American Coastal Insurance Corporation (Nasdaq: ACIC) ("ACIC" or
the "Company"), a property and casualty insurance holding company,
today reported its financial results for the second quarter ended
June 30, 2024. On May 9, 2024, the Company entered into a
Stock Purchase Agreement (the "Sale Agreement") with Forza
Insurance Holdings, LLC ("Forza") in which ACIC will sell and Forza
will acquire 100% of the issued and outstanding stock of the
Company's subsidiary, Interboro Insurance Company ("IIC"). As such,
prior year financial results have been recast to reflect the
activity of IIC within discontinued operations.
| ($ in thousands,
except for per share data) |
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
| |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
| Gross premiums written |
|
$ |
229,449 |
|
|
$ |
236,822 |
|
|
(3.1)% |
|
$ |
414,050 |
|
|
$ |
413,463 |
|
|
0.1 |
% |
|
Gross premiums earned |
|
$ |
155,450 |
|
|
$ |
149,837 |
|
|
3.7 |
% |
|
$ |
315,720 |
|
|
$ |
287,812 |
|
|
9.7 |
% |
| Net premiums earned |
|
$ |
63,381 |
|
|
$ |
78,014 |
|
|
(18.8)% |
|
$ |
126,012 |
|
|
$ |
162,655 |
|
|
(22.5)% |
| Total revenue |
|
$ |
68,656 |
|
|
$ |
73,542 |
|
|
(6.6)% |
|
$ |
135,254 |
|
|
$ |
160,617 |
|
|
(15.8)% |
| Income from continuing
operations, net of tax |
|
$ |
19,073 |
|
|
$ |
21,244 |
|
|
(10.2)% |
|
$ |
42,782 |
|
|
$ |
52,809 |
|
|
(19.0)% |
| Income (loss) from
discontinued operations, net of tax |
|
$ |
(19 |
) |
|
$ |
(3,465 |
) |
|
99.5 |
% |
|
$ |
(129 |
) |
|
$ |
232,250 |
|
|
NM |
| Consolidated net income |
|
$ |
19,054 |
|
|
$ |
17,779 |
|
|
7.2 |
% |
|
$ |
42,653 |
|
|
$ |
285,059 |
|
|
(85.0)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income available to ACIC
stockholders per diluted share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations |
|
$ |
0.39 |
|
|
$ |
0.49 |
|
|
(20.4)% |
|
$ |
0.87 |
|
|
$ |
1.21 |
|
|
(28.1)% |
|
Discontinued Operations |
|
$ |
— |
|
|
$ |
(0.08 |
) |
|
100.0 |
% |
|
|
— |
|
|
|
5.31 |
|
|
(100.0)% |
| Total |
|
$ |
0.39 |
|
|
$ |
0.41 |
|
|
(4.9)% |
|
$ |
0.87 |
|
|
$ |
6.52 |
|
|
(86.7)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of net income
to core income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Non-cash amortization of intangible assets and goodwill
impairment |
|
$ |
609 |
|
|
$ |
811 |
|
|
(24.9)% |
|
$ |
1,421 |
|
|
$ |
1,623 |
|
|
(12.4)% |
|
Less: Income (loss) from discontinued operations, net of tax |
|
$ |
(19 |
) |
|
$ |
(3,465 |
) |
|
99.5 |
% |
|
$ |
(129 |
) |
|
$ |
232,250 |
|
|
NM |
|
Less: Net realized losses on investment portfolio |
|
$ |
(121 |
) |
|
$ |
(6,708 |
) |
|
98.2 |
% |
|
$ |
(121 |
) |
|
$ |
(6,791 |
) |
|
98.2 |
% |
|
Less: Unrealized gains (losses) on equity securities |
|
$ |
49 |
|
|
$ |
141 |
|
|
(65.2)% |
|
$ |
(1 |
) |
|
$ |
615 |
|
|
NM |
|
Less: Net tax impact (1) |
|
$ |
143 |
|
|
$ |
1,549 |
|
|
(90.8)% |
|
$ |
324 |
|
|
$ |
1,638 |
|
|
(80.2)% |
| Core income (2) |
|
$ |
19,611 |
|
|
$ |
27,073 |
|
|
(27.6)% |
|
$ |
44,001 |
|
|
$ |
58,970 |
|
|
(25.4)% |
| Core income per diluted
share (2) |
|
$ |
0.40 |
|
|
$ |
0.62 |
|
|
(35.5)% |
|
$ |
0.90 |
|
|
$ |
1.35 |
|
|
(33.3)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Book value per share |
|
|
|
|
|
|
|
$ |
4.63 |
|
|
$ |
2.59 |
|
|
78.8 |
% |
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 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,
Dan Peed: “During the second quarter of 2024, we recorded
yet another profitable period for American Coastal. We also
successfully placed our core catastrophe reinsurance program,
increasing the exhaustion point of the program from the prior year
period and meeting our goal of limiting American Coastal’s
retention to less than one quarter’s pre-tax earnings. Moreover, we
executed on the final phase of our multi-year strategy to phase out
our personal lines operations by signing definitive agreements for
the sale of Interboro Insurance Company. We remain focused on
delivering long-term shareholder value over time and will continue
to explore further opportunities to expand our product offering to
meet the needs of the market.”
