FALSE000140152100014015212024-08-072024-08-07

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 7, 2024

American Coastal Insurance Corporation
(Exact name of registrant as specified in its charter)
Delaware001-3576175-3241967
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
800 2nd Avenue S.33701
Saint Petersburg,FL
(Address of principal executive offices)(Zip Code)
(727)633-0851
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, $0.0001 par value per shareACICNasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02. Results of Operations and Financial Condition

On August 7, 2024, American Coastal Insurance Corporation (the Company, we, our) issued a press release relating to our earnings for the second quarter ended June 30, 2024 (the Earnings Release). We have attached a copy of the Earnings Release as Exhibit 99.1.

Item 7.01: Regulation FD Disclosure.
The executive officers of the Company intend to use the materials filed herewith, in whole or in part, in one or more meetings with investors and analysts, beginning on August 7, 2024. A copy of the Earnings presentation is attached hereto as Exhibit 99.2.

The information furnished under this Item 2.02 and 7.01, including Exhibit 99.1 and Exhibit 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.

Item 9.01. Financial Statements and Exhibits
Exhibit
No.		 Description
     
Earnings release issued by the Company on August 7, 2024
Earnings presentation issued by the Company on August 7, 2024
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized.
    
  AMERICAN COASTAL INSURANCE CORPORATION
August 7, 2024
By:/s/ B. Bradford Martz
  B. Bradford Martz, President



Exhibit 99.1
a1a.jpg
FOR IMMEDIATE RELEASE
AMERICAN COASTAL INSURANCE CORPORATION REPORTS FINANCIAL RESULTS
FOR ITS SECOND QUARTER ENDED JUNE 30, 2024

Company to Host Quarterly Conference Call at 5:00 P.M. ET on August 7, 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.
 
St. Petersburg, FL - August 7, 2024: 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 EndedSix Months Ended
June 30,June 30,
20242023Change20242023Change
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.


1
Exhibit 99.1

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 EndedSix Months Ended
June 30,June 30,
2024202320242023
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.


2
Exhibit 99.1
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 EndedSix Months Ended
June 30,June 30,
20242023Change20242023Change
Consolidated
Loss ratio, net(1)
24.1 %20.8 %3.3  pts22.0 %18.4 %3.6  pts
Expense ratio, net(2)
40.8 %42.3 %(1.5) pts37.1 %42.2 %(5.1) pts
Combined ratio (CR)(3)
64.9 %63.1 %1.8  pts59.1 %60.6 %(1.5) pts
Effect of current year catastrophe losses on CR— %7.9 %(7.9) pts0.2 %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  pts59.7 %60.6 %(0.9) pts
IIC
Loss ratio, net(1)
91.4 %90.6 %0.8  pts74.3 %91.6 %(17.3) pts
Expense ratio, net(2)
37.4 %46.9 %(9.5) pts45.7 %60.4 %(14.7) pts
Combined ratio (CR)(3)
128.8 %137.5 %(8.7) pts120.0 %152.0 %(32.0) pts
Effect of current year catastrophe losses on CR2.5 %6.6 %(4.1) pts5.6 %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  pts118.3 %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.






























3
Exhibit 99.1
Combined Ratio Analysis

The calculations of the Company's loss ratios and underlying loss ratios are shown below.
($ in thousands)Three Months EndedSix Months Ended
June 30,June 30,
20242023Change20242023Change
Loss and LAE$15,277 $16,245 $(968)$27,751 $30,146 $(2,395)
% of Gross earned premiums9.8 %10.8 %(1.0) pts8.8 %10.5 %(1.7) pts
% of Net earned premiums24.1 %20.8 %3.3  pts22.0 %18.4 %3.6  pts
Less:
Current year catastrophe losses$(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 premiums10.5 %10.3 %0.2  pts9.0 %10.4 %(1.4) pts
% of Net earned premiums25.6 %19.7 %5.9  pts22.7 %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 EndedSix Months Ended
June 30,June 30,
20242023Change20242023Change
Policy acquisition costs$13,939 $23,526 $(9,587)$23,534 $48,692 $(25,158)
Operating and underwriting2,040 3,046 (1,006)4,377 4,881 (504)
General and administrative9,898 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) pts14.8 %23.8 %(9.0) pts
% of Net earned premiums
40.8 %42.3 %(1.5) pts37.1 %42.2 %(5.1) pts
















4
Exhibit 99.1

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,
20242023Change $Change %
Direct Written and Assumed Premium by State
Florida $229,449 $236,766 $(7,317)(3.1)%
New York— — — — 
Total direct written premium by state229,449 236,766 (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.



