American Coastal Insurance Corporation (Nasdaq: ACIC) ("ACIC" or
the "Company"), a property and casualty insurance holding company,
today reported its financial results for the third quarter ended
September 30, 2024.
| ($ in thousands,
except for per share data) |
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
| |
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
|
Gross premiums written |
|
$ |
93,016 |
|
$ |
93,986 |
|
(1.0)% |
|
$ |
507,066 |
|
$ |
507,449 |
|
(0.1)% |
| Gross premiums earned |
|
$ |
160,178 |
|
$ |
157,777 |
|
1.5% |
|
$ |
475,898 |
|
$ |
445,589 |
|
6.8% |
| Net premiums earned |
|
$ |
74,486 |
|
$ |
50,264 |
|
48.2% |
|
$ |
200,498 |
|
$ |
212,919 |
|
(5.8)% |
| Total revenue |
|
$ |
82,136 |
|
$ |
52,532 |
|
56.4% |
|
$ |
217,390 |
|
$ |
213,149 |
|
2.0% |
| Income from continuing
operations, net of tax |
|
$ |
27,669 |
|
$ |
15,015 |
|
84.3% |
|
$ |
70,451 |
|
$ |
67,824 |
|
3.9% |
| Income (loss) from
discontinued operations, net of tax |
|
$ |
450 |
|
$ |
(4,447) |
|
110.1% |
|
$ |
321 |
|
$ |
227,803 |
|
NM |
| Consolidated net income |
|
$ |
28,119 |
|
$ |
10,568 |
|
166.1% |
|
$ |
70,772 |
|
$ |
295,627 |
|
(76.1)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income available to ACIC
stockholders per diluted share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations |
|
$ |
0.56 |
|
$ |
0.34 |
|
64.7% |
|
$ |
1.43 |
|
$ |
1.54 |
|
(7.1)% |
|
Discontinued Operations |
|
$ |
0.01 |
|
$ |
(0.10) |
|
110.0% |
|
|
0.01 |
|
|
5.19 |
|
(99.8)% |
| Total |
|
$ |
0.57 |
|
$ |
0.24 |
|
137.5% |
|
$ |
1.44 |
|
$ |
6.73 |
|
(78.6)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of net income
to core income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Non-cash amortization of intangible assets and goodwill
impairment |
|
$ |
610 |
|
$ |
812 |
|
(24.9)% |
|
$ |
2,031 |
|
$ |
2,436 |
|
(16.6)% |
|
Less: Income (loss) from discontinued operations, net of tax |
|
$ |
450 |
|
$ |
(4,447) |
|
110.1% |
|
$ |
321 |
|
$ |
227,803 |
|
NM |
|
Less: Net realized gains (losses) on investment portfolio |
|
$ |
(3) |
|
$ |
4 |
|
NM |
|
$ |
(124) |
|
$ |
(6,787) |
|
98.2% |
|
Less: Unrealized gains on equity securities |
|
$ |
1,543 |
|
$ |
177 |
|
NM |
|
$ |
1,542 |
|
$ |
792 |
|
NM |
|
Less: Net tax impact (1) |
|
$ |
(195) |
|
$ |
133 |
|
NM |
|
$ |
129 |
|
$ |
1,771 |
|
(92.7)% |
| Core income (2) |
|
$ |
26,934 |
|
$ |
15,513 |
|
73.6% |
|
$ |
70,935 |
|
$ |
74,484 |
|
(4.8)% |
| Core income per diluted
share (2) |
|
$ |
0.54 |
|
$ |
0.35 |
|
54.3% |
|
$ |
1.44 |
|
$ |
1.70 |
|
(15.3)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Book value per share |
|
|
|
|
|
|
|
$ |
5.38 |
|
$ |
2.78 |
|
93.5% |
|
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 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,
Dan Peed:
“Foremost, American Coastal is committed to
helping and responding to those who were impacted by Hurricanes
Debby, Helene and Milton. Having so many associates impacted by the
storms, we understand the requirement for, and expectation of,
exceptional customer service. Two of American Coastal’s core values
are collaboration and resiliency, and I am proud that our
associates embody these values in the wake of devastating storms
that impacted so many.
