Company to Host Quarterly Conference Call at
5:00 P.M. ET on February 29, 2024
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.
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, 2023.
($ in thousands, except for per share
data)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
Change
2023
2022
Change
Gross premiums written
$
135,163
$
119,144
13.4
%
$
670,043
$
572,343
17.1
%
Gross premiums earned
$
167,529
$
144,793
15.7
%
$
635,964
$
535,369
18.8
%
Net premiums earned
$
55,583
$
76,842
(27.7
)%
$
281,884
$
269,346
4.7
%
Total revenues
$
58,214
$
74,697
(22.1
)%
$
286,543
$
269,791
6.2
%
Income (loss) from continuing operations,
net of tax
$
17,106
$
1,026
NM
$
82,198
$
(40,004
)
NM
Income (loss) from discontinued
operations, net of tax
$
(2,822
)
$
(297,796
)
99.1
%
$
227,713
$
(429,962
)
NM
Consolidated net income (loss)
attributable to ACIC
$
14,284
$
(296,770
)
NM
$
309,911
$
(469,855
)
NM
Net income (loss) available to ACIC
stockholders per diluted share
Continuing Operations
$
0.37
$
0.02
NM
$
1.85
$
(0.93
)
NM
Discontinued Operations
$
(0.06
)
$
(6.91
)
99.1
%
5.13
(9.98
)
NM
Total
$
0.31
$
(6.89
)
NM
$
6.98
$
(10.91
)
NM
Reconciliation of net income (loss) to
core income (loss):
Plus: Non-cash amortization of intangible
assets and goodwill impairment (1)
$
811
$
812
(0.1
)%
$
3,247
$
13,404
(75.8
)%
Less: Income (loss) from discontinued
operations, net of tax
$
(2,822
)
$
(297,796
)
99.1
%
$
227,713
$
(429,962
)
NM
Less: Net realized losses on investment
portfolio
$
(2
)
$
(6,439
)
NM
$
(6,808
)
$
(6,483
)
5.0
%
Less: Unrealized gains (losses) on equity
securities
$
22
$
2,090
NM
$
814
$
(1,968
)
NM
Less: Net tax impact (2)
$
166
$
1,084
84.7
%
$
1,941
$
4,590
(57.7
)%
Core income (loss) (3)
$
17,731
$
5,103
NM
$
89,498
$
(22,628
)
NM
Core income (loss) per diluted share
(3)
$
0.39
$
0.12
NM
$
2.02
$
(0.53
)
NM
Book value per share
$
3.61
$
(4.21
)
185.7
%
NM = Not Meaningful
(1)
For the year ended December 31,
2022, non-cash amortization of intangible assets included $10.2
million related to the impairment of goodwill attributable to the
Company's personal lines operating segment.
(2)
In order to reconcile net income
(loss) to the core income (loss) measures, the Company included the
tax impact of all adjustments using the 21% federal corporate tax
rate.
(3)
Core income (loss), and core
income (loss) per diluted share, both of which are measures that
are not based on GAAP, are reconciled above to net income (loss)
and net income (loss) 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:
“We are pleased to deliver continued positive results to our
shareholders. Our continuing operations reported core earnings of
$17.7 million and $89.5 million for the 2023 fourth quarter and
full year, respectively, leading to an annualized core return on
equity of 100.6%. Our underlying book value per share was $3.97 at
December 31, 2023.”
“Although our personal lines segment experienced a pre-tax loss
of $5.2 million, this is an improvement quarter-over-quarter,
reflecting the effectiveness of our underwriting and rating
actions. Our strategy to reduce expenses and improve the
underwriting performance in our commercial lines segment has
yielded ongoing positive results; consolidated net income for the
fourth quarter was $14.3 million, with an underlying combined ratio
of 50.9% for commercial lines and 67.2% on a consolidated
basis.”
Return on Equity and Core Return on Equity
The calculations of the Company's return on equity and core
return on equity are shown below.
