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]

Group 1 - The article discusses American Coastal (NASDAQ: ACIC) as a contrarian underwriter that focuses on carefully pricing highly perceived risks to achieve exceptional returns on equity [1] - The author expresses admiration for great investors and emphasizes a willingness to invest in companies at the right price, particularly in emerging markets [1] - The article highlights the importance of maintaining an investment journal to track past successes and learn from failures, promoting an owner-mindset while largely ignoring macro-environment noise [1] Group 2 - The author mentions being influenced by notable economists and their works, particularly highlighting the impact of the book 'Economics in One Lesson' on their economic thinking [1]

Dividend Announcement - The Board of Directors of American Coastal Insurance Corporation declared a special cash dividend of $0.50 per share of common stock outstanding, payable on January 10, 2025, to shareholders of record on January 2, 2025 [1] Company Overview - American Coastal Insurance Corporation is the holding company of American Coastal Insurance Company, which was founded in 2007 to insure Condominium and Homeowner Association properties and apartments in Florida [2] - The company has an exclusive partnership with AmRisc Group for the distribution of Condominium Association properties in Florida, one of the largest Managing General Agents specializing in hurricane-exposed properties [2] - 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 [2] - ACIC holds a "BB+" issuer rating with a Stable outlook by Kroll [2]

Financial Performance - Gross premiums written for Q3 2024 were $93.016 million, a slight decrease from $93.986 million in Q3 2023[154]. - Net premiums earned increased significantly to $74.486 million in Q3 2024 from $50.264 million in Q3 2023, representing a 48.1% growth[154]. - Total revenues for Q3 2024 reached $82.136 million, compared to $52.532 million in Q3 2023, marking a 56.4% increase[155]. - Consolidated net income for Q3 2024 was $28.119 million, up from $10.568 million in Q3 2023, reflecting a 166.5% increase[155]. - Core income for Q3 2024 was $26.934 million, compared to $15.513 million in Q3 2023, representing a 73.8% increase[154]. - Total gross written premium decreased by $383,000, or 0.1%, to $507,066,000 for the nine months ended September 30, 2024, compared to $507,449,000 for the same period in 2023[222]. - Net income for the nine months ended September 30, 2024 decreased by $224,855,000, or 76.1%, to $70,772,000 from $295,627,000 for the same period in 2023[221]. Operational Efficiency - The loss ratio for Q3 2024 improved to 15.8%, down from 19.5% in Q3 2023[155]. - The combined ratio for Q3 2024 was 57.7%, a decrease from 62.7% in Q3 2023, indicating improved operational efficiency[155]. - Loss and LAE expense as a percentage of net earned premiums decreased by 7.6 percentage points to 63.5% for the third quarter of 2024, compared to 71.1% for the third quarter of 2023[198]. - The underlying loss and LAE ratio for the third quarter of 2024 was 5.1%, unchanged from the third quarter of 2023[218]. Catastrophe and Reinsurance - AmCoastal's core catastrophe reinsurance program provides coverage up to approximately $1,260,000,000 for a first occurrence, with a retention of $20,500,000[171]. - The all other perils catastrophe excess of loss agreement provides protection up to $172,000,000 in the aggregate, sufficient for a 1-in-450-year return period[172]. - The total catastrophe losses incurred for the three months ended September 30, 2024, amounted to $4,952,000, with a combined ratio impact of 6.6%[184]. - The company recorded a total of 4 catastrophe events during the three months ended September 30, 2024, compared to 2 events in the same period of 2023[184]. - The quota share agreement with UPC Re provides coverage for all catastrophe perils and attritional losses, effectively reducing retention for catastrophe losses[177]. Investment and Cash Flow - Total cash, cash equivalents, restricted cash, and investments amounted to $571,113,000 as of September 30, 2024, up from $311,874,000 at December 31, 2023[166]. - Cash inflows from operating activities totaled $241,907,000 for the nine months ended September 30, 2024, compared to cash outflows of $184,889,000 for the same period in 2023[237]. - Net purchases of investments totaled $162,893,000 for the nine months ended September 30, 2024, compared to net sales of investments of $263,877,000 during the same period in 2023[238]. - Cash provided by financing activities totaled $11,621,000 for the nine months ended September 30, 2024, compared to $38,000 for the same period in 2023, attributed to proceeds from the issuance of common stock[239]. - As of September 30, 2024, the equity portfolio consists of mutual funds totaling $25,950,000, marking the company's entry into equity securities[242]. Policy and Claims - Policies in-force decreased by 1.7% from 23,162 at September 30, 2023, to 22,775 at September 30, 2024[151]. - Unpaid losses and loss adjustment expenses totaled $173,322,000 as of September 30, 2024, down from $347,738,000 as of December 31, 2023[187]. - The cession rate for a specific treaty is set to decrease from 20% to 15% effective June 1, 2025, to June 1, 2026[178]. - The ceding premiums earned for IIC during the three months ended September 30, 2024, were $85,692,000, compared to $107,513,000 for the same period in 2023[181]. - The percentage of net earned premiums for loss and LAE increased by 0.9 points to 19.7% for the nine months ended September 30, 2024, compared to 18.8% for the same period in 2023[226]. Company Transactions - The company is in the process of selling Interboro Insurance Company (IIC) to Forza Insurance Holdings, with the closing subject to regulatory approvals[148]. - The company entered into a Sale Agreement with Forza to sell 100% of the issued and outstanding stock of IIC, with the closing subject to customary conditions[191]. - The company made capital contributions of $1,265,000 to its reinsurance subsidiary during the nine months ended September 30, 2024[233]. - The company entered into an equity distribution agreement for up to 8,000,000 shares, with 4,373,000 shares sold resulting in net proceeds of approximately $38,190,000[234].

