American Coastal Insurance Corporation (Nasdaq: ACIC) ("ACIC" or
the "Company"), a property and casualty insurance holding company,
today reported its financial results for the fourth quarter and
year ended December 31, 2024.
| |
|
|
|
| ($ in thousands,
except for per share data) |
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
| |
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
Gross premiums written |
$ |
140,739 |
|
|
$ |
128,260 |
|
|
9.7 |
% |
|
$ |
647,805 |
|
|
$ |
635,709 |
|
|
1.9 |
% |
| Gross premiums earned |
|
162,710 |
|
|
|
159,094 |
|
|
2.3 |
|
|
|
638,608 |
|
|
|
604,683 |
|
|
5.6 |
|
| Net premiums earned |
|
73,492 |
|
|
|
49,141 |
|
|
49.6 |
|
|
|
273,990 |
|
|
|
262,060 |
|
|
4.6 |
|
| Total revenue |
|
79,267 |
|
|
|
51,251 |
|
|
54.7 |
|
|
|
296,657 |
|
|
|
264,400 |
|
|
12.2 |
|
| Income from continuing
operations, net of tax |
|
5,868 |
|
|
|
17,380 |
|
|
(66.2 |
) |
|
|
76,319 |
|
|
|
85,204 |
|
|
(10.4 |
) |
| Income (loss) from
discontinued operations, net of tax |
|
(922 |
) |
|
|
(3,096 |
) |
|
70.2 |
|
|
|
(601 |
) |
|
|
224,707 |
|
|
NM |
| Consolidated net income |
$ |
4,946 |
|
|
$ |
14,284 |
|
|
(65.4 |
)% |
|
$ |
75,718 |
|
|
$ |
309,911 |
|
|
NM |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income available to ACIC
stockholders per diluted share |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations |
$ |
0.12 |
|
|
$ |
0.38 |
|
|
(68.4 |
)% |
|
$ |
1.55 |
|
|
$ |
1.92 |
|
|
(19.3 |
)% |
|
Discontinued Operations |
$ |
(0.02 |
) |
|
$ |
(0.07 |
) |
|
71.4 |
|
|
|
(0.01 |
) |
|
|
5.06 |
|
|
NM |
| Total |
$ |
0.10 |
|
|
$ |
0.31 |
|
|
(67.7 |
)% |
|
$ |
1.54 |
|
|
$ |
6.98 |
|
|
NM |
| |
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of net income
to core income: |
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Non-cash amortization of intangible assets and goodwill
impairment |
$ |
608 |
|
|
$ |
811 |
|
|
(25.0 |
)% |
|
$ |
2,639 |
|
|
$ |
3,247 |
|
|
(18.7 |
)% |
|
Less: Income (loss) from discontinued operations, net of tax |
|
(922 |
) |
|
|
(3,096 |
) |
|
70.2 |
|
|
|
(601 |
) |
|
|
224,707 |
|
|
NM |
|
Less: Net realized losses on investment portfolio |
|
— |
|
|
|
(2 |
) |
|
NM |
|
|
(124 |
) |
|
|
(6,789 |
) |
|
98.2 |
|
|
Less: Unrealized gains on equity securities |
|
454 |
|
|
|
22 |
|
|
NM |
|
|
1,996 |
|
|
|
814 |
|
|
NM |
|
Less: Net tax impact (1) |
|
32 |
|
|
|
166 |
|
|
(80.7 |
)% |
|
|
161 |
|
|
|
1,937 |
|
|
(91.7 |
) |
| Core income(2) |
|
5,990 |
|
|
|
18,005 |
|
|
(66.7 |
) |
|
|
76,925 |
|
|
|
92,489 |
|
|
(16.8 |
) |
| Core income per diluted share
(2) |
$ |
0.12 |
|
|
$ |
0.39 |
|
|
(69.2 |
)% |
|
$ |
1.56 |
|
|
$ |
2.08 |
|
|
(25.0 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Book value per share |
|
|
|
|
|
|
$ |
4.89 |
|
|
$ |
3.61 |
|
|
35.5 |
% |
|
NM = Not Meaningful |
|
(1) |
In order to reconcile net income to the core income measures, the
Company included the tax impact of all adjustments using the 21%
federal corporate tax rate. |
|
(2) |
Core income and core income per diluted share, both of which are
measures that are not based on generally accepted accounting
principles ("GAAP"), are reconciled above to net income and net
income per diluted share, respectively, the most directly
comparable GAAP measures. Additional information regarding non-GAAP
financial measures presented in this press release can be found in
the "Definitions of Non-GAAP Measures" section,
below. |
|
|
|
Comments from Chief Executive Officer,
B. Bradford Martz:
“American Coastal, our insurance subsidiary,
remains a leader in the Florida commercial residential market. The
Company remained profitable in the 2024 fourth quarter with a
combined ratio of 91.9%, despite the devastating impact and full
catastrophe retention from Hurricane Milton, leading to a 67.5%
combined ratio for the full year. This underscores the strength of
our reinsurance strategy in safeguarding our balance sheet while
mitigating the financial impact of catastrophic events.
Furthermore, American Coastal’s written premium
increased 9.7% from the prior year fourth quarter and renewal
retention remained steady. In December, we announced the launch of
our apartment program, and, to date, we have received hundreds of
high-quality submissions from our six broker partners, affirming
the strong demand for American Coastal’s products.”
