $ — — $ — 321,544,052 $ 33 $ 530,290 $ (148,450) $ — $ 381,873


	Preferred Stock Series A			Preferred Stock Series A-1			Preferred Stock Series A-2			Preferred Stock Series B			Preferred Stock Series C			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Stockholders’ Equity
(In thousands, except share information)	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance, January 1, 2022	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—	323,347,806	$	33	$	543,070	$	(192,179)	$	—	$	350,924
Exercise of stock options	—	—		—	—		—	—		—	—		—	—		957,648	—		(97)		—		—		(97)
Vesting of RSU awards	—	—		—	—		—	—		—	—		—	—		42,800	—		—		—		—		—
Stock-based compensation expense	—	—		—	—		—	—		—	—		—	—		—	—		11,579		—		—		11,579
Cumulative effect of change in accounting principle	—	—		—	—		—	—		—	—		—	—		—	—		—		(399)		—		(399)
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(50,026)		—		(50,026)
Balance, March, 31, 2022	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—	324,348,254	$	33	$	554,552	$	(242,604)	$	—	$	311,981

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

Table of Contents

Doma Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Nine months ended September 30,					Three months ended March 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Cash flow from operating activities:	Cash flow from operating activities:					Cash flow from operating activities:
Net loss	Net loss	$	(69,327)	$	(26,540)	Net loss	$	(50,026)	$	(11,758)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Interest expense - paid in kind	Interest expense - paid in kind	6,353		5,085		Interest expense - paid in kind	2,448		1,567
Depreciation and amortization	Depreciation and amortization	7,705		3,236		Depreciation and amortization	3,236		2,707
Stock-based compensation expense	Stock-based compensation expense	8,447		945		Stock-based compensation expense	11,579		2,289
Amortization of debt issuance costs and original issue discount	Amortization of debt issuance costs and original issue discount	1,429		—		Amortization of debt issuance costs and original issue discount	641		347
Provision for doubtful accounts		562		304
Provision for credit losses						Provision for credit losses	218		350
Deferred income taxes	Deferred income taxes	377		535		Deferred income taxes	147		125
Realized gain on debt securities	Realized gain on debt securities	(908)		(141)		Realized gain on debt securities	(5)		(678)
Net unrealized loss on equity securities	Net unrealized loss on equity securities	119		10		Net unrealized loss on equity securities	—		119
Gain on disposal of fixed assets and title plants	Gain on disposal of fixed assets and title plants	(11)		(281)		Gain on disposal of fixed assets and title plants	44		4
Accretion of discounts on held-to-maturity securities		901		369
Amortization of premiums and accretion of discounts on held-to-maturity securities						Amortization of premiums and accretion of discounts on held-to-maturity securities	289		224
Change in fair value of Warrant and Sponsor Covered Shares liabilities	Change in fair value of Warrant and Sponsor Covered Shares liabilities	4,478		—		Change in fair value of Warrant and Sponsor Covered Shares liabilities	(13,900)		—
Change in operating assets and liabilities:	Change in operating assets and liabilities:					Change in operating assets and liabilities:
Accounts receivable	Accounts receivable	(284)		(261)		Accounts receivable	2,642		(542)
Prepaid expenses, deposits and other assets	Prepaid expenses, deposits and other assets	(14,799)		(6,166)		Prepaid expenses, deposits and other assets	3,873		(9,466)
Lease right-of-use assets and lease liabilities						Lease right-of-use assets and lease liabilities	394		—
Accounts payable	Accounts payable	(274)		2,658		Accounts payable	(3,037)		(2,452)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	13,813		472		Accrued expenses and other liabilities	(17,279)		(3,011)
Liability for loss and loss adjustments expenses	Liability for loss and loss adjustments expenses	8,872		3,374		Liability for loss and loss adjustments expenses	2,267		852
Net cash used in operating activities	Net cash used in operating activities	$	(32,547)	$	(16,401)	Net cash used in operating activities	$	(56,469)	$	(19,323)
Cash flow from investing activities:	Cash flow from investing activities:					Cash flow from investing activities:
Proceeds from sales, calls and maturities of investments: Held-to-maturity	Proceeds from sales, calls and maturities of investments: Held-to-maturity	$	23,514	$	15,394	Proceeds from sales, calls and maturities of investments: Held-to-maturity	$	6,185	$	8,005
Proceeds from sales, calls and maturities of investments: Available-for-sale	Proceeds from sales, calls and maturities of investments: Available-for-sale	7,817		18		Proceeds from sales, calls and maturities of investments: Available-for-sale	—		7,817
Proceeds from sales of investments: Equity securities	Proceeds from sales of investments: Equity securities	2,000		—		Proceeds from sales of investments: Equity securities	—		2,000
Proceeds from sales and principal repayments of investments: Mortgage loans	Proceeds from sales and principal repayments of investments: Mortgage loans	60		378		Proceeds from sales and principal repayments of investments: Mortgage loans	882		30
Purchases of investments: Held-to-maturity	Purchases of investments: Held-to-maturity	(33,650)		(57,624)		Purchases of investments: Held-to-maturity	(2,104)		(8,120)
Purchases of investments: Equity securities		—		(1,000)
Proceeds from sales of fixed assets	Proceeds from sales of fixed assets	306		246		Proceeds from sales of fixed assets	—		295
Purchases of fixed assets	Purchases of fixed assets	(18,842)		(12,670)		Purchases of fixed assets	(10,129)		(5,090)
Proceeds from sale of title plants and dividends from title plants	Proceeds from sale of title plants and dividends from title plants	482		1,349		Proceeds from sale of title plants and dividends from title plants	124		179
Net cash used in investing activities		$	(18,313)	$	(53,909)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	$	(5,042)	$	5,116

Table of Contents

Doma Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Nine months ended September 30,					Three months ended March 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Cash flow from financing activities:	Cash flow from financing activities:					Cash flow from financing activities:
Proceeds from issuance of Series C preferred stock, net of financing costs		$	—	$	70,701
Proceeds from issuance of senior secured credit agreement	Proceeds from issuance of senior secured credit agreement	150,000		—		Proceeds from issuance of senior secured credit agreement	$	—	$	150,000
Payments on loan from a related party	Payments on loan from a related party	(65,532)		(28,092)		Payments on loan from a related party	—		(65,532)
Debt issuance costs		(579)		—
Exercise of stock warrants		48		—
Exercise of stock options	Exercise of stock options	1,690		92		Exercise of stock options	(97)		1,267
Redemptions of redeemable common and preferred stock		(294,856)		—
Net proceeds from Business Combination and PIPE Investment		624,952		—
Payment of costs directly attributable to the issuance of common stock in connection with Business Combination and PIPE Investment		(63,195)		—
Net cash provided by financing activities		$	352,528	$	42,701
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	$	(97)	$	85,735
Net change in cash and cash equivalents and restricted cash	Net change in cash and cash equivalents and restricted cash	301,668		(27,609)		Net change in cash and cash equivalents and restricted cash	(61,608)		71,528
Cash and cash equivalents and restricted cash at the beginning period	Cash and cash equivalents and restricted cash at the beginning period	112,022		141,668		Cash and cash equivalents and restricted cash at the beginning period	383,828		112,022
Cash and cash equivalents and restricted cash at the end of period	Cash and cash equivalents and restricted cash at the end of period	$	413,690	$	114,059	Cash and cash equivalents and restricted cash at the end of period	$	322,220	$	183,550
Supplemental cash flow disclosures:	Supplemental cash flow disclosures:					Supplemental cash flow disclosures:
Cash paid for interest	Cash paid for interest	$	5,347	$	1	Cash paid for interest	$	1,958	$	1,516
Supplemental disclosure of non-cash investing activities:	Supplemental disclosure of non-cash investing activities:					Supplemental disclosure of non-cash investing activities:
Unrealized loss on available-for-sale debt securities	Unrealized loss on available-for-sale debt securities	$	(179)	$	(53)	Unrealized loss on available-for-sale debt securities	$	—	$	(179)
Supplemental disclosure of non-cash financing activities:	Supplemental disclosure of non-cash financing activities:					Supplemental disclosure of non-cash financing activities:
Issuance of penny warrants related to the senior secured credit agreement	Issuance of penny warrants related to the senior secured credit agreement	$	(18,519)	$	—	Issuance of penny warrants related to the senior secured credit agreement	$	—	$	18,519
Warrant liabilities recognized in conjunction with the Business Combination		$	19,240	$	—
Net liabilities assumed in the Business Combination		$	9,517	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

109

Table of Contents

Doma Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share information or unless otherwise noted)

1. Organization and business operations

Unless the context otherwise requires, references herein to “company,” “Company,” “Doma,” “we,” “us,” “our” and similar terms refer to Doma Holdings, Inc. (f/k/a Capitol Investment Corp. V) and its consolidated subsidiaries. References to “Capitol” refer to our legal predecessor company prior to the consummation of the Business Combination. References to “Old Doma” refer to Old Doma prior to the Business Combination and to States Title, the wholly owned subsidiary of Doma, upon the consummation of the Business Combination.

Headquartered in San Francisco, California, Doma is a real estate technology company that is architecting the future of real estate transactions. Using machine intelligence and our proprietary technology solutions, we are creating a vastly more simple, efficient, and affordable real estate closing experience for current and prospective homeowners, lenders, title agents and real estate professionals. We are licensed to underwrite title insurance in 3942 states and the District of Columbia.

Old Doma was initially formed as a wholly-owned subsidiary of States Title Inc. (“Legacy States Title”) to combine the operations of Legacy States Title and the retail agency and title insurance underwriting business (the “Acquired Business”) of North American Title Group, LLC (“NATG”), a subsidiary of Lennar Corporation (“Lennar”). We completed the acquisition of the Acquired Business on January 7, 2019, which we refer hereinafter as the “North American Title Acquisition.” Old Doma survived the North American Title Acquisition as the parent company and now wholly owns the businesses operated by Legacy States Title and the Acquired Business.

We conduct our operations through 2 reportable segments, (1) Distribution and (2) Underwriting. See further discussion in Note 7 for additional information regarding segment information.

2. Summary of significant accounting policies

Basis of presentation

The accompanying condensed consolidated balance sheet as of ~~September 30, 2021~~March 31, 2022 and the condensed consolidated statements of operations, condensed consolidated statements of comprehensive loss, ~~and~~ condensed consolidated statements of changes in stockholders’ equity ~~for the three and nine months ended September 30, 2021 and 2020~~ and the condensed consolidated statements of cash flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ are unaudited.

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of ~~September 30, 2021~~March 31, 2022 and its results of operations, including its comprehensive income, ~~and~~ stockholders’ equity ~~for the three and nine months ended September 30, 2021 and 2020~~ and cash flows for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. All adjustments are of a normal recurring nature. The results for the three ~~and nine~~ months ended ~~September 30, 2021~~

~~Table of Contents~~

March 31, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter or for the

Table of Contents

fiscal year ending December 31, ~~2021.~~2022. These unaudited interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements and related notes.

References to the Accounting Standard Codification (“ASC”) and Accounting Standard Updates (“ASU”) included hereinafter refer to the Accounting Standards Codification and Updates issued by the Financial Accounting Standards Board (“FASB”) as the source of authoritative U.S. GAAP. The accompanying condensed consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from the estimates made by management. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.

Significant items subject to such estimates and assumptions include, but are not limited to, reserves for incurred but not reported claims, the useful lives of property and equipment, accrued net premiums written from Third-Party Agent (as defined in Item 2) referrals, fair value measurements, and the valuations of stock-based compensation arrangements and the Sponsor Covered Shares liability (as defined below).

Title plants

Title plants are carried at cost, with costs incurred to maintain, update and operate title plants expensed as incurred. Because properly maintained title plants have indefinite lives and do not diminish in value with the passage of time, no provision has been made for depreciation or amortization. The Company analyzes the title plants for impairment when events or circumstances indicate that the carrying amount may not be recoverable. This analysis includes, but is not limited to, the effects of obsolescence, duplication, demand and other economic factors. There were no impairments of title plants for the three ~~or nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020. In February 2020, we sold a title plant for a total sale price of $3.2 million, including a realized gain of $0.2 million.~~2021.

Reinsurance

The Company utilizes excess of loss and quota share reinsurance programs to limit its maximum loss exposure by reinsuring certain risks with other insurers. The Company has 2 reinsurance treaties: the Excess of Loss Treaty and the Quota Share Treaty.

Under the Excess of Loss Treaty, we cede liability over $15.0 million on all files. Excess of loss reinsurance coverage protects the Company from a large loss from a single loss occurrence. The Excess of Loss Treaty provides for ceding liability above the retention of $15.0 million for all policies up to a liability cap of $500.0 million.

Under the Quota Share Treaty, during the period from January 1, 2021 to February 23, 2021 the Company ceded 100% of its instant underwriting policies. Effective February 24, 2021, the Company cedes 25% of the written premium on our instantly underwritten policies. ~~During the three and nine months ended September 30, 2020, the Company ceded 100% of its instant underwriting policies.~~

Payments and recoveries on reinsured losses for the Company’s title insurance business were immaterial during the three months ended March 31, 2022 and ~~nine month periods ended September 30, 2021~~2021.

Ceding commission from reinsurance transactions are presented as revenue within the “Escrow, other title-related fees and ~~2020.~~other” revenue line item in the consolidated statements of operations.

Total premiums ceded in connection with reinsurance are netted against the written premiums in the consolidated statements of operations. Gross premiums written and ceded premiums are as follows:

Table of Contents


	Three Months Ended March 31,
	2022		2021
Gross premiums written	97,242		110,611
Ceded premiums	(1,576)		(2,619)
Net premiums written	95,666		107,992
Percentage of amount assumed to net	98.4	%	97.6	%

Income taxes

Our effective tax rate for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was (1)% and ~~(2)~~(1)%, respectively, as a result of our recording a full valuation allowance against the deferred tax assets. In determining the realizability of the net U.S. federal and state deferred tax assets, we consider numerous factors including historical profitability, estimated future taxable income, prudent and feasible tax planning strategies, and the industry in which we operate. As of March 31, 2022 and December 31, ~~2020,~~2021, the Company carried a valuation allowance against deferred tax assets as management believes it is more likely than not that the benefit of the net deferred tax assets covered by that valuation allowance will not be realized. A net deferred tax liability has been recorded as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 of ~~$1.2~~$1.7 million and ~~$1.0~~$1.8 million, respectively, and is included in accrued expenses and other liabilities within the accompanying condensed consolidated balance sheets. Management reassesses the realization of the deferred tax assets each reporting period. The Company has approximately $0.2 million of pre-2018 federal net operating losses

~~Table of Contents~~

subject to expiration beginning in 2036. The remainder of the federal net operating losses have no expiration. The Company’s state net operating losses are subject to various expirations, beginning in 2030. The Company’s ~~2017~~2018 through ~~2019~~2020 tax years remain open to federal ~~and~~examinations. The Company’s 2017 through 2020 tax years remain open to state tax examinations. The Company believes that as of ~~September 30, 2021~~March 31, 2022 it had no material uncertain tax positions. Interest and penalties related to unrecognized tax expenses (benefits) are recognized in income tax expense, when applicable. There were no material liabilities for interest and penalties accrued as of ~~September 30, 2021.~~March 31, 2022.

~~Public Warrants and Private Placement Warrants~~Leases

AsThe Company determines if a ~~result~~contract contains a lease at inception of the ~~Business Combination,~~contract. The Company's inventory of leases primarily consists of operating office space and office equipment leases which are recorded as a lease obligation liability and as a lease right-of-use asset on the ~~Company assumed~~ the ~~Public Warrants (as defined in Note 3)~~accompanying condensed consolidated balance sheet. The lease right-of-use asset represents the Company's right to use each underlying asset for the lease term and the ~~Private Placement Warrants (as defined in Note 3) (collectively,~~lease obligation liability represents the ~~“Warrants”)~~Company's obligation over the lease term. The Company's lease obligation is recorded at the present value of the lease payments based on the term of the lease. The Company applies an incremental borrowing rate of interest as of the ~~Closing Date.~~effective date of adoption or the lease effective date equivalent to a collateralized borrowing rate with similar terms. The ~~Warrants meet~~discount rate used to calculate the ~~definition~~present value of ~~derivatives as contemplated in Accounting Standards Codification (“ASC”) 815. As such, the Warrants were recorded as liabilities~~our future minimum lease payments is based, where appropriate, on the Company's incremental borrowing rate of its current loan and security agreement.

Lease expenses for lease payments, where appropriate, are recognized on a straight-line basis over the lease term. Short-term leases of 12 months or less are recorded in the condensed consolidated balance sheet ~~at fair value upon the consummation of the Business Combination, with subsequent changes in their respective fair values~~and lease payments are recognized inon the condensed consolidated statement of ~~operations at each reporting period.~~

~~Sponsor Covered Shares~~operations. The Company accounts for agreements with lease and ~~Seller Earnout Shares~~

Immediately after the Closing Date, certain common stock held by the Sponsor (as defined in Note 3) became subject to vesting, contingent upon the price of Doma’s common stock, par value $0.0001 (“Doma common stock”) exceeding certain thresholds (the “Sponsor Covered Shares”). The Sponsor Covered Shares are accounted fornon-lease components as a ~~derivative due~~single lease component. For more information on leases, refer to the settlement adjustments upon change in control transactions that are not deemed to be indexed to Doma common stock. As such, the Sponsor Covered Shares were recorded as liabilities on the balance sheet at fair value upon the consummationNote 17 of ~~the Business Combination, with subsequent changes in their respective fair values recognized in the condensed consolidated statement of operations at each reporting period.~~

Also following the Closing Date, equity holders of Old Doma prior to the Business Combination (the “Sellers”) have the right to receive an additional number of shares contingent on the price of Doma common stock. The Seller Earnout Shares (as defined in Note 3) are treated as an equity classified contract because all settlement scenarios, including those under fundamental change events, are indexed to Doma common stock (see Note 3 for additional information).

~~Share counts of Doma common stock provided in~~ this Quarterly ~~Report exclude both the Sponsor Covered Shares and the Seller Earnout Shares.~~

Report.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in financial institutions and our investment portfolio. The Company has not experienced losses on the cash accounts and management believes the Company is not exposed to significant risks on such accounts.

Additionally, we manage the exposure to credit risk in our investment portfolio by investing in high quality securities and diversifying our holdings. Our investment portfolio is comprised of corporate debt, certificates of deposit, ~~mortgages,~~single-family residential mortgage loans, U.S. government agency obligations and U.S. Treasuries.

~~Coronavirus outbreak~~

The COVID-19 global pandemic has caused national and global economic and financial market disruptions. On the onset of the pandemic, the Company braced and anticipated uncertain disruption to our business. Our results from operations for the three and nine months ended September 30, 2021, show that the Company’s performance from operations was not adversely impacted in a material manner. The Company continues to monitor and react to business disruptions caused by the pandemic but we cannot predict with certainty the duration of the pandemic or its impact on the Company’s financial condition and results of operations, as well as business operations and workforce.

1312

Table of Contents

Emerging Growth Company and Smaller Reporting Company

Subsequent to the Business Combination described in Note 3, the Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Additionally, subsequent to the Business Combination described in Note 3, the Company is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.

Recently issued and adopted accounting pronouncements

~~No new accounting policies were recently issued and adopted in the three or nine months ended September 30, 2021.~~

~~Recently issued but not adopted accounting pronouncements~~

In June 2016, the FASB issued ASU No. 2016-13Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). The amendments in this and the related ASUs introduce broad changes to accounting for credit impairment of financial instruments. The primary updates include the introduction of a new current expected credit loss (”(“CECL”) model that is based on expected rather than incurred losses for instruments measured at amortized cost and ~~amendments to~~amends the accounting for impairment of held-to-maturity securities and available-for-sale securities. This model incorporates past experience, current conditions and reasonable and supportable forecasts affecting collectability of these instruments. The amendments in this update are effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, the amendment is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The ~~Company currently expects to adopt Topic 326 under the private company transition~~early adoption of this new guidance ~~beginning~~on January 1, ~~2022. The~~2022 required the Company ~~is currently evaluating~~to record an allowance for credit losses for the ~~impact~~Company’s held-to-maturity investment portfolio, which resulted in an allowance of $0.4 million and a corresponding $0.4 million adjustment for the cumulative effect of a change in accounting principle, net of income taxes. For more information on the held-to-maturity allowance for credit losses, refer to Note 4 of this Quarterly Report. Prior to the adoption of ~~Topic 326 will have~~the new guidance, the Company utilized an aging model to estimate credit losses on accounts receivable. As this aging model is allowed under the new guidance, there is no impact to the Company’s ~~financial statements, however management currently believes that the~~allowance for credit losses for accounts receivable. The adoption ~~will~~of this new standard did not have a significant impact on the ~~Company's financial position and results~~condensed consolidated statements of ~~operations. We~~operations or the condensed consolidated statements of cash flows. The guidance also requires additional disclosures regarding the Company’s held-to-maturity allowance for credit losses, which have ~~not early adopted this standard.~~been included within Note 4.

