American Coastal Insurance (ACIC) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $19.1M, up 7.2% from Q2 2023, with $19.1M from continuing operations; core income was $19.6M, down 27.6% year-over-year due to higher ceded earned premiums from a 40% quota share.

• Gross premiums earned increased 3.7% to $155.5M year-over-year, while gross premiums written declined 3.1% to $229.4M; policies in force declined 5.4%.

• Entered definitive agreements to divest Interboro Insurance Company (IIC), with results now classified as discontinued operations.

• Successfully renewed and expanded catastrophe reinsurance, adding $100M in limit and third event coverage, raising the exhaustion point and reducing risk exposure.

• Former subsidiary UPC was placed into receivership in 2023, resulting in a non-recurring gain last year.

Financial highlights

• Net income for Q2 2024 was $19.1M ($0.39/share), up 7.2% from Q2 2023; core income was $19.6M ($0.40/share), down 27.6% year-over-year.

• Gross premiums earned were $155.5M, up 3.7% year-over-year; net premiums earned fell 18.7% to $63.4M due to increased ceded premiums.

• Combined ratio was 64.9%, up 1.8 points from 63.1% in the prior year; underlying combined ratio was 66.4%.

• Book value per share rose 28.5% to $4.63 at June 30, 2024, from $3.61 at year-end 2023.

• Cash and investments totaled $572.6M at June 30, 2024, up 83.6% from year-end 2023.

Outlook and guidance

• FY 2024 net income from continuing operations projected at $85M–$95M, up from $82.2M in FY 2023, with 2H 2024 net income guidance of $42.3M–$52.3M, a 43.8%–77.8% increase year-over-year.

• FY 2024 net premiums earned expected at $285M–$300M, up from $281.9M in FY 2023, indicating 33%–46% revenue growth in H2.

• Underlying combined ratio target remains at 65% despite expectations for lower rates and increased competition.

• Additional $100M in catastrophe reinsurance coverage secured in July 2024, increasing protection for future events.

• Plans to participate in the October 27, 2024, Citizens Commercial Residential Takeout, with regulatory approval received.