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 |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| Income from continuing
operations, net of tax |
|
$ |
19,073 |
|
|
$ |
21,244 |
|
|
$ |
42,782 |
|
|
$ |
52,809 |
|
| Return on equity based on GAAP
income from continuing operations, net of tax (1) |
|
|
45.6 |
% |
|
|
228.9 |
% |
|
|
51.1 |
% |
|
|
284.5 |
% |
| |
|
|
|
|
|
|
|
|
| Income (loss) from
discontinued operations, net of tax |
|
$ |
(19 |
) |
|
$ |
(3,465 |
) |
|
$ |
(129 |
) |
|
$ |
232,250 |
|
| Return on equity based on GAAP
income (loss) from discontinued operations, net of
tax (1) |
|
|
— |
% |
|
(37.3)% |
|
(0.2)% |
|
NM |
| |
|
|
|
|
|
|
|
|
| Consolidated net income
attributable to ACIC |
|
$ |
19,054 |
|
|
$ |
17,779 |
|
|
$ |
42,653 |
|
|
$ |
285,059 |
|
| Return on equity based on GAAP
net income (1) |
|
|
45.6 |
% |
|
|
191.6 |
% |
|
|
51.0 |
% |
|
NM |
| |
|
|
|
|
|
|
|
|
| Core income |
|
$ |
19,611 |
|
|
$ |
27,073 |
|
|
$ |
44,001 |
|
|
$ |
58,970 |
|
| Core return on
equity (1)(2) |
|
|
46.9 |
% |
|
|
291.7 |
% |
|
|
52.6 |
% |
|
|
317.7 |
% |
(1) Return on equity for the three and six
months ended June 30, 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 IIC, captured within discontinued operations, are
shown below.
| ($ in
thousands) |
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
| |
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio, net (1) |
|
24.1 |
% |
|
20.8 |
% |
|
3.3 pts |
|
22.0 |
% |
|
18.4 |
% |
|
3.6 pts |
| Expense ratio,
net (2) |
|
40.8 |
% |
|
42.3 |
% |
|
(1.5) pts |
|
37.1 |
% |
|
42.2 |
% |
|
(5.1) pts |
| Combined ratio
(CR) (3) |
|
64.9 |
% |
|
63.1 |
% |
|
1.8 pts |
|
59.1 |
% |
|
60.6 |
% |
|
(1.5) pts |
|
Effect of current year catastrophe losses on CR |
|
— |
% |
|
7.9 |
% |
|
(7.9) pts |
|
0.2 |
% |
|
5.0 |
% |
|
(4.8) pts |
|
Effect of prior year favorable development on CR |
|
(1.5)% |
|
(6.8)% |
|
5.3 pts |
|
(0.8)% |
|
(5.0)% |
|
4.2 pts |
| Underlying combined
ratio (4) |
|
66.4 |
% |
|
62.0 |
% |
|
4.4 pts |
|
59.7 |
% |
|
60.6 |
% |
|
(0.9) pts |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
IIC |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss ratio, net (1) |
|
91.4 |
% |
|
90.6 |
% |
|
0.8 pts |
|
74.3 |
% |
|
91.6 |
% |
|
(17.3) pts |
| Expense ratio,
net (2) |
|
37.4 |
% |
|
46.9 |
% |
|
(9.5) pts |
|
45.7 |
% |
|
60.4 |
% |
|
(14.7) pts |
| Combined ratio
(CR) (3) |
|
128.8 |
% |
|
137.5 |
% |
|
(8.7) pts |
|
120.0 |
% |
|
152.0 |
% |
|
(32.0) pts |
|
Effect of current year catastrophe losses on CR |
|
2.5 |
% |
|
6.6 |
% |
|
(4.1) pts |
|
5.6 |
% |
|
10.9 |
% |
|
(5.3) pts |
|
Effect of prior year favorable development on CR |
|
(1.7)% |
|
3.6 |
% |
|
(5.3) pts |
|
(3.9)% |
|
(2.7)% |
|
(1.2) pts |
| Underlying combined
ratio (4) |
|
128.0 |
% |
|
127.3 |
% |
|
0.7 pts |
|
118.3 |
% |
|
143.8 |
% |
|
(25.5) 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 |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
Loss and LAE |
|
$ |
15,277 |
|
|
$ |
16,245 |
|
|
$ |
(968 |
) |
|
$ |
27,751 |
|
|
$ |
30,146 |
|
|
$ |
(2,395 |
) |
|
% of Gross earned premiums |
|
|
9.8 |
% |
|
|
10.8 |
% |