In February 2016, the FASB issued ASU 2016-02, Leases (”(“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an

Table of Contents

effective interest rate method or on a straight-line basis over the term of the lease. ~~The amendments in this update~~

~~Table of Contents~~

~~are~~Modified or new leases subsequent to the effective date will follow ASC 2016-02. Accounting for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. In June 2020, the FASB issued ASU 2020-05, Revenue From Contracts With Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, which extended the adoption date of ASU 2016-02 for all other entities.lessors remains largely unchanged from current U.S. GAAP. Under ASU 2020-05, the effective date for adoption of ASU 2016-02 is fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. ~~Accounting for lessors remains largely unchanged from current U.S. GAAP. ASU 2016-02 will be effective for the Company’s fiscal year beginning~~We early adopted this new guidance on January 1, 2022 under a modified retrospective transition approach using the cumulative-effect adjustment transition method approved by the FASB, which results in reporting for the comparative periods presented in accordance with the previous lease guidance under ASC 840. We elected the package of practical expedients but did not adopt the hindsight practical expedient as of January 1, 2022. The package of practical expedients allowed the Company not to reassess whether the arrangement contains a lease, lease classification and ~~subsequent interim periods~~whether previously capitalized costs qualify as initial direct costs. The practical expedients allowed the Company to continue classifying all of its leases as operating leases as they were previously classified under ~~the private company transition guidance.~~ASC 840. The Company ~~is currently evaluating~~recognized lease liabilities of $24.4 million and corresponding right-of-use assets of $23.8 million in our consolidated balance sheet on January 1, 2022. The difference between the ~~impact the adoption of ASU 2016-02 will have~~lease liabilities and corresponding right-of-use assets related to prepaid rent and deferred lease obligations recognized in prepaid expenses, deposits and other assets and accrued expenses and other liabilities, respectively, in our consolidated balance sheet on ~~the Company's financial statements, however management currently believes that the adoption will~~January 1, 2022, resulting in no cumulative-effect adjustment to opening equity. The new standard did not have a significant impact on the ~~Company's~~condensed consolidated statements of operations or the condensed consolidated statements of cash flows. The guidance also requires additional disclosures regarding the Company’s lease portfolio, which have been included within Note 17.

In January 2020, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. Specifically, ASU 2019-12 eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 is effective for annual periods beginning after December 15, 2020, and interim periods beginning after December 15, 2020. ASU 2019-12 is effective for private entities for annual periods beginning after December 15, 2021, and interim periods beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2019-12 under the private company transition guidance beginning January 1, 2022, and the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial ~~position~~statements or disclosures given the Company has a full valuation allowance and ~~results~~the scenarios for which the guidance offer simplification are not significant for the Company.

Recently issued but not adopted accounting pronouncements

In August 2018, the FASB issued ASU 2018-12, Financial Services-Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts, effective for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years. In June of ~~operations.~~2020, the FASB deferred the effective date of ASU 2018-12 for one-year in response to implementation challenges resulting from COVID-19. This update requires insurance companies to annually review and update the assumptions used for measuring the liability under long-duration contracts. The amendments in this ASU may be early adopted as of the beginning of an annual reporting period for which financial statements have not yet been issued, including interim financial statements. We do not currently expect to early adopt this standard. Although we have long-duration contracts, this specific guidance is not expected to impact our title insurance operations; therefore, we do not expect this standard to have a material impact on our condensed consolidated financial statements.

3. Business Combination

As described in Note 1, on March 2, 2021, Old Doma entered into the Agreement with Capitol, a blank check company incorporated in the State of Delaware and formed for the purpose of effecting a merger. Pursuant to the Agreement, a newly formed subsidiary of Capitol was merged with and into Old Doma, and the Business Combination was completed on July 28, 2021. The Business Combination was accounted for as a reverse recapitalization and Capitol was treated as the acquired company for financial statement reporting purposes. Old Doma was deemed the predecessor for financial reporting purposes and Doma was deemed the successor SEC registrant, meaning that Old Doma’s financial statements for periods prior to the consummation of the Business

Table of Contents

Combination are disclosed in the financial statements included within this Quarterly Report and will be disclosed in Doma’s future periodic reports. No goodwill or other intangible assets were recorded, in accordance with GAAP. At the Closing Date, Doma received gross cash consideration of $345.0 million as a result of the reverse recapitalization from Capitol’s trust account, which was then reduced by the redemption of Class A common stock of $294.9 million. In addition, existing Old Doma stockholders and option holders received cash payments from the settlement of the net proceeds of the Business Combination totaling $20.1 million.

In connection with the Business Combination, Capitol entered into subscription agreements with certain investors, whereby Doma issued 30,000,000 shares of common stock at $10.00 per share for an aggregate purchase price of $300.0 million ~~(“PIPE~~(the “PIPE Investment”), which closed simultaneously with the consummation of the Business Combination.

Upon the Closing Date, holders of Old Doma common stock, par value $0.0001 per share (“Old Doma Common Stock”) received shares of ~~Doma~~our common stock in an amount determined by the exchange ratio of approximately 5.994933 to 1 (the “Exchange Ratio”), which was based on the implied price per share prior to the Business Combination established within the Agreement. Reported shares and earnings per share available to holders of Old Doma’s Common Stock, prior to the Business Combination, have been retroactively restated ~~as shares~~ reflecting the Exchange Ratio. Applicable share activity within the statement of changes in stockholder’s equity were also retroactively converted to ~~Doma~~our common stock at the Exchange Ratio.

Old Doma recorded the net assets acquired from Capitol. The total estimated transaction costs directly attributable to the Business Combination are approximately $67.0 million, ~~of which $63.2 million have been paid,~~ consisting of advisory, legal, share registration and other professional fees. $12.1 million of these fees represent underwriter fees incurred by Capitol prior to the Business Combination related to their initial public offering.

Immediately after the Closing Date, 1,325,664 shares of common stock held by the Sponsor became subject to vesting, contingent upon the price of Doma’s common stock, par value 0.0001 (“Doma common stock”) exceeding certain thresholds (the “Sponsor Covered Shares”).

Immediately after giving effect to the Business Combination and the PIPE Investment, there were 321,461,822 shares of common stock outstanding, which excludes the 1,325,664 of Sponsor Covered Shares. The Company is authorized to issue 2,000,000,000 shares of common stock having a par value of $0.0001 per share. Additionally, the Company is authorized to issue 100,000,000 shares of preferred stock having a par value of $0.0001 per share. As of ~~September 30, 2021,~~March 31, 2022, there were ~~321,544,052~~324,348,254 and 0 shares of common stock and preferred stock issued and outstanding, respectively, which excludes the 1,325,664 of Sponsor Covered Shares.

On December 4, 2020, Capitol consummated its initial public offering, which included the issuance of 11,500,000 redeemable warrants (the “Public Warrants”). Simultaneously with the closing of the initial public offering, Capitol completed the private sale of 5,833,333 warrants (the “Private Placement Warrants”). These

~~Table of Contents~~

Warrants remain outstanding following the Business Combination and each whole warrant entitles the holder to purchase one share of ~~Doma~~our common stock at a price of $11.50 (see Note 16 for additional information).

Immediately after the Closing Date, 20% of the aggregate of ~~Doma~~our common stock held by certain investors (collectively, the “Sponsor”) became subject to vesting, contingent upon the price of ~~Doma~~our common stock exceeding certain thresholds. The Sponsor Covered Shares will vest in 2 tranches: (i) one-half of such shares shall vest if the last reported sale price of the common stock equals or exceeds $15.00 for any 20 trading days within any 30-day trading period ending on or before the tenth anniversary of the Closing Date, and (ii) one-half of such shares shall vest if the last reported sale price of the common stock equals or exceeds $17.50 for any 20 trading days within any 30-day trading period ending on or before the tenth anniversary of the Closing Date. The Sponsor is also entitled to the Sponsor Covered Shares if a covered strategic transaction or change in control, as defined by the sponsor support agreement dated as of March 2, 2021 (the “Sponsor Support Agreement”) by and among the sponsors named thereto, Capitol and Old Doma, occurs prior to the ten (10)-year anniversary of the Closing Date. As of ~~September 30, 2021,~~March 31, 2022, the Sponsor Covered Shares were legally outstanding; however, since none of the conditions were met, no related shares are included in the Company's condensed consolidated balance sheets and condensed consolidated statement of changes in ~~stockholders'~~stockholders’ equity or for the purposes of calculating earnings per share.

Table of Contents

Also following the Closing Date, the Sellers have the contingent right to receive up to an additional number of shares equal to 5% of the sum of (i) the aggregate number of outstanding shares of ~~Doma~~our common stock (including restricted common stock, but excluding Sponsor Covered Shares), plus (ii) the maximum number of shares underlying ~~Doma~~our options that are vested and the maximum number of shares underlying warrants to purchase shares of Doma common stock issued as replacement warrants for Old Doma warrants, in each case of these clauses (i) and (ii), as of immediately following the Closing Date ~~(“Seller~~(the “Seller Earnout Shares”). The Seller Earnout Shares are contingently issuable to the Sellers in 2 tranches: (i) one-half of such shares shall be issued if the last reported sale price of the common stock equals or exceeds $15.00 for any 20 trading days within any 30-day trading period ending on or before the fifth anniversary of the Closing Date, and (ii) one-half of such shares shall be issued if the last reported sale price of the common stock equals or exceeds $17.50 for any 20 trading days within any 30-day trading period ending on or before the fifth anniversary of the Closing Date. Since none of the conditions of the Seller Earnout Shares were met as of ~~September 30, 2021,~~March 31, 2022, no related shares are included in the Company’s condensed consolidated statements of changes in stockholders’ equity as of ~~September 30, 2021~~March 31, 2022 or for purposes of calculating earnings per share.

Unless the context otherwise requires or otherwise indicates, share counts of Doma common stock provided in this Quarterly Report exclude both the Sponsor Covered Shares and the Seller Earnout Shares.

4. Investments and fair value measurements

Held-to-maturity debt securities

The cost basis, fair values and gross unrealized gains and losses of our held-to-maturity debt securities are as follows:


		September 30, 2021								December 31, 2020									March 31, 2022								December 31, 2021
		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value			Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Corporate debt securities(1)	Corporate debt securities(1)	$	69,670	$	766	$	(43)	$	70,393	$	57,651	$	994	$	(53)	$	58,592	Corporate debt securities(1)	$	55,727	$	42	$	(906)	$	54,863	$	62,078	$	459	$	(207)	$	62,330
U.S. Treasury securities	U.S. Treasury securities	4,965		3		(1)		4,967		7,519		54		—		7,573		U.S. Treasury securities	6,834		—		(98)		6,736		4,849		—		(16)		4,833
Certificates of deposit	Certificates of deposit	237		—		—		237		236		—		—		236		Certificates of deposit	237		—		—		237		237		—		—		237
Total	Total	$	74,872	$	769	$	(44)	$	75,597	$	65,406	$	1,048	$	(53)	$	66,401	Total	$	62,798	$	42	$	(1,004)	$	61,836	$	67,164	$	459	$	(223)	$	67,400

_______________

(1)Includes both U.S. and foreign corporate debt securities.

The cost basis of held-to-maturity debt securities includes an adjustment for the amortization of premium or discount since the date of purchase. Held-to-maturity debt securities valued at approximately ~~$4.6~~$4.5 million and ~~$5.1~~$4.2 million were on deposit with various governmental authorities at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, as required by law.

~~Table of Contents~~

The change in net unrealized gains and losses on held-to-maturity debt securities for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$(0.3)~~$(1.2) million and ~~$0.7~~$(0.1) million, respectively.

~~The following table reflects the composition~~

Table of ~~net realized gains or losses and corresponding proceeds for the sales of the securities for each of the periods shown below:~~Contents

Three months ended September 30, Nine months ended September 30,
2021 2020 2021 2020
Realized gains (losses):
Held-to-maturity debt securities:
Gains $ — $ — $ 65 $ 15
Losses — — (11) —
Net $ — $ — $ 54 $ 15
Proceeds from sales $ — $ — $ 3,048 $ 1,504

Net realized gains ~~on disposition~~ of held-to-maturity debt securities are computed using the specific identification method and are included in the condensed consolidated statements of operations.

The following table presents certain information regarding contractual maturities of our held-to-maturity debt securities:


Maturity	Maturity	September 30, 2021								Maturity	March 31, 2022
		Amortized Cost		% of Total		Fair Value		% of Total			Amortized Cost		% of Total		Fair Value		% of Total
One year or less	One year or less	$	24,951	33	%	$	25,103	33	%	One year or less	$	30,051	48	%	$	29,973	48	%
After one year through five years	After one year through five years	$	49,921	67	%	$	50,494	67	%	After one year through five years	$	32,747	52	%	$	31,863	52	%
Total	Total	$	74,872	100	%	$	75,597	100	%	Total	$	62,798	100	%	$	61,836	100	%

There were no held-to-maturity debt securities with contractual maturities after five years. Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Net unrealized losses on held-to-maturity debt securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position are as follows:

September 30, 2021 December 31, 2020
Corporate debt securities U.S. Treasury securities Certificate of deposits Total Corporate debt securities U.S. Treasury securities Certificate of deposits Total
Less than 12 months
Fair value $ 5,934 $ 1,676 $ — $ 7,610 $ 8,464 $ 5,181 $ — $ 13,645
Unrealized losses $ (38) $ (1) $ — $ (39) $ (53) $ — $ — $ (53)
Greater than 12 months
Fair value $ 151 $ — $ — $ 151 $ — $ — $ — $ —
Unrealized losses $ (5) $ — $ — $ (5) $ — $ — $ — $ —
Total
Fair value $ 6,085 $ 1,676 $ — $ 7,761 $ 8,464 $ 5,181 $ — $ 13,645
Unrealized losses $ (43) $ (1) $ — $ (44) $ (53) $ — $ — $ (53)

~~Table of Contents~~


	March 31, 2022								December 31, 2021
	Corporate debt securities		U.S. Treasury securities		Certificate of deposits		Total		Corporate debt securities		U.S. Treasury securities		Certificate of deposits		Total
Less than 12 months
Fair value	$	40,973	$	6,571	$	—	$	47,544	$	18,309	$	4,667	$	—	$	22,976
Unrealized losses	$	(836)	$	(98)	$	—	$	(934)	$	(192)	$	(16)	$	—	$	(208)
Greater than 12 months
Fair value	$	1,085	$	—	$	—	$	1,085	$	605	$	—	$	—	$	605
Unrealized losses	$	(70)	$	—	$	—	$	(70)	$	(15)	$	—	$	—	$	(15)
Total
Fair value	$	42,058	$	6,571	$	—	$	48,629	$	18,914	$	4,667	$	—	$	23,581
Unrealized losses	$	(906)	$	(98)	$	—	$	(1,004)	$	(207)	$	(16)	$	—	$	(223)

We believe that any unrealized losses on our held-to-maturity debt securities at ~~September 30, 2021~~March 31, 2022 are temporary based upon our current analysis of the issuers of the securities that we hold and current market conditions. We have no intent to sell, and it is more likely than not that we will not be required to sell, these securities until the fair value recovers to at least equal our cost basis or the securities mature.

Under the new CECL model, the Company recognizes credit losses for its held-to-maturity debt securities by setting up an allowance which is remeasured each reporting period, with changes in the allowance recorded in the condensed consolidated statements of operations. The Company establishes an allowance for credit losses based on a number of factors including the current economic conditions, management's expectations of future economic conditions and performance indicators, such as credit agency ratings and payment and default history. As of March 31, 2022, credit agency ratings on our U.S. Treasury and corporate debt securities ranged from AAA through B1.

For our held-to-maturity debt securities, the Company's model estimates expected credit loss by multiplying the exposure at default by both the probability of default and loss given default (“LGD”). The probability of default and LGD percentages are estimated after considering historical experience with global default rates and unsecured bond recovery rates for horizons aligning to the Company’s held-to-maturity debt security portfolio. The calculated

Table of Contents

allowance is recorded as an offset to held-to-maturity debt securities in the condensed consolidated balance sheets and in the investment, dividend and other income line on the condensed consolidated statements of operations.


Rollforward of Credit Loss Allowance for Held-to-Maturity Debt Securities
Beginning balance, January 1, 2022	$	399
Current-period provision (reduction) for expected credit losses	(17)
Write-off charged against the allowance, if any	—
Recoveries of amounts previously written off, if any	—
Ending balance of the allowance for credit losses, March 31, 2022	$	382

The current-period provision for expected credit losses is due to changes in portfolio composition and the maturity of certain securities.

Available-for-sale debt securities

~~The cost basis, fair values and gross unrealized gains and losses of our available-for-sale debt securities are as follows:~~

December 31, 2020
Cost Basis Unrealized Gains Unrealized Losses Fair Value
Corporate debt securities(1)
$ 7,139 $ 918 $ — $ 8,057
Total $ 7,139 $ 918 $ — $ 8,057

~~_________________~~

~~(1)Includes both U.S. and foreign corporate debt securities.~~

~~The cost basis of available-for-sale debt securities includes an adjustment for the amortization of premium or discount since the date of purchase.~~

The change in net unrealized gains on available-for-sale debt securities for the ~~nine~~three months ended ~~September 30,~~ 2021 ~~and 2020~~ was $(0.9) million ~~and $(0.1) million, respectively.~~. The Company disposed all available-for-sale debt securities in the three months ended March 31, 2021 and therefore had no unrealized gain or loss as of ~~September 30, 2021~~March 31, 2022 and no change in net unrealized gains on available-for-sale debt securities for the three months ended ~~September 30, 2021. The change in net unrealized gains on available-for sale debt securities for the three months ended September 30, 2020 was $0.6 million~~. ~~Any unrealized holding gains or losses on available-for-sale debt securities as of December~~March 31, ~~2020 are reported as accumulated other comprehensive gain or loss, which is a separate component of stockholders’ equity, net of tax, until realized.~~2022.

The following table reflects the composition of net realized gains or losses ~~and corresponding proceeds~~ for the sales of the available-for-sale securities:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
Realized gains (losses):	Realized gains (losses):									Realized gains (losses):
Available-for-sale debt securities:	Available-for-sale debt securities:									Available-for-sale debt securities:
Gains	Gains	$	—	$	—	$	768	$	—	Gains	$	—	$	768
Losses	Losses	—		—		(90)		—		Losses	—		(90)
Net	Net	$	—	$	—	$	678	$	—	Net	$	—	$	678

Proceeds from sales		$	—	$	—	$	7,817	$	—

Net realized gains on disposition of available-for-sale debt securities are computed using the specific identification method and are included in the condensed consolidated statements of operations.

~~Table of Contents~~

Equity securities

~~The cost and estimated fair value of equity securities are as follows:~~

September 30, 2021 December 31, 2020
Cost Estimated Fair Value Cost Estimated Fair Value
Preferred stocks $ — $ — $ 2,000 $ 2,119
Total $ — $ — $ 2,000 $ 2,119

The Company disposed of all equity securities in the three months ended March 31, 2021.

Mortgage loans

The mortgage loan portfolio as of ~~September 30, 2021~~March 31, 2022 is comprised entirely of single-family residential mortgage loans. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company did not purchase any new mortgage loans.

Mortgage loans, which include ~~original~~ contractual terms to maturity of thirty years, are not categorized by contractual maturity as borrowers may have the right to call or prepay obligations with, or without, call or prepayment penalties.

The cost and estimated fair value of mortgage loans are as follows:


		September 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Cost		Estimated Fair Value		Cost		Estimated Fair Value			Cost		Estimated Fair Value		Cost		Estimated Fair Value
Mortgage loans	Mortgage loans	$	2,920	$	2,920	$	2,980	$	2,980	Mortgage loans	$	1,141	$	1,141	$	2,022	$	2,022
Total	Total	$	2,920	$	2,920	$	2,980	$	2,980	Total	$	1,141	$	1,141	$	2,022	$	2,022

Table of Contents

Investment income

Investment income from securities ~~inclusive of realized gains (losses),~~ consists of the following:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
Available-for-sale debt securities	Available-for-sale debt securities	$	—	$	102	$	773	$	306	Available-for-sale debt securities	$	—	$	773
Held-to-maturity debt securities	Held-to-maturity debt securities	543		465		1,507		987		Held-to-maturity debt securities	389		394
Equity investments	Equity investments	—		166		(89)		56		Equity investments	—		(89)
Mortgage loans	Mortgage loans	45		46		136		149		Mortgage loans	22		46
Other	Other	—		4		61		157		Other	44		60
Total	Total	$	588	$	783	$	2,388	$	1,655	Total	$	455	$	1,184

Accrued interest receivable

Accrued interest receivable from investments is included in receivables, net onin the condensed consolidated balance sheets. The following table reflects the composition of accrued interest receivable for investments:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Corporate debt securities	Corporate debt securities	$	568	$	641	Corporate debt securities	$	409	$	874
U.S. Treasury securities	U.S. Treasury securities	38		45		U.S. Treasury securities	20		12
Accrued interest receivable on investment securities	Accrued interest receivable on investment securities	$	606	$	686	Accrued interest receivable on investment securities	$	429	$	886
Mortgage loans	Mortgage loans	21		43		Mortgage loans	8		13
Accrued interest receivable on investments	Accrued interest receivable on investments	$	627	$	729	Accrued interest receivable on investments	$	437	$	899

~~Table of Contents~~

The Company does not recognize an allowance for credit losses for accrued interest receivable, which is recorded in the receivables line in the condensed consolidated balance sheets, because the Company writes off accrued investment timely. The Company writes off accrued interest receivables after three months by reversing interest income.

Fair value measurement

ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”) establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure financial assets or liabilities at fair value. The observability of inputs is impacted by a number of factors, including the type of asset or liability, characteristics specific to the asset or liability, market conditions and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy under ASC 820 are as follows:


Level 1						Quoted prices (unadjusted) in active markets for identical asset or liability at the measurement date are used.

Level 2						Pricing inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 pricing inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3						Pricing inputs are unobservable and include situations where there is little, if any, market activity for the asset or liability. The inputs used in determination of fair value require significant judgment and estimation.

When fair value inputs fall within different levels of the fair value hierarchy, the level in the fair value hierarchy within which the asset or liability is categorized in its entirety is determined based on the lowest level input that is

Table of Contents

significant to the asset or liability. Assessing the significance of a particular input to the valuation of an asset or liability in its entirety requires judgment and considers factors specific to the asset or liability. The categorization of an asset or liability within the hierarchy is based upon the pricing transparency of the asset or liability and does not necessarily correspond to the perceived risk of that asset or liability.