($ in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Income (loss) from continuing operations,
net of tax
$
17,106
$
1,026
$
82,198
$
(40,004
)
Return on equity based on GAAP income
(loss) from continuing operations, net of tax (1)
97.0
%
2.7
%
116.6
%
(26.2
)%
Income (loss) from discontinued
operations, net of tax
$
(2,822
)
$
(297,796
)
$
227,713
$
(429,962
)
Return on equity based on GAAP income
(loss) from discontinued operations, net of tax (1)
(16.0
)%
(779.2
)%
322.9
%
(281.3
)%
Consolidated net income (loss)
attributable to ACIC
$
14,284
$
(296,770
)
$
309,911
$
(469,855
)
Return on equity based on GAAP net income
(loss) attributable to ACIC (1)
81.0
%
(776.5
)%
439.5
%
(307.4
)%
Core income (loss)
$
17,731
$
5,103
$
89,498
$
(22,628
)
Core return on equity (1)(2)
100.6
%
13.4
%
126.9
%
(14.8
)%
(1)
Return on equity for the three
months and years ended December 31, 2023 and 2022 is calculated on
an annualized basis by dividing the net income (loss) or core
income (loss) 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
(loss), which is reconciled on the first page of this press release
to net income (loss), 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 both the
Company's personal lines and commercial lines operating segments
are shown below.
($ in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
Change
2023
2022
Change
Consolidated
Loss ratio, net(1)
21.2
%
54.3
%
(33.1) pts
22.3
%
50.0
%
(27.7) pts
Expense ratio, net(2)(3)
45.4
%
50.2
%
(4.8) pts
43.7
%
56.2
%
(12.5) pts
Combined ratio (CR)(4)
66.6
%
104.5
%
(37.9) pts
66.0
%
106.2
%
(40.2) pts
Effect of current year catastrophe losses
on CR
0.5
%
24.6
%
(24.1) pts
5.4
%
21.5
%
(16.1) pts
Effect of prior year favorable development
on CR
(1.1
)%
(2.7
)%
1.6 pts
(4.4
)%
(4.1
)%
(0.3) pts
Underlying combined ratio(5)
67.2
%
82.6
%
(15.4) pts
65.0
%
88.8
%
(23.8) pts
Personal Lines
Loss ratio, net(1)
84.4
%
77.4
%
7.0 pts
55.5
%
94.5
%
(39.0) pts
Expense ratio, net(2)(3)
123.0
%
89.5
%
33.5 pts
109.6
%
109.0
%
0.6 pts
Combined ratio (CR)(4)
207.4
%
166.9
%
40.5 pts
165.1
%
203.5
%
(38.4) pts
Effect of current year catastrophe losses
on CR
10.6
%
22.7
%
(12.1) pts
8.4
%
28.8
%
(20.4) pts
Effect of prior year unfavorable
(favorable) development on CR
13.2
%
2.3
%
10.9 pts
1.3
%
(5.9
)%
7.2 pts
Underlying combined ratio(5)
183.6
%
141.9
%
41.7 pts
155.4
%
180.6
%
(25.2) pts
Commercial Lines
Loss ratio, net(1)
12.9
%
49.0
%
(36.1) pts
18.4
%
39.8
%
(21.4) pts
Expense ratio, net(2)
34.2
%
40.5
%
(6.3) pts
35.3
%
43.2
%
(7.9) pts
Combined ratio (CR)(4)
47.1
%
89.5
%
(42.4) pts
53.7
%
83.0
%
(29.3) pts
Effect of current year catastrophe losses
on CR
(0.8
)%
25.0
%
(25.8) pts
5.1
%
19.8
%
(14.7) pts
Effect of prior year favorable development
on CR
(3.0
)%
(3.9
)%
0.9 pts
(5.0
)%
(3.6
)%
(1.4) pts
Underlying combined ratio(5)
50.9
%
68.4
%
(17.5) pts
53.6
%
66.8
%
(13.2) 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)
Includes impairment of goodwill,
which had an impact of 3.6% on the Company's consolidated expense
ratios and a 34.0% impact on the Company's personal lines expense
ratios during the year ended December 31, 2022, respectively.
