AMERICAN COASTAL INSURANCE Corp

American Coastal Insurance Corporation (ACIC) operates as a holding company primarily engaged in the commercial property and casualty insurance business, with investments in the United States. The company's revenue is generated from writing insurance in Florida, targeting states where the perceived threat of natural catastrophe has led large national carriers to reduce their concentration of policies. ACIC's core business is conducted through its wholly-owned insurance subsidiary, American Coastal Insurance Company (AmCoastal) ¹. The company's strategy is to be a top-quartile underwriter of catastrophe-exposed property insurance, focusing on low-rise commercial property insurance in Florida ². ACIC aims to achieve consistent and sustainable underwriting profitability by balancing risk appetite, underwriting profit opportunities, available capital, and reinsurance capacity ³.

ACIC's core business model revolves around generating revenue from commercial property and casualty insurance in Florida. The company primarily offers commercial multi-peril property insurance for residential condominium associations, apartments, and assisted living facilities ⁴. Revenue is also generated from "not-at-risk" offerings like equipment breakdown, identity theft, and flood policies, where ACIC earns a commission but cedes all risk of loss to other private companies ⁵. The company's underwriting process involves pricing products to generate acceptable underwriting profit, using pricing algorithms, judgment-based rating, and consent-to-rate methodologies that consider historical attritional loss costs, modeled expected losses for catastrophes, and projected reinsurance costs ⁶. ACIC optimizes its portfolio by managing probable maximum loss (PML), total insured value (TIV), and average annual loss (AAL) ⁷.

The company's commercial residential products include multi-peril property insurance for residential condominium associations, apartments, and assisted living facilities in Florida ⁸. These policies cover loss or damage to buildings, inventory, or equipment from perils such as fire, wind, hail, water, theft, and vandalism ⁹. The condominium product is distributed through an exclusive managing general agency agreement and long-term partnership with AmRisc, which represents 100% of ACIC's condominium revenue in Florida ¹⁰. The apartment and assisted living products are marketed and distributed by Skyway Underwriters through multiple wholesaler partners, which also represent 100% of the revenue for these products ¹¹.

For the fiscal year ended December 31, 2025, ACIC reported total revenue of $335,439,000 ¹². Net income for the year increased by $31,119,000 to $106,837,000, compared to $75,718,000 in 2024 ¹³. Diluted earnings per share (EPS) were $2.15 ¹⁴. The company's net loss and loss adjustment expenses (LAE) were $46,040,000 ¹⁵, resulting in a net loss ratio of 15.0% ¹⁶. Policy acquisition costs were $97,844,000 ¹⁷, and general and administrative expenses were $40,463,000 ¹⁸. The combined ratio was 60.1% ¹⁹. Cash and cash equivalents totaled $198,762,000 ²⁰, and restricted cash was $94,092,000 ²¹. Total investments, at fair value, were $354,890,000 ²². Notes payable, net, stood at $149,353,000 ²³.

Year-over-year, gross premiums written decreased by $35,283,000, or 5.4%, to $612,522,000 in 2025 from $647,805,000 in 2024 ²⁴. Gross premiums earned increased by $9,652,000, or 1.5%, to $648,260,000 ²⁵. Ceded premiums earned decreased by $23,210,000, or 6.4%, to $341,408,000 ²⁶, primarily due to a $51,621,000 decrease in ceded premiums earned from quota share agreements, as coverage was reduced from 40% for the first half of 2024 to 20% effective June 1, 2024, and further to 15% effective June 1, 2025 ²⁷. This was partially offset by a $28,010,000 increase in catastrophe reinsurance coverage due to exposure growth and the decreased quota share cession rate ²⁸. Net investment income increased by $1,411,000, or 6.8%, to $22,206,000 ²⁹. Losses and LAE decreased by $23,279,000, or 33.6%, to $46,040,000 ³⁰, mainly due to Hurricane Milton in 2024 causing a large increase in catastrophe losses, with no similar activity in 2025 ³¹. Policy acquisition costs increased by $26,854,000, or 37.8%, to $97,844,000 ³², driven by a $17,161,000 decrease in ceding commission income and a $9,807,000 increase in external management fees ³³.

