United Insurance(ACIC) - 2025 Q2 - Quarterly Results

Press Release Overview ACIC announced Q2 2025 financial results and conference call details, with the CEO highlighting strong performance and market share gains Announcement & Conference Call American Coastal Insurance Corporation (ACIC) announced its financial results for the second quarter ended June 30, 2025, and scheduled a conference call to discuss these results - American Coastal Insurance Corporation (ACIC) reported financial results for its second quarter ended June 30, 2025[2] - The company will host a quarterly conference call at 5:00 P.M. ET on August 6, 2025[1] CEO Commentary CEO B. Bradford Martz expressed satisfaction with a strong quarter, highlighting year-over-year growth in total revenue and underwriting profit, continued market share gains in the commercial residential segment, and a positive outlook reinforced by recent credit rating upgrades - Achieved year-over-year growth in both total revenue and underwriting profit[4] - Continued to gain market share in the commercial residential segment[4] - Received recent credit rating upgrades from Kroll Bond Rating Agency, reflecting a very positive outlook[4] Financial Highlights (Summary Table) ACIC's Q2 2025 financial highlights include strong growth in net income and EPS, alongside key metrics for return on equity and combined ratio Key Financial Metrics ACIC reported strong financial performance for Q2 2025, with significant increases in net premiums earned, total revenue, and consolidated net income, alongside growth in diluted EPS and book value per share Key Financial Metrics (Three Months Ended June 30) | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | Change (%) | | :----------------------------------- | :-------------------- | :-------------------- | :--------- | | Gross premiums written | 228,346 | 229,449 | (0.5)% | | Gross premiums earned | 165,460 | 155,450 | 6.4% | | Net premiums earned | 78,443 | 63,381 | 23.8% | | Total revenue | 86,467 | 68,656 | 25.9% | | Income from continuing operations, net of tax | 28,037 | 19,073 | 47.0% | | Consolidated net income | 26,442 | 19,054 | 38.8% | | Net income available to ACIC stockholders per diluted share (Total) | 0.53 | 0.39 | 35.9% | | Core income | 26,756 | 19,611 | 36.4% | | Core income per diluted share | 0.54 | 0.40 | 35.0% | | Book value per share (as of June 30) | 6.00 | 4.63 | 29.6% | Return on Equity and Core Return on Equity The company's GAAP Return on Equity and Core Return on Equity both decreased for the three and six months ended June 30, 2025, compared to the prior year, despite an increase in net income Return on Equity (Annualized) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Return on equity based on GAAP income from continuing operations, net of tax | 43.6% | 45.6% | 37.1% | 51.1% | | Return on equity based on GAAP net income | 41.1% | 45.6% | 37.1% | 51.0% | | Core return on equity | 41.6% | 46.9% | 36.8% | 52.6% | Combined Ratio and Underlying Ratio ACIC's combined ratio improved for the three months ended June 30, 2025, primarily driven by a significant decrease in the net loss ratio, while the six-month combined ratio saw an increase Combined Ratio (Consolidated) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (pts) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (pts) | | :-------------------------- | :------------------------------- | :------------------------------- | :----------- | :----------------------------- | :----------------------------- | :----------- | | Loss ratio, net | 19.8% | 24.1% | (4.3) | 18.4% | 22.0% | (3.6) | | Expense ratio, net | 40.8% | 40.8% | — | 44.3% | 37.1% | 7.2 | | Combined ratio (CR) | 60.6% | 64.9% | (4.3) | 62.7% | 59.1% | 3.6 | | Underlying combined ratio | 62.2% | 66.4% | (4.2) | 65.0% | 59.7% | 5.3 | Detailed Quarterly Financial Results ACIC's detailed Q2 2025 financial results cover net income, premiums, loss and LAE, acquisition costs, administrative expenses, and reinsurance costs Net Income and EPS Net income for Q2 2025 increased significantly year-over-year, driven by higher gross premiums earned and decreased ceded premiums earned, partially offset by increased policy acquisition costs and a net loss from discontinued operations Net Income and EPS (Three Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Net income ($ in millions) | 26.4 | 19.1 | | Diluted EPS | 0.53 | 0.39 | - Drivers of net income included increased gross premiums earned and decreased ceded