Earnings Presentation Q2 2024
Earnings Presentation
2nd Quarter 2024
August 7th, 2024
Company Overview
ACIC is a specialty underwriter of catastrophe exposed property insurance.
holding company for two P&C carriers:
AmCoastal has the #1 market share of commercial residential property insurance (commercial lines) in
IIC's homeowners & fire insurance products (personal lines) are
written exclusively in
ACIC as of
|
Total Assets: |
|
|
Total Equity: |
|
|
Annualized Revenue: |
|
|
Employees: |
65 |
|
Headquarters: |
|
|
Credit Rating: |
BB+ (Kroll) |
Specialty Commercial Property
Specialty Homeowners ¹
¹ IIC 's results are classified as discontinued operations.
2
Executive Summary
- Q2-24Results
-
- Non-GAAPCore Income of
$19.6m ($0.40 ) decreased -$7.5m (-27.6%) from$27.1m ($0.62 ) y/y on higher ceded earned premiums resulting from the 40% gross CAT quota share effective6.1.2023 . - Gross premiums earned grew
$5.6m (+3.7%)to$155.5m y/y. - Our combined ratio of 64.9% was on target but increased 1.8 points from 63.1% in the same period last year.
- Current year net catastrophe losses in the quarter were effectively nil and we had
$1.0m of favorable prior year reserve development. - Stockholders' equity attributable to ACIC, increased to
$223.1m or$4.63 per share and$5.03 per share excluding unrealized losses in accumulated other comprehensive income.
- Non-GAAPCore Income of
- Other Highlights
-
- Completed catastrophe reinsurance program renewals effective
6.1.24 at lower cost due to replacing FORA and reducing the quota share. This sets up revenue and earnings in the next 4 quarters to compare favorably with the prior year and added more limit for a potential 3rd event and higher severity protection to support future exposure growth. - Executed definitive agreements to divest of
Interboro Insurance Company and we anticipate closing during 1Q-25. As a result of the pending sale, IIC is now included in discontinued operations. - Began development of a new apartment product to be distributed and underwritten directly through our MGA, Skyway Underwriters.
- Secured extension and regulatory approval of our exclusive MGA agreement with
AmRisc to1.1.29 .
- Completed catastrophe reinsurance program renewals effective
3
2Q-24 Financial Scorecard
Key results all compare favorably to
Core Earnings per Share (CEPS)
2Q-24 =
vs.
Analyst's Est. =
Book Value per Share (BVPS)
2Q-24 =
vs.
Analyst's Est. =
Combined Ratio (CR)
2Q-24 = 64.9%
vs.
Analyst's Est. = 74.3%
Core Retuon Equity (CROE)
2Q-24 = 46.9%
vs.
Analyst's Est. = 28.5%
4
2Q-24 Summary of Key Results
Combined ratio increased 1.8 points and core income declined -
|
$ in thousands, except per share amounts |
Q2-24 |
Q2-23 |
Change |
2024 |
2023 |
Change |
|||||
|
Net income (loss) |
$ |
19,054 |
$ |
17,779 |
7.2% |
$ |
42,653 |
$ |
285,059 |
n/m |
|
|
per diluted share (EPS) |
$ |
0.39 |
$ |
0.41 |
$ |
0.87 |
$ |
6.52 |
|||
|
Reconciliation to core income (loss), net of tax: |
|||||||||||
|
Investment gains (losses) |
$ |
(57) |
$ |
(5,188) |
$ |
(97) |
$ |
(4,879) |
|||
|
Amortization of intangible assets |
$ |
(481) |
$ |
(641) |
$ |
(1,122) |
$ |
(1,282) |
|||
|
Gain (loss) from discontinued operations |
$ |
(19) |
$ |
(3,465) |
$ |
(129) |
$ |
232,250 |
|||
|
Total adjustments |
$ |
(557) |
$ |
(9,294) |
$ |
(1,348) |
$ |
226,089 |
|
Core income (loss) |
$ |
19,611 |
$ |
27,073 |
-27.6% |
$ |
44,001 |
$ |
58,970 |
-25.4% |
|||
|
per diluted share (CEPS) |
$ |
0.40 |
$ |
0.62 |
$ |
0.90 |
$ |
1.35 |
|||||
|
Net loss & LAE ratio |
24.1% |
20.8% |
22.0% |
18.4% |
|||||||||
|
Net expense ratio |
40.8% |
42.3% |
37.1% |
42.2% |
|||||||||
|
Combined ratio |
64.9% |
63.1% |
1.8 |
pts |
59.1% |
60.6% |
(1.5) pts |
||||||
|
Less: Net current year catastrophe loss & LAE |
0.0% |
7.9% |
0.2% |
5.0% |
|||||||||
|
Less: Net (favorable) unfavorable reserve development |
-1.5% |
-6.8% |
-0.8% |
-5.0% |
|||||||||
|
Underlying combined ratio |
66.4% |
62.0% |
4.4 |
pts |
59.7% |
60.6% |
(0.9) pts |
||||||
5
2Q-24 Operating Overview
Earnings before income tax improved +11.2% despite the significant change in ceded premiums.
