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 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]
United Insurance(ACIC) - 2024 Q4 - Annual Report