Company to Host Quarterly Conference Call at
5:00 P.M. ET on August 10, 2023
The information in this press release should
be read in conjunction with an investor presentation that is
available on the Company's website at
investors.amcoastal.com/Presentations.
American Coastal Insurance Corporation (Nasdaq: UIHC) ("ACIC" or
"the Company"), a property and casualty insurance holding company,
today reported its financial results for the second quarter ended
June 30, 2023. 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.
($ in thousands, except for per share
data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
Change
2023
2022
Change
Gross premiums written
$
243,885
$
207,632
17.5
%
$
431,008
$
350,046
23.1
%
Gross premiums earned
$
158,199
$
129,483
22.2
%
$
302,675
$
252,216
20.0
%
Net premiums earned
$
83,169
$
64,532
28.9
%
$
170,493
$
122,278
39.4
%
Total revenues
$
79,295
$
63,910
24.1
%
$
169,615
$
122,342
38.6
%
Earnings from continuing operations, net
of tax
$
22,605
$
5,844
286.8
%
$
54,274
$
5,571
NM
Income (loss) from discontinued
operations, net of tax
$
(4,358
)
$
(74,899
)
94.2
%
$
224,851
$
(107,883
)
NM
Consolidated net income (loss)
attributable to ACIC
$
18,247
$
(69,029
)
NM
$
279,125
$
(102,201
)
NM
Net income (loss) available to ACIC
stockholders per diluted share
Continuing Operations
$
0.52
$
0.14
NM
$
1.24
$
0.13
NM
Discontinued Operations
$
(0.10
)
$
(1.74
)
94.3
%
5.15
(2.50
)
NM
Total
$
0.42
$
(1.60
)
NM
$
6.39
$
(2.37
)
NM
Reconciliation of net income (loss) to
core income (loss):
Plus: Non-cash amortization of intangible
assets
$
811
$
812
(0.1
)%
$
1,623
$
1,624
(0.1
)%
Less: Income (loss) from discontinued
operations, net of tax
$
(4,358
)
$
(74,899
)
94.2
%
$
224,851
$
(107,883
)
NM
Less: Net realized losses on investment
portfolio
$
(6,725
)
$
(77
)
NM
$
(6,808
)
$
(40
)
NM
Less: Unrealized gains (losses) on equity
securities
$
141
$
(2,391
)
NM
$
615
$
(3,161
)
NM
Less: Net tax impact (1)
$
1,553
$
689
NM
$
1,641
$
1,013
62.0
%
Core income (2)
$
28,447
$
8,461
236.2
%
$
60,449
$
9,494
536.7
%
Core income per diluted share (2)
$
0.65
$
0.20
225.0
%
$
1.38
$
0.22
527.3
%
Book value per share
$
2.45
$
3.85
NM
NM = Not Meaningful
(1)
In order to reconcile net income
(loss) to the core income measures, the Company included the tax
impact of all adjustments using the 21% federal corporate tax
rate.
(2)
Core income, and core income 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.
Comment from Chief Executive Officer, Dan Peed: “The
second quarter continued to demonstrate the strength of American
Coastal Insurance Company’s (“American Coastal”) portfolio. Our
commercial lines segment ended the quarter with favorable reserve
development, a trend that continues as a result of our strong
partnerships with leading industry insurance professionals, and
strategic efforts to manage loss costs. Our core return on equity
at June 30 was 310.7% with core income of $28.4 million. While we
saw a modest loss in our personal lines segment, Interboro
experienced lower underlying combined ratios. Nevertheless, we
continue our efforts to divest Interboro and further the group’s
transition to a specialty insurer.” Peed continued, “during the
second quarter we successfully completed our 2023-2024 catastrophe
reinsurance program while maintaining American Coastal’s coverage
at approximately the 1-in-167-year event and $10 million retention
per occurrence for first event coverage. The Company also rejoined
the Russell 3000 and Russell 2000 Index. We are optimistic about
the future and steadfastly work to maintain our number one market
share in Florida Condominium Associations. Finally, as announced on
July 27th, we changed our name to American Coastal Insurance
Corporation, and effective August 15th we will begin trading under
the ticker symbol ACIC.”
Return on Equity and Core Return on Equity
The calculations of the Company's return on equity and core
return on equity are shown below.