Return on Equity and Core Return on
Equity
The calculations of the Company's return on
equity and core return on equity are shown below.
| |
|
|
|
| ($ in
thousands) |
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| Income from continuing
operations, net of tax |
$ |
5,868 |
|
|
$ |
17,380 |
|
|
$ |
76,319 |
|
|
$ |
85,204 |
|
| Return on equity based on GAAP
income from continuing operations, net of tax (1) |
|
10.4 |
% |
|
|
98.6 |
% |
|
|
33.7 |
% |
|
|
120.8 |
% |
| |
|
|
|
|
|
|
|
| Income (loss) from
discontinued operations, net of tax |
$ |
(922 |
) |
|
$ |
(3,096 |
) |
|
$ |
(601 |
) |
|
$ |
224,707 |
|
| Return on equity based on GAAP
income (loss) from discontinued operations, net of tax (1) |
|
(1.6 |
)% |
|
|
(17.6 |
)% |
|
|
(0.3 |
)% |
|
NM |
| |
|
|
|
|
|
|
|
| Consolidated net income |
$ |
4,946 |
|
|
$ |
14,284 |
|
|
$ |
75,718 |
|
|
$ |
309,911 |
|
| Return on equity based on GAAP
net income (1) |
|
8.7 |
% |
|
|
81.0 |
% |
|
|
33.5 |
% |
|
NM |
| |
|
|
|
|
|
|
|
| Core income |
$ |
5,990 |
|
|
$ |
18,005 |
|
|
$ |
76,925 |
|
|
$ |
92,489 |
|
| Core return on equity
(1)(2) |
|
10.6 |
% |
|
|
102.1 |
% |
|
|
34.0 |
% |
|
|
131.1 |
% |
|
(1) |
Return on equity for the three months and years ended
December 31, 2024 and 2023 is calculated on an annualized
basis by dividing the net income or core income for the period by
the average stockholders' equity for the trailing twelve
months. |
| (2) |
Core return on equity, a measure that is not based on GAAP, is
calculated based on core income, which is reconciled on the first
page of this press release to net income, the most directly
comparable GAAP measure. Additional information regarding non-GAAP
financial measures presented in this press release can be found in
the "Definitions of Non-GAAP Measures" section
below. |
| |
|
Combined Ratio and Underlying
Ratio
The calculations of the Company's combined ratio
and underlying combined ratio on a consolidated basis and
attributable to Interboro Insurance Company ("IIC"), now captured
within discontinued operations, are shown below.
| |
|
|
|
| ($ in
thousands) |
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
2024 |
|
|
2023 |
|
|
Change |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
| Loss ratio, net(1) |
40.5 |
% |
|
13.7 |
% |
|
26.8 pts |
|
25.3 |
% |
|
17.8 |
% |
|
7.5 pts |
| Expense ratio, net(2) |
51.4 |
% |
|
46.2 |
% |
|
5.2 pts |
|
42.2 |
% |
|
43.1 |
% |
|
(0.9) pts |
| Combined ratio (CR)(3) |
91.9 |
% |
|
59.9 |
% |
|
32.0 pts |
|
67.5 |
% |
|
60.9 |
% |
|
6.6 pts |
|
Effect of current year catastrophe losses on CR |
27.8 |
% |
|
(0.8 |
)% |
|
28.6 pts |
|
9.3 |
% |
|
4.9 |
% |
|
4.4 pts |
|
Effect of prior year favorable development on CR |
(1.8 |
)% |
|
(3.0 |
)% |
|
1.2 pts |
|
(1.4 |
)% |
|
(4.9 |
)% |
|
3.5 pts |
| Underlying combined
ratio(4) |
65.9 |
% |
|
63.7 |
% |
|
2.2 pts |
|
59.6 |
% |
|
60.9 |
% |
|
(1.3) pts |
| |
|
|
|
|
|
|
|
|
|
|
|
|
IIC |
|
|
|
|
|
|
|
|
|
|
|
| Loss ratio, net(1) |
73.4 |
% |
|
78.5 |
% |
|
(5.1) pts |
|
71.2 |
% |
|
81.6 |
% |
|
(10.4) pts |
| Expense ratio, net(2) |
47.1 |
% |
|
39.0 |
% |
|
8.1 pts |
|
43.4 |
% |
|
50.8 |
% |
|
(7.4) pts |
| Combined ratio (CR)(3) |
120.5 |
% |
|
117.5 |
% |
|
3.0 pts |
|
114.6 |
% |
|
132.4 |
% |
|
(17.8) pts |
|
Effect of current year catastrophe losses on CR |
0.8 |
% |
|
10.6 |
% |
|
(9.8) pts |
|
4.1 |
% |
|
12.6 |
% |
|
(8.5) pts |
|
Effect of prior year favorable development on CR |
(0.7 |
)% |
|
13.2 |
% |
|
(13.9) pts |
|
(3.6 |
)% |
|
2.0 |
% |
|
(5.6) pts |
| Underlying combined
ratio(4) |
120.4 |
% |
|
93.7 |
% |
|
26.7 pts |
|
114.1 |
% |
|
117.8 |
% |
|
(3.7) pts |
|
(1) |
Loss ratio, net is calculated as losses and loss adjustment
expenses ("LAE"), net of losses ceded to reinsurers, relative to
net premiums earned. |
| (2) |
Expense ratio, net is calculated as the sum of all operating
expenses, less interest expense relative to net premiums
earned. |
| (3) |
Combined ratio is the sum of the loss ratio, net and expense ratio,
net. |
| (4) |
Underlying combined ratio, a measure that is not based on GAAP, is
reconciled above to the combined ratio, the most directly
comparable GAAP measure. Additional information regarding non-GAAP
financial measures presented in this press release can be found in
the "Definitions of Non-GAAP Measures" section
below. |
| |
|
Combined Ratio Analysis
The calculations of the Company's loss ratios
and underlying loss ratios are shown below.
