Financial Performance - Gross premiums written for Q2 2024 were $229.449 million, a decrease from $236.822 million in Q2 2023, representing a decline of 5.8%[150] - Net premiums earned for Q2 2024 were $63.381 million, down from $78.014 million in Q2 2023, reflecting a decrease of 18.8%[150] - Total revenues for Q2 2024 were $68.656 million, compared to $73.542 million in Q2 2023, indicating a decline of 6.4%[150] - Income from continuing operations for Q2 2024 was $19.073 million, down from $21.244 million in Q2 2023, a decrease of 10.2%[150] - Consolidated net income for Q2 2024 was $19.054 million, compared to $17.779 million in Q2 2023, an increase of 7.2%[150] - Core income for Q2 2024 was $19.611 million, down from $27.073 million in Q2 2023, a decrease of 27.6%[150] - Total revenue for the three months ended June 30, 2024, was $68,656,000, down from $73,542,000 in the prior year, representing a decline of about 12.7%[152] - Net income from continuing operations for the three months ended June 30, 2024, was $19,073,000, compared to $21,244,000 in the same period of 2023, a decline of about 10.2%[152] - Net income for the three months ended June 30, 2024 increased by $1,275,000, or 7.2%, to $19,054,000 from $17,779,000 for the same period in 2023[199] Policy and Operations - Policies in-force decreased by 5.4% from 23,664 at June 30, 2023, to 22,395 at June 30, 2024[147] - The former subsidiary United Property & Casualty Insurance Company was placed into receivership, impacting the company's operations and financial results[146] - The company is in the process of selling Interboro Insurance Company, with the purchase price based on IIC's GAAP shareholders' equity at closing[145] - The company entered into a Sale Agreement with Forza on May 9, 2024, to sell 100% of the issued and outstanding stock of IIC, with the purchase price equal to IIC's GAAP shareholders' equity on the closing date[183] Investment and Assets - Cash, cash equivalents, restricted cash, and investment portfolio totaled $572,580,000 at June 30, 2024, an increase from $311,874,000 at December 31, 2023[162] - As of June 30, 2024, total investments amounted to $310,991 million, representing 54.3% of total assets, compared to $154,874 million or 49.5% as of December 31, 2023[163] - U.S. government and agency securities accounted for $155,733 million, or 27.2% of total investments as of June 30, 2024, up from $26,002 million or 8.3% at the end of 2023[163] - The total fixed maturities increased to $264,446 million, representing 46.2% of total assets, compared to $138,387 million or 44.2% previously[163] - Approximately 87.9% of fixed maturities were rated "A" or better as of June 30, 2024, indicating a strong credit quality in the investment portfolio[163] - The company's equity portfolio consists of mutual funds totaling $15,429,000[227] Reinsurance and Loss Ratios - The loss ratio, net for the three months ended June 30, 2024, was 24.1%, compared to 20.8% for the same period in 2023[152] - The combined ratio for the three months ended June 30, 2024, was 64.9%, compared to 63.1% in the prior year[152] - The underlying combined ratio for the three months ended June 30, 2024, was 66.4%, compared to 62.0% for the same period in 2023[152] - Reinsurance costs as a percentage of gross earned premium for the three months ended June 30, 2024, totaled 59.3%, compared to 47.9% in the same period of 2023[172] - The total ceding ratio for the six months ended June 30, 2024, was 60.1%, up from 43.6% in 2023, indicating increased reliance on reinsurance[172] Cash Flow and Financing - During the six months ended June 30, 2024, cash inflows from operating activities totaled $250,886,000, compared to cash outflows of $232,823,000 in the same period of 2023[223] - Cash provided by financing activities in the first half of 2024 amounted to $11,458,000, attributed to proceeds from the issuance of common stock[225] - The company made capital contributions of $1,265,000 to its reinsurance subsidiary, UPC Re, during the six months ended June 30, 2024[218] Expenses and Cost Management - Total expenses for the three months ended June 30, 2024, were $44,580,000, compared to $51,950,000 for the same period in 2023, a decrease of approximately 14.2%[152] - Expenses attributable to IIC for the three months ended June 30, 2024, increased by $1,210,000, or 17.1%, to $8,296,000 from $7,086,000 for the same period in 2023[187] - General and administrative expenses increased by $3,788,000, or 25.2%, to $18,813,000 for the six months ended June 30, 2024 from $15,025,000 for the same period in 2023[215] - Policy acquisition costs attributable to IIC increased by $357,000, or 9.3%, to $4,182,000 for the six months ended June 30, 2024 from $3,825,000 for the same period in 2023[197] Market Risks - The company is exposed to market risks, including interest rate risk, credit risk, and equity price risk, as disclosed in its Annual Report[227] - The commission for the equity distribution agreement is set at 3.0% of the gross proceeds from the sales of the shares[219]

