Ategrity Specialty NYSE: ASIC reported first-quarter fiscal 2026 results highlighted by record earnings, strong premium growth, and improved underwriting profitability, as management emphasized disciplined risk selection and targeted regional initiatives designed to find less-competitive pockets of the excess and surplus (E&S) market.
Record earnings and underwriting profitability
Chief Executive Officer Justin Cohen said the company generated “another quarter of record earnings,” posting a combined ratio of 87.4% while growing gross written premiums 23.1% in what he described as a relatively flat industry environment. Cohen said both metrics were better than guidance and attributed performance to identifying underserved segments, building differentiated solutions for distribution partners, and improving “the quality and renewability of our portfolio.”
Chief Financial Officer Neelam Patel reported adjusted net income of $25.6 million, up from $8.5 million in the prior-year quarter, driven by top-line growth, improving margins, and higher investment income. Net income was $25.5 million, and adjusted net income was $0.51 per diluted share. Underwriting income rose 87% year-over-year to $13.3 million, Patel said.
Patel attributed the combined ratio improvement from 90.9% a year ago to reductions in both loss and expense ratios. The loss ratio was 58.8%, down one point year-over-year, “driven by strong underlying results in our property business,” with favorable development equal to 0.5% of net earned premium. Catastrophe losses were 4% of net earned premium, down from 6.2% in the prior-year quarter, which included modest losses from California wildfires.
Premium growth, mix, and fee income
Gross written premiums increased 23% with “broad-based” growth, Patel said, including 27% growth in casualty premiums and 13% growth in property premiums. Net written premiums increased 32%, which Patel said reflected higher retention, while net earned premiums rose 34%.
Fee income grew to $2.2 million from $0.6 million a year ago, reflecting standard policy fees introduced during 2025, Patel said.
On the expense side, Patel said the overall expense ratio improved 2.5 percentage points to 28.6%. Operating expense was 10.9% of net earned premiums, down 1.4 points year-over-year, driven by earned premiums growing faster than operating expenses and the benefit of higher fee income. Policy acquisition costs declined to 17.6% of net earned premiums from 18.8%, which Patel said was primarily mix-driven due to growth in lines with lower acquisition costs and higher ceding commissions.
Investment results and balance sheet
Patel said net investment income increased to $12.0 million from $7.9 million in the prior-year quarter due to a larger investment portfolio. Realized and unrealized gains were $9.5 million, which Patel said were “supported by strong results in our utility and infrastructure portfolio.” The effective tax rate was 20.6%.
On the balance sheet, Patel said cash and investments increased by $42 million from the fourth quarter to $1.15 billion, reflecting strong operating cash flow. Book value increased by $17 million, driven by retained earnings but offset by a decrease in accumulated other comprehensive income. Book value per share ended the quarter at $13.13, which Patel said was up 24% since the IPO.
Underwriting strategy and regional initiatives
President and Chief Underwriting Officer Chris Schenk said the quarter validated Ategrity’s model of pursuing “multiple differentiated pathways for growth” and operating independently of market cycles. He said more than 50% of the 23.1% top-line growth came from strategies “unique to us,” while the company continued investing in production capacity, technology, marketing, and partnership management.
Schenk described the company’s approach as built on “a long-term view of customer value” and “a deliberate approach to creating new markets for growth.” He said Ategrity has focused since 2021 on writing “durable, sticky business,” resulting in a record renewal base and its highest retention since going public, though management declined to provide a specific retention figure.
On new business production, Schenk said submission growth was strong, driven by distribution investments and strategic initiatives. Quote production reached an “all-time high,” supported by both submission volume and quality, and he said the company’s AI investments and operating model helped process volume efficiently while maintaining fast turnaround. He noted conversion moderated modestly, which he called expected, and said the company won at a higher rate in areas where it has a regional strategy.
Schenk also described shifting emphasis as competition intensified in larger accounts. The company “leaned into small and middle market risk in our core verticals,” he said, where “precision, speed, and consistency matters most.” He said that improved the portfolio’s overall quality and renewability.
During the quarter, Ategrity launched three new regional strategies in Texas, New England, and Florida. Schenk said the company analyzes local market dynamics at a municipal and neighborhood level, including economic, legal, and policy trends, submission flows, loss experience, and even admitted market filings to identify opportunity. He gave examples including wholesale trade moving into E&S along the I-10 corridor in Texas and older mixed-use properties in Springfield, Massachusetts. Schenk said Ategrity equips wholesale partners with interactive “city guides” and targeted marketing intended to help source business more effectively.
Market conditions, pricing, and reinsurance retention
Management said competitive pressure increased in parts of the E&S market, but Cohen said its impact on Ategrity remained limited because the company operates outside more commoditized areas by focusing on small and medium-sized businesses and differentiated solutions.
On pricing, Schenk told analysts he saw “very aggressive competition” in catastrophe-exposed property, particularly larger accounts, but said Ategrity is not active there. He said the company saw more pressure in large non-cat accounts and “chose to walk away because the rates were not right,” adding that small and medium opportunities were sufficient to offset. Schenk also said that as part of the company’s renewal playbook it gave back some rate on accounts that performed well, but overall the company had “net positive rate change.”
Asked about favorable development, Cohen said Ategrity had been conservative in recent years on both property and casualty reserving. He said the quarter’s favorable development reflected a release of reserves in property 2025 after losses did not emerge as expected, adding that the company believes it remains prudently reserved.
On reinsurance, Cohen said 2026 should be “relatively consistent” and described the company’s move away from a casualty quota share, which he said was “purely opportunistic in nature.” He said the higher retention ratio seen in the first quarter was consistent with expectations, while noting quarterly mix can vary due to property seasonality. Cohen told analysts the company believes “the low 80s is the right place to think about” retention going forward.
Looking ahead, Cohen said second-quarter fiscal 2026 guidance remained consistent with the prior quarter. The company expects direct written premium growth of approximately 20 percentage points above the E&S market and expects a combined ratio “in the 87s,” which he said would represent continued year-over-year improvement.
About Ategrity Specialty NYSE: ASIC
We are a profitable and growing specialty insurance company dedicated to providing excess and surplus (“E&S”) products to small to medium-sized businesses (“SMBs”) across the United States. We have built a proprietary underwriting platform that combines sophisticated data analytics with automated and streamlined processes to efficiently serve our clients and deliver long-term value to our stockholders. The SMB market is characterized by large volumes of small-sized policies, and we believe our competitive edge lies in our ability to offer consistent, high-speed, and low-touch interactions that our distribution partners value.
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