ACIC - Earnings call 4 2023 | AMERICAN COASTAL INSURANCE Corp

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and welcome to the American Coastal Insurance Corporation's 2023 Fourth Quarter and Full Year Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Karin Daly, Vice President of the Equity Group and American Coastal's Investor Relations representative. Please go ahead, Karin.

Karin Daly

Thank you, Kevin, and good afternoon, everyone. has www.yamcoastal.com. this Corporation its available Insurance at website Coastal also broadcast made on American will available replay A be the days call. following for approximately XX

release Investors can presentations website. you find of latest Additionally, copies in of section earnings the the company's the and

Chairman will Board the Daniel be Officer, Martz. and Bennett and President, Speaking Bradford Executive R. of today Chief Peed;

statements historical behalf are company this call during of statements that made The estimates, reasonable the On on statements. are based company, facts not assumptions note believes forward-looking I'd these like to plans. are that and

results Factors assumptions However, if or plans these results those materially the Risk statements forward-looking the prove report recent -- in cause statements. the or on differ arise with filings Form or could estimates, could risks most be company's section Securities or may and other in underlying materially Commission that from by U.S. XX-K. expressed the if differ actual annual of their inaccurate the actual Exchange found Factors in implied uncertainties forward-looking to

statements. speak of to and law, the made which are by they required any as except company as statements revise forward-looking or undertakes no the only update date obligation on Forward-looking applicable

to With to the that, Mr. may turn it's you Daniel call my Dan, over Peed. pleasure begin.

Robert Peed

and Brad fourth from earnings it the Martz turn Insurance Hello, Corporation. results will year-to-date, you call. Karin. I to and results. of thank on of and expand quarter us the Coastal American who Thanks, an and on I'm for over Chairman our fourth joining financial CEO Dan Peed, quarter provide will then overview

core annualized million, on is our Commercial quarter XX fourth the return $XX.X to over income income segment. attributable a The $XXX primarily which a improvement is at core XXX.X% $XX.X million year-over-year. December is for which Lines million, is equity. income core Net Our is

net year-to-date 'XX XXXX. in XX.X% ratio loss was the Consolidated ratio net XX.X% quarter for fourth versus consolidated the same XX.X%. The is loss in period

last net continues from XX.X% XX.X% the trend the ratio XX.X% The year. to fourth XXX.X% ratio net consolidated respectively, down downwards, respectively. fourth quarter XX.X% XXX.X% in year-over-year, and and is from combined year-to-date, down XX.X%, year-to-date, expense The and XX.X% quarter in and

in Lines of year-over-year. and smooth year-to-date, the $X.X earnings XXXX Commercial Commercial attributable to Lines is to the by the the fourth continuing of but impact underperformed segment XXXX. compared Personal the Pretax $XX.X for totaled quarter fourth Lines quarter quarter fourth the outperform million for to million segment

holds fourth underlying underlying year-over-year The Lines improving XXXX for to XXXX. XX.X combined in the year-to-date fourth from quarter Commercial same XX.X% true The improvement ratio points with XX.X% quarter XX.X year-to-date XXXX. Commercial in the to improved points Lines ratio, XX.X% combined

bottom policy as the Earnings reduced plan were administrative positively implemented for underwriting impacting also and in and reduction acquisition, management achieved expense all improved its and expenses XXXX, general line.

to a Lines opportunities Am the XXXX in to lines Coastal results Florida the and create Am balance Coastal's creates policyholders to shareholder Commercial into writer going identify protect and its solid products largest residential Citizens needs reinsurance Florida sheet expand behind meet position XXXX in unique approach, its to conservative continue our Almay value. and position opportunities commercial of

pretax of to XXXX. quarter in on fourth compares XXXX the but experienced Lines. million $X.X million a to in favorably fourth quarter Moving pretax the loss This of Personal a that of segment loss $XX.X

$XXX.X shortly. income of diluted million per all, to We explore and our diversification net of $X.XX Interboro liquidity XXXX, definitive continue to sale and generate with Interboro In or will confirmatory diligence December buyer opportunities The business. company for XX, attributable unlock year share. documents the expect due sign the to for capital ended the potential was

market approximately date underwriting, hard especially conditions. capacity creates stated, expanding for as raised offering which, during million to have these at-the-market Our specialty $XX we

segment to in increased and at Commercial XX, As common XXXX, our Period-over-period, of September from book Lines XX.X% a segment. Personal share at result of the $X.XX our per $X.XX the XX, improvement December our performance value strong XXXX.

to expertise. results commercial a well-established because expect network to leader its Florida unmatched While Am to of competition residential deliver in space distribution increasing, commercial the reputation is I advantage continue extensive in Coastal and be lines competitive will value continues underwriting this and drive shareholders.