($ in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Income from continuing operations, net of
tax
$
22,605
$
5,844
$
54,274
$
5,571
Return on equity based on GAAP earnings
from continuing operations, net of tax (1)
246.9
%
8.3
%
296.4
%
3.9
%
Income (loss) from discontinued
operations, net of tax
$
(4,358
)
$
(74,899
)
$
224,851
$
(107,883
)
Return on equity based on GAAP income
(loss) from discontinued operations, net of tax (1)
(47.6
)%
(105.8
)%
NM
(76.2
)%
Consolidated net income (loss)
attributable to ACIC
$
18,247
$
(69,029
)
$
279,125
$
(102,201
)
Return on equity based on GAAP net income
(loss) attributable to ACIC (1)
199.3
%
(97.5
)%
NM
(72.2
)%
Core income
$
28,447
$
8,461
$
60,449
$
9,494
Core return on equity (1)(2)
310.7
%
12.0
%
330.1
%
6.7
%
(1)
Return on equity for the three
and six months ended June 30, 2023 and 2022 is calculated on an
annualized basis by dividing the net income (loss) or core income
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 residential property and
casualty insurance policies (commercial lines) operating segments
are shown below.
($ in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
Change
2023
2022
Change
Consolidated
Loss ratio, net(1)
25.1
%
21.7
%
3.4 pts
21.9
%
33.0
%
(11.1) pts
Expense ratio, net(2)
42.6
%
55.2
%
(12.6) pts
43.0
%
55.3
%
(12.3) pts
Combined ratio (CR)(3)
67.7
%
76.9
%
(9.2) pts
64.9
%
88.3
%
(23.4) pts
Effect of current year catastrophe losses
on CR
7.9
%
(3.3
)%
11.2 pts
5.4
%
2.8
%
2.6 pts
Effect of prior year unfavorable
(favorable) development on CR
(6.2
)%
(6.0
)%
(0.2) pts
(4.9
)%
(5.7
)%
0.8 pts
Underlying combined ratio(4)
66.0
%
86.2
%
(20.2) pts
64.4
%
91.2
%
(26.8) pts
Personal Lines
Loss ratio, net(1)
50.9
%
44.6
%
6.3 pts
40.2
%
71.1
%
(30.9) pts
Expense ratio, net(2)
81.2
%
88.1
%
(6.9) pts
95.9
%
90.7
%
5.2 pts
Combined ratio (CR)(3)
132.1
%
132.7
%
(0.6) pts
136.1
%
161.8
%
(25.7) pts
Effect of current year catastrophe losses
on CR
3.7
%
3.6
%
0.1 pts
4.8
%
11.4
%
(6.6) pts
Effect of prior year unfavorable
(favorable) development on CR
2.0
%
(15.2
)%
17.2 pts
(1.2
)%
(12.8
)%
11.6 pts
Underlying combined ratio(4)
126.4
%
144.3
%
(17.9) pts
132.5
%
163.2
%
(30.7) pts
Commercial Lines
Loss ratio, net(1)
22.0
%
15.9
%
6.1 pts
19.7
%
23.0
%
(3.3) pts
Expense ratio, net(2)
37.4
%
45.6
%
(8.2) pts
36.5
%
45.0
%
(8.5) pts
Combined ratio (CR)(3)
59.4
%
61.5
%
(2.1) pts
56.2
%
68.0
%
(11.8) pts
Effect of current year catastrophe losses
on CR
8.4
%
(5.0
)%
13.4 pts
5.4
%
0.5
%
4.9 pts
Effect of prior year favorable development
on CR
(7.2
)%
(3.7
)%
(3.5) pts
(5.3
)%
(3.8
)%
(1.5) pts
Underlying combined ratio(5)
58.2
%
70.2
%
(12.0) pts
56.1
%
71.3
%
(15.2) 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)
Combined ratio is the sum of the
loss ratio, net and expense ratio, net.