|
(1.0) pts |
|
|
8.8 |
% |
|
|
10.5 |
% |
|
(1.7) pts |
|
% of Net earned premiums |
|
|
24.1 |
% |
|
|
20.8 |
% |
|
3.3 pts |
|
|
22.0 |
% |
|
|
18.4 |
% |
|
3.6 pts |
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year catastrophe losses |
|
$ |
(8 |
) |
|
$ |
6,201 |
|
|
$ |
(6,209 |
) |
|
$ |
203 |
|
|
$ |
8,298 |
|
|
$ |
(8,095 |
) |
|
Prior year reserve favorable development |
|
|
(968 |
) |
|
|
(5,334 |
) |
|
|
4,366 |
|
|
|
(1,022 |
) |
|
|
(8,107 |
) |
|
|
7,085 |
|
| Underlying loss and
LAE (1) |
|
$ |
16,253 |
|
|
$ |
15,378 |
|
|
$ |
875 |
|
|
$ |
28,570 |
|
|
$ |
29,955 |
|
|
$ |
(1,385 |
) |
|
% of Gross earned premiums |
|
|
10.5 |
% |
|
|
10.3 |
% |
|
0.2 pts |
|
|
9.0 |
% |
|
|
10.4 |
% |
|
(1.4) pts |
|
% of Net earned premiums |
|
|
25.6 |
% |
|
|
19.7 |
% |
|
5.9 pts |
|
|
22.7 |
% |
|
|
18.4 |
% |
|
4.3 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 |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
Policy acquisition costs |
|
$ |
13,939 |
|
|
$ |
23,526 |
|
|
$ |
(9,587 |
) |
|
$ |
23,534 |
|
|
$ |
48,692 |
|
|
$ |
(25,158 |
) |
| Operating and
underwriting |
|
|
2,040 |
|
|
|
3,046 |
|
|
|
(1,006 |
) |
|
|
4,377 |
|
|
|
4,881 |
|
|
|
(504 |
) |
| General and
administrative |
|
|
9,898 |
|
|
|
6,414 |
|
|
|
3,484 |
|
|
|
18,813 |
|
|
|
15,025 |
|
|
|
3,788 |
|
| Total Operating Expenses |
|
$ |
25,877 |
|
|
$ |
32,986 |
|
|
$ |
(7,109 |
) |
|
$ |
46,724 |
|
|
$ |
68,598 |
|
|
$ |
(21,874 |
) |
|
% of Gross earned premiums |
|
|
16.6 |
% |
|
|
22.0 |
% |
|
(5.4) pts |
|
|
14.8 |
% |
|
|
23.8 |
% |
|
(9.0) pts |
|
% of Net earned premiums |
|
|
40.8 |
% |
|
|
42.3 |
% |
|
(1.5) pts |
|
|
37.1 |
% |
|
|
42.2 |
% |
|
(5.1) pts |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Financial Results
Net income for the second quarter of 2024 was
$19.1 million, or $0.39 per diluted share, compared to $17.8
million, or $0.41 per diluted share, for the second quarter of
2023. Of this income, $19.1 million is attributable to continuing
operations for the three months ended June 30, 2024, a
decrease of $2.1 million from net income of $21.2 million for the
same period in 2023. Quarter-over-quarter revenues decreased,
driven by an increase in ceded premiums earned, partially offset by
an increase in gross premiums earned. This was offset by lower
expenses quarter-over-quarter, driven by a decrease in policy
acquisition costs and operating expenses, partially offset by
increased administrative expenses. In addition, the Company's
provision for income taxes increased quarter-over-quarter. The
continuing operations changes were partially offset by a decrease
in the Company's loss from discontinued operations, which decreased
$3.5 million quarter-over-quarter, as the deconsolidation of UPC is
not impacting the Company in 2024.
The Company's total gross written premium
decreased by $7.4 million, or 3.1%, to $229.4 million for the
second quarter of 2024, from $236.8 million for the second quarter
of 2023. The breakdown of the quarter-over-quarter changes in both
direct written and assumed premiums by state and gross written
premium by line of business are shown in the table below.
