[10-Q] American Coastal Insurance Corporation Quarterly Earnings Report
BioAtla, Inc. (BCAB) filed its Q2-25 Form 10-Q. Cash & cash equivalents fell to $18.2 m from $49.0 m at 12/31/24 after $30.4 m operating cash burn in H1-25. Management states 鈥渟ubstantial doubt鈥� about the company鈥檚 ability to continue as a going concern beyond the next 12 months without new financing.
Q2 results show meaningful cost containment: R&D expense declined 15% YoY to $13.7 m; G&A fell 14% to $5.0 m. Net loss narrowed to $(18.7 m) / $(0.32) ps from $(21.1 m)/(0.44) ps, and the six-month loss improved to $(34.0 m) from $(44.3 m).
The March-25 restructuring eliminated ~30 % of staff; June-25 lease amendment cut office space, creating a $6.0 m right-of-use asset. A December-24 equity raise brought in $9.2 m and issued 9.7 m five-year warrants (FV liability now $2.2 m, generating a $1.6 m H1 fair-value gain).
No product or licensing revenue was recorded; pipeline continues with four active CAB programs in Phase 1/2. H1 R&D spend concentrated on AXL-ADC (BA3011, $6.0 m), ROR2-ADC (BA3021, $3.3 m), CTLA-4 (BA3071, $3.2 m) and EpCAM 脳 CD3 bispecific (BA3182, $3.1 m).
Liquidity is the critical risk. Management is evaluating equity, debt or partnership options; failure to secure capital may force further cuts or program delays.
BioAtla, Inc. (BCAB) ha presentato il suo modulo 10-Q per il secondo trimestre del 2025. La liquidit脿 e le disponibilit脿 liquide sono scese a 18,2 milioni di dollari da 49,0 milioni al 31/12/24, dopo un consumo operativo di cassa di 30,4 milioni di dollari nella prima met脿 del 2025. La direzione dichiara un 鈥渄ubbio sostanziale鈥� sulla capacit脿 dell鈥檃zienda di continuare l鈥檃ttivit脿 nei prossimi 12 mesi senza nuovi finanziamenti.
I risultati del secondo trimestre mostrano un significativo contenimento dei costi: le spese per R&S sono diminuite del 15% su base annua a 13,7 milioni di dollari; le spese generali e amministrative sono calate del 14% a 5,0 milioni di dollari. La perdita netta si 猫 ridotta a (18,7 milioni di dollari) / (0,32 dollari per azione) da (21,1 milioni) / (0,44 dollari per azione), mentre la perdita semestrale 猫 migliorata a (34,0 milioni) da (44,3 milioni).
La ristrutturazione di marzo 2025 ha eliminato circa il 30% del personale; l鈥檈mendamento al contratto di locazione di giugno 2025 ha ridotto gli spazi ufficio, generando un asset di diritto d鈥檜so di 6,0 milioni di dollari. Un aumento di capitale a dicembre 2024 ha portato 9,2 milioni di dollari e l鈥檈missione di 9,7 milioni di warrant quinquennali (passivit脿 a fair value ora di 2,2 milioni, con un guadagno a fair value di 1,6 milioni nella prima met脿 dell鈥檃nno).
Non sono stati registrati ricavi da prodotti o licenze; il pipeline continua con quattro programmi CAB attivi in Fase 1/2. La spesa R&S nella prima met脿 dell鈥檃nno si 猫 concentrata su AXL-ADC (BA3011, 6,0 milioni), ROR2-ADC (BA3021, 3,3 milioni), CTLA-4 (BA3071, 3,2 milioni) e EpCAM 脳 CD3 bispecifico (BA3182, 3,1 milioni).
La liquidit脿 猫 il rischio critico. La direzione sta valutando opzioni di equity, debito o partnership; il mancato reperimento di capitale potrebbe costringere a ulteriori tagli o ritardi nei programmi.
BioAtla, Inc. (BCAB) present贸 su Formulario 10-Q del segundo trimestre de 2025. El efectivo y equivalentes de efectivo cayeron a 18,2 millones de d贸lares desde 49,0 millones al 31/12/24 tras un consumo operativo de efectivo de 30,4 millones de d贸lares en el primer semestre de 2025. La direcci贸n expresa
Los resultados del segundo trimestre muestran un control significativo de costos: los gastos en I+D disminuyeron un 15% interanual a 13,7 millones de d贸lares; los gastos generales y administrativos bajaron un 14% a 5,0 millones de d贸lares. La p茅rdida neta se redujo a (18,7 millones) / (0,32 d贸lares por acci贸n) desde (21,1 millones) / (0,44 d贸lares por acci贸n), y la p茅rdida semestral mejor贸 a (34,0 millones) desde (44,3 millones).
La reestructuraci贸n de marzo de 2025 elimin贸 aproximadamente el 30% del personal; la enmienda del contrato de arrendamiento de junio de 2025 redujo el espacio de oficinas, creando un activo por derecho de uso de 6,0 millones de d贸lares. Una ampliaci贸n de capital en diciembre de 2024 aport贸 9,2 millones de d贸lares y emiti贸 9,7 millones de warrants a cinco a帽os (pasivo a valor razonable ahora de 2,2 millones, generando una ganancia a valor razonable de 1,6 millones en la primera mitad del a帽o).
No se registraron ingresos por productos o licencias; la cartera contin煤a con cuatro programas CAB activos en Fase 1/2. El gasto en I+D en el primer semestre se concentr贸 en AXL-ADC (BA3011, 6,0 millones), ROR2-ADC (BA3021, 3,3 millones), CTLA-4 (BA3071, 3,2 millones) y EpCAM 脳 CD3 bispec铆fico (BA3182, 3,1 millones).
La liquidez es el riesgo cr铆tico. La direcci贸n est谩 evaluando opciones de capital, deuda o asociaciones; la falta de capital podr铆a forzar m谩s recortes o retrasos en los programas.
BioAtla, Inc. (BCAB)電� 2025雲� 2攵勱赴 Form 10-Q毳� 鞝滌稖頄堨姷雼堧嫟. 順勱笀 氚� 順勱笀靹� 鞛愳偘鞚� 2024雲� 12鞗� 31鞚� 4,900毵� 雼煬鞐愳劀 1,820毵� 雼煬搿� 臧愳唽頄堨溂氅�, 2025雲� 靸侂皹旮� 鞖挫榿 順勱笀 靻岆鞎§潃 3,040毵� 雼煬鞓�鞀惦媹雼�. 瓴届榿歆勳潃 頄ロ泟 12臧滌洈 鞚挫儊 鞁犼窚 鞛愱笀 臁半嫭 鞐嗢澊電� 須岇偓臧� 瓿勳啀旮办梾鞙茧 臁挫啀頃� 靾� 鞛堨潉歆�鞐� 雽�頃� 鈥滌雽�頃� 鞚橂鈥�鞚� 響滊獏頄堨姷雼堧嫟.
2攵勱赴 鞁れ爜鞚� 鞚橂 鞛堧姅 牍勳毄 鞝堦皭鞚� 氤挫棳欷嶋媹雼�: 鞐瓣惮臧滊皽 牍勳毄鞚� 鞝勲厔 霃欔赴 雽�牍� 15% 臧愳唽頃� 1,370毵� 雼煬, 鞚茧皹甏�毽箘電� 14% 臧愳唽頃� 500毵� 雼煬鞛呺媹雼�. 靾滌啇鞁れ潃 (1,870毵� 雼煬) / 欤茧嫻 (0.32雼煬)搿� 於曥唽霅橃棃鞙茧┌, 6臧滌洈 雸勳爜 靻愳嫟霃� (4,430毵� 雼煬)鞐愳劀 (3,400毵� 雼煬)搿� 臧滌劆霅橃棃鞀惦媹雼�.
2025雲� 3鞗� 甑“臁办爼鞙茧 歆侅洂 鞎� 30%臧� 臧愳稌霅橃棃瓿�, 2025雲� 6鞗� 鞛勲寑 瓿勳暯 靾橃爼鞙茧 靷鞁� 瓿店皠鞚� 於曥唽霅橃柎 600毵� 雼煬鞚� 靷毄甓� 鞛愳偘鞚� 靸濎劚霅橃棃鞀惦媹雼�. 2024雲� 12鞗� 鞛愲掣 頇曥订鞙茧 920毵� 雼煬臧� 鞙犾瀰霅橃棃鞙茧┌, 5雲� 毵岅赴 鞗岆煱韸� 970毵� 欤缄皜 氚滍枆霅橃棃鞀惦媹雼�(瓿奠爼臧�旃� 攵�毂勲姅 順勳灛 220毵� 雼煬, 靸侂皹旮办棎 160毵� 雼煬鞚� 瓿奠爼臧�旃� 鞚挫澋 氚滌儩).
鞝滍拡 霕愲姅 霛检澊靹犾姢 靾橃澋鞚� 鞐嗢棃鞙茧┌, 韺岇澊頂勲澕鞚胳潃 1/2靸� 雼硠鞚� 4臧� 頇滌劚 CAB 頂勲攴鸽灗鞙茧 鞙犾霅橁碃 鞛堨姷雼堧嫟. 靸侂皹旮� 鞐瓣惮臧滊皽 牍勳毄鞚� AXL-ADC (BA3011, 600毵� 雼煬), ROR2-ADC (BA3021, 330毵� 雼煬), CTLA-4 (BA3071, 320毵� 雼煬), EpCAM 脳 CD3 鞚挫韸轨澊靹� (BA3182, 310毵� 雼煬)鞐� 歆戩霅橃棃鞀惦媹雼�.
鞙犽彊靹膘澊 臧�鞛� 韥� 鞙勴棙鞛呺媹雼�. 瓴届榿歆勳潃 鞛愲掣, 攵�毂� 霕愲姅 韺岉姼雱堨嫮 鞓奠厴鞚� 瓴�韱� 欷戩澊氅�, 鞛愱笀 頇曤炒 鞁ろ尐 鞁� 於旉皜 鞚鸽牓 臧愳稌鞚措倶 頂勲攴鸽灗 歆�鞐办澊 攵堦皜頂柬暊 靾� 鞛堨姷雼堧嫟.