(4)
Combined ratio is the sum of the
loss ratio, net and expense ratio, net.
(5)
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,
2023
2022
Change
2023
2022
Change
Loss and LAE
$
11,770
$
41,693
$
(29,923
)
$
62,861
$
134,805
$
(71,944
)
% of Gross earned premiums
7.0
%
28.8
%
(21.8) pts
9.9
%
25.2
%
(15.3) pts
% of Net earned premiums
21.2
%
54.3
%
(33.1) pts
22.3
%
50.0
%
(27.7) pts
Less:
Current year catastrophe losses
$
277
$
18,885
$
(18,608
)
$
15,279
$
57,906
$
(42,627
)
Prior year reserve favorable
development
(629
)
(2,082
)
1,453
(12,294
)
(10,869
)
(1,425
)
Underlying loss and LAE (1)
$
12,122
$
24,890
$
(12,768
)
$
59,876
$
87,768
$
(27,892
)
% of Gross earned premiums
7.2
%
17.2
%
(10.0) pts
9.4
%
16.4
%
(7.0) pts
% of Net earned premiums
21.8
%
32.4
%
(10.6) pts
21.2
%
32.6
%
(11.4) 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,
2023
2022
Change
2023
2022
Change
Policy acquisition costs
$
15,229
$
25,410
$
(10,181
)
$
83,346
$
95,318
$
(11,972
)
Operating and underwriting
1,999
3,079
(1,080
)
10,240
13,729
(3,489
)
General and administrative
7,982
10,050
(2,068
)
29,489
42,281
(12,792
)
Total Operating Expenses
$
25,210
$
38,539
$
(13,329
)
$
123,075
$
151,328
$
(28,253
)
% of Gross earned premiums
15.0
%
26.6
%
(11.6) pts
19.4
%
28.3
%
(8.9) pts
% of Net earned premiums
45.4
%
50.2
%
(4.8) pts
43.7
%
56.2
%
(12.5) pts
Quarterly Financial Results
Net income attributable to the Company for the fourth quarter of
2023 was $14.3 million, or $0.31 per diluted share, compared to a
net loss of $296.8 million, or $6.89 per diluted share, for the
fourth quarter of 2022. Of this income, $17.1 million is
attributable to continuing operations for the three months ended
December 31, 2023, an increase of $16.1 million from net income of
$1.0 million for the same period in 2022. Drivers of net income
from continuing operations during the fourth quarter of 2023
included increased gross premiums earned partially offset by
increased ceded premiums earned driven by our 2023 quota share
agreements, a decrease in our loss and LAE incurred, driven by
decreased catastrophe losses, and decreased policy acquisition
costs and administrative costs, as described below. This was
partially offset by the recognition of losses from discontinued
operations of $2.8 million, driven by the deconsolidation of
activities related directly to supporting the run-off of United
Property & Casualty Insurance Company (UPC).
The Company's total gross written premium increased by $16.0
million, or 13.4%, to $135.2 million for the fourth quarter of
2023, from $119.1 million for the fourth quarter of 2022. This
increase was driven primarily by an increase in our personal lines
written premium, driven by the Interboro Insurance Company ("IIC")
quota share ending and unearned premium being returned. In
addition, our commercial lines written premium increased as we
focus on transitioning towards a specialty commercial lines
underwriter. The breakdown of the quarter-over-quarter changes in
both direct written and assumed premiums by state and gross written
premium by line of business are shown in the table below.