| |
|
|
|
| ($ in
thousands) |
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
Loss and LAE |
$ |
29,794 |
|
|
$ |
6,710 |
|
|
$ |
23,084 |
|
$ |
69,319 |
|
|
$ |
46,678 |
|
|
$ |
22,641 |
|
% of Gross earned premiums |
|
18.3 |
% |
|
|
4.2 |
% |
|
14.1 pts |
|
|
10.9 |
% |
|
|
7.7 |
% |
|
3.2 pts |
|
% of Net earned premiums |
|
40.5 |
% |
|
|
13.7 |
% |
|
26.8 pts |
|
|
25.3 |
% |
|
|
17.8 |
% |
|
7.5 pts |
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Current year catastrophe losses |
$ |
20,405 |
|
|
$ |
(406 |
) |
|
$ |
20,811 |
|
$ |
25,561 |
|
|
$ |
12,783 |
|
|
$ |
12,778 |
|
Prior year reserve favorable development |
|
(1,325 |
) |
|
|
(1,482 |
) |
|
|
157 |
|
|
(3,704 |
) |
|
|
(12,694 |
) |
|
|
8,990 |
| Underlying loss and LAE
(1) |
$ |
10,714 |
|
|
$ |
8,598 |
|
|
$ |
2,116 |
|
$ |
47,462 |
|
|
$ |
46,589 |
|
|
$ |
873 |
|
% of Gross earned premiums |
|
6.6 |
% |
|
|
5.4 |
% |
|
1.2 pts |
|
|
7.4 |
% |
|
|
7.7 |
% |
|
(0.3) pts |
|
% of Net earned premiums |
|
14.5 |
% |
|
|
17.5 |
% |
|
(3.0) pts |
|
|
17.3 |
% |
|
|
17.8 |
% |
|
(0.5) pts |
|
(1) |
Underlying loss and LAE is a non-GAAP financial measure and is
reconciled above to loss and LAE, the most directly comparable GAAP
measure. Additional information regarding non-GAAP financial
measures presented in this press release can be found in the
"Definitions of Non-GAAP Measures" section,
below. |
| |
|
The calculations of the Company's expense ratios
are shown below.
| |
|
|
|
| ($ in
thousands) |
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
Policy acquisition costs |
$ |
26,514 |
|
|
$ |
13,138 |
|
|
$ |
13,376 |
|
$ |
70,990 |
|
|
$ |
75,436 |
|
|
$ |
(4,446 |
) |
| General and
administrative |
|
11,277 |
|
|
|
9,561 |
|
|
|
1,716 |
|
|
44,756 |
|
|
|
37,559 |
|
|
|
7,197 |
|
| Total Operating Expenses |
$ |
37,791 |
|
|
$ |
22,699 |
|
|
$ |
15,092 |
|
$ |
115,746 |
|
|
$ |
112,995 |
|
|
$ |
2,751 |
|
|
% of Gross earned premiums |
|
23.2 |
% |
|
|
14.3 |
% |
|
8.9 pts |
|
|
18.1 |
% |
|
|
18.7 |
% |
|
(0.6) pts |
|
% of Net earned premiums |
|
51.4 |
% |
|
|
46.2 |
% |
|
5.2 pts |
|
|
42.2 |
% |
|
|
43.1 |
% |
|
(0.9) pts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Financial Results
Net income for the fourth quarter of 2024 was
$4.9 million, or $0.10 per diluted share, compared to $14.3
million, or $0.31 per diluted share, for the fourth quarter of
2023. Of this income, $5.9 million is attributable to continuing
operations for the three months ended December 31, 2024, a
decrease of $11.5 million from net income of $17.4 million for the
same period in 2023. Quarter-over-quarter revenues increased,
driven by a decrease in ceded premiums earned, and an increase in
gross premiums earned and net investment income. This was offset by
increased expenses quarter-over-quarter, driven by an increase in
loss and LAE and policy acquisition costs, as described below. The
Company's loss from discontinued operations, also contributed to
this change in net income, with the loss decreasing $2.2 million
quarter-over-quarter, as the deconsolidation of the Company's
former subsidiary, United Property and Casualty Insurance Company
("UPC"), is not impacting the Company in 2024.
The Company's total gross written premium
increased $12.5 million, or 9.7%, to $140.7 million for the fourth
quarter of 2024, from $128.3 million for the fourth quarter of
2023. The breakdown of the quarter-over-quarter changes in both
direct written and assumed premiums by state and gross written
premium by line of business are shown in the table below.
| |
|
|
|
|
|
| ($ in thousands) |
Three Months Ended December 31, |
|
|
|
|
| |
|
2024 |
|
|
2023 |
|
Change $ |
|
Change % |
| Direct Written and
Assumed Premium by State |
|
|
|
|
|
|
|
|
Florida |
$ |
135,661 |
|
$ |
128,260 |
|
$ |
7,401 |
|
5.8 |
% |
|
New York |
|
— |
|
|
— |
|
|
— |
|
— |
|
| Total direct written premium
by state |
|
135,661 |
|
|
128,260 |
|
|
7,401 |
|
5.8 |
|
|
Assumed premium |
|
5,078 |
|
|
— |
|
|
5,078 |
|
100.0 |
|
| Total gross written premium by
state |
$ |
140,739 |
|
$ |
128,260 |
|
$ |
12,479 |
|
9.7 |
% |
| |
|
|
|
|
|
|
|
| Gross Written Premium
by Line of Business |
|
|
|
|
|
|
|
|
Commercial property |
$ |
140,739 |
|
$ |
128,260 |
|
$ |
12,479 |
|
9.7 |
% |
|
Personal property |
|
— |
|
|
— |
|
|
— |
|
— |
|
| Total gross written premium by
line of business |
$ |
140,739 |
|
$ |
128,260 |
|
$ |
12,479 |
|
9.7 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE increased by $23.1 million, or
344.8%, to $29.8 million for the fourth quarter of 2024, from $6.7
million for the fourth quarter of 2023. Loss and LAE expense as a
percentage of net earned premiums increased 26.8 points to 40.5%
for the fourth quarter of 2024, compared to 13.7% for the fourth
quarter of 2023. Excluding catastrophe losses and reserve
development, the Company's gross underlying loss and LAE ratio for
the fourth quarter of 2024 would have been 6.6%, a 1.2 point
increase from the fourth quarter of 2023.