The ~~Company’s assets in the following table are presented at amortized cost on the accompanying condensed consolidated balance sheets. The~~ following table summarizes the Company’s ~~assets~~investments measured at fair value:


		Assets													Assets
		Corporate debt securities		U.S. Treasury securities		Mortgage loans		Preferred stocks		Certificate of deposits		Total			Corporate debt securities		U.S. Treasury securities		Mortgage loans		Certificate of deposits		Total
September 30, 2021
March 31, 2022														March 31, 2022
Level 1	Level 1	$	—	$	4,967	$	—	$	—	$	—	$	4,967	Level 1	$	—	$	6,736	$	—	$	—	$	6,736
Level 2	Level 2	70,393		—		—		—		237		70,630		Level 2	54,863		—		—		237		55,100
Level 3	Level 3	—		—		2,920		—		—		2,920		Level 3	—		—		1,141		—		1,141
Total	Total	$	70,393	$	4,967	$	2,920	$	—	$	237	$	78,517	Total	$	54,863	$	6,736	$	1,141	$	237	$	62,977

December 31, 2020
December 31, 2021														December 31, 2021
Level 1	Level 1	$	—	$	7,573	$	—	$	2,119	$	—	$	9,692	Level 1	$	—	$	4,833	$	—	$	—	$	4,833
Level 2	Level 2	66,649		—		—		—		236		66,885		Level 2	62,330		—		—		237		62,567
Level 3	Level 3	—		—		2,980		—		—		2,980		Level 3	—		—		2,022		—		2,022
Total	Total	$	66,649	$	7,573	$	2,980	$	2,119	$	236	$	79,557	Total	$	62,330	$	4,833	$	2,022	$	237	$	69,422

The Company classifies U.S. Treasury bonds ~~and preferred stocks~~ within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. Corporate debt securities and certificates of deposit are classified within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical

~~Table of Contents~~

underlying security which may not be actively traded. The Company classifies mortgage loans as Level 3 due to the reliance on significant unobservable valuation inputs.

The Company’s liabilities in the following table are ~~presented~~recorded at fair value on the accompanying condensed consolidated balance sheets. The following table summarizes the Company’s liabilities measured at fair value:


		Liabilities									Liabilities
		Public Warrants		Private Placement Warrants		Sponsor Covered Shares		Total			Public Warrants		Private Placement Warrants		Sponsor Covered Shares		Total
September 30, 2021
March 31, 2022										March 31, 2022
Level 1	Level 1	$	16,215	$	—	$	—	$	16,215	Level 1	$	4,025	$	—	$	—	$	4,025
Level 2	Level 2	—		8,225		—		8,225		Level 2	—		2,042		—		2,042
Level 3	Level 3	—		—		8,610		8,610		Level 3	—		—		1,916		1,916
Total	Total	$	16,215	$	8,225	$	8,610	$	33,050	Total	$	4,025	$	2,042	$	1,916	$	7,983

December 31, 2020
December 31, 2021										December 31, 2021
Level 1	Level 1	$	—	$	—	$	—	$	—	Level 1	$	10,925	$	—	$	—	$	10,925
Level 2	Level 2	—		—		—		—		Level 2	—		5,542		—		5,542
Level 3	Level 3	—		—		—		—		Level 3	—		—		5,415		5,415
Total	Total	$	—	$	—	$	—	$	—	Total	$	10,925	$	5,542	$	5,415	$	21,882

The Company considers the Public Warrants to be Level 1 liabilities due to the use of an observable market quote in an active market under the ticker DOMA.WS. For the Private Placement Warrants, the Company considers the fair value of each Private Placement Warrant to be equivalent to that of each Public Warrant, with an immaterial

Table of Contents

adjustment for short-term marketability restrictions. As such, the Private Placement Warrants are classified as Level 2.

The fair value of the Sponsor Covered Shares was determined using a Monte Carlo simulation valuation model using a distribution of potential stock price outcomes on a daily basis over the 10-year vesting period. The unobservable significant inputs to the valuation model were as follows:


	~~September 30,~~March 31, ~~2021~~2022
Current stock price	$	~~7.40~~2.17
Expected volatility	~~55.2~~60.0		%
Risk-free interest rate	~~1.50~~2.32		%
Expected term	~~9.83~~9.3 years
Expected dividend yield	—		%
Annual change in control probability	2.0		%

~~Table of Contents~~

The changes for Level 3 items measured at fair value on a recurring basis using significant unobservable inputs are as follows:


	Sponsor Covered Shares
Fair value as of ~~June 30,~~December 31, 2021	$	—5,415
~~Sponsor Covered Shares assumed in Business Combination~~	~~9,332~~
Change in fair value of Sponsor Covered Shares	~~(722)~~(3,499)
Fair value as of ~~September 30, 2021~~March 31, 2022	$	~~8,610~~1,916

There were no transfers of assets or liabilities between Level 1 and Level 2 during the three ~~or nine~~ months ended ~~September 30, 2021~~March 31, 2022 and the year ended December 31, ~~2020.~~2021. There were no transfers involving Level 3 assets or liabilities during the three ~~or nine~~ months ended ~~September 30, 2021~~March 31, 2022 and the year ended December 31, ~~2020.~~2021.

Cash and cash equivalents, restricted cash, receivables, prepaid expenses and other assets, accounts payable, and accrued expenses and other liabilities approximate fair value and are therefore excluded from the leveling table above. The cost basis is determined to approximate fair value due to the short term duration of these financial instruments.

2221

Table of Contents

5. Revenue recognition

Disaggregation of revenue

Our revenue consists of:


				Three months ended September 30,				Nine months ended September 30,							Three months ended March 31,
				2021		2020		2021		2020					2022		2021
Revenue Stream	Revenue Stream	Statement of Operations Classification	Segment	Total Revenue								Revenue Stream	Statements of Operations Classification	Segment	Total Revenue
Revenue from insurance contracts:	Revenue from insurance contracts:											Revenue from insurance contracts:
Direct Agents title insurance premiums	Direct Agents title insurance premiums	Net premiums written	Underwriting	$	32,944	$	23,146	$	88,797	$	59,399	Direct Agents title insurance premiums	Net premiums written	Underwriting	$	22,413	$	24,573
Direct Agents title insurance premiums	Direct Agents title insurance premiums	Net premiums written	Elimination	(96)		—		(976)		—		Direct Agents title insurance premiums	Net premiums written	Elimination	—		(770)
Third-Party Agents title insurance premiums		Net premiums written	Underwriting	108,643		80,441		270,933		187,339
Third-Party Agent title insurance premiums												Third-Party Agent title insurance premiums	Net premiums written	Underwriting	73,253		84,189
Total revenue from insurance contracts	Total revenue from insurance contracts			$	141,491	$	103,587	$	358,754	$	246,738	Total revenue from insurance contracts			$	95,666	$	107,992
Revenue from contracts with customers:	Revenue from contracts with customers:											Revenue from contracts with customers:
Escrow fees	Escrow fees	Escrow, title-related and other fees	Distribution	$	16,190	$	11,456	$	45,325	$	29,331	Escrow fees	Escrow, title-related and other fees	Distribution	$	11,832	$	13,380
Other title-related fees and income	Other title-related fees and income	Escrow, title-related and other fees	Distribution	31,383		24,638		86,181		63,712		Other title-related fees and income	Escrow, title-related and other fees	Distribution	22,448		24,266
Other title-related fees and income	Other title-related fees and income	Escrow, title-related and other fees	Underwriting	823		490		2,621		1,088		Other title-related fees and income	Escrow, title-related and other fees	Underwriting	803		1,409
Other title-related fees and income	Other title-related fees and income	Escrow, title-related and other fees	Elimination(1)	(27,944)		(19,842)		(75,035)		(50,833)		Other title-related fees and income	Escrow, title-related and other fees	Elimination(1)	(18,970)		(20,480)
Total revenue from contracts with customers	Total revenue from contracts with customers			$	20,452	$	16,742	$	59,092	$	43,298	Total revenue from contracts with customers			$	16,113	$	18,575
Other revenue:	Other revenue:											Other revenue:
Interest and investment income (2)	Interest and investment income (2)	Investment, dividend and other income	Distribution	68		33		155		304		Interest and investment income (2)	Investment, dividend and other income	Distribution	41		50
Interest and investment income (2)	Interest and investment income (2)	Investment, dividend and other income	Underwriting	493		659		1,483		1,513		Interest and investment income (2)	Investment, dividend and other income	Underwriting	410		451
Realized gains and losses, net	Realized gains and losses, net	Investment, dividend and other income	Distribution	(21)		(73)		(25)		310		Realized gains and losses, net	Investment, dividend and other income	Distribution	(27)		(4)
Realized gains and losses, net	Realized gains and losses, net	Investment, dividend and other income	Underwriting	99		124		905		141		Realized gains and losses, net	Investment, dividend and other income	Underwriting	4		732
Total other revenues	Total other revenues			$	639	$	743	$	2,518	$	2,268	Total other revenues			$	428	$	1,229
Total revenues	Total revenues			$	162,582	$	121,072	$	420,364	$	292,304	Total revenues			$	112,207	$	127,796

_________________

(1)Premiums retained by Direct Agents are recognized as income to the Distribution segment, and expense to the Underwriting segment. Upon consolidation, the impact of these internal segment transactions is eliminated. See Note 7. Segment information for additional breakdown.

(2)Interest and investment income consists primarily of interest payments received on held-to-maturity debt securities, available-for-sale debt securities and mortgage loans.

2322

Table of Contents

6. Liability for loss and loss adjustment expenses

A summary of the changes in the liability for loss and loss adjustment expenses for the ~~nine~~three months ending ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ is as follows:


		September 30,							March 31,
		2021			2020				2022			2021
Balance at the beginning of the year	Balance at the beginning of the year	$	69,800		$	62,758		Balance at the beginning of the year	$	80,267		$	69,800

Provision for claims related to:	Provision for claims related to:							Provision for claims related to:
Current year	Current year	$	23,567		$	15,761		Current year	$	5,656		$	6,490
Prior years	Prior years	(6,826)			(5,696)			Prior years	(1,045)			(3,241)
Total provision for claims	Total provision for claims	$	16,741		$	10,065		Total provision for claims	$	4,611		$	3,249

Paid losses related to:	Paid losses related to:							Paid losses related to:
Current year	Current year	$	(2,832)		$	(1,636)		Current year	$	(548)		$	(222)
Prior years	Prior years	(5,038)			(5,055)			Prior years	(1,796)			(2,176)
Total paid losses	Total paid losses	$	(7,870)		$	(6,691)		Total paid losses	$	(2,344)		$	(2,398)

Balance at the end of the period	Balance at the end of the period	$	78,671		$	66,132		Balance at the end of the period	$	82,534		$	70,651

Provision for claims as a percentage of net written premiums	Provision for claims as a percentage of net written premiums	4.7		%	4.1		%	Provision for claims as a percentage of net written premiums	4.8		%	3.0		%

We continually update our liability for loss and loss adjustment expense estimates as new information becomes known, new loss patterns emerge, or as other contributing factors ~~and judgments~~ are considered and incorporated into the analysis. Estimating future title loss payments is difficult because of the complex nature of title claims, the long periods of time over which claims are paid, significantly varying dollar amounts of individual claims, and other factors.

Current year incurred and paid losses includes current year reported claims as well as estimated future losses on such claims.

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the prior year’s provision for claims ~~reserve~~ release ~~related to prior years~~ of ~~$6.8~~$1.0 million is due to ~~expected~~reported loss emergence ~~being~~which was lower than ~~prior expectations.~~expected. Historically, ~~our~~this favorable loss experience has resulted in a decrease in the projection of ultimate loss for past policy years. Most recently, our favorable loss experience resulted in a decrease in the projection of ultimate loss for policy years ~~2017-2020.~~2018-2020. For the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, the provision for claims reserve release related to prior years of ~~$5.7~~$3.2 million is due to reported loss emergence which was lower than expected. This has resulted in a decrease in the projection of ultimate loss ~~primarily~~ for policy years ~~2017-2019.~~2017-2020. The actuarial assumptions underlying the Company’s selected ultimate loss estimates place more consideration on title insurance industry benchmarks for more recent policy years. These title insurance benchmarks are based on industry long-term average loss ratios. As the Company’s claims experience matures, we refine those estimates to put more consideration to the Company’s actual claims experience. For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company’s actual claims experience reflects lower loss ratios than industry benchmarks from a current positive underwriting cycle and resulted in the favorable development.

Current year incurred and paid losses includes current year reported claims as well as estimated future losses on such claims.

The liability for loss and loss adjustment expenses of ~~$78.7~~$82.5 million and ~~$69.8~~$80.3 million, as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, includes ~~$0.2~~$0.5 and ~~$0.7~~$0.1 million, respectively, of reserves for the settlement of claims which the Company has deemed to be directly related to its escrow or agent related activities. The reserves for the settlement of claims related to escrow or agent related activities are not actuarially determined.

2423

Table of Contents

7. Segment information

The Company’s chief operating decision maker reviews financial performance and makes decisions about the allocation of resources for our operations through 2 reportable segments, (1) Distribution and (2) Underwriting. The Company’s reportable segments offer different products and services that are marketed through different channels for real estate closing transactions. They are managed separately because of the unique technology, service requirements and regulatory environment.

A description of each of our reportable segments is as follows.

•Distribution: Our Distribution segment reflects our Direct Agents operations of acquiring customer orders and providing title and escrow services for real estate closing transactions. We acquire customers through our partnerships with realtors, attorneys and non-centralized loan originators via a ~~94-branch~~108-branch footprint across 10 states as of March 31, 2022 (“Local”) and our partnerships with national lenders and mortgage originators that maintain centralized lending operations representing our Doma Enterprise accounts (“Doma Enterprise”).

•Underwriting: Our Underwriting segment reflects the results of our title insurance underwriting business, including policies referred through our Direct Agents and Third-Party Agents channels. The referring agents typically retain approximately 82% - 84% of the policy premiums in exchange for their services. The retention varies by state and agent.

We use adjusted gross profit as the primary profitability measure for making decisions regarding ongoing operations. Adjusted gross profit is calculated by subtracting direct costs, such as premiums retained by agents, direct labor, other direct costs, and provision for claims, from total revenue. Our chief operating decision maker evaluates the results of the aforementioned segments on a pre-tax basis. Segment adjusted gross profit excludes certain items which are included in net loss, such as depreciation and amortization, corporate and other expenses, change in the fair value of Warrant and Sponsor Covered Shares liabilities, interest expense, and income tax expense, as these items are not considered by the chief operating decision maker in evaluating the segments’ overall operating performance. Our chief operating decision maker does not review nor consider assets allocated to our segments for the purpose of assessing performance or allocating resources. Accordingly, segments’ assets are not presented.

The following table summarizes the operating results of the Company’s reportable segments:


		Three months ended September 30, 2021									Three months ended March 31, 2022
		Distribution		Underwriting		Eliminations		Consolidated total			Distribution		Underwriting		Eliminations		Consolidated total
Net premiums written	Net premiums written	$	—	$	141,587	$	(96)	$	141,491	Net premiums written	$	—	$	95,666	$	—	$	95,666
Escrow, other title-related fees and other (1)	Escrow, other title-related fees and other (1)	47,573		823		(27,944)		20,452		Escrow, other title-related fees and other (1)	34,280		803		(18,970)		16,113
Investment, dividend and other income	Investment, dividend and other income	47		592		—		639		Investment, dividend and other income	14		414		—		428
Total revenue	Total revenue	$	47,620	$	143,002	$	(28,040)	$	162,582	Total revenue	$	34,294	$	96,883	$	(18,970)	$	112,207

Premiums retained by agents (2)	Premiums retained by agents (2)	$	—	$	119,636	$	(28,040)	$	91,596	Premiums retained by agents (2)	$	—	$	79,572	$	(18,970)	$	60,602
Direct labor (3)	Direct labor (3)	21,791		2,157		—		23,948		Direct labor (3)	25,553		2,245		—		27,798
Other direct costs (4)	Other direct costs (4)	5,650		4,423		—		10,073		Other direct costs (4)	6,059		2,767		—		8,826
Provision for claims	Provision for claims	1,243		5,442		—		6,685		Provision for claims	599		4,012		—		4,611
Adjusted gross profit	Adjusted gross profit	$	18,936	$	11,344	$	—	$	30,280	Adjusted gross profit	$	2,083	$	8,287	$	—	$	10,370

Table of Contents


		Nine months ended September 30, 2021									Three months ended March 31, 2021
		Distribution		Underwriting		Eliminations		Consolidated total			Distribution		Underwriting		Eliminations		Consolidated total
Net premiums written	Net premiums written	$	—	$	359,730	$	(976)	$	358,754	Net premiums written	$	—	$	108,762	$	(770)	$	107,992
Escrow, other title-related fees and other (1)	Escrow, other title-related fees and other (1)	131,506		2,621		(75,035)		59,092		Escrow, other title-related fees and other (1)	37,646		1,409		(20,480)		18,575
Investment, dividend and other income	Investment, dividend and other income	130		2,388		—		2,518		Investment, dividend and other income	46		1,183		—		1,229
Total revenue	Total revenue	$	131,636	$	364,739	$	(76,011)	$	420,364	Total revenue	$	37,692	$	111,354	$	(21,250)	$	127,796

Premiums retained by agents (2)	Premiums retained by agents (2)	$	—	$	303,126	$	(76,011)	$	227,115	Premiums retained by agents (2)	$	—	$	91,588	$	(21,250)	$	70,338
Direct labor (3)	Direct labor (3)	56,884		5,945		—		62,829		Direct labor (3)	16,107		1,872		—		17,979
Other direct costs (4)	Other direct costs (4)	16,846		7,896		—		24,742		Other direct costs (4)	5,317		1,792		—		7,109
Provision for claims	Provision for claims	1,777		14,964		—		16,741		Provision for claims	559		2,690		—		3,249
Adjusted gross profit	Adjusted gross profit	$	56,129	$	32,808	$	—	$	88,937	Adjusted gross profit	$	15,709	$	13,412	$	—	$	29,121

Three months ended September 30, 2020
Distribution Underwriting Eliminations Consolidated total
Net premiums written $ — $ 103,587 $ — $ 103,587
Escrow, other title-related fees and other (1)
36,094 490 (19,842) 16,742
Investment, dividend and other income (40) 783 — 743
Total revenue $ 36,054 $ 104,860 $ (19,842) $ 121,072
Premiums retained by agents (2)
$ — $ 86,866 $ (19,842) $ 67,024
Direct labor (3)
13,185 1,707 — 14,892
Other direct costs (4)
4,711 1,603 — 6,314
Provision for claims 617 4,625 — 5,242
Adjusted gross profit $ 17,541 $ 10,059 $ — $ 27,600

_________________

Nine months ended September 30, 2020
Distribution Underwriting Eliminations Consolidated total
Net premiums written $ — $ 246,738 $ — $ 246,738
Escrow, other title-related fees and other (1)
93,043 1,088 (50,833) 43,298
Investment, dividend and other income 614 1,654 — 2,268
Total revenue $ 93,657 $ 249,480 $ (50,833) $ 292,304
Premiums retained by agents (2)
$ — $ 206,965 $ (50,833) $ 156,132
Direct labor (3)
40,213 4,891 — 45,104
Other direct costs (4)
12,433 3,916 — 16,349
Provision for claims 1,006 9,059 — 10,065
Adjusted gross profit $ 40,005 $ 24,649 $ — $ 64,654

~~_________________~~

(1)Includes fee income from closings, escrow, title exams, ceding commission income, as well as premiums retained by Direct Agents.

(2)This expense represents a deduction from the net premiums written for the amounts that are retained by Direct Agents and Third-Party Agents as compensation for their efforts to generate premium income for our Underwriting segment. The impact of premiums retained by our Direct Agents and the expense for reinsurance or co-insurance procured on Direct ~~Agents~~Agent sourced premiums are eliminated in consolidation.

~~Table of Contents~~

(3)Includes all compensation costs, including salaries, bonuses, incentive payments, and benefits, for personnel involved in the direct fulfillment of title and/or escrow services.

(4)Includes title examination expense, office supplies, and premium and other taxes.

The following table provides a reconciliation of the Company’s total reportable segments’ adjusted gross profit to its total loss before income taxes:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
Adjusted gross profit	Adjusted gross profit	$	30,280	$	27,600	$	88,937	$	64,654	Adjusted gross profit	$	10,370	$	29,121
Depreciation and amortization	Depreciation and amortization	1,978		1,221		7,705		3,236		Depreciation and amortization	3,236		2,707
Corporate and other expenses (1)	Corporate and other expenses (1)	53,393		28,604		133,234		82,910		Corporate and other expenses (1)	66,668		34,687
Change in fair value of Warrant and Sponsor Covered Shares liabilities	Change in fair value of Warrant and Sponsor Covered Shares liabilities	4,478		—		4,478		—		Change in fair value of Warrant and Sponsor Covered Shares liabilities	(13,900)		—
Interest expense	Interest expense	4,531		1,193		12,341		4,428		Interest expense	4,207		3,360
Loss before income taxes	Loss before income taxes	$	(34,100)	$	(3,418)	$	(68,821)	$	(25,920)	Loss before income taxes	$	(49,841)	$	(11,633)

_________________

(1)Includes corporate and other costs not allocated to segments including corporate support function costs, such as legal, finance, human resources, technology support and certain other indirect operating expenses, such as sales and management payroll, and incentive related expenses.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 the Distribution segment had allocated goodwill of $88.1 million and the Underwriting segment had allocated goodwill of $23.4 million. There were no additions from acquisitions, impairments, or adjustments to goodwill resulting from prior year acquisitions in either segment for the three months ended March 31, 2022 and 2021.