($ in thousands)
Three Months Ended December
31,
2023
2022
Change $
Change %
Direct Written and Assumed Premium by
State (1)
Florida
$
128,260
$
122,257
$
6,003
4.9
%
New York
6,903
5,685
1,218
21.4
Texas
—
(16
)
16
(100.0
)
Total direct written premium by state
135,163
127,926
7,237
5.7
Assumed premium (2)
—
(8,782
)
8,782
(100.0
)
Total gross written premium by state
$
135,163
$
119,144
$
16,019
13.4
%
Gross Written Premium by Line of
Business
Commercial property
$
128,260
$
122,345
$
5,915
4.8
%
Personal property
6,903
(3,201
)
10,104
(315.7
)
Total gross written premium by line of
business
$
135,163
$
119,144
$
16,019
13.4
%
(1)
We ceased writing in Texas as of May 31,
2022.
(2)
Assumed premium written during the fourth
quarter of 2022 primarily included personal property business
assumed from our former subsidiary, UPC. This assumption ended
effective December 31, 2022, resulting in the return of unearned
premium for the quarter.
Loss and LAE decreased by $29.9 million, or 71.7%, to $11.8
million for the fourth quarter of 2023, from $41.7 million for the
fourth quarter of 2022. Loss and LAE expense as a percentage of net
earned premiums decreased 33.1 points to 21.2% for the fourth
quarter of 2023, compared to 54.3% for the fourth quarter of 2022.
Excluding catastrophe losses and reserve development, the Company's
gross underlying loss and LAE ratio for the fourth quarter of 2023
would have been 7.2%, a decrease of 10.0 points from 17.2% during
the fourth quarter of 2022.
Policy acquisition costs decreased by $10.2 million, or 40.2%,
to $15.2 million for the fourth quarter of 2023, from $25.4 million
for the fourth quarter of 2022, primarily due to an increase in
reinsurance ceding commission income, driven by our quota share
coverage entered into in the second quarter of 2023 in our
commercial lines business. This was partially offset by increases
in management fees and premium taxes associated with the increased
commercial lines written premiums experienced in 2023.
Operating and underwriting expenses decreased by $1.1 million,
or 35.1%, to $2.0 million for the fourth quarter of 2023, from $3.1
million for the fourth quarter of 2022, driven by decreased costs
such as printing, postage, rent and utilities as we look to reduce
our overhead spending. In addition, our costs related to computer
software and services have decreased quarter-over-quarter in
2023.
General and administrative expenses decreased by $2.1 million,
or 20.8%, to $8.0 million for the fourth quarter of 2023, from
$10.1 million for the fourth quarter of 2022, driven by decreased
amortization costs associated with our capitalized software and
intangible assets.
Commercial Lines Operating Segment Highlights
Pre-tax earnings attributable to the Company's commercial lines
operating segment totaled $27.9 million for the fourth quarter of
2023 compared to $3.7 million for the fourth quarter of 2022. This
increase can be attributed to a decrease in Loss and LAE incurred
of $24.3 million, driven by decreased catastrophe losses
quarter-over-quarter. In addition, policy acquisition costs
decreased $8.8 million, driven by reinsurance ceding commission
income earned during the period, partially offset by increased
management fees and premium taxes associated with the increased
commercial lines written premiums experienced in 2023.
These decreased expenses were partially offset by decreased
revenues of $8.7 million quarter-over-quarter, driven by decreased
net premiums earned during the period, partially offset by
decreased net realized investment losses in 2023. Operating and
underwriting expenses and general and administrative expenses
remained relatively flat, with a net decrease of $302 thousand
experienced quarter-over-quarter.
Personal Lines Operating Segment Highlights
Pre-tax loss attributable to the Company's personal lines
operating segment totaled $5.2 million for the fourth quarter of
2023 compared to a pre-tax loss of $10.6 million for the fourth
quarter of 2022. Drivers of the quarter-over-quarter decrease in
pre-tax loss included: a decrease in general and administrative
costs of $2.8 million, driven by decreased amortization of our
capitalized software and intangible assets related to our personal
lines, a decrease in policy acquisition costs of $1.4 million
driven by decreased ceding commission expense, partially offset by
increased agent commission and policy administration costs and a
decrease in loss and LAE incurred of $5.7 million due to decreased
non-catastrophe losses.
