American Coastal Insurance Corporation Reports Financial Results for Its Fourth Quarter and Year Ended December 31, 2024
Company to Host Quarterly Conference Call at 5:00 P.M. ET on February 27, 2025
The information in this press release should be read in conjunction with an earnings presentation that is available on the Company's website at investors.amcoastal.com/Presentations.
ST. PETERSBURG, Fla., Feb. 27, 2025 (GLOBE NEWSWIRE) -- American Coastal Insurance Corporation (Nasdaq: ACIC) ("ACIC" or the "Company"), a property and casualty insurance holding company, today reported its financial results for the fourth quarter and year ended December 31, 2024.
($ in thousands,
except for per
share data) Three Months Ended Year Ended
December 31, December 31,
------------------------------- -------------------------------
2024 2023 Change 2024 2023 Change
------- ------- --------- ------- ------- ---------
Gross premiums
written $140,739 $128,260 9.7% $647,805 $635,709 1.9%
Gross premiums
earned 162,710 159,094 2.3 638,608 604,683 5.6
Net premiums
earned 73,492 49,141 49.6 273,990 262,060 4.6
Total revenue 79,267 51,251 54.7 296,657 264,400 12.2
Income from
continuing
operations, net
of tax 5,868 17,380 (66.2) 76,319 85,204 (10.4)
Income (loss)
from
discontinued
operations, net
of tax (922) (3,096) 70.2 (601) 224,707 NM
Consolidated net
income $ 4,946 $ 14,284 (65.4)% $ 75,718 $309,911 NM
Net income
available to ACIC
stockholders per
diluted share
Continuing
Operations $ 0.12 $ 0.38 (68.4)% $ 1.55 $ 1.92 (19.3)%
Discontinued
Operations $ (0.02) $ (0.07) 71.4 (0.01) 5.06 NM
------- ------- ------- -------
Total $ 0.10 $ 0.31 (67.7)% $ 1.54 $ 6.98 NM
======= ======= ======= =======
Reconciliation of
net income to
core income:
Plus: Non-cash
amortization
of intangible
assets and
goodwill
impairment $ 608 $ 811 (25.0)% $ 2,639 $ 3,247 (18.7)%
Less: Income
(loss) from
discontinued
operations,
net of tax (922) (3,096) 70.2 (601) 224,707 NM
Less: Net
realized
losses on
investment
portfolio -- (2) NM (124) (6,789) 98.2
Less:
Unrealized
gains on
equity
securities 454 22 NM 1,996 814 NM
Less: Net tax
impact (1) 32 166 (80.7)% 161 1,937 (91.7)
Core income((2) 5,990 18,005 (66.7) 76,925 92,489 (16.8)
Core income per
diluted share
(2) $ 0.12 $ 0.39 (69.2)% $ 1.56 $ 2.08 (25.0)%
Book value per
share $ 4.89 $ 3.61 35.5%
NM = Not Meaningful
(1) In order to reconcile net income to the core income
measures, the Company included the tax impact of all
adjustments using the 21% federal corporate tax rate.
(2) Core income and core income per diluted share, both
of which are measures that are not based on generally
accepted accounting principles ("GAAP"), are reconciled
above to net income and net income per diluted share,
respectively, the most directly comparable GAAP measures.
Additional information regarding non-GAAP financial
measures presented in this press release can be found
in the "Definitions of Non-GAAP Measures" section,
below.
Comments from Chief Executive Officer, B. Bradford Martz:
"American Coastal, our insurance subsidiary, remains a leader in the Florida commercial residential market. The Company remained profitable in the 2024 fourth quarter with a combined ratio of 91.9%, despite the devastating impact and full catastrophe retention from Hurricane Milton, leading to a 67.5% combined ratio for the full year. This underscores the strength of our reinsurance strategy in safeguarding our balance sheet while mitigating the financial impact of catastrophic events.
Furthermore, American Coastal's written premium increased 9.7% from the prior year fourth quarter and renewal retention remained steady. In December, we announced the launch of our apartment program, and, to date, we have received hundreds of high-quality submissions from our six broker partners, affirming the strong demand for American Coastal's products."
Return on Equity and Core Return on Equity
The calculations of the Company's return on equity and core return on equity are shown below.
($ in thousands) Three Months Ended Year Ended
December 31, December 31,
----------------------- -------------------------
2024 2023 2024 2023
------ -------
Income from
continuing
operations, net
of tax $5,868 $17,380 $76,319 $ 85,204
Return on equity
based on GAAP
income from
continuing
operations, net
of tax (1) 10.4% 98.6% 33.7% 120.8%
Income (loss)
from
discontinued
operations, net
of tax $ (922) $(3,096) $ (601) $224,707
Return on equity
based on GAAP
income (loss)
from
discontinued
operations, net
of tax (1) (1.6)% (17.6)% (0.3)% NM
Consolidated net
income $4,946 $14,284 $75,718 $309,911
Return on equity
based on GAAP
net income (1) 8.7% 81.0% 33.5% NM
Core income $5,990 $18,005 $76,925 $ 92,489
Core return on
equity (1)(2) 10.6% 102.1% 34.0% 131.1%
(1) Return on equity for the three months and years ended
December 31, 2024 and 2023 is calculated on an annualized
basis by dividing the net income or core income for
the period by the average stockholders' equity for
the trailing twelve months.