Our performance this quarter reflects these core
values and the strength of our underwriting discipline and the
focus on protecting American Coastal from outsized exposure. We
continue reporting increased returns on equity and combined ratios
lower than 60%. For the third quarter, our total revenue was $82.1
million, a 56% increase year-over-year.”
Return on Equity and Core Return on Equity
The calculations of the Company's return on
equity and core return on equity are shown below.
| ($ in
thousands) |
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
| |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Income from continuing operations, net of tax |
|
$ |
27,669 |
|
$ |
15,015 |
|
$ |
70,451 |
|
$ |
67,824 |
| Return on equity based on GAAP
income from continuing operations, net of tax(1) |
|
|
55.3% |
|
|
177.9% |
|
|
46.9% |
|
|
267.9% |
| |
|
|
|
|
|
|
|
|
| Income (loss) from
discontinued operations, net of tax |
|
$ |
450 |
|
$ |
(4,447) |
|
$ |
321 |
|
$ |
227,803 |
| Return on equity based on GAAP
income (loss) from discontinued operations, net of tax(1) |
|
|
0.9% |
|
(52.7)% |
|
|
0.2% |
|
NM |
| |
|
|
|
|
|
|
|
|
| Consolidated net income |
|
$ |
28,119 |
|
$ |
10,568 |
|
$ |
70,772 |
|
$ |
295,627 |
| Return on equity based on GAAP
net income (1) |
|
|
56.2% |
|
|
125.2% |
|
|
47.1% |
|
NM |
| |
|
|
|
|
|
|
|
|
| Core income |
|
$ |
26,934 |
|
$ |
15,513 |
|
$ |
70,935 |
|
$ |
74,484 |
| Core return on
equity (1)(2) |
|
|
53.8% |
|
|
183.8% |
|
|
47.3% |
|
|
294.2% |
|
(1) Return on equity for the three and nine months ended
September 30, 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 |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss ratio, net (1) |
|
15.8% |
|
19.5% |
|
(3.7) pts |
|
19.7% |
|
18.8% |
|
0.9 pts |
| Expense ratio,
net (2) |
|
41.9% |
|
43.2% |
|
(1.3) pts |
|
38.9% |
|
42.4% |
|
(3.5) pts |
| Combined ratio
(CR) (3) |
|
57.7% |
|
62.7% |
|
(5.0) pts |
|
58.6% |
|
61.2% |
|
(2.6) pts |
|
Effect of current year catastrophe losses on CR |
|
6.6% |
|
9.7% |
|
(3.1) pts |
|
2.6% |
|
6.2% |
|
(3.6) pts |
|
Effect of prior year favorable development on CR |
|
(1.8)% |
|
(6.2)% |
|
4.4 pts |
|
(1.2)% |
|
(5.2)% |
|
4.0 pts |
| Underlying combined
ratio (4) |
|
52.9% |
|
59.2% |
|
(6.3) pts |
|
57.2% |
|
60.2% |
|
(3.0) pts |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
IIC |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss ratio, net (1) |
|
63.5% |
|
71.1% |
|
(7.6) pts |
|
70.4% |
|
83.1% |
|
(12.7) pts |
| Expense ratio,
net (2) |
|
35.8% |
|
51.1% |
|
(15.3) pts |
|
42.2% |
|
56.6% |
|
(14.4) pts |
| Combined ratio
(CR) (3) |
|
99.3% |
|
122.2% |
|
(22.9) pts |
|
112.6% |
|
139.7% |
|
(27.1) pts |
|
Effect of current year catastrophe losses on CR |
|
4.7% |
|
17.2% |
|
(12.5) pts |
|
5.3% |
|
13.5% |
|
(8.2) pts |
|
Effect of prior year favorable development on CR |
|
(6.0)% |
|
(4.4)% |
|
(1.6) pts |
|
(4.7)% |
|
(3.4)% |
|
(1.3) pts |
| Underlying combined
ratio (4) |
|
100.6% |
|
109.4% |
|
(8.8) pts |
|
112.0% |
|
129.6% |
|
(17.6) 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 |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