Financial Data and Key Metrics Changes - The company reported a net income of $19.1 million for Q2 2024, with core income at $19.6 million, a decrease of $7.5 million year-over-year due to higher ceded earned premiums from the 40% gross catastrophe quota share effective June 1, 2023 [13] - Gross premium earned increased by $5.6 million to $165.5 million, while the combined ratio was 64.9%, up 1.8 points from 63.1% in the same period last year [13][14] - Operating expenses decreased by $7.1 million, primarily due to a 41% decrease in policy acquisition costs [14] Business Line Data and Key Metrics Changes - The company has transitioned to focusing solely on profitable Commercial Lines operations following the divestiture of Interboro Insurance Company, which is now classified as discontinued operations [7] - The company expects net income from continuing operations, excluding catastrophes, to be between $85 million and $95 million for the full year, indicating potential earnings growth of 43% to 77% year-over-year in the second half of 2024 [10] Market Data and Key Metrics Changes - The Florida commercial residential marketplace is showing signs of softening, but this is not expected to materially impact the company's expected margin, with a target underlying combined ratio of 65% still achievable [11] - The company plans to participate in the October 2024 Citizens Commercial Residential takeout, having identified several hundred policies that fit its underwriting criteria [12] Company Strategy and Development Direction - The company has diversified its reinsurance panel by adding eight new reinsurers and enhanced its core catastrophe reinsurance program, which is expected to positively impact revenue and earnings growth [9] - The company is focused on disciplined underwriting, maintaining terms and conditions while curbing exposures, particularly in peak zones [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to thrive through all parts of the insurance cycle since 2007, highlighting strong liquidity and capitalization improvements [15][16] - The company anticipates growth opportunities despite a softening market, with plans to selectively increase exposure following the recent reinsurance renewal [21] Other Important Information - Cash and investments grew by 83.6% to $573 million, reflecting a strong liquidity position [14] - Stockholders' equity increased by 32.2% to $223 million, driven by strong underwriting results [15] Q&A Session Summary Question: Discussion on TIV and policy count changes - Management noted that the total insured value (TIV) decreased by just under 2% and policy count by just under 6%, attributing this to disciplined underwriting practices [18][20] Question: Clarification on reinsurance program details - Management confirmed that the first event retention is $16 million, with net maximum reinstatement exposure of $14 million, and explained the complexities of reinstatement costs [22][23] Question: Impact of recent weather events - Management commented that the recent weather event was primarily a rain event, with minimal impact on the commercial residential portfolio, and noted only one small claim [26][27]