premiums earned, leading to an overall increase in revenues[16] - Offset by increased policy acquisition costs and a net loss from discontinued operations of $1.6 million[16] Gross Written Premium Total gross written premium experienced a slight decrease in Q2 2025, primarily due to a reduction in direct premium Gross Written Premium (Three Months Ended June 30) | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | Change ($) | Change (%) | | :---------------------------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Direct premium | 228,373 | 229,449 | (1,076) | (0.5)% | | Assumed premium | (27) | — | (27) | (100.0)% | | Total commercial property gross written premium | 228,346 | 229,449 | (1,103) | (0.5)% | Loss and Loss Adjustment Expenses (LAE) Loss and LAE increased slightly in Q2 2025, but as a percentage of net earned premiums, it decreased significantly, indicating improved underwriting performance, with the underlying gross loss and LAE ratio also showing a decrease Loss and LAE (Three Months Ended June 30) | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | Change ($) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Net loss and LAE | 15,540 | 15,277 | 263 | | % of Net earned premiums | 19.8% | 24.1% | (4.3) pts | | Gross underlying loss and LAE ratio | 10.2% | 10.5% | (0.3) pts | Policy Acquisition Costs Policy acquisition costs increased substantially in Q2 2025, primarily due to a decrease in ceding commission income resulting from reduced quota share reinsurance coverage and an increase in external management fees Policy Acquisition Costs (Three Months Ended June 30) | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | Change ($) | | :---------------------- | :-------------------- | :-------------------- | :--------- | | Policy acquisition costs | 24,257 | 13,939 | 10,318 | - Increase primarily due to a decrease in ceding commission income from reduced quota share reinsurance coverage (from 40% to 20% effective June 1, 2024, and to 15% effective June 1, 2025)[20] - External management fees also increased due to a one percent increase in the management fee and profit share accrual with AmRisc, LLC[20] General and Administrative Expenses General and administrative expenses decreased in Q2 2025, driven by a non-recurring employee retention tax credit refund and reduced spending on professional and consulting services General and Administrative Expenses (Three Months Ended June 30) | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | Change ($) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | General and administrative expenses | 7,778 | 11,938 | (4,160) | - Decrease driven by a non-recurring employee retention tax credit refund received in Q2 2025[21] - External spending for professional and consulting services also decreased[21] Reinsurance Costs The total ceding ratio decreased in Q2 2025, primarily due to a reduction in quota share reinsurance coverage, which was replaced by more cost-effective excess-of-loss coverage Reinsurance Costs as a Percentage of Gross Earned Premium | Category | 2025 | 2024 | | :--------- | :--- | :--- | | Non-at-Risk | (0.3)% | (0.2)% | | Quota Share | (15.1)% | (26.4)% | | All Other | (37.2)% | (32.7)% | | Total Ceding Ratio | (52.6)% | (59.3)% | - Decrease in quota share reinsurance coverage from 40% to 20% (effective June 1, 2024) and further to 15% (effective June 1, 2025) lowered the overall ceding ratio[23] - Replacement excess of loss coverage was more cost-effective than higher quota share coverage[23] Financial Position & Investments ACIC's financial position shows significant growth in investment holdings and an increase in book value per share Investment Portfolio Highlights The company's cash, restricted cash, and investment holdings significantly increased from December 31, 2024, to June 30, 2025, driven by cash flows from operations, with fixed maturities remaining the largest component of investments Cash and Investment Holdings | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | | :------------------------------------------ | :------------------------------ | :-------------------------------- | | Total cash, restricted cash and investment holdings | 726.2 | 540.8 | | Fixed maturities as % of total investments | 78.0% | 82.3% | | Modified duration of fixed maturity investments | 2.2 years | 2.2 years | - Increase driven by cash flows from operations[24] - Holdings consist of U.S. government and agency securities, corporate debt, mutual