|
Loss and LAE |
|
$ |
11,774 |
|
$ |
9,822 |
|
$ |
1,952 |
|
$ |
39,525 |
|
$ |
39,968 |
|
$ |
(443) |
|
% of Gross earned premiums |
|
|
7.4% |
|
|
6.2% |
|
1.2 pts |
|
|
8.3% |
|
|
9.0% |
|
(0.7) pts |
|
% of Net earned premiums |
|
|
15.8% |
|
|
19.5% |
|
(3.7) pts |
|
|
19.7% |
|
|
18.8% |
|
0.9 pts |
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year catastrophe losses |
|
$ |
4,953 |
|
$ |
4,891 |
|
$ |
62 |
|
$ |
5,156 |
|
$ |
13,189 |
|
$ |
(8,033) |
|
Prior year reserve favorable development |
|
|
(1,357) |
|
|
(3,105) |
|
|
1,748 |
|
|
(2,379) |
|
|
(11,212) |
|
|
8,833 |
| Underlying loss and
LAE (1) |
|
$ |
8,178 |
|
$ |
8,036 |
|
$ |
142 |
|
$ |
36,748 |
|
$ |
37,991 |
|
$ |
(1,243) |
|
% of Gross earned premiums |
|
|
5.1% |
|
|
5.1% |
|
— pts |
|
|
7.7% |
|
|
8.5% |
|
(0.8) pts |
|
% of Net earned premiums |
|
|
11.0% |
|
|
16.0% |
|
(5.0) pts |
|
|
18.3% |
|
|
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 |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
|
Policy acquisition costs |
|
$ |
20,942 |
|
$ |
13,606 |
|
$ |
7,336 |
|
$ |
44,476 |
|
$ |
62,298 |
|
$ |
(17,822) |
| Operating and
underwriting |
|
|
2,115 |
|
|
2,081 |
|
|
34 |
|
|
6,492 |
|
|
6,962 |
|
|
(470) |
| General and
administrative |
|
|
8,174 |
|
|
6,011 |
|
|
2,163 |
|
|
26,987 |
|
|
21,036 |
|
|
5,951 |
| Total Operating Expenses |
|
$ |
31,231 |
|
$ |
21,698 |
|
$ |
9,533 |
|
$ |
77,955 |
|
$ |
90,296 |
|
$ |
(12,341) |
|
% of Gross earned premiums |
|
|
19.5% |
|
|
13.8% |
|
5.7 pts |
|
|
16.4% |
|
|
20.3% |
|
(3.9) pts |
|
% of Net earned premiums |
|
|
41.9% |
|
|
43.2% |
|
(1.3) pts |
|
|
38.9% |
|
|
42.4% |
|
(3.5) pts |
Quarterly Financial Results
Net income for the third quarter of 2024 was
$28.1 million, or $0.57 per diluted share, compared to $10.6
million, or $0.24 per diluted share, for the third quarter of 2023.
Of this income, $27.7 million is attributable to continuing
operations for the three months ended September 30, 2024, an
increase of $12.7 million from net income of $15.0 million for the
same period in 2023. Quarter-over-quarter revenues increased,
driven by a decrease in ceded premiums earned, an increase in net
investment income and unrealized gains on equity securities. This
was offset by increased expenses quarter-over-quarter, driven by an
increase in policy acquisition costs and general and administrative
expenses, as described below. In addition, the Company's provision
for income taxes increased as a result of increased income before
taxes quarter-over-quarter. The Company's income from discontinued
operations, also contributed to this change in net income,
increasing $4.9 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
remained relatively flat, decreasing by $1.0 million, or 1.0%, to
$93.0 million for the third quarter of 2024, from $94.0 million for
the third quarter of 2023. The breakdown of the
quarter-over-quarter changes in both direct written and assumed
premiums by state and gross written premium by line of business are
shown in the table below.