During the period, ACIC completed the sale of Interboro Insurance Company (IIC) on April 1, 2025, receiving cash proceeds of $25,679,000 and recognizing a loss on disposal of $247,000, net of tax impacts ³⁴. The company also recognized a $1,348,000 loss, net of tax impacts, on IIC's fixed maturity portfolio ³⁵. In September 2023, ACIC entered into an equity distribution agreement to sell up to 8,000,000 shares of common stock, with 4,373,000 shares sold as of December 31, 2025, generating net proceeds of approximately $38,190,000 ³⁶. The company made capital contributions of $8,269,000 to its reinsurance subsidiary, Shoreline Re, and a $15,000,000 contribution to form a new excess and surplus insurance entity in 2025 ³⁷.

The company's core catastrophe reinsurance program for AmCoastal provides occurrence-based coverage up to an exhaustion point of approximately $1,330,000,000 for a first occurrence and $1,676,000,000 in the aggregate ³⁸. The GAAP retention on a first event is $29,750,000, with second and third event retrocession coverage reducing GAAP retention to $18,500,000 and $3,750,000, respectively, based on three $100,000,000 loss events ³⁹. This program is designed to provide sufficient coverage for approximately a 1-in-203-year return period for a single occurrence, and for a 1-in-100-year event followed by a 1-in-50-year event in the same treaty year ⁴⁰. AmCoastal's all other perils catastrophe excess of loss agreement provides protection up to $88,200,000 for a first and second event, totaling $176,400,000 in the aggregate, with sufficient coverage for approximately a 1-in-450-year return period ⁴¹. Additionally, a new catastrophe aggregate excess of loss coverage (CAT Agg agreement) effective January 1, 2025, provides $40,000,000 of aggregate limit with a $20,000,000 per occurrence cap, after a $40,000,000 annual aggregate deductible ⁴². This CAT Agg agreement limits losses from all catastrophe loss events for the full year ending December 31, 2025 ⁴³. For 2026, the AOP CAT agreement was renewed, providing up to $95.6 million of occurrence limit excess of a $10.0 million attachment point, with a cost of approximately $11.4 million ⁴⁴. The CAT Agg agreement was also renewed for 2026, providing up to $40 million of aggregate limit (with a $20 million per occurrence cap) excess of zero after the $40 million annual aggregate deductible has been exceeded, at a cost of approximately $4.9 million ⁴⁵.

The company plans to continue its portfolio optimization process to balance risk appetite and underwriting profit opportunities with available capital and reinsurance capacity ⁴⁶. This includes maintaining the right combination of price, underwriting rules, deductibles, and coverages to earn a return on capital exceeding its cost of capital ⁴⁷. ACIC also seeks to ensure properties maintain appropriate insurance to value through re-underwriting and inspections every three years ⁴⁸. The company continues to leverage existing technology and make substantial investments in new technology to gain a competitive advantage ⁴⁹.

ACIC's capital allocation plans include continued investment in its reinsurance subsidiary, Shoreline Re, as evidenced by the $8,269,000 capital contribution in 2025 ⁵⁰. The company also made a $15,000,000 contribution to form a new excess and surplus insurance entity in 2025 ⁵¹. The company has an equity distribution agreement for up to 8,000,000 shares of common stock, with 4,373,000 shares sold as of December 31, 2025, generating net proceeds of approximately $38,190,000 ⁵². The Board of Directors authorized a stock repurchase plan of up to $25,000,000 in July 2019, under which no shares have been repurchased as of December 31, 2025 ⁵³. The company declared a special cash dividend of $0.75 per share of common stock in December 2025, paid on January 9, 2026 ⁵⁴.