Policy acquisition costs increased by $13.4
million, or 102.3%, to $26.5 million for the fourth quarter of
2024, from $13.1 million for the fourth quarter of 2023,
primarily due to a decrease in reinsurance commission income
attributable to the change in our quota share reinsurance cession
rate from 40% to 20% effective June 1, 2024. In addition, our
management fees attributable to our commercial property premiums
increased as the result of additional premiums written
quarter-over-quarter.
General and administrative expenses increased by
$1.7 million, or 17.7%, to $11.3 million for the fourth quarter of
2024, from $9.6 million for the fourth quarter of 2023, driven by
increased overhead costs, such as amortization of capitalized
software, equipment costs and salaries, and external spend for
audit, actuarial and legal services.
IIC Quarterly Results
Highlights
Net loss attributable to IIC totaled $633
thousand for the fourth quarter of 2024 compared to a net loss of
$274 thousand for the fourth quarter of 2023. Drivers of the
quarter-over-quarter increase included: an increase in general and
administrative expenses of $406 thousand as the result of increased
costs such as software licensing costs and salary expenses, offset
by increased revenues of $355 thousand, which were driven by an
increase in gross earned premiums of $1.4 million, offset by
increased ceded premiums earned of $1.0 million.
Annual Financial Results
Net income attributable to the Company for the
year ended December 31, 2024 was $75.7 million, or $1.54 per
diluted share, compared to net income of $309.9 million, or $6.98
per diluted share, for the year ended December 31, 2023. Drivers of
net income during 2024 included increased gross premiums earned
partially offset by increased ceded premiums earned. Net investment
income also increased, driving additional total revenues
year-over-year. This increase in revenue was offset by increased
expenses year-over-year, driven by increases in losses and LAE
incurred and general and administrative expenses, partially offset
by decreased policy acquisition costs. During 2024, the Company
experienced a net loss attributable to discontinued operations of
$601 thousand, compared to $224.7 million of net income
attributable to discontinued operations during 2023, as the
deconsolidation of the Company's former subsidiary, UPC, is not
impacting the Company in 2024.
The Company's total gross written premium
increased by $12.1 million, or 1.9%, to $647.8 million for the year
ended December 31, 2024, from $635.7 million for the year ended
December 31, 2023. The breakdown of the quarter-over-quarter
changes in both direct written and assumed premiums by state and
gross written premium by line of business are shown in the table
below.
| |
|
|
|
|
|
| ($ in thousands) |
Year Ended December 31, |
|
|
|
|
| |
|
2024 |
|
|
2023 |
|
|
Change $ |
|
Change % |
| Direct Written and
Assumed Premium by State (1) |
|
|
|
|
|
|
|
|
Florida |
$ |
642,727 |
|
$ |
635,602 |
|
|
$ |
7,125 |
|
1.1 |
% |
|
New York |
|
— |
|
|
— |
|
|
|
— |
|
— |
|
|
Texas |
|
— |
|
|
(9 |
) |
|
|
9 |
|
(100.0 |
) |
| Total direct written premium
by state |
|
642,727 |
|
|
635,593 |
|
|
|
7,134 |
|
1.1 |
|
|
Assumed premium (2) |
|
5,078 |
|
|
116 |
|
|
|
4,962 |
|
4,277.6 |
|
| Total gross written premium by
state |
$ |
647,805 |
|
$ |
635,709 |
|
|
$ |
12,096 |
|
1.9 |
% |
| |
|
|
|
|
|
|
|
| Gross Written Premium
by Line of Business |
|
|
|
|
|
|
|
|
Commercial property |
$ |
647,805 |
|
$ |
635,709 |
|
|
$ |
12,096 |
|
1.9 |
% |
|
Personal property |
|
— |
|
|
— |
|
|
|
— |
|
— |
|
| Total gross written premium by
line of business |
$ |
647,805 |
|
$ |
635,709 |
|
|
$ |
12,096 |
|
1.9 |
% |
|
(1) |
The Company ceased writing in Texas as of May 31, 2022. |
| (2) |
Assumed premium written for 2023 and 2024 primarily included
commercial property business assumed from unaffiliated
insurers. |
| |
|
Loss and LAE increased by $22.6 million, or
48.4%, to $69.3 million for the year ended December 31, 2024, from
$46.7 million for the year ended December 31, 2023. Loss and LAE
expense as a percentage of net earned premiums increased 7.5 points
to 25.3% for the year ended December 31, 2024, compared to 17.8%
for the year ended December 31, 2023. Excluding catastrophe losses
and reserve development, the Company's gross underlying loss and
LAE ratio for the year ended December 31, 2024, would have been
7.4%, a decrease of 0.3 points from 7.7% for the year ended
December 31, 2023.
Policy acquisition costs decreased by $4.4
million, or 5.9%, to $71.0 million for the year ended December 31,
2024, from $75.4 million for the year ended December 31, 2023,
primarily due to an increase in ceding commission income as the
result of the Company including quota share reinsurance coverage in
their core catastrophe reinsurance programs beginning June 1, 2023.
This resulted in ceding commission income for the full year ended
December 31, 2024, compared to only seven months of the year ended
December 31, 2023. This was partially offset by increased external
management fees and premium taxes related to the Company's
increased commercial lines gross written premium.
General and administrative expenses increased by
$7.2 million, or 19.1%, to $44.8 million for the year ended
December 31, 2024, from $37.6 million for the year ended December
31, 2023, driven by increased overhead costs, such as amortization
of capitalized software and salaries, as well as external spend for
audit, actuarial and legal services.