| ($ in thousands) |
|
Three Months EndedSeptember 30, |
|
|
|
|
| |
|
2024 |
|
2023 |
|
Change $ |
|
Change % |
| Direct Written and
Assumed Premium by State |
|
|
|
|
|
|
|
|
|
Florida |
|
$ |
93,016 |
|
$ |
93,965 |
|
$ |
(949) |
|
(1.0)% |
|
New York |
|
|
— |
|
|
— |
|
|
— |
|
— |
| Total direct written premium
by state |
|
|
93,016 |
|
|
93,965 |
|
|
(949) |
|
(1.0) |
|
Assumed premium |
|
|
— |
|
|
21 |
|
|
(21) |
|
(100.0) |
| Total gross written premium by
state |
|
$ |
93,016 |
|
$ |
93,986 |
|
$ |
(970) |
|
(1.0)% |
| |
|
|
|
|
|
|
|
|
| Gross Written Premium
by Line of Business |
|
|
|
|
|
|
|
|
|
Commercial property |
|
$ |
93,016 |
|
$ |
93,986 |
|
$ |
(970) |
|
(1.0)% |
|
Personal property |
|
|
— |
|
|
— |
|
|
— |
|
— |
| Total gross written premium by
line of business |
|
$ |
93,016 |
|
$ |
93,986 |
|
$ |
(970) |
|
(1.0)% |
Loss and LAE increased by $2.0 million, or
20.4%, to $11.8 million for the third quarter of 2024, from $9.8
million for the third quarter of 2023. Loss and LAE expense as a
percentage of net earned premiums decreased 3.7 points to 15.8% for
the third quarter of 2024, compared to 19.5% for the third quarter
of 2023. Excluding catastrophe losses and reserve development, the
Company's gross underlying loss and LAE ratio for the third quarter
of 2024 would have been 5.1%, unchanged from the third quarter of
2023.
Policy acquisition costs increased by $7.3
million, or 53.7%, to $20.9 million for the third quarter of
2024, from $13.6 million for the third 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. This was partially
offset by increased management fees attributable to our commercial
property premiums.
Operating and underwriting expenses remained
unchanged at $2.1 million for both the third quarter of 2024 and
the third quarter of 2023.
General and administrative expenses increased by
$2.2 million, or 36.7%, to $8.2 million for the third quarter of
2024, from $6.0 million for the third quarter of 2023, driven by
increased overhead costs such as amortization of capitalized
software and salaries.
IIC Results Highlights
Net income attributable to IIC totaled $450
thousand for the third quarter of 2024 compared to a net loss of
$642 thousand for the third quarter of 2023. Drivers of the
quarter-over-quarter increase included: an increase in net premiums
earned of $1.5 million, driven by an increase in gross premiums
earned of $1.3 million, while ceded premiums earned remained
relatively flat, decreasing $182 thousand. Expenses also remained
relatively flat, with a net increase of $179 thousand, driven by an
increase in loss and LAE incurred of $506 thousand, which was
driven by current year non-catastrophe losses, offset primarily by
a decrease in operating and underwriting expenses of $390 thousand.
IIC's remaining expenses remained relatively flat
quarter-over-quarter.
