American Coastal Insurance Corporation Reports Financial Results for Its Fourth Quarter and Year Ended December 31, 2023
American Coastal Insurance Corporation (ACIC) reports financial results for Q4 and full year 2023. Gross premiums written and earned show significant growth. Net premiums earned decrease. Total revenues decline. Core income and core income per diluted share improve. The company achieves positive consolidated net income. CEO Dan Peed highlights positive results and strategies.
Positive
Gross premiums written and earned increase by 13.4% and 15.7% respectively for the fourth quarter of 2023 compared to the same period in 2022.
Net premiums earned decrease by 27.7% for the fourth quarter of 2023 compared to the same period in 2022.
Total revenues decline by 22.1% for the fourth quarter of 2023 compared to the same period in 2022.
Core income for the fourth quarter of 2023 is $17.7 million, an improvement from $5.1 million in the same period in 2022.
Core income per diluted share for the fourth quarter of 2023 is $0.39, an increase from $0.12 in the same period in 2022.
Consolidated net income for the fourth quarter of 2023 is $14.3 million, a positive result compared to a net loss of $296.8 million in the same period in 2022.
CEO Dan Peed acknowledges the positive results achieved and highlights strategies to improve underwriting performance and reduce expenses.
Book value per share shows a significant increase from $3.61 to $4.21, reflecting a positive trend.
Negative
Net premiums earned show a significant decrease of 27.7% for the fourth quarter of 2023.
Total revenues decline by 22.1% for the fourth quarter of 2023 compared to the same period in 2022.
Loss ratio, net for the personal lines segment increases by 7.0 percentage points for the fourth quarter of 2023 compared to the same period in 2022.
Expense ratio, net for the personal lines segment increases by 33.5 percentage points for the fourth quarter of 2023 compared to the same period in 2022.
The reported financial results of American Coastal Insurance Corporation (ACIC) for the fourth quarter and full year ended December 31, 2023, indicate a significant turnaround in performance. The data shows a robust increase in gross premiums written and earned, alongside a dramatic shift from a consolidated net loss in the previous year to a substantial net income. The company's strategic focus on specialty commercial lines underwriting seems to be yielding positive results, as evidenced by the improved combined ratios for both personal and commercial lines.
From a financial perspective, the core return on equity (ROE) of 100.6% annualized for the fourth quarter is exceptionally high, signaling strong profitability. However, stakeholders should consider the sustainability of such high ROE levels. The shift from a negative book value per share in 2022 to a positive figure in 2023 is another critical indicator of the company's recovery. The underlying book value growth is essential for investors as it reflects the intrinsic value of the company.
It is also noteworthy that the decrease in net premiums earned may raise questions about the company's premium retention after reinsurance. The significant decrease in losses and loss adjustment expenses (LAE) suggests effective management of claims and possibly favorable reserve development. However, investors should be cautious about the potential for adverse development in the future. The expense ratio improvement reflects well on cost control measures, but it is essential to monitor whether these reductions impact service quality or business growth.
The insurance industry is highly competitive and sensitive to catastrophic events, regulatory changes and economic cycles. ACIC's performance in the property and casualty insurance sector, with a focus on specialty commercial lines, aligns with industry trends towards niche market specialization. The company's ability to increase gross written premiums in a challenging market environment is commendable and may indicate competitive advantages or successful market penetration strategies.
ACIC's reported improvement in the combined ratio, particularly in the commercial lines segment, suggests an effective underwriting discipline and cost management. The underlying combined ratio, a measure that excludes certain volatile components such as catastrophe losses and reserve development, provides a clearer view of the company's operating efficiency. A combined ratio below 100% typically indicates underwriting profitability and ACIC's reported figures reflect a strong performance in this regard.
Market participants should also consider the broader economic context, including interest rate environments and their impact on investment income for insurers. ACIC's results could be indicative of broader industry trends and its performance may influence investor sentiment towards the sector. Additionally, the reduction in policy acquisition costs and administrative expenses may reflect industry-wide efforts to leverage technology and improve operational efficiencies.
The financial results of ACIC demonstrate compliance with regulatory financial reporting requirements, which is critical for maintaining investor confidence and market integrity. The presentation of both GAAP and non-GAAP financial measures, such as core income and underlying combined ratios, provides a comprehensive view of the company's financial health. It is essential for the company to ensure transparency in its financial disclosures, particularly when reconciling non-GAAP measures to their most directly comparable GAAP measures.