BioAtla, Inc. (BCAB) a d茅pos茅 son formulaire 10-Q pour le deuxi猫me trimestre 2025. La tr茅sorerie et les 茅quivalents de tr茅sorerie sont pass茅s 脿 18,2 millions de dollars contre 49,0 millions au 31/12/24, apr猫s une consommation de tr茅sorerie op茅rationnelle de 30,4 millions de dollars au premier semestre 2025. La direction exprime un doute substantiel quant 脿 la capacit茅 de la soci茅t茅 脿 poursuivre son activit茅 au-del脿 des 12 prochains mois sans nouveau financement.
Les r茅sultats du deuxi猫me trimestre montrent une ma卯trise significative des co没ts : les d茅penses en R&D ont diminu茅 de 15 % en glissement annuel 脿 13,7 millions de dollars ; les frais g茅n茅raux et administratifs ont baiss茅 de 14 % 脿 5,0 millions de dollars. La perte nette s鈥檈st r茅duite 脿 (18,7 millions) / (0,32 dollar par action) contre (21,1 millions) / (0,44 dollar par action), et la perte semestrielle s鈥檈st am茅lior茅e 脿 (34,0 millions) contre (44,3 millions).
La restructuration de mars 2025 a supprim茅 environ 30 % des effectifs ; l鈥檃mendement du bail de juin 2025 a r茅duit les locaux, cr茅ant un actif de droit d鈥檜sage de 6,0 millions de dollars. Une lev茅e de fonds en d茅cembre 2024 a rapport茅 9,2 millions de dollars et 茅mis 9,7 millions de bons de souscription quinquennaux (passif 脿 la juste valeur maintenant de 2,2 millions, g茅n茅rant un gain de 1,6 million au premier semestre).
Aucun revenu produit ou licence n鈥檃 茅t茅 enregistr茅 ; le pipeline comprend toujours quatre programmes CAB actifs en phase 1/2. Les d茅penses R&D du premier semestre se sont concentr茅es sur AXL-ADC (BA3011, 6,0 millions), ROR2-ADC (BA3021, 3,3 millions), CTLA-4 (BA3071, 3,2 millions) et EpCAM 脳 CD3 bisp茅cifique (BA3182, 3,1 millions).
La liquidit茅 est le risque critique. La direction 茅tudie des options de capitaux propres, de dette ou de partenariat ; l鈥櫭ヽhec 脿 s茅curiser des fonds pourrait entra卯ner de nouvelles r茅ductions ou des retards dans les programmes.
BioAtla, Inc. (BCAB) hat seinen 10-Q-Bericht f眉r das zweite Quartal 2025 eingereicht. Kassenbestand und liquide Mittel fielen von 49,0 Mio. USD zum 31.12.24 auf 18,2 Mio. USD nach einem operativen Cash-Burn von 30,4 Mio. USD im ersten Halbjahr 2025. Das Management 盲u脽ert erhebliche Zweifel (鈥瀞ubstantial doubt鈥�) an der F盲higkeit des Unternehmens, ohne neue Finanzierung 眉ber die n盲chsten 12 Monate hinaus fortzuf眉hren.
Die Ergebnisse des zweiten Quartals zeigen eine deutliche Kostensenkung: F&E-Ausgaben sanken im Jahresvergleich um 15 % auf 13,7 Mio. USD; Verwaltungskosten fielen um 14 % auf 5,0 Mio. USD. Der Nettoverlust verringerte sich auf (18,7 Mio. USD) / (0,32 USD pro Aktie) von (21,1 Mio.) / (0,44 USD pro Aktie), und der Halbjahresverlust verbesserte sich auf (34,0 Mio.) von (44,3 Mio.).
Die Restrukturierung im M盲rz 2025 f眉hrte zum Abbau von etwa 30 % der Mitarbeiter; die Mietvertrags盲nderung im Juni 2025 reduzierte die B眉rofl盲che und schuf einen 6,0 Mio. USD Nutzungsrecht-Asset. Eine Kapitalerh枚hung im Dezember 2024 brachte 9,2 Mio. USD und f眉hrte zur Ausgabe von 9,7 Mio. F眉nfjahres-Warrants (Fair-Value-Verbindlichkeit nun 2,2 Mio., was im ersten Halbjahr einen 1,6 Mio. USD Fair-Value-Gewinn generierte).
Keine Produkt- oder Lizenzums盲tze wurden verbucht; die Pipeline besteht weiterhin aus vier aktiven CAB-Programmen in Phase 1/2. Die F&E-Ausgaben im ersten Halbjahr konzentrierten sich auf AXL-ADC (BA3011, 6,0 Mio.), ROR2-ADC (BA3021, 3,3 Mio.), CTLA-4 (BA3071, 3,2 Mio.) und EpCAM 脳 CD3 bispezifisch (BA3182, 3,1 Mio.).
Liquidit盲t ist das kritische Risiko. Das Management pr眉ft Eigenkapital-, Fremdkapital- oder Partnerschaftsoptionen; ein Scheitern bei der Kapitalbeschaffung k枚nnte weitere Einschnitte oder Programmverz枚gerungen erzwingen.
- Operating expenses down 22 % YoY, reflecting effective restructuring and cost discipline.
- Net loss narrowed by $10 m for the six-month period.
- $1.6 m fair-value gain on warrant liability improved other income.
- Lease amendment reduces future facility costs and increases flexibility.
- Cash balance only $18.2 m, covering less than one year of operations at current burn.
- Going-concern warning signals high financing and dilution risk.
- No revenue generation; pipeline milestones and sales remain uncertain.
- Warrant overhang: 9.7 m warrants exercisable at $1.19 may cap share upside.
Insights
TL;DR 鈥� Cost cuts narrowed losses, but $18 m cash covers <1 year; financing risk dominates.
BioAtla reduced H1 operating spend by 22 % and improved six-month loss by $10 m, aided by a 30 % workforce reduction and smaller real-estate footprint. Nevertheless, quarterly burn (~$15 m) implies 鈮�3-4 quarters of runway. The going-concern language confirms urgency for new capital, likely via another dilutive raise given <$1 stock price and outstanding 9.7 m warrants.
Pipeline progress is incremental; four CAB assets remain in mid-stage trials but no near-term catalysts or revenue. The Context Therapeutics license could yield up to $133 m milestones, yet timing is uncertain and none booked.
Balance-sheet risk outweighs operational improvements; shares may remain pressured until financing clarity emerges.
TL;DR 鈥� Strategic refocus trims spend; CAB platform intact, but capital scarcity threatens trial continuity.
Management has prioritized high-potential indications鈥擜XL, ROR2, CTLA-4 and EpCAM鈥攚hile shelving earlier discovery programs, cutting preclinical spend by ~$1.5 m. Trial data readouts, if positive, could unlock partnerships; however, investors will discount until liquidity risk recedes.
Operationally, lease renegotiation extended term yet halved space, aligning footprint with leaner headcount. Stock-based comp also fell 37 %, showing discipline.
Key watch items: (1) interim Phase 2 data for BA3011/3021; (2) ability to monetize warrant exercises (~$11 m potential cash at $1.19 strike) if share price recovers; (3) execution of milestone-based cash from the Context deal.
BioAtla, Inc. (BCAB) ha presentato il suo modulo 10-Q per il secondo trimestre del 2025. La liquidit脿 e le disponibilit脿 liquide sono scese a 18,2 milioni di dollari da 49,0 milioni al 31/12/24, dopo un consumo operativo di cassa di 30,4 milioni di dollari nella prima met脿 del 2025. La direzione dichiara un 鈥渄ubbio sostanziale鈥� sulla capacit脿 dell鈥檃zienda di continuare l鈥檃ttivit脿 nei prossimi 12 mesi senza nuovi finanziamenti.
I risultati del secondo trimestre mostrano un significativo contenimento dei costi: le spese per R&S sono diminuite del 15% su base annua a 13,7 milioni di dollari; le spese generali e amministrative sono calate del 14% a 5,0 milioni di dollari. La perdita netta si 猫 ridotta a (18,7 milioni di dollari) / (0,32 dollari per azione) da (21,1 milioni) / (0,44 dollari per azione), mentre la perdita semestrale 猫 migliorata a (34,0 milioni) da (44,3 milioni).
La ristrutturazione di marzo 2025 ha eliminato circa il 30% del personale; l鈥檈mendamento al contratto di locazione di giugno 2025 ha ridotto gli spazi ufficio, generando un asset di diritto d鈥檜so di 6,0 milioni di dollari. Un aumento di capitale a dicembre 2024 ha portato 9,2 milioni di dollari e l鈥檈missione di 9,7 milioni di warrant quinquennali (passivit脿 a fair value ora di 2,2 milioni, con un guadagno a fair value di 1,6 milioni nella prima met脿 dell鈥檃nno).
Non sono stati registrati ricavi da prodotti o licenze; il pipeline continua con quattro programmi CAB attivi in Fase 1/2. La spesa R&S nella prima met脿 dell鈥檃nno si 猫 concentrata su AXL-ADC (BA3011, 6,0 milioni), ROR2-ADC (BA3021, 3,3 milioni), CTLA-4 (BA3071, 3,2 milioni) e EpCAM 脳 CD3 bispecifico (BA3182, 3,1 milioni).
La liquidit脿 猫 il rischio critico. La direzione sta valutando opzioni di equity, debito o partnership; il mancato reperimento di capitale potrebbe costringere a ulteriori tagli o ritardi nei programmi.
BioAtla, Inc. (BCAB) present贸 su Formulario 10-Q del segundo trimestre de 2025. El efectivo y equivalentes de efectivo cayeron a 18,2 millones de d贸lares desde 49,0 millones al 31/12/24 tras un consumo operativo de efectivo de 30,4 millones de d贸lares en el primer semestre de 2025. La direcci贸n expresa
Los resultados del segundo trimestre muestran un control significativo de costos: los gastos en I+D disminuyeron un 15% interanual a 13,7 millones de d贸lares; los gastos generales y administrativos bajaron un 14% a 5,0 millones de d贸lares. La p茅rdida neta se redujo a (18,7 millones) / (0,32 d贸lares por acci贸n) desde (21,1 millones) / (0,44 d贸lares por acci贸n), y la p茅rdida semestral mejor贸 a (34,0 millones) desde (44,3 millones).
