On August 7, 2024, American Coastal Insurance Corp (ACIC, Financial) released its 8-K filing detailing financial results for the second quarter ended June 30, 2024. American Coastal Insurance Corp is a holding company that underwrites commercial residential property and casualty insurance policies in the United States through its wholly-owned insurance subsidiary. The company operates in two segments: Commercial Lines Business and Personal Lines Business, deriving maximum revenue from the Commercial Lines Business Segment.
Performance Overview
For the second quarter of 2024, ACIC reported a net income of $19.1 million, or $0.39 per diluted share, compared to $17.8 million, or $0.41 per diluted share, for the same period in 2023. This represents a 7.2% increase in net income year-over-year. However, the earnings per share (EPS) of $0.39 fell short of the analyst estimate of $0.42.
Revenue and Premiums
Total revenue for the quarter was $68.7 million, a 6.6% decrease from $73.5 million in the second quarter of 2023. Gross premiums written decreased by 3.1% to $229.4 million from $236.8 million in the same period last year. Gross premiums earned increased by 3.7% to $155.5 million, while net premiums earned decreased by 18.8% to $63.4 million.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Gross Premiums Written | $229.4 million | $236.8 million | (3.1)% |
| Gross Premiums Earned | $155.5 million | $149.8 million | 3.7% |
| Net Premiums Earned | $63.4 million | $78.0 million | (18.8)% |
| Total Revenue | $68.7 million | $73.5 million | (6.6)% |
| Net Income | $19.1 million | $17.8 million | 7.2% |
| EPS | $0.39 | $0.41 | (4.9)% |
Challenges and Financial Metrics
ACIC faced several challenges during the quarter, including a decrease in net premiums earned and an increase in administrative expenses. The loss ratio, net increased by 3.3 percentage points to 24.1%, and the expense ratio, net decreased by 1.5 percentage points to 40.8%. The combined ratio stood at 64.9%, up from 63.1% in the same period last year.
Balance Sheet and Cash Flow
The company's cash, restricted cash, and investment holdings increased significantly from $311.9 million at the end of 2023 to $572.6 million as of June 30, 2024. This increase was driven by positive cash flows from operations during the first half of 2024. Book value per share increased by 28.3% to $4.63 from $3.61 at the end of 2023.
Commentary from Management
“During the second quarter of 2024, we recorded yet another profitable period for American Coastal. We also successfully placed our core catastrophe reinsurance program, increasing the exhaustion point of the program from the prior year period and meeting our goal of limiting American Coastal’s retention to less than one quarter’s pre-tax earnings. Moreover, we executed on the final phase of our multi-year strategy to phase out our personal lines operations by signing definitive agreements for the sale of Interboro Insurance Company. We remain focused on delivering long-term shareholder value over time and will continue to explore further opportunities to expand our product offering to meet the needs of the market.” - Dan Peed, CEO
Conclusion
Despite facing challenges, American Coastal Insurance Corp (ACIC, Financial) managed to deliver a profitable quarter. The company's strategic initiatives, including the sale of Interboro Insurance Company and the successful placement of its reinsurance program, are expected to contribute positively to its long-term growth. Investors and stakeholders will be keenly watching how these developments unfold in the coming quarters.
Explore the complete 8-K earnings release (here) from American Coastal Insurance Corp for further details.