ACIC's significant income from discontinued operations, primarily from the disposal of UPC, may attract regulatory scrutiny to ensure proper accounting treatment and disclosure. The legal implications of such transactions must be carefully considered to avoid potential misrepresentation of the company's ongoing financial performance. Moreover, the company's strategic decisions, such as ceasing writing in Texas, may have legal and regulatory considerations that need to be managed to mitigate risks.
Investors should be aware of the legal landscape in which ACIC operates, including any pending litigation, regulatory changes, or compliance requirements that could impact future financial performance. The insurance industry is subject to a complex regulatory environment and any changes in laws or regulations could have significant financial implications for ACIC and its stakeholders.
02/29/2024 - 04:10 PM
Company to Host Quarterly Conference Call at 5:00 P.M. ET on February 29, 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, Fla. --(BUSINESS WIRE)--
American Coastal Insurance Corporation (Nasdaq: ACIC) ("ACIC" or "the Company"), a property and casualty insurance holding company, today reported its financial results for the fourth quarter and year ended December 31, 2023.
($ in thousands, except for per share data)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
Change
2023
2022
Change
Gross premiums written
$
135,163
$
119,144
13.4
%
$
670,043
$
572,343
17.1
%
Gross premiums earned
$
167,529
$
144,793
15.7
%
$
635,964
$
535,369
18.8
%
Net premiums earned
$
55,583
$
76,842
(27.7
)%
$
281,884
$
269,346
4.7
%
Total revenues
$
58,214
$
74,697
(22.1
)%
$
286,543
$
269,791
6.2
%
Income (loss) from continuing operations, net of tax
$
17,106
$
1,026
NM
$
82,198
$
(40,004
)
NM
Income (loss) from discontinued operations, net of tax
$
(2,822
)
$
(297,796
)
99.1
%
$
227,713
$
(429,962
)
NM
Consolidated net income (loss) attributable to ACIC
$
14,284
$
(296,770
)
NM
$
309,911
$
(469,855
)
NM
Net income (loss) available to ACIC stockholders per diluted share
Continuing Operations
$
0.37
$
0.02
NM
$
1.85
$
(0.93
)
NM
Discontinued Operations
$
(0.06
)
$
(6.91
)
99.1
%
5.13
(9.98
)
NM
Total
$
0.31
$
(6.89
)
NM
$
6.98
$
(10.91
)
NM
Reconciliation of net income (loss) to core income (loss):
Plus: Non-cash amortization of intangible assets and goodwill impairment (1)
$
811
$
812
(0.1
)%
$
3,247
$
13,404
(75.8
)%
Less: Income (loss) from discontinued operations, net of tax
$
(2,822
)
$
(297,796
)
99.1
%
$
227,713
$
(429,962
)
NM
Less: Net realized losses on investment portfolio
$
(2
)
$
(6,439
)
NM
$
(6,808
)
$
(6,483
)
5.0
%
Less: Unrealized gains (losses) on equity securities
$
22
$
2,090
NM
$
814
$
(1,968
)
NM
Less: Net tax impact (2)
$
166
$
1,084
84.7
%
$
1,941
$
4,590
(57.7
)%
Core income (loss) (3)
$
17,731
$
5,103
NM
$
89,498
$
(22,628
)
NM
Core income (loss) per diluted share (3)
$
0.39
$
0.12
NM
$
2.02
$
(0.53
)
NM
Book value per share
$
3.61
$
(4.21
)
185.7
%
NM = Not Meaningful
(1)
For the year ended December 31, 2022, non-cash amortization of intangible assets included $10.2 million
(2)
In order to reconcile net income (loss) to the core income (loss) measures, the Company included the tax impact of all adjustments using the 21% federal corporate tax rate.
(3)
Core income (loss), and core income (loss) per diluted share, both of which are measures that are not based on GAAP, are reconciled above to net income (loss) and net income (loss) 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.
Comments from Chief Executive Officer, Dan Peed:
“We are pleased to deliver continued positive results to our shareholders. Our continuing operations reported core earnings of $17.7 million $89.5 million 100.6% . Our underlying book value per share was $3.97
“Although our personal lines segment experienced a pre-tax loss of $5.2 million $14.3 million 50.9% for commercial lines and 67.2% on a consolidated basis.”
Return on Equity and Core Return on Equity
The calculations of the Company's return on equity and core return on equity are shown below.