La reestructuraci贸n de marzo de 2025 elimin贸 aproximadamente el 30% del personal; la enmienda del contrato de arrendamiento de junio de 2025 redujo el espacio de oficinas, creando un activo por derecho de uso de 6,0 millones de d贸lares. Una ampliaci贸n de capital en diciembre de 2024 aport贸 9,2 millones de d贸lares y emiti贸 9,7 millones de warrants a cinco a帽os (pasivo a valor razonable ahora de 2,2 millones, generando una ganancia a valor razonable de 1,6 millones en la primera mitad del a帽o).
No se registraron ingresos por productos o licencias; la cartera contin煤a con cuatro programas CAB activos en Fase 1/2. El gasto en I+D en el primer semestre se concentr贸 en AXL-ADC (BA3011, 6,0 millones), ROR2-ADC (BA3021, 3,3 millones), CTLA-4 (BA3071, 3,2 millones) y EpCAM 脳 CD3 bispec铆fico (BA3182, 3,1 millones).
La liquidez es el riesgo cr铆tico. La direcci贸n est谩 evaluando opciones de capital, deuda o asociaciones; la falta de capital podr铆a forzar m谩s recortes o retrasos en los programas.
BioAtla, Inc. (BCAB)電� 2025雲� 2攵勱赴 Form 10-Q毳� 鞝滌稖頄堨姷雼堧嫟. 順勱笀 氚� 順勱笀靹� 鞛愳偘鞚� 2024雲� 12鞗� 31鞚� 4,900毵� 雼煬鞐愳劀 1,820毵� 雼煬搿� 臧愳唽頄堨溂氅�, 2025雲� 靸侂皹旮� 鞖挫榿 順勱笀 靻岆鞎§潃 3,040毵� 雼煬鞓�鞀惦媹雼�. 瓴届榿歆勳潃 頄ロ泟 12臧滌洈 鞚挫儊 鞁犼窚 鞛愱笀 臁半嫭 鞐嗢澊電� 須岇偓臧� 瓿勳啀旮办梾鞙茧 臁挫啀頃� 靾� 鞛堨潉歆�鞐� 雽�頃� 鈥滌雽�頃� 鞚橂鈥�鞚� 響滊獏頄堨姷雼堧嫟.
2攵勱赴 鞁れ爜鞚� 鞚橂 鞛堧姅 牍勳毄 鞝堦皭鞚� 氤挫棳欷嶋媹雼�: 鞐瓣惮臧滊皽 牍勳毄鞚� 鞝勲厔 霃欔赴 雽�牍� 15% 臧愳唽頃� 1,370毵� 雼煬, 鞚茧皹甏�毽箘電� 14% 臧愳唽頃� 500毵� 雼煬鞛呺媹雼�. 靾滌啇鞁れ潃 (1,870毵� 雼煬) / 欤茧嫻 (0.32雼煬)搿� 於曥唽霅橃棃鞙茧┌, 6臧滌洈 雸勳爜 靻愳嫟霃� (4,430毵� 雼煬)鞐愳劀 (3,400毵� 雼煬)搿� 臧滌劆霅橃棃鞀惦媹雼�.
2025雲� 3鞗� 甑“臁办爼鞙茧 歆侅洂 鞎� 30%臧� 臧愳稌霅橃棃瓿�, 2025雲� 6鞗� 鞛勲寑 瓿勳暯 靾橃爼鞙茧 靷鞁� 瓿店皠鞚� 於曥唽霅橃柎 600毵� 雼煬鞚� 靷毄甓� 鞛愳偘鞚� 靸濎劚霅橃棃鞀惦媹雼�. 2024雲� 12鞗� 鞛愲掣 頇曥订鞙茧 920毵� 雼煬臧� 鞙犾瀰霅橃棃鞙茧┌, 5雲� 毵岅赴 鞗岆煱韸� 970毵� 欤缄皜 氚滍枆霅橃棃鞀惦媹雼�(瓿奠爼臧�旃� 攵�毂勲姅 順勳灛 220毵� 雼煬, 靸侂皹旮办棎 160毵� 雼煬鞚� 瓿奠爼臧�旃� 鞚挫澋 氚滌儩).
鞝滍拡 霕愲姅 霛检澊靹犾姢 靾橃澋鞚� 鞐嗢棃鞙茧┌, 韺岇澊頂勲澕鞚胳潃 1/2靸� 雼硠鞚� 4臧� 頇滌劚 CAB 頂勲攴鸽灗鞙茧 鞙犾霅橁碃 鞛堨姷雼堧嫟. 靸侂皹旮� 鞐瓣惮臧滊皽 牍勳毄鞚� AXL-ADC (BA3011, 600毵� 雼煬), ROR2-ADC (BA3021, 330毵� 雼煬), CTLA-4 (BA3071, 320毵� 雼煬), EpCAM 脳 CD3 鞚挫韸轨澊靹� (BA3182, 310毵� 雼煬)鞐� 歆戩霅橃棃鞀惦媹雼�.
鞙犽彊靹膘澊 臧�鞛� 韥� 鞙勴棙鞛呺媹雼�. 瓴届榿歆勳潃 鞛愲掣, 攵�毂� 霕愲姅 韺岉姼雱堨嫮 鞓奠厴鞚� 瓴�韱� 欷戩澊氅�, 鞛愱笀 頇曤炒 鞁ろ尐 鞁� 於旉皜 鞚鸽牓 臧愳稌鞚措倶 頂勲攴鸽灗 歆�鞐办澊 攵堦皜頂柬暊 靾� 鞛堨姷雼堧嫟.
BioAtla, Inc. (BCAB) a d茅pos茅 son formulaire 10-Q pour le deuxi猫me trimestre 2025. La tr茅sorerie et les 茅quivalents de tr茅sorerie sont pass茅s 脿 18,2 millions de dollars contre 49,0 millions au 31/12/24, apr猫s une consommation de tr茅sorerie op茅rationnelle de 30,4 millions de dollars au premier semestre 2025. La direction exprime un doute substantiel quant 脿 la capacit茅 de la soci茅t茅 脿 poursuivre son activit茅 au-del脿 des 12 prochains mois sans nouveau financement.
Les r茅sultats du deuxi猫me trimestre montrent une ma卯trise significative des co没ts : les d茅penses en R&D ont diminu茅 de 15 % en glissement annuel 脿 13,7 millions de dollars ; les frais g茅n茅raux et administratifs ont baiss茅 de 14 % 脿 5,0 millions de dollars. La perte nette s鈥檈st r茅duite 脿 (18,7 millions) / (0,32 dollar par action) contre (21,1 millions) / (0,44 dollar par action), et la perte semestrielle s鈥檈st am茅lior茅e 脿 (34,0 millions) contre (44,3 millions).
La restructuration de mars 2025 a supprim茅 environ 30 % des effectifs ; l鈥檃mendement du bail de juin 2025 a r茅duit les locaux, cr茅ant un actif de droit d鈥檜sage de 6,0 millions de dollars. Une lev茅e de fonds en d茅cembre 2024 a rapport茅 9,2 millions de dollars et 茅mis 9,7 millions de bons de souscription quinquennaux (passif 脿 la juste valeur maintenant de 2,2 millions, g茅n茅rant un gain de 1,6 million au premier semestre).
Aucun revenu produit ou licence n鈥檃 茅t茅 enregistr茅 ; le pipeline comprend toujours quatre programmes CAB actifs en phase 1/2. Les d茅penses R&D du premier semestre se sont concentr茅es sur AXL-ADC (BA3011, 6,0 millions), ROR2-ADC (BA3021, 3,3 millions), CTLA-4 (BA3071, 3,2 millions) et EpCAM 脳 CD3 bisp茅cifique (BA3182, 3,1 millions).
La liquidit茅 est le risque critique. La direction 茅tudie des options de capitaux propres, de dette ou de partenariat ; l鈥櫭ヽhec 脿 s茅curiser des fonds pourrait entra卯ner de nouvelles r茅ductions ou des retards dans les programmes.
BioAtla, Inc. (BCAB) hat seinen 10-Q-Bericht f眉r das zweite Quartal 2025 eingereicht. Kassenbestand und liquide Mittel fielen von 49,0 Mio. USD zum 31.12.24 auf 18,2 Mio. USD nach einem operativen Cash-Burn von 30,4 Mio. USD im ersten Halbjahr 2025. Das Management 盲u脽ert erhebliche Zweifel (鈥瀞ubstantial doubt鈥�) an der F盲higkeit des Unternehmens, ohne neue Finanzierung 眉ber die n盲chsten 12 Monate hinaus fortzuf眉hren.
Die Ergebnisse des zweiten Quartals zeigen eine deutliche Kostensenkung: F&E-Ausgaben sanken im Jahresvergleich um 15 % auf 13,7 Mio. USD; Verwaltungskosten fielen um 14 % auf 5,0 Mio. USD. Der Nettoverlust verringerte sich auf (18,7 Mio. USD) / (0,32 USD pro Aktie) von (21,1 Mio.) / (0,44 USD pro Aktie), und der Halbjahresverlust verbesserte sich auf (34,0 Mio.) von (44,3 Mio.).
Die Restrukturierung im M盲rz 2025 f眉hrte zum Abbau von etwa 30 % der Mitarbeiter; die Mietvertrags盲nderung im Juni 2025 reduzierte die B眉rofl盲che und schuf einen 6,0 Mio. USD Nutzungsrecht-Asset. Eine Kapitalerh枚hung im Dezember 2024 brachte 9,2 Mio. USD und f眉hrte zur Ausgabe von 9,7 Mio. F眉nfjahres-Warrants (Fair-Value-Verbindlichkeit nun 2,2 Mio., was im ersten Halbjahr einen 1,6 Mio. USD Fair-Value-Gewinn generierte).
