AMERICAN COASTAL INSURANCE Corp Q1 FY2025 earnings call

• Hitted target combined ratio of 65% and core return on equity over 34%.
• Policies in-force grew ~6% since year-end, with premiums in-force as of March 31, 2025, totaling ~$661 million.
• Gross premiums written increased by over 7% compared to the same period last year, with new business growth and 88% renewal account retention.
• Florida condominium market: Not impacted significantly as target market is newer, well-maintained low-rise garden style condos further inland.
• Core catastrophe reinsurance program renewal: 100% placed except for layer five, expected first event limit up ~16% to ~$1.35 billion, aggregate protection up ~32% year-over-year.
• First event retention expected to increase from ~$20.5 million to $29.75 million, but similar as percentage of stockholders’ equity.
• Cash investments grew 5.2% to $540.8 million, stockholders’ equity increased 10.7% to $260.9 million.
• Apartment building initiative: Averaged ~15 policies bound per month in first four months of 2025, average premium ~$100,000, focused on central and northeast Florida, competitive market.

American Coastal demonstrated a strong first quarter with net income of $21.3 million and core income of $20.7 million. Net premium earned grew 9% to $68.3 million. The combined ratio was 65%, and core return on equity was over 34%. Policies in-force grew approximately 6% since year-end to $661 million, and gross premiums written increased by over 7% compared to the same period last year. Cash investments grew 5.2% to $540.8 million, and stockholders’ equity increased 10.7% to $260.9 million.

• Reinsurance program expected first event limit up ~16% to ~$1.35 billion, aggregate protection up ~32% year-over-year.
• First event retention expected to increase from ~$20.5 million to $29.75 million.
• Risk-adjusted reinsurance rate decrease estimated at ~12%, sharing rate decreases with policyholders.
• Apartment building initiative expected to contribute to portfolio diversification with attractive underwriting returns.

• Market conditions in Florida condominium market, though not significantly impacting business, but competition and underwriting risks exist.
• Reinsurance availability and cost, as quota share and other reinsurance terms need to be carefully considered.
• Changing hurricane risk models and their impact on reinsurance program structuring.

Q: Can you explain the rate trend and wind deductible chart?

A: The red line is average account rate, relatively stable since third quarter 2024, with real decrease from record high levels. Average wind deductible is watched carefully, with focus on maintaining 5% wind deductibles in Tri-County area.

Q: About reinsurance third event cover and reinstatement costs?

A: Reinstatement premium exposure reduced from ~$13 million last year to ~$5 million this year. Third event cover was more limited last year, this year enhanced with cat bond and improved aggregate coverage.

Q: Thoughts on quota sharing going ahead?

A: Quota share stepped down from 20% to 15% in 2025, considering cost and availability of reinsurance, internal quota share increased from 30% to 45%.

Q: Discuss AmRisc management fee change?

A: Profit-sharing component added, total percentage of management fee increased 1%, with most of increase passed on to producers.