(4)
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
Six Months Ended
June 30,
June 30,
2023
2022
Change
2023
2022
Change
Loss and LAE
$
20,915
$
14,032
$
6,883
$
37,327
$
40,347
$
(3,020
)
% of Gross earned premiums
13.2
%
10.8
%
2.4 pts
12.3
%
16.0
%
(3.7) pts
% of Net earned premiums
25.1
%
21.7
%
3.4 pts
21.9
%
33.0
%
(11.1) pts
Less:
Current year catastrophe losses
$
6,540
$
(2,112
)
$
8,652
$
9,155
$
3,416
$
5,739
Prior year reserve unfavorable (favorable)
development
(5,151
)
(3,877
)
(1,274
)
(8,316
)
(6,941
)
(1,375
)
Underlying loss and LAE (1)
$
19,526
$
20,021
$
(495
)
$
36,488
$
43,872
$
(7,384
)
% of Gross earned premiums
12.3
%
15.5
%
(3.2) pts
12.1
%
17.4
%
(5.3) pts
% of Net earned premiums
23.5
%
31.0
%
(7.5) pts
21.4
%
35.9
%
(14.5) 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
Six Months Ended
June 30,
June 30,
2023
2022
Change
2023
2022
Change
Policy acquisition costs
$
25,545
$
23,570
$
1,975
$
52,517
$
43,878
$
8,639
Operating and underwriting
3,274
3,820
(546
)
5,442
7,527
(2,085
)
General and administrative
6,583
8,208
(1,625
)
15,376
16,272
(896
)
Total Operating Expenses
$
35,402
$
35,598
$
(196
)
$
73,335
$
67,677
$
5,658
% of Gross earned premiums
22.4
%
27.5
%
(5.1) pts
24.2
%
26.8
%
(2.6) pts
% of Net earned premiums
42.6
%
55.2
%
(12.6) pts
43.0
%
55.3
%
(12.3) pts
Quarterly Financial Results
Net income attributable to the Company for the second quarter of
2023 was $18.2 million, or $0.42 per diluted share, compared to a
net loss of $69.0 million, or $1.60 per diluted share, for the
second quarter of 2022. Of this income, $22.6 million is
attributable to continuing operations for the three months ended
June 30, 2023, an increase of $16.8 million from net income of $5.8
million for the same period in 2022. Drivers of net income from
continuing operations during the second quarter of 2023 included
increased gross premiums earned, a decrease in our provision for
taxes driven by the recognition of a valuation allowance against
our deferred tax assets during 2022 that did not reoccur in 2023.
and decreases in both operating and administrative costs, as
described below. This was partially offset by increases in loss and
LAE driven by increased catastrophe losses and increased policy
acquisition costs, as described below. In addition to continuing
operations, we recognized a loss from discontinued operations of
$4.4 million, driven by the deconsolidation of activities related
directly to supporting the business conducted by UPC.
The Company's total gross written premium increased by $36.3
million, or 17.5%, to $243.9 million for the second quarter of
2023, from $207.6 million for the second quarter of 2022. This
increase was driven primarily by an increase in our commercial
premiums written, as we focus on transitioning towards a specialty
commercial lines underwriter. The breakdown of the
quarter-over-quarter changes in both direct written and assumed
premiums by state and gross written premium by line of business are
shown in the table below.
($ in thousands)
Three Months Ended
June 30,
2023
2022
Change $
Change %
Direct Written and Assumed Premium by
State (1)
Florida
$
236,766
$
179,188
$
57,578
32.1
%
New York
7,063
4,984
2,079
41.7
Texas
—
1,803
(1,803
)
(100.0
)
South Carolina
—
(78
)
78
(100.0
)
Total direct written premium by state
243,829
185,897
57,932
31.2
Assumed premium (2)
56
21,735
(21,679
)
(99.7
)
Total gross written premium by state
$
243,885
$
207,632
$
36,253
17.5
%
Gross Written Premium by Line of
Business
Commercial property
$
236,822
$
181,067
$
55,755
30.8
%
Personal property
7,063
26,565
(19,502
)
(73.4
)
Total gross written premium by line of
business
$
243,885
$
207,632
$
36,253
17.5
%
(1)
We are no longer 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 increased by $6.9 million, or 49.3%, to $20.9
million for the second quarter of 2023, from $14.0 million for the
second quarter of 2022. Loss and LAE expense as a percentage of net
earned premiums increased 3.4 points to 25.1% for the second
quarter of 2023, compared to 21.7% for the second quarter of 2022.