5
Exhibit 99.1
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:
20242023
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
20242023
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.










6
Exhibit 99.1

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, 2024December 31, 2023
Book Value per Share
Numerator:
Common stockholders' equity$223,073 $168,765 
Denominator:
Total Shares Outstanding48,132,370 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 Outstanding48,132,370 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.
7
Exhibit 99.1

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













8
Exhibit 99.1
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
9
Exhibit 99.1
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.
10
Exhibit 99.1
Consolidated Statements of Comprehensive Income
In thousands, except share and per share amounts
Three Months EndedSix Months Ended
June 30,June 30,
2024202320242023
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 earned155,450 149,837 315,720 287,812 
Ceded premiums earned(92,069)(71,823)(189,708)(125,157)
Net premiums earned63,381 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 securities49 141 (1)615 
Total revenues$68,656 $73,542 $135,254 $160,617 
EXPENSES:
Losses and loss adjustment expenses15,277 16,245 27,751 30,146 
Policy acquisition costs13,939 23,526 23,534 48,692 
Operating expenses2,040 3,046 4,377 4,881 
General and administrative expenses9,898 6,414 18,813 15,025 
Interest expense3,426 2,719 6,145 5,438 
Total expenses 44,580 51,950 80,620 104,182 
Income before other income24,076 21,592 54,634 56,435 
Other income811 806 1,621 1,394 
Income before income taxes24,887 22,398 56,255 57,829 
Provision for income taxes5,814 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 investments73 (2,168)(125)2,063 
Reclassification adjustment for net realized investment losses121 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
Basic47,821,115 43,229,416 47,572,236 43,178,758 
Diluted49,398,463 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 $6.52 
Dividends declared per share$— $— $— $— 
11
Exhibit 99.1
Consolidated Balance Sheets
In thousands, except share amounts
June 30, 2024December 31, 2023
ASSETS 
Investments, at fair value:  
Fixed maturities, available-for-sale$264,446 $138,387 
Equity securities15,429 — 
Other investments31,116 16,487 
Total investments$310,991 $154,874 
Cash and cash equivalents229,431 138,930 
Restricted cash32,158 18,070 
Accrued investment income4,722 1,767 
Property and equipment, net9,096 3,658 
Premiums receivable, net52,873 45,924 
Reinsurance recoverable on paid and unpaid losses206,436 340,820 
Ceded unearned premiums260,852 155,301 
Goodwill59,476 59,476 
Deferred policy acquisition costs51,423 21,149 
Intangible assets, net7,127 8,548 
Other assets12,995 36,718 
Assets held for sale73,705 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 premiums374,487 276,157 
Reinsurance payable on premiums226,508 — 
Payments outstanding580 706 
Accounts payable and accrued expenses75,530 74,783 
Operating lease liability67 739 
Other liabilities713 672 
Notes payable, net148,854 148,688 
Liabilities held for sale50,040 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 capital436,383 423,717 
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 
12
2nd Quarter 2024 August 7th, 2024 Earnings Presentation

 
2 Company Overview ACIC is a specialty underwriter of catastrophe exposed property insurance. American Coastal Insurance Corp. (Nasdaq: ACIC) is the insurance holding company for two P&C carriers: American Coastal Insurance Company (AmCoastal) and Interboro Insurance Company (IIC) ¹ along with other operating affiliates. AmCoastal has the #1 market share of commercial residential property insurance (commercial lines) in Florida with roughly 4,000 policies and $656 million of premium in-force. IIC’s homeowners & fire insurance products (personal lines) are written exclusively in New York with approximately 18,000 policies and $36 million of premium in-force. ¹ ACIC as of June 30, 2024 Total Assets: $1.31 billion Total Equity: $223 million Annualized Revenue: $271 million Employees: 65 Headquarters: St. Petersburg, FL Credit Rating: BB+ (Kroll) Specialty Commercial Property Specialty Homeowners ¹ ¹ IIC ‘s results are classified as discontinued operations.

