American Coastal Insurance NASDAQ: ACIC executives said the company delivered another profitable quarter while navigating what management described as a rapidly softening commercial property insurance market, highlighting stable underwriting margins, a completed June 1 catastrophe reinsurance renewal, and early progress in its excess and surplus (E&S) initiative.
Management cites disciplined underwriting amid softening market
President and CEO Bennett Bradford Martz said American Coastal remained “patient and disciplined” as average account rate decreases pressured premium comparisons. Martz argued premium production “only tells part of the story,” pointing instead to retention, policy count, and exposures as indicators of market position.
Martz said the company’s account retention was in line with targets and that policy count and exposure base increased at quarter-end compared with the same period a year ago, which he characterized as evidence the company is defending its market leadership position.
First-quarter financial results: net income of $19.3 million, combined ratio of 66%
Chief Financial Officer Svetlana Castle reported net income of $19.3 million for the first quarter of 2026. Castle said core income was also $19.3 million, down $1.4 million year-over-year due to decreased net premium earned, partially offset by lower total expenses.
Castle said the company’s combined ratio was 66%, up 1 point from 2025 and “in line with our previously stated target.” She added that the company’s non-GAAP underlying combined ratio—which excludes current-year catastrophe losses and prior-year development—was 68.3% versus 68.2% in the prior year, which she said reflected stable margin and underwriting discipline through the cycle.
On the income statement, Castle said other income declined by $900,000, driven by non-recurring items in 2025. Net income from continuing operations was “relatively flat,” decreasing $400,000 year-over-year when including the prior-year non-recurring income.
On the balance sheet, Castle said cash and investments fell 7.5% from year-end to $599.4 million, primarily due to the payment of a previously declared special dividend of $0.75 per share totaling $36.6 million. She said liquidity remained strong. Stockholders’ equity increased 4.5% to $331.7 million, driven by underwriting results, and book value per share rose to $6.86, up 5.4% from year-end 2025.
Catastrophe reinsurance renewal: cost decreases, higher exhaustion point, structural changes
Martz said the company’s June 1, 2026 core catastrophe reinsurance program was “effectively complete,” and he said management was “very pleased with the outcome.” He outlined several takeaways, including that American Coastal secured “risk-adjusted reinsurance cost decreases” that Martz said were necessary to remain competitive and profitable.
Martz also said the company increased its exhaustion point to “over $1.6 billion,” which he said is expected to exceed the 250-year return time using the most recent version of Verisk’s hurricane model, including demand surge and a 10% load for loss adjustment expenses. He added that lower layers have been moved to an all-perils basis, which he said would allow the company to non-renew the January 1 all other perils catastrophe reinsurance program next year while maintaining protection against non-hurricane catastrophe events. He also said the program includes more aggregate protection against frequency and severity for a potentially active hurricane season.
In the Q&A, Martz said the program includes more overall limit, including “new cascading layers” that he described as functioning like a “top and drop,” providing more vertical limit for a first event and more aggregate limit for second and subsequent events if layers are not eroded. He also emphasized the move from a hurricane-only structure to an all-perils tower in the lower layers.
Martz said the company is still evaluating “various retention options,” particularly to assess the cost-benefit of reducing second- and third-event retentions. He said one goal is maintaining underwriting profitability even with “3 full retention events in Florida.” Because retention decisions affect ceded premium and loss modeling, Martz declined to provide modeling details on net-to-gross premiums until those decisions are finalized. He said full-year guidance remained unchanged, while noting it could be revisited after the second quarter.
E&S initiatives: first-quarter start and expectations for 2026 and beyond
Martz said the company assumed some E&S business in the first quarter, totaling about $6.2 million of E&S premium through participation in the AmRisc E&S portfolio. He said most 2026 E&S premium is expected to come from the assumption of and co-participation in the AmRisc portfolio, which he placed at “somewhere between $50 million and $80 million” for the year, though he noted it could vary depending on how much capacity is deployed.
Responding to a question from Titan Capital’s Bill DeZellem, Martz said he would expect roughly $70 million in E&S written premium in 2026 that the company did not have last year, while clarifying that he was referring to written premium and that he would expect “about half of that to earn this year.”
Martz said opportunities for Skyway would depend on market conditions, with a focus on core commercial property products such as condominiums, apartments, and assisted living facilities, targeting risk characteristics similar to the company’s Florida portfolio. He also said the company is working with fronting partners to establish an AM Best-rated fronted option intended to provide additional underwriting capacity inside and outside Florida, which he expects to be operational in the third quarter with premium production beginning in the fourth quarter. Martz said Skyway-related E&S growth in 2026 is not expected to be a “huge uplift,” describing it as more of a 2027 initiative.
Competitive environment, expenses, and capital allocation
Asked by Raymond James’ Mitchell Rubin about increased competition in Florida, Martz said the company targets account retention in a range of 75% to 95%, with a “sweet spot” in the low-to-mid 80s. He said retention in the first quarter was slightly below that level but within the targeted range and improved in March after the company chose to walk away from a few very large accounts in January where competitors “significantly undercut” pricing and deductibles. Martz described that behavior as “reckless competition,” adding that the company will remain disciplined even if it means ceding market share in those situations.
On expenses, Martz told Oppenheimer’s Michael Phillips that G&A has been relatively stable and that the company has a strategy to “do more with less,” citing operating efficiencies from technology and AI tools. He said the effort to operationalize AI is “very premature” in terms of details but that the company is “off to a very good start.”
Martz said the company estimates it has $150 million to $200 million of excess capital, which he said provides strategic and financial flexibility. In response to a private investor’s question about share repurchases, Martz said the company has been cautious with buybacks because repurchases could further reduce float and liquidity in the stock. He said additional use of the board authorization could occur in the second half of the year, while noting trading window constraints. Martz added that buybacks, debt reduction, and special dividends are all under consideration, depending on timing, interest rates, and full-year results.
About American Coastal Insurance NASDAQ: ACIC
American Coastal Insurance Company NASDAQ: ACIC is a specialized property and casualty insurer focused on coastal residential and commercial lines across the Southeastern United States. Headquartered in St. Petersburg, Florida, the company underwrites policies designed to address windstorm and non-windstorm perils in areas exposed to hurricane risk. Since its founding in 2007, American Coastal has positioned itself to meet the insurance needs of homeowners, condominium associations, and small business owners operating near coastal zones.
Through a diversified portfolio of personal lines products, American Coastal offers homeowners insurance, dwelling fire, mobile home, condominium unitowners and renters policies.
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