Core Points - American Coastal Insurance Corporation has completed the sale of Interboro Insurance Company to Forza Insurance Holdings for approximately $26.4 million in cash based on GAAP estimated equity as of the closing date [2][3] - The sale marks a strategic transformation for American Coastal, allowing the company to focus entirely on underwriting commercial residential property insurance, enhancing its market leadership and shareholder value [3] Financial Details - The cash received from Forza is approximately $26.4 million, with a reconciliation of the purchase price expected within 30 days based on finalized GAAP equity as of April 1, 2025 [2] Company Background - American Coastal Insurance Corporation is the holding company for American Coastal Insurance Company, which specializes in insuring condominium and homeowner association properties in Florida [5] - The company has a partnership with AmRisc Group for the distribution of condominium association properties and has received a Financial Stability Rating of "A, Exceptional" from Demotech, along with an "A-" insurance financial strength rating from Kroll [5]

Financial Performance - The combined ratio, a measure of underwriting profitability, indicates an underwriting profit when it is under 100%[33] - As of December 31, 2024, the total number of policies in-force is 23,060, a slight increase from 22,848 in 2023[39] - The total TIV (Total Insured Value) of all policies in-force as of December 31, 2024, is $72,390,599, up from $69,595,880 in 2023[41] - The company has remediated material weaknesses in internal control over financial reporting as of December 31, 2024[96][97] - The company’s financial results are subject to fluctuations due to unpredictable weather conditions and catastrophic events, which could exceed loss reserves[86][91] - A downgrade in financial strength ratings could adversely impact business volume and access to additional financing, with significant losses potentially leading to a need for equity capital[145] Risk Management - AmCoastal's RBC (Risk-Based Capital) ratio is 1,470%, while IIC's RBC ratio is 461%, both exceeding minimum requirements as of December 31, 2024[52] - The company’s insurance operations are exposed to risks from catastrophic events, particularly hurricanes, which could significantly impact financial results[83][84] - The company is highly dependent on its information technology systems, and any unplanned shutdown or failure could impair its ability to process policies and claims in a timely manner[98] - The company has experienced threats to its data systems, including malware and unauthorized access, which could lead to significant reputational damage and financial losses[99] - The company faces intense competition in the property and casualty insurance market, which may limit its ability to retain existing business or write new business at adequate rates[114] - The inability to obtain reinsurance on acceptable terms could increase loss exposure and limit underwriting capabilities, adversely affecting financial condition[126] - Counterparty risk related to reinsurance claims could materially affect business results and cash flow[127] - Accurate pricing of risks is critical; failure in loss limitation methods could adversely impact financial results[129] - Increased litigation and expanded coverage issues may contribute to higher litigation costs and loss exposure under policies[141] - The company may face increased litigation costs and inadequate loss reserves due to emerging claims and coverage issues, which could materially affect operating results and cash flows[144] Corporate Governance and Diversity - The diversity statistics show that 28.6% of executive officers are female, a decrease of 8.6 percentage points from December 31, 2023[74] - The company has committed to adding at least two new directors to improve overall diversity at the Board level[71] - The company’s management team includes three members from underrepresented groups, reflecting its commitment to ESG goals[74] Operational Strategy - The company has made substantial investments in new technology to gain a competitive advantage in underwriting and claims handling[44] - The company distributes personal lines policies through approximately 400 independent agencies as of December 31, 2024[34] - The company has focused on building relationships with independent agents to enhance policyholder satisfaction and business profitability[35] - The company is no longer writing policies in Texas as of May 31, 2022, impacting its geographic distribution[39] - The company relies on approximately 400 independent agencies for marketing its homeowners' insurance product, which limits direct solicitation of existing policyholders[90] Regulatory Environment - The insurance industry is heavily regulated, with potential for further restrictive regulations that may reduce profitability and limit growth[119] - Compliance with evolving privacy and cybersecurity laws, such as the NYDFS regulations, may impose significant costs and operational restrictions on the company[101] - The SEC has adopted new cybersecurity disclosure rules that require public companies to enhance their disclosures regarding cybersecurity risk management, which could impact the company's operations[102] - Changes in state regulations could limit the company's ability to manage risk and adjust pricing, potentially leading to increased losses[116] - Compliance with state insurance regulations is complex and varies by state, posing risks to operational and financial conditions[121] - The federal government's role in insurance regulation is limited, but potential future federal regulations could negatively impact business opportunities[122] - The company may face significant compliance costs due to changes in insurance laws or regulations, which could adversely affect operations and growth prospects[125] Financial Structure - The company's Senior Notes impose restrictions on its financial operations, and failure to comply could result in an event of default, adversely affecting liquidity[113] - The ability of the company's subsidiaries to pay dividends is limited by state insurance regulations, which could adversely affect holding company liquidity and its ability to meet obligations[151] - The company currently does not pay ordinary quarterly dividends, and future payments may be constrained by its holding company structure and regulatory restrictions[149] - The substantial ownership of common stock by R. Daniel Peed allows him to exert significant control over the company, which may conflict with the interests of other stockholders[154] Investment and Asset Management - The company has a portfolio monitoring process for fixed income securities, and any credit losses will be recorded in earnings if the present value of expected cash flows is less than the amortized cost[284] - Goodwill is tested for impairment at least annually, and impairment occurs when the carrying value exceeds the fair value of the reporting segment[288] - There were no related party transactions for the years ended December 31, 2024, 2023, and 2022[290] Community Engagement - In 2024, the company made donations totaling $150,000 for local disaster relief due to Hurricanes Helene and Milton[69] - The company is committed to achieving net-zero carbon emissions by 2030, although further analysis and strategy are necessary[67]