These fluctuations were partially offset by a $7.8 million
decrease in revenues quarter-over-quarter. All of these changes can
be attributed to the Company's shift towards becoming a specialty
commercial lines underwriter, resulting in reduced writings,
exposure, and lower costs associated with the servicing of this
business.
Year to Date Financial Results
Net income attributable to the Company for the year ended
December 31, 2023, was $309.9 million, or $7.11 per diluted share,
compared to a net loss of $469.9 million, or $10.91 per diluted
share, for the year ended December 31, 2022. Drivers of the income
from continuing operations during 2023 include decreases to loss
and loss adjustment expenses due to the impact of Hurricane Ian
making landfall in Florida in 2022 causing an increase to losses
that year, increased gross written premiums, an increase in ceded
premiums earned, favorable prior year loss development during the
year, decreased policy acquisition costs, and decreased general and
administrative costs. In addition, during 2023 we recorded a gain
on disposal of our former subsidiary UPC totaling $238,440,000,
driving the income from discontinued operations for the year.
The Company's total gross written premium increased by $97.7
million, or 17.1%, to $670.0 million for the year ended December
31, 2023, from $572.3 million for the year ended December 31, 2022.
This increase was driven primarily by increases to premiums written
in Florida as we continue to focus on our commercial book of
business. This was offset by a decline in written premiums across
the personal lines business, due to a decrease in assumed premiums
driven by the cancellation of the quota share with our former
subsidiary, UPC. The breakdown of the year-over-year changes in
both direct written and assumed premiums by state and gross written
premium by line of business are shown in the table below.
($ in thousands)
Year Ended December
31,
2023
2022
Change $
Change %
Direct Written and Assumed Premium by
State (1)
Florida
$
635,602
$
503,815
$
131,787
26.2
%
New York
34,334
25,101
9,233
36.8
Texas
(9
)
3,887
(3,896
)
(100.2
)
South Carolina
—
15
(15
)
(100.0
)
Total direct written premium by state
669,927
532,818
137,109
25.7
Assumed premium (2)
116
39,525
(39,409
)
(99.7
)
Total gross written premium by state
$
670,043
$
572,343
$
97,700
17.1
%
Gross Written Premium by Line of
Business
Commercial property
$
635,709
$
508,243
$
127,466
25.1
%
Personal property
34,334
64,100
(29,766
)
(46.4
)
Total gross written premium by line of
business
$
670,043
$
572,343
$
97,700
17.1
%
(1)
We ceased writing in Texas or
South Carolina as of May 31, 2022.
(2)
Assumed premium written for 2023
primarily included commercial property business assumed from
unaffiliated insurers. Assumed premium written for 2022 primarily
included personal property business assumed from our former
subsidiary, UPC.
Loss and LAE decreased by $71.9 million, or 53.4%, to $62.9
million for the year ended December 31, 2023, from $134.8 million
for the year ended December 31, 2022. Loss and LAE expense as a
percentage of net earned premiums decreased 27.7 points to 22.3%
for the year ended December 31, 2023, compared to 50.0% for the
year ended December 31, 2022. Excluding catastrophe losses and
reserve development, the Company's gross underlying loss and LAE
ratio for the year ended December 31, 2023, would have been 9.4%, a
decrease of 7.0 points from 16.4% for the year ended December 31,
2022.
Policy acquisition costs decreased by $12.0 million, or 12.6%,
to $83.3 million for the year ended December 31, 2023, from $95.3
million for the year ended December 31, 2022, primarily due to an
increase in ceding commission income due to changes in the terms of
the Company's quota share reinsurance agreements. This was
partially offset by increased external management fees and premium
taxes related to the Company's increased commercial lines gross
written premium.