| ($ in thousands) |
|
Three Months Ended June 30, |
|
|
|
|
| |
|
|
2024 |
|
|
|
2023 |
|
|
Change $ |
|
Change % |
| Direct Written and
Assumed Premium by State |
|
|
|
|
|
|
|
|
|
Florida |
|
$ |
229,449 |
|
|
$ |
236,766 |
|
|
$ |
(7,317 |
) |
|
(3.1)% |
|
New York |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
| Total direct written premium
by state |
|
|
229,449 |
|
|
|
236,766 |
|
|
|
(7,317 |
) |
|
(3.1 |
) |
|
Assumed premium |
|
|
— |
|
|
|
56 |
|
|
|
(56 |
) |
|
(100.0 |
) |
| Total gross written premium by
state |
|
$ |
229,449 |
|
|
$ |
236,822 |
|
|
$ |
(7,373 |
) |
|
(3.1)% |
| |
|
|
|
|
|
|
|
|
| Gross Written Premium
by Line of Business |
|
|
|
|
|
|
|
|
|
Commercial property |
|
$ |
229,449 |
|
|
$ |
236,822 |
|
|
$ |
(7,373 |
) |
|
(3.1)% |
|
Personal property |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
| Total gross written premium by
line of business |
|
$ |
229,449 |
|
|
$ |
236,822 |
|
|
$ |
(7,373 |
) |
|
(3.1)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE decreased by $900 thousand, or
5.6%, to $15.3 million for the second quarter of 2024, from $16.2
million for the second quarter of 2023. Loss and LAE expense as a
percentage of net earned premiums increased 3.3 points to 24.1% for
the second quarter of 2024, compared to 20.8% for the second
quarter of 2023. Excluding catastrophe losses and reserve
development, the Company's gross underlying loss and LAE ratio for
the second quarter of 2024 would have been 10.5%, an increase of
0.2 points from 10.3% during the second quarter of 2023.
Policy acquisition costs decreased by $9.6
million, or 40.9%, to $13.9 million for the second quarter of
2024, from $23.5 million for the second quarter of 2023,
primarily due to an increase in reinsurance ceding commission
income, driven by our commercial lines quota share coverage
effective June 1, 2023. In addition, agent commission expense
decreased, driven by the collection of agent commissions that
previously had a valuation allowance booked against them.
Operating and underwriting expenses decreased by
$1.0 million, or 33.3%, to $2.0 million for the second quarter of
2024, from $3.0 million for the second quarter of 2023, driven by
decreased underwriting costs and decreased overhead costs such as
rent, utilities and computer software and services.
General and administrative expenses increased by
$3.5 million, or 54.7%, to $9.9 million for the second quarter of
2024, from $6.4 million for the second quarter of 2023, driven by
increased external service costs, such as legal and audit fees. In
addition, salary related expenses increased
quarter-over-quarter.
IIC Results Highlights
Net losses attributable to IIC totaled $1.0
million for the second quarter of 2024 compared to $900 thousand
for the second quarter of 2023. Drivers of the quarter-over-quarter
increase included: an increase in loss and LAE incurred of $1.3
million due to increased current year non-catastrophe losses,
partially offset by increased revenue of $1.2 million driven by
both an increase in gross premiums earned of $300 thousand, as a
result of rate increases and decrease in ceded premiums earned of
$900 thousand driven by changes made to the reinsurance program in
2024. All other IIC expenses remained relatively flat
quarter-over-quarter.
Reinsurance Costs as a Percentage of
Gross Earned Premium
Reinsurance costs as a percentage of gross
earned premium in the second quarter of 2024 and 2023 were as
follows:
|
|
2024 |
|
2023 |
| Non-at-Risk |
(0.2)% |
|
(0.4)% |
| Quota Share |
(26.4)% |
|
(15.2)% |
| All Other |
(32.7)% |
|
(32.3)% |
|
Total Ceding Ratio |
(59.3)% |
|
(47.9)% |
| |
|
|
|
Ceded premiums earned related to the Company's
catastrophe excess of loss contracts remained relatively flat. The
Company's utilization of quota share reinsurance coverage resulted
in less excess of loss coverage needed for the 2023-2024
catastrophe year. The cost associated with this reduction in
necessary coverage was offset by rate increases on catastrophe
excess of loss coverage for the 2023-2024 catastrophe year. The
utilization of quota share reinsurance coverage, as described
below, increased the Company's ceding ratio overall.
Reinsurance costs as a percentage of gross
earned premium in the second quarter of 2024 and 2023 for IIC,
captured within discontinued operations, were as follows:
| |
IIC |
|
|
2024 |
|
2023 |
| Non-at-Risk |
(2.6)% |
|
(2.9)% |
|
Quota Share |
— |
% |
|
— |
% |
| All Other |
(23.8)% |
|
(35.4)% |
|
Total Ceding Ratio |
(26.4)% |
|
(38.3)% |
| |
|
|
|
Investment Portfolio
Highlights
The Company's cash, restricted cash and
investment holdings increased from $311.9 million at December
31, 2023 to $572.6 million at June 30, 2024. This
increase is driven by our cash flows from operations which have
been positive during the first half of 2024. The Company's cash and
investment holdings consist of investments in U.S. government and
agency securities, corporate debt and investment grade money market
instruments. Fixed maturities represented approximately 85.0% of
total investments at June 30, 2024 compared to 89.4% of total
investments at December 31, 2023. The Company's fixed maturity
investments had a modified duration of 2.4 years at June 30,
2024, compared to 3.4 years at December 31, 2023.
Book Value Analysis
Book value per common share increased 28.3% from
$3.61 at December 31, 2023, to $4.63 at June 30, 2024.