8. Debt

Senior secured credit agreement

On December 31, 2020, Old Doma executed a loan and security agreement with Hudson Structured Capital Management Ltd. (“HSCM”), providing for a $150.0 million senior secured term loan (“Senior Debt”)~~. On January 14, 2021 Old Doma executed a notice of borrowing, committing Old Doma to borrow $150.0 million under the terms and conditions of the Senior Debt. The Senior Debt~~ that was funded by the lenders, which are affiliates of HSCM, on January 29, 2021 (“Funding Date”). The Senior Debt matures five years from the Funding Date. Under the agreement, the Senior Debt will bear interest of 11.25% per annum, 5.0% of which will be paid on a current cash basis and the remainder to accrue and be added to the outstanding principal balance. Interest shall be compounded quarterly. If at any time Old Doma (now known as

Table of Contents

States Title) is in an event of default under the Senior Debt, outstanding amounts shall bear interest at the default interest rate of 15.00%. Upon funding, Old Doma issued penny warrants to affiliates of HSCM equal to 1.35% of Old Doma’s fully diluted shares. The warrants were net exercised on the Closing Date and such affiliates of HSCM received the right to receive approximately 4.2 million shares of ~~Doma~~our common stock. The Senior Debt is secured by a first-priority pledge and security interest in substantially all of the assets (tangible and intangible) of ~~the Company~~our wholly owned subsidiary States Title (which represent substantially all of our assets) and any of its existing and future domestic subsidiaries (in each case, subject to customary exclusions, including the exclusion of regulated insurance company subsidiaries). ~~The Company~~States Title is subject to customary affirmative, negative and financial covenants, including, among other things, minimum liquidity of $20.0 million (as of the last day of any month), minimum consolidated annual revenue of $130.0 million, limits on the incurrence of indebtedness, restrictions on asset sales outside the ordinary course of business and material acquisitions, limitations on dividends and other restricted payments. ~~The Company~~States Title was in compliance with the Senior Debt covenants as of ~~September 30, 2021.~~March 31, 2022. The Senior Debt also includes customary events of default for facilities of this type and provides that, if an event of default occurs and is continuing, the Senior Debt will amortize requiring regular payments on a straight-line basis over the subsequent 24-month calendar period, but not to extend beyond the maturity date.

~~Loan from a related party~~

~~As part~~The estimated fair value of the ~~North American Title Acquisition, Lennar issued Old Doma~~Senior Debt at March 31, 2022 was $160.7 million. No active or observable market exists for the Senior Debt and, as a ~~note for $87.0 million at January 7, 2019 (the “Loan”). As of December 31, 2020,~~result, this is a Level 3 fair value measurement. Therefore, the ~~Loan had an outstanding balance of $65.5 million. The Loan was~~

~~Table of Contents~~

~~paid in full in January 2021. Upon repayment~~estimated fair value of the ~~Loan, Lennar forfeited its seat~~Senior Debt is based on the ~~board of directors of Old Doma~~income valuation approach, which is a valuation technique that ~~was associated with the Loan.~~converts future amounts (for example, cash flows or income and expenses) to a single current (that is, discounted) amount.

9. Stock compensation expense

The Company ~~issues~~issued stock options (incentive stock options (“ISOs”) and non-statutory stock options (“NSOs”) and restricted stock awards (“RSAs”) to employees and key advisors under the Company’s 2019 Equity Incentive Plan, which ~~was~~has been approved by the board of directors. Granted stock options do not expire for 10 years and have vesting periods ranging from 7 to 60 months. The holder of one stock option may purchase one share of common stock at the underlying strike price.

The Company issues restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”) under the 2021 Omnibus Incentive Plan. The RSUs are subject to time-based vesting, with a majority of the RSUs vesting 25% on the first anniversary of the award date and ratably thereafter for twelve quarters, such that the RSUs will be fully vested on the fourth anniversary of their award date. Eligible participants in the PRSUs will receive a number of earned shares based on growth in retained premiums and fees and adjusted gross profit during the performance period, as established by the Company’s board of directors. Earned shares for the PRSUs will fully vest in three equal annual installments after the performance period based on continuous employment. The RSUs and PRSUs are measured at fair market value on the grant date and stock-based compensation expense is recognized as the shares vest with a corresponding offset credited to additional paid-in-capital.

Stock-based compensation expense for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$3.0~~$11.4 million and ~~$0.4~~$2.3 million, respectively. ~~Stock-based compensation expense for the nine months ended September 30, 2021 and 2020 was $9.0 million and $0.9 million, respectively.~~

Table of Contents

Stock options (ISO and NSO)

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company had the following stock option ~~activity (option amounts have been retroactively restated as shares reflecting the Exchange Ratio):~~activity:


		Number of Stock Options	Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Life (In years)	Aggregate Intrinsic Value ($)			Number of Stock Options	Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Life (In years)	Aggregate Intrinsic Value ($)

Outstanding as of December 31, 2020		26,492,158	$	0.53	8.5	$	374,808
Outstanding as of December 31, 2021								Outstanding as of December 31, 2021	24,255,204	$	0.51	7.91	$	109,061
Granted	Granted	4,583,033	0.71		9.25			Granted	—	—		0
Exercised	Exercised	(4,004,764)	0.43		7.2			Exercised	(924,717)	0.52		7.55
Cancelled or forfeited	Cancelled or forfeited	(786,607)	0.66		8.41			Cancelled or forfeited	(241,210)	0.68		8.16
Outstanding as of September 30, 2021		26,283,820	$	0.58	8.03	$	179,382
Outstanding as of March 31, 2022								Outstanding as of March 31, 2022	23,089,277	$	0.59	7.66	$	36,586

Options exercisable as of September 30, 2021		10,412,664	$	0.49	7.48	$	71,902
Options exercisable as of March 31, 2022								Options exercisable as of March 31, 2022	11,853,819	$	0.53	7.38	$	19,403

~~Restricted~~As of March 31, 2022, there was $24.0 million of stock-based compensation expense that had yet to be recognized related to nonvested stock ~~awards (RSAs)~~option grants.

RSAs, RSUs and PRSUs

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company had the following non-vested RSA, ~~activity (share amounts have been retroactively restated as shares reflecting the Exchange Ratio):~~RSU and PRSU activity:

Number of
RSAs
Average
Grant Date
Fair Value ($)
Non-vested at December 31, 2020 1,551,867 $ 0.52
Granted — —
Exercised (613,563) 0.38
Cancelled or Forfeited — —
Non-vested at September 30, 2021 938,304 $ 0.61


	Number of RSAs, RSUs and PRSUs	Average Grant Date Fair Value ($)
Non-vested at December 31, 2021	18,579,930	$	6.11
Granted	29,551,401	2.17
Vested	(174,352)	2.54
Cancelled or Forfeited	(584,181)	6.22
Non-vested at March 31, 2022	47,372,798	$	3.67

As of March 31, 2022, there was $157.1 million of stock-based compensation expense that had yet to be recognized related to nonvested RSAs, RSUs and PRSUs.

~~Table of Contents~~

10. Earnings per share

The calculation of the basic and diluted EPS is as follows:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
Numerator	Numerator									Numerator
Net loss attributable to Doma Holdings, Inc.	Net loss attributable to Doma Holdings, Inc.	$	(34,270)	$	(3,622)	$	(69,327)	$	(26,540)	Net loss attributable to Doma Holdings, Inc.	$	(50,026)	$	(11,758)

Denominator	Denominator									Denominator
Weighted-average common shares – basic and diluted	Weighted-average common shares – basic and diluted	245,003,754		64,060,987		128,105,954		62,255,035		Weighted-average common shares – basic and diluted	323,890,562		67,418,142

Net loss per share attributable to Doma Holdings, Inc. shareholders
Net loss per share attributable to stockholders										Net loss per share attributable to stockholders
Basic and diluted	Basic and diluted	$	(0.14)	$	(0.06)	$	(0.54)	$	(0.43)	Basic and diluted	$	(0.15)	$	(0.17)

Table of Contents

As we have reported net loss for each of the periods presented, all potentially dilutive securities are antidilutive. The following potential outstanding shares of common stock were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:
As of September 30,
2021 2020
Convertible preferred stock — 183,159,138
Outstanding stock options 26,283,820 27,621,396
Warrants for common stock 18,022,750 28,870,386
Restricted stock units 938,304 2,083,281
Total antidilutive securities 45,244,874 241,734,201


	As of March 31,
	2022	2021
Old Doma preferred stock	—	183,159,138
Outstanding stock options	23,089,277	28,137,947
Warrants for common and preferred stock	18,022,750	33,896,874
RSA’s, RSU’s and PRSU’s	47,372,798	1,338,016
Total antidilutive securities	88,484,825	246,531,975

11. Related party transactions

Equity held by Lennar

In connection with the North American Title Acquisition, subsidiaries of Lennar were granted equity in the Company. As of ~~September 30, 2021,~~March 31, 2022, Lennar, through its subsidiaries, held ~~25.6%~~25.4% of the ~~Company’s outstanding common stock.~~

~~Loan from Lennar~~

~~In connection with the North American Title Acquisition, the~~ Company ~~received~~on a ~~loan from Lennar, which was repaid in full in January 2021 (see Note 8 for additional information).~~

~~Shared services agreements between the Company and Lennar~~

In connection with the North American Title Acquisition, the Company and Lennar entered into a transition services agreement (“TSA”) that provided for certain shared services provided by Lennar to the Company as it incorporated the Acquired Business into its operations, and also for the sharing of expenses in office locations that would contain both Company and Lennar personnel until such time one entity or the other, depending on the location, established separate office space for its personnel and operations.

During the three and nine months ended September 30, 2020, the Company paid Lennar $0.0 and $0.3 million, respectively, in settlement of the TSA services arrangement. Additionally, during the nine months ended

~~Table of Contents~~

~~September 30, 2021 and 2020, the Company paid Lennar approximately $0.1 million and $0.2 million, respectively, for rent associated with shared spaces.~~fully diluted basis.

Transactions with Lennar

In the routine course of its business, ~~North American~~Doma Title Insurance, ~~Company ("NATIC"~~Inc. (“DTI”) underwrites title insurance policies for a subsidiary of Lennar. ~~During the three months ended September 30, 2021 and 2020, the~~The Company recorded the following revenues ~~of $30.3 million~~ and ~~$22.9 million, respectively,~~premiums retained by Third-Party Agents from these transactions, which are included within our Underwriting segment. During the three months ended September 30, 2021 and 2020, the Company recorded premiums retained by Third-Party Agents of $24.8 million and $18.4 million, respectively from these transactions. During the nine months ended September 30, 2021 and 2020, the Company recorded revenues of $81.9 million and $64.2 million, respectively, from these transactions. During the nine months ended September 30, 2021 and 2020, the Company recorded premiums retained by Third-Party Agents of $66.6 million and $51.9 million, respectively from these transactions. As of September 30, 2021 and December 31, 2020, the Company had net receivables related to these transactions of $3.4 million and $4.4 million, respectively. segment:


	Three Months Ended March 31,
	2022		2021
Revenues	$	27,668	$	24,650
Premiums retained by Third-Party Agents	22,460		19,884


	March 31, 2022		December 31, 2021
Net receivables	$	3,549	$	3,883

These amounts are included in receivables, net onin the Company’s condensed consolidated balance sheets.

~~Consulting agreement~~

In the third quarter of 2021, the Company entered into a consulting services agreement with a company that provides IT consulting services for which our Chief Executive Officer is a member of its board of directors. During the three and nine months ended September 30, 2021, the Company incurred costs related to this agreement totaling $0.3 million. No costs were incurred during the three and nine months ended September 30, 2020. Total accounts payable related to this agreement at September 30, 2021 was $0.3 million.

12. Commitments and contingencies

Legal matters

The Company is subject to claims and litigation matters in the ordinary course of business. Management does not believe the resolution of any such matters will have a materially adverse effect on the Company’s financial position or results of operations.

Commitments and other contingencies

The Company leases office space and equipment under non-cancellable lease agreements that expire at various points through 2028. For the three months ended September 30, 2021 and 2020, rental expense under these leases was $2.4 million and $2.4 million, respectively. For the nine months ended September 30, 2021 and 2020, rental expense under these leases was $7.0 million and $7.5 million, respectively.

~~As of September 30, 2021, total future commitments on non-cancelable operating leases with a minimum remaining term in excess of one year are as follows:~~

2021 $ 2,311
2022 9,059
2023 8,037
2024 6,417
2025 4,724
Thereafter 7,032
Total $ 37,580

The Company also administers escrow deposits as a service to customers, a substantial portion of which are held at third-party financial institutions. These escrow deposits amounted to ~~$511.1~~$230.3 million and ~~$290.9~~$204.8 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Such deposits are not reflected onin the condensed consolidated balance sheets, but the Company could be contingently liable for them under certain circumstances (for

~~Table of Contents~~

example, if the Company disposes of escrowed assets). Such contingent liabilities have not materially impacted the results of operations or financial condition to date and are not expected to do so in the future.

Table of Contents

See Note 17 in our condensed consolidated financial statements for information on our operating lease obligations.

13. Accrued expenses and other liabilities

Accrued expenses and other liabilities include the following:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Employee compensation and benefits	Employee compensation and benefits	$	32,746	$	23,899	Employee compensation and benefits	$	23,719	$	32,756
Other	Other	17,441		9,145		Other	11,758		21,393
Total accrued expenses and other liabilities	Total accrued expenses and other liabilities	$	50,187	$	33,044	Total accrued expenses and other liabilities	$	35,477	$	54,149

14. Employee benefit plan

The Company sponsors a defined contribution 401(k) plan for its employees (the “Retirement Savings Plan”). The Retirement Savings Plan is a voluntary contributory plan under which employees may elect to defer compensation for federal income tax ~~purposes.~~purposes under Section 401(k) of the Internal Revenue Code of 1986. All full-time employees age 18+ are eligible to enroll in the plan on their first day of employment. ~~The Company provides~~Company matching contributions begin upon employee enrollment in the Retirement Savings Plan. Prior to January 1, 2022, the Company provided an employer match up to 50% of the first 6% of elective ~~contributions. There are~~contributions, and there were no matching contributions in excess of 3% of compensation. ~~Company matching contributions begin upon employee enrollment in the Retirement Savings Plan.~~

~~For the year ended December 31, 2020,~~Effective January 1, 2022, the Company ~~made contributions for the benefit of employees of $0.9 million from January 1, 2020 through May 15, 2020. The Company suspended the~~provides an employer match ~~effective May 16, 2020 and made no contributions for the benefit of employees~~up to ~~the Retirement Savings Plan for the rest of the year through December 31, 2020. The temporary suspension was due to the COVID-19 pandemic and its potential impact~~100% on the ~~business, which was not estimable at~~first 1% of elective contributions and 50% on the ~~time. On January 1, 2021, the Company reinstated~~next 5% of elective contributions. The maximum matching ~~contributions to the Retirement Savings Plan, according to the aforementioned terms, rates, and limitations.~~ contribution is 3.5% of compensation.

For the three months ended ~~September 30,~~March 31, 2022 and 2021, the Company made contributions for the benefit of employees of $1.2 million and $0.7 million, ~~to the Retirement Savings Plan. For the nine months ended September 30, 2021 and 2020, the Company made contributions for the benefit of employees of $2.0 million and $0.9 million~~respectively, to the Retirement Savings Plan.

15. Research and development

For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~the Company recorded the following related to research and development expenses ~~were $5.4 million~~ and ~~$1.7 million, respectively. The Company also had~~ capitalized internally developed software costs of $5.3 million and $3.1 million in the three months ended September 30, 2021 and 2020, respectively. Inclusive of capitalized internally developed software costs, our research and development spend was $10.7 million and $4.8 million for the three months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021 and 2020, research and development expenses were $10.8 million and $4.5 million, respectively. The Company also had capitalized internally developed software costs of $14.2 million and $8.3 million in the nine months ended September 30, 2021 and 2020, respectively. Inclusive of capitalized internally developed software costs, our research and development spend was $25.0 million and $12.8 million for the nine months ended September 30, 2021 and 2020, respectively. costs:


	Three Months Ended March 31,
	2022		2021
Research and development expenses incurred	$	5,603	$	2,327
Capitalized internally developed software costs	8,352		4,133
Research and development spend, inclusive of capitalized internally developed software cost	$	13,955	$	6,460

Our research and development costs reflect certain payroll-related costs of employees directly associated with such activities and certain software subscription costs, which are included in personnel costs on the condensed consolidated statements of operations. Capitalized internally developed software and acquired software costs are included in fixed assets, net onin the condensed consolidated balance sheets.

16. Warrant liabilities

As a result of the Business Combination, the Company assumed, as of the Closing Date, Public Warrants to purchase an aggregate of 11,500,000 shares of ~~Doma~~our common stock and Private Placement Warrants to purchase an aggregate of 5,833,333 shares of ~~Doma~~our common stock. Each whole Warrant entitles the holder to purchase one share of common stock at a price of $11.50.

~~Table of Contents~~

The Warrants ~~are~~became exercisable commencing on December 4, 2021, which is one year from the closing of the initial public offering of Capitol; provided, that we ~~have~~maintain an effective registration statement under the Securities Act of 1934, as amended (the “Securities Act”), covering ~~Doma~~our common stock.

Table of Contents

Redemption of Public Warrants when the price per share of ~~Doma~~our common stock equals or exceeds $18.00

~~Once the Public Warrants become exercisable, the~~The Company may call the Public Warrants for redemption:

•in whole and not in part;

•at a price of $0.01 per Public Warrant;

•upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder; and

•if, and only if, the last reported sale price of ~~Doma’s~~our common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and for certain issuances of common stock and equity-linked securities as described above) for any 20 trading days within a 30-trading day period ending three business days before the Company sends to the notice of redemption to the Public Warrant holders.

The Company will not redeem the Public Warrants as described above unless a registration statement under the Securities Act covering the issuance of the shares of common stock issuable upon a cashless exercise of the Public Warrants is then effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the Public Warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act.

Redemption of Public Warrants when the price per share of ~~Doma~~our common stock equals or exceeds $10.00

~~Once the Public Warrants become exercisable, the~~The Company may redeem the outstanding Public Warrants:

•in whole and not in part;

•at $0.10 per Public Warrant upon a minimum of 30 days’ prior written notice of redemption; provided that holders will be able to exercise their Public Warrants prior to redemption and receive a number of shares based on the redemption date and the “fair market value” of common stock except as otherwise described below;

•if, and only if, the last reported sale price of our common stock equals or exceeds $10.00 per share (as adjusted per stock splits, stock dividends, reorganizations, reclassifications, recapitalizations and the like and for certain issuances of common stock and equity-linked securities as described above) on the trading day prior to the date on which the Company sends the notice of redemption to the Public Warrant holders; and

•if, and only if, the last reported sale price of common stock is less than $18.00 per share (as adjusted for stock for stock splits, stock dividends, reorganizations, recapitalizations and the like and for certain issuances of common stock and equity-linked securities), the Private Placement Warrants are also concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.

Beginning on the date the notice of redemption is given until the Public Warrants are redeemed or exercised, holders may elect to exercise their Public Warrants on a cashless basis. The “fair market value” of ~~Doma~~our common stock will mean the volume-weighted average price of ~~Doma~~our common stock for the ten trading days immediately following the date on which the notice of redemption is sent to the holders of Public Warrants. In no event will the Public Warrants be exercisable in connection with this redemption feature for more than 0.361 shares of common stock per Public Warrant (subject to adjustment).

The Private Placement Warrants are identical to the Public Warrants except that the Private Placement Warrants, (i) subject to limited exceptions, are not redeemable by us, (ii) may be exercised for cash or on a cashless basis and (iii) are entitled to registration rights (including the shares of ~~Doma~~our common stock issuable upon exercise of the Private Placement Warrants), in each case, so long as they are held by the initial purchasers or any of their permitted transferees (as further described in the warrant agreement, dated as of December 1, 2020, between the

~~Table of Contents~~

Company and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agreement”). If the Private Placement Warrants are held by holders other than the initial purchasers or any

Table of Contents

of their permitted transferees, they will be redeemable by us and exercisable by the holders on the same basis as the Public Warrants.

On September 3, 2021, the Company filed a Registration Statement on Form S-1 (No. 333-258942), as amended, with the SEC (which was declared effective on September 8, ~~2021)~~2021; and the Company subsequently filed a post-effective amendment thereto, which was declared effective on March 30, 2022), which related to, among other things, the issuance of an aggregate of up to 17,333,333 shares of common stock issuable upon the exercise of the Warrants. As of ~~September 30, 2021,~~March 31, 2022, the aggregate values of the Public and Private Warrants were $~~16.2~~4.0 million and ~~$8.2~~$2.0 million, respectively, representing Warrants outstanding to purchase 11,500,000 shares and 5,833,333 shares, respectively, of ~~Doma's~~our common stock. As of December 31, 2021, the aggregate values of the Public and Private Warrants were $10.9 million and $5.5 million, respectively, representing Warrants outstanding to purchase 11,500,000 shares and 5,833,333 shares, respectively, of our common stock. The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities onin the condensed consolidated balance ~~sheet.~~sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of Warrants and Sponsor Covered Shares liabilities in the condensed consolidated ~~statement~~statements of operations.

17. ~~Subsequent events~~Leases

The Company ~~filed~~has operating leases consisting of office space and office equipment. Lease terms and options vary in the Company's operating leases dependent upon the underlying leased asset. We exclude options to extend or terminate a ~~Form S-8 registration statement on October 4, 2021. Effective October~~lease from our recognition as part of our right-of-use assets and lease liabilities until those options are known and/or executed, as we typically do not exercise options to purchase the underlying leased asset. As of March 31, 2022, we have leases with remaining terms of 1 month to 7.5 years, some of which may include no options for renewal and others with options to extend the lease terms from 1 year to 5 ~~2021~~years. The components of our operating leases were as follows:


	March 31, 2022
Components of lease expense:
Operating lease expense	$	2,972
Less sublease income	(89)
Net lease expense	2,883

Cash flow information related to leases:
Operating cash inflow from operating leases	$	2,774


	March 31, 2022
Right-of-use assets obtained during the three months ended March 31, 2022 in exchange for new operating lease liabilities	$	4,676
Weighted average remaining lease term	4.57 years
Weighted average discount rate	10		%

Table of Contents


Maturities of lease liabilities:	March 31, 2022
2022	$	6,498
2023	8,071
2024	6,774
2025	5,045
2026	4,061
Thereafter	4,184
Total lease payments	34,633
Less imputed interest	(6,974)
Lease liabilities	$	27,659

18. Subsequent events

On May 5, 2022, the Company committed to a workforce reduction plan (the “Reduction”) to improve cost efficiency and align with strategic investments in the Doma Intelligence platform.