Financial Data and Key Metrics Changes - American Coastal Insurance Corporation reported a net income of $28.1 million for Q3 2024, with core income increasing by $11.4 million year-over-year to $26.9 million due to lower ceded earned premiums from a reduction in gross catastrophe quota share from 40% to 20% [19][20] - Total revenue for the third quarter reached $82.1 million, reflecting significant growth driven by favorable reinsurance pricing [9] - The combined ratio improved to 57.7%, down from 62.7% in the same period last year, indicating strong underwriting performance [20] Business Line Data and Key Metrics Changes - The company experienced an increase in gross premium earned, which grew by $2.4 million to $160.2 million [20] - The company successfully participated in its first-ever takeout from Citizens, adding policies to its condo book and launching a new apartment program [10] Market Data and Key Metrics Changes - The company faced significant hurricane activity, with estimated after-tax losses of approximately $3.8 million from Hurricanes Debby and Helene, and $16.2 million from Hurricane Milton expected in Q4 [8][15] - Hurricane Milton, a Category 3 storm, resulted in an estimated gross loss of between $150 million and $200 million, marking the first event ceded to the core catastrophe excess loss reinsurance program this year [15][16] Company Strategy and Development Direction - The company aims to maintain a strong underwriting profit and expects the new non-cat margin run rate to continue in future quarters [9] - American Coastal is focused on enhancing its liquidity and capitalization to meet policyholder obligations following recent catastrophe losses [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in remaining profitable in Q4 2024 despite increased hurricane activity impacting Florida, noting that comparisons to prior periods are affected by the absence of hurricane losses in 2023 [18] - The company is optimistic about future opportunities and continuing profitable growth [25] Other Important Information - Cash and investments grew by 83.1% to $571.1 million, reflecting a strong liquidity position [22] - Stockholders' equity increased by 53.8% to $259.6 million, driven by strong underwriting results [22] Q&A Session Summary Question: No questions were raised during the Q&A session - The operator noted that there were no questions at this time, and the call was turned back to the CEO for closing remarks [24]