turn Martz. to With Brad I'll that, over it

Bennett Martz

XX-Q I'm press and results our Thank review release, you, presentations company's earnings and happy financial including Dan, and for and performance. amendments more the everyone information to Forms hello. review and encourage XX-K, investor regarding to

with favorable the with We post over reduction highlighted XXXX operating momentum Underwriting results more year, record and led forward combined expense a positive to Dan environment, our for past external in actions taken entered XXXX. core business. ACIC

the pleased nonrecurring impacted reinsurance While costs. performance in included software impairment million roughly were of pretax was capitalized charges fourth related million $X.X and with our million, to earnings overall which quarter, $X.X of $X of we

May actually reinsurance reinsurance Page reduce in will accounting reinsurance over million X in XXXX XX, thing color reinsurance, million incurred time. $X.X net voluntary limit savings a $X upfront expected exchange The commuted. QX in of the is of our approximately the the for benefit it program earnings some presentation costs from replace to in and costs is a incurred because charge which provides The net QX remaining which on catastrophe the charge are QX to QX after the X be core million bonus. costs The incurred $XX.X occurred by cat cost for trading of offset of good to period XXXX, will related XXXX. to a we from additional ACIC commutation over and savings no-claims the January economic to

was this our the of Catastrophe year. the driver losses. and lack of same meaningful ratio any $XXX,XXX in in $XX.X last catastrophe compared in quarter combined the pretax were period improvement earnings the losses just big to current million A quarter

continue in the year year-end. about $XXX,XXX development loss current We see reserves feel reserve quarter good favorable prior at to with overall our and

was current XX% for this reserve ratio in year year. We points XX%, XX.X% full target underlying prior XXXX underlying stated previously and the for obviously period development, so our in was XX over with losses we're goal. pleased hitting improved catastrophe that our combined and Excluding the combined the ratio to

Page of Lines million loss down by of expense pretax of $XX.X X a Commercial at the reduced breaks $X.X ratio [ whole million company, and our in from Personal Lines with to Lines from year-to-date primarily our earnings $X.X profit million over pretax ] which is profit our results of a segment expense. presentation combined brought XX.X%. by with This Commercial $XXX million interest

the more of towards slated continue on ACIC get But year. Personal to results will Lines of the still XXXX. we to is to As work finalizing That Interboro drag overall continues that mentioned, sale end definitive now be and a occur minor to this expect year. sale this completing agreements Dan towards to means done

annualized did renewal approval March regulatory an business and we with $X.X business XX York impact However, million. New for in a receive X for February of rate XX.X% effective expected increase,

current So that expected to is in help obviously period. improve results Lines the Personal

total highlights, invested Page $X.XX underlying just Unrealized earnings stockholders' under approximately $X.XX of provides million to balance or $X.XX. $XXX.X XX% portfolio and assets an value increasing our $XX.X share sheet X our equity of million cash with including of assets of bond $X.X a share. losses indicated $XXX presentation or million book totaled billion. on And a

overall a our boost nice Dan capitalization liquidity and mentioned, quarter. our the As program, to announced our ATM during previously delivered at-the-market, unrestricted or

capital raised million another approximately now net ATM issued program than $XX.X we originally expenses. and The raising impact of anticipated, dilutive Accordingly, has year-end, selling common was American now sold the has expenses. ATM been another paused, ATM of the but its and with As net this not Coastal sold Subsequent time. million ACIC shares, additional million shares, line is in at the of expectations. year-end, under X.X of the more anticipating original raising new stock to million company our X $XX.X sales

our are we question opportunity raised everyone $XX.X grow And The placed over already expected risk with February inception on to excess in capital of tremendous some as net well layers previously, this the going a AOP stated the time more to is our from we XX%. our on wants deployed earned million return modeled retaining excess our a see was with of of our program and program at support underwriting per know results. capital X reinsurance date. X to direct January do to premiums We've to to reinsurance that big by ATM we've cat what captive

the are catastrophe However, most core much at of this proceeds year. being for of bigger reserved a X June renewal

relative and but at successful May we to reinsurance improvements It's renewal June expect we in renewals are the XX. evidence to upcoming core premature year overall is to good at can very at this it work X, point X/X June X hard pricing at and and on that protection expiring significant the on to program comment see our at catastrophe

could carriers, competitive underwriting current underwriting profitability and this, meet will offset conditions our environment. in believe exploring and our Citizens, capital of achieving year Page pressures potentially of capitalize takeout the and potential as risk-adjusted look by To the returns term. remain X assumption our also anticipated evolves. We on any environment the summarizes near from business supplement this above-average on opportunities. the cycle such to underwriting view earnings growth organic we assuming for market as current other sense our very criteria in that presentation make favorable Market