Operating and underwriting expenses decreased by $3.5 million,
or 25.5%, to $10.2 million for the year ended December 31, 2023,
from $13.7 million for the year ended December 31, 2022, driven by
decreased costs such as printing, postage, rent and utilities as we
look to reduce our overhead spending.
General and administrative expenses decreased by $12.8 million,
or 30.3%, to $29.5 million for the year ended December 31, 2023,
from $42.3 million for the year ended December 31, 2022, driven by
the impairment of goodwill attributable to the Company's personal
lines operating segment during 2022. There were no similar
transactions in 2023.
Commercial Lines Operating Segment Highlights
Pre-tax earnings attributable to the Company's commercial lines
operating segment totaled $118.1 million for the year ended
December 31, 2023, compared to $35.8 million for the year ended
December 31, 2022. Drivers of the year-over-year increase in
pre-tax earnings include a decrease in loss and LAE incurred of
$40.8 million due to decreased catastrophe losses year-over-year as
well as favorable development on prior year losses and increased
net premiums earned of $33.1 million driven by higher gross written
premiums year-over-year as the Company transitions towards becoming
a specialty commercial lines underwriter. This was partially offset
by increased ceded premiums driven by the changes in our quota
share contracts.
Year-over-year, policy acquisition costs decreased $5.6 million
driven by to an increase in ceding commission income due to changes
in the terms of the Company's quota share reinsurance agreements in
2023. Operating and administrative expenses remained relatively
flat, with a net increase of $123 thousand as we look to reduce our
overhead spending.
Personal Lines Operating Segment Highlights
Pre-tax losses attributable to the Company's personal lines
operating segment totaled $13.9 million for the year ended December
31, 2023, compared to $52.2 million for the year ended December 31,
2022. This decreased loss can be attributed to decreased expenses
of $53.4 million, driven by a $31.1 million decrease in losses and
LAE incurred driven by decreased catastrophe losses year-over-year,
decreased policy acquisition costs of $6.4 million driven by
decreased policy management fees associated with decreased written
premiums and decreased operating expenses of $2.6 million, driven
by a reduction in our overhead spending. Additionally, general and
administrative expenses decreased $13.3 million driven by the
one-time impairment of goodwill totaling $10.2 million in 2022.
There was no similar transaction during 2023.
These decreased expenses were partially offset by decreased net
premiums earned of $20.6 million driven by decreased assumed
premiums from the cancellation of the quota share contract with our
former subsidiary, UPC.
Reinsurance Costs as a Percentage of Gross Earned
Premium
Reinsurance costs as a percentage of gross earned premium in the
fourth quarter of 2023 and 2022 were as follows:
2023
2022
Non-at-Risk
(0.3
)%
(0.5
)%
Quota Share
(29.9
)%
(11.6
)%
All Other
(36.6
)%
(34.8
)%
Total Ceding Ratio
(66.8
)%
(46.9
)%
Ceded premiums earned related to the Company's catastrophe
excess of loss contracts remained relatively flat, driven by the
need for less coverage for the 2023-2024 treaty year due to the
reduction in the Company's geographic footprint and exposure, as
well as the utilization of quota share reinsurance coverage for our
commercial lines operating segment, offset by rate increases on the
coverage experienced in the current year. The utilization of quota
share reinsurance coverage, as described, increased the Company's
ceding ratio overall.
Reinsurance costs as a percentage of gross earned premium in the
fourth quarter of 2023 and 2022 for the Company's personal lines
and commercial lines operating segments were as follows:
Personal
Commercial
2023
2022
2023
2022
Non-at-Risk
(2.7
)%
(1.0
)%
(0.2
)%
(0.5
)%
Quota Share
—
%
—
%
(31.4
)%
(13.5
)%
All Other
(20.9
)%
(31.1
)%
(37.4
)%
(35.4
)%
Total Ceding Ratio
(23.6
)%
(32.1
)%
(69.0
)%
(49.4
)%
Investment Portfolio Highlights
The Company's cash, restricted cash and investment holdings
increased from $340.9 million at December 31, 2022 to $369.0
million at December 31, 2023. 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 91.6% of
total investments at December 31, 2023 compared to 91.4% of total
investments at December 31, 2022. The Company's fixed maturity
investments had a modified duration of 3.4 years at December 31,
2023 compared to 4.0 years at December 31, 2022.