IIC Annual Results
Highlights
Net loss attributable to IIC totaled $1.3
million for the year ended December 31, 2024, compared to a net
loss of $3.0 million for the year ended December 31, 2023. Drivers
of the year-over-year decreased loss included: an increase in net
premiums earned of $6.5 million, driven by an increase in gross
premiums earned of $5.1 million, while ceded premiums earned
decreased $1.4 million. This was partially offset by increased
expenses of $3.9 million, driven by an increase in loss and LAE
incurred of $2.6 million, which was driven by current year
non-catastrophe losses, and an increase in general and
administrative expenses of $853 thousand as the result of increased
costs, such as software licensing costs and salary expenses. IIC's
policy acquisition costs also increased $426 thousand, driven by
the increase in premiums described above.
Reinsurance Costs as a Percentage of
Gross Earned Premium
Reinsurance costs as a percentage of gross
earned premium in the fourth quarter of 2024 and 2023 were as
follows:
|
|
|
|
|
| |
2024 |
|
2023 |
| Non-at-Risk |
(0.3) % |
|
(0.2) % |
| Quota Share |
(16.2) % |
|
(31.4) % |
| All Other |
(38.3) % |
|
(37.4) % |
|
Total Ceding Ratio |
(54.8) % |
|
(69.0) % |
|
|
|
|
|
Ceded premiums earned related to the Company's
catastrophe excess of loss contracts remained relatively flat
quarter-over-quarter. The Company's utilization of quota share
reinsurance coverage resulted in less excess of loss coverage
needed for the 2023-2024 catastrophe year; however, the cost
savings associated with this reduction in necessary coverage were
offset by rate increases on catastrophe excess of loss coverage for
the same period. This utilization of quota share reinsurance
coverage increased the Company's ceding ratio overall during 2023.
Effective June 1, 2024, the Company decreased its quota share
reinsurance coverage from 40% to 20%, lowering the Company's quota
share ceding ratio and overall ceding ratio.
Reinsurance costs as a percentage of gross
earned premium in the fourth quarter of 2024 and 2023 for IIC,
captured within discontinued operations, were as follows:
| |
|
| |
IIC |
|
|
2024 |
|
2023 |
| Non-at-Risk |
(2.4) % |
|
(2.7) % |
| Quota Share |
— % |
|
— % |
| All Other |
(28.4) % |
|
(20.9) % |
|
Total Ceding Ratio |
(30.8) % |
|
(23.6) % |
|
|
|
|
|
Investment Portfolio
Highlights
The Company's cash, restricted cash and
investment holdings increased from $311.9 million at December
31, 2023, to $540.8 million at December 31, 2024. This
increase is driven by positive cash flows from operations. The
Company's cash and investment holdings consist of investments in
U.S. government and agency securities, corporate debt and
investment grade money market instruments. Fixed maturities
represented approximately 82.3% of total investments at
December 31, 2024, compared to 89.4% of total investments at
December 31, 2023. The Company's fixed maturity investments
had a modified duration of 2.2 years at December 31, 2024,
compared to 3.4 years at December 31, 2023.
Book Value Analysis
Book value per common share increased 35.5% from
$3.61 at December 31, 2023, to $4.89 at December 31,
2024. Underlying book value per common share increased 31.2% from
$3.97 at December 31, 2023, to $5.21 at December 31,
2024. An increase in the Company's retained earnings as a result of
net income for the year ended December 31, 2024, drove the
increase in the Company's book value per share. As shown in the
table below, removing the effect of Accumulated Other Comprehensive
Income ("AOCI"), caused by capital market conditions, increases the
Company's book value per common share at December 31,
2024.
| |
|
|
|
| ($ in thousands, except for
share and per share data) |
December 31, 2024 |
|
December 31, 2023 |
| |
| Book Value per
Share |
|
|
|
| Numerator: |
|
|
|
|
Common stockholders' equity |
$ |
235,660 |
|
|
$ |
168,765 |
|
| Denominator: |
|
|
|
|
Total Shares Outstanding |
|
48,204,962 |
|
|
|
46,777,006 |
|
| Book Value Per Common
Share |
$ |
4.89 |
|
|
$ |
3.61 |
|
| |
|
|
|
| Book Value per Share,
Excluding the Impact of AOCI |
|
|
|
| Numerator: |
|
|
|
|
Common stockholders' equity |
$ |
235,660 |
|
|
$ |
168,765 |
|
|
Less: Accumulated other comprehensive loss |
|
(15,666 |
) |
|
|
(17,137 |
) |
| Stockholders' Equity,
excluding AOCI |
$ |
251,326 |
|
|
$ |
185,902 |
|
| Denominator: |
|
|
|
|
Total Shares Outstanding |
|
48,204,962 |
|
|
|
46,777,006 |
|
|
Underlying Book Value Per Common Share(1) |
$ |
5.21 |
|
|
$ |
3.97 |
|
|
(1) |
Underlying book value per common share is a non-GAAP financial
measure and is reconciled above to book value per common share, the
most directly comparable GAAP measure. Additional information
regarding non-GAAP financial measures presented in this press
release can be found in the "Definitions of Non-GAAP
Measures" section below. |
| |
|
Conference Call Details
|
Date and Time: |
February 27, 2025 - 5:00 P.M. ET |
|
|
|
| Participant
Dial-In: |
(United States): 877-445-9755(International): 201-493-6744 |
| |
|
| Webcast: |
To listen to the live webcast, please go to
https://investors.amcoastal.com and click on the conference
call link at the top of the page or go to:
https://event.webcasts.com/starthere.jsp?ei=1705069&tp_key=6c7e737025An
archive of the webcast will be available for a limited period of
time thereafter. |
| |
|
|
Presentation: |
The information in this press release should be read in conjunction
with an earnings presentation that is available on the Company's
website at investors.amcoastal.com/Presentations. |
| |
|
About American Coastal Insurance
Corporation
American Coastal Insurance Corporation
(amcoastal.com) is the holding company of the insurance carrier,
American Coastal Insurance Company, which was founded in 2007 for
the purpose of insuring Condominium and Homeowner Association
properties, and apartments in the state of Florida. American
Coastal Insurance Company has an exclusive partnership for
distribution of Condominium Association properties in the state of
Florida with AmRisc Group (amriscgroup.com), one of the largest
Managing General Agents in the country specializing in
hurricane-exposed properties. American Coastal Insurance Company
has earned a Financial Stability Rating of “A”, "Exceptional" from
Demotech, and maintains an “A-” insurance financial strength rating
with a Stable outlook by Kroll. ACIC maintains a ‘BB+’ issuer
rating with a Stable outlook by Kroll.