The Reduction includes the elimination of approximately 310 positions across the Company, or approximately 15% of the Company’s ~~Board~~current workforce. The Company estimates that it will incur approximately $3.7 million in charges in connection with the Reduction, including cash expenditures for employee benefits, severance payments, payroll taxes and related facilitation costs offset by forfeitures of ~~Directors granted RSAs~~bonus and ~~performance stock awards (“PSAs”) totaling 10.1 million shares and 3.6 million shares, respectively.~~stock-based compensation. The ~~RSAs are subject to time-based vesting, with a majority~~Company expects the execution of the ~~RSAs vesting 25% on the first anniversary of the award date and ratably thereafter for twelve quarters, such that the RSAs~~Reduction, including cash payments, will be ~~fully vested on~~substantially complete in the ~~fourth anniversary~~second quarter of their award date. The PSAs vest on the achievement of certain performance conditions, as established by the Company’s Board of Directors, and are subject to time-based vesting after the performance period. The RSAs and PSAs are measured at fair market value on the date of the grant and stock-based compensation expense is recognized as the shares vest with a corresponding offset credited to additional paid-in-capital.2022.

In the preparation of the accompanying condensed consolidated financial statements, the Company has evaluated all material subsequent events or transactions that occurred after the balance sheet date through the date on which the financial statements were issued for potential recognition or disclosure in the Company's financial statements, noting no subsequent events or transactions that require disclosure, aside from those previously discussed.

3332

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations of Doma should be read together with the unaudited condensed consolidated financial statements as of ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ together with the related notes thereto, contained in this Quarterly Report on Form 10-Q (“Quarterly Report”), as well as the audited consolidated financial statements as of December 31, ~~2020~~2021 and ~~2019~~2020 and for the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018,~~2019, together with related notes thereto, contained in our ~~registration statement~~annual report on Form ~~S-1 (No. 333-258942), as amended~~10-K for the year ended December 31, 2021 (the ~~“Registration Statement”~~“Annual Report”). This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties ~~including, but not limited to, those described~~and should be read in conjunction with the disclosures and information contained in “Cautionary Note Regarding Forward-Looking Statements” in the ~~“Risk Factors” section of the Registration Statement.~~Annual Report. Our actual results may differ materially from those projected in these forward-looking statements as a result of various ~~factors.~~factors, including those set forth under Part I, Item 1A “Risk Factors” or in other parts of the Annual Report. Certain amounts may not foot due to rounding. All forward-looking statements in this Quarterly Report are based on information available to us as of the date hereof, and we assume no obligation to update any such forward-looking statements to reflect future events or circumstances, except as required by law.

Unless the context otherwise requires, references to “company,” “Company,” “Doma,” “we,” “us,” “our” and similar terms refer to Doma Holdings, Inc. (f/k/a Capitol Investment Corp. V) and its consolidated subsidiaries. References to “Capitol” refer to our predecessor company prior to the consummation of the Business Combination. References to “Old Doma” refer to Old Doma prior to the Business Combination and to States Title Holding, Inc. (“States Title”), the wholly owned subsidiary of Doma, upon the consummation of the Business Combination.All forward-looking statements in this Quarterly Report are based on information available to us as of the date hereof, and we assume no obligation to update any such forward-looking statements to reflect future events or circumstances, except as required by law.

Overview

Doma was founded in 2016 to focus top-tier data scientists, product managers, and engineers on building game-changing technology to completely reimagine the residential real estate closing process. We founded Doma to create a home ownership process for today’s consumers who expect instant, digital experiences. Our approach to the title and escrow process is driven by our innovative full stack platform, Doma Intelligence. The Doma Intelligence platform is the result of significant investment in research and development over more than ~~four~~five years across a team of more than 100 data scientists and ~~engineers, creating~~engineers. It creates a revolutionary new end-to-end real estate closing platform that seeks to eliminate all of the latent, manual tasks involved in underwriting title insurance, performing core escrow functions, generating closing documentation and getting documents signed and recorded. The platform harnesses the power of data analytics, machine learning and natural language processing, which will enable us to deliver a ~~cheaper~~more affordable and faster closing transaction with a seamless customer experience at every point in the process. Doma’s machine intelligence algorithms are being trained and optimized on 30 years of historical anonymized closing transaction data allowing us to make underwriting decisions in less than a minute and significantly reduce the time, effort and cost of facilitating the entire closing process.

Our Business Model

Today, we primarily originate, underwrite, and provide title, escrow and settlement services for the two most prevalent transaction types in the residential real estate market: ~~purchase/resale~~purchase and refinance transactions. We operate and report our business through two complementary reporting segments, Distribution and Underwriting. See “—Basis of Presentation” below.

Our Distribution segment reflects the sale of our products and services, other than underwriting and insurance services reflected in our Underwriting segment, that we provide through our captive title agents and agencies (“Direct Agents”). We market our products and services through two channels to appeal to our referral partners and ultimately reach our ~~end~~ customers, the ~~borrowers~~individuals purchasing a new home or ~~home buyers/sellers:~~refinancing their existing mortgage:

•Doma Enterprise – we target partnerships with national lenders and mortgage originators that maintain centralized lending operations. Once a partnership has been established, we integrate our Doma Intelligence platform with the ~~client’s~~partner’s loan production systems, to enable frictionless order origination and fulfillment. Substantially all Doma Enterprise orders are underwritten by Doma.

Table of Contents

•Local Markets (“Local”) – we target partnerships with realtors, attorneys and non-centralized loan originators via a ~~94-branch~~108-branch footprint across ten states ~~(as~~as of ~~September 30, 2021).~~March 31, 2022. For the quarter ended

~~Table of Contents~~

~~September 30, 2021,~~ March 31, 2022, approximately 90% of our lender and owner policies from our Local channel were underwritten by Doma, while the remaining share was underwritten by third-party underwriters.

Our Underwriting segment reflects the sale of our underwriting and insurance services. These services are integrated with our Direct Agents channel and ~~are also provided to~~ other non-captive title and escrow agents in the market (“Third-Party Agents”) through our captive title insurance carrier. For customers sourced through the Third-Party Agents channel, we retain a portion of the title premium (approximately 16% - 18%) in exchange for underwriting risk to our balance sheet. The Third-Party Agents channel includes the title underwriting and insurance services we provide to Lennar, a related party, for its home builder transactions.

The financial results of our Direct Agents channel impact both our Distribution and Underwriting reporting segments, whereas the results from the Third-Party Agents channel impact only the Underwriting reporting segment.

Our expenses generally consist of direct fulfillment expenses related to closing a transaction and insuring the risk, customer acquisition costs related to acquiring new business, and other operating expenses as described below:

•Direct fulfillment expenses – comprised of direct labor and direct non-labor expenses. Direct labor expenses refer to payroll costs associated with employees who directly contribute to the opening and closing of an order. Some examples of direct labor expenses include title and escrow services, closing services, and customer service. Direct non-labor expenses refer to non-payroll expenses that are closely linked with order volume, such as provision for claims, title examination expense, office supplies, and premium and other related taxes.

•Customer acquisition costs – this ~~expense~~ category is ~~the summation~~comprised of sales payroll, sales commissions, customer success payroll, ~~sales related~~sales-related travel and entertainment, and an allocated portion of corporate ~~marketing.~~marketing

•Other operating expenses – all other expenses that do not directly contribute to the fulfillment or acquisition of an order or policy are considered other operating expenses. This category is predominately comprised of research and development costs, corporate support expenses, occupancy, and other general and administrative ~~expenses.~~expenses

We expect to continue to invest in our Doma Intelligence platform as well as organic and inorganic growth opportunities in order to remain competitive with existing large-scale industry incumbents who are well financed and have significant resources to defend their existing market positions. Over time, we plan to use our cash flows to invest in customer acquisition, research and development, and new product offerings, to further improve revenue growth and accelerate the elimination of the friction and expense of closing a residential real estate transaction.

Basis of Presentation

We report results for our two operating segments:

•Distribution – our Distribution segment reflects our Direct Agents operations of acquiring customer orders and providing title and escrow services for real estate closing transactions. We acquire customers through our Local and Doma Enterprise customer referral channels.

•Underwriting – our Underwriting segment reflects the results of our title insurance underwriting business, including policies referred through our Direct Agents and Third-Party Agents channels. The referring agents retain approximately 82% - 84% of the policy premiums in exchange for their services. The retention rate varies by state and agent.

Costs are allocated to the segments to arrive at adjusted gross profit, our segment measure of profit and loss. Our accounting policies for segments are the same as those applied to our consolidated financial statements, ~~except~~ as described below under “—Key Components of Revenues and Expenses.” Inter-segment revenues and expenses are eliminated in consolidation. See Note 7 in our condensed consolidated financial statements for a summary of our

Table of Contents

segment results and a reconciliation between segment adjusted gross profit and our consolidated loss before income taxes.

~~Table of Contents~~

Significant Events and Transactions

The Business Combination

On the Closing Date, Capitol consummated the Business Combination with Old Doma, pursuant to the Agreement. In connection with the closing of the Business Combination, Old Doma changed its name to States Title Holding, Inc., Capitol changed its name to Doma Holdings, Inc. (“Doma”) and Old Doma became a wholly owned subsidiary of Doma. Doma continues the existing business operations of Old Doma as a publicly traded company. Refer to Note 3 to the condensed consolidated financial statements for additional details on the Business Combination.

As a result ofof the Business Combination, we became the operating successor to an SEC-registered and New York Stock Exchange-listed shell company. Becoming a public company~~which~~ has required us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and practices. ~~As is typical,~~Also, we ~~expect to incur~~have incurred additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources.

Impact of COVID-19 and ~~Other~~Related Macroeconomic Trends

~~On March 11, 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic.~~ COVID-19 has resulted in significant macroeconomic impacts, ~~and~~ market disruptions, and volatility in the real estate market, particularly as federal, state, and local governments enacted emergency measures intended to combat the spread of the virus, including shelter-in-place orders, travel limitations, quarantine periods and social distancing. In response, we took appropriate measures to ensure the health and safety of our employees, ~~clients~~customers and partners, including work-from-home ~~policies~~policies. Depending on the location and ~~limits to physical contact between our employees and our customers and partners.~~timing, some of these measures still remain in place today.

We operate in the real estate industry and our business volumes are directly impacted by market trends for mortgage refinancing transactions, existing real estate purchase transactions, and new real estate purchase transactions, particularly in the residential segment of the market. Our success depends on a high volume of residential and, to a lesser extent, commercial real estate transactions, throughout the markets in which we operate. Responses to the COVID-19 pandemic initially led to a material decline in purchase transactions, and, for a period of time, the future performance of the U.S. economy was perceived to be in peril. As a result, Doma management made the difficult decision to reduce our workforce by approximately 12%, resulting in approximately $1.4 million of severance costs.transactions. Subsequent U.S. federal stimulus measures in 2021, including interest rate reductions by the Federal Reserve, and local regulatory initiatives, such as permitting remote notarization, led to a quick recovery for the real estate industry and resulted in an increase in mortgage refinancing and purchase volumes, which we believe benefited our business model. ~~While~~These initiatives have also led to a greater demand for homes, higher home prices, and record low home inventories. Sharp inflation and rising interest rates at the end of 2021 through the first quarter of 2022 have only increased the volatility within the real estate industry, leading to a sharp decline in refinancing transactions ~~have largely returned to or exceeded pre-pandemic levels, we~~and continued record low home inventories in the first quarter of 2022. We continue to monitor economic and regulatory developments closely as we navigate the ~~pandemic.~~volatility and uncertainty created by the pandemic and the subsequent macroeconomic activity.

Demand for mortgages tends to correlate closely with changes in interest rates, meaning that our order trends are likely to be impacted by future changes in interest rates. However, we believe that our current, low market share and disruptive approach to title insurance, escrow, and closing services will enable us to gain market share, which in turn should mitigate the risk to our revenue growth trends relative to industry incumbents.

~~The North American Title Acquisition~~

On January 7, 2019, we acquired from Lennar Corporation (“Lennar”) its subsidiary, North American Title Insurance Company (“NATIC”), which operated its title insurance underwriting business, and its third-party title insurance agency business, which was operated under its North American Title Company brand (collectively, the “Acquired Business”), for total stock and deferred cash consideration of $171.7 million (the “North American Title Acquisition”), including $87.0 million in the form of a seller financing note.

The North American Title Acquisition provided us with insurance licenses and an agency network across the United States, as well as a substantial data set to accelerate our machine intelligence technology. This acquisition marked a significant milestone for Doma in achieving national scale and licensure in pursuit of our long-term growth strategy. Whereas we generated minimal revenue prior to the North American Title Acquisition, following its consummation we began to operate our business with a broad distribution footprint and data that enabled us to

Table of Contents

accelerate the rollout of our Doma Intelligence platform. The North American Title Acquisition also resulted in our recording of $111.5 million in goodwill and $61.4 million in acquired marketable securities.

Since the North American Title Acquisition, we have implemented several initiatives to integrate and realign the operations of the Acquired Business. This includes transforming the Acquired Business’s retail agency operations by streamlining our physical branch footprint, consolidating branch back office functions into a common corporate operation, and implementing a common production platform across all our branches. We continue to invest in the development and rollout of the Doma Intelligence platform across our Local branch footprint. We expect to realize significant cost savings over time as manual processes are replaced with our proprietary machine learning platform and data science-driven approach to title and closing services. The benefits of this effort, particularly on margin growth, are likely to be realized gradually in future reporting periods. As a result, our recent results of operations, including for the years ended December 31, 2020 and 2019 and the three and nine months ended September 30, 2021 and 2020, may not be indicative of our results for future periods.

Key Operating and Financial Indicators

We regularly review several key operating and financial indicators to evaluate our performance and trends and inform management’s budgets, financial projections and strategic decisions.

The following table presents our key operating and financial indicators, as well as the relevant ~~GAAP~~generally accepted accounting principles (“GAAP”) measures, for the periods indicated:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2021			2020			2021			2020				2022			2021
		(in thousands, except for open and closed order numbers)													(in thousands, except for open and closed order numbers)
Key operating data:	Key operating data:													Key operating data:
Opened orders	Opened orders	52,867			37,572			135,442			101,161			Opened orders	35,192			41,084
Closed orders	Closed orders	35,300			25,358			99,386			65,026			Closed orders	27,347			32,650
GAAP financial data:	GAAP financial data:													GAAP financial data:
Revenue (1)	Revenue (1)	$	162,582		$	121,072		$	420,364		$	292,304		Revenue (1)	$	112,207		$	127,796
Gross profit (2)	Gross profit (2)	$	28,302		$	26,379		$	81,232		$	61,418		Gross profit (2)	$	7,134		$	26,414
Net loss	Net loss	$	(34,270)		$	(3,622)		$	(69,327)		$	(26,540)		Net loss	$	(50,026)		$	(11,758)
Non-GAAP financial data (3):	Non-GAAP financial data (3):													Non-GAAP financial data (3):
Retained premiums and fees	Retained premiums and fees	$	70,986		$	54,048		$	193,249		$	136,172		Retained premiums and fees	$	51,605		$	57,458
Adjusted gross profit	Adjusted gross profit	$	30,280		$	27,600		$	88,937		$	64,654		Adjusted gross profit	$	10,370		$	29,121
Ratio of adjusted gross profit to retained premiums and fees	Ratio of adjusted gross profit to retained premiums and fees	43		%	51		%	46		%	47		%	Ratio of adjusted gross profit to retained premiums and fees	20		%	51		%
Adjusted EBITDA	Adjusted EBITDA	$	(20,109)		$	(649)		$	(35,291)		$	(15,926)		Adjusted EBITDA	$	(44,905)		$	(3,277)

_________________

~~n.m. = not meaningful~~

(1)Revenue is comprised of (i) net premiums written, (ii) escrow, other title-related fees and other, and (iii) investment, dividend and other income. Net loss is made up of the components of revenue and expenses. For more information about measures appearing in our consolidated income statements, refer to “—Key Components of Revenue and Expenses—Revenue” below.

(2)Gross profit, calculated in accordance with GAAP, is calculated as total revenue, minus premiums retained by Third-Party Agents, direct labor expense (including mainly personnel expense for certain employees involved in the direct fulfillment of policies) and direct non-labor expense (including mainly title examination expense, provision for claims, and depreciation and amortization). In our consolidated income statements, depreciation and amortization is recorded under the “other operating expenses” caption.

(3)Retained premiums and fees, adjusted gross profit and adjusted EBITDA are non-GAAP financial measures. Refer to “—Non-GAAP Financial Measures” below for additional information and reconciliations of these measures to the most closely comparable GAAP financial measures.

~~Table of Contents~~

Opened and closed orders

Opened orders represent the number of orders placed for title insurance and/or escrow services (which includes the disbursement of funds, signing of documents and recording of the transaction with the county office) through our Direct Agents, typically in connection with a home purchase or mortgage refinancing transaction. An order may be opened upon an indication of interest in a specific property from a customer and may be cancelled by the customer before or after the signing of a purchase or loan agreement. Closed orders represent the number of opened orders for title insurance and/or escrow services that were successfully fulfilled in each period with the issuance of a title insurance policy and/or provision of escrow services. Opened and closed orders do not include orders or referrals for title insurance from our Third-Party Agents. ~~For avoidance of doubt, a~~A closed order for a home purchase ~~or resale~~ transaction typically results in the issuance of two title insurance policies, whereas a refinance transaction typically results in the issuance of one title insurance policy.

We review opened orders as a leading indicator of our Direct Agents revenue pipeline and closed orders as a direct indicator of Direct Agents revenue for the concurrent period, and believe these measures are useful to investors for the same reasons. We believe that the relationship between opened and closed orders will remain relatively consistent over time, and that opened order growth is generally a reliable indicator of future financial performance. However, degradation in the ratio of opened orders to closed orders may be a leading indicator of adverse macroeconomic or real estate market trends.

Table of Contents

Retained premiums and fees

Retained premiums and fees, a non-GAAP financial measure, is defined as total revenue under GAAP minus premiums retained by Third-Party Agents. See “—Non-GAAP Financial Measures” below for a reconciliation of our retained premiums and fees to gross profit, the most closely comparable GAAP measure, and additional information about the limitations of our non-GAAP measures.

Our business strategy is focused on leveraging ~~the~~our Doma Intelligence platform to provide an overall improved customer and referral partner experience and to drive time and expense efficiencies principally in our Direct Agents channel. In our Third-Party Agents channel in contrast, we provide our underwriting expertise and balance sheet to insure the risk on policies referred by such Third-Party Agents and, for that service, we typically receive approximately 16% - 18% of the premium for the policy we underwrite. As such, we use retained premiums and fees, which is net of the impact of premiums retained by Third-Party Agents, as an important measure of the earning power of our business and our future growth trends, and believe it is useful to investors for the same reasons.

Adjusted gross profit

Adjusted gross profit, a non-GAAP financial measure, is defined as gross profit (loss) under GAAP, adjusted to exclude the impact of depreciation and amortization. See “—Non-GAAP Financial Measures” below for a reconciliation of our adjusted gross profit to gross profit, the most closely comparable GAAP measure and additional information about the limitations of our non-GAAP measures.

Management views adjusted gross profit as an important indicator of our underlying profitability and efficiency. As we generate more business that is serviced through our Doma Intelligence platform, we expect to reduce fulfillment costs as our direct labor expense per order continues to decline, and we expect the adjusted gross profit per transaction to grow faster than retained premiums and fees per transaction over the long term.

Ratio of adjusted gross profit to retained premiums and fees

~~Ratio~~The ratio of adjusted gross profit to retained premiums and fees, a non-GAAP measure, expressed as a percentage, is calculated by dividing adjusted gross profit by retained premiums and fees. Both the numerator and denominator are net of the impact of premiums retained by Third-Party Agents because that is a cost related to our Underwriting segment over which we have limited control, as Third-Party Agents customarily retain approximately 82% - 84% of the premiums related to a title insurance policy referral pursuant to the terms of long-term contracts.

~~Table of Contents~~

We view the ratio of adjusted gross profit to retained premiums and fees as an important indicator of our operating efficiency and the impact of our machine-learning capabilities, and believe it is useful to investors for the same reasons.

We expect improvement to our ratio of adjusted gross profit to retained premiums and fees over the long term, reflecting the continued reduction in our average fulfillment costs per order.

Adjusted EBITDA

Adjusted EBITDA, a non-GAAP financial measure, is defined as net income (loss) before interest, income taxes and depreciation and amortization, and further adjusted to exclude the impact of stock-based compensation ~~COVID-related severance costs~~ and the change in fair value of Warrant and Sponsor Covered Shares liabilities. See “—Non-GAAP Financial Measures” below for a reconciliation of our adjusted EBITDA to net loss, the most closely comparable GAAP measure and additional information about the limitations of our non-GAAP measures.

We review adjusted EBITDA as an important measure of our recurring and underlying financial performance, and believe it is useful to investors for the same reason.

Table of Contents

Key Components of Revenues and Expenses

Revenues

Net premiums written

We generate net premiums by underwriting title insurance policies and recognize premiums in full upon the closing of the underlying transaction. For some of our Third-Party Agents, we also accrue premium revenue for title insurance policies we estimate to have been issued in the current period but reported to us by the Third-Party Agent in a subsequent period. See “—Critical Accounting Policies and Estimates— ~~Net~~Accrued net premiums written from Third-Party Agent referrals” below for further explanation onof this accrual. For the three months ended March 31, 2022 and ~~nine month periods ended September 30,~~ 2021, ~~and 2020,~~ the average time lag between the issuing of these policies by our Third-Party Agents and the reporting of these policies or premiums to us has been approximately three months. Net premiums written is inclusive of the portion of premiums retained by Third-Party Agents, which is recorded as an expense, as described below.