we residential on remain Rate earned valuation moderating exposures which line XX% premiums healthy with and of ended up what will very We premiums Even out, truly grow in flattening year-over-year. XX% some trends but are XX in confident relative levels XXXX year. to premiums to down and pricing business. color bottom current our our and ability XX Pages provides drive direct our in our expense commercial XXXX, presentation net this earnings additional and trends. loss with exposures is written are

in our both residential to we Am change American success exceptional their admitted our space because thank and would in congratulations like the and buyer of to we to Risk very to seller a XXXX you Am business Am company. significant also give the foreseeable the our future. not and sincere Risk in commercial to the Coastal with relationship Risk strong Florida finally, any contributions offer at our partners changes of Risk huge exclusive parent to a expect ownership for Am And do and continues enjoy

the please operator, questions. open that, for With line

Operator

James. is Instructions] [Operator from First coming from Greg question Raymond Peters

Charles Peters

specialty in is segment your of mentioned about also terms and what in So in us Commercial what 'XX? pricing compare your hinted Can your competition Lines Dan, increased how in specialty might comments, happened it. or you Brad, of 'XX with a business. rates sense you for your in give you expectation that

Robert Peed

a Sure, competition would leave rate accounts being due We be year that any to the to Citizens had so mostly policy. We rate, Dan. for probably to is if expensive competition going about an see and the the less where increase. just main just little last a company due Citizens

We Coastal volume products, a sees. are different few tend a small that have that seen to to typically also number American carriers be introducing but the compared they

to So course as that I the of as months. were we will of course REIT, just increases, getting continue between would from that be XXXX far last decelerating expect they the expect probably XX% increases get the the over rate we XXXX be and up that XX% will we the average we And rates. over will rate XX through

Charles Peters

or be expectation for 'XX sort volatility what you want I other understanding expected benchmark sort and guess range if you of made just think should will of think enterprise the underlying was margin be, you you performance a I Wondering target what a us underlying guess, for of the us target 'XX. of venture combined Okay. for ratio for the there's think what the that ratio give the cat. around comment, give to was combined some

Bennett Martz

years still what's Brad. this create we cat. that Well, reserve the so comparison is targeting cat happening prior today. volatility But so reserve it's a of we're apples-to-apples measurement. the of It allow of combined and an us year with Greg, and XX% Yes, purpose think and development, the does as metric, underlying with excludes that's associated to regardless good

variable think how could costs we June favorably with reinsurance I on to costs but see our unfavorably quota I associated related outlook renewal the our we that's wait June that execute, need the up that X. the or at big changing as well reset share X how to think change reinsurance end and depending as fixed

Charles Peters

missing was guess, pivoting of How sort now situation. across enterprise? to time it should the something. peers, ATM you the we you look total If elevated capital debt and maybe relative think used. I'm the the sheet pausing, the I guess And then being, closing I for think, your about capital you're I but word balance capital leverage Okay. to to to adequacy your looks ratio,

right just a RBC high on But your some views think running you capital. around I is maybe your bit perspective provide can now. probably little

Bennett Martz

Certainly.

correct. You're

On we're with capital needs. capital where the of statutory Insurance ended our Company to the year side, American most which is sensitive XXX%. risk-based Coastal ratio a

like decreasing us potential that. to So a Obviously, but offset great that back profitability. reinsurance decrease with premium job feel taking be risk done by could more we we've a cause see managing net underwriting will in it increased spend RBC,

way out, it we've think all I the on capital the year. modeled we're set So for

of in personal Obviously, and do we more are we with big it's line great in formally were length that additional the ATM I risk, exit some for feverishly as the and to we think retain reason liquidity to have dispose surplus of which the asset the on to we Interboro, a RBC, lines capital somewhat selling think to now, we right it. unlock working went But we're the want to by disappointed is policyholder on taking if shape time business. and time I

Charles Peters

Got back take-out it. Citizens. specialty That's opportunities pivot personal I commercial a side. the pivoting correct? from on into guess comments residential one to assume focused Is just that side. of that's the I about your back not other

Bennett Martz

apologize That is and But think like rate happens do is clarification. time And way for to accounts business that to that. good one differential get correct. it. that's time. there from That a I to I we'd Yes, few to okay. yes, due that's Citizens But we've to back. some lost good admitting

be we're there from risks should available, to underwriting opportunities our we'll evaluating it. time sense criteria with when makes that the and familiar it And we the meet consider time. So are

Charles Peters

it. Got the Well, congratulations on air.

Robert Peed

Thank you.

