ACIC - Earnings call transcript Q4 2024 | AMERICAN COASTAL INSURANCE Corp

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Operator

Greetings, and welcome to the American Coastal Insurance Corporation Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

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

Karin Daly

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

and of Additionally, find website. section the presentation company's in latest of you the the copies earnings can Relations Investor release

not Speaking be that call company, the I'd and Chief to note President facts Executive Martz; this Bennett Bradford historical of today Chief On Financial statements. plans. based are believes behalf made forward-looking will statements that during statements and these assumptions Officer, on and The Officer, Svetlana are Castle. like estimates, reasonable company are

if other from in or However, forward-looking if risks the or statements. underlying implied by uncertainties those expressed the results or estimates, materially the forward-looking arise, plans differ or statements prove inaccurate, actual assumptions could

could found be quarterly report Securities Risk Form Factors recent the materially results the in XX-Q. reports Exchange most the actual Factors Commission that differ U.S. and filings subsequent in Form the XX-K with of and to may on cause section on company's annual

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

turn With to the that, pleasure it's Brad my to over call Martz. Brad?

B. Martz

to on specifics year for XXXX. then it more expectations over turn quarter XXXX welcome Earnings CFO, operational and update Castle, along Call. fourth American for results Quarter and Coastal's Fourth our and an to Hello, strategic Today, I'll with and provide our Lana full our

despite loss to future. and program apartment optimistic starting Hurricane capabilities team not Florida a efforts very distribution In off. out new to and be technological the worked extremely a our are perform our apartments, well more retention already underwrite hard pay these Milton, to to build and launched and successfully in December, I the from profitable, in quarter. continued we Coastal And could fourth American we about remain full

American $X.X spread less today, new has Most zones our of apartment helping risk. totaling new with approximately exposure of is of are most XX and As outside some brand than located risks old premium. improve condos, of that for Coastal our peak million years XX risks written of being

of remain easy has company risk business. objective our business. very part are our primary from our hundreds with is received added our Premium but laser high-quality what distribution that on of submissions generation The new the being as focused partners, we've the is portfolio. Underwriting and all selective to we goal, profit for we

retaining very assumption renewal These business fourth with Citizens to the being quarter, combined to its QX. revenues our growing better count along new in from was quarter-over-quarter. of pleased growth total see with share, resulted expected. our I During account we business quota grow Further, more less policy year-over-year policy using retention were ACIC sequentially metrics, able XX% nearly than in by

favorable us Rates creates in levels underwriting and margins. are to are deductible due but which in grow maintain costs, reinsurance to firm, holding decrease continuing valuations opportunity loss to and our for trends

least pricing Coastal's events new third not has million X/X new American We or potential [ hurricane drop-down XXXX. This that was that range. market, reinsurance protections. year-end, terms attractive and at not from in placed Prior been top bond below company the did because since our a our million and ] available X-year advance of second upsized feature available accomplishments, that layer cascading highlight includes also like Next, time. $XXX of the previously catastrophe for to program the renewal a us at expected priced top this enhancing the to I'd to core our at $XXX the well reinsurance of catastrophe to and in

this obtained have So to we're very grateful robust more coverage.

our modest renewed and other in with tax. successfully against a X, cat all to storms. $X completed terms, XX% as non-hurricane hail such or January tornado was which we AOP before improvement retention million catastrophe That perils $XX.XX million also protects including events, program, At our from approximately reducing

X similar We protects perils program, about our excess reducing also a as which experience with $X had at per reinsurance million just our million February $X.X such non-catastrophe before risk retention from XX% fire, against tax. to

purpose $XX for program, a of the or million designed headline annual Ag real to placement our volatility. the CAT However, reduce is CAT XXXX. probability earnings of to Ag during net catastrophe from reduce catastrophes the The aggregate exceeding was of new the potential the period losses

would Coastal frequency the should any hurricanes the CAT program events and this respond increases, and will it's Ag, History expected feed future unlikely cat and severity of if to earnings. protect losses suggest American but non-hurricane

year the up our catastrophe approximately million losses. was For full incurred X% income despite XXXX, $XXX pretax year-over-year million, more nearly $XX net in having