($ in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Income (loss) from continuing operations, net of tax
$
17,106
$
1,026
$
82,198
$
(40,004
)
Return on equity based on GAAP income (loss) from continuing operations, net of tax (1)
97.0
%
2.7
%
116.6
%
(26.2
)%
Income (loss) from discontinued operations, net of tax
$
(2,822
)
$
(297,796
)
$
227,713
$
(429,962
)
Return on equity based on GAAP income (loss) from discontinued operations, net of tax (1)
(16.0
)%
(779.2
)%
322.9
%
(281.3
)%
Consolidated net income (loss) attributable to ACIC
$
14,284
$
(296,770
)
$
309,911
$
(469,855
)
Return on equity based on GAAP net income (loss) attributable to ACIC (1)
81.0
%
(776.5
)%
439.5
%
(307.4
)%
Core income (loss)
$
17,731
$
5,103
$
89,498
$
(22,628
)
Core return on equity (1)(2)
100.6
%
13.4
%
126.9
%
(14.8
)%
(1)
Return on equity for the three months and years ended December 31, 2023 and 2022 is calculated on an annualized basis by dividing the net income (loss) or core income (loss) 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 (loss), which is reconciled on the first page of this press release to net income (loss), 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.
Combined Ratio and Underlying Ratio
The calculations of the Company's combined ratio and underlying combined ratio on a consolidated basis and attributable to both the Company's personal lines and commercial lines operating segments are shown below.
($ in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
Change
2023
2022
Change
Consolidated
Loss ratio, net(1)
21.2
%
54.3
%
(33.1) pts
22.3
%
50.0
%
(27.7) pts
Expense ratio, net(2)(3)
45.4
%
50.2
%
(4.8) pts
43.7
%
56.2
%
(12.5) pts
Combined ratio (CR)(4)
66.6
%
104.5
%
(37.9) pts
66.0
%
106.2
%
(40.2) pts
Effect of current year catastrophe losses on CR
0.5
%
24.6
%
(24.1) pts
5.4
%
21.5
%
(16.1) pts
Effect of prior year favorable development on CR
(1.1
)%
(2.7
)%
1.6 pts
(4.4
)%
(4.1
)%
(0.3) pts
Underlying combined ratio(5)
67.2
%
82.6
%
(15.4) pts
65.0
%
88.8
%
(23.8) pts
Personal Lines
Loss ratio, net(1)
84.4
%
77.4
%
7.0 pts
55.5
%
94.5
%
(39.0) pts
Expense ratio, net(2)(3)
123.0
%
89.5
%
33.5 pts
109.6
%
109.0
%
0.6 pts
Combined ratio (CR)(4)
207.4
%
166.9
%
40.5 pts
165.1
%
203.5
%
(38.4) pts
Effect of current year catastrophe losses on CR
10.6
%
22.7
%
(12.1) pts
8.4
%
28.8
%
(20.4) pts
Effect of prior year unfavorable (favorable) development on CR
13.2
%
2.3
%
10.9 pts
1.3
%
(5.9
)%
7.2 pts
Underlying combined ratio(5)
183.6
%
141.9
%
41.7 pts
155.4
%
180.6
%
(25.2) pts
Commercial Lines
Loss ratio, net(1)
12.9
%
49.0
%
(36.1) pts
18.4
%
39.8
%
(21.4) pts
Expense ratio, net(2)
34.2
%
40.5
%
(6.3) pts
35.3
%
43.2
%
(7.9) pts
Combined ratio (CR)(4)
47.1
%
89.5
%
(42.4) pts
53.7
%
83.0
%
(29.3) pts
Effect of current year catastrophe losses on CR
(0.8
)%
25.0
%
(25.8) pts
5.1
%
19.8
%
(14.7) pts
Effect of prior year favorable development on CR
(3.0
)%
(3.9
)%
0.9 pts
(5.0
)%
(3.6
)%
(1.4) pts
Underlying combined ratio(5)
50.9
%
68.4
%
(17.5) pts
53.6
%
66.8
%
(13.2) 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)
Includes impairment of goodwill, which had an impact of 3.6% on the Company's consolidated expense ratios and a 34.0% impact on the Company's personal lines expense ratios during the year ended December 31, 2022, respectively.
(4)
Combined ratio is the sum of the loss ratio, net and expense ratio, net.
(5)
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.