Core Viewpoint - American Coastal Insurance (ACIC) reported quarterly earnings of $0.12 per share, missing the Zacks Consensus Estimate of $0.16 per share, and down from $0.39 per share a year ago, indicating a -25% earnings surprise [1] - The company posted revenues of $79.27 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.13% and up from $58.21 million year-over-year [2] Group 1 - The company has surpassed consensus EPS estimates three times over the last four quarters [2] - American Coastal shares have lost about 5% since the beginning of the year, while the S&P 500 has gained 1.3% [3] - The current consensus EPS estimate for the coming quarter is $0.45 on revenues of $78.94 million, and for the current fiscal year, it is $1.50 on revenues of $336.59 million [7] Group 2 - The estimate revisions trend for American Coastal is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] - The Zacks Industry Rank for Insurance - Property and Casualty is currently in the top 17% of over 250 Zacks industries, suggesting a favorable outlook for the industry [8] - Heritage Insurance, another company in the same industry, is expected to report quarterly earnings of $0.52 per share, reflecting a year-over-year change of -54.8% [9]

Financial Data and Key Metrics Changes - American Coastal Insurance Corporation reported a net income of $4.9 million for Q4 2024, with core income decreasing by $12 million year-over-year to $6 million due to a 20.53% tax retention from Hurricane Milton [18][19] - Gross premium earned increased by $3.6 million to $162.7 million, while the combined ratio was 91.9%, with Hurricane Milton contributing 27.8% to this ratio [19][20] - The full-year 2024 pre-tax income was approximately $102 million, up nearly 6% year-over-year, despite incurring $23 million more in net catastrophe losses [14][15] Business Line Data and Key Metrics Changes - The company successfully launched a new apartment program in Florida, writing 19 new apartment risks totaling approximately $2.3 million in premium [8] - New business growth and better-than-expected renewal account retention contributed to a sequential quarter-over-quarter increase in policy count [10] - The company aims for a modest target of about $20 million in premium from the apartment book for 2025, with potential for growth in subsequent years [35] Market Data and Key Metrics Changes - Rates are continuing to decrease due to favorable trends in loss and reinsurance costs, with average account renewal pricing down between 5% and 10% year-over-year [30] - The company has received hundreds of high-quality submissions from distribution partners, indicating a strong market interest [9] Company Strategy and Development Direction - American Coastal is focused on maintaining underwriting profit as the primary objective for all new business, emphasizing the importance of risk selection [9][56] - The company has enhanced its reinsurance protections, including a new three-year catastrophe bond upsized from $100 million to $200 million, which includes a cascading feature for multiple hurricane events [11][12] - The strategic goal is to achieve a combined ratio of 65 before catastrophe losses, maintaining profitability despite pricing changes [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the successful absorption of Hurricane Milton's losses within a single quarter's profit [7][15] - The company projects a net income range of $70 million to $90 million for 2025, supported by strong liquidity and capitalization [23] - Management noted that while the California fires may impact the global reinsurance market, they do not expect significant effects on American Coastal [60][62] Other Important Information - Stockholders' equity increased by 39.6% to $235.7 million, reflecting strong underwriting results and a $24 million dividend paid to shareholders [22] - The company received regulatory approval to complete the sale of Interboro, which will add approximately $22 million in cash to the holding company [24] Q&A Session Summary Question: Can you provide an update on pricing and how it is evolving? - Management indicated that pricing is changing due to expectations of future loss and reinsurance costs, with a positive outlook for the Florida marketplace [28][30] Question: What is the aspirational target for the apartment book? - The company aims for a target of $20 million in premium for the apartment book in 2025, with potential for growth in the following years [35] Question: What changes are expected in the reinsurance structure for the upcoming renewal? - Management is actively working on the reinsurance structure and aims to keep a modest retention that can be absorbed within a typical quarter's earnings [37][40] Question: What implications do the recent California fires have for American Coastal? - Management believes the impact will be minimal, although it may affect capacity in the global reinsurance market [60][62] Question: Can you elaborate on the new coverage that has become available? - The new CAT bond provides superior coverage with a cascading feature for multiple events, offering more protection than in previous years [65]