Underlying book value per common share increased 26.7% from $3.97
at December 31, 2023 to $5.03 at June 30, 2024. An
increase in the Company's retained earnings as the result of net
income in the first six months of 2024, drove the increase in the
Company's book value per share. As shown in the table below,
removing the effect of AOCI, caused by unfavorable capital market
conditions, increases the Company's book value per common share at
June 30, 2024.
|
($ in thousands, except for share and per share data) |
|
|
|
|
|
|
|
|
| |
|
June 30, 2024 |
|
December 31, 2023 |
| Book Value per
Share |
|
|
|
|
| Numerator: |
|
|
|
|
|
Common stockholders' equity |
|
$ |
223,073 |
|
|
$ |
168,765 |
|
| Denominator: |
|
|
|
|
|
Total Shares Outstanding |
|
|
48,132,370 |
|
|
|
46,777,006 |
|
| Book Value Per Common
Share |
|
$ |
4.63 |
|
|
$ |
3.61 |
|
| |
|
|
|
|
| Book Value per Share,
Excluding the Impact of Accumulated Other Comprehensive Income
(AOCI) |
|
|
|
|
| Numerator: |
|
|
|
|
|
Common stockholders' equity |
|
$ |
223,073 |
|
|
$ |
168,765 |
|
|
Less: Accumulated other comprehensive loss |
|
|
(19,149 |
) |
|
|
(17,137 |
) |
| Stockholders' Equity,
excluding AOCI |
|
$ |
242,222 |
|
|
$ |
185,902 |
|
| Denominator: |
|
|
|
|
|
Total Shares Outstanding |
|
|
48,132,370 |
|
|
|
46,777,006 |
|
|
Underlying Book Value Per Common Share (1) |
|
$ |
5.03 |
|
|
$ |
3.97 |
|
(1) Underlying book value per common share is a
non-GAAP financial measure and is reconciled above to book value
per common share, 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.
Conference Call Details
|
Date and Time: |
August 7, 2024 - 5:00 P.M. ET |
| Participant
Dial-In: |
(United States): 877-445-9755 |
| |
(International): 201-493-6744 |
| Webcast: |
To listen to the live webcast, please go to
https://investors.amcoastal.com and click on the conference call
link at the top of the page or go to:
https://event.webcasts.com/starthere.jsp?ei=1678464&tp_key=7e632cd730 |
| |
An archive of the webcast will be available for a limited period of
time thereafter. |
|
Presentation: |
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. |
| |
|
About American Coastal Insurance
Corporation
American Coastal Insurance Corporation
(amcoastal.com) is the holding company of the insurance carrier,
American Coastal Insurance Company, which was founded in 2007 for
the purpose of insuring Condominium and Homeowner Association
properties, and apartments in the state of Florida. American
Coastal Insurance Company has an exclusive partnership for
distribution of Condominium Association properties in the state of
Florida with AmRisc Group (amriscgroup.com), one of the largest
Managing General Agents in the country specializing in
hurricane-exposed properties. American Coastal Insurance Company
has earned a Financial Stability Rating of “A”, Exceptional’ from
Demotech, and maintains an “A-” insurance financial strength rating
with a Stable outlook by Kroll. ACIC maintains a ‘BB+’ issuer
rating with a Stable outlook by Kroll.
| Contact
Information: |
| Alexander Baty |
| Vice President, Finance &
Investor Relations, American Coastal Insurance Corp. |
|
investorrelations@amcoastal.com |
| (727) 425-8076 |
| |
| Karin Daly |
| Investor Relations, Vice
President, The Equity Group |
| kdaly@equityny.com |
| (212) 836-9623 |
| |
Definitions of Non-GAAP
Measures
The Company believes that investors'
understanding of ACIC's performance is enhanced by the Company's
disclosure of the following non-GAAP measures. The Company's
methods for calculating these measures may differ from those used
by other companies and therefore comparability may be limited.
Net income (loss) excluding the effects
of amortization of intangible assets, income (loss) from
discontinued operations, realized gains (losses) and unrealized
gains (losses) on equity securities, net of tax (core income
(loss)) is a non-GAAP measure that is computed by adding
amortization, net of tax, to net income (loss) and subtracting
income (loss) from discontinued operations, net of tax, realized
gains (losses) on the Company's investment portfolio, net of tax,
and unrealized gains (losses) on the Company's equity securities,
net of tax, from net income (loss). Amortization expense is related
to the amortization of intangible assets acquired, including
goodwill, through mergers and, therefore, the expense does not
arise through normal operations. Investment portfolio gains
(losses) and unrealized equity security gains (losses) vary
independent of the Company's operations. The Company believes it is
useful for investors to evaluate these components both separately
and in the aggregate when reviewing the Company's performance. The
most directly comparable GAAP measure is net income (loss). The
core income (loss) measure should not be considered a substitute
for net income (loss) and does not reflect the overall
profitability of the Company's business.