Operator

Arian Gupta Eagle Private coming Next Limited. from Asset question from Eye is

Unknown Analyst

results Congratulations a segment. the specialty questions. couple for of on the I commercial just had

income question. guess, have first guess side any the the there business? been on fee I that's I So of updates my

Robert Peed

that. This Dan. is I'll take

feel different working build something it imminently mentioned term, all are along, We that short is some wouldn't on kind we something I that of just think be as is I time. the But opportunities. we have that like would in over

working yet. are there fee opportunities, on opportunity nothing is but still fee We to there some business report

Unknown Analyst

Sure. the sense. be, opportunities And where I for in are that guys was non-admitted any there on growth? wondering, there market makes I might market potentially also you opportunities E&S That the see mean,

Robert Peed

earned in for and written the premium look of thing Brad perspective in is able more mentioned of very of growth part the the due written if cooking. net from a just large and to pretty our standpoint [indiscernible], the we that like opportunity of be capital our at own writing that that to more we from eating one significant our gross at there's Well, Obviously, level feeded premiums and hit the net premiums we're percentage you our last Obviously, net may been has a written that perspective. business year. have beginning capital numbers,

the could number, number. we the as on think gross but year, while top it this opportunity And be be written premium net that's significant it don't on significant one for won't So growth. premium

So some some opportunity. are the like, other we that's for really to that reinsurance but nothing right exploring or of example, one that, from opportunities business side or we're E&S opportunities And prepared in discuss now. potentially,

Unknown Analyst

Sure. sense. makes quick quota shares. question on just last That one the And

of sort clarity being And give this up sort new of So for expected to this, go down you that ends any us year? year? could if what on like of the is this that sort for

Robert Peed

in course really to June did years. then quota the and XX%, to go that numbers, XX%, we stated to we X of down we X would specific expect the a XX% have X So provide of eventually X% that share we can't but at in any past 'XX,

going be X/X/XX to down say would that quota expectation X/X I is So to share the X/X for would that our into go by component.

Operator

Bill Dezellem Next Tieton question coming from is from Capital.

William Dezellem

all, market, of to you as of reinsurance June would the view relates please your First discuss specifically renewal? it your

Bennett Martz

some $XXX of or [indiscernible] press a all about we to release cat, January limit. details We million placement the did of did, AOP the cat of of issue certainly. screen Yes, X, the it's

we or catastrophe and midyear. limit. did see decrease limit, it's done significantly just more risk-adjusted smaller rate on But we focused program reinsurance a under that XX% hurricane our than So did buy

towards, do available. feedback we got that The So capacity remaining my to more X/X is X/X we both guiding capacity see we're available. hungry. They're expect Reinsurers comments some was and at are disciplined.

So and we mindful have be cognizant of to that.

terms over former pricing disposal But United program the company of the as was last have year's still distressed, it the uncertainty capacity well definitely of impacted We hanging the our available other as the & affiliate Property Casualty. and and to And cloud us regarding conditions. right?

now that, negotiating support mirror, that reinsurance rearview their book the and playing a immensely. got overall we've see respect sure. we much in and for with I further business long we a of think ball better So our company in We But away we've position. them strong is we're that proven we're very partners need

we're So to is and you months. the opportunity I terms, drive for coming in details do at a more think bit market annual have we'll this moment, cedence in a the little an while

William Dezellem

And a what your for are most then secondarily, things important see you you've walk you highlighted through, Would strategic specifically, that please as XXXX initiatives? doing. you of number

Bennett Martz

growth. profitability. that's Sure. earnings never X, mean It always Number growth. That line That's developing two growth. doesn't is is change. Number to for going one job top underwriting means earnings pathways

deploying form strong reinsurance, So can whether or capital. the of capital fee earn intelligently, that in assumed can come direct income. the in come It to of it's form on returns

complete to say, continue support and the to runoff operations. discontinued third, of The would I is

the that getting we sold can. in So there, of of notably and our couple continuing things will a have on list way Services support Interboro, Financial to we Department most still any to-do

bench lastly, strength. And it's then building

new on on [ And I'm getting and and how joins that, likely officers, we She we're new and executive position will in that known in I this Castle title long Chief quarter. today, very with Financial excited. a think be and within of Risk Chief She operate, X she's listening and us also learning a that January we Beth self-explanatory. our naming new our has created from a I've call here speed She's up joined showed and named her Compliance us as about serious promoted participating we everyone very, time, Officer ] pretty to Officer. hire. is but next team. terrific

went risk management be going what at compliance forward. in on and to company increased Given through XXXX, emphasis there's we the going

are those X. So top my

Operator

of question-and-answer We've the reached like turn our end further back to Dan session. for closing comments. floor I'd to over any

Robert Peed

Okay. time and time your company again. and Thanks, your that on our everybody, interest our And this call. ends your Thanks for on call.

Operator

does teleconference webcast. That you. and conclude Thank today's

disconnect may You and you for time, at participation have thank wonderful your a day. We this today. your line

AMERICAN COASTAL INSURANCE (ACIC) 29 Feb 242023 Q4 Earnings call transcript