(2) Core return on equity, a measure that is not based
on GAAP, is calculated based on core income, which
is reconciled on the first page of this press release
to net income, the most directly comparable GAAP measure.
Additional information regarding non-GAAP financial
measures presented in this press release can be found
in the "Definitions of Non-GAAP Measures" section
below.
Combined Ratio and Underlying Ratio
The calculations of the Company's combined ratio and underlying combined ratio on a consolidated basis and attributable to Interboro Insurance Company ("IIC"), now captured within discontinued operations, are shown below.
($ in thousands) Three Months Ended Year Ended
December 31, December 31,
---------------------------- ----------------------------
2024 2023 Change 2024 2023 Change
----- ------ ----- ------
Consolidated
Loss ratio, 26.8 7.5
net((1) 40.5% 13.7% pts 25.3% 17.8% pts
Expense ratio, 5.2 (0.9)
net((2) 51.4% 46.2% pts 42.2% 43.1% pts
----- ----- ------ ----- ----- ------
Combined ratio 32.0 6.6
$(CR)$((3) 91.9% 59.9% pts 67.5% 60.9% pts
Effect of
current year
catastrophe 28.6 4.4
losses on CR 27.8% (0.8)% pts 9.3% 4.9% pts
Effect of
prior year
favorable
development 1.2 3.5
on CR (1.8)% (3.0)% pts (1.4)% (4.9)% pts
----- ----- ------ ----- ----- ------
Underlying
combined 2.2 (1.3)
ratio((4) 65.9% 63.7% pts 59.6% 60.9% pts
===== ===== ====== ===== ===== ======
IIC
Loss ratio, (5.1) (10.4)
net((1) 73.4% 78.5% pts 71.2% 81.6% pts
Expense ratio, 8.1 (7.4)
net((2) 47.1% 39.0% pts 43.4% 50.8% pts
----- ----- ------ ----- ----- ------
Combined ratio 3.0 (17.8)
(CR)((3) 120.5% 117.5% pts 114.6% 132.4% pts
Effect of
current year
catastrophe (9.8) (8.5)
losses on CR 0.8% 10.6% pts 4.1% 12.6% pts
Effect of
prior year
favorable
development (13.9) (5.6)
on CR (0.7)% 13.2% pts (3.6)% 2.0% pts
----- ----- ------ ----- ----- ------
Underlying
combined 26.7 (3.7)
ratio((4) 120.4% 93.7% pts 114.1% 117.8% pts
===== ===== ====== ===== ===== ======
(1) Loss ratio, net is calculated as losses and loss adjustment
expenses ("LAE"), net of losses ceded to reinsurers,
relative to net premiums earned.
(2) Expense ratio, net is calculated as the sum of all
operating expenses, less interest expense relative
to net premiums earned.
(3) Combined ratio is the sum of the loss ratio, net and
expense ratio, net.
(4) Underlying combined ratio, a measure that is not based
on GAAP, is reconciled above to the combined ratio,
the most directly comparable GAAP measure. Additional
information regarding non-GAAP financial measures
presented in this press release can be found in the
"Definitions of Non-GAAP Measures" section below.
Combined Ratio Analysis
The calculations of the Company's loss ratios and underlying loss ratios are shown below.
($ in thousands) Three Months Ended Year Ended
December 31, December 31,
--------------------------------- ----------------------------------
2024 2023 Change 2024 2023 Change
------ ------ ------- ------ ------- -------
Loss and LAE $29,794 $ 6,710 $23,084 $69,319 $ 46,678 $22,641
% of Gross
earned 14.1
premiums 18.3% 4.2% pts 10.9% 7.7% 3.2 pts
% of Net
earned 26.8
premiums 40.5% 13.7% pts 25.3% 17.8% 7.5 pts
Less:
Current year
catastrophe
losses $20,405 $ (406) $20,811 $25,561 $ 12,783 $12,778
Prior year
reserve
favorable
development (1,325) (1,482) 157 (3,704) (12,694) 8,990
------ ------ ------ ------ ------- ------
Underlying loss
and LAE (1) $10,714 $ 8,598 $ 2,116 $47,462 $ 46,589 $ 873
% of Gross
earned (0.3)
premiums 6.6% 5.4% 1.2 pts 7.4% 7.7% pts
% of Net
earned (3.0) (0.5)
premiums 14.5% 17.5% pts 17.3% 17.8% pts
(1) Underlying loss and LAE is a non-GAAP financial measure
and is reconciled above to loss and LAE, the most
directly comparable GAAP measure. Additional information
regarding non-GAAP financial measures presented in
this press release can be found in the "Definitions
of Non-GAAP Measures" section, below.
The calculations of the Company's expense ratios are shown below.