Combined Ratio Analysis
The calculations of the Company's loss ratios and underlying loss ratios are shown below.
($ in thousands)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
Change
2023
2022
Change
Loss and LAE
$
11,770
$
41,693
$
(29,923
)
$
62,861
$
134,805
$
(71,944
)
% of Gross earned premiums
7.0
%
28.8
%
(21.8) pts
9.9
%
25.2
%
(15.3) pts
% of Net earned premiums
21.2
%
54.3
%
(33.1) pts
22.3
%
50.0
%
(27.7) pts
Less:
Current year catastrophe losses
$
277
$
18,885
$
(18,608
)
$
15,279
$
57,906
$
(42,627
)
Prior year reserve favorable development
(629
)
(2,082
)
1,453
(12,294
)
(10,869
)
(1,425
)
Underlying loss and LAE (1)
$
12,122
$
24,890
$
(12,768
)
$
59,876
$
87,768
$
(27,892
)
% of Gross earned premiums
7.2
%
17.2
%
(10.0) pts
9.4
%
16.4
%
(7.0) pts
% of Net earned premiums
21.8
%
32.4
%
(10.6) pts
21.2
%
32.6
%
(11.4) 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 Ended
Year Ended
December 31,
December 31,
2023
2022
Change
2023
2022
Change
Policy acquisition costs
$
15,229
$
25,410
$
(10,181
)
$
83,346
$
95,318
$
(11,972
)
Operating and underwriting
1,999
3,079
(1,080
)
10,240
13,729
(3,489
)
General and administrative
7,982
10,050
(2,068
)
29,489
42,281
(12,792
)
Total Operating Expenses
$
25,210
$
38,539
$
(13,329
)
$
123,075
$
151,328
$
(28,253
)
% of Gross earned premiums
15.0
%
26.6
%
(11.6) pts
19.4
%
28.3
%
(8.9) pts
% of Net earned premiums
45.4
%
50.2
%
(4.8) pts
43.7
%
56.2
%
(12.5) pts
Quarterly Financial Results
Net income attributable to the Company for the fourth quarter of 2023 was $14.3 million $0.31 $296.8 million $6.89 $17.1 million $16.1 million $1.0 million $2.8 million
The Company's total gross written premium increased by $16.0 million 13.4% , to $135.2 million $119.1 million
($ in thousands)
Three Months Ended December 31,
2023
2022
Change $
Change %
Direct Written and Assumed Premium by State (1)
Florida
$
128,260
$
122,257
$
6,003
4.9
%
New York
6,903
5,685
1,218
21.4
Texas
—
(16
)
16
(100.0
)
Total direct written premium by state
135,163
127,926
7,237
5.7
Assumed premium (2)
—
(8,782
)
8,782
(100.0
)
Total gross written premium by state
$
135,163
$
119,144
$
16,019
13.4
%
Gross Written Premium by Line of Business
Commercial property
$
128,260
$
122,345
$
5,915
4.8
%
Personal property
6,903
(3,201
)
10,104
(315.7
)
Total gross written premium by line of business
$
135,163
$
119,144
$
16,019
13.4
%
(1)
We ceased writing in Texas as of May 31, 2022.
(2)
Assumed premium written during the fourth quarter of 2022 primarily included personal property business assumed from our former subsidiary, UPC. This assumption ended effective December 31, 2022, resulting in the return of unearned premium for the quarter.
Loss and LAE decreased by $29.9 million 71.7% , to $11.8 million $41.7 million 21.2% for the fourth quarter of 2023, compared to 54.3% for the fourth quarter of 2022. Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for the fourth quarter of 2023 would have been 7.2% , a decrease of 10.0 points from 17.2% during the fourth quarter of 2022.