$ in millions
Total Revenue
Underlying Loss & LAE Current year CAT Loss & LAE Prior year development (F)/U
Total Expenses
|
Q2-24 |
Q2-23 |
Change |
% Chg |
|
|
|
5.6 |
3.7% |
|
(92.1) |
(71.8) |
(20.2) |
28.1% |
|
63.4 |
78.0 |
(14.6) |
-18.7% |
|
5.2 |
(4.6) |
9.8 |
-213.0% |
0.0 0.1 (0.1) -100.0%
|
68.7 |
73.5 |
(4.9) |
-6.7% |
|
16.3 |
15.4 |
0.9 |
5.8% |
|
(0.0) |
6.2 |
(6.2) |
-100.0% |
|
(1.0) |
(5.3) |
4.4 |
-83.0% |
|
15.3 |
16.2 |
(1.0) |
-6.2% |
|
25.9 |
33.0 |
(7.1) |
-21.5% |
|
3.4 |
2.7 |
0.7 |
25.9% |
|
44.6 |
51.9 |
(7.4) |
-14.3% |
The 40.0% quota share had a significant impact on net earned premiums and OPEX y/y but was reduced to 20.0% effective June 1st, 2024.
|
Other income (expense) |
0.8 |
0.8 |
0.0 |
0.0% |
|||
|
Earnings from continuing operations before tax |
$ |
24.9 |
$ |
22.4 |
$ |
2.5 |
11.2% |
|
Provision (benefit) for income tax |
5.8 |
1.2 |
4.7 |
391.7% |
|||
|
Net income from continuing operations |
$ |
19.1 |
$ |
21.2 |
$ |
(2.1) |
-9.9% |
6
2024 Full Year & 2H-24 Guidance
Our new reinsurance cost structure effective
Estimated range of Net Income from Continuing Operations ¹
|
FY-24 E |
|
- |
$ |
95.0 |
Estimated range of Net
Premiums Earned
|
FY-24 E |
|
- |
|
|
FY-23 A |
|
FY-23 A |
|
||||||||
|
Y/Y Change |
$ |
2.8 |
- |
$ |
12.8 |
Y/Y Change |
$ |
3.1 |
- |
$ |
18.1 |
|
% Change |
3.5% |
- |
15.6% |
% Change |
1.1% |
- |
6.4% |
|
2H-24 |
E |
$ |
42.3 |
- |
$ |
52.3 |
2H-24 |
E |
$ |
158.9 |
- |
$ |
173.9 |
|
2H-23 |
A |
|
2H-23 |
A |
|
||||||||
|
Y/Y Change |
$ |
12.9 |
- |
$ |
22.9 |
Y/Y Change |
$ |
39.7 |
- |
$ |
54.7 |
||
|
% Change |
43.8% |
- |
77.8% |
% Change |
33.3% |
- |
45.9% |
¹ Earnings estimates exclude potential 2H-24 catastrophe losses.
7
Balance Sheet Highlights
|
|
|
YTD |
|||
|
($ in thousands, except per share amounts) |
2024 |
2023 |
% Change |
||
|
Selected Balance Sheet Data |
|||||
|
Cash & investments |
$ |
572,580 |
$ |
311,874 |
83.6% |
|
Accumulated other comprehensive income (loss) |
$ |
(19,149) |
$ |
(17,137) |
11.7% |
|
Unpaid loss & LAE reserves |
$ |
211,433 |
$ |
347,738 |
-39.2% |
|
Reinsurance recoverable |
$ |
206,436 |
$ |
340,820 |
-39.4% |
|
Net Loss & LAE reserves |
$ |
4,997 |
$ |
6,918 |
-27.8% |
|
Financial debt |
$ |
148,854 |
$ |
148,688 |
0.1% |
|
Stockholders' equity attributable to ACIC |
$ |
223,073 |
$ |
168,765 |
32.2% |
|
Total capital |
$ |
371,927 |
$ |
317,453 |
17.2% |
|
Leverage Ratios |
|||||
|
Debt-to-total capital |
40.0% |
46.8% |
-14.6% |
||
|
Net premiums earned-to-stockholders' equity (annualized) |
113.0% |
192.8% |
-41.4% |
||
|
Per Share Data |
|||||
|
Common shares outstanding |
48,132,370 |
46,777,006 |
2.9% |
||
|
Book value per common share |
$ |
4.63 |
$ |
3.61 |
28.5% |
|
Underlying book value per common share |
$ |
5.03 |
$ |
3.97 |
26.6% |
|
Tangible book value per common share |
$ |
3.25 |
$ |
2.14 |
52.1% |
|
Underlying tangible book value per common share |
$ |
3.65 |
$ |
2.50 |
45.7% |
Liquidity & Equity have improved significantly since year-end driven by strong underwriting results.
8
Investment Portfolio Overview
- Strong cash generation has propelled successive quarterly growth in investments and liquid assets.
- Focus on a resilient and high-quality portfolio considerate of current market conditions and risks.
9
Underwriting Environment
Competition remains limited but is getting more aggressive and driving softer market conditions.
- TIV down -1.7% and policy count down -5.8% YTD, but 100-YR PML up +3.5% due to model change.
- Premiums in-force are up 2.0% to
$656m with average premium up +8.3% YTD, but average renewal rates started to decline consistent with lower reinsurance costs. - Account retention was near target of 85% and submission volume remains strong, but accounts bound relative to submissions received and quotes provided are down y/y due to pricing.
- Market appears to have peaked and is beginning to soften, but renewal pricing is holding close to expiring. AmCoastal is a market leader and expects to maintain its portfolio at comparable terms.
- Valuation changes are slowing as replacement cost estimates reflect lower inflation pressure.
- Our commercial residential take-out application for the October 27th, 2024 assumption date has been approved by the
Florida Office of Insurance Regulation .
10
Attachments
Disclaimer
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