Keine Produkt- oder Lizenzums盲tze wurden verbucht; die Pipeline besteht weiterhin aus vier aktiven CAB-Programmen in Phase 1/2. Die F&E-Ausgaben im ersten Halbjahr konzentrierten sich auf AXL-ADC (BA3011, 6,0 Mio.), ROR2-ADC (BA3021, 3,3 Mio.), CTLA-4 (BA3071, 3,2 Mio.) und EpCAM 脳 CD3 bispezifisch (BA3182, 3,1 Mio.).
Liquidit盲t ist das kritische Risiko. Das Management pr眉ft Eigenkapital-, Fremdkapital- oder Partnerschaftsoptionen; ein Scheitern bei der Kapitalbeschaffung k枚nnte weitere Einschnitte oder Programmverz枚gerungen erzwingen.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
Commission File Number
(Exact Name of Registrant as Specified in its Charter)
|
|
|
||
|
(State or Other Jurisdiction of Incorporation or Organization) |
|
(IRS Employer Identification Number) |
|
|
|
|
|||
|
|
|
|
|
|
|
(Address of Principle Executive Offices) |
|
(Zip Code) |
|
|
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on Which Registered |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer |
☐ |
☑ |
Emerging growth company |
|
||
|
Non-accelerated filer |
☐ |
Smaller reporting company |
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of August 4, 2025,
AMERICAN COASTAL INSURANCE CORPORATION
|
PART I. FINANCIAL INFORMATION |
|
|
|
Item 1. Financial Statements |
4 |
|
Condensed Consolidated Balance Sheets (Unaudited) |
4 |
|
Condensed Consolidated Statements of Comprehensive Income (Unaudited) |
5 |
|
Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) |
6 |
|
Condensed Consolidated Statements of Cash Flows (Unaudited) |
8 |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
9 |
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
35 |
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
48 |
|
Item 4. Controls and Procedures |
49 |
PART II. OTHER INFORMATION |
|
|
|
Item 1. Legal Proceedings |
50 |
|
Item 1A. Risk Factors |
50 |
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
50 |
|
Item 3. Defaults Upon Senior Securities |
51 |
|
Item 4. Mine Safety Disclosures |
51 |
|
Item 5. Other Information |
51 |
|
Item 6. Exhibits |
51 |
Signatures |
53 |
|
Throughout this Quarterly Report on Form 10-Q (Form 10-Q), the Company presents amounts in all tables in thousands, except for share amounts, per share amounts, policy counts or where more specific language or context indicates a different presentation. In the narrative sections of this Form 10-Q, the Company shows full values rounded to the nearest thousand.
2
AMERICAN COASTAL INSURANCE CORPORATION
|
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about anticipated growth in revenues, gross written premium, earnings per share, estimated unpaid losses on insurance policies, investment returns, and diversification and expectations about our liquidity, our ability to meet our investment objectives, our ability to manage and mitigate market risk with respect to our investments and our ability to continue as a going concern. Without limiting the generality of the foregoing, 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 are intended to identify forward-looking statements. These statements are based on current expectations, estimates and projections about the industry and market in which we operate, and management's beliefs and assumptions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. The risks and uncertainties include, without limitation:
We caution you not to rely on these forward-looking statements, which are valid only as of the date they were made. Except as may be required by applicable law, we undertake no obligation to update or revise any forward-looking statements to reflect new information, the occurrence of unanticipated events or otherwise.
3
AMERICAN COASTAL INSURANCE CORPORATION
|
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)
|
|
June 30, |
|
|
December 31, |
|
||
ASSETS |
|
|
|
|
|
|
||
Investments, at fair value: |
|
|
|
|
|
|
||
Fixed maturities, available-for-sale (amortized cost of $ |
|
$ |
|
|
$ |
|
||
Equity securities |
|
|
|
|
|
|
||
Other investments (amortized cost of $ |
|
|
|
|
|
|
||
Total investments |
|
$ |
|
|
$ |
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
Accrued investment income |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Premiums receivable, net (credit allowance of $ |
|
|
|
|
|
|
||
Reinsurance recoverable on paid and unpaid losses, net (credit allowance of $ |
|
|
|
|
|
|
||
Ceded unearned premiums |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Deferred policy acquisition costs, net |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Assets held for sale |
|
|
|
|
|
|
||
Total Assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
|
||
Unpaid losses and loss adjustment expenses |
|
$ |
|
|
$ |
|
||
Unearned premiums |
|
|
|
|
|
|
||
Reinsurance payable on premiums |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Operating lease liability |
|
|
|
|
|
|
||
Notes payable, net |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
||
Liabilities held for sale |
|
|
|
|
|
|
||
Total Liabilities |
|
$ |
|
|
$ |
|
||
Commitments and Contingencies (Note 12) |
|
|
|
|
|
|
||
Stockholders' Equity: |
|
|
|
|
|
|
||
Preferred stock, $ |
|
$ |
|
|
$ |
|
||
Common stock, $ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Treasury shares, at cost: |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Retained earnings (deficit) |
|
|
( |
) |
|
|
( |
) |
Total Stockholders' Equity |
|
$ |
|
|
$ |
|
||
Total Liabilities and Stockholders' Equity |
|
$ |
|
|
$ |
|
||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
4
AMERICAN COASTAL INSURANCE CORPORATION
|
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross premiums written |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Change in gross unearned premiums |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Gross premiums earned |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Ceded premiums earned |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net premiums earned |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net realized investment gains (losses) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net unrealized gains (losses) on equity securities |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Losses and loss adjustment expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policy acquisition costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations, net of tax |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income (loss) from discontinued operations, net of tax |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
OTHER COMPREHENSIVE INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in net unrealized gains (losses) on investments |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Reclassification adjustment for net realized investment losses (gains) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total comprehensive income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings available to ACIC common stockholders per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Continuing operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Discontinued operations |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Continuing operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Discontinued operations |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
5
AMERICAN COASTAL INSURANCE CORPORATION
|
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended
(Unaudited)
|
Common Stock |
|
|
Additional |
|
|
|
|
|
Accumulated |
|
|
Retained |
|
|
Total |
|
||||||||||
|
Number |
|
|
|
|
|
Paid-in |
|
|
Treasury |
|
|
Comprehensive |
|
|
Earnings |
|
|
Stockholders' |
|
|||||||
|
of Shares |
|
|
Dollars |
|
|
Capital |
|
|
Stock |
|
|
Loss |
|
|
(Deficit) |
|
|
Equity |
|
|||||||
March 31, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|||||||
Other comprehensive income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|||||||
Stock compensation |
|
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|||||||
Issuance of common stock, including exercise of stock options |
|
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|||||||
Impact of deconsolidation of discontinued operations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
June 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
Common Stock |
|
|
Additional |
|
|
|
|
|
Accumulated |
|
|
Retained |
|
|
Total |
|
||||||||||
|
Number |
|
|
|
|
|
Paid-in |
|
|
Treasury |
|
|
Comprehensive |
|
|
Earnings |
|
|
Stockholders' |
|
|||||||
|
of Shares |
|
|
Dollars |
|
|
Capital |
|
|
Stock |
|
|
Loss |
|
|
(Deficit) |
|
|
Equity |
|
|||||||
March 31, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|||||||
Other comprehensive income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|||||||
Stock compensation |
|
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|||||||
Issuance of common stock, including exercise of stock options |
|
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|||||||
June 30, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
6
AMERICAN COASTAL INSURANCE CORPORATION
|
Condensed Consolidated Statements of Stockholders’ Equity for the Six Months Ended
(Unaudited)
|
Common Stock |
|
|
Additional |
|
|
|
|
|
Accumulated |
|
|
Retained |
|
|
Total |
|
||||||||||
|
Number |
|
|
|
|
|
Paid-in |
|
|
Treasury |
|
|
Comprehensive |
|
|
Earnings |
|
|
Stockholders' |
|
|||||||
|
of Shares |
|
|
Dollars |
|
|
Capital |
|
|
Stock |
|
|
Loss |
|
|
(Deficit) |
|
|
Equity |
|
|||||||
December 31, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|||||||
Other comprehensive loss, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
( |
) |
|
— |
|
|
|
( |
) |
|||||
Stock compensation |
|
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|||||||
Issuance of common stock, including exercise of stock options |
|
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|||||||
Impact of deconsolidation of discontinued operations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
June 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
Common Stock |
|
|
Additional |
|
|
|
|
|
Accumulated |
|
|
Retained |
|
|
Total |
|
||||||||||
|
Number |
|
|
|
|
|
Paid-in |
|
|
Treasury |
|
|
Comprehensive |
|
|
Earnings |
|
|
Stockholders' |
|
|||||||
|
of Shares |
|
|
Dollars |
|
|
Capital |
|
|
Stock |
|
|
Loss |
|
|
(Deficit) |
|
|
Equity |
|
|||||||
December 31, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|||||||
Other comprehensive income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|||||||
Stock compensation |
|
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|||||||
Issuance of common stock, including exercise of stock options |
|
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|||||||
June 30, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
7
AMERICAN COASTAL INSURANCE CORPORATION
|
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
|
Six Months Ended June 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
OPERATING ACTIVITIES |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Bond amortization and accretion |
|
|
|
|
|
|
||
Net realized losses on investments |
|
|
|
|
|
|
||
Net unrealized losses (gains) on equity securities |
|
|
( |
) |
|
|
|
|
Provision for uncollectable premiums |
|
|
( |
) |
|
|
|
|
Provision for uncollectable reinsurance recoverables |
|
|
( |
) |
|
|
|
|
Deferred income taxes, net |
|
|
|
|
|
( |
) |
|
Stock based compensation |
|
|
|
|
|
|
||
Fixed asset disposal |
|
|
|
|
|
|
||
Loss on sale of subsidiary |
|
|
|
|
|
|
||
Gain on disposition of former subsidiary |
|
|
|
|
|
( |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accrued investment income |
|
|
( |
) |
|
|
( |
) |
Premiums receivable |
|
|
( |
) |
|
|
( |
) |
Reinsurance recoverable on paid and unpaid losses |
|
|
|
|
|
|
||
Ceded unearned premiums |
|
|
( |
) |
|
|
( |
) |
Deferred policy acquisition costs, net |
|
|
( |
) |
|
|
( |
) |
Other assets |
|
|
|
|
|
|
||
Unpaid losses and loss adjustment expenses |
|
|
( |
) |
|
|
( |
) |
Unearned premiums |
|
|
|
|
|
|
||
Reinsurance payable on premiums |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
|
( |
) |
|
|
|
|
Operating lease liability |
|
|
( |
) |
|
|
( |
) |
Other liabilities |
|
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
$ |
|
|
$ |
|
||
INVESTING ACTIVITIES |
|
|
|
|
|
|
||
Proceeds from sales, maturities and repayments of: |
|
|
|
|
|
|
||
Fixed maturities |
|
|
|
|
|
|
||
Equity securities |
|
|
|
|
|
|
||
Other investments |
|
|
|
|
|
|
||
Purchases of: |
|
|
|
|
|
|
||
Fixed maturities |
|
|
( |
) |
|
|
( |
) |
Equity securities |
|
|
( |
) |
|
|
( |
) |
Other investments |
|
|
( |
) |
|
|
( |
) |
Cost of property, equipment and capitalized software acquired |
|
|
( |
) |
|
|
|
|
Net proceeds from sale of former subsidiary |
|
|
|
|
|
|
||
Net cash provided by (used in) investing activities |
|
$ |
|
|
$ |
( |
) |
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Proceeds from issuance of common stock, including exercise of stock options |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
$ |
|
|
$ |
|
||
Increase in cash, cash equivalents and restricted cash, including cash classified as assets held for sale |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted at end of period |
|
$ |
|
|
$ |
|
||
Supplemental Cash Flows Information |
|
|
|
|
|
|
||
Interest paid |
|
$ |
|
|
$ |
|
||
Income taxes refunded |
|
$ |
( |
) |
|
$ |
( |
) |
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
8
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
American Coastal Insurance Corporation (referred to in this document as we, our, us, the Company or ACIC) is a property and casualty insurance holding company that sources, writes and services residential commercial and casualty insurance policies using a network of agents and a wholly-owned insurance subsidiary, American Coastal Insurance Company (AmCoastal), acquired via merger on April 3, 2017. The Company also previously wrote insurance through Interboro Insurance Company (IIC); however, on April 1, 2025, the Company completed the sale of IIC. The details of this transaction are described below.