Policy acquisition costs decreased by $10.2 million 40.2% , to $15.2 million $25.4 million
Operating and underwriting expenses decreased by $1.1 million 35.1% , to $2.0 million $3.1 million
General and administrative expenses decreased by $2.1 million 20.8% , to $8.0 million $10.1 million
Commercial Lines Operating Segment Highlights
Pre-tax earnings attributable to the Company's commercial lines operating segment totaled $27.9 million $3.7 million $24.3 million $8.8 million
These decreased expenses were partially offset by decreased revenues of $8.7 million $302 thousand
Personal Lines Operating Segment Highlights
Pre-tax loss attributable to the Company's personal lines operating segment totaled $5.2 million $10.6 million $2.8 million $1.4 million $5.7 million
These fluctuations were partially offset by a $7.8 million
Year to Date Financial Results
Net income attributable to the Company for the year ended December 31, 2023, was $309.9 million $7.11 $469.9 million $10.91 Florida in 2022 causing an increase to losses that year, increased gross written premiums, an increase in ceded premiums earned, favorable prior year loss development during the year, decreased policy acquisition costs, and decreased general and administrative costs. In addition, during 2023 we recorded a gain on disposal of our former subsidiary UPC totaling $238,440,000
The Company's total gross written premium increased by $97.7 million 17.1% , to $670.0 million $572.3 million Florida as we continue to focus on our commercial book of business. This was offset by a decline in written premiums across the personal lines business, due to a decrease in assumed premiums driven by the cancellation of the quota share with our former subsidiary, UPC. The breakdown of the year-over-year changes in both direct written and assumed premiums by state and gross written premium by line of business are shown in the table below.
($ in thousands)
Year Ended December 31,
2023
2022
Change $
Change %
Direct Written and Assumed Premium by State (1)
Florida
$
635,602
$
503,815
$
131,787
26.2
%
New York
34,334
25,101
9,233
36.8
Texas
(9
)
3,887
(3,896
)
(100.2
)
South Carolina
—
15
(15
)
(100.0
)
Total direct written premium by state
669,927
532,818
137,109
25.7
Assumed premium (2)
116
39,525
(39,409
)
(99.7
)
Total gross written premium by state
$
670,043
$
572,343
$
97,700
17.1
%
Gross Written Premium by Line of Business
Commercial property
$
635,709
$
508,243
$
127,466
25.1
%
Personal property
34,334
64,100
(29,766
)
(46.4
)
Total gross written premium by line of business
$
670,043
$
572,343
$
97,700
17.1
%
(1)
We ceased writing in Texas or South Carolina as of May 31, 2022.
(2)
Assumed premium written for 2023 primarily included commercial property business assumed from unaffiliated insurers. Assumed premium written for 2022 primarily included personal property business assumed from our former subsidiary, UPC.
Loss and LAE decreased by $71.9 million 53.4% , to $62.9 million $134.8 million 22.3% for the year ended December 31, 2023, compared to 50.0% for the year ended December 31, 2022. Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for the year ended December 31, 2023, would have been 9.4% , a decrease of 7.0 points from 16.4% for the year ended December 31, 2022.
Policy acquisition costs decreased by $12.0 million 12.6% , to $83.3 million $95.3 million
Operating and underwriting expenses decreased by $3.5 million 25.5% , to $10.2 million $13.7 million
General and administrative expenses decreased by $12.8 million 30.3% , to $29.5 million $42.3 million
Commercial Lines Operating Segment Highlights
Pre-tax earnings attributable to the Company's commercial lines operating segment totaled $118.1 million $35.8 million $40.8 million $33.1 million
Year-over-year, policy acquisition costs decreased $5.6 million $123 thousand
Personal Lines Operating Segment Highlights
Pre-tax losses attributable to the Company's personal lines operating segment totaled $13.9 million $52.2 million $53.4 million $31.1 million $6.4 million $2.6 million $13.3 million $10.2 million
These decreased expenses were partially offset by decreased net premiums earned of $20.6 million
Reinsurance Costs as a Percentage of Gross Earned Premium
Reinsurance costs as a percentage of gross earned premium in the fourth quarter of 2023 and 2022 were as follows:
2023
2022
Non-at-Risk
(0.3
)%
(0.5
)%
Quota Share
(29.9
)%
(11.6
)%
All Other
(36.6
)%
(34.8
)%
Total Ceding Ratio
(66.8
)%
(46.9
)%
Ceded premiums earned related to the Company's catastrophe excess of loss contracts remained relatively flat, driven by the need for less coverage for the 2023-2024 treaty year due to the reduction in the Company's geographic footprint and exposure, as well as the utilization of quota share reinsurance coverage for our commercial lines operating segment, offset by rate increases on the coverage experienced in the current year. The utilization of quota share reinsurance coverage, as described, increased the Company's ceding ratio overall.