Contact Information:Alexander BatyVice
President, Finance & Investor Relations, American Coastal
Insurance Corp.investorrelations@amcoastal.com(727) 425-8076
Karin DalyInvestor Relations, Vice President, The Equity
Groupkdaly@equityny.com(212) 836-9623
Definitions of Non-GAAP
Measures
The Company believes that investors'
understanding of ACIC's performance is enhanced by the Company's
disclosure of the following non-GAAP measures. The Company's
methods for calculating these measures may differ from those used
by other companies and therefore comparability may be limited.
Net income (loss) excluding the effects
of amortization of intangible assets, income (loss) from
discontinued operations, realized gains (losses) and unrealized
gains (losses) on equity securities, net of tax (core income
(loss)) is a non-GAAP measure that is computed by adding
amortization, net of tax, to net income (loss) and subtracting
income (loss) from discontinued operations, net of tax, realized
gains (losses) on the Company's investment portfolio, net of tax,
and unrealized gains (losses) on the Company's equity securities,
net of tax, from net income (loss). Amortization expense is related
to the amortization of intangible assets acquired, including
goodwill, through mergers and, therefore, the expense does not
arise through normal operations. Investment portfolio gains
(losses) and unrealized equity security gains (losses) vary
independent of the Company's operations. The Company believes it is
useful for investors to evaluate these components both separately
and in the aggregate when reviewing the Company's performance. The
most directly comparable GAAP measure is net income (loss). The
core income (loss) measure should not be considered a substitute
for net income (loss) and does not reflect the overall
profitability of the Company's business.
Core return on equity is a
non-GAAP ratio calculated using non-GAAP measures. It is calculated
by dividing the core income (loss) for the period by the average
stockholders’ equity for the trailing twelve months (or one quarter
of such average, in the case of quarterly periods). Core income
(loss) is an after-tax non-GAAP measure that is calculated by
excluding from net income (loss) the effect of income (loss) from
discontinued operations, net of tax, non-cash amortization of
intangible assets, including goodwill, unrealized gains or losses
on the Company's equity security investments and net realized gains
or losses on the Company's investment portfolio. In the opinion of
the Company’s management, core income (loss), core income (loss)
per share and core return on equity are meaningful indicators to
investors of the Company's underwriting and operating results,
since the excluded items are not necessarily indicative of
operating trends. Internally, the Company’s management uses core
income (loss), core income (loss) per share and core return on
equity to evaluate performance against historical results and
establish financial targets on a consolidated basis. The most
directly comparable GAAP measure is return on equity. The core
return on equity measure should not be considered a substitute for
return on equity and does not reflect the overall profitability of
the Company's business.
Combined ratio excluding the effects of
current year catastrophe losses and prior year reserve development
(underlying combined ratio) is a non-GAAP measure, that is
computed by subtracting the effect of current year catastrophe
losses and prior year development from the combined ratio. The
Company believes that this ratio is useful to investors, and it is
used by management to highlight the trends in the Company's
business that may be obscured by current year catastrophe losses
and prior year development. Current year catastrophe losses cause
the Company's loss trends to vary significantly between periods as
a result of their frequency of occurrence and severity and can have
a significant impact on the combined ratio. Prior year development
is caused by unexpected loss development on historical reserves.
The Company believes it is useful for investors to evaluate these
components both separately and in the aggregate when reviewing the
Company's performance. The most directly comparable GAAP measure is
the combined ratio. The underlying combined ratio should not be
considered as a substitute for the combined ratio and does not
reflect the overall profitability of the Company's business.
Net loss and LAE excluding the effects
of current year catastrophe losses and prior year reserve
development (underlying loss and LAE) is a non-GAAP
measure that is computed by subtracting the effect of current year
catastrophe losses and prior year reserve development from net loss
and LAE. The Company uses underlying loss and LAE figures to
analyze the Company's loss trends that may be impacted by current
year catastrophe losses and prior year development on the Company's
reserves. As discussed previously, these two items can have a
significant impact on the Company's loss trends in a given period.
The Company believes it is useful for investors to evaluate these
components both separately and in the aggregate when reviewing the
Company's performance. The most directly comparable GAAP measure is
net loss and LAE. The underlying loss and LAE measure should not be
considered a substitute for net loss and LAE and does not reflect
the overall profitability of the Company's business.
Book value per common share, excluding
the impact of accumulated other comprehensive loss (underlying book
value per common share), is a non-GAAP measure that is
computed by dividing common stockholders' equity after excluding
accumulated other comprehensive income (loss), by total common
shares outstanding plus dilutive potential common shares
outstanding. The Company uses the trend in book value per common
share, excluding the impact of accumulated other comprehensive
income (loss), in conjunction with book value per common share to
identify and analyze the change in net worth attributable to
management efforts between periods. The Company believes this
non-GAAP measure is useful to investors because it eliminates the
effect of interest rates that can fluctuate significantly from
period to period and are generally driven by economic and financial
factors that are not influenced by management. Book value per
common share is the most directly comparable GAAP measure. Book
value per common share, excluding the impact of accumulated other
comprehensive income (loss), should not be considered a substitute
for book value per common share and does not reflect the recorded
net worth of the Company's business.