we've million was The of which Even an year. profit, Hurricane starts guidance which now reiterating are previously year, a given expected target. for profitable, X absorbed on stockholders' company strong earnings equity American on we beginning event implies return annual that $XXX And over XX%, all this with approximately our Milton quarter's of equity. will for in Cat this produced with XXXX single cat of QX, return an inclusive XX.X% earnings our losses previous equity. ACIC's beginning hurricane Coastal and is stated within exceptional that remain

will But losses our should Net around certainty ultimately less and incurred actual more the results provide our transfer risk performance. volatility added drive XXXX. enhancements for

would I to Lana. turn that, with over And Lana? it to now like

Svetlana Castle

Coastal I'll release, earnings regarding our everyone encourage Insurance Thank you, I financial Form for XX-K the a information of more Lana Brad, but update, review company's Castle, hello. press and to and and I'm and investor presentations Officer performance. provide Chief Financial Corporation American

of despite of Milton American Core had reflected full retention earned income pretax million, the of of Page our net As retention decrease to from $XX was quarter $X million. of XX% Milton X catastrophe Hurricane partially the on earnings presentation, XX% from effective June gross a with ceded from lower $X.X profitable quota income Coastal a by share step-down a XX.X% from as X, XXXX. million the offset result year-over-year premiums

presentation the X Page earned premium to million grew $X.X $XXX.X million. shows gross of that

ratio was this Milton drove combined ratio. XX.X%, XX.X% Our Hurricane of

combined year Our XXXX which non-GAAP XX.X%, and ratio excludes our was XX.X% target. losses combined full was prior year line current our development and catastrophe ratio, year underlying XX% in with

Our remains strong. reserve position

related shown of mentioned that million earlier in a due As result operating presentation, increased a costs ceding million. and expenses quarter-over-quarter. $XX.X by decrease on paid commission our acquisition premium growth MGA increased a was income primarily Page to quarter [indiscernible] in X driven policy our shift This increase as the of to $XX.X fees

decrease the expenses increase, or by previously in this line ceded administrative gross successful to Milton, that premiums and earned. contributed by We're an initiatives $X.X in were earnings increased an proud and and increased General costs to premiums erodes also have offset equity expectations event demonstrated million proving increasing catastrophe XX.X%. the be earned mentioned events event, These very quarter our have profitable to despite a not position. with

XXXX. leverage from ratios. XXXX. $XX Book million in dividend increase per by and X highlights. XX.X% liquidity year-end Stockholders' inclusive shows to sheet value High stronger equity of and $X.XX, a company's to shareholders underwriting and January $XXX.X resulted results liquidity million, significant balance $XXX.X the Page Cash increased million, XX.X% to driven in strong strong our investments to XX.X% share reflecting position. is capitalization paid grew improvement

a The on to company growth execute is in initiatives. strong XXXX position its

we As in of previously mentioned, income Brad range and million net guidance and forward-looking the million remains between XXXX. our provided same, project $XX a $XX

Brad to for over call Martz the turn now I'll remarks. closing

B. Martz

the Thank of you, that complete state I'll from we the New mentioning approval York to Lana. sale Interboro. today of received conclude regulatory by have

We have X. a -- April scheduled for closing date date

quarter. past second holding closing kidding buyer we're of with to checklist on all X and million transaction add date But aside, approximately working the for now cash So our our items that company. all $XX update will first the

by honored and lead one American Coastal to in your great want to our interest participation the and into humbled future and and every thank the you for I'm each company. of opportunity

questions. prepared to That remarks completes today's now happy are we our and take call, any for

Operator

coming Gregory Our Peters Raymond question Instructions] is first [Operator from from James.

Charles Peters

expectations pricing said color I see provide because changed go on to course the profitability. how guidance provided you the You through to pricing the just or pricing earned -- you has the how that -- some of slide, can give year? the an some around you've Maybe environment wanted update on is? and evolving outlook this premium us of

B. Martz

to. be Sure. in of your happy Thanks changing I'd expectations costs. is Greg. future Pricing of because reinsurance for loss question,

be it's down, coming that some savings those with expectation able to our to policyholders. we'll on our So pass

that. excited about So we're

in especially of positive of absolutely enacted there do of I Inflation in effect reforms for moderating, reasons number are the a some that. a think litigation. having the that have in market, been -- Florida are terms

still the But a to our why before of a So we're not it's Cat. reasons profitability. XX% there optimistic today. are number about We're combined marketplace targeting going ratio of impact Florida expected