Reinsurance Costs as a Percentage of
Gross Earned Premium
Reinsurance costs as a percentage of gross
earned premium in the third quarter of 2024 and 2023 were as
follows:
|
|
|
2024 |
|
2023 |
| Non-at-Risk |
|
(0.5)% |
|
(0.2)% |
| Quota Share |
|
(16.2)% |
|
(31.5)% |
| All Other |
|
(36.8)% |
|
(36.4)% |
|
Total Ceding Ratio |
|
(53.5)% |
|
(68.1)% |
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 third quarter of 2024 and 2023 for IIC,
captured within discontinued operations, were as follows:
| |
|
IIC |
|
|
|
2024 |
|
2023 |
| Non-at-Risk |
|
(2.5)% |
|
(2.8)% |
| Quota Share |
|
—% |
|
—% |
| All Other |
|
(21.9)% |
|
(27.9)% |
|
Total Ceding Ratio |
|
(24.4)% |
|
(30.7)% |
Investment Portfolio
Highlights
The Company's cash, restricted cash and
investment holdings increased from $311.9 million at December
31, 2023 to $571.1 million at September 30, 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 84.2% of total investments at
September 30, 2024 compared to 89.4% of total investments at
December 31, 2023. The Company's fixed maturity investments
had a modified duration of 2.3 years at September 30, 2024,
compared to 3.4 years at December 31, 2023.
Book Value Analysis
Book value per common share increased 49.0% from
$3.61 at December 31, 2023, to $5.38 at September 30,
2024. Underlying book value per common share increased 41.8% from
$3.97 at December 31, 2023 to $5.63 at September 30,
2024. An increase in the Company's retained earnings as a result of
net income in the first nine months of 2024, drove the increase in
the Company's book value per share. As shown in the table below,
removing the effect of Accumulated Other Comprehensive Income
("AOCI"), caused by capital market conditions, increases the
Company's book value per common share at September 30,
2024.
|
($ in thousands, except for share and per share data) |
|
|
|
|
|
|
| |
|
September 30, 2024 |
|
December 31, 2023 |
| Book Value per
Share |
|
|
|
|
| Numerator: |
|
|
|
|
|
Common stockholders' equity |
|
$ |
259,582 |
|
$ |
168,765 |
| Denominator: |
|
|
|
|
|
Total Shares Outstanding |
|
|
48,204,962 |
|
|
46,777,006 |
| Book Value Per Common
Share |
|
$ |
5.38 |
|
$ |
3.61 |
| |
|
|
|
|
| Book Value per Share,
Excluding the Impact of AOCI |
|
|
|
|
| Numerator: |
|
|
|
|
|
Common stockholders' equity |
|
$ |
259,582 |
|
$ |
168,765 |
|
Less: Accumulated other comprehensive loss |
|
|
(11,617) |
|
|
(17,137) |
| Stockholders' Equity,
excluding AOCI |
|
$ |
271,199 |
|
$ |
185,902 |
| Denominator: |
|
|
|
|
|
Total Shares Outstanding |
|
|
48,204,962 |
|
|
46,777,006 |
|
Underlying Book Value Per Common Share (1) |
|
$ |
5.63 |
|
$ |
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: November 6, 2024 - 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=1692077&tp_key=987914f3a40.
An 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.
Virtual Investor Day
American Coastal Insurance Corporation will host
its 2024 Investor Day on Wednesday, December 4, 2024 from 11:00
A.M. ET. This will be a virtual video event that investors can
access live from American Coastal's investor relations website at
https://investors.amcoastal.com. The event will feature
presentations from the senior leadership team and will highlight
operational developments and strategic initiatives across the
business.
Investors are encourage to pre-submit questions
for the Q&A portion of the event by emailing the Company's
investor relations representative, Karin Daly, Vice President, The
Equity Group, at kdaly@equityny.com. There will also be an
opportunity to ask live questions via chat during the webcast. A
replay of the webcast will be available shortly after the event
concludes.