Discontinued Operations
On May 9, 2024, the Company entered into the
Sale Agreement with Forza Insurance Holdings, LLC ("Forza") in
which ACIC will sell and Forza will acquire 100% of the issued and
outstanding stock of the Company's subsidiary, IIC. Forza's
application to acquire IIC was approved by the New York Department
of Financial Services on February 13, 2025. The Company and Forza
have agreed to close on April 1, 2025.
In addition, on February 27, 2023, the Florida
Department of Financial Services was appointed as receiver of the
Company's former subsidiary, UPC. As such, prior year financial
results and Consolidated Balance Sheet components have been
reclassified to reflect continuing and discontinued operations
appropriately.
Forward-Looking Statements
Statements made in this press release, or on the
conference call identified above, and otherwise, that are not
historical facts are “forward-looking statements”. The Company
believes these statements are based on reasonable estimates,
assumptions and plans. However, if the estimates, assumptions, or
plans underlying the forward-looking statements prove inaccurate or
if other risks or uncertainties arise, actual results could differ
materially from those expressed in, or implied by, the
forward-looking statements. These statements are made subject to
the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements do not relate
strictly to historical or current facts and may be identified by
their use of words such as “may,” “will,” “expect,” "endeavor,"
"project," “believe,” "plan," “anticipate,” “intend,” “could,”
“would,” “estimate” or “continue” or the negative variations
thereof or comparable terminology. Factors that could cause actual
results to differ materially may be found in the Company's filings
with the U.S. Securities and Exchange Commission, in the “Risk
Factors” section in the Company's most recent Annual Report on Form
10-K and subsequent Quarterly Reports on Form 10-Q. Forward-looking
statements speak only as of the date on which they are made, and,
except as required by applicable law, the Company undertakes no
obligation to update or revise any forward-looking statements.
| |
|
|
|
|
Consolidated Statements of Comprehensive IncomeIn
thousands, except share and per share amounts |
| |
|
|
|
| |
Three Months Ended |
|
Year Ended |
| |
December 31, |
|
December 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| REVENUE: |
|
|
|
|
|
|
|
| Gross premiums written |
$ |
140,739 |
|
|
$ |
128,260 |
|
|
$ |
647,805 |
|
|
$ |
635,709 |
|
| Change in gross unearned
premiums |
|
21,971 |
|
|
|
30,834 |
|
|
|
(9,197 |
) |
|
|
(31,026 |
) |
|
Gross premiums earned |
|
162,710 |
|
|
|
159,094 |
|
|
|
638,608 |
|
|
|
604,683 |
|
|
Ceded premiums earned |
|
(89,218 |
) |
|
|
(109,953 |
) |
|
|
(364,618 |
) |
|
|
(342,623 |
) |
|
Net premiums earned |
|
73,492 |
|
|
|
49,141 |
|
|
|
273,990 |
|
|
|
262,060 |
|
|
Net investment income |
|
5,321 |
|
|
|
2,075 |
|
|
|
20,795 |
|
|
|
8,300 |
|
|
Net realized investment losses |
|
— |
|
|
|
(2 |
) |
|
|
(124 |
) |
|
|
(6,789 |
) |
|
Net unrealized gains on equity securities |
|
454 |
|
|
|
22 |
|
|
|
1,996 |
|
|
|
814 |
|
|
Other revenue |
|
— |
|
|
|
15 |
|
|
|
— |
|
|
|
15 |
|
|
Total revenues |
$ |
79,267 |
|
|
$ |
51,251 |
|
|
$ |
296,657 |
|
|
$ |
264,400 |
|
| EXPENSES: |
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
29,794 |
|
|
|
6,710 |
|
|
|
69,319 |
|
|
|
46,678 |
|
|
Policy acquisition costs |
|
26,514 |
|
|
|
13,138 |
|
|
|
70,990 |
|
|
|
75,436 |
|
|
General and administrative expenses |
|
11,277 |
|
|
|
9,561 |
|
|
|
44,756 |
|
|
|
37,559 |
|
|
Interest expense |
|
2,784 |
|
|
|
2,719 |
|
|
|
11,996 |
|
|
|
10,875 |
|
|
Total expenses |
|
70,369 |
|
|
|
32,128 |
|
|
|
197,061 |
|
|
|
170,548 |
|
| Income before other
income |
|
8,898 |
|
|
|
19,123 |
|
|
|
99,596 |
|
|
|
93,852 |
|
|
Other income (loss) |
|
(11 |
) |
|
|
1,071 |
|
|
|
2,063 |
|
|
|
2,228 |
|
| Income before income
taxes |
|
8,887 |
|
|
|
20,194 |
|
|
|
101,659 |
|
|
|
96,080 |
|
|
Provision for income taxes |
|
3,019 |
|
|
|
2,814 |
|
|
|
25,340 |
|
|
|
10,876 |
|
| Income from continuing
operations, net of tax |
$ |
5,868 |
|
|
$ |
17,380 |
|
|
$ |
76,319 |
|
|
$ |
85,204 |
|
| Income (loss) from
discontinued operations, net of tax |
|
(922 |
) |
|
|
(3,096 |
) |
|
|
(601 |
) |
|
|
224,707 |
|
| Net income |