To reduce the risk associated with our underwritten insurance policies, we utilize reinsurance programs to limit our maximum loss exposure. Under our reinsurance treaties, we cede the premiums on the underlying policies in exchange for a ceding commission from the reinsurer and our net premiums written exclude such ceded premiums.

Our principal reinsurance quota share agreement covers instantly underwritten policies from refinance and home equity line of credit transactions under which we historically ceded 100% of the written premium of each covered ~~policy.~~policy from January 1, 2021 through February 23, 2021. Pursuant to ~~the~~a renewed agreement, which became effective inon February 24, 2021, we cede only 25% of the written premium on such instantly underwritten policies ~~instead of 100%,~~ up to a total reinsurance coverage limit of $80.0 million in premiums reinsured, after which we retain 100% of the written premium on instantly underwritten policies. This reduction in ceding percentage has resulted in higher net premiums written per transaction when compared to prior period results. Refer to Note 2 to the condensed consolidated financial statements above for additional details on our reinsurance treaties.

Escrow, other title-related fees and other

Escrow fees and other title-related fees are charged ~~in association with~~for managing the closing of real estate transactions, including the processing of funds on behalf of the transaction participants, gathering and recording the required closing documents, providing notary services, and other real estate or title-related activities. Other fees relate to various ancillary services we provide, including fees for rendering a cashier’s check, document preparation fees, homeowner’s association letter fees, inspection fees, lien letter fees and wire fees. We also recognize ceding commissions received in connection with reinsurance treaties, to the extent the amount of such ceding commissions exceeds reinsurance-related costs.

~~Table of Contents~~

This revenue item is most directly associated with our Distribution segment. For segment-level reporting, agent premiums retained by our Distribution segment are recorded as revenue under the “escrow, other title-related fees and other” caption of our segment income statements, while our Underwriting segment records a corresponding expense for insurance policies issued by us. The impact of these internal transactions is eliminated upon consolidation.

Investment, dividends and other income

Investment, dividends and other income isare mainly generated ~~mainly by income on~~from our investment ~~portfolio, which consists mainly of our statutory reserves and excess statutory capital.~~portfolio. We primarily invest in fixed income securities, mainly composed of corporate debt obligations, U.S. government agency obligations, certificates of deposit, U.S. Treasuries and mortgage loans.

Expenses

Premiums retained by Third-Party Agents

When customers are referred to us and we underwrite a policy, the referring Third-Party Agent retains a significant portion of the premium, which typically amounts to approximately 82% - 84% of the premium. The

Table of Contents

portion of premiums retained by Third-Party Agents is recorded as an expense. These referral expenses relate exclusively to our Underwriting segment. As we continue to grow our Direct Agents channel relative to our Third-Party Agents channel, we expect that premiums retained by Third-Party Agents will decline as a percentage of revenue over time.

For segment-level reporting, premiums retained by our Direct Agents (which are recorded as Distribution segment revenue) are recorded as part of “premiums retained by agents” expense for our Underwriting segment. The impact of these internal transactions is eliminated upon consolidation.

Title examination expense

Title examination expense is incurred in connection with the search and examination of public information prior to the issuance of title insurance policies.

Provision for claims

Provision for claims expense is ~~viewed by management to be~~ comprised of three components: ~~incurred but not reported (“IBNR”) reserves,~~IBNR losses, known claims loss and loss adjustment ~~expense reserves,~~expenses and escrow-related losses.

IBNR is a loss reserve that primarily reflects the sum of expected losses for unreported claims. The expense is calculated by applying a rate (the loss provision rate) to total title insurance premiums. The loss provision rate is determined atthroughout the ~~beginning of each~~ year based in part upon an assessment performed by an independent actuarial firm utilizing generally accepted actuarial methods. The assessment also takes account of industry trends, the regulatory environment and geographic considerations and is updated during the year based on developments. This loss provision rate is set to provide for losses on current year policies. Due to our long claim exposure, our provision for claims periodically includes amounts of adverse or positive claims development on policies issued in prior years, when claims on such policies are higher or lower than initially expected.

Based on the risk profile of premium vintages over time and based upon the projections of an independent actuarial firm, we build or release reserves related to our older policies. Our IBNR may increase as a proportion of our revenue as we continue to increase the proportion of our business serviced through our Doma Intelligence platform, though we believe it will decrease over the long term as our predictive machine intelligence technology produces improved results.

Known claims loss and loss adjustment expense reserves is an expense that reflects the best estimate of the remaining cost to resolve a claim, based on the information available at the time. In practice, most claims do not settle for the initial known claims provision; rather, as new information is developed during the course of claims administration, the initial estimates are revised, sometimes downward and sometimes upward. This additional development is provided for in the actuarial projection of IBNR, but it is not allocable to specific claims. Actual

~~Table of Contents~~

costs that are incurred in the claims administration are booked to loss adjustment expense, which is primarily comprised of legal expenses associated with investigating and settling a claim.

Escrow-related losses are primarily attributable to clerical errors that arise during the escrow process and caused by the settlement agent. As the proportion of our orders processed through our Doma Intelligence platform continues to increase, we expect escrow-related losses to decline over time.

Personnel costs

Personnel costs include base salaries, employee benefits, bonuses paid to employees, and payroll taxes. This expense is primarily driven by the average number of employees and our hiring activities in a given period.

In our presentation and reconciliation of segment results and our calculation of gross profit, we classify personnel costs as either direct or indirect expenses, reflecting the activities performed by each employee. Direct personnel costs relate to employees whose job function is directly related to our fulfillment activities, including underwriters, closing agents, escrow agents, funding agents, and title and curative agents, and are included in the calculation of our segment adjusted gross profit. Indirect personnel costs relate to employees whose roles do not directly support our transaction fulfillment activities, including sales agents, training specialists and customer

Table of Contents

success agents, segment management, research and development and other information technology personnel, and corporate support staff.

Other operating expenses

Other operating expenses are comprised of occupancy, maintenance and utilities, product taxes (for example, state taxes on ~~gross~~ premiums written), professional fees (including legal, audit and other third-party consulting costs), software licenses and sales tools, travel and entertainment costs, and depreciation and amortization, among other costs.

Change in fair value of Warrant and Sponsor Covered Shares liabilities

Change in fair value of Warrant and Sponsor Covered Shares liabilities consists of unrealized gains and losses as a result of ~~marking~~recording our Warrants and Sponsor Covered Shares to fair value at the end of each reporting period.

Income tax expense

Although we are in a consolidated net loss position and report our federal income taxes as a consolidated tax group, we incur state income taxes in certain jurisdictions where we have profitable operations. Additionally, we incur mandatory minimum state income taxes in certain jurisdictions. Also, we have recognized deferred tax assets but have offset them with a full valuation allowance, reflecting substantial uncertainty as to their recoverability in future periods. Until we report at least three years of profitability, we may not be able to realize the tax benefits of these deferred tax assets.

Results of Operations

We discuss our historical results of operations below, on a consolidated basis and by segment. Past financial results are not indicative of future results.

Three ~~and Nine~~ Months Ended ~~September 30, 2021~~March 31, 2022 Compared to the Three ~~and Nine~~ Months Ended ~~September 30, 2020~~March 31, 2021

The following table sets forth a summary of our consolidated results of operations for the periods indicated, and the changes between periods.

4140

Table of Contents


		Three Months Ended September 30,									Three Months Ended March 31,
		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change
		(in thousands, except percentages)									(in thousands, except percentages)
Revenues:	Revenues:									Revenues:
Net premiums written	Net premiums written	$	141,491	$	103,587	$	37,904	37	%	Net premiums written	$	95,666	$	107,992	$	(12,326)	(11)	%
Escrow, other title-related fees and other	Escrow, other title-related fees and other	20,452		16,742		3,710		22	%	Escrow, other title-related fees and other	16,113		18,575		(2,462)		(13)	%
Investment, dividend and other income	Investment, dividend and other income	639		743		(104)		(14)	%	Investment, dividend and other income	428		1,229		(801)		(65)	%
Total revenues	Total revenues	$	162,582	$	121,072	$	41,510	34	%	Total revenues	$	112,207	$	127,796	$	(15,589)	(12)	%
Expenses:	Expenses:									Expenses:
Premiums retained by Third-Party Agents	Premiums retained by Third-Party Agents	$	91,596	$	67,024	$	24,572	37	%	Premiums retained by Third-Party Agents	$	60,602	$	70,338	$	(9,736)	(14)	%
Title examination expense	Title examination expense	5,289		4,624		665		14	%	Title examination expense	5,981		4,853		1,128		23	%
Provision for claims	Provision for claims	6,685		5,242		1,443		28	%	Provision for claims	4,611		3,249		1,362		42	%
Personnel costs	Personnel costs	62,410		36,197		26,213		72	%	Personnel costs	77,793		43,464		34,329		79	%
Other operating expenses	Other operating expenses	21,693		10,210		11,483		112	%	Other operating expenses	22,754		14,165		8,589		61	%
Total operating expenses	Total operating expenses	$	187,673	$	123,297	$	64,376	52	%	Total operating expenses	$	171,741	$	136,069	$	35,672	26	%

Loss from operations	Loss from operations	(25,091)		(2,225)		(22,866)		1028	%	Loss from operations	(59,534)		(8,273)		(51,261)		620	%

Other (expense) income:	Other (expense) income:									Other (expense) income:
Change in fair value of Warrant and Sponsor Covered Shares liabilities	Change in fair value of Warrant and Sponsor Covered Shares liabilities	(4,478)		—		(4,478)		*		Change in fair value of Warrant and Sponsor Covered Shares liabilities	13,900		—		13,900		*
Interest expense	Interest expense	(4,531)		(1,193)		(3,338)		280	%	Interest expense	(4,207)		(3,360)		(847)		25	%
Loss before income taxes	Loss before income taxes	(34,100)		(3,418)		(30,682)		898	%	Loss before income taxes	(49,841)		(11,633)		(38,208)		328	%

Income tax expense	Income tax expense	$	(170)	$	(204)	$	34	(17)	%	Income tax expense	(185)		(125)		(60)		48	%
Net loss	Net loss	$	(34,270)	$	(3,622)	$	(30,648)	846	%	Net loss	$	(50,026)	$	(11,758)	$	(38,268)	325	%

* = Not presented as prior period amount is zero

~~Table of Contents~~

Nine Months Ended September 30,
2021 2020 $ Change % Change
(in thousands, except percentages)
Revenues:
Net premiums written $ 358,754 $ 246,738 $ 112,016 45 %
Escrow, other title-related fees and other 59,092 43,298 15,794 36 %
Investment, dividend and other income 2,518 2,268 250 11 %
Total revenues $ 420,364 $ 292,304 $ 128,060 44 %
Expenses:
Premiums retained by Third-Party Agents $ 227,115 $ 156,132 $ 70,983 45 %
Title examination expense 15,643 11,811 3,832 32 %
Provision for claims 16,741 10,065 6,676 66 %
Personnel costs 159,829 104,652 55,177 53 %
Other operating expenses 53,038 31,136 21,902 70 %
Total operating expenses $ 472,366 $ 313,796 $ 158,570 51 %
Loss from operations (52,002) (21,492) (30,510) 142 %
Other (expense) income:
Change in fair value of Warrant and Sponsor Covered Shares liabilities (4,478) — (4,478) *
Interest expense (12,341) (4,428) (7,913) 179 %
Loss before income taxes (68,821) (25,920) (42,901) 166 %
Income tax expense $ (506) $ (620) $ 114 (18) %
Net loss $ (69,327) $ (26,540) $ (42,787) 161 %

* = Not presented as prior period amount is zero

Revenue

Net premiums written. Net premiums written ~~increased~~decreased by ~~$37.9~~$12.3 million, or ~~37%~~11%, in the three months ended ~~September 30, 2021~~March 31, 2022 compared to the same period in the prior year, driven by a 6~~42%~~% ~~increase~~decrease in premiums from our Direct Agents channel and a 3513% ~~increase in premiums from our Third-Party Agents channel. Net premiums written increased by $112.0 million, or 45%, in the nine months ended September 30, 2021 compared to the same period in the prior year,~~ ~~driven by a 49~~% ~~increase in premiums from our Direct Agents channel and a 4~~5% ~~increase~~decrease in premiums from our Third-Party Agents channel.

For the three ~~and nine month periods~~months ended ~~September 30, 2021,~~March 31, 2022, Direct Agents premium ~~growth~~decline was driven by closed order ~~growth~~decline of ~~39% and 53%~~16%, ~~respectively. For the three month period ended September 30, 2021,~~which was offset by higher average retained premium per order of 12% ~~contributed to the increase in premiums.~~ .

For the ~~nine~~three month period ended ~~September 30, 2021, closed order growth was offset by lower average~~March 31, 2022, the decrease in premiums ~~per order of 3%,~~ ~~due to a higher share of refinance orders during the year.~~

~~Third-party agent growth reflects the results of management’s continued efforts to increase wallet share capture~~ from ~~existing~~our Third-Party Agents ~~as well as efforts to generate new agent relationships to accelerate growth. For the nine month period ended September 30, 2021, the rise in premiums~~channel was ~~also~~ driven by an overall ~~increase~~decrease in market ~~activity.~~activity, specifically in the refinance market, resulting from the rising interest rate environment.

Escrow, other title-related fees and other. Escrow, other title-related fees and other ~~increased $3.7~~decreased $2.5 million, or ~~22%~~13%, in the three months ended ~~September 30, 2021 and $15.8 million, or 36%, in the nine months ended September 30, 2021~~March 31, 2022 compared to the same periods in the prior year, driven by the corresponding closed order ~~growth.~~decline

~~Table~~of 16%. The decline in closed order activity was partially offset by higher average escrow fees per order of ~~Contents~~4% during the same period.

Investment, dividend and other income. Investment, dividend and other income ~~increas~~decreased~~ed $0.3~~ $0.8 million or ~~11%~~65% in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to the same period in the prior year, primarily due to ~~one-time~~one-time realized gains on investments from portfolio ~~rebalancing.~~rebalancing during the three months ended March 31, 2021.

Table of Contents

Expenses

Premiums retained by Third-Party Agents. Premiums retained by Third-Party Agents ~~increased~~decreased by ~~$24.6~~$9.7 million, or ~~37%~~14%, in the three months ended ~~September 30, 2021 and $71.0 million, or 45%, for the nine months ended September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year. The ~~increases~~decreases were driven principally by the ~~growth~~reduction in underwritten policies referred by Third-Party Agents, and there was no material change in average commissions paid to our Third-Party Agents.

Title examination expense. Title examination expense increased by ~~$0.7~~$1.1 million, or ~~14%~~23%, in the three months ended ~~September 30, 2021 and $3.8 million, or 32%, for the nine months ended September 30, 2021~~March 31, 2022 compared to the same periods in the prior year, ~~principally~~ due to ~~growth~~an increase in ~~Direct Agents opened~~geography-specific closing costs and ~~closed orders~~fixed expenses incurred to support fulfillment, including software license fees and ~~premiums written.~~title plant maintenance expenses.

Provision for claims. Provision for claims increased by $1.4 million, or ~~28%~~42%, in the three months ended ~~September 30, 2021 and $6.7 million, or 66%, for the nine months ended September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year primarily due to ~~new business written premiums~~a decrease in reserve releases for claims incurred from prior year business. For the three months ended March 31, 2022 reserve releases related to prior year policies were $1.0 million compared to $3.2 million for the corresponding ~~periods.~~period in the prior year. This was offset by a reduction in the provision for claims related to the current year due to the corresponding decrease in premiums written. The provision for claims, expressed as a percentage of net premiums written, was ~~4.7%~~4.8% and ~~5.1%~~3.0% for the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020,~~2021, respectively ~~and 4.7% and 4.1% for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021 and 2020, respectively.~~. The reported loss emergence ~~in both periods~~ on policies issued in prior years was lower than expected.

Personnel costs. Personnel costs increased by ~~$26.2~~$34.3 million, or ~~72%~~79%, in the three months ended ~~September 30, 2021 and $55.2 million, or 53%, for the nine months ended September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year, due to investments in direct labor and customer acquisition, investments in research and development, the expansion of our corporate support functions to operate as a public company, and an increase in operations and management staff supporting the Direct Agents channel as the organization invests in driving growth of Doma Intelligence-enabled purchase closings.

Other operating expenses. Other operating expenses increased by ~~$11.5~~$8.6 million, or ~~112%~~61%, in the three months ended ~~September 30, 2021 and $21.9 million, or 70%, in the nine months ended September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year, driven by higher corporate support expenses to operate as a public company such as improved operating systems and human resources services, higher expenses to support revenue growth such as hardware and software purchases and travel and entertainment spend, higher amortization expenses related to investments in the development of our Doma Intelligence platform and a higher ~~amortization of intangibles related to our rebranding to “Doma.”~~premium tax rate. Depreciation and amortization increased by ~~$0.8~~$0.5 million, or ~~62%, and $4.5 million, or 138%~~20%, in the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 compared to the same period in the prior year due to these factors.

Change in fair value of Warrant and Sponsor Covered Shares liabilities. The change in fair value of Warrant and Sponsor Covered Shares (as defined in Note 2) liabilities increased by ~~$4.5~~$13.9 million in the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year ~~primarily~~ due to the ~~$5.2 million increase~~addition of these liabilities from the Business Combination in the ~~Warrant liabilities resulting from the subsequent measurement~~third quarter of ~~the Public and Private Placement Warrants as of September 30,~~ 2021. The Warrant liabilities increased in fair value due to the corresponding increase in the market price of the Warrants, which is correlated to movements in Doma’s stock price. This was partially offset by the $0.7 million decrease in the fair value of the Sponsor Covered Shares liability resulting from updates to the market inputs used to estimate that liability.

Interest expense. Interest expense increased by ~~$3.3~~$0.8 million, or ~~280%~~25%, in the three months ended ~~September 30, 2021 and $7.9 million, or 179%, for the nine months ended September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year, due to a higher amount of debt outstanding, ~~as well as a higher effective interest rate in 2021,~~ which is a result of the ~~issuance of~~paid in kind interest expense on the ~~new~~ $150.0 million Senior Debt facility that was funded during the first quarter of 2021.

~~Table of Contents~~

Supplemental Segment Results Discussion – Three ~~and Nine~~ Months Ended ~~September 30, 2021~~March 31, 2022 Compared to the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021

The following table sets forth a summary of the results of operations for our Distribution and Underwriting segments for the years indicated. See “—Basis of Presentation” above.

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020
Distribution Underwriting Eliminations Consolidated Distribution Underwriting Eliminations Consolidated
(in thousands)
Net premiums written $ — $ 141,587 $ (96) $ 141,491 $ — $ 103,587 $ — $ 103,587
Escrow, other title-related fees and other (1)
47,573 823 (27,944) 20,452 36,094 490 (19,842) 16,742
Investment, dividend and other income 47 592 — 639 (40) 783 — 743
Total revenue $ 47,620 $ 143,002 $ (28,040) $ 162,582 $ 36,054 $ 104,860 $ (19,842) $ 121,072
Premiums retained by agents (2)
— 119,636 (28,040) 91,596 — 86,866 (19,842) 67,024
Direct labor (3)
21,791 2,157 — 23,948 13,185 1,707 — 14,892
Other direct costs (4)
5,650 4,423 — 10,073 4,711 1,603 — 6,314
Provision for claims 1,243 5,442 — 6,685 617 4,625 — 5,242
Adjusted gross profit (5)
$ 18,936 $ 11,344 $ — $ 30,280 $ 17,541 $ 10,059 $ — $ 27,600

Table of Contents


	Three Months Ended March 31, 2022								Three Months Ended March 31, 2021
	Distribution		Underwriting		Eliminations		Consolidated		Distribution		Underwriting		Eliminations		Consolidated
	(in thousands)
Net premiums written	$	—	$	95,666	$	—	$	95,666	$	—	$	108,762	$	(770)	$	107,992
Escrow, other title-related fees and other (1)	34,280		803		(18,970)		16,113		37,646		1,409		(20,480)		18,575
Investment, dividend and other income	14		414		—		428		46		1,183		—		1,229
Total revenue	$	34,294	$	96,883	$	(18,970)	$	112,207	$	37,692	$	111,354	$	(21,250)	$	127,796
Premiums retained by agents (2)	—		79,572		(18,970)		60,602		—		91,588		(21,250)		70,338
Direct labor (3)	25,553		2,245		—		27,798		16,107		1,872		—		17,979
Other direct costs (4)	6,059		2,767		—		8,826		5,317		1,792		—		7,109
Provision for claims	599		4,012		—		4,611		559		2,690		—		3,249
Adjusted gross profit (5)	$	2,083	$	8,287	$	—	$	10,370	$	15,709	$	13,412	$	—	$	29,121

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
Distribution Underwriting Eliminations Consolidated Distribution Underwriting Eliminations Consolidated
(in thousands)
Net premiums written $ — $ 359,730 $ (976) $ 358,754 $ — $ 246,738 $ — $ 246,738
Escrow, other title-related fees and other (1)
131,506 2,621 (75,035) 59,092 93,043 1,088 (50,833) 43,298
Investment, dividend and other income 130 2,388 — 2,518 614 1,654 — 2,268
Total revenue $ 131,636 $ 364,739 $ (76,011) $ 420,364 $ 93,657 $ 249,480 $ (50,833) $ 292,304
Premiums retained by agents (2)
— 303,126 (76,011) 227,115 — 206,965 (50,833) 156,132
Direct labor (3)
56,884 5,945 — 62,829 40,213 4,891 — 45,104
Other direct costs (4)
16,846 7,896 — 24,742 12,433 3,916 — 16,349
Provision for claims 1,777 14,964 — 16,741 1,006 9,059 — 10,065
Adjusted gross profit (5)
$ 56,129 $ 32,808 $ — $ 88,937 $ 40,005 $ 24,649 $ — $ 64,654

~~__________________~~

_________________

(1)Includes fee income from closings, escrow, title exams, ceding commission income, as well as premiums retained by Direct Agents.

