What American Integrity Insurance Group (AII) Said on Its Q3 Earnings Call

Key Points

• Third-quarter net income more than doubled to $28.4 million, or $1.44 per diluted share, as net premiums earned climbed 94.5% to $101.2 million. Growth in voluntary policies and retaining a larger share of premiums helped drive the increase.
• The insurer expanded its business, with policies in force up 18.6% to more than 481,000 and retention improving to 84.9%. It wrote about 41,000 new voluntary policies, up 57% year over year, while emphasizing underwriting discipline in Florida and other states.
• Reducing its non-catastrophe quota-share cession lets American Integrity retain more premiums but also more risk and less ceding commission income. The company estimated Hurricane Isaias could generate up to $35 million in losses, while saying it does not currently expect the storm to materially change its outlook for favorable reinsurance pricing at the 2027 renewal.

American Integrity Insurance Group NYSE: AII more than doubled its third-quarter net income as growth in voluntary policies and a reduction in the share of business ceded to reinsurers boosted the property insurer’s retained premiums.

Net income rose to $28.4 million, or $1.44 per diluted share, from $13.2 million, or $0.67 per diluted share, a year earlier. Net premiums earned increased 94.5% to $101.2 million, while gross premiums written rose 22.7% to $293.3 million.

Founder and CEO Bob Ritchie said the company is expanding its voluntary business while maintaining underwriting discipline in a more competitive Florida market. American Integrity wrote approximately 41,000 new voluntary policies during the quarter, up 57% from a year earlier.

Reinsurance changes lift retained premiums

CFO Brian Foley said the increase in net premiums earned reflected both underlying business growth and the company’s decision to reduce its non-catastrophe quota share cession to 25% from 40%, effective Jan. 1. The change allows American Integrity to retain more premiums, but also leaves it responsible for more losses and reduces the ceding commission income available to offset expenses.

The company’s combined ratio improved to 70.6% from 78.9% a year earlier. Its net underlying loss ratio fell to 31.7% from 49.9%, although Foley cautioned that much of that movement reflected reinsurance economics and the timing of prior-year catastrophe coverage costs. The gross underlying loss ratio, a measure before reinsurance, was 18.9%, compared with 19.3% a year earlier.

Policy acquisition expenses rose to $18 million from $6.3 million, while general and administrative expenses increased to $17.6 million from $7.3 million. Foley attributed much of the increases to lower ceding commission offsets, alongside higher production and other factors. Third-quarter catastrophe losses were $5.1 million from severe convective storms, compared with none a year earlier.

Net investment income increased 21.9% to $8.4 million, helped by the redeployment of approximately $200 million in cash into fixed-income securities at the start of the quarter. Annualized return on equity rose to 29.8% from 17%.

Growth in Florida and beyond

Policies in force increased 18.6% to more than 481,000, and in-force premium rose 17.4% to nearly $1.1 billion. Policy retention improved to 84.9%, from 84.4% in the second quarter and 82.8% a year earlier.

President Jon Ritchie said the company wrote approximately 8,000 new voluntary policies in Florida’s Tri-County region, up from just over 200 a year earlier. Outside that region, it wrote approximately 8,600 new voluntary policies on middle-aged homes, compared with fewer than 600 a year earlier.

Bob Ritchie said improved market conditions and Florida’s legislative reforms have supported the company’s expansion in middle-aged homes, a segment where it had reduced participation during the state’s litigation crisis. He said the average premium per policy remained broadly stable year over year, with business mix and an inflation guard adjustment helping offset modest rate reductions elsewhere in the portfolio.

Voluntary new business policies in Georgia, South Carolina and North Carolina rose 20% year over year, Jon Ritchie said. The company plans to expand its offerings in those states in 2027, including dwelling fire coverage, subject to applicable filings and approvals. He said there are no immediate plans for other new products in those states next year.

American Integrity did not participate in a Citizens take-out during the quarter because the available policies did not meet its underwriting and profitability standards. Jon Ritchie said the company can obtain attractive risks through its voluntary distribution network and considers Citizens take-outs additive rather than central to its production strategy.

Hurricane estimate and reinsurance outlook

Jon Ritchie said Hurricane Isaias, a fourth-quarter event, is expected to produce a loss of up to $35 million based on preliminary information. The company’s catastrophe excess-of-loss program attaches at $35 million. He described the estimate as conservative but cautioned that claims were still at an early stage and the estimate could change.

American Integrity does not currently expect the storm to materially alter its outlook for the June 1, 2027, reinsurance renewal. Jon Ritchie said the company continues to anticipate favorable pricing, while noting that terms will depend on industry losses, available capacity and conditions at renewal. He also expects the company’s $35 million retention exhaustion point to rise in proportion to portfolio growth.

The insurer ended the quarter with $391.2 million in shareholders’ equity and book value of $19.96 per share. Foley said it fully repaid its outstanding surplus note debt during the quarter and ended the period debt-free.

About American Integrity Insurance Group (NYSE:AII)

American Integrity Insurance Group, Inc. is a property and casualty insurance holding company focused primarily on the Florida residential market. Its insurance products include coverage for homeowners, condominium unit owners, renters, manufactured homes and rental properties. The company was founded in 2006 and is headquartered in Tampa, Florida. It serves customers through independent insurance agents and operates through its insurance subsidiaries, including American Integrity Insurance Company of Florida.

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