Financial Performance - Gross premiums written decreased by 3.1% to $229,449,000 compared to $236,822,000 in the prior year[3] - Net premiums earned fell by 18.8% to $63,381,000 from $78,014,000 year-over-year[3] - Total revenue declined by 6.6% to $68,656,000, down from $73,542,000 in the same quarter last year[3] - Income from continuing operations decreased by 10.2% to $19,073,000 compared to $21,244,000 in the prior year[3] - Consolidated net income increased by 7.2% to $19,054,000 from $17,779,000 year-over-year[3] - Core income fell by 27.6% to $19,611,000 from $27,073,000 in the same quarter last year[3] - Net income for Q2 2024 was $19.1 million, or $0.39 per diluted share, compared to $17.8 million, or $0.41 per diluted share in Q2 2023, reflecting a decrease of $2.1 million in continuing operations[17] - Total gross written premium decreased by $7.4 million, or 3.1%, to $229.4 million in Q2 2024 from $236.8 million in Q2 2023[18] - Total revenues for Q2 2024 were $68,656,000, a decline of 6.4% compared to $73,542,000 in Q2 2023[43] - Net income for Q2 2024 was $19,054,000, an increase of 7.2% from $17,779,000 in Q2 2023[43] Operational Efficiency - The combined ratio for the quarter was 64.9%, an increase of 1.8 percentage points from 63.1% in the prior year[10] - Loss and LAE decreased by $900 thousand, or 5.6%, to $15.3 million in Q2 2024 from $16.2 million in Q2 2023, with the loss ratio increasing to 24.1% from 20.8%[19] - Policy acquisition costs decreased by $9.6 million, or 40.9%, to $13.9 million in Q2 2024, primarily due to increased reinsurance ceding commission income[20] - General and administrative expenses increased by $3.5 million, or 54.7%, to $9.9 million in Q2 2024, driven by higher external service costs[21] - Total operating expenses decreased by $7.1 million, or 21.6%, to $25.9 million in Q2 2024 from $32.9 million in Q2 2023[15] Asset and Liability Management - Total assets increased to $1,311,285,000 as of June 30, 2024, up from $1,062,378,000 at December 31, 2023[44] - Total liabilities rose to $1,088,212,000 as of June 30, 2024, compared to $893,613,000 at December 31, 2023[44] - Cash and cash equivalents increased to $229,431,000 as of June 30, 2024, from $138,930,000 at December 31, 2023[44] - The company’s retained earnings improved to $(193,735,000) as of June 30, 2024, from $(237,389,000) at December 31, 2023[44] Book Value and Investment - Book value per share increased by 78.8% to $4.63 from $2.59 year-over-year[3] - Book value per common share increased by 28.3% from $3.61 at December 31, 2023, to $4.63 at June 30, 2024[26] - The underlying book value per common share increased by 26.7% from $3.97 at December 31, 2023, to $5.03 at June 30, 2024[26] - The company's cash and investment holdings increased from $311.9 million at December 31, 2023, to $572.6 million at June 30, 2024, driven by positive cash flows from operations[25] - The company reported a net unrealized gain on equity securities of $49,000 in Q2 2024, compared to a gain of $141,000 in Q2 2023[43] Strategic Initiatives - The company successfully placed its core catastrophe reinsurance program, increasing the exhaustion point from the prior year[5] - The company is focused on phasing out personal lines operations, having signed agreements for the sale of Interboro Insurance Company[5] - The company has entered into a Sale Agreement to sell 100% of its subsidiary, IIC, to Forza, which is expected to impact future financial results[40] - ACIC maintains a Financial Stability Rating of "A, Exceptional" from Demotech and an "A-" insurance financial strength rating with a Stable outlook by Kroll[30] - The company anticipates continued growth in the Florida market, driven by its exclusive partnership with AmRisc Group for condominium association properties[30] - Forward-looking statements indicate that ACIC expects to navigate potential risks and uncertainties while pursuing growth strategies in the insurance sector[41] Reclassification and Ratings - The company has reclassified prior year financial results to reflect continuing and discontinued operations appropriately, following the appointment of a receiver for its former subsidiary, UPC[40] - ACIC's core return on equity for the period was E%, reflecting strong underwriting performance[35] - The underlying combined ratio, excluding current year catastrophe losses, was D%, which highlights the company's operational efficiency[36] - American Coastal Insurance Corporation (ACIC) reported a core income of $X million for the quarter, reflecting a Y% increase compared to the previous year[34] - The company's combined ratio for the period was Z%, indicating an improvement from the prior year's ratio of A%[36]

Group 1 - American Coastal Insurance Corporation (ACIC) will release its financial results for Q2 2024 on August 7, 2024, 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 [1] - Interested parties can participate by dialing in 10 minutes before the call, with specific numbers provided for U.S. and international participants [1] Group 2 - American Coastal Insurance Corporation is the holding company for American Coastal Insurance Company, which specializes in insuring condominium and homeowner association properties in Florida [2] - The company has an exclusive partnership with AmRisc Group for the distribution of condominium association properties in Florida [2] - 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 [2]

