Financial Data and Key Metrics Changes - American Coastal Insurance reported a net income of $21.3 million, with core income at $20.7 million, a decrease of $3.7 million year-over-year due to increased policy acquisition costs [10] - The company achieved a combined ratio of 65%, aligning with its target, while the non-GAAP underlying combined ratio was 68.2% [10] - Cash and investments grew by 5.2% to $540.8 million, reflecting a strong liquidity position [11] - Stockholders' equity increased by 10.7% to $260.9 million, driven by first-quarter income, with book value per share rising to $5.4, a 10.4% increase from year-end 2024 [12] Business Line Data and Key Metrics Changes - Policies in force grew approximately 6% since year-end, with gross premiums written increasing by over 7% compared to the same period last year [4][10] - The underwriting environment for newer, well-maintained, low-rise, garden-style condos in Florida remains healthy and competitive, with the company open to new business [5] Market Data and Key Metrics Changes - The Florida condominium market is facing challenges related to declining affordability and resale values, but these issues are not significantly impacting the company's business [4][5] - The company is focused on maintaining competitive rates while managing risk, particularly in the Tri County area [19] Company Strategy and Development Direction - The company is increasing its internal quota share from 30% to 45%, which will feed more business to its captive, enhancing its balance sheet [39] - The company is cautiously expanding into the apartment building market, averaging about 15 policies per month, with an average premium of over $100,000 [28][29] - Management emphasizes a selective approach to growth in the apartment initiative, aiming for underwriting returns similar to those achieved in the condo segment [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong reserve position and the effectiveness of its catastrophe reinsurance program, which is expected to increase aggregate protection significantly [11][12] - The company is adopting a more conservative view of hurricane risk, leading to increased protection purchases this year [7] Other Important Information - The company reported a risk-adjusted reinsurance rate decrease of approximately 12%, consistent with the rate decreases shared with policyholders [9] - The company is currently finalizing a new top layer of its catastrophe reinsurance program, which is expected to enhance its coverage [6] Q&A Session Summary Question: Can you explain the rate trend and deductible chart? - Management clarified that the average account rate has been stable, with a decrease from record high levels, but remains healthy at approximately $0.97 as of March 31 [16][18] Question: What has changed regarding the reinsurance program? - Management noted a significant reduction in reinstatement costs from approximately $13 million last year to about $5 million this year, and improvements in coverage for third events [22][23][25] Question: How is the apartment building initiative progressing? - Management reported averaging about 15 policies per month in the apartment initiative, with a focus on maintaining underwriting standards and risk characteristics [28][30] Question: What are the plans for quota sharing going forward? - Management indicated satisfaction with the current quota share structure and mentioned the possibility of further reductions depending on reinsurance costs and availability [37][39] Question: Can you discuss the Amrisk management fee changes? - Management explained that a profit-sharing component was added to the Amrisk agreement, along with a 1% increase in the total percentage of fees, primarily passed on to producers [40][41]
United Insurance(ACIC) - 2025 Q1 - Earnings Call Transcript