So despite account XX% being margins the and X% are average down year-over-year renewal. intact on between pricing

Charles Peters

And selective. do -- target Obviously, that book. mix the how mind you being to very apartment book about? Do have an you But the you're to of term, your in thinking you mean Okay. of have then want you're longer about you apartment grow business that get? talked you're opportunity I growth, aspirational sort a how much big

B. Martz

characteristics in somewhere Investor is of book. Day little did question. the bit to analysis our we of It's Garden Absolutely. opportunity the writing complexes. our being apartment our and on sort good condo about a physical of million risk between garden-style today the $XXX same $XXX million premium do. We market a And we're back in talk December based that style

owner-occupied. tenant So risk is only worked the we're from us well of characteristics. not versus occupancy, sauce in going has apartment for occupied [indiscernible] to The that stray really secret terms

is risk, liability potential the the like -- we has wind a building fire, We write unchanged. risk fiscal characteristics primary are of that for. which -- loss either. perils price Obviously, experience perspective, from some our obviously otherwise, which don't But differences from in that's

So it is property cover. really just a

XXXX, $XX to year. I may it leading in see premium. apartments. got and exceed larger several expect modest may But it XXXX, yes, And for up We've a will typical with we've book. to much you'll this ramp-up mix I million a we'll strong We just have our to a a think earnings seasonality good X, the off pretty and shift XXXX, not. about have issued, condo impact that. modest then in condos between We goal start. quiet our of is will and quotes stated down, But at June like We're

Charles Peters

question final that important the will renewal coming The Great. I'll an be have reinsurance call just you for up. have

quota reduced a us give from kind preview I you on how your deck, share think -- in the Can XX% talked about you previous how XX%. your what how slide And was year renewal? year. you might pricing that of think a you the have reinsurance your last do structure the did with that losses some changes considering is happen on for renewal to

B. Martz

my do It's pretty I'll best. obviously Sure. early.

of was yesterday as team Monday meeting on Our Bermuda in and some our Tuesday partners reinsurance with well. actually

So we're a keeping goals modest the that and actively working earnings. placement in quarter's similar a can on midyear. for just of I within are tell typical absorbed very you terms our retention is the structure

We'd The up can. we like was the closer the to XXX if the to program of XXX-year push exhaustion according about the expiring to point AIR. program year return period

start both. at be bond limit So a in of from change look cat placed market we and at good to the with that the we're December. a model off But end RMS. both little will challenging the We ARR with

essentially new million market bond that sit is $XXX of this There's in our below of most $XXX cat million $XXX slightly the $XXX year, above but So alongside layer limit some market other and already that sits placing limit the million million the on top. will fund above we're retention. cat done that open and

end finalized our procedures retention be fund cat the which rate-making attachment we will point March. the structure. done not the layering finalize is and and hurricane the And with Florida the that fund, finalizing the of So haven't instrumental will in of their catastrophe yet, until us

successful have to from away that, actively on still but very, we're weeks very having it, we're renewal. on and we a working a few expect So clarity

Charles Peters

Makes results. on Great. sense. Congratulations your

Operator

from Capital. Tieton from Next Dezellem Bill coming is question

William Dezellem

Congratulations a on with a good big gap. quarter

So we're the you I million million? $XXX $XXX the the like questions. in have start proper correctly I'd or of market you're a gross would this referencing And that with being X sure be earned the of to that Would characterization? versus to this couple compared and size make apartment scaling address point that XXXX. of to and million premiums $XXX be that would like reference to market

B. Martz

of of Yes. It We vast with would condos. premium, majority the XXXX $XXX be. that ended million being in-force

point reference appropriate I terms apartments So that's think yes, condos. between in and of the the mix

William Dezellem

had lot opening I you the that And work for helpful. your was business. apartment get That's believe there ready Brad, to of a referenced in remarks,

us be us before, and For company do was of have those you what ready insurance an who to about scenes to this the never that behind of could talk run kind view, required to please?