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 Baty |
| Vice President, Finance &
Investor Relations, American Coastal Insurance Corp. |
|
investorrelations@amcoastal.com |
| (727) 425-8076 |
| |
| Karin Daly |
| Investor Relations, Vice
President, The Equity Group |
| kdaly@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. 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
Income |
|
In thousands, except share and per share amounts |
| |
| |
|
Three Months Ended |
|
Nine Months Ended |
| |
|
September 30, |
|
September 30, |
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
| REVENUE: |
|
|
|
|
|
|
|
|
|
Gross premiums written |
|
$ |
93,016 |
|
$ |
93,986 |
|
$ |
507,066 |
|
$ |
507,449 |
| Change in gross unearned
premiums |
|
|
67,162 |
|
|
63,791 |
|
|
(31,168) |
|
|
(61,860) |
|
Gross premiums earned |
|
|
160,178 |
|
|
157,777 |
|
|
475,898 |
|
|
445,589 |
|
Ceded premiums earned |
|
|
(85,692) |
|
|
(107,513) |
|
|
(275,400) |
|
|
(232,670) |
|
Net premiums earned |
|
|
74,486 |
|
|
50,264 |
|
|
200,498 |
|
|
212,919 |
|
Net investment income |
|
|
6,110 |
|
|
2,087 |
|
|
15,474 |
|
|
6,225 |
|
Net realized investment gains (losses) |
|
|
(3) |
|
|
4 |
|
|
(124) |
|
|
(6,787) |
|
Net unrealized gains on equity securities |
|
|
1,543 |
|
|
177 |
|
|
1,542 |
|
|
792 |
|
Total revenues |
|
$ |
82,136 |
|
$ |
52,532 |
|
$ |
217,390 |
|
$ |
213,149 |
| EXPENSES: |
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
|
11,774 |
|
|
9,822 |
|
|
39,525 |
|
|
39,968 |
|
Policy acquisition costs |
|
|
20,942 |
|
|
13,606 |
|
|
44,476 |
|
|
62,298 |
|
Operating expenses |
|
|
2,115 |
|
|
2,081 |
|
|
6,492 |
|
|
6,962 |
|
General and administrative expenses |
|
|
8,174 |
|
|
6,011 |
|
|
26,987 |
|
|
21,036 |
|
Interest expense |
|
|
3,067 |
|
|
2,718 |
|
|
9,212 |
|
|
8,156 |
|
Total expenses |
|
|
46,072 |
|
|
34,238 |
|
|
126,692 |
|
|
138,420 |
| Income before other
income |
|
|
36,064 |
|
|
18,294 |
|
|
90,698 |
|
|
74,729 |
|
Other income (loss) |
|
|
453 |
|
|
(237) |
|
|
2,074 |
|
|
1,157 |
| Income before income
taxes |
|
|
36,517 |
|
|
18,057 |
|
|
92,772 |
|
|
75,886 |
|
Provision for income taxes |
|
|
8,848 |
|
|
3,042 |
|
|
22,321 |
|
|
8,062 |
| Income from continuing
operations, net of tax |
|
$ |
27,669 |
|
$ |
15,015 |
|
$ |
70,451 |
|
$ |
67,824 |
| Income (loss) from
discontinued operations, net of tax |
|
|
450 |
|
|
(4,447) |
|
|
321 |
|
|
227,803 |
| Net income |
|
$ |
28,119 |
|
$ |
10,568 |
|
$ |
70,772 |
|
$ |
295,627 |
| OTHER COMPREHENSIVE
INCOME: |
|
|
|
|
|
|
|
|
|
Change in net unrealized gains (losses) on investments |
|
|
7,529 |
|
|
(2,761) |
|
|
7,404 |
|
|
(698) |
|
Reclassification adjustment for net realized investment losses
(gains) |
|
|
3 |
|
|
(2) |
|
|
124 |
|
|
6,806 |
|
Income tax benefit related to items of other comprehensive income
(loss) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| Total comprehensive
income |
|
$ |
35,651 |
|
$ |
7,805 |
|
$ |
78,300 |
|
$ |
301,735 |
| |
|
|
|
|
|
|
|
|
| Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
|
Basic |
|
|
48,066,358 |
|
|
43,301,388 |
|
|
47,742,744 |
|
|
43,220,084 |
|
Diluted |
|
|
49,521,246 |
|
|
44,142,693 |
|
|
49,255,071 |
|
|
43,888,665 |
| |
|
|
|
|
|
|
|
|
| Earnings available to ACIC
common stockholders per share |
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.58 |
|
$ |
0.34 |
|
$ |
1.48 |
|
$ |
1.57 |
|
Discontinued operations |
|
|
0.01 |
|
|
(0.10) |
|
|
0.01 |
|
|
5.27 |
|
Total |
|
$ |
0.59 |
|
$ |
0.24 |
|
$ |
1.49 |
|
$ |
6.84 |
|
Diluted |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.56 |
|
$ |
0.34 |
|
$ |
1.43 |
|
$ |
1.54 |
|
Discontinued operations |
|
|
0.01 |
|
|
(0.10) |
|
|
0.01 |
|
|
5.19 |
|
Total |
|
$ |
0.57 |
|
$ |
0.24 |
|
$ |
1.44 |
|
$ |
6.73 |
| |
|
|
|
|
|
|
|
|
| Dividends declared per
share |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
Consolidated Balance Sheets |
|
In thousands, except share amounts |
| |
| |
|
September 30, 2024 |
|
December 31, 2023 |
| ASSETS |
|
|
|
|
|
Investments, at fair value: |
|
|
|
|
|
Fixed maturities, available-for-sale |
|
$ |
278,373 |
|
$ |
138,387 |
|
Equity securities |
|
|
25,950 |
|
|
— |
|
Other investments |
|
|
26,392 |
|
|
16,487 |
|
Total investments |
|
$ |
330,715 |
|
$ |
154,874 |
|
Cash and cash equivalents |
|
|
183,147 |
|
|
138,930 |
|
Restricted cash |
|
|
57,251 |
|
|
18,070 |
|
Accrued investment income |
|
|
3,359 |
|
|
1,767 |
|
Property and equipment, net |
|
|
7,300 |
|
|
3,658 |
|
Premiums receivable, net |
|
|
18,630 |
|
|
45,924 |
|
Reinsurance recoverable on paid and unpaid losses |
|
|
147,065 |
|
|
340,820 |
|
Ceded unearned premiums |
|
|
199,426 |
|
|
155,301 |
|
Goodwill |
|
|
59,476 |
|
|
59,476 |
|
Deferred policy acquisition costs |
|
|
43,166 |
|
|
21,149 |
|
Intangible assets, net |
|
|
6,518 |
|
|
8,548 |
|
Other assets |
|
|
13,284 |
|
|
36,718 |
|
Assets held for sale |
|
|
74,537 |
|
|
77,143 |
|
Total Assets |
|
$ |
1,143,874 |
|
$ |
1,062,378 |
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Unpaid losses and loss adjustment expenses |
|
$ |
173,322 |
|
$ |
347,738 |
|
Unearned premiums |
|
|
307,325 |
|
|
276,157 |
|
Reinsurance payable on premiums |
|
|
122,597 |
|
|
— |
|
Payments outstanding |
|
|
4,479 |
|
|
706 |
|
Accounts payable and accrued expenses |
|
|
75,525 |
|
|
74,783 |
|
Operating lease liability |
|
|
23 |
|
|
739 |
|
Other liabilities |
|
|
2,960 |
|
|
672 |
|
Notes payable, net |
|
|
148,937 |
|
|
148,688 |
|
Liabilities held for sale |
|
|
49,124 |
|
|
44,130 |
|
Total Liabilities |
|
$ |
884,292 |
|
$ |
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 |
|
|
437,241 |
|
|
423,717 |
|
Treasury shares, at cost; 212,083 shares |
|
|
(431) |
|
|
(431) |
|
Accumulated other comprehensive loss |
|
|
(11,617) |
|
|
(17,137) |
|
Retained earnings (deficit) |
|
|
(165,616) |
|
|
(237,389) |
|
Total Stockholders' Equity |
|
$ |
259,582 |
|
$ |
168,765 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
1,143,874 |
|
$ |
1,062,378 |
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