Group 1 - American Coastal Insurance Corporation held its Q4 2024 earnings conference call on February 27, 2025, at 5:00 PM ET [1] - The call featured key participants including Karin Daly, Vice President of Investor Relations, President and CEO Bradford Martz, and CFO Svetlana Castle [4] - The company provided access to the earnings call broadcast on its website, with a replay available for approximately 30 days [3] Group 2 - The conference call included a question-and-answer session following the formal presentation [1][2] - Forward-looking statements were made during the call, emphasizing that actual results could differ materially from those expressed due to various risks and uncertainties [5]

Core Insights - American Coastal Insurance Corporation reported its financial results for Q4 and the year ended December 31, 2024, highlighting a decrease in net income and challenges faced due to increased losses and expenses [1][17][24]. Financial Performance - Gross premiums written increased by 9.7% to $140.7 million in Q4 2024 from $128.3 million in Q4 2023 [2][18]. - Net income for Q4 2024 was $4.9 million, or $0.10 per diluted share, down from $14.3 million, or $0.31 per diluted share, in Q4 2023 [17][24]. - For the year ended December 31, 2024, net income was $75.7 million, or $1.54 per diluted share, compared to $309.9 million, or $6.98 per diluted share, in 2023 [24][25]. Loss and Expense Analysis - Loss and LAE (Loss Adjustment Expenses) increased by 344.8% to $29.8 million in Q4 2024 from $6.7 million in Q4 2023, with the loss ratio net rising to 40.5% [17][29]. - Policy acquisition costs surged by 102.3% to $26.5 million in Q4 2024, primarily due to changes in reinsurance commission income [21][30]. - General and administrative expenses rose by 17.7% to $11.3 million in Q4 2024, driven by increased overhead costs [22][31]. Combined Ratio and Underlying Metrics - The combined ratio for Q4 2024 was reported at 91.9%, significantly higher than 59.9% in Q4 2023, reflecting the impact of catastrophe losses [10][11]. - The underlying combined ratio, excluding current year catastrophe losses, was 65.9% for Q4 2024, compared to 63.7% in Q4 2023 [10][11]. Investment and Book Value - The company's cash and investment holdings increased from $311.9 million at the end of 2023 to $540.8 million at the end of 2024, indicating strong cash flow from operations [36]. - Book value per share rose by 35.5% from $3.61 at December 31, 2023, to $4.89 at December 31, 2024, driven by retained earnings from net income [37][38].