Excluding catastrophe losses and reserve development, the Company's
gross underlying loss and LAE ratio for the second quarter of 2023
would have been 12.3%, a decrease of 3.2 points from 15.5% during
the second quarter of 2022.
Policy acquisition costs increased by $1.9 million, or 8.1%, to
$25.5 million for the second quarter of 2023, from $23.6 million
for the second quarter of 2022, primarily due to an increase in
external management fees incurred related to an increase in our
commercial lines gross written premium during the second quarter of
2023. In addition, we experienced increases in agent commissions,
policy administration fees and premium taxes driven by increased
written premium quarter-over-quarter. These increases were
partially offset by an increase in reinsurance commission income
driven by our quota share coverage entered into in the second
quarter of 2023 in our commercial lines business.
Operating and underwriting expenses decreased by $0.5 million,
or 13.2%, to $3.3 million for the second quarter of 2023, from $3.8
million for the second quarter of 2022, primarily due to decreased
investments in technology quarter-over-quarter.
General and administrative expenses decreased by $1.6 million,
or 19.5%, to $6.6 million for the second quarter of 2023, from $8.2
million for the second quarter of 2022, driven by a decrease in
salary related expenses attributable to decreased headcount
quarter-over-quarter. In addition, costs for professional services
provided by external vendors decreased quarter-over-quarter.
Commercial Lines Operating Segment Highlights
Pre-tax earnings attributable to the Company's commercial lines
operating segment totaled $25.4 million for the second quarter of
2023 compared to $18.8 million for the second quarter of 2022. This
increase can be attributed to increased gross premiums earned of
$32.6 million, as the Company transitions towards becoming a
specialty commercial lines underwriter.
This increased premium was partially offset by increased policy
acquisition costs of $3.6 million, driven by increases in external
management fees as a result of the increased premiums, partially
offset by reinsurance commission income earned. In addition, Loss
and LAE incurred increased $8.1 million, driven by ongoing handling
of prior year catastrophe losses. Operating and underwriting and
general and administrative expenses remained relatively flat, with
a net increase of $584 thousand experienced
quarter-over-quarter.
Personal Lines Operating Segment Highlights
Pre-tax loss attributable to the Company's personal lines
operating segment totaled $1.3 million for the second quarter of
2023 compared to a pre-tax loss of $3.7 million for the second
quarter of 2022. Drivers of the quarter-over-quarter decrease in
pre-tax loss included: a decrease in administrative costs of $1.5
million, driven by decreased salary related expenses and costs for
professional services provided by external vendors, a decrease in
policy acquisition costs of $1.6 million driven by ceding
commission income earned, partially offset by increased agent
commission and policy administration costs, a decrease in loss and
LAE incurred of $1.2 million due to decreased non-catastrophe
losses and a decrease in operating expenses of $938 thousand driven
by decreased investments in technology and underwriting expenses.
This was partially offset by a $3.9 million decrease in gross
premiums earned quarter-over-quarter. All of these changes can be
attributed to the Company's shift towards becoming a specialty
commercial lines underwriter, resulting in reduced writings,
exposure, and lower costs associated with the servicing of this
business.
Reinsurance Costs as a Percentage of Gross Earned
Premium
Reinsurance costs as a percentage of gross earned premium in the
second quarter of 2023 and 2022 were as follows:
2023
2022
Non-at-Risk
(0.5
)%
(0.6
)%
Quota Share
(14.4
)%
(14.2
)%
All Other
(32.5
)%
(35.4
)%
Total Ceding Ratio
(47.4
)%
(50.2
)%
Ceded premiums earned related to the Company's catastrophe
program decreased, driven by the need for less coverage for the
2023-2024 treaty year for the reduction in the geographic footprint
and exposure, as well as the utilization of quota share reinsurance
coverage for our commercial lines operating segment.