 
3 Executive Summary • Q2-24 Results • Non-GAAP Core Income of $19.6m ($0.40) decreased -$7.5m (-27.6%) from $27.1m ($0.62) y/y on higher ceded earned premiums resulting from the 40% gross CAT quota share effective 6.1.2023. • Gross premiums earned grew $5.6m (+3.7%) to $155.5m y/y. • Our combined ratio of 64.9% was on target but increased 1.8 points from 63.1% in the same period last year. • Current year net catastrophe losses in the quarter were effectively nil and we had $1.0m of favorable prior year reserve development. • Stockholders’ equity attributable to ACIC, increased to $223.1m or $4.63 per share and $5.03 per share excluding unrealized losses in accumulated other comprehensive income. • Other Highlights • Completed catastrophe reinsurance program renewals effective 6.1.24 at lower cost due to replacing FORA and reducing the quota share. This sets up revenue and earnings in the next 4 quarters to compare favorably with the prior year and added more limit for a potential 3rd event and higher severity protection to support future exposure growth. • Executed definitive agreements to divest of Interboro Insurance Company and we anticipate closing during 1Q-25. As a result of the pending sale, IIC is now included in discontinued operations. • Began development of a new apartment product to be distributed and underwritten directly through our MGA, Skyway Underwriters. • Secured extension and regulatory approval of our exclusive MGA agreement with AmRisc to 1.1.29.

 
4 2Q-24 Financial Scorecard Key results all compare favorably to Raymond James’ estimates for the current period. 2Q-24 = $0.40 vs. Analyst’s Est. = $0.30 2Q-24 = $4.63 vs. Analyst’s Est. = $4.58 2Q-24 = 64.9% vs. Analyst’s Est. = 74.3% 2Q-24 = 46.9% vs. Analyst’s Est. = 28.5% Core Earnings per Share (CEPS) Book Value per Share (BVPS) Combined Ratio (CR) Core Return on Equity (CROE)

 
5 2Q-24 Summary of Key Results Combined ratio increased 1.8 points and core income declined -$7.5m ($0.22) due to reinsurance costs. $ in thousands, except per share amounts Q2-24 Q2-23 Change 2024 2023 Change Net income (loss) 19,054$ 17,779$ 7.2% 42,653$ 285,059$ n/m per diluted share (EPS) 0.39$ 0.41$ 0.87$ 6.52$ Reconciliation to core income (loss), net of tax: Investment gains (losses) (57)$ (5,188)$ (97)$ (4,879)$ Amortization of intangible assets (481)$ (641)$ (1,122)$ (1,282)$ Gain (loss) from discontinued operations (19)$ (3,465)$ (129)$ 232,250$ Total adjustments (557)$ (9,294)$ (1,348)$ 226,089$ Core income (loss) 19,611$ 27,073$ -27.6% 44,001$ 58,970$ -25.4% per diluted share (CEPS) 0.40$ 0.62$ 0.90$ 1.35$ Net loss & LAE ratio 24.1% 20.8% 22.0% 18.4% Net expense ratio 40.8% 42.3% 37.1% 42.2% Combined ratio 64.9% 63.1% 1.8 pts 59.1% 60.6% (1.5) pts Less: Net current year catastrophe loss & LAE 0.0% 7.9% 0.2% 5.0% Less: Net (favorable) unfavorable reserve development -1.5% -6.8% -0.8% -5.0% Underlying combined ratio 66.4% 62.0% 4.4 pts 59.7% 60.6% (0.9) pts