Book Value Analysis
Book value per common share increased 185.8% from $(4.21) at
December 31, 2022, to $3.61 at December 31, 2023. Underlying book
value per common share increased 213.8% from $(3.49) at December
31, 2022 to $3.97 at December 31, 2023. An increase in the
Company's retained earnings as the result of net income from both
continuing and discontinued operations in 2023 drove the increase
in the Company's book value per share. As shown in the table below,
removing the effect of AOCI increases the Company's book value per
common share, as the Company has experienced unfavorable capital
market conditions resulting in an accumulated other comprehensive
loss position at December 31, 2023.
($ in thousands, except for share and per
share data)
December 31, 2023
December 31, 2022
Book Value per Share
Numerator:
Common stockholders' equity attributable
to ACIC
$
168,765
$
(182,039
)
Denominator:
Total Shares Outstanding
46,777,006
43,280,173
Book Value Per Common Share
$
3.61
$
(4.21
)
Book Value per Share, Excluding the
Impact of Accumulated Other Comprehensive Income (AOCI)
Numerator:
Common stockholders' equity attributable
to ACIC
$
168,765
$
(182,039
)
Less: Accumulated other comprehensive
loss
(17,137
)
(30,947
)
Stockholders' Equity, excluding AOCI
$
185,902
$
(151,092
)
Denominator:
Total Shares Outstanding
46,777,006
43,280,173
Underlying Book Value Per Common
Share(1)
$
3.97
$
(3.49
)
(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:
February 29, 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=1655068&tp_key=698fd24f9f
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.
American Coastal Insurance Corporation’s portfolio of
investments also includes Interboro Insurance Company, a New York
domiciled personal lines carrier founded in 1914.
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 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 have been recast to
reflect the activity of UPC and activities related directly to
supporting the business conducted by UPC within discontinued
operations.
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 (Loss)
In thousands, except share and
per share amounts
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
REVENUE:
Gross premiums written
$
135,163
$
119,144
$
670,043
$
572,343
Change in gross unearned premiums
32,366
25,649
(34,079
)
(36,974
)
Gross premiums earned
167,529
144,793
635,964
535,369
Ceded premiums earned
(111,946
)
(67,951
)
(354,080
)
(266,023
)
Net premiums earned
55,583
76,842
281,884
269,346
Net investment income
2,584
2,194
10,574
7,673
Net realized investment losses
(2
)
(6,439
)
(6,808
)
(6,483
)
Net unrealized gains (losses) on equity
securities
22
2,090
814
(1,968
)
Other revenue
27
10
79
1,223
Total revenues
$
58,214
$
74,697
$
286,543
$
269,791
EXPENSES:
Losses and loss adjustment expenses
11,770
41,693
62,861
134,805
Policy acquisition costs
15,229
25,410
83,346
95,318
Operating expenses
1,999
3,079
10,240
13,729
General and administrative expenses
7,982
10,050
29,489
42,281
Interest expense
2,719
2,403
10,875
9,483
Total expenses
39,699
82,635
196,811
295,616
Income (loss) before other income
(loss)
18,515
(7,938
)
89,732
(25,825
)
Other income
1,071
8,781
2,239
10,343
Income (loss) before income taxes
19,586
843
91,971
(15,482
)
Provision (benefit) for income taxes
2,480
(183
)
9,773
24,522
Income (loss) from continuing operations,