B. Martz

executive our I you forms Tallahassee, and a developing distribution profit the to rates, issue brief building a rules and bind, then quote, price, summary, approval give regulators Sure. to out filing, those for that and in can entailed able network. our with be and systems really policies and the also establishing policy then first administration risk getting

others, us are with [ -- Specialty on we we So key condo CRC Bridge they AmRisc partnered and the side. and among for have producers ] and are

with very we not territory people well. they well into So foreign us know who them we know know. a We're don't venturing very and

know Florida. identical producers. did with given that steps We know our lot require again, appropriately. before. to know underwrite We've be a We're it this a condo, us this comfortable product. it's substantially to we able We very of it risk, So but underwritten to for

William Dezellem

to is And systems? same back a how about it that? systems? accomplish Was the essentially Or heavy there lift office

B. Martz

experience AmRisc. our mean, No, implementing was a were that forte. and produced complex of team heavy not starting that XXX% substantial really a have but with by been integrating architecture, Historically, with partnership we we lift. it And building was our I very has and AmRisc. business fantastic had pretty and

compete that with to reiterate I again. We have are not to seeking AmRisc.

some producing internally. are stuff But the obviously, of we

company. we so on is that are do third lot done the our are activities to best replicate to that the being a condo of a book had And that the by unaffiliated party with

William Dezellem

front. additional And that question then one on

written look of the of versus If condo you for gross is AmRisc million that work premium $X on the on apartment are you American that doing what or of $X gross incremental the does million the that AmRisc earned underwritten premiums earned now by profitability business to on business, the at front. Coastal level you condo

B. Martz

a there's incremental I huge say wouldn't level.

we're I slightly there we just get still mix different. It's combined think targeting ratio. of is a the how similar

slightly reduced the of will operating we've tenant of for the higher for So for loss doing occupancy in-house. efficiencies costs apartments expenses created trade internal this at with some

we are with good really we are and risk selection depends in has scale on how this and lot that, of do to we obviously, business. our how But much a binding ratios business selection. job XX% today. good do a with underwriters ultimate are is it Risk right how And determinant of write -- profitability we and the of underwriting around

I start good thing. picky, make and some I off way and we'll a I'm very being to think a we're very, that's we're the We'll accordingly. sure pivot along So slow. start. good think But mistakes

with hard It's It's And The the book. XX-plus ratio, will all condo very been if -- underwritten, to book very is thrilled. yes, a be can that it compete might combined a it around -- we be mature But condo years. very the in well similar stable. reality approach I'd be book. is

take think, to is to us objective will comparable. have very it But there. it time, be So get I the

William Dezellem

That's helpful. jumping And reinsurance. to then

time if and may. fires has to had for you if made a headlines. passed What impact. month, the Last So time California the of Coastal any, bit I the now has little American industry do that big implications, see evaluate

B. Martz

market it's ceded may Florida, global My but don't a personal have of California. significant market. the capacity opinion big it that will have impacted on in pretty a this reinsurance loss think I was out But global Obviously, big is impact. it with on small a being a reinsurance impact

it. I think they handle can

address it they separately. for their for But think could pressure and globally will forms all loss. put underwriting a of cat pricing big such capacity is California just on it I because

in So that it Florida, could -- to carriers some have impact expect American much I but don't impact on impact Coastal.

William Dezellem

previously remarks coverage you referenced, all. of to relative then you Would that's And that in significant. how has and renewal, implications you available and please your that sounds the been through to opening for important rewalk not several that kind Okay. your years, X/X

B. Martz

and $XX I a us, providing of this at successful cascades maybe coverage we hasn't new for the for point. years available, it year. limit day when -- to for And to substantially had bond in after purchasing or just mean to is down. it But Sure. a think been the a it's drop that's of for recent to that first I the high-frequency available us, potential were more most in for a down instead third will catastrophe event, and the while, do protection others fixed past really say drops exhaustion years for second us What a been event having superior and us limit at end than and has we've million least event attachment

William Dezellem

on congratulations And Great. the promotion. .

B. Martz

Bill. Thanks,

Operator

the teleconference gentlemen, and end conclude ladies And of We've reached and our question-and-answer webcast. that session. does today's

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

AMERICAN COASTAL INSURANCE (ACIC) 27 Feb 252024 Q4 Earnings call transcript