(2)This expense represents a deduction from the net premiums written for the amounts that are retained by Direct Agents and Third-Party Agents as compensation for their efforts to generate premium income for our Underwriting segment. The impact of premiums retained by our Direct Agents and the expense for reinsurance or co-insurance procured on Direct Agent sourced premiums are eliminated in consolidation.

(3)Includes all compensation costs, including salaries, bonuses, incentive payments, and benefits, for personnel involved in the direct fulfillment of title and/or escrow services.

(4)Includes title examination expense, office supplies, and premium and other taxes.

(5)See “—Non-GAAP Financial Measures—Adjusted gross profit” below for a reconciliation of consolidated adjusted gross profit, which is a non-GAAP measure, to our gross profit, the most closely comparable GAAP financial measure.

Distribution segment revenue ~~increased~~decreased by ~~$11.6~~$3.4 million, or ~~32%, and $38.0 million, or 41%~~9%, for ~~the~~ three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022, compared to the same ~~periods~~period in the prior year driven by the closed order ~~growth~~decline discussed above. For the three months ended ~~September 30, 2021~~March 31, 2022, higher average escrow revenue per order of ~~10%~~4% ~~contributed to~~partially offset the ~~increase~~decrease in Distribution segment revenue ~~while for the nine month period ended September 30, 2021,~~ ~~lower average revenue per order of 7% offset the increase.~~driven by fewer closed orders. Underwriting segment revenue ~~increased~~decreased by ~~$38.1~~$14.5 million, or ~~36%, and $115.3 million, or 46%~~13%, for the three ~~and~~ ~~nine~~months ended ~~September 30, 2021, respectively,~~March 31, 2022 as compared to the same ~~periods~~period in the prior year, reflecting ~~significant growth~~the reduction in title policies underwritten from both Direct and Third-Party ~~Agents.~~

~~Table~~Agents as a result of ~~Contents~~current market conditions.

Distribution segment adjusted gross profit ~~improved $1.4~~decreased by $13.6 million, or ~~8%, and $16.1 million, or 40%~~87%, for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year, driven by closed order decline, a higher mix of Doma Enterprise closed orders, which carry a lower price point as compared to the Local channel, and investments in fulfillment infrastructure to support volume growth and ~~efficiency improvements in direct expenses per order.~~migration of transactions to the Doma Intelligence platform. Underwriting segment adjusted gross profit ~~increased~~decreased by ~~$1.3~~$5.1 million, or ~~13%, and $8.2 million, or 33%~~38%, during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year, reflecting ~~increased demand across all channels of the business,~~market contraction, a higher premium tax rate, and ~~improvements realized in direct expenses that more than offset the~~an increase in provision for title claims expenses ~~for the period.~~due to lower reserve releases related to prior year policies.

Supplemental Key Operating and Financial Indicators Results Discussion – Three ~~and Nine~~ Months Ended ~~September 30, 2021~~March 31, 2022 Compared to the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021

The following table presents our key operating and financial indicators, including our non-GAAP financial measures, for the periods indicated, and the changes between periods. This discussion should be read only as a supplement to the discussion of our GAAP results above. See “—Non-GAAP Financial Measures” below for important information about the non-GAAP financial measures presented below and their reconciliation to the respective most closely comparable GAAP measures.

Three Months Ended September 30,
2021 2020 $ Change % Change
(in thousands, except percentages and open and closed order numbers)
Opened orders 52,867 37,572 15,295 41 %
Closed orders 35,300 25,358 9,942 39 %
Retained premiums and fees $ 70,986 $ 54,048 $ 16,938 31 %
Adjusted gross profit 30,280 27,600 2,680 10 %
Ratio of adjusted gross profit to retained premiums and fees 43 % 51 % (8) p.p (16) %
Adjusted EBITDA $ (20,109) $ (649) (19,460) 2998 %

Table of Contents


	Three Months Ended March 31,
	2022			2021			$ Change		% Change
	(in thousands, except percentages and open and closed order numbers)
Opened orders	35,192			41,084			(5,892)		(14)	%
Closed orders	27,347			32,650			(5,303)		(16)	%

Retained premiums and fees	$	51,605		$	57,458		$	(5,853)	(10)	%
Adjusted gross profit	10,370			29,121			(18,751)		(64)	%
Ratio of adjusted gross profit to retained premiums and fees	20		%	51		%	(31) p.p		(61)	%
Adjusted EBITDA	$	(44,905)		$	(3,277)		(41,628)		1270	%

Nine Months Ended September 30,
2021 2020 $ Change % Change
(in thousands, except percentages and open and closed order numbers)
Opened orders 135,442 101,161 34,281 34 %
Closed orders 99,386 65,026 34,360 53 %
Retained premiums and fees $ 193,249 $ 136,172 $ 57,077 42 %
Adjusted gross profit 88,937 64,654 24,283 38 %
Ratio of adjusted gross profit to retained premiums and fees 46 % 47 % (1) p.p (2) %
Adjusted EBITDA $ (35,291) $ (15,926) (19,365) 122 %

Opened and closed orders

For the three months ending ~~September 30, 2021,~~March 31, 2022, we opened ~~52,867~~35,192 orders and closed ~~35,300~~27,347 orders, ~~an increase~~a decrease of ~~41%~~14% and ~~39%~~16%, respectively, over the same period in the prior ~~year.~~year due to the rising interest rate environment and shrinking population of refinance-eligible homeowners. Closed orders increased ~~386%~~38% for the three months ended ~~September 30, 2021~~March 31, 2022 as compared to the same period in the prior year in our Doma Enterprise channel due to new customer acquisitions, increased wallet share with existing customers, and an expanding geographical footprint. Closed orders decreased by 8%45% in our Local channel in the ~~third~~first quarter of ~~2021~~2022 compared to the same period in the prior year due to the contracting refinance market. While the lower overall market ~~which was partially offset by~~activity negatively impacted our closed order growth ~~in purchase orders.~~

~~For~~for the ~~nine~~three months ending ~~September 30,~~March 31, 2022, our total closed order market share grew from 1.0% at March 31, 2021 ~~we opened 135,442 orders~~to 1.4% at March 31, 2022, according to closed order refinance and ~~closed 99,386 orders, an increase of 34%~~purchase statistics from the Mortgage Bankers Association.

Retained premiums and ~~53%~~fees

Retained premiums and fees decreased by $5.9 million, or 10%, ~~respectively, over~~during the ~~same period in the prior year. Closed orders increased 462% year over year in our Doma Enterprise channel due to new customer acquisitions, increased wallet share with existing~~

~~Table of Contents~~

~~customers, and an expanding geographical footprint. Closed order growth was 7% in our Local channel in the nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to the same period in the prior year, driven by ~~growth in both refinance and purchase orders.~~

~~Retained premiums and fees~~

~~Retained premiums and fees increased by $16.9 million, or 31%, and $57.1 million, or 42%, during the three and~~ ~~nine~~ ~~months ended September 30, 2021 compared to the same periods in the prior year, driven by strong~~ closed order reduction and title policy ~~growth~~decline across Direct and Third-Party Agents.

Adjusted gross profit

Adjusted gross profit ~~increase~~decreasedd by ~~$2.7~~$18.8 million, or ~~10%, and $24.3 million, or 38%~~64%, during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year, due to ~~growth~~declines in retained premiums and fees of ~~$16.9 million and $57.1~~$5.9 million in the same ~~periods. The growth in retained premiums and fees was partially offset~~period. I ~~by investments~~nvestments in fulfillment infrastructure to support ~~future~~volume growth. and migration of transactions to the Doma Intelligence platform contributed to the decrease in adjusted gross profit.

Ratio of adjusted gross profit to retained premiums and fees

The ratio of adjusted gross profit to retained premiums and fees decreased 831 percentage points ~~and 1 percentage point~~ during the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 compared to the same ~~periods~~period in the prior year. The decrease is primarily due to higher direct labor expenses of ~~$9.1~~$9.8 million, or ~~61%, and $17.7 million, or 39%~~55%, during the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 compared to the same ~~periods~~period in the prior year. The rise in direct labor expenses ~~exceeded retained premium and fee growth as~~are the result of hiring fulfillment labor ~~was hired~~ in advance of ~~future~~ volume ~~growth.~~growth and the near-term inefficiencies associated with the migration of transactions to the Doma Intelligence platform. Contributing to the ~~increase~~decrease in the ratio during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was a ~~slight~~higher mix of Doma Enterprise closed orders, which carry a lower price point as compared to the Local channel, an increase in the provision for claims as a percentage of net written premium from ~~4.1%~~3.0% to ~~4.7%.~~4.8%, and an increase in the premium tax rate.

Adjusted EBITDA

Adjusted EBITDA decreased by ~~$19.5~~$41.6 million ~~or 2998%,~~ to negative ~~$20.1~~$44.9 million for the three months ended ~~September 30, 2021,~~March 31, 2022, driven by $~~22.1~~27.0 million of higher operating costs from investments in corporate support functions to

Table of Contents

successfully operate as a public company, research and development, and operations and management staff to ~~support~~accelerate growth and transformation inof our home purchase product offering on the ~~Direct Agents channel.~~ ~~This was offset by a~~ ~~$2.7~~ ~~million improvement in adjusted gross profit. Adjusted EBITDA decreased by $19.4 million, or 122%, to negative $35.3 million for the~~ ~~nine~~ ~~months ended September 30, 2021, driven by~~ ~~$44.0 million of higher operating costs from the same investments in the Company.~~ ~~This was offset by a $24.3 million improvement in adjusted gross profit.~~Doma Intelligence platform.

Non-GAAP Financial Measures

The non-GAAP financial measures described in this Quarterly Report should be considered only as supplements to results prepared in accordance with GAAP and should not be considered as substitutes for GAAP results. These measures, retained premiums and fees, adjusted gross profit, and adjusted EBITDA, have not been calculated in accordance with GAAP and are therefore not necessarily indicative of our trends or profitability in accordance with GAAP. These measures exclude or otherwise adjust for certain cost items that are required by GAAP. Further, these measures may be defined and calculated differently than similarly-titled measures reported by other companies, making it difficult to compare our results with the results of other companies. We caution investors against undue reliance on our non-GAAP financial measures as a substitute for our results in accordance with GAAP.

Management uses these non-GAAP financial measures, in conjunction with GAAP financial measures to: (i) monitor and evaluate the growth and performance of our business operations; (ii) facilitate internal comparisons of the historical operating performance of our business operations; (iii) facilitate external comparisons of the results of our overall business to the historical operating performance of other companies that may have different capital structures or operating histories; (iv) review and assess the performance of our management team and other employees; and (v) prepare budgets and evaluate strategic planning decisions regarding future operating investments.

~~Table of Contents~~

Retained premiums and fees

The following presents our retained premiums and fees and reconciles the measure to our gross profit, the most closely comparable GAAP financial measure, for the periods indicated:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(in thousands)				(in thousands)					(in thousands)
Revenue	Revenue	$	162,582	$	121,072	$	420,364	$	292,304	Revenue	$	112,207	$	127,796
Minus:	Minus:									Minus:
Premiums retained by Third-Party Agents	Premiums retained by Third-Party Agents	91,596		67,024		227,115		156,132		Premiums retained by Third-Party Agents	60,602		70,338
Retained premiums and fees	Retained premiums and fees	$	70,986	$	54,048	$	193,249	$	136,172	Retained premiums and fees	$	51,605	$	57,458
Minus:	Minus:									Minus:
Direct labor	Direct labor	23,948		14,892		62,829		45,104		Direct labor	27,798		17,979
Provision for claims	Provision for claims	6,685		5,242		16,741		10,065		Provision for claims	4,611		3,249
Depreciation and amortization	Depreciation and amortization	1,978		1,221		7,705		3,236		Depreciation and amortization	3,236		2,707
Other direct costs (1)	Other direct costs (1)	10,073		6,314		24,742		16,349		Other direct costs (1)	8,826		7,109
Gross Profit	Gross Profit	$	28,302	$	26,379	$	81,232	$	61,418	Gross Profit	$	7,134	$	26,414

__________________

(1)Includes title examination expense, office supplies, and premium and other taxes.

Table of Contents

Adjusted gross profit

The following table reconciles our adjusted gross profit to our gross profit, the most closely comparable GAAP financial measure, for the periods indicated:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(in thousands)				(in thousands)					(in thousands)
Gross Profit	Gross Profit	$	28,302	$	26,379	$	81,232	$	61,418	Gross Profit	$	7,134	$	26,414
Adjusted for:	Adjusted for:									Adjusted for:
Depreciation and amortization	Depreciation and amortization	1,978		1,221		7,705		3,236		Depreciation and amortization	3,236		2,707
Adjusted Gross Profit	Adjusted Gross Profit	$	30,280	$	27,600	$	88,937	$	64,654	Adjusted Gross Profit	$	10,370	$	29,121

Adjusted EBITDA

The following table reconciles our adjusted EBITDA to our net loss, the most closely comparable GAAP financial measure, for the periods indicated:

~~Table of Contents~~


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(in thousands)				(in thousands)					(in thousands)
Net loss (GAAP)	Net loss (GAAP)	$	(34,270)	$	(3,622)	$	(69,327)	$	(26,540)	Net loss (GAAP)	$	(50,026)	$	(11,758)
Adjusted for:	Adjusted for:									Adjusted for:
Depreciation and amortization	Depreciation and amortization	1,978		1,221		7,705		3,236		Depreciation and amortization	3,236		2,707
Interest expense	Interest expense	4,531		1,193		12,341		4,428		Interest expense	4,207		3,360
Income taxes	Income taxes	170		204		506		620		Income taxes	185		125
EBITDA	EBITDA	$	(27,591)	$	(1,004)	$	(48,775)	$	(18,256)	EBITDA	$	(42,398)	$	(5,566)
Adjusted for:	Adjusted for:									Adjusted for:
Stock-based compensation	Stock-based compensation	3,004		355		9,006		945		Stock-based compensation	11,393		2,289
COVID-related severance costs		—		—		—		1,385
Change in fair value of Warrant and Sponsor Covered Shares liabilities	Change in fair value of Warrant and Sponsor Covered Shares liabilities	4,478		—		4,478		—		Change in fair value of Warrant and Sponsor Covered Shares liabilities	(13,900)		—
Adjusted EBITDA	Adjusted EBITDA	$	(20,109)	$	(649)	$	(35,291)	$	(15,926)	Adjusted EBITDA	$	(44,905)	$	(3,277)

Liquidity and Capital Resources

We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including our working capital and capital expenditure needs and other commitments. Our recurring working capital requirements relate mainly to our cash operating costs. Our capital expenditure requirements consist mainly of software development related to our Doma Intelligence platform.

We had ~~$413.7~~$322.2 million in cash and cash equivalents and restricted cash as of ~~September 30, 2021.~~March 31, 2022. We believe our operating cash flows, together with our cash on hand and the cash proceeds from the Business Combination and the related private placement, will be sufficient to meet our working capital and capital expenditure requirements for a period of at least 12 months from the date of this Quarterly Report.

We may need additional cash due to changing business conditions or other developments, including unanticipated regulatory developments and competitive pressures. To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing.

~~Debt~~

Table of Contents

~~Lennar seller financing note~~

As part of the North American Title Acquisition, Lennar issued Old Doma a note for $87.0 million on January 7, 2019 with a maturity date of January 7, 2029. Cash interest on the note accrued at the LIBOR one-month rate, plus a fixed rate of 8.5% per annum on a “pay-in-kind” ("PIK") basis. Old Doma repaid the note in full in January 2021, after making several principal prepayments in 2019 and 2020.Debt

Senior secured credit agreement

In December 2020, Old Doma entered into a loan and security agreement with Hudson Structured Capital Management Ltd. (“HSCM”), providing for a $150.0 million senior secured term loan (“Senior Debt”), which was fully funded by the lenders, which are affiliates of HSCM, at its principal face value on January 29, 2021 (the “Funding Date”) and matures on the fifth anniversary of the Funding Date. The Senior Debt bears interest at a rate of 11.25% per annum, of which 5.0% is payable in cash in arrears and the remaining 6.25% accrues to the outstanding principal balance on a PIK basis. Interest is payable or compounded, as applicable, quarterly. Principal prepayments on the Senior Debt are permitted, subject to a premium, which declines from 8% of principal today to 4% in 2023 and to zero in 2024.

~~Table of Contents~~

The Senior Debt is secured by a first-priority pledge and security interest in substantially all of the assets of ~~the Company,~~our wholly owned subsidiary States Title (which represents substantially all of our assets), including the assets of ~~our~~any of its existing and future domestic subsidiaries (in each case, subject to customary exclusions, including the exclusion of regulated insurance company subsidiaries). The Senior Debt is subject to customary affirmative and negative covenants, including limits on the incurrence of debt and restrictions on acquisitions, sales of assets, dividends and certain restricted payments. The Senior Debt is also subject to two financial maintenance covenants, related to ~~our~~ liquidity and revenues. The liquidity covenant requires ~~the Company~~States Title to have at least $20.0 million of liquidity, calculated as of the last day of each month, as the sum of (i) our unrestricted cash and cash equivalents and (ii) the aggregate unused and available portion of any working capital or other revolving credit facility. The revenue covenant, which is tested as of the last day of each fiscal year, requires that ~~our~~States Title’s consolidated GAAP revenue for the year to be greater than $130.0 million. The Senior Debt is subject to customary events of default and cure rights. As of the date of this Quarterly Report, ~~we complied~~States Title is in compliance with all Senior Debt covenants.

Upon funding, Old Doma issued penny warrants to affiliates of HSCM equal to 1.35% of Old Doma’s fully diluted shares. The warrants were net exercised on the Closing Date and such affiliates of HSCM received the right to receive approximately 4.2 million shares of ~~Doma~~our common stock.

Other commitments and contingencies

Our commitments for leases, excluding any imputed interest, related to our office space and equipment, amounted to ~~$37.6~~ $34.6 million~~million~~ as of ~~September 30, 2021~~March 31, 2022 of which ~~$2.3~~$6.5 million is payable in ~~2021.~~2022. Refer to Note 1217 to our condensed consolidated financial statements for a summary of our future commitments. Our headquarters lease expires in 2024. As of ~~the date of this Quarterly Report,~~March 31, 2022, we did not have any other material commitments for cash expenditures. We also administer escrow deposits as a service to customers, a substantial portion of which are held at third-party financial institutions. Such deposits are not reflected on our balance sheet, but we could be contingently liable for them under certain circumstances (for example, if we dispose of escrowed assets). Such contingent liabilities have not materially impacted our results of operations or financial condition to date and are not expected to do so in the near term.

Cash flows

The following table summarizes our cash flows for the periods indicated:

Nine Months Ended September 30,
2021 2020
(in thousands)
Net cash used in operating activities $ (32,547) $ (16,401)
Net cash used in investing activities (18,313) (53,909)
Net cash provided by financing activities 352,528 42,701


	Three Months Ended March 31,
	2022		2021
	(in thousands)
Net cash used in operating activities	$	(56,469)	$	(19,323)
Net cash (used in) provided by investing activities	(5,042)		5,116
Net cash (used in) provided by financing activities	(97)		85,735

Table of Contents

Operating activities

In the first ~~nine~~three months of 2022, net cash used in operating activities was $56.5 million driven by the net loss of $50.0 million, cash paid for accrued expenses of $17.3 million and non-cash costs relating to the change in the fair value of warrant and Sponsor Covered Shares liabilities of $13.9 million. This was offset by decreases in prepaid expenses, deposits and other assets of $3.9 million and receivables of $2.6 million and non-cash costs including depreciation and amortization of $3.2 million and stock-based compensation expense of $11.6 million.

In the first three months of 2021, net cash used in operating activities was ~~$32.5~~$19.3 million driven by the net loss of ~~$69.3~~$11.8 million, cash paid for accrued expenses of $3.0 million and cash paid for prepaid expenses associated with the Business Combination of ~~$14.8~~$9.5 million. This was partially offset by ~~increases of accrued expenses and other liabilities of $13.8 million and the liability for loss and loss adjustment expenses of $8.9 million and~~ non-cash costs including depreciation and amortization of ~~$7.7~~$2.7 million and stock-based compensation expense of ~~$8.4~~$2.3 million.

In the first nine months of 2020, net cash used in operating activities was $16.4 million driven by the net loss of $26.5 million and cash paid for prepaid expenses of $6.2 million. This was offset by increases in the liability for loss and loss adjustment expenses of $3.4 million and accounts payable of $2.7 million and non-cash costs including PIK interest of $5.1 million and depreciation and amortization of $3.2 million.

~~Table of Contents~~

Investing activities

Our capital expenditures have historically consisted mainly of costs incurred in the development of the Doma Intelligence platform. Our other investing activities generally consist of transactions in fixed maturity investment securities to provide regular interest payments.

In the first ~~nine~~three months of ~~2021,~~2022, net cash used in investing activities was ~~$18.3~~$5.0 million, and reflected ~~$33.7~~$2.1 million of purchases of investments offset by ~~$33.4~~$7.1 million of proceeds from the sale of investments. Cash paid for fixed assets was ~~$18.8~~$10.1 million in the same period, largely consisting of technology development costs related to the Doma Intelligence platform.

In the first ~~nine~~three months of ~~2020,~~2021, net cash ~~used in~~provided by investing activities was ~~$53.9~~$5.1 million, and reflected ~~$58.6 million of purchases of investments offset by $15.8~~mainly $17.9 million of proceeds from the sale of investments offset by $8.1 million of purchases of investments. ~~In the same period, cash~~Cash paid for fixed assets was ~~$12.7~~$5.1 million in the same period, largely consisting of technology development costs related to Doma Intelligence. ~~We also received $1.3 million from the sale of a title plant~~

Financing activities

Net cash used by financing activities was immaterial in the ~~same period.~~

~~Financing activities~~first three months of 2022.