Core return on equity is a
non-GAAP ratio calculated using non-GAAP measures. It is calculated
by dividing the core income (loss) for the period by the average
stockholders’ equity for the trailing twelve months (or one quarter
of such average, in the case of quarterly periods). Core income
(loss) is an after-tax non-GAAP measure that is calculated by
excluding from net income (loss) the effect of income (loss) from
discontinued operations, net of tax, non-cash amortization of
intangible assets, including goodwill, unrealized gains or losses
on the Company's equity security investments and net realized gains
or losses on the Company's investment portfolio. In the opinion of
the Company’s management, core income (loss), core income (loss)
per share and core return on equity are meaningful indicators to
investors of the Company's underwriting and operating results,
since the excluded items are not necessarily indicative of
operating trends. Internally, the Company’s management uses core
income (loss), core income (loss) per share and core return on
equity to evaluate performance against historical results and
establish financial targets on a consolidated basis. The most
directly comparable GAAP measure is return on equity. The core
return on equity measure should not be considered a substitute for
return on equity and does not reflect the overall profitability of
the Company's business.
Combined ratio excluding the effects of
current year catastrophe losses and prior year reserve development
(underlying combined ratio) is a non-GAAP measure, that is
computed by subtracting the effect of current year catastrophe
losses and prior year development from the combined ratio. The
Company believes that this ratio is useful to investors, and it is
used by management to highlight the trends in the Company's
business that may be obscured by current year catastrophe losses
and prior year development. Current year catastrophe losses cause
the Company's loss trends to vary significantly between periods as
a result of their frequency of occurrence and severity and can have
a significant impact on the combined ratio. Prior year development
is caused by unexpected loss development on historical reserves.
The Company believes it is useful for investors to evaluate these
components both separately and in the aggregate when reviewing the
Company's performance. The most directly comparable GAAP measure is
the combined ratio. The underlying combined ratio should not be
considered as a substitute for the combined ratio and does not
reflect the overall profitability of the Company's business.
Net loss and LAE excluding the effects
of current year catastrophe losses and prior year reserve
development (underlying loss and LAE) is a non-GAAP
measure that is computed by subtracting the effect of current year
catastrophe losses and prior year reserve development from net loss
and LAE. The Company uses underlying loss and LAE figures to
analyze the Company's loss trends that may be impacted by current
year catastrophe losses and prior year development on the Company's
reserves. As discussed previously, these two items can have a
significant impact on the Company's loss trends in a given period.
The Company believes it is useful for investors to evaluate these
components both separately and in the aggregate when reviewing the
Company's performance. The most directly comparable GAAP measure is
net loss and LAE. The underlying loss and LAE measure should not be
considered a substitute for net loss and LAE and does not reflect
the overall profitability of the Company's business.
Book value per common share, excluding
the impact of accumulated other comprehensive loss (underlying book
value per common share), is a non-GAAP measure that is
computed by dividing common stockholders' equity after excluding
accumulated other comprehensive income (loss), by total common
shares outstanding plus dilutive potential common shares
outstanding. The Company uses the trend in book value per common
share, excluding the impact of accumulated other comprehensive
income (loss), in conjunction with book value per common share to
identify and analyze the change in net worth attributable to
management efforts between periods. The Company believes this
non-GAAP measure is useful to investors because it eliminates the
effect of interest rates that can fluctuate significantly from
period to period and are generally driven by economic and financial
factors that are not influenced by management. Book value per
common share is the most directly comparable GAAP measure. Book
value per common share, excluding the impact of accumulated other
comprehensive income (loss), should not be considered a substitute
for book value per common share and does not reflect the recorded
net worth of the Company's business.
Discontinued Operations
On May 9, 2024, the Company entered into the
Sale Agreement with Forza in which ACIC will sell and Forza will
acquire 100% of the issued and outstanding stock of the Company's
subsidiary, IIC. In addition, on February 27, 2023, the Florida
Department of Financial Services was appointed as receiver of the
Company's former subsidiary, United Property & Casualty
Insurance Company ("UPC"). As such, prior year financial results
and Consolidated Balance Sheet components have been reclassified to
reflect continuing and discontinued operations appropriately.
Forward-Looking Statements
Statements made in this press release, or on the
conference call identified above, and otherwise, that are not
historical facts are “forward-looking statements”. The Company
believes these statements are based on reasonable estimates,
assumptions and plans. However, if the estimates, assumptions, or
plans underlying the forward-looking statements prove inaccurate or
if other risks or uncertainties arise, actual results could differ
materially from those expressed in, or implied by, the
forward-looking statements. These statements are made subject to
the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements do not relate
strictly to historical or current facts and may be identified by
their use of words such as “may,” “will,” “expect,” "endeavor,"
"project," “believe,” "plan," “anticipate,” “intend,” “could,”
“would,” “estimate” or “continue” or the negative variations
thereof or comparable terminology. Factors that could cause actual
results to differ materially may be found in the Company's filings
with the U.S. Securities and Exchange Commission, in the “Risk
Factors” section in the Company's most recent Annual Report on Form
10-K and subsequent Quarterly Reports on Form 10-Q. Forward-looking
statements speak only as of the date on which they are made, and,
except as required by applicable law, the Company undertakes no
obligation to update or revise any forward-looking statements.