The Company's other subsidiaries include Skyway Underwriters, LLC, a managing general agent that provides technological and distribution services to the Company's insurance company; AmCo Holding Company, LLC (AmCo), which is a holding company subsidiary that consolidates its respective insurance company; BlueLine Cayman Holdings (BlueLine), which reinsures portfolios of excess and surplus policies; and Shoreline Re, which provides a portion of the reinsurance protection purchased by the Company's insurance subsidiary where management deems prudent. The Company also has several subsidiaries in run-off including United Insurance Management, L.C. (UIM), a managing general agent; Skyway Claims Services, LLC (SCS), which previously provided claims adjusting services to the Company's insurance companies; Skyway Reinsurance Services, LLC, which previously provided reinsurance brokerage services for the Company's insurance companies; and Skyway Legal Services, LLC (SLS), which previously provided claims litigation services to the Company's insurance companies.
On May 9, 2024, the Company entered into a Stock Purchase Agreement (the "Sale Agreement") with Forza Insurance Holdings, LLC (Forza) in which the Company agreed to sell and Forza agreed to acquire
The Company's primary product is commercial residential property insurance in Florida. As a result of the Sale Agreement described above and the resulting classification of IIC as discontinued operations, the remaining activity captured within continuing operations supports only the Company's commercial residential insurance offerings. Given this fact pattern, the Company conducts operations under
The Company prepares its unaudited condensed consolidated interim financial statements in conformity with GAAP. The Company has condensed or omitted certain information and footnote disclosures normally included in the annual consolidated financial statements presented in accordance with GAAP. In management's opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of interim periods. The Company includes all of its subsidiaries in its consolidated financial statements, eliminating intercompany balances and transactions during consolidation. As described in Note 4, the Company's former subsidiary, IIC, qualified as discontinued operations. The Company's unaudited condensed consolidated interim financial statements and footnotes should be read in conjunction with the Company's consolidated financial statements and footnotes in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
While preparing the Company's unaudited condensed consolidated financial statements, the Company makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require the Company to make extensive use of estimates include its reserves for unpaid losses and loss adjustment expenses, investments and goodwill. Except for the captions on the Company's Unaudited Condensed Consolidated Balance Sheets and Unaudited Condensed Consolidated Statements of Comprehensive Income, the Company generally uses the term loss(es) to collectively refer to both loss and loss adjustment expenses.
The Company's results of operations and cash flows as of the end of the interim periods reported herein do not necessarily indicate the Company's results for the remainder of the year or for any other future period.
9
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
Operating segments are components of the Company's business about which separate financial information is available and evaluated by the Company's CODM in decisions regarding resource allocations and financial performance assessments. Generally, financial information is required to be reported on the basis that is used internally for evaluating segment performance and deciding how to allocate resources to each segment. Segments are determined based on differences in products, internal reporting, and how operational decisions are made.
As described above, as a result of the sale of IIC, the Company discloses
The Company's CODM is its President and CEO. The CODM uses net income that is also reported on the Consolidated Statements of Comprehensive Income to make decisions on how to allocate resources, for example deciding whether to reinvest profits for items such as product development or acquisitions, or whether to pay dividends. Net income is used to monitor budget versus actual results. Net income is also used in competitive analysis by benchmarking against the Company's peers. This analysis is used in assessing performance of the Company's operating segment and in establishing targets for management.
In addition, the Company's measure of segment assets is reported on the Consolidated Balance Sheets as total assets. The accounting policies of the Company's operating segment are the same as those described in the Company's summary of significant accounting policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Revenue, profit or loss and significant segment expenses can be seen on the Consolidated Statements of Comprehensive Income. Additional reconciliation of certain expenses can be seen within Note 3, below.
(a) Changes to Significant Accounting Policies
There have been no changes to the Company's significant accounting policies as reported in its Annual Report on Form 10-K for the year ended December 31, 2024.
(b) Pending Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 2024-40): Disaggregation of Income Statement Expenses. This update requires disaggregated disclosure of income statement expenses for entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for all entities for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is assessing the impact of this new accounting standard on its consolidated financial statements and related disclosures.
10
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The Company presents its expenses in four major captions: loss and loss adjustment expenses, policy acquisition costs, general and administrative expenses and interest expense. The Company has presented the disaggregation of its general and administrative expenses below for the three and six months ended June 30, 2025 and 2024 to enhance disclosure regarding its recast general and administrative expenses.
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
General and Administrative Expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Employee compensation(1) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
||||
Association fees |
|
|
|
|
|
|
|
|
|
|
|
||||
Software & equipment costs |
|
|
|
|
|
|
|
|
|
|
|
||||
Professional services |
|
|
|
|
|
|
|
|
|
|
|
||||
Intangible asset amortization |
|
|
|
|
|
|
|
|
|
|
|
||||
Audit fees |
|
|
|
|
|
|
|
|
|
|
|
||||
Liability insurance |
|
|
|
|
|
|
|
|
|
|
|
||||
Legal fees |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating lease expense |
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Provision for (reversal of) expected credit losses |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other general and administrative(2) |
|
|
|
|
|
|
|
|
|
|
|
||||
Total general and administrative expenses |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1) For the three and six months ended June 30, 2025 and 2024, employee compensation includes $
(2) For the three and six months ended June 30, 2025 and 2024, other general and administrative expenses were comprised primarily of regulatory fees, franchise fees, and overhead such as office utilities.
On May 9, 2024, the Company entered into the Sale Agreement with Forza in which ACIC agreed to sell and Forza agreed to acquire
11
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The results from IIC's discontinued operations for the three and six months ended June 30, 2025 and 2024 are presented below.
IIC Results from Discontinued Operations
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2025 (2) |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross premiums written |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Change in gross unearned premiums |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Gross premiums earned |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Ceded premiums earned |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net premiums earned |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net realized investment losses |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Losses and loss adjustment expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policy acquisition costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) before income taxes |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Provision (benefit) for income taxes(1) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Income (loss) from discontinued operations, net of tax |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
(1) Includes $
(2) Excludes loss on sale and realization of unrealized losses on fixed maturity portfolio, the details of which are described above and are not operational results related to IIC.
12
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The major classes of IIC assets and liabilities transferred as a result of the sale as of the date of sale and December 31, 2024 are presented below.