Net cash provided by financing activities was ~~$352.5~~$85.7 million in the first ~~nine~~three months of 2021, reflecting ~~$625.0~~$150.0 million in proceeds from the ~~Business Combination and PIPE Investment (as defined in Note 3) and $150.0 million of proceeds from the~~ Senior Debt. This increase was offset by $294.9 million in redemptions of redeemable common and preferred stock and $63.2 million in payment of costs directly attributable to the issuance of common stock in connection with Business Combination and PIPE Investment. The net cash provided by financing activities was also offset by the $65.5 million repayment of the Lennar seller financing note.

~~Net cash provided by financing activities was $42.7 million in the first nine months of 2020, reflecting $70.7 million in proceeds from the issuance of Series C preferred stock,~~Debt, offset by a ~~$28.1~~$65.5 million payment on the Lennar seller financing note.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with GAAP. Preparation of the financial statements requires ~~our~~ management to make several judgments, estimates and assumptions relating to the reported amount of revenue and expenses, assets and liabilities and the disclosure of contingent assets and liabilities. We evaluate our significant estimates on an ongoing basis, including, but not limited to, liability for loss and loss adjustment expenses, goodwill, accrued net premiums written from Third-Party ~~Agents~~Agent referrals, and the Sponsor Covered Shares liability. We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on our consolidated financial statements. Our significant accounting policies are described in Note 2 to our annual audited consolidated financial statements. Our critical accounting estimates are described below.

Liability for loss and loss adjustment expenses

Our liability for loss and loss adjustment expenses include mainly reserves for known claims as well as reserves for IBNR claims. Each known claim is reserved based on our estimate of the costs required to settle the claim.

IBNR is a loss reserve that primarily reflects the sum of expected losses for unreported claims. The expense is calculated by applying ~~the~~a loss provision rate to total title insurance premiums. With the assistance of a third-party actuarial firm, we determine the loss provision rate for the policies written in the current ~~year.~~and prior years. This assessment considers factors such as historical experience and other factors, including industry trends, claim loss

Table of Contents

history, legal environment, geographic considerations and the types of title insurance policies written (i.e., real estate purchase or refinancing transactions). The loss provision rate is set to provide for losses on current year policies, but due to development of prior years and our long claim duration, it periodically includes amounts of estimated adverse or positive development on prior years’ policies. The provision rate on prior year policies will continue to change as actual experience on those specific policy years develop. As the Company’s claims experience matures, we refine estimates on prior policy years to put more consideration to the Company’s actual claims experience as compared to industry experience. Changes in the loss provision rate for recent policy years are considered likely and could result in a material adjustment to the IBNR reserves.

The estimates used require considerable judgment and are established as management’s best estimate of future outcomes, however, the amount of IBNR ~~reserved~~reserves based on these estimates could ultimately prove to be inadequate

~~Table of Contents~~

to cover actual future claims experience. We continually monitor for any events and/or circumstances that arise during the year which may indicate that the assumptions used to record the provision for claims estimate requires reassessment.

Our total loss reserve as of ~~September 30, 2021~~March 31, 2022 amounted to ~~$78.7~~$82.5 million, which we believe, based on historical claims experience and actuarial analyses, is adequate to cover claim losses resulting from pending and future claims for policies issued through ~~September 30, 2021.~~ March 31, 2022.

A summary of the Company’s loss reserves is as follows:


	March 31, 2022				December 31, 2021
	($ in thousands)
Known title claims	$	7,550	9	%	$	7,578	9	%
IBNR title claims	74,484		90	%	72,621		90	%
Total title claims	$	82,034	99	%	$	80,199	99	%
Non-title claims	500		1	%	68		1	%
Total loss reserves	$	82,534	100	%	$	80,267	100	%

We continually review and adjust our reserve estimates to reflect loss experience and any new information that becomes available.

Goodwill

We have significant goodwill on our balance sheet related to acquisitions, as goodwill represents the excess of the acquisition price over the fair value of net assets acquired and liabilities assumed in a business combination. Goodwill is tested and reviewed annually for impairment on October 1 of each ~~fiscal~~ year, and between annual tests if events or circumstances arise that would more likely than not reduce the fair value of any one of our reporting units below its respective carrying amount. In addition, an interim impairment test may be completed upon a triggering event or when there is a reorganization of reporting structure or disposal of all or a portion of a reporting unit. As of ~~September 30, 2021,~~March 31, 2022, we had $111.5 million of goodwill, relating to the North American Title Acquisition, of which $88.1 million and $23.4 million was allocated to our Distribution and Underwriting reporting units, respectively.

In performing our annual goodwill impairment test, we first perform a qualitative assessment, which requires that we consider significant estimates and assumptions regarding macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, changes in management or key personnel, changes in strategy, changes in customers, changes in the composition or carrying amount of a reporting unit or other factors that have the potential to impact fair value. If, after assessing the totality of events and circumstances, we determine that it is more likely than not that the fair values of our reporting units are greater than the carrying amounts, then the quantitative goodwill impairment test is not performed, as goodwill is not considered to be impaired. However, if we determine that the fair value of a reporting unit is more likely than not to be less than its carrying value, then a quantitative assessment is performed. For the quantitative assessment, the determination of estimated fair value of our reporting units requires us to make assumptions about future discounted cash flows, including profit margins, long-term forecasts, discount rates and terminal growth rates and, if possible, a comparable market transaction model. If, based upon the quantitative assessment, the reporting unit fair value is less than the carrying amount, a

Table of Contents

goodwill impairment is recorded equal to the difference between the carrying amount of the reporting ~~unit's~~unit’s goodwill and its fair value, not to exceed the carrying value of goodwill allocated to that reporting unit, and a corresponding impairment loss is recorded in the consolidated statements of operations.

We ~~completed~~conduct our annual goodwill impairment test as of October 1. Based on ~~October 1, 2020. We~~the last test performed, we determined, after performing a qualitative review of each reporting unit, that the fair value of each reporting unit exceeded its respective carrying value. Accordingly, there was no indication of impairment and the quantitative goodwill impairment test was not performed. We did not identify any events, changes in circumstances, or triggering events since the performance of our annual goodwill impairment test that would require us to perform an interim goodwill impairment test during the ~~fiscal~~ year.

Accrued net premiums written from Third-Party Agent referrals

We recognize revenues on title insurance policies issued by Third-Party Agents when notice of issuance is received from Third-Party Agents, which is generally when cash payment is received. In addition, we estimate and accrue for revenues on policies sold but not reported by Third-Party Agents as of the relevant balance sheet closing date. This accrual is based on historical transactional volume data for title insurance policies that have closed and were not reported before the relevant balance sheet closing, as well as trends in our operations and in the title and housing industries. There could be variability in the amount of this accrual from period to period and amounts subsequently reported to us by Third-Party Agents may differ from the estimated accrual recorded in the preceding period. If the amount of revenue subsequently reported to us by Third Party Agents is higher or lower than our estimate, we record the difference in revenue in the period in which it is reported. ~~For the three and nine months ended September 30, 2021 and 2020, the~~The time lag between the closing of transactions by Third-Party Agents and the

~~Table of Contents~~

reporting of policies, or premiums from policies issued by Third-Party Agents to us has been approximately three months. In addition to the premium accrual, we also record accruals for the corresponding direct expenses related to this revenue, including premiums retained by Third-Party Agents, premium taxes, and provision for claims.

Sponsor Covered Shares liability

The Sponsor Covered Shares, as described in Note 3, will become vested contingent upon the price of ~~Doma~~our common stock exceeding certain thresholds or upon some strategic events, which include events that are not indexed to ~~Doma~~our common stock.

We obtained a third-party valuation of the Sponsor Covered Shares as of ~~July 28,~~December 31, 2021 ~~(i.e., the Closing Date)~~ and ~~September 30, 2021~~March 31, 2022 using the Monte Carlo simulation methodology and based upon ~~assumptions~~market inputs regarding stock price, dividend yield, expected term, volatility and risk-free rate. The share price represents the trading price as of each valuation date. The expected dividend yield is zero as we have never declared or paid cash dividends and have no current plans to do so during the expected term. The expected term represents the vesting period, which is ~~9.83~~9.3 years. The expected volatility of ~~55.2%~~60.0% was calculated based on the average of (i) the Doma implied volatility calculated using longest term stock option (ii) the Doma implied warrant volatility using the term of the Public and ~~(ii)~~Private Warrants and (iii) median leverage adjusted (asset) volatility calculated using a set of Guideline Public Companies (“GPCs”). Volatility for the GPCs was calculated over a lookback period of ~~9.83~~9.3 years (or longest available data for GPCs whose trading history was shorter than ~~9.83~~9.3 years), commensurate with the contractual term of the Sponsor Covered Shares. The risk-free rate utilizes the 10-year U.S. Constant Maturity. Finally, the annual change in control probability is estimated to be 2.0%.

As of ~~September 30, 2021,~~March 31, 2022, the Sponsor Covered Shares liability amounted to ~~$8.6~~$1.9 million.

New Accounting Pronouncements

For information about recently issued accounting pronouncements, refer to Note 2 to our condensed consolidated financial statements included elsewhere in this filing.

Emerging Growth Company Accounting Election

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private

Table of Contents

companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards ~~used..~~used.

Item 3. Quantitative and Qualitative Disclosures About Market Risks

Our principal market risk is interest rate risk because our results of operations can vary due to changes in interest rates. In a declining interest rate environment, we would expect our results of operations to be positively impacted by higher loan refinancing activity. However, in a rising interest rate environment, we would expect our results of operations to be negatively impacted by lower loan refinancing activity. We would expect both of these scenarios to be mitigated by home purchase loan activity. Fluctuations in interest rates may also impact the interest income earned on floating-rate investments and the fair value of our fixed-rate investments. An increase in interest rates decreases the market value of fixed-rate investments. Conversely, a decrease in interest rates increases the fair market value of fixed-rate investments.

Additionally, we analyze potential changes in the value of our investment portfolio due to the market risk factors noted above within the overall context of asset and liability management. A technique we use in the management of our investment portfolio is the calculation of duration. Our actuaries estimate the payout pattern of our reserve liabilities to determine their duration, which is the present value of the weighted average payments expressed in years. We then establish a target duration for our investment portfolio so that at any given time the estimated cash generated by the investment portfolio will closely match the estimated cash required for the payment of the related reserves. We structure the investment portfolio to meet the target duration to achieve the required cash flow, based on liquidity and market risk factors.

The Company’s debt security portfolio is subject to credit risk. For further information on the credit quality of the Company’s investment portfolio at March 31, 2022, see Note 4 to the consolidated financial statements.

The Company also has credit risk related to the ability of reinsurance counterparties to honor their obligations to pay the contract amounts under our reinsurance programs. For information on our reinsurance programs, see Note 2 to the consolidated financial statements.

~~Table of Contents~~

Item 4. Controls and Procedures

Disclosure Controls and Procedures

~~Our management,~~Management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of ~~September 30, 2021.~~March 31, 2022. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of ~~September 30, 2021,~~March 31, 2022, our disclosure controls and procedures were ~~not~~ effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to ~~our~~ management, including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure, due solely to the material weakness in our internal control over financial reporting due to the insufficient risk assessment of the underlying accounting treatment for certain complex financial instruments initially determined by Capitol, as described below. As this material weakness in internal control over financial reporting existed for Capitol, we continue to report the material weakness in internal control within our condensed consolidated financial statements.

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the Warrant Agreement.

Prior to the issuance of the SEC Statement, Capitol had accounted for the Public Warrants (as defined in Note 3) and the Private Placement Warrants (as defined in Note 3) (collectively, the “Warrants”) as components of equity. As a result of the SEC Statement, Capitol reevaluated the accounting treatment of the Warrants. The guidance in ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity, addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common stock. Upon further evaluation of the terms of the Warrants, Capitol concluded that the Warrants should be accounted for as a derivative liability. The Warrant Agreement includes a provision the application of which could result in a different settlement value for the Warrants depending on their holder. Because the holder of an instrument is not an input into the pricing of a fixed-for-fixed option on Doma common stock (as defined in Note 2), as noted in ASC 815-40-15, the Warrants could not be considered “indexed to the Company’s own stock.” In addition, the provision provides that in the event of a tender or exchange offer accepted by holders of more than 50% of the outstanding shares of Doma common stock, all holders of the Warrants would be entitled to receive cash for their Warrants. In other words, in the event of a qualifying cash tender offer (which could be outside of the Company’s control), all Warrant holders would be entitled to cash, while only certain holders of Doma common stock would be entitled to cash. Thus, the Company concluded that the Warrants meet the definition of a derivative as contemplated in ASC 815 and recorded these Warrants as liabilities on the balance sheet at fair value upon the consummation of the Business Combination, with subsequent changes in their respective fair values recognized in the condensed consolidated statement of operations at each reporting period. The classification and reported values of the Warrants as described above are included in the financial statements herein.

In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. This included implementing processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Accordingly, management believes that the financial statements included in this Quarterly Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented. While management believes that the enhancements it has instituted will be effective, the elements of our remediation plan can only be accomplished over time.

~~Table of Contents~~

The material weakness will not be considered remediated, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.disclosure.

Changes in Internal Control over Financial Reporting

Table of Contents

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

5552

Table of Contents

Part II - Other Information

Item 1. Legal Proceedings

In the ordinary course of business, the Company is, or may become, involved in various pending or threatened litigation matters related to our operations, some of which may include claims for punitive or exemplary damages. For our business, customary litigation includes, but is not limited to, cases related to title and escrow claims, for which we make provisions through our loss reserves. Further, ordinary course litigation may include class action and purported class action lawsuits.

~~Additionally, we may, from time to time, receive various inquiries from governmental regulators concerning practices in the title insurance industry or other matters. Management reviews all~~For additional information regarding legal proceedings, ~~(which includes lawsuits and other legal and regulatory matters and inquiries)~~see Part I, Item 3. “Legal Proceedings” in our annual report on ~~an ongoing basis when making its accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment~~Form 10-K for the year ended December 31, 2021 (the “Annual Report”). See also the information set forth in Note 12 “Legal Matters” contained in Part I, Item 1 “Financial Information” of the ultimate outcome of the proceeding. For legal proceedings in which it is determined that a loss is both probable and reasonably estimable, a liability which represents our best estimate, based on known facts, will be been recorded. Actual losses for a legal proceeding may differ materially from the amounts, if any, recorded and the ultimate outcome of our pending legal proceedings is generally not yet determinable. While it is possible that some matters could be material to our operating results or cash flows in any particular period in the event of an unfavorable outcome, management does not believe the resolution of any such legal proceedings, individually or in the aggregate, will have a materially adverse effect on our financial position or results of operations.

this Quarterly Report.

Item 1A. Risk Factors

Factors that could cause our actual results to differ materially from those in this Quarterly Report ~~on Form 10-Q (“Quarterly Report”)~~ include the risk factors described ~~under the heading “Risk Factors~~”in Part I, Item 1A “Risk Factors” in our ~~registration statement on Form S-1 (No. 333-258942), as amended (the “Registration Statement”).~~Annual Report. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the ~~Registration Statement.~~Annual Report. We may face additional risks and uncertainties that are not presently known to us or that we currently deem immaterial, which may also impair our business or financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Equity Securities

During the period from July 1, 2021 through September 30, 2021, we issued an aggregate of 82,230 shares of Doma common stock (in one or more transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Rule 701), upon the exercise by holders of options granted under our 2019 Equity Incentive Plan at exercise prices ranging from ~~$0.03 to $0.71~~ ~~per share, for an aggregate purchase price of~~ ~~$0.03~~ ~~million.~~

In July 2021, we also issued 30,000,000 shares of Doma common stock at $10.00 per share to certain qualified institutional investors in connection with the PIPE Investment, for an aggregate amount of $300.0 million. These shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.

None

Use of Proceeds

~~The proceeds raised from the sales referenced above were brought into corporate treasury and are expected to be used for general corporate purposes.~~None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

~~Table of Contents~~

Item 5. Other Information

~~None~~Promotion of Hasan Rizvi to President of Technology & Operations.

On May 6, 2022, the board of directors of the Company promoted Hasan Rizvi, age 56, an executive officer of the Company, to serve as the Company's President of Technology & Operations.

Mr. Rizvi most recently served the Company's Chief Technology Officer since March 2019. Prior to joining the Company, Mr. Rizvi was a Senior Advisor at Bridge Growth Partners, LLC from December 2017 until September 2019 and the founder and CEO of Qlue, Inc., an enterprise SaaS platform, from September 2014 until May 2017 when Qlue was acquired by ServiceNow, Inc., a software company. He started his career at the computer software company Oracle, Inc., holding various roles including Executive Vice President, Fusion Middleware and Java Products, from July 2012 to November 2013. He received an M.S. in Computer Science from Rutgers University, an M.S. in Engineering Management from Stanford University and completed Harvard Business School’s Advanced Management Program.

In connection with Mr. Rizvi’s new role, he will receive an annual base salary of $400,000, with a target annual cash incentive opportunity equal to 100% of his annual base salary and a target annual long-term incentive

5753

Table of Contents

opportunity of $3,000,000 (in each case subject to performance and the Company’s discretion). Additionally, in connection with this promotion Mr. Rizvi received a special one-time equity award of 854,700 restricted stock units (“RSUs”) pursuant to the Company’s Omnibus Incentive Plan (the “Plan”). The RSUs are subject to the same terms and conditions applicable to RSUs granted to other senior executives under the Company’s Plan.

Mr. Rizvi has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K, has no arrangement or understanding between him and any other person required to be disclosed pursuant to Item 401(b) of Regulation S-K and has no family relationships required to be disclosed pursuant to Item 401(d) of Regulation S-K.

Table of Contents

Item 6. Exhibits.

The exhibits listed on the Exhibit Index to this Quarterly Report on Form 10-Q are filed herewith or incorporated by reference herein:


Exhibit						Description
~~3.1~~						~~Amended and Restated Certificate of Incorporation of Doma Holdings, Inc. (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K, filed on August 3, 2021).~~
~~3.2~~						~~Amended and Restated Bylaws of Doma Holdings, Inc. (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K, filed on August 3, 2021).~~
~~10.1~~						Amended & Restated Registration Rights Agreement, dated as of July 28, 2021, by and among Doma Holdings, Inc. and the securityholders signatory thereto (incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K, filed on August 3, 2021).
~~10.2^~~10.1^*						Form of ~~Indemnification Agreement (incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K, filed on August 3, 2021).~~
~~10.3^~~						Doma Holdings, Inc.’s 2021 Omnibus Incentive Plan ~~(incorporated by reference to Exhibit 10.9 to Registrant’s Current Report on Form 8-k, filed August 3, 2021).~~
~~10.4^~~						~~Doma Holdings, Inc.’s 2021 Employee~~Notice and Agreement of Restricted Stock ~~Purchase Plan (incorporated by reference to Exhibit 10.10 to Registrant’s Current Report on Form 8-K, filed August 3, 2021).~~Unit Award.
~~10.5*^~~						~~Doma Holdings, Inc. Outside Director Compensation Policy~~
31.1*						Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 .
32.2**						Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~.2002.
101.INS*						Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema Document.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

_________________

^ Management Contract or Compensatory Plan or Arrangement

* Filed herewith.

** Furnished herewith.

5855

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


DOMA HOLDINGS, INC.
By:	/s/ Max Simkoff
	Name:	Max Simkoff
	Date:	~~November 10, 2021~~May 11, 2022
	Title:	Chief Executive Officer
		(Principal Executive Officer)


DOMA HOLDINGS, INC.
By:	/s/ Noaman Ahmad
	Name:	Noaman Ahmad
	Date:	~~November 10, 2021~~May 11, 2022
	Title:	Chief Financial Officer
		(Principal Financial Officer)


DOMA HOLDINGS, INC.
By:	/s/ Mike Smith
	Name:	Mike Smith
	Date:	~~November 10, 2021~~May 11, 2022
	Title:	Chief Accounting Officer
		(Principal Accounting Officer)

5956


	December 31, 2020
	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Corporate debt securities(1)	$	7,139	$	918	$	—	$	8,057
Total	$	7,139	$	918	$	—	$	8,057


	Three months ended September 30, 2020
	Distribution		Underwriting		Eliminations		Consolidated total
Net premiums written	$	—	$	103,587	$	—	$	103,587
Escrow, other title-related fees and other (1)	36,094		490		(19,842)		16,742
Investment, dividend and other income	(40)		783		—		743
Total revenue	$	36,054	$	104,860	$	(19,842)	$	121,072

Premiums retained by agents (2)	$	—	$	86,866	$	(19,842)	$	67,024
Direct labor (3)	13,185		1,707		—		14,892
Other direct costs (4)	4,711		1,603		—		6,314
Provision for claims	617		4,625		—		5,242
Adjusted gross profit	$	17,541	$	10,059	$	—	$	27,600


	Nine months ended September 30, 2020
	Distribution		Underwriting		Eliminations		Consolidated total
Net premiums written	$	—	$	246,738	$	—	$	246,738
Escrow, other title-related fees and other (1)	93,043		1,088		(50,833)		43,298
Investment, dividend and other income	614		1,654		—		2,268
Total revenue	$	93,657	$	249,480	$	(50,833)	$	292,304

Premiums retained by agents (2)	$	—	$	206,965	$	(50,833)	$	156,132
Direct labor (3)	40,213		4,891		—		45,104
Other direct costs (4)	12,433		3,916		—		16,349
Provision for claims	1,006		9,059		—		10,065
Adjusted gross profit	$	40,005	$	24,649	$	—	$	64,654


	Number of RSAs	Average Grant Date Fair Value ($)
Non-vested at December 31, 2020	1,551,867	$	0.52
Granted	—	—
Exercised	(613,563)	0.38
Cancelled or Forfeited	—	—
Non-vested at September 30, 2021	938,304	$	0.61


	As of September 30,
	2021	2020
Convertible preferred stock	—	183,159,138
Outstanding stock options	26,283,820	27,621,396
Warrants for common stock	18,022,750	28,870,386
Restricted stock units	938,304	2,083,281
Total antidilutive securities	45,244,874	241,734,201


2021	$	2,311
2022	9,059
2023	8,037
2024	6,417
2025	4,724
Thereafter	7,032
Total	$	37,580