Reinsurance costs as a percentage of gross earned premium in the
second 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
(2.0
)%
(1.1
)%
(0.4
)%
(0.5
)%
Quota Share
—
%
—
%
(15.6
)%
(16.3
)%
All Other
(23.9
)%
(18.5
)%
(33.2
)%
(37.8
)%
Total Ceding Ratio
(25.9
)%
(19.6
)%
(49.2
)%
(54.6
)%
Investment Portfolio Highlights
The Company's cash, restricted cash and investment holdings
decreased from $340.9 million at December 31, 2022 to $241.7
million at June 30, 2023. The Company's cash and investment
holdings consist of investments in U.S. government and agency
securities, corporate debt and investment grade money market
instruments. Fixed maturities represented approximately 97.8% of
total investments at June 30, 2023 compared to 91% of total
investments at December 31, 2022. The Company's fixed maturity
investments had a modified duration of 4.1 years at June 30, 2023
compared to 4.0 years at December 31, 2022.
Book Value Analysis
Book value per common share increased 158.3% from $(4.21) at
December 31, 2022, to $2.45 at June 30, 2023. Underlying book value
per common share increased 184.2% from $(3.49) at December 31, 2022
to $2.94 at June 30, 2023. An increase in the Company's retained
earnings as the result of net income from both continuing and
discontinued operations in the first half of 2023 drove the
increase in the Company's book value per share. As shown in the
table below, removing the effect of AOCI increases the Company's
book value per common share, as the Company has experienced
unfavorable capital market conditions resulting in an accumulated
other comprehensive loss position at June 30, 2023.
($ in thousands, except for share and per
share data)
June 30, 2023
December 31, 2022
Book Value per Share
Numerator:
Common stockholders' equity attributable
to ACIC
$
106,462
$
(182,039
)
Denominator:
Total Shares Outstanding
43,406,486
43,280,173
Book Value Per Common Share
$
2.45
$
(4.21
)
Book Value per Share, Excluding the
Impact of Accumulated Other Comprehensive Income (AOCI)
Numerator:
Common stockholders' equity attributable
to ACIC
$
106,462
$
(182,039
)
Less: Accumulated other comprehensive
loss
(21,072
)
(30,947
)
Stockholders' Equity, excluding AOCI
$
127,534
$
(151,092
)
Denominator:
Total Shares Outstanding
43,406,486
43,280,173
Underlying Book Value Per Common
Share(1)
$
2.94
$
(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
Date and Time:
August 10, 2023 - 5:00 P.M.
ET
Participant Dial-In:
(United States): 877-445-9755
(International): 201-493-6744
Webcast:
To listen to the live webcast,
please go to http://investors.amcoastal.com and click on the
conference call link at the top of the page or go to:
https://event.webcasts.com/starthere.jsp?ei=1626191&tp_key=0b57a76f37
An archive of the webcast will be
available for a limited period of time thereafter.
Presentation:
The information in this press
release should be read in conjunction with an investor presentation
that is available on the Company's website at
investors.amcoastal.com/Presentations.
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), a subsidiary of Truist Insurance
Holdings, 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.
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
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
REVENUE:
Gross premiums written
$
243,885
$
207,632
$
431,008
$
350,046
Change in gross unearned premiums
(85,686
)
(78,149
)
(128,333
)
(97,830
)
Gross premiums earned
158,199
129,483
302,675
252,216
Ceded premiums earned
(75,030
)
(64,951
)
(132,182
)
(129,938
)
Net premiums earned
83,169
64,532
170,493
122,278
Net investment income
2,692
1,839
5,281
3,243
Net realized investment losses
(6,725
)
(77
)
(6,808
)
(40
)
Net unrealized gains (losses) on equity
securities
141
(2,391
)
615
(3,161
)
Other revenue
18
7
34
22
Total revenues
$
79,295
$
63,910
$
169,615
$
122,342
EXPENSES:
Losses and loss adjustment expenses
20,915
14,032
37,327
40,347
Policy acquisition costs
25,545
23,570
52,517
43,878
Operating expenses
3,274
3,820
5,442