Reinsurance costs as a percentage of gross earned premium in the fourth quarter of 2023 and 2022 for the Company's personal lines and commercial lines operating segments were as follows:
Personal
Commercial
2023
2022
2023
2022
Non-at-Risk
(2.7
)%
(1.0
)%
(0.2
)%
(0.5
)%
Quota Share
—
%
—
%
(31.4
)%
(13.5
)%
All Other
(20.9
)%
(31.1
)%
(37.4
)%
(35.4
)%
Total Ceding Ratio
(23.6
)%
(32.1
)%
(69.0
)%
(49.4
)%
Investment Portfolio Highlights
The Company's cash, restricted cash and investment holdings increased from $340.9 million $369.0 million U.S. government and agency securities, corporate debt and investment grade money market instruments. Fixed maturities represented approximately 91.6% of total investments at December 31, 2023 compared to 91.4% of total investments at December 31, 2022. The Company's fixed maturity investments had a modified duration of 3.4 years at December 31, 2023 compared to 4.0 years at December 31, 2022.
Book Value Analysis
Book value per common share increased 185.8% from $(4.21) $3.61 213.8% from $(3.49) $3.97
($ in thousands, except for share and per share data)
December 31, 2023
December 31, 2022
Book Value per Share
Numerator:
Common stockholders' equity attributable to ACIC
$
168,765
$
(182,039
)
Denominator:
Total Shares Outstanding
46,777,006
43,280,173
Book Value Per Common Share
$
3.61
$
(4.21
)
Book Value per Share, Excluding the Impact of Accumulated Other Comprehensive Income (AOCI)
Numerator:
Common stockholders' equity attributable to ACIC
$
168,765
$
(182,039
)
Less: Accumulated other comprehensive loss
(17,137
)
(30,947
)
Stockholders' Equity, excluding AOCI
$
185,902
$
(151,092
)
Denominator:
Total Shares Outstanding
46,777,006
43,280,173
Underlying Book Value Per Common Share(1)
$
3.97
$
(3.49
)
(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.
Conference Call Details
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.
American Coastal Insurance Corporation’s portfolio of investments also includes Interboro Insurance Company, a New York domiciled personal lines carrier founded in 1914.
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 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 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 have been recast to reflect the activity of UPC and activities related directly to supporting the business conducted by UPC within discontinued operations.
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.
Consolidated Statements of Comprehensive Income (Loss)
In thousands, except share and per share amounts
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
REVENUE:
Gross premiums written
$
135,163
$
119,144
$
670,043
$
572,343
Change in gross unearned premiums
32,366
25,649
(34,079
)
(36,974
)
Gross premiums earned
167,529
144,793
635,964
535,369
Ceded premiums earned
(111,946
)
(67,951
)
(354,080
)
(266,023
)
Net premiums earned
55,583
76,842
281,884
269,346
Net investment income
2,584
2,194
10,574
7,673
Net realized investment losses
(2
)
(6,439
)
(6,808
)
(6,483
)
Net unrealized gains (losses) on equity securities
22
2,090
814
(1,968
)
Other revenue
27
10
79
1,223
Total revenues
$
58,214
$
74,697
$
286,543
$
269,791
EXPENSES:
Losses and loss adjustment expenses
11,770
41,693
62,861
134,805
Policy acquisition costs
15,229
25,410
83,346
95,318
Operating expenses
1,999
3,079
10,240
13,729
General and administrative expenses
7,982
10,050
29,489
42,281
Interest expense
2,719
2,403
10,875
9,483
Total expenses
39,699
82,635
196,811
295,616
Income (loss) before other income (loss)
18,515
(7,938
)
89,732
(25,825
)
Other income
1,071
8,781
2,239
10,343
Income (loss) before income taxes
19,586
843
91,971
(15,482
)
Provision (benefit) for income taxes
2,480
(183
)
9,773
24,522
Income (loss) from continuing operations, net of tax
$
17,106
$
1,026
$
82,198
$
(40,004
)
Income (loss) from discontinued operations, net of tax
(2,822
)
(297,796
)
227,713
(429,962
)
Net income (loss)
$
14,284
$
(296,770
)
$
309,911
$
(469,966
)
Less: Net loss attributable to noncontrolling interests
—
—
—
(111
)
Net income (loss) attributable to ACIC
$
14,284
$
(296,770
)
$
309,911
$
(469,855
)
OTHER COMPREHENSIVE INCOME (LOSS):
Change in net unrealized gains (losses) on investments