Investment Thesis - American Coastal Insurance reported strong first quarter earnings with an underlying combined ratio of 57.8% and core ROE of 69.7%, indicating exceptional profitability metrics compared to peers [1] - The company's shares are considered a buy due to attractive premiums in coastal homeowners insurance and cheap valuation metrics relative to the sector median [1] Company Overview - American Coastal Insurance is engaged in commercial and personal property and casualty insurance, focusing on high-risk areas like Florida and New York [2] - The company employs a contrarian underwriting strategy, targeting perceived high-risk areas where larger carriers have reduced their policy concentration [2] - The company has a robust reinsurance program providing significant coverage, which enhances its reputation and profitability [2] Operational Efficiency - The company demonstrated improved efficiency with an expense ratio reduction from 43.4% to 35.2% year-over-year in Q1 2024 [3] - American Coastal's investment strategy focuses on stable debt securities, contributing to its low-cost operational history [3] Earnings Performance - For Q1 2024, net income was $23.6 million, or $0.48 per diluted share, with total gross written premiums increasing by 5.5% to $197.5 million [4] - The company successfully reduced loss and LAE by 3.1% to $15.9 million, attributing strong performance to better rates in high-risk areas [4] - Management expects continued premium growth and has renewed its MGA agreement with AmRisc, indicating confidence in future earnings [4] Personal Lines Segment - The personal lines insurance segment experienced a spike in loss ratios from 29% to 71.4% year-over-year, prompting management to cut costs significantly [5] - Rate increases in the personal lines market are expected to stabilize, leading to improved loss ratios and potential earnings growth [5] - The company has low retention in its reinsurance agreements, which protects against extreme losses [5] Valuation - Projected revenues are expected to reach $300 million by 2025, with a conservative net margin of 25% leading to estimated earnings of $75 million [6] - The fair value of the stock is estimated at $15 per share based on a 10x P/E ratio, which is slightly below the sector median [6] - The P/B ratio of 2.0x may not accurately reflect future valuation due to past losses, suggesting a potential undervaluation of the company [6]

Group 1 - American Coastal Insurance (ACIC) is outperforming the Finance sector with a year-to-date return of approximately 13.6%, compared to the sector average of 2.3% [2] - ACIC has a Zacks Rank of 1 (Strong Buy), indicating a positive earnings outlook with a 20% increase in the full-year earnings estimate over the past quarter [2] - The Insurance - Property and Casualty industry, to which ACIC belongs, is ranked 29 in the Zacks Industry Rank and has an average gain of 13% year-to-date, showing ACIC's strong performance within its industry [3] Group 2 - Mr Cooper (COOP) is another Finance stock that has outperformed the sector, with a year-to-date return of 25.6% [3] - Mr Cooper has a Zacks Rank of 2 (Buy), with a consensus EPS estimate increase of 9.1% over the past three months [3] - The Financial - Consumer Loans industry, which includes Mr Cooper, is currently ranked 45 and has seen a year-to-date increase of 3.7% [3]

Core Insights - American Coastal Insurance (ACIC) shows a significant improvement in earnings outlook, making it an attractive investment option [1] - Analysts are increasingly optimistic, raising earnings estimates for the company, which is expected to positively impact stock prices [1][5] - The Zacks Rank system indicates a strong correlation between earnings estimate revisions and stock price movements, with ACIC currently holding a Zacks Rank 1 (Strong Buy) [1][5] Current-Quarter Estimate Revisions - The expected earnings for the current quarter are $0.30 per share, reflecting a year-over-year decline of 53.85% [3] - The Zacks Consensus Estimate for the current quarter has increased by 20% over the last 30 days, with one estimate rising and no negative revisions [3] Current-Year Estimate Revisions - For the full year, the earnings estimate stands at $1.50 per share, indicating a year-over-year decrease of 25.74% [4] - The consensus estimate for the current year has also seen a 20% increase, with one estimate moving higher and no negative revisions [4] Zacks Rank and Performance - The positive estimate revisions have led to a Zacks Rank 1 (Strong Buy) for American Coastal, suggesting strong potential for outperformance [5] - Research indicates that stocks with Zacks Rank 1 and 2 significantly outperform the S&P 500 [5] Stock Performance - The stock has appreciated by 13.4% over the past four weeks due to strong estimate revisions, indicating potential for further upside [6]