$ |
4,946 |
|
|
$ |
14,284 |
|
|
$ |
75,718 |
|
|
$ |
309,911 |
|
| OTHER COMPREHENSIVE
INCOME: |
|
|
|
|
|
|
|
|
Change in net unrealized gains (losses) on investments |
|
(4,049 |
) |
|
|
6,696 |
|
|
|
3,355 |
|
|
|
5,998 |
|
|
Reclassification adjustment for net realized investment losses |
|
— |
|
|
|
2 |
|
|
|
124 |
|
|
|
6,808 |
|
|
Income tax benefit related to items of other comprehensive
income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Total comprehensive
income |
$ |
897 |
|
|
$ |
20,982 |
|
|
$ |
79,197 |
|
|
$ |
322,717 |
|
| |
|
|
|
|
|
|
|
| Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
48,095,488 |
|
|
|
44,713,148 |
|
|
|
47,831,412 |
|
|
|
43,596,432 |
|
|
Diluted |
|
49,589,458 |
|
|
|
45,712,715 |
|
|
|
49,362,985 |
|
|
|
44,388,804 |
|
| |
|
|
|
|
|
|
|
| Earnings available to ACIC common
stockholders per share |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
Continuing operations |
$ |
0.12 |
|
|
$ |
0.39 |
|
|
$ |
1.60 |
|
|
$ |
1.96 |
|
|
Discontinued operations |
|
(0.02 |
) |
|
|
(0.07 |
) |
|
|
(0.01 |
) |
|
|
5.15 |
|
|
Total |
$ |
0.10 |
|
|
$ |
0.32 |
|
|
$ |
1.59 |
|
|
$ |
7.11 |
|
|
Diluted |
|
|
|
|
|
|
|
|
Continuing operations |
$ |
0.12 |
|
|
$ |
0.38 |
|
|
$ |
1.55 |
|
|
$ |
1.92 |
|
|
Discontinued operations |
|
(0.02 |
) |
|
|
(0.07 |
) |
|
|
(0.01 |
) |
|
|
5.06 |
|
|
Total |
$ |
0.10 |
|
|
$ |
0.31 |
|
|
$ |
1.54 |
|
|
$ |
6.98 |
|
| |
|
|
|
|
|
|
|
| Dividends declared per
share |
$ |
0.50 |
|
|
$ |
— |
|
|
$ |
0.50 |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Consolidated Balance SheetsIn thousands, except
share amounts |
| |
|
|
|
| |
December 31, 2024 |
|
December 31, 2023 |
| ASSETS |
|
|
|
|
Investments, at fair value: |
|
|
|
|
Fixed maturities, available-for-sale |
$ |
281,001 |
|
|
$ |
138,387 |
|
|
Equity securities |
|
36,794 |
|
|
|
— |
|
|
Other investments |
|
23,623 |
|
|
|
16,487 |
|
|
Total investments |
$ |
341,418 |
|
|
$ |
154,874 |
|
|
Cash and cash equivalents |
|
137,036 |
|
|
|
138,930 |
|
|
Restricted cash |
|
62,357 |
|
|
|
18,070 |
|
|
Accrued investment income |
|
2,964 |
|
|
|
1,767 |
|
|
Property and equipment, net |
|
5,736 |
|
|
|
3,658 |
|
|
Premiums receivable, net |
|
46,564 |
|
|
|
45,924 |
|
|
Reinsurance recoverable on paid and unpaid losses |
|
263,419 |
|
|
|
340,820 |
|
|
Ceded unearned premiums |
|
160,893 |
|
|
|
155,301 |
|
|
Goodwill |
|
59,476 |
|
|
|
59,476 |
|
|
Deferred policy acquisition costs |
|
40,282 |
|
|
|
21,149 |
|
|
Intangible assets, net |
|
5,908 |
|
|
|
8,548 |
|
|
Other assets |
|
16,816 |
|
|
|
36,718 |
|
|
Assets held for sale |
|
73,243 |
|
|
|
77,143 |
|
|
Total Assets |
$ |
1,216,112 |
|
|
$ |
1,062,378 |
|
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
Liabilities: |
|
|
|
|
Unpaid losses and loss adjustment expenses |
$ |
322,087 |
|
|
$ |
347,738 |
|
|
Unearned premiums |
|
285,354 |
|
|
|
276,157 |
|
|
Reinsurance payable on premiums |
|
83,130 |
|
|
|
— |
|
|
Payments outstanding |
|
699 |
|
|
|
706 |
|
|
Accounts payable and accrued expenses |
|
86,140 |
|
|
|
74,783 |
|
|
Operating lease liability |
|
3,323 |
|
|
|
739 |
|
|
Other liabilities |
|
757 |
|
|
|
672 |
|
|
Notes payable, net |
|
149,020 |
|
|
|
148,688 |
|
|
Liabilities held for sale |
|
49,942 |
|
|
|
44,130 |
|
|
Total Liabilities |
$ |
980,452 |
|
|
$ |
893,613 |
|
|
Commitments and contingencies |
|
|
|
|
Stockholders' Equity: |
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 authorized; none
issued or outstanding |
|
— |
|
|
|
— |
|
|
Common stock, $0.0001 par value; 100,000,000 shares authorized;
48,417,045 and 46,989,089 issued, respectively; 48,204,962 and
46,777,006 outstanding, respectively |
|
5 |
|
|
|
5 |
|
|
Additional paid-in capital |
|
436,524 |
|
|
|
423,717 |
|
|
Treasury shares, at cost; 212,083 shares |
|
(431 |
) |
|
|
(431 |
) |
|
Accumulated other comprehensive loss |
|
(15,666 |
) |
|
|
(17,137 |
) |
|
Retained earnings (deficit) |
|
(184,772 |
) |
|
|
(237,389 |
) |
|
Total Stockholders' Equity |
$ |
235,660 |
|
|
$ |
168,765 |
|
|
Total Liabilities and Stockholders' Equity |
$ |
1,216,112 |
|
|
$ |
1,062,378 |
|
American Coastal Insurance (NASDAQ:ACIC)
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From Feb 2025 to Mar 2025
American Coastal Insurance (NASDAQ:ACIC)
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From Mar 2024 to Mar 2025