 
6 2Q-24 Operating Overview Earnings before income tax improved +11.2% despite the significant change in ceded premiums. The 40.0% quota share had a significant impact on net earned premiums and OPEX y/y but was reduced to 20.0% effective June 1st, 2024. $ in millions Q2-24 Q2-23 Change % Chg Gross Premiums Earned 155.5$ 149.8$ 5.6 3.7% Ceded Premiums Earned (92.1) (71.8) (20.2) 28.1% Net Premiums Earned 63.4 78.0 (14.6) -18.7% Investment & Other Income 5.2 (4.6) 9.8 -213.0% Unrealized G(L) on Equities 0.0 0.1 (0.1) -100.0% Total Revenue 68.7 73.5 (4.9) -6.7% Underlying Loss & LAE 16.3 15.4 0.9 5.8% Current year CAT Loss & LAE (0.0) 6.2 (6.2) -100.0% Prior year development (F)/U (1.0) (5.3) 4.4 -83.0% Net Loss & LAE 15.3 16.2 (1.0) -6.2% Operating Expense 25.9 33.0 (7.1) -21.5% Interest Expense 3.4 2.7 0.7 25.9% Total Expenses 44.6 51.9 (7.4) -14.3% Other income (expense) 0.8 0.8 0.0 0.0% Earnings from continuing operations before tax 24.9$ 22.4$ 2.5$ 11.2% Provision (benefit) for income tax 5.8 1.2 4.7 391.7% Net income from continuing operations 19.1$ 21.2$ (2.1)$ -9.9%

 
7 2024 Full Year & 2H-24 Guidance Our new reinsurance cost structure effective 6.1.24 set the stage for earning & total revenue growth y/y. Estimated range of Net Income from Continuing Operations ¹ Estimated range of Net Premiums Earned Low High Low High ¹ Earnings estimates exclude potential 2H-24 catastrophe losses. FY-24 E 85.0$ - 95.0$ FY-24 E 285.0$ - 300.0$ FY-23 A FY-23 A Y/Y Change 2.8$ - 12.8$ Y/Y Change 3.1$ - 18.1$ % Change 3.5% - 15.6% % Change 1.1% - 6.4% 2H-24 E 42.3$ - 52.3$ 2H-24 E 158.9$ - 173.9$ 2H-23 A 2H-23 A Y/Y Change 12.9$ - 22.9$ Y/Y Change 39.7$ - 54.7$ % Change 43.8% - 77.8% % Change 33.3% - 45.9% $82.2 $281.9 $119.2$29.4

 
8 Balance Sheet Highlights Liquidity & Equity have improved significantly since year-end driven by strong underwriting results. Jun 30, Dec. 31, YTD ($ in thousands, except per share amounts) 2024 2023 % Change Selected Balance Sheet Data Cash & investments 572,580$ 311,874$ 83.6% Accumulated other comprehensive income (loss) (19,149)$ (17,137)$ 11.7% Unpaid loss & LAE reserves 211,433$ 347,738$ -39.2% Reinsurance recoverable 206,436$ 340,820$ -39.4% Net Loss & LAE reserves 4,997$ 6,918$ -27.8% Financial debt 148,854$ 148,688$ 0.1% Stockholders' equity attributable to ACIC 223,073$ 168,765$ 32.2% Total capital 371,927$ 317,453$ 17.2% Leverage Ratios Debt-to-total capital 40.0% 46.8% -14.6% Net premiums earned-to-stockholders' equity (annualized) 113.0% 192.8% -41.4% Per Share Data Common shares outstanding 48,132,370 46,777,006 2.9% Book value per common share 4.63$ 3.61$ 28.5% Underlying book value per common share 5.03$ 3.97$ 26.6% Tangible book value per common share 3.25$ 2.14$ 52.1% Underlying tangible book value per common share 3.65$ 2.50$ 45.7%

 
9 Investment Portfolio Overview • Focus on a resilient and high-quality portfolio considerate of current market conditions and risks. • Strong cash generation has propelled successive quarterly growth in investments and liquid assets.