Core Viewpoint - American Coastal Insurance (ACIC) has received a Zacks Rank 1 (Strong Buy) upgrade, indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Outlook - The Zacks rating reflects an upward trend in earnings estimates, which is crucial for stock price movements [1][3]. - Analysts have raised their earnings estimates for American Coastal, with the Zacks Consensus Estimate increasing by 20% over the past three months [5]. Earnings Estimate Revisions - The company is expected to earn $1.50 per share for the fiscal year ending December 2024, representing a year-over-year decline of 25.7% [5]. - The Zacks Rank system effectively utilizes earnings estimate revisions to classify stocks, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [4]. Institutional Investor Influence - Institutional investors play a role in stock price movements by adjusting their valuations based on earnings estimates, leading to buying or selling actions that affect stock prices [3]. Market Positioning - The upgrade to Zacks Rank 1 places American Coastal in the top 5% of Zacks-covered stocks, suggesting potential for near-term stock price increases [7].

Group 1 - American Coastal Insurance (ACIC) has a year-to-date return of approximately 29.3%, significantly outperforming the Finance sector average return of about 4.1% [2][3] - The Zacks Consensus Estimate for ACIC's full-year earnings has increased by 20% over the past quarter, indicating improved analyst sentiment [2] - ACIC holds a Zacks Rank of 1 (Strong Buy), suggesting strong potential for continued performance [1][2] Group 2 - ACIC is part of the Insurance - Property and Casualty industry, which has an average year-to-date gain of 14.9%, further highlighting ACIC's strong performance [3] - Mr Cooper (COOP), another outperforming stock in the Finance sector, has a year-to-date return of 25.9% and also holds a Zacks Rank of 1 (Strong Buy) [2][3] - The Financial - Consumer Loans industry, to which Mr Cooper belongs, has seen a year-to-date increase of 9.7% [3]

Financial Data and Key Metrics Changes - The first quarter 2024 net income was $23.6 million, up 38% from the fourth quarter of 2023, highlighting an expanding net earned premium margin [9] - Core return on equity reached 69.7%, driven by an underlying combined ratio of 57.8% [8] - Book value per share increased by 18.3% from the end of 2023 to March 31, 2024 [8][15] Business Line Data and Key Metrics Changes - Gross premium written increased by $10.4 million year-over-year to $197.5 million, while gross premium earned grew by $24.3 million to $168.8 million [12] - The combined ratio improved to 58.3%, a 4-point improvement from 62.3% in the same period last year [12] - Personal lines were profitable, with operating expenses benefiting from the collection of $2.5 million in return agent commissions [14] Market Data and Key Metrics Changes - Year-over-year, enforced premiums in commercial business were up about 16%, while exposures were down 19% [16] - Average effective rate change across the enforced portfolio during Q1 was 4.3% [16] - Retention in personal lines was strong at nearly 92%, despite double-digit average rate increases for renewed policies [18] Company Strategy and Development Direction - The company is focused on enhancing shareholder value through strategic initiatives and risk management [7] - A significant reduction in external quota share from 40% to 20% is expected to materially increase net premiums earned [20] - The company aims to maintain a strong combined ratio while improving cost efficiency in its catastrophe reinsurance program [19] Management's Comments on Operating Environment and Future Outlook - Management noted an increase in competition in the commercial lines business but described the market as firm and rate-adequate [24] - The target for the underlying combined ratio remains at 65%, with expectations for continued strong performance [26] - The company anticipates a smooth transition regarding the sale of Interboro Insurance Company, aiming for a year-end closing [36] Other Important Information - The company has secured over 90% of the total limit sought for its catastrophe reinsurance renewals [19] - Cash and investments grew 36.7% to $504 million, reflecting a strong liquidity position [15] Q&A Session Summary Question: Competition perspective in commercial lines business - Management acknowledged increased competition compared to last year but emphasized that it does not significantly impact their portfolio or renewal retention rates [24] Question: Target for underlying combined ratio - Management confirmed that the target remains at 65%, considering current reinsurance costs and market factors [26] Question: Impact of reinsurance renewal on profits - It was indicated that the reduction in ceded commissions from 40% to 20% will have a significant positive impact on the bottom line, driving total revenues year-over-year [29] Question: Increase in net premiums earned - Management attributed the increase in net premiums earned to stronger premium production and positive underwriting actions taken in both personal and commercial lines [31] Question: Timeline for the sale of Interboro - The expected timeline for closing the sale is between 6 to 12 months, with a goal for a year-end transaction [36]