funds, and investment grade money market instruments[24] Book Value Analysis Book value per common share and underlying book value per common share both increased significantly from December 31, 2024, to June 30, 2025, primarily due to an increase in retained earnings from net income Book Value Per Share | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Book Value Per Common Share | $6.00 | $4.89 | | Underlying Book Value Per Common Share | $6.20 | $5.21 | - Increase driven by an increase in retained earnings as a result of net income for the first half of 2025[26] Discontinued Operations This section details the completed sale of Interboro Insurance Company, including cash proceeds and financial impact Interboro Insurance Company Sale ACIC completed the sale of its subsidiary, Interboro Insurance Company (IIC), on April 1, 2025, for $25.679 million in cash, resulting in a loss on disposal and a loss on IIC's fixed maturity portfolio - Sale of Interboro Insurance Company (IIC) to Forza Insurance Holdings, LLC closed on April 1, 2025[38] - Received cash proceeds totaling $25,679,000 from the sale[38] - Resulted in a loss on disposal of $247,000, net of tax impact, and a $1,348,000 loss, net of tax impact, on IIC's fixed maturity portfolio[38] Definitions of Non-GAAP Measures This section defines ACIC's key non-GAAP financial measures, such as core income, core return on equity, and underlying ratios Core Income (Loss) Core income (loss) is a non-GAAP measure that adjusts net income (loss) by excluding amortization of intangible assets, income/loss from discontinued operations, realized gains/losses, and unrealized gains/losses on equity securities, providing a clearer view of the company's operating performance - Computed by adding amortization (net of tax) to net income (loss) and subtracting income (loss) from discontinued operations, realized gains (losses) on investment portfolio, and unrealized gains (losses) on equity securities (all net of tax)[32] - Excludes items not arising through normal operations or varying independently of operations to evaluate performance[32] Core Return on Equity Core return on equity is a non-GAAP ratio calculated using core income (loss) to evaluate the company's underwriting and operating results, excluding items not necessarily indicative of operating trends - Calculated by dividing core income (loss) for the period by the average stockholders' equity for the trailing twelve months[33] - Excludes income/loss from discontinued operations, non-cash amortization of intangible assets, unrealized gains/losses on equity security investments, and net realized gains/losses on investment portfolio[33] - Used by management to evaluate performance and establish financial targets[33] Underlying Combined Ratio The underlying combined ratio is a non-GAAP measure that subtracts the effect of current year catastrophe losses and prior year reserve development from the combined ratio, aiming to highlight business trends obscured by these volatile items - Computed by subtracting the effect of current year catastrophe losses and prior year development from the combined ratio[35] - Useful to investors and management to highlight trends not obscured by the frequency and severity of catastrophe losses or unexpected loss development on historical reserves[35] Underlying Loss and LAE Underlying loss and LAE is a non-GAAP measure that excludes current year catastrophe losses and prior year reserve development from net loss and LAE, allowing for a more accurate analysis of the company's loss trends - Computed by subtracting the effect of current year catastrophe losses and prior year reserve development from net loss and LAE[36] - Used to analyze loss trends that may be impacted by these significant and volatile items[36] Underlying Book Value Per Common Share Underlying book value per common share is a non-GAAP measure that excludes accumulated other comprehensive income (loss) from common stockholders' equity, providing insight into changes in net worth attributable to management efforts by removing the effect of interest rate fluctuations - Computed by dividing common stockholders' equity (excluding accumulated other comprehensive income (loss)) by total common shares outstanding plus dilutive potential common shares outstanding[37] - Used to identify and analyze changes in net worth attributable to management efforts, eliminating the effect of interest rates[37] Company Information This section provides an overview