ACIC faces significant risks due to its concentration of business in Florida, making it highly susceptible to catastrophic events and severe weather conditions such as hurricanes, tropical storms, and tornadoes ⁵⁵. The frequency and severity of these events, potentially exacerbated by climate change, could lead to losses exceeding reinsurance coverage, increased reinsurance costs, and credit exposure to reinsurers ⁵⁶. Regulatory, legal, economic, political, and demographic changes in Florida could disproportionately affect ACIC's revenues and profitability ⁵⁷. The company relies heavily on agent relationships, particularly with AmRisc, and the loss or inability to incentivize these agents could adversely impact business, especially given AmRisc's substantial leverage in negotiations ⁵⁸. Inaccurate loss reserves, due to the inherent judgment and variables involved, could lead to understated earnings or higher future losses ⁵⁹. Government-levied assessments, such as the $400,000 fine from the FLOIR related to Hurricane Ian claims handling, may materially affect results, even if recoverable from policyholders, due to timing differences ⁶⁰. Difficulties with information technology or data security systems, including cyber-attacks, could disrupt operations, lead to data breaches, and result in significant remediation costs, litigation, or regulatory penalties ⁶¹. Reliance on third-party vendors for critical functions exposes ACIC to risks of operational impairments and financial losses if vendors fail to perform, comply with regulations, or protect sensitive information ⁶². The loss of senior management could adversely affect the business due to their integral role and the intense competition for talent ⁶³. Acquisitions, mergers, dispositions, and other strategic transactions may not be successful, could be difficult to integrate, divert management resources, result in unanticipated costs, or dilute existing stockholders ⁶⁴. Investments in which ACIC shares ownership or management with third parties carry risks due to potential lack of complete control and differing goals ⁶⁵. The Senior Notes place restrictions on operations, and failure to comply with covenants could result in an event of default and acceleration of maturity ⁶⁶. The highly competitive property and casualty insurance market, with competitors having greater financial resources, could limit ACIC's ability to retain or write new business at adequate rates ⁶⁷. Changes in state regulation, including those limiting risk management or mandating participation in residual markets, could adversely affect profitability and growth ⁶⁸. The inability to obtain reinsurance on acceptable terms could increase loss exposure or limit underwriting capacity ⁶⁹. Failure of reinsurers to honor obligations poses counterparty risk, as ACIC remains primarily liable for insured losses ⁷⁰. Inaccurate pricing of risks or failure of loss limitation methods could materially impact results ⁷¹. Failure to pay claims accurately and timely could lead to litigation and reputational damage ⁷². Market risks related to investments, particularly fixed-income securities, could result in reduced returns or losses due to interest rate changes or credit quality declines ⁷³. A downgrade or withdrawal of financial strength ratings could adversely impact business volume, access to financing, and competitive position ⁷⁴. Future sales of substantial amounts of common stock by ACIC or existing stockholders, particularly R. Daniel Peed and his affiliates who beneficially own approximately 28% of outstanding common stock, could cause the stock price to decrease ⁷⁵.

Management's message to shareholders emphasizes a vision to be a top-quartile underwriter of catastrophe-exposed property insurance, with a primary focus on low-rise commercial property insurance in Florida ⁷⁶. They highlight a continuous portfolio optimization process to balance risk appetite and underwriting profit opportunities with available capital and reinsurance capacity to achieve consistent and sustainable underwriting profitability ⁷⁷. Key strategic priorities include maintaining the right combination of price, underwriting rules, deductibles, and coverages to earn a return on capital that exceeds the cost of capital throughout the insurance market cycle ⁷⁸. Management also stresses the importance of ensuring risks maintain an appropriate insurance to value through re-underwriting and inspections of each property every three years ⁷⁹. The company is committed to leveraging technology and making substantial investments in new technology to gain a competitive advantage ⁸⁰. Management also noted that the company received a special cash dividend of $0.75 per share of common stock in December 2025, which was paid on January 9, 2026 ⁸¹.