Ategrity Specialty NYSE: ASIC reported record quarterly written premiums, underwriting income and net income for its second quarter of fiscal 2026, as the specialty insurer grew premiums across its casualty and property businesses despite what management described as a contracting excess-and-surplus, or E&S, market.
Gross written premiums increased 23.4% from a year earlier, including 24.7% growth in casualty premiums and 21.3% growth in property premiums. Net written premiums rose 30.8%, while net earned premiums increased 30.9%.
Chief Executive Officer Justin Cohen said the company’s growth exceeded industry conditions and was supported by expanded distribution relationships, regional initiatives and products introduced during the past year. He said both casualty and property premium growth surpassed 20%.
“In a quarter in which the E&S industry contracted as a whole, we produced 23.4% growth in gross written premiums alongside an 85.9% combined ratio, with both metrics well ahead of guidance,” Cohen said.
Profitability Improves as Expenses Decline
Adjusted net income rose to $33.5 million from $17.9 million in the prior-year quarter. Adjusted earnings were $0.67 per diluted share. Underwriting income increased 66.9% year over year to $16 million.
The combined ratio improved to 85.9% from 88.9% a year earlier. The improvement was primarily driven by expenses, with the overall expense ratio declining 3.5 percentage points to 27.5%.
Chief Financial Officer Neil Adler said the underwriting operating expense ratio fell 2.9 points to 9.5% of net earned premiums, reflecting premium growth that outpaced operating expenses as well as higher fee income. Policy acquisition costs declined to 17.9% of net earned premiums, from 18.5% in the prior-year period.
Fee income increased to $3.4 million from $1.5 million, driven by standard policy fees introduced during 2025.
The loss ratio was 58.5%, up 0.5 percentage point year over year. Adler said the increase reflected a continued shift toward the brokerage channel, which carries a higher booked loss ratio than the company’s small-business channel, as well as lower catastrophe activity in the year-earlier period.
Catastrophe losses represented 4.3% of net earned premiums, compared with 4.1% a year earlier. The company also recorded favorable prior-year reserve development equivalent to 0.9% of net earned premiums. Cohen said the reserve release was related to property business, where losses had not emerged to the degree the company had anticipated when it established reserves.
Management said it saw no material favorable or adverse casualty reserve development during the quarter. Cohen said actual casualty reporting has been below expectations, which management views as evidence of the portfolio’s performance.
Property Momentum and Regional Strategies
President and Chief Underwriting Officer Chris Schenk said the quarter’s growth reflected a larger renewal portfolio and broad-based new-business activity. Submission growth exceeded premium growth, he said, while the company remained selective in underwriting.
Schenk pointed to Project Heartland, Ategrity’s regional strategy in the Midwest, and its New England initiative, which launched in April, as contributors to growth. The company also cited accelerating property growth and contributions from newer professional liability and management liability products.
On pricing, Schenk said property rates were effectively flat to down by low-single-digit percentages. He said Ategrity opted to preserve certain well-performing renewal accounts in regions important to its portfolio balance. New-business property pricing, meanwhile, was slightly higher year over year, according to Schenk.
Management said it continues to identify opportunities in smaller and medium-sized businesses, including through the brokerage channel. Cohen described the small-business channel as covering more micro-sized accounts, while brokerage business includes accounts in the company’s mid-sized range.
The brokerage mix shift has reduced policy acquisition costs but increased the booked loss ratio and reinsurance use, management said. Cohen also said the higher level of brokerage business contributed to an unusually low quarterly retention level, as mid-sized accounts use more reinsurance programs and placements.
Technology and Claims Operations
Schenk said Ategrity’s modular technology architecture allows the company to reuse capabilities across products, channels and growth initiatives. He said the company is using agentic artificial intelligence across functions including marketing and governance.
The company brought its Architects and Engineers product to market earlier in the month using an estimated 60% fewer resources because of AI, Schenk said. He said the company has “all but eliminated” the fixed cost of launching a new product while accelerating its speed to market.
Ategrity also said it has more than 30 employees on its in-house claims team. Cohen said the company uses a staffing model based on actual versus expected claim counts and is focused on ensuring it remains appropriately resourced as claims volume grows.
Schenk said the company has been adding claims capabilities product by product, including integration and estimation tools, more precise case-reserving functionality and processes intended to place claims on appropriate paths to resolution.
Investment Results and Third-Quarter Outlook
Net investment income increased to $12.7 million from $11.9 million a year earlier, as a larger investment portfolio partly offset lower short-term interest rates. Realized and unrealized gains totaled $18.6 million, or $14.9 million after non-controlling interest, supported by results in the company’s utility and infrastructure portfolio.
Cash and investments rose by $62.3 million from the first quarter to $1.2 billion. Book value increased by $33.4 million during the quarter, supported by retained earnings and an increase in accumulated other comprehensive income, partially offset by repurchases under the company’s stock buyback program. Book value per share ended the quarter at $13.86, up 31% since Ategrity’s initial public offering.
For the third quarter, Cohen said Ategrity expects gross written premiums to grow more than 20 percentage points above the E&S market and forecast a combined ratio of about 87%, which would represent a 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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