7,527
General and administrative expenses
6,583
8,208
15,376
16,272
Interest expense
2,719
2,363
5,438
4,722
Total expenses
59,036
51,993
116,100
112,746
Income before other income
20,259
11,917
53,515
9,596
Other income
806
258
1,394
1,591
Income before income taxes
21,065
12,175
54,909
11,187
Provision (benefit) for income taxes
(1,540
)
6,331
635
5,616
Income from continuing operations, net of
tax
$
22,605
$
5,844
$
54,274
$
5,571
Income (loss) from discontinued
operations, net of tax
(4,358
)
(74,899
)
224,851
(107,883
)
Net income (loss)
$
18,247
$
(69,055
)
$
279,125
$
(102,312
)
Less: Net loss attributable to
noncontrolling interests
—
(26
)
—
(111
)
Net income (loss) attributable to ACIC
$
18,247
$
(69,029
)
$
279,125
$
(102,201
)
OTHER COMPREHENSIVE INCOME (LOSS):
Change in net unrealized gains (losses) on
investments
(2,168
)
(16,590
)
2,063
(44,279
)
Reclassification adjustment for net
realized investment losses
6,725
78
6,808
1,847
Income tax benefit (expense) related to
items of other comprehensive income (loss)
—
(6,187
)
—
49
Total comprehensive income (loss)
$
22,804
$
(91,754
)
$
287,996
$
(144,695
)
Less: Comprehensive income (loss)
attributable to noncontrolling interests
—
479
—
(164
)
Comprehensive income (loss) attributable
to ACIC
$
22,804
$
(92,233
)
$
287,996
$
(144,531
)
Weighted average shares outstanding
Basic
43,229,416
43,049,227
43,178,758
43,015,114
Diluted
43,805,217
43,049,227
43,690,435
43,015,114
Earnings available to ACIC common
stockholders per share
Basic
Continuing operations
$
0.53
$
0.14
$
1.25
$
0.13
Discontinued operations
(0.10
)
(1.74
)
5.21
(2.50
)
Total
$
0.43
$
(1.60
)
$
6.46
$
(2.37
)
Diluted
Continuing operations
$
0.52
$
0.14
$
1.24
$
0.13
Discontinued operations
(0.10
)
(1.74
)
5.15
(2.50
)
Total
$
0.42
$
(1.60
)
$
6.39
$
(2.37
)
Dividends declared per share
$
—
$
—
$
—
$
0.06
Consolidated Balance
Sheets
In thousands, except share
amounts
June 30, 2023
December 31, 2022
ASSETS
Investments, at fair value:
Fixed maturities, available-for-sale
$
160,863
$
204,682
Equity securities
—
15,657
Other investments
3,583
3,675
Total investments
$
164,446
$
224,014
Cash and cash equivalents
27,767
70,903
Restricted cash
49,501
45,988
Accrued investment income
1,632
1,605
Property and equipment, net
4,474
5,293
Premiums receivable, net
55,651
39,301
Reinsurance recoverable on paid and unpaid
losses
658,814
796,546
Ceded unearned premiums
329,676
90,496
Goodwill
59,476
59,476
Deferred policy acquisition costs
34,821
52,369
Intangible assets, net
10,946
12,770
Other assets
33,496
3,920
Assets held for disposal
12,105
1,434,815
Total Assets
$
1,442,805
$
2,837,496
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment
expenses
$
534,676
$
842,958
Unearned premiums
387,311
258,978
Reinsurance payable on premiums
140,662
30,503
Payments outstanding
17,532
2,000
Accounts payable and accrued expenses
93,184
74,386
Operating lease liability
1,172
1,689
Other liabilities
11,490
14,815
Notes payable, net
148,521
148,355
Liabilities held for disposal
1,795
1,645,851
Total Liabilities
$
1,336,343
$
3,019,535
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.0001 par value;
1,000,000 authorized; none issued or outstanding
—
—
Common stock, $0.0001 par value;
100,000,000 shares authorized; 43,618,569 and 43,492,256 issued,
respectively; 43,406,486 and 43,280,173 outstanding,
respectively
4
4
Additional paid-in capital
396,136
395,631
Treasury shares, at cost; 212,083
shares
(431
)
(431
)
Accumulated other comprehensive loss
(21,072
)
(30,947
)
Retained earnings (deficit)
(268,175
)
(546,296
)
Total Stockholders' Equity
$
106,462
$
(182,039
)
Total Liabilities and Stockholders'
Equity
$
1,442,805
$
2,837,496
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810419548/en/
Alexander Baty Director of Financial Reporting, American Coastal
Insurance Corp. abaty@amcoastal.com (727) 895-7737
Karin Daly Investor Relations, Vice President, The Equity Group
kdaly@equityny.com (212) 836-9623
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