IIC Major Classes of Assets and Liabilities Sold and Disposed
|
|
April 1, 2025 |
|
|
December 31, 2024 |
|
||
ASSETS |
|
|
|
|
|
|
||
Fixed maturities, available-for-sale |
|
$ |
|
|
$ |
|
||
Other investments |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
Accrued investment income |
|
|
|
|
|
|
||
Premiums receivable, net |
|
|
|
|
|
|
||
Reinsurance recoverable on paid and unpaid losses, net |
|
|
|
|
|
|
||
Ceded unearned premiums |
|
|
|
|
|
|
||
Deferred policy acquisition costs, net |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
LIABILITIES |
|
|
|
|
|
|
||
Unpaid losses and loss adjustment expenses |
|
$ |
|
|
$ |
|
||
Unearned premiums |
|
|
|
|
|
|
||
Reinsurance payable on premiums |
|
|
|
|
|
|
||
Payments outstanding |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Operating lease liability |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
$ |
|
|
$ |
|
||
During the first quarter of 2024, due to a change in circumstances, the Company evaluated its capitalized software, previously classified as held for disposal at December 31, 2023. As a result of this evaluation, it was determined that the use case of the software by the Company shifted. The Company reclassified this asset and the associated amortization expense in 2024 in accordance with GAAP guidance, resulting in amortization expense for the capitalized software being captured in continuing operations prospectively. The value of this capitalized software at the time of reclassification was $
13
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The following table details fixed-maturity available-for-sale securities, by major investment category, at June 30, 2025 and December 31, 2024:
|
Cost or Adjusted/ Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
||||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agency securities |
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
Corporate securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
States, municipalities and political subdivisions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asset-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Public utilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign government |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total fixed maturities |
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agency securities |
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
Corporate securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
States, municipalities and political subdivisions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asset-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Public utilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign government |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total fixed maturities |
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
Equity securities are summarized as follows:
|
June 30, 2025 |
|
December 31, 2024 |
||||||||||||||
|
Estimated Fair Value |
|
|
Percent of Total |
|
Estimated Fair Value |
|
|
Percent of Total |
||||||||
Mutual funds |
$ |
|
|
|
|
% |
|
$ |
|
|
|
|
% |
||||
Other common stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total equity securities |
$ |
|
|
|
|
% |
|
$ |
|
|
|
|
% |
||||
When the Company sells investments, the Company calculates the gain or loss realized on the sale by comparing the sales price (fair value) to the cost or adjusted/amortized cost of the security sold. The Company determines the cost or adjusted/amortized cost of
14
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
the security sold using the specific-identification method.
|
2025 |
|
|
2024 |
|
||||||||||
|
Gains |
|
|
Fair Value |
|
|
Gains |
|
|
Fair Value |
|
||||
Three Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed maturities |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Other investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Total realized gains |
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed maturities |
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Other investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Total realized losses |
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Net realized investment gains (losses) |
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Six Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed maturities |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Other investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Total realized gains |
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed maturities |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Other investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Total realized losses |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net realized investment gains (losses) |
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
(1) Fair value at sale includes maturities and paydowns executed at par value.
The table below summarizes the Company's fixed maturities at June 30, 2025 by contractual maturity period. Actual results may differ, as issuers may have the right to call or prepay obligations, with or without penalties, prior to the contractual maturities of those obligations.
|
June 30, 2025 |
||||||||||||||||
|
Cost or Amortized Cost |
|
|
Percent of Total |
|
Fair Value |
|
|
Percent of Total |
||||||||
Due in one year or less |
$ |
|
|
|
|
% |
|
$ |
|
|
|
|
% |
||||
Due after one year through five years |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Due after five years through ten years |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Due after ten years |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asset and mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
$ |
|
|
|
|
% |
|
$ |
|
|
|
|
% |
||||
15
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The following table summarizes net investment income by major investment category:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Fixed maturities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net investment income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Portfolio Monitoring
The Company has a quarterly portfolio monitoring process to identify and evaluate each fixed-income security whose carrying value may be impaired as a result of a credit loss. For each fixed-income security in an unrealized loss position, if the Company determines that it intends to sell the security or that it is more likely than not that it will be required to sell the security before recovery of the cost or amortized cost basis for reasons such as liquidity needs, contractual or regulatory requirements, the security's entire decline in fair value is recorded in earnings.
If management decides not to sell the fixed-income security and it is more likely than not that the Company will not be required to sell the fixed-income security before recovery of its amortized cost basis, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. This is typically indicated by a change in the rating of the security assigned by a rating agency, and any adverse conditions specifically related to the security or industry, among other factors. If the assessment indicates that a credit loss may exist, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses will be recorded in earnings. Credit loss is limited to the difference between a security's amortized cost basis and its fair value. Any additional impairment not recorded through an allowance for credit losses is recognized in other comprehensive income (loss).
During the three and six months ended June 30, 2025, the Company determined that none of its fixed-income securities shown in the table below that are in an unrealized loss position have declines in fair value that are reflected as a result of credit losses. Therefore,
16
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The following table presents an aging of the Company's unrealized investment losses by investment class:
|
Less Than Twelve Months |
|
|
Twelve Months or More |
|
||||||||||||||||||
|
Number of Securities(1) |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
|
Number of Securities(1) |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
||||||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. government and agency securities |
|
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
||||||
Corporate securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
States, municipalities and political subdivisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Asset-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Public utilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign governments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total fixed maturities |
|
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. government and agency securities |
|
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
||||||
Corporate securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
States, municipalities and political subdivisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Asset-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Public utilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign governments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total fixed maturities |
|
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
||||||
(1) This amount represents the actual number of discrete securities, not the number of shares or units of those securities. The numbers are not presented in thousands.
Fair Value Measurement
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Company's Unaudited Condensed Consolidated Balance Sheets at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows:
Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.
Level 2: Assets and liabilities whose values are based on the following:
(a) Quoted prices for similar assets or liabilities in active markets;
(b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or
(c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company's estimates of the assumptions that market participants would use in valuing the assets and liabilities.
17
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The Company estimates the fair value of our investments using the closing prices on the last business day of the reporting period, obtained from active markets such as the NYSE, Nasdaq and NYSE American. For securities for which quoted prices in active markets are unavailable, the Company uses a third-party pricing service that utilizes quoted prices in active markets for similar instruments, benchmark interest rates, broker quotes and other relevant inputs to estimate the fair value of those securities for which quoted prices are unavailable. The Company's estimates of fair value reflect the interest rate environment that existed as of the close of business on June 30, 2025 and December 31, 2024. Changes in interest rates subsequent to June 30, 2025 may affect the fair value of the Company's investments.
The fair value of the Company's fixed maturities is initially calculated by a third-party pricing service. Valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of proprietary models, produce valuation information in the form of a single fair value for individual fixed-income and other securities for which a fair value has been requested. The inputs used by the valuation service providers include, but are not limited to, market prices from recently completed transactions and transactions of comparable securities, interest rate yield curves, credit spreads, liquidity spreads, currency rates and other information, as applicable. Credit and liquidity spreads are typically implied from completed transactions and transactions of comparable securities. Valuation service providers also use proprietary discounted cash flow models that are widely accepted in the financial services industry and similar to those used by other market participants to value the same financial information. The valuation models take into account, among other things, market observable information as of the measurement date, as described above, as well as the specific attributes of the security being valued, including its term, interest rate, credit rating, industry sector and, where applicable, collateral quality and other issue or issuer specific information. Executing valuation models effectively requires seasoned professional judgment and experience.
Any change in the estimated fair value of the Company's fixed-income securities would impact the amount of unrealized gain or loss the Company has recorded, which could change the amount the Company has recorded for its investments and other comprehensive income (loss) on its Unaudited Condensed Consolidated Balance Sheets as of June 30, 2025.
18
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The following table presents the fair value of the Company's financial instruments measured on a recurring basis by level at June 30, 2025 and December 31, 2024, respectively:
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agency securities |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Corporate securities |
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
||||
States, municipalities and political subdivisions |
|
|
|
|
|
|
|
|
|
|
|
||||
Asset-backed securities |
|
|
|
|
|
|
|
|
|
|
|
||||
Public utilities |
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign government |
|
|
|
|
|
|
|
|
|
|
|
||||
Total fixed maturities |
|
|
|
|
|
|
|
|
|
|
|
||||
Mutual funds |
|
|
|
|
|
|
|
|
|
|
|
||||
Other common stocks (1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total equity securities |
|
|
|
|
|
|
|
|
|
|
|
||||
Other investments (2) |
|
|
|
|
|
|
|
|
|
|
|
||||
Total investments |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agency securities |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Corporate securities |
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
||||
States, municipalities and political subdivisions |
|
|
|
|
|
|
|
|
|
|
|
||||
Asset-backed securities |
|
|
|
|
|
|
|
|
|
|
|
||||
Public utilities |
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign government |
|
|
|
|
|
|
|
|
|
|
|
||||
Total fixed maturities |
|
|
|
|
|
|
|
|
|
|
|
||||
Mutual Funds |
|
|
|
|
|
|
|
|
|
|
|
||||
Other common stocks (1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total equity securities |
|
|
|
|
|
|
|
|
|
|
|
||||
Other investments (2) |
|
|
|
|
|
|
|
|
|
|
|
||||
Total investments |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1) Other common stocks in the fair value hierarchy exclude common stock interests that are measured at estimated fair value using the net asset value per share (or its equivalent) practical expedient.
(2) Other investments included in the fair value hierarchy exclude these limited partnership interests that are measured at estimated fair value using the net asset value per share (or its equivalent) practical expedient.
Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; this is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). There were
The carrying amounts for the following financial instrument categories approximate their fair values at June 30, 2025 and December 31, 2024 because of their short-term nature: cash and cash equivalents, accrued investment income, premiums receivable, reinsurance recoverable, reinsurance payable, other assets, and other liabilities. The carrying amount of the Company's senior notes approximate fair value as the interest rates and terms are variable.
19
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company has implemented a system of processes and controls designed to provide assurance that its assets and liabilities are appropriately valued. For fair values received from third parties, the Company's processes are designed to provide assurance that the valuation methodologies and inputs are appropriate and consistently applied, the assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded.
At the end of each quarter, the Company determines whether it needs to transfer the fair values of any securities between levels of the fair value hierarchy and, if so, the Company reports the transfer as of the end of the quarter. During the quarter ended June 30, 2025, the Company transferred
For the Company's investments in U.S. government securities that do not have prices in active markets, agency securities, state and municipal governments, and corporate bonds, the Company obtains the fair values from its investment custodians, which use a third-party valuation service. The valuation service calculates prices for the Company's investments in the aforementioned security types on a month-end basis by using several matrix-pricing methodologies that incorporate inputs from various sources. The model the valuation service uses to price U.S. government securities and securities of states and municipalities incorporates inputs from active market makers and inter-dealer brokers. To price corporate bonds and agency securities, the valuation service calculates non-call yield spreads on all issuers, uses option-adjusted yield spreads to account for any early redemption features, and adds final spreads to the U.S. Treasury curve at 3 p.m. (ET) as of quarter end. Since the inputs the valuation service uses in its calculations are not quoted prices in active markets, but are observable inputs, they represent Level 2 inputs.