6,696
3,632
5,998
(56,600
)
Reclassification adjustment for net realized investment losses
2
30,226
6,808
32,082
Income tax benefit related to items of other comprehensive income (loss)
—
—
—
49
Total comprehensive income (loss)
$
20,982
$
(262,912
)
$
322,717
$
(494,435
)
Less: Comprehensive loss attributable to noncontrolling interests
—
—
—
(164
)
Comprehensive income (loss) attributable to ACIC
$
20,982
$
(262,912
)
$
322,717
$
(494,271
)
Weighted average shares outstanding
Basic
44,713,148
43,101,872
43,596,432
43,052,070
Diluted
45,712,715
43,101,872
44,388,804
43,052,070
Earnings available to ACIC common stockholders per share
Basic
Continuing operations
$
0.38
$
0.02
$
1.89
$
(0.93
)
Discontinued operations
(0.06
)
(6.91
)
5.22
(9.98
)
Total
$
0.32
$
(6.89
)
$
7.11
$
(10.91
)
Diluted
Continuing operations
$
0.37
$
0.02
$
1.85
$
(0.93
)
Discontinued operations
(0.06
)
(6.91
)
5.13
(9.98
)
Total
$
0.31
$
(6.89
)
$
6.98
$
(10.91
)
Dividends declared per share
$
—
$
—
$
—
$
0.06
Consolidated Balance Sheets
In thousands, except share amounts
December 31, 2023
December 31, 2022
ASSETS
Investments, at fair value:
Fixed maturities, available-for-sale
$
180,703
$
204,682
Equity securities
—
15,657
Other investments
16,487
3,675
Total investments
$
197,190
$
224,014
Cash and cash equivalents
153,762
70,903
Restricted cash
18,070
45,988
Accrued investment income
2,104
1,605
Property and equipment, net
3,658
5,293
Premiums receivable, net
47,274
39,301
Reinsurance recoverable on paid and unpaid losses
341,102
796,546
Ceded unearned premiums
159,147
90,496
Goodwill
59,476
59,476
Deferred policy acquisition costs
25,041
52,369
Intangible assets, net
9,323
12,770
Other assets
36,141
3,920
Assets held for disposal
8,095
1,434,815
Total Assets
$
1,060,383
$
2,837,496
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses
$
370,221
$
842,958
Unearned premiums
293,057
258,978
Reinsurance payable on premiums
317
30,503
Payments outstanding
2,116
2,000
Accounts payable and accrued expenses
75,284
74,386
Operating lease liability
776
1,689
Other liabilities
1,159
5,849
Notes payable, net
148,688
148,355
Liabilities held for disposal
—
1,654,817
Total Liabilities
$
891,618
$
3,019,535
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.00 01
—
—
Common stock, $0.00 01
5
4
Additional paid-in capital
423,717
395,631
Treasury shares, at cost; 212,083 shares
(431
)
(431
)
Accumulated other comprehensive loss
(17,137
)
(30,947
)
Retained earnings (deficit)
(237,389
)
(546,296
)
Total Stockholders' Equity (Deficit)
$
168,765
$
(182,039
)
Total Liabilities and Stockholders' Equity (Deficit)
$
1,060,383
$
2,837,496
View source version on businesswire.com: https://www.businesswire.com/news/home/20240229266396/en/
Alexander Baty
investorrelations@amcoastal.com
Karin Daly
kdaly@equityny.com
Source: American Coastal Insurance Corporation
What are the financial results reported by American Coastal Insurance Corporation (ACIC) for Q4 and full year 2023?
American Coastal Insurance Corporation reports positive financial results for Q4 and full year 2023. Gross premiums written and earned show growth, while net premiums earned decrease. Total revenues decline, but core income and core income per diluted share improve.
What is the core income reported by ACIC for the fourth quarter of 2023?
The core income reported by ACIC for the fourth quarter of 2023 is $17.7 million, showing improvement from $5.1 million in the same period in 2022.
How does the net income compare between the fourth quarter of 2023 and the same period in 2022 for ACIC?
The net income for the fourth quarter of 2023 is $14.3 million, a positive result compared to a net loss of $296.8 million in the same period in 2022.
What is the change in book value per share for ACIC from the previous period?
The book value per share for ACIC increases significantly from $3.61 to $4.21, reflecting a positive trend.
How does the loss ratio, net for the personal lines segment change for the fourth quarter of 2023 compared to the same period in 2022?
The loss ratio, net for the personal lines segment increases by 7.0 percentage points for the fourth quarter of 2023 compared to the same period in 2022.