of ACIC's business, including its focus, partnerships, financial ratings, and conference call details About American Coastal Insurance Corporation American Coastal Insurance Corporation is a property and casualty insurance holding company focused on insuring Condominium and Homeowner Association properties and Apartments in Florida, operating with an exclusive partnership with AmRisc Group and maintaining strong financial stability ratings - Holding company of American Coastal Insurance Company, founded in 2007[30] - Primary business is insuring Condominium and Homeowner Association properties, and Apartments in Florida[30] - Exclusive partnership for distribution of Condominium Association properties in Florida with AmRisc Group[30] - Maintains a Financial Stability Rating of 'A', 'Exceptional' from Demotech, and an 'A-' insurance financial strength rating with a Positive outlook by Kroll[30] Conference Call & Presentation Details Details for the upcoming quarterly conference call and access to the accompanying earnings presentation are provided for investors - Conference Call Date and Time: August 6, 2025 - 5:00 P.M. ET[28] - Webcast available at investors.amcoastal.com or https://event.webcasts.com/starthere.jsp?ei=1727195&tp_key=9825ec9393[28](index=28&type=chunk) - Earnings presentation available on the Company's website at investors.amcoastal.com/Presentations[29] Forward-Looking Statements This section provides a standard disclaimer for forward-looking statements, noting that actual results may differ due to risks and uncertainties Disclaimer The report includes a standard disclaimer regarding forward-looking statements, indicating that these statements are based on estimates and assumptions, and actual results may differ materially due to various risks and uncertainties. The company undertakes no obligation to update these statements - Statements not historical facts are 'forward-looking statements' based on reasonable estimates, assumptions, and plans[39] - Actual results could differ materially if underlying estimates, assumptions, or plans prove inaccurate or if other risks arise[40] - Statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995[40] - The Company undertakes no obligation to update or revise any forward-looking statements[40] Consolidated Financial Statements This section presents ACIC's consolidated financial statements, detailing comprehensive income and balance sheet as of June 30, 2025 Consolidated Statements of Comprehensive Income The consolidated statements of comprehensive income detail the company's revenue, expenses, net income, and other comprehensive income for the three and six months ended June 30, 2025, and 2024, showing overall growth in net income and total comprehensive income Consolidated Statements of Comprehensive Income (Three Months Ended June 30) | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :------------------------------------------ | :-------------------- | :-------------------- | | Gross premiums written | 228,346 | 229,449 | | Net premiums earned | 78,443 | 63,381 | | Total revenue | 86,467 | 68,656 | | Losses and loss adjustment expenses | 15,540 | 15,277 | | Policy acquisition costs | 24,257 | 13,939 | | General and administrative expenses | 7,778 | 11,938 | | Total expenses | 50,294 | 44,580 | | Income from continuing operations, net of tax | 28,037 | 19,073 | | Net income | 26,442 | 19,054 | | Total comprehensive income | 29,484 | 19,248 | | Diluted EPS (Total) | 0.53 | 0.39 | Consolidated Balance Sheets The consolidated balance sheets as of June 30, 2025, and December 31, 2024, show an increase in total assets, primarily driven by higher cash and cash equivalents, and an increase in total stockholders' equity Consolidated Balance Sheets (As of) | Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :------------------------------------------ | :----------------------------- | :------------------------------- | | Total investments | 319,031 | 341,418 | | Total cash, cash equivalents and restricted cash | 407,212 | 199,393 | | Total Assets | 1,346,865 | 1,216,112 | | Unpaid losses and loss adjustment expenses | 219,242 | 322,087 | | Unearned premiums | 383,991 | 285,354 | | Total Liabilities | 1,054,565 | 980,452 | | Total Stockholders' Equity | 292,300 | 235,660 | - Assets held for sale decreased from $73,243 thousand to $0, reflecting the completion of the IIC sale[45] - Common stockholders' equity increased from $235,660 thousand to $292,300 thousand[45]