Other Investments
The Company acquired investments in limited partnerships, recorded in the other investments line of the Company's Unaudited Condensed Consolidated Balance Sheets, and these investments are currently being measured at estimated fair value utilizing a net asset value per share practical expedient.
The information presented in the table below is as of June 30, 2025 and December 31, 2024:
|
Book Value |
|
|
Unrealized Gain |
|
|
Unrealized Loss |
|
|
Fair Value |
|
||||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
||||
Limited partnership investments (1) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Surplus note (1) |
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Total other investments |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
||||
Limited partnership investments (1) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Total other investments |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1)Distributions will be generated from operating income, from investment gains, from underlying investments of funds, and from liquidation of the underlying assets of the funds. The Company estimates that the underlying assets of the funds will be liquidated over the next few months to five years.
Restricted Cash
The Company is required to maintain assets on deposit with various regulatory authorities to support its insurance operations. The cash on deposit with state regulators is available to settle insurance liabilities. The Company also uses trust funds in certain reinsurance transactions.
20
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The following table presents the components of restricted assets:
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Trust funds |
$ |
|
|
$ |
|
||
Cash on deposit (regulatory deposits) |
|
|
|
|
|
||
Total restricted cash |
$ |
|
|
$ |
|
||
Basic EPS is based on the weighted average number of common shares outstanding for the period, excluding any dilutive common share equivalents. Diluted EPS reflects the potential dilution resulting from the vesting of outstanding restricted stock awards, restricted stock units, performance stock units and stock options.
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to ACIC common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average diluted shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings available to ACIC common stockholders per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See Note 17 of these Notes to Unaudited Condensed Consolidated Financial Statements for additional information on the stock grants related to dilutive securities.
Property and equipment, net consists of the following:
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Computer hardware and software |
$ |
|
|
$ |
|
||
Office furniture and equipment |
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
||
Total, at cost |
|
|
|
|
|
||
Less: accumulated depreciation and amortization |
|
( |
) |
|
|
( |
) |
Property and equipment, net |
$ |
|
|
$ |
|
||
21
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
Depreciation and amortization expense under property and equipment was $
During the six months ended June 30, 2025, the Company disposed of computer hardware, software, and equipment totaling $
Goodwill
The carrying amount of goodwill at June 30, 2025 and December 31, 2024 was $
There was
Intangible Assets
The following is a summary of intangible assets excluding goodwill recorded as intangible assets on the Company's Unaudited Condensed Consolidated Balance Sheets:
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Intangible assets subject to amortization |
|
$ |
|
|
$ |
|
||
Indefinite-lived intangible assets(1) |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
(1) Indefinite-lived intangible assets are comprised of state insurance and agent licenses, as well as perpetual software licenses.
Intangible assets subject to amortization and not fully amortized consisted of the following:
|
|
Weighted-average remaining amortization period (in years) |
|
|
Gross carrying amount |
|
|
Accumulated amortization |
|
|
Net carrying amount |
|
||||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Agency agreements acquired |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Agency agreements acquired |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
22
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
Amortization expense of the Company's intangible assets was $
Year ending December 31, |
|
Estimated Amortization Expense |
|
|
Remaining in 2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
The Company's catastrophe reinsurance programs are designed primarily by utilizing third-party catastrophe modeling software and consulting with third-party reinsurance experts to project the Company's exposure to catastrophe events. The Company evaluates modeled expected losses developed by the catastrophe modeling software using its risk portfolio data to estimate probable maximum losses ("PML") across multiple return periods and the average annual loss. The Company monitors and manages its catastrophe risk using this model output along with other internal and external data sources, such as its historical loss experience and industry loss experience, to develop its view of catastrophe risk.
The Company's catastrophe reinsurance coverage consists of two separate placements:
This reinsurance protection is an essential part of the Company's catastrophe risk management strategy. It is intended to provide stockholders with an acceptable return on the risks assumed by its insurance entity, and to reduce the variability of earnings, while providing surplus protection. Although reinsurance agreements contractually obligate the Company's reinsurers to reimburse it for the agreed-upon portion of its gross paid losses, they do not discharge the Company's primary liability. In the event one or more of the Company's reinsurers fail to fulfill their obligation, the surplus of the Company's statutory entity may decline, and the Company may not be able to fulfill its obligation to policyholders, or the Company may not be able to maintain compliance with various regulatory financial requirements. Additionally, the Company faces the risk that actual losses incurred from one or more catastrophic events may be above the modeled expected loss, resulting in losses exceeding its reinsurance coverage, which may result in a decline in surplus, and as a result the Company may not be able to fulfill its obligations to policyholders, or the Company may not be able to maintain compliance with various regulatory financial requirements. The details of the Company's programs and the likelihood of a catastrophic event exceeding these two coverages are outlined below.
23
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
AmCoastal’s core catastrophe reinsurance program provides occurrence-based coverage up to an exhaustion point of approximately $
AmCoastal’s all other perils catastrophe excess of loss agreement provides protection from catastrophe loss events other than named windstorms and earthquakes up to $
In addition to the programs described above, AmCoastal purchased a new catastrophe aggregate excess of loss agreement (the “CAT Agg” agreement) to mitigate the Company's catastrophe frequency risk. This agreement provides coverage for in-force, new and renewal business. Effective January 1, 2025, the new CAT Agg agreement provides $
Effective December 15, 2023, the Company agreed to commute a private reinsurer’s share of core catastrophe reinsurance coverage and replace this gap in coverage with new coverage provided by one of the Company's other private reinsurers. This transaction resulted in a reduction in expense of approximately $
Where management thinks prudent, particularly where premium rates are high relative to the risk, the Company retains risk whereby AmCoastal purchases reinsurance from Shoreline Re, the Company's captive reinsurance entity. Shoreline Re participates on AmCoastal's all other perils catastrophe excess of loss agreement and AmCoastal's excess per risk agreement. In addition, Shoreline Re participates in a
Treaty |
|
Effective Dates |
|
Premium Collected / Cession Rate |
|
|
Capital at Risk (1) |
|
|
||
Quota Share Agreement |
|
06/01/2025 - 06/01/2026 |
|
|
|
$ |
|
(3) |
|||
All Other Perils Catastrophe |
|
01/01/2025 - |
|
|
|
|
|
|
|
||
Excess of Loss Agreement |
|
12/31/2025 |
|
$ |
|
|
|
|
|
||
All Other Perils Catastrophe |
|
01/01/2024 - |
|
|
|
|
|
|
|
||
Excess of Loss Agreement |
|
01/01/2025 |
|
|
— |
|
|
|
|
(4) |
|
Excess Per Risk Agreement |
|
02/01/2024 - 02/01/2025 |
|
|
|
|
|
|
|
||
Quota Share Agreement (5) |
|
06/01/2024 - 06/01/2026 |
|
|
|
$ |
|
(6) |
|||
(1) Capital at risk is calculated by taking the aggregate losses Shoreline Re is subject to under the contract, less net premiums earned under the contract.
(2) This treaty provides or provided coverage for all catastrophe perils and attritional losses incurred. For all catastrophe perils, the quota share agreement provides or provided ground-up protection, effectively reducing our retention for catastrophe losses.
(3) Net premiums earned based on estimated subject premiums at 06/01/2025.
(4) This treaty was amended on June 1, 2025 to include reinstatement, resulting in additional premium and aggregate losses.
(5) This treaty was commuted on June 1, 2025 with no impact on our consolidated results.
(6) Net premiums earned based on estimated subject premiums at 06/01/2024.
24
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The table below outlines the Company's external quota share agreements in effect for the six months ended June 30, 2025 and 2024.
Reinsurer |
|
Companies in Scope |
|
Effective Dates |
|
Cession Rate |
|
States in Scope |
External third-party |
|
AmCoastal |
|
06/01/2024 - 06/01/2026 |
|
|
Florida |
|
External third-party |
|
AmCoastal |
|
06/01/2023 - 06/01/2024 |
|
|
Florida |
(1) This treaty provides or provided coverage for all catastrophe perils and attritional losses incurred. For all catastrophe perils, the quota share agreement provides or provided ground-up protection, effectively reducing the Company's retention for catastrophe losses.
(2) The cession rate of this treaty is reduced from
Reinsurance recoverable at the balance sheet dates consists of the following:
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Reinsurance recoverable on unpaid losses and loss adjustment expenses |
|
$ |
|
|
$ |
|
||
Reinsurance recoverable on paid losses and loss adjustment expenses |
|
|
|
|
|
|
||
Reinsurance recoverable(1) |
|
$ |
|
|
$ |
|
||
(1) The Company's reinsurance recoverable balance is net of its allowance for expected credit losses. More information related to this allowance can be found in Note 13.
25
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The Company determines its reserve for unpaid losses on an individual case basis for all incidents reported. The liability also includes amounts for incurred but not reported ("IBNR") claims as of the balance sheet date.
The table below shows the analysis of the Company's reserve for unpaid losses for the six months ended June 30, 2025 and 2024 on a GAAP basis:
|
|
2025 |
|
|
2024 |
|
||
Balance at January 1 |
|
$ |
|
|
$ |
|
||
Less: reinsurance recoverable on unpaid losses |
|
|
|
|
|
|
||
Net balance at January 1 |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Incurred related to: |
|
|
|
|
|
|
||
Current year |
|
|
|
|
|
|
||
Prior years |
|
|
( |
) |
|
|
( |
) |
Total incurred |
|
|
|
|
|
|
||
Paid related to: |
|
|
|
|
|
|
||
Current year |
|
|
|
|
|
|
||
Prior years |
|
|
|
|
|
|
||
Total paid |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net balance at June 30 |
|
|
|
|
|
|
||
Plus: reinsurance recoverable on unpaid losses |
|
|
|
|
|
|
||
Balance at June 30 |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Composition of reserve for unpaid losses and LAE: |
|
|
|
|
|
|
||
Case reserves |
|
|
|
|
|
|
||
IBNR reserves |
|
|
|
|
|
|
||
Balance at June 30 |
|
$ |
|
|
$ |
|
||
Based upon the Company's internal analysis and the Company's review of the annual statement of actuarial opinion provided by its actuarial consultants at December 31, 2024, the Company believes that the reserve for unpaid losses reasonably represents the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.