| |
|
Consolidated Statements of Comprehensive
Income |
|
In thousands, except share and per share amounts |
| |
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
June 30, |
|
June 30, |
|
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| REVENUE: |
|
|
|
|
|
|
|
|
| Gross premiums written |
|
$ |
229,449 |
|
|
$ |
236,822 |
|
|
$ |
414,050 |
|
|
$ |
413,463 |
|
| Change in gross unearned
premiums |
|
|
(73,999 |
) |
|
|
(86,985 |
) |
|
|
(98,330 |
) |
|
|
(125,651 |
) |
|
Gross premiums earned |
|
|
155,450 |
|
|
|
149,837 |
|
|
|
315,720 |
|
|
|
287,812 |
|
|
Ceded premiums earned |
|
|
(92,069 |
) |
|
|
(71,823 |
) |
|
|
(189,708 |
) |
|
|
(125,157 |
) |
|
Net premiums earned |
|
|
63,381 |
|
|
|
78,014 |
|
|
|
126,012 |
|
|
|
162,655 |
|
|
Net investment income |
|
|
5,347 |
|
|
|
2,095 |
|
|
|
9,364 |
|
|
|
4,138 |
|
|
Net realized investment losses |
|
|
(121 |
) |
|
|
(6,708 |
) |
|
|
(121 |
) |
|
|
(6,791 |
) |
|
Net unrealized gains (losses) on equity securities |
|
|
49 |
|
|
|
141 |
|
|
|
(1 |
) |
|
|
615 |
|
|
Total revenues |
|
$ |
68,656 |
|
|
$ |
73,542 |
|
|
$ |
135,254 |
|
|
$ |
160,617 |
|
| EXPENSES: |
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
|
15,277 |
|
|
|
16,245 |
|
|
|
27,751 |
|
|
|
30,146 |
|
|
Policy acquisition costs |
|
|
13,939 |
|
|
|
23,526 |
|
|
|
23,534 |
|
|
|
48,692 |
|
|
Operating expenses |
|
|
2,040 |
|
|
|
3,046 |
|
|
|
4,377 |
|
|
|
4,881 |
|
|
General and administrative expenses |
|
|
9,898 |
|
|
|
6,414 |
|
|
|
18,813 |
|
|
|
15,025 |
|
|
Interest expense |
|
|
3,426 |
|
|
|
2,719 |
|
|
|
6,145 |
|
|
|
5,438 |
|
|
Total expenses |
|
|
44,580 |
|
|
|
51,950 |
|
|
|
80,620 |
|
|
|
104,182 |
|
| Income before other
income |
|
|
24,076 |
|
|
|
21,592 |
|
|
|
54,634 |
|
|
|
56,435 |
|
|
Other income |
|
|
811 |
|
|
|
806 |
|
|
|
1,621 |
|
|
|
1,394 |
|
| Income before income
taxes |
|
|
24,887 |
|
|
|
22,398 |
|
|
|
56,255 |
|
|
|
57,829 |
|
|
Provision for income taxes |
|
|
5,814 |
|
|
|
1,154 |
|
|
|
13,473 |
|
|
|
5,020 |
|
| Income from continuing
operations, net of tax |
|
$ |
19,073 |
|
|
$ |
21,244 |
|
|
$ |
42,782 |
|
|
$ |
52,809 |
|
| Income (loss) from
discontinued operations, net of tax |
|
|
(19 |
) |
|
|
(3,465 |
) |
|
|
(129 |
) |
|
|
232,250 |
|
| Net income |
|
$ |
19,054 |
|
|
$ |
17,779 |
|
|
$ |
42,653 |
|
|
$ |
285,059 |
|
| OTHER COMPREHENSIVE INCOME
(LOSS): |
|
|
|
|
|
|
|
|
|
Change in net unrealized gains (losses) on investments |
|
|
73 |
|
|
|
(2,168 |
) |
|
|
(125 |
) |
|
|
2,063 |
|
|
Reclassification adjustment for net realized investment losses |
|
|
121 |
|
|
|
6,725 |
|
|
|
121 |
|
|
|
6,808 |
|
|
Income tax benefit related to items of other comprehensive income
(loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Total comprehensive
income |
|
$ |
19,248 |
|
|
$ |
22,336 |
|
|
$ |
42,649 |
|
|
$ |
293,930 |
|
| |
|
|
|
|
|
|
|
|
| Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
|
Basic |
|
|
47,821,115 |
|
|
|
43,229,416 |
|
|
|
47,572,236 |
|
|
|
43,178,758 |
|
|
Diluted |
|
|
49,398,463 |
|
|
|
43,805,217 |
|
|
|
49,162,233 |
|
|
|
43,690,435 |
|
| |
|
|
|
|
|
|
|
|
| Earnings available to ACIC
common stockholders per share |
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.40 |
|
|
$ |
0.49 |
|
|
$ |
0.90 |
|
|
$ |
1.22 |
|
|
