American Coastal Insurance Corporation Q2 FY2025 earnings call

• American Coastal grew revenues 26% YOY, pretax earnings 51% YOY, and core return on equity ~42%.
• Florida admitted commercial residential property insurance market has falling rates, but Southeast Florida is firmer. Risk portfolio performs in line with metrics; policies in-force up ~10% since year-end.
• Completed core catastrophe reinsurance program renewal on June 1, 2025, with risk-adjusted cost decrease ~12.4%.
• Kroll upgraded to BBB minus with outlooks positive.
• Net premiums earned increased due to step-downs in gross quota share, partially offset by increased operating costs but net earnings strong.
• Cash and investments up 34.3% since year-end, stockholders' equity up 24% since year-end.

American Coastal Insurance Corporation saw revenues grow 26% year-over-year, pretax earnings 51% year-over-year, and a core return on equity of approximately 42% in the second quarter. Net income was $26.4 million, core income was $26.8 million, an increase of $7.2 million year-over-year. The combined ratio was 60.6%, a decrease of 4.3 points from 2024. Cash and investments grew 34.3% since year-end to $726.2 million, and stockholders' equity increased 24% since year-end to $292.3 million.

• Risk appetite for adding new exposures limited in third quarter; expect to resume growth in fourth quarter if underwriting environment favorable.
• Company continues to be in strong position to execute 2025 initiatives.

• Property insurance rates continue to fall in most Florida territories.
• Ceded premiums subject to potential adjustment based on actual modeled average annual loss vs projected AAL.
• Underwriting environment changes could impact growth of apartment business.

Q: In your investor deck, you talked about Skyway Underwriters and the quote-to-bind ratio. How to think about the market for Skyway Underwriters in context of pricing environment?

A: Cautiously optimistic about growing apartment space in Florida admitted basis. Quote-to-bind ratio has improvement, due to seasonality, gaining experience, and building relationships.

Q: Directionally, is the quote-to-bind ratio going up or down in the second half?

A: Hard to say, depends on underwriting environment; will be opportunistic and thoughtful about growing the business.

Q: Reference to Southeast Florida being a better market, harder than average. Dive into that?

A: Southeast Florida (Tri-County) is peak hurricane risk zone, has more demand than supply of quality carriers; our presence there bodes well, and apartment premium written is not in peak zones, diversifying portfolio.

Q: Relative to employee tax retention credit, received all or still some lingering?

A: All employee retention tax credit refunds received, as confirmed by Svetlana Castle.