Financial Performance - Gross premiums written increased by 9.7% year-over-year to $140,739,000 in Q4 2024, while total revenue rose by 54.7% to $79,267,000[4]. - Net premiums earned surged by 49.6% to $73,492,000 in Q4 2024, contributing to a total of $273,990,000 for the year, a 4.6% increase from 2023[4]. - The company reported a consolidated net income of $4,946,000 for Q4 2024, a decrease of 65.4% compared to $14,284,000 in Q4 2023[4]. - Net income for Q4 2024 was $4.9 million, or $0.10 per diluted share, down from $14.3 million, or $0.31 per diluted share in Q4 2023[16]. - Total revenues for the year ended December 31, 2024, reached $296.657 million, an increase of 12.2% from $264.400 million in 2023[51]. - Total comprehensive income for the year ended December 31, 2024, was $79.197 million, down from $322.717 million in 2023, a decrease of 75.7%[51]. Ratios and Efficiency - The combined ratio for Q4 2024 was 91.9%, reflecting a significant increase from 59.9% in Q4 2023, with a full-year combined ratio of 67.5%[6][10]. - The return on equity based on GAAP net income was 8.7% for Q4 2024, down from 81.0% in Q4 2023[8]. - The loss ratio for Q4 2024 was 40.5%, up from 13.7% in Q4 2023, while the expense ratio increased to 51.4% from 46.2%[10]. Expenses - Policy acquisition costs rose by $13.4 million, or 102.3%, to $26.5 million in Q4 2024, primarily due to a decrease in reinsurance commission income[19]. - General and administrative expenses increased by $1.7 million, or 17.7%, to $11.3 million in Q4 2024, driven by higher overhead costs[20]. - General and administrative expenses increased by $7.2 million, or 19.1%, to $44.8 million for the year ended December 31, 2024, driven by increased overhead costs[26]. Assets and Liabilities - Total assets increased to $1,216.112 million as of December 31, 2024, compared to $1,062.378 million in 2023, indicating a growth of 14.5%[53]. - Total liabilities rose to $980.452 million in 2024, up from $893.613 million in 2023, representing an increase of 9.7%[53]. Shareholder Information - Book value per share increased by 35.5% to $4.89 compared to $3.61 in the previous year[4]. - The total shares outstanding increased from 46,777,006 in 2023 to 48,204,962 in 2024, impacting the book value calculations[33]. - The company declared a dividend of $0.50 per share in Q4 2024, consistent with the previous year[51]. Investment and Cash Flow - 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, driven by positive cash flows from operations[30]. - Fixed maturities represented approximately 82.3% of total investments at December 31, 2024, down from 89.4% at December 31, 2023, indicating a shift in investment strategy[30]. - The company's investment portfolio had a modified duration of 2.2 years at December 31, 2024, compared to 3.4 years at December 31, 2023, reflecting changes in interest rate sensitivity[30]. Operational Developments - The company launched an apartment program in December 2024, receiving hundreds of high-quality submissions, indicating strong demand for its products[7]. - The company plans to reduce its quota share reinsurance coverage from 40% to 20% effective June 1, 2024, which will lower the overall ceding ratio[28]. - The company entered into a Sale Agreement to sell its subsidiary, IIC, to Forza Insurance Holdings, with the transaction expected to close on April 1, 2025[46].

Core Points - American Coastal Insurance Corporation (ACIC) will release its financial results for Q4 and full year 2024 on February 27, 2025, after market close [1] - A conference call will be held at 5:00 p.m. ET on the same day, including live remarks and a Q&A session [2][3] Company Overview - American Coastal Insurance Corporation is the holding company for American Coastal Insurance Company, which was established in 2007 to insure condominium and homeowner association properties in Florida [4] - The company has an exclusive partnership with AmRisc Group for the distribution of condominium association properties in Florida, focusing on hurricane-exposed properties [4] - American Coastal Insurance Company has received a Financial Stability Rating of "A, Exceptional" from Demotech and an "A-" insurance financial strength rating with a Stable outlook from Kroll [4] - ACIC holds a 'BB+' issuer rating with a Stable outlook from Kroll [4]

Group 1: Industry Insights - Property insurance is increasingly in demand in the US due to rising property prices and natural disasters, leading to higher insurance values [1] - The property insurance sector is characterized as one of the riskiest and costliest business ventures [1] Group 2: Market Participation - The logistics sector has been a focus for nearly two decades, with significant involvement in stock investing and macroeconomic analysis for almost a decade [1] - The company has diversified its investments across various industries and market cap sizes, including banking, telecommunications, logistics, and hotels [1] - The company entered the US market in 2020, expanding its investment portfolio to include US banks, hotels, shipping, and logistics companies [1]

Group 1 - ACM Research, Inc. (ACMR) is a semiconductor cleaning equipment provider with a Zacks Rank 1 and has seen a Zacks Consensus Estimate for its current year earnings increase by 18.4% over the last 60 days [1] - Oceaneering International, Inc. (OII) is an engineering and robotics company also carrying a Zacks Rank 1, with a Zacks Consensus Estimate for its current year earnings increasing by 0.7% over the last 60 days [4] - ACM Research has a price-to-earnings ratio (P/E) of 7.97, significantly lower than the industry average of 13.70, and holds a Value Score of A [4] - Oceaneering International has a P/E ratio of 17.89 compared to 25.17 for the S&P, and possesses a Value Score of B [3]