Discontinued operations |
|
|
— |
|
|
|
(0.08 |
) |
|
|
— |
|
|
|
5.37 |
|
|
Total |
|
$ |
0.40 |
|
|
$ |
0.41 |
|
|
$ |
0.90 |
|
|
$ |
6.59 |
|
|
Diluted |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.39 |
|
|
$ |
0.49 |
|
|
$ |
0.87 |
|
|
$ |
1.21 |
|
|
Discontinued operations |
|
|
— |
|
|
|
(0.08 |
) |
|
|
— |
|
|
|
5.31 |
|
|
Total |
|
$ |
0.39 |
|
|
$ |
0.41 |
|
|
$ |
0.87 |
|
|
$ |
6.52 |
|
| |
|
|
|
|
|
|
|
|
| Dividends declared per
share |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Consolidated Balance Sheets |
|
In thousands, except share amounts |
|
|
| |
|
June 30, 2024 |
|
December 31, 2023 |
| ASSETS |
|
|
|
|
|
Investments, at fair value: |
|
|
|
|
|
Fixed maturities, available-for-sale |
|
$ |
264,446 |
|
|
$ |
138,387 |
|
|
Equity securities |
|
|
15,429 |
|
|
|
— |
|
|
Other investments |
|
|
31,116 |
|
|
|
16,487 |
|
|
Total investments |
|
$ |
310,991 |
|
|
$ |
154,874 |
|
|
Cash and cash equivalents |
|
|
229,431 |
|
|
|
138,930 |
|
|
Restricted cash |
|
|
32,158 |
|
|
|
18,070 |
|
|
Accrued investment income |
|
|
4,722 |
|
|
|
1,767 |
|
|
Property and equipment, net |
|
|
9,096 |
|
|
|
3,658 |
|
|
Premiums receivable, net |
|
|
52,873 |
|
|
|
45,924 |
|
|
Reinsurance recoverable on paid and unpaid losses |
|
|
206,436 |
|
|
|
340,820 |
|
|
Ceded unearned premiums |
|
|
260,852 |
|
|
|
155,301 |
|
|
Goodwill |
|
|
59,476 |
|
|
|
59,476 |
|
|
Deferred policy acquisition costs |
|
|
51,423 |
|
|
|
21,149 |
|
|
Intangible assets, net |
|
|
7,127 |
|
|
|
8,548 |
|
|
Other assets |
|
|
12,995 |
|
|
|
36,718 |
|
|
Assets held for sale |
|
|
73,705 |
|
|
|
77,143 |
|
|
Total Assets |
|
$ |
1,311,285 |
|
|
$ |
1,062,378 |
|
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Unpaid losses and loss adjustment expenses |
|
$ |
211,433 |
|
|
$ |
347,738 |
|
|
Unearned premiums |
|
|
374,487 |
|
|
|
276,157 |
|
|
Reinsurance payable on premiums |
|
|
226,508 |
|
|
|
— |
|
|
Payments outstanding |
|
|
580 |
|
|
|
706 |
|
|
Accounts payable and accrued expenses |
|
|
75,530 |
|
|
|
74,783 |
|
|
Operating lease liability |
|
|
67 |
|
|
|
739 |
|
|
Other liabilities |
|
|
713 |
|
|
|
672 |
|
|
Notes payable, net |
|
|
148,854 |
|
|
|
148,688 |
|
|
Liabilities held for sale |
|
|
50,040 |
|
|
|
44,130 |
|
|
Total Liabilities |
|
$ |
1,088,212 |
|
|
$ |
893,613 |
|
|
Commitments and contingencies |
|
|
|
|
|
Stockholders' Equity: |
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 authorized; none
issued or outstanding |
|
|
— |
|
|
|
— |
|
|
Common stock, $0.0001 par value; 100,000,000 shares authorized;
48,344,453 and 46,989,089 issued, respectively; 48,132,370 and
46,777,006 outstanding, respectively |
|
|
5 |
|
|
|
5 |
|
|
Additional paid-in capital |
|
|
436,383 |
|
|
|
423,717 |
|
|
Treasury shares, at cost; 212,083 shares |
|
|
(431 |
) |
|
|
(431 |
) |
|
Accumulated other comprehensive loss |
|
|
(19,149 |
) |
|
|
(17,137 |
) |
|
Retained earnings (deficit) |
|
|
(193,735 |
) |
|
|
(237,389 |
) |
|
Total Stockholders' Equity |
|
$ |
223,073 |
|
|
$ |
168,765 |
|
|
Total Liabilities and Stockholders' Equity |
|
$ |
1,311,285 |
|
|
$ |
1,062,378 |
|
American Coastal Insurance (NASDAQ:ACIC)
Historical Stock Chart
Von Okt 2024 bis Nov 2024
American Coastal Insurance (NASDAQ:ACIC)
Historical Stock Chart
Von Nov 2023 bis Nov 2024