 
10 Underwriting Environment • TIV down -1.7% and policy count down -5.8% YTD, but 100-YR PML up +3.5% due to model change. • Premiums in-force are up 2.0% to $656m with average premium up +8.3% YTD, but average renewal rates started to decline consistent with lower reinsurance costs. • Account retention was near target of 85% and submission volume remains strong, but accounts bound relative to submissions received and quotes provided are down y/y due to pricing. • Market appears to have peaked and is beginning to soften, but renewal pricing is holding close to expiring. AmCoastal is a market leader and expects to maintain its portfolio at comparable terms. • Valuation changes are slowing as replacement cost estimates reflect lower inflation pressure. • Our commercial residential take-out application for the October 27th, 2024 assumption date has been approved by the Florida Office of Insurance Regulation. Competition remains limited but is getting more aggressive and driving softer market conditions.

 
AmCoastal Premium and TIV Trends 11 Premiums in-force are up 6.3% but exposures are down -10.4% vs. Jun-23 Commercial Lines Premium & Total Insured Value (TIV) In-force Risk/Return profile remains solid

 
12 Commercial Property Valuation Trends Valuation changes are slowing down as inflationary pressure moderates.

 
13 2024-25 CAT Reinsurance Program - AmCoastal Program Illustration Program Highlights $782m 100-YR PML (50/50 Blend AIR & RMS)

 
14 Cautionary Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include expectations regarding our diversification, growth opportunities, retention rates, liquidity, investment returns and our ability to meet our investment objectives and to manage and mitigate market risk with respect to our investments. These statements are based on current expectations, estimates and projections about the industry and market in which we operate, and management's beliefs and assumptions. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "endeavor," "project," "believe," "anticipate," "intend," "could," "would," "estimate," or "continue" or the negative variations thereof, or comparable terminology, are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. The risks and uncertainties include, without limitation: the regulatory, economic and weather conditions in the states in which we operate; the impact of new federal or state regulations that affect the property and casualty insurance market; the cost, variability and availability of reinsurance; assessments charged by various governmental agencies; pricing competition and other initiatives by competitors; our ability to attract and retain the services of senior management; the outcome of litigation pending against us, including the terms of any settlements; dependence on investment income and the composition of our investment portfolio and related market risks; our exposure to catastrophic events and severe weather conditions; downgrades in our financial strength ratings; risks and uncertainties relating to our acquisitions including our ability to successfully integrate the acquired companies; and other risks and uncertainties described in the section entitled "Risk Factors" and elsewhere in our filings with the Securities and Exchange Commission (the "SEC"), including our Annual Report in Form 10-K for the year ended December 31, 2022 and 2023 and our Form 10-Q for the periods ending March 31, 2023 (Form 10-Q/A), June 30, 2023, September 30, 2023, March 31, 2024, and June 30, 2024 including amendments and recast results. We caution you not to place undue reliance on these forward looking statements, which are valid only as of the date they were made. Except as may be required by applicable law, we undertake no obligation to update or revise any forward-looking statements to reflect new information, the occurrence of unanticipated events, or otherwise. This presentation contains certain non-GAAP financial measures. See our earnings release, Form 10-K , Form 10-Q, and Form 10-Q/A for further information regarding these non-GAAP financial measures.

 
v3.24.2.u1
Cover Page Document
Aug. 07, 2024
Document Information [Line Items]  
Amendment Flag false
Document Type 8-K
Document Period End Date Aug. 07, 2024
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Title of 12(b) Security Common stock, $0.0001 par value per share
Entity Registrant Name American Coastal Insurance Corporation
Entity Incorporation, State or Country Code DE
Entity File Number 001-35761
Entity Tax Identification Number 75-3241967
Entity Address, Address Line One 800 2nd Avenue S.
Entity Address, Postal Zip Code 33701
Entity Address, City or Town Saint Petersburg,
Entity Address, State or Province FL
City Area Code (727)
Local Phone Number 633-0851
Trading Symbol ACIC
Security Exchange Name NASDAQ
Entity Central Index Key 0001401521
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