net of tax
$
17,106
$
1,026
$
82,198
$
(40,004
)
Income (loss) from discontinued
operations, net of tax
(2,822
)
(297,796
)
227,713
(429,962
)
Net income (loss)
$
14,284
$
(296,770
)
$
309,911
$
(469,966
)
Less: Net loss attributable to
noncontrolling interests
—
—
—
(111
)
Net income (loss) attributable to ACIC
$
14,284
$
(296,770
)
$
309,911
$
(469,855
)
OTHER COMPREHENSIVE INCOME (LOSS):
Change in net unrealized gains (losses) on
investments
6,696
3,632
5,998
(56,600
)
Reclassification adjustment for net
realized investment losses
2
30,226
6,808
32,082
Income tax benefit related to items of
other comprehensive income (loss)
—
—
—
49
Total comprehensive income (loss)
$
20,982
$
(262,912
)
$
322,717
$
(494,435
)
Less: Comprehensive loss attributable to
noncontrolling interests
—
—
—
(164
)
Comprehensive income (loss) attributable
to ACIC
$
20,982
$
(262,912
)
$
322,717
$
(494,271
)
Weighted average shares outstanding
Basic
44,713,148
43,101,872
43,596,432
43,052,070
Diluted
45,712,715
43,101,872
44,388,804
43,052,070
Earnings available to ACIC common
stockholders per share
Basic
Continuing operations
$
0.38
$
0.02
$
1.89
$
(0.93
)
Discontinued operations
(0.06
)
(6.91
)
5.22
(9.98
)
Total
$
0.32
$
(6.89
)
$
7.11
$
(10.91
)
Diluted
Continuing operations
$
0.37
$
0.02
$
1.85
$
(0.93
)
Discontinued operations
(0.06
)
(6.91
)
5.13
(9.98
)
Total
$
0.31
$
(6.89
)
$
6.98
$
(10.91
)
Dividends declared per share
$
—
$
—
$
—
$
0.06
Consolidated Balance
Sheets
In thousands, except share
amounts
December 31, 2023
December 31, 2022
ASSETS
Investments, at fair value:
Fixed maturities, available-for-sale
$
180,703
$
204,682
Equity securities
—
15,657
Other investments
16,487
3,675
Total investments
$
197,190
$
224,014
Cash and cash equivalents
153,762
70,903
Restricted cash
18,070
45,988
Accrued investment income
2,104
1,605
Property and equipment, net
3,658
5,293
Premiums receivable, net
47,274
39,301
Reinsurance recoverable on paid and unpaid
losses
341,102
796,546
Ceded unearned premiums
159,147
90,496
Goodwill
59,476
59,476
Deferred policy acquisition costs
25,041
52,369
Intangible assets, net
9,323
12,770
Other assets
36,141
3,920
Assets held for disposal
8,095
1,434,815
Total Assets
$
1,060,383
$
2,837,496
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment
expenses
$
370,221
$
842,958
Unearned premiums
293,057
258,978
Reinsurance payable on premiums
317
30,503
Payments outstanding
2,116
2,000
Accounts payable and accrued expenses
75,284
74,386
Operating lease liability
776
1,689
Other liabilities
1,159
5,849
Notes payable, net
148,688
148,355
Liabilities held for disposal
—
1,654,817
Total Liabilities
$
891,618
$
3,019,535
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; 46,989,089 and 43,492,256 issued,
respectively; 46,777,006 and 43,280,173 outstanding,
respectively
5
4
Additional paid-in capital
423,717
395,631
Treasury shares, at cost; 212,083
shares
(431
)
(431
)
Accumulated other comprehensive loss
(17,137
)
(30,947
)
Retained earnings (deficit)
(237,389
)
(546,296
)
Total Stockholders' Equity (Deficit)
$
168,765
$
(182,039
)
Total Liabilities and Stockholders' Equity
(Deficit)
$
1,060,383
$
2,837,496
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240229266396/en/
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
American Coastal Insurance (NASDAQ:ACIC)
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