($ in thousands) Three Months Ended Year Ended
December 31, December 31,
--------------------------------- --------------------------------------
2024 2023 Change 2024 2023 Change
------ ------ ------- ------- ------- ----------
Policy
acquisition
costs $26,514 $13,138 $13,376 $ 70,990 $ 75,436 $(4,446)
General and
administrative 11,277 9,561 1,716 44,756 37,559 7,197
------ ------ ------ ------- ------- ------
Total Operating
Expenses $37,791 $22,699 $15,092 $115,746 $112,995 $ 2,751
% of Gross
earned
premiums 23.2% 14.3% 8.9 pts 18.1% 18.7% (0.6) pts
% of Net
earned
premiums 51.4% 46.2% 5.2 pts 42.2% 43.1% (0.9) pts
Quarterly Financial Results
Net income for the fourth quarter of 2024 was $4.9 million, or $0.10 per diluted share, compared to $14.3 million, or $0.31 per diluted share, for the fourth quarter of 2023. Of this income, $5.9 million is attributable to continuing operations for the three months ended December 31, 2024, a decrease of $11.5 million from net income of $17.4 million for the same period in 2023. Quarter-over-quarter revenues increased, driven by a decrease in ceded premiums earned, and an increase in gross premiums earned and net investment income. This was offset by increased expenses quarter-over-quarter, driven by an increase in loss and LAE and policy acquisition costs, as described below. The Company's loss from discontinued operations, also contributed to this change in net income, with the loss decreasing $2.2 million quarter-over-quarter, as the deconsolidation of the Company's former subsidiary, United Property and Casualty Insurance Company ("UPC"), is not impacting the Company in 2024.
The Company's total gross written premium increased $12.5 million, or 9.7%, to $140.7 million for the fourth quarter of 2024, from $128.3 million for the fourth quarter of 2023. The breakdown of the quarter-over-quarter changes in both direct written and assumed premiums by state and gross written premium by line of business are shown in the table below.
Three Months Ended December
($ in thousands) 31,
-----------------------------
2024 2023 Change $ Change %
--------- ---------- ---------- ----------
Direct Written
and Assumed
Premium by State
Florida $ 135,661 $ 128,260 $ 7,401 5.8%
New York -- -- -- --
Total direct
written premium
by state 135,661 128,260 7,401 5.8
--------- ---------- ------ ------
Assumed
premium 5,078 -- 5,078 100.0
--------- ---------- ------ ------
Total gross
written premium
by state $ 140,739 $ 128,260 $ 12,479 9.7%
========= ========== ====== ======
Gross Written
Premium by Line
of Business
Commercial
property $ 140,739 $ 128,260 $ 12,479 9.7%
Personal
property -- -- -- --
--------- ---------- ------ ------
Total gross
written premium
by line of
business $ 140,739 $ 128,260 $ 12,479 9.7%
========= ========== ====== ======
Loss and LAE increased by $23.1 million, or 344.8%, to $29.8 million for the fourth quarter of 2024, from $6.7 million for the fourth quarter of 2023. Loss and LAE expense as a percentage of net earned premiums increased 26.8 points to 40.5% for the fourth quarter of 2024, compared to 13.7% for the fourth quarter of 2023. Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for the fourth quarter of 2024 would have been 6.6%, a 1.2 point increase from the fourth quarter of 2023.
Policy acquisition costs increased by $13.4 million, or 102.3%, to $26.5 million for the fourth quarter of 2024, from $13.1 million for the fourth quarter of 2023, primarily due to a decrease in reinsurance commission income attributable to the change in our quota share reinsurance cession rate from 40% to 20% effective June 1, 2024. In addition, our management fees attributable to our commercial property premiums increased as the result of additional premiums written quarter-over-quarter.
General and administrative expenses increased by $1.7 million, or 17.7%, to $11.3 million for the fourth quarter of 2024, from $9.6 million for the fourth quarter of 2023, driven by increased overhead costs, such as amortization of capitalized software, equipment costs and salaries, and external spend for audit, actuarial and legal services.
IIC Quarterly Results Highlights
Net loss attributable to IIC totaled $633 thousand for the fourth quarter of 2024 compared to a net loss of $274 thousand for the fourth quarter of 2023. Drivers of the quarter-over-quarter increase included: an increase in general and administrative expenses of $406 thousand as the result of increased costs such as software licensing costs and salary expenses, offset by increased revenues of $355 thousand, which were driven by an increase in gross earned premiums of $1.4 million, offset by increased ceded premiums earned of $1.0 million.
Annual Financial Results
Net income attributable to the Company for the year ended December 31, 2024 was $75.7 million, or $1.54 per diluted share, compared to net income of $309.9 million, or $6.98 per diluted share, for the year ended December 31, 2023. Drivers of net income during 2024 included increased gross premiums earned partially offset by increased ceded premiums earned. Net investment income also increased, driving additional total revenues year-over-year. This increase in revenue was offset by increased expenses year-over-year, driven by increases in losses and LAE incurred and general and administrative expenses, partially offset by decreased policy acquisition costs. During 2024, the Company experienced a net loss attributable to discontinued operations of $601 thousand, compared to $224.7 million of net income attributable to discontinued operations during 2023, as the deconsolidation of the Company's former subsidiary, UPC, is not impacting the Company in 2024.
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