Workflow
United Insurance(ACIC) - 2024 Q4 - Earnings Call Transcript
ACICUnited Insurance(ACIC)2025-02-28 00:44
Filings

Financial Data and Key Metrics Changes - American Coastal Insurance Corporation reported a net income of 4.9millionforQ42024,withcoreincomedecreasingby4.9 million for Q4 2024, with core income decreasing by 12 million year-over-year to 6millionduetoa20.536 million due to a 20.53% tax retention from Hurricane Milton [18][19] - Gross premium earned increased by 3.6 million to 162.7million,whilethecombinedratiowas91.9162.7 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 23millionmoreinnetcatastrophelosses[14][15]BusinessLineDataandKeyMetricsChanges−ThecompanysuccessfullylaunchedanewapartmentprograminFlorida,writing19newapartmentriskstotalingapproximately23 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 20millioninpremiumfromtheapartmentbookfor2025,withpotentialforgrowthinsubsequentyears[35]MarketDataandKeyMetricsChanges−Ratesarecontinuingtodecreaseduetofavorabletrendsinlossandreinsurancecosts,withaverageaccountrenewalpricingdownbetween520 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 200million,whichincludesacascadingfeatureformultiplehurricaneevents[11][12]−Thestrategicgoalistoachieveacombinedratioof65beforecatastrophelosses,maintainingprofitabilitydespitepricingchanges[30]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismaboutthefuture,highlightingthesuccessfulabsorptionofHurricaneMilton′slosseswithinasinglequarter′sprofit[7][15]−Thecompanyprojectsanetincomerangeof200 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 90millionfor2025,supportedbystrongliquidityandcapitalization[23]−ManagementnotedthatwhiletheCaliforniafiresmayimpacttheglobalreinsurancemarket,theydonotexpectsignificanteffectsonAmericanCoastal[60][62]OtherImportantInformation−Stockholders′equityincreasedby39.690 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 24milliondividendpaidtoshareholders[22]−ThecompanyreceivedregulatoryapprovaltocompletethesaleofInterboro,whichwilladdapproximately24 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]