As reflected in the table above, the Company had favorable development in the first half of 2025 and 2024 related to prior year losses. This development came as a result of re-estimating ultimate losses in 2025 and 2024 based on historical loss trends. The prior year loss payments made by the Company during the six months ended June 30, 2025 were lower than the loss payments made during the six months ended June 30, 2024, driven by decreased catastrophe and non-catastrophe loss payments. The current year loss payments made by the Company during the six months ended June 30, 2025 and June 30, 2024 remained relatively flat. Case reserves on unpaid losses also decreased when compared to the prior period as a result of the continued settlement of prior year claims, offset by increases to IBNR reserves as a result of Hurricane Milton which made landfall in the fourth quarter of 2024. Reinsurance recoverable remained relatively flat year over year.
Senior Notes Payable
On December 13, 2017, the Company issued $
26
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
Financial Covenants
The Company's Senior Notes provide that the Company and its subsidiaries shall not incur any indebtedness unless no default exists and the Company’s leverage ratio as of the last day of any annual or quarterly period (the balance sheet date) immediately preceding the date on which such additional indebtedness is incurred would have been no greater than
Debt Issuance Costs
The table below presents the roll forward of the Company's debt issuance costs paid, in conjunction with the debt instruments described above, during the six months ended June 30, 2025 and 2024:
|
|
2025 |
|
|
2024 |
|
||
Balance at January 1, |
|
$ |
|
|
$ |
|
||
Amortization |
|
|
( |
) |
|
|
( |
) |
Balance at June 30, |
|
$ |
|
|
$ |
|
||
Litigation
The Company is involved in claims-related legal actions arising in the ordinary course of business. The Company accrues amounts resulting from claims-related legal actions in unpaid losses and LAE during the period when that it determines an unfavorable outcome becomes probable and can estimate the amounts. Management makes revisions to estimates based on its analysis of subsequent information that the Company receives regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation.
On October 20, 2023, the Company received notice that the Florida Department of Financial Services ("DFS") filed a notice of claim and demand for tender of policy limits under the Company's director and officer insurance policy (the "Claim"). The Claim alleges that former officers and directors of United Property & Casualty Insurance Company ("UPC") were involved in wrongful acts that resulted in UPC's insolvency. The Claim demands immediate tender of the Company's director and officer’s policy limit of $
27
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
has arisen from the Claim, litigation is anticipated. The directors and officers plan to vigorously defend against the Claim; however, due to the Company's indemnification obligation, during 2023, the Company accrued the policy retention amount of $
Commitments to fund partnership investments
The Company has fully funded one limited partnership investment and partially funded two additional limited partnership investments. The amount of unfunded commitments was $
Leases
The Company, as a lessee, has entered into leases of commercial office space of various term lengths. In addition to office space, the Company leases office equipment under operating leases.
The classification of operating and lease asset and liability balances within the Unaudited Condensed Consolidated Balance Sheets was as follows:
|
Financial Statement Line |
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Assets |
|
|
|
|
|
|
|
||
Operating lease assets |
Other assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
|
||
Operating lease liabilities |
Operating lease liability |
|
$ |
|
|
$ |
|
||
The components of lease expenses were as follows:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Operating lease expense |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
At June 30, 2025, future minimum gross lease payments relating to these non-cancellable operating lease agreements were as follows:
|
Estimated Remaining Payments |
|
|
Remaining in 2025 |
$ |
|
|
2026 |
|
|
|
2027 |
|
|
|
2028 |
|
|
|
2029 |
|
|
|
Thereafter |
|
|
|
Total undiscounted future minimum lease payments |
|
|
|
Less: Imputed interest |
|
( |
) |
Present value of lease liabilities |
$ |
|
|
Weighted average remaining lease term and discount rate related to operating leases were as follows:
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Weighted average remaining lease term (months) |
|
|
|
|
|||
Weighted average discount rate |
|
% |
|
|
% |
||
There were no other cash or non-cash related activities during the six months ended June 30, 2025 and 2024.
28
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
Capital lease amortization expenses are included in depreciation expense in the Company's Unaudited Condensed Consolidated Statements of Comprehensive Income. See Note 7 of these Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding depreciation expense, Note 11 for information regarding commitments related to long-term debt, and Note 14 for information regarding commitments related to regulatory actions.
Subleases
The Company previously leased and occupied office space in which it no longer operates. Effective October 1, 2022, this office space was subleased to a third-party. The sublease was effective from October 1, 2022 through July 31, 2025, with no option to extend. However, on February 29, 2024, this sublease was cancelled as a part of an agreement to terminate the original lease associated with the office space. During the six months ended June 30, 2024, the Company recognized $
Employee Retention Credit
A series of legislation was enacted in the United States during 2020 and 2021 in response to the COVID-19 pandemic that provided financial relief for businesses impacted by government-mandated shutdowns, work stoppages, or other losses suffered by employers. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided an employee retention credit, which is a refundable tax credit against certain employment taxes of up to $
Quota Share Commission Loss Contingency
AmCoastal participates in shared quota-share reinsurance agreements with the Company's former subsidiary, UPC, which are subject to a variable ceding commission based on loss experience. With the receivership of UPC in 2023, the Company has not received data related to UPC losses that could unfavorably shift AmCoastal’s commission related to these contracts. In addition, the Company cannot reasonably determine how this shift will be allocated between the contracted parties. Until the Company receives this loss data and provides the updated calculations to both the Company's reinsurance partners and the DFS, as receiver of UPC, the Company is unable to estimate the impact; however, the Company believes a loss contingency related to these commissions may exist as of June 30, 2025.
The Company will continue to monitor the matter for further developments that could affect the outcome of these contingencies and will make any appropriate adjustments each quarter.
The Company is exposed to credit losses primarily through three different pools of assets based on similar risk characteristics: premiums receivable for direct written business; reinsurance recoverables from ceded losses to its reinsurers; and its investment holdings. The Company estimates the expected credit losses based on historical trends, credit ratings assigned to reinsurers by rating agencies, average default rates, current economic conditions, and reasonable and supportable forecasts of future economic conditions that affect the collectability of the reported amounts over its expected life. Changes in the relevant information may significantly affect the estimates of expected credit losses.
The allowance for credit losses is deducted from the amortized cost basis of the assets to present their net carrying value at the amount expected to be collected. Each period, the allowance for credit losses is adjusted through earnings to reflect expected credit losses over the remaining lives of the assets.
29
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The following tables summarize the Company's allowance for expected credit losses by pooled asset for the six months ended June 30, 2025 and 2024, respectively:
June 30, 2025 |
December 31, 2024 |
|
|
Provision for (reversal of) expected credit losses |
|
|
Write-offs |
|
|
June 30, 2025 |
|
||||
Premiums Receivable |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
Reinsurance Recoverables |
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
June 30, 2024 |
December 31, 2023 |
|
|
Provision for (reversal of) expected credit losses |
|
|
Write-offs |
|
|
June 30, 2024 |
|
||||
Premiums Receivable |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Reinsurance Recoverables |
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
As of June 30, 2025 and 2024, the Company had no allowance for expected credit losses related to its investment holdings.
The insurance industry is heavily regulated. State laws and regulations, as well as national regulatory agency requirements, govern the operations of all insurers such as the Company's insurance subsidiary. The various laws and regulations require that insurers maintain minimum amounts of statutory surplus and risk-based capital, restrict insurers' ability to pay dividends, specify allowable investment types and investment mixes, and subject insurers to assessments. AmCoastal is domiciled and operates in Florida and at June 30, 2025, and during the six months then ended, met all regulatory requirements of the state.
During 2023, the Company received a multi-year Emergency Assessment notice from the Florida Insurance Guaranty Association ("FIGA"). This assessment will be
The National Association of Insurance Commissioners ("NAIC") has Risk-Based Capital ("RBC") guidelines for insurance companies that are designed to assess capital adequacy and to raise the level of protection that statutory surplus provides for policyholders. Most states, including Florida, have enacted statutory requirements adopting the NAIC RBC guidelines, and insurers having less statutory surplus than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. State insurance regulatory authorities could require an insurer to cease operations in the event the insurer fails to maintain the required statutory capital.
The state laws of Florida permit an insurer to pay dividends or make distributions out of that part of statutory surplus derived from net operating profit and net realized capital gains. The state laws further provide calculations to determine the amount of dividends or distributions that can be made without the prior approval of the insurance regulatory authorities in those states and the amount of dividends or distributions that would require prior approval of the insurance regulatory authorities in those states. Statutory RBC requirements may further restrict the Company's insurance subsidiary's ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause statutory surplus to fall below minimum RBC requirements.
The Company's insurance subsidiary must file with the various insurance regulatory authorities an “Annual Statement” which reports, among other items, statutory net income and surplus as regards policyholders, which is called stockholders' equity under GAAP. The table below details the statutory net income for the three and six months ended June 30, 2025 and 2024 for AmCoastal.
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
30
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The Company's insurance subsidiary must maintain capital and surplus ratios or balances as determined by the regulatory authority of the state in which it is domiciled. At June 30, 2025, the Company met these requirements. The table below details the amount of surplus as regards policyholders for AmCoastal at June 30, 2025 and December 31, 2024.
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Surplus as regards policyholders |
|
$ |
|
|
$ |
|
||
The Company reports changes in other comprehensive income items within comprehensive income on the Unaudited Condensed Consolidated Statements of Comprehensive Income, and includes accumulated other comprehensive income (loss) as a component of stockholders' equity on its Unaudited Condensed Consolidated Balance Sheets.
The table below details the components of accumulated other comprehensive loss at period end:
|
Pre-Tax Amount |
|
|
Tax (Expense) Benefit (1) |
|
|
Net-of-Tax Amount |
|
|||
December 31, 2024 |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Changes in net unrealized losses on investments |
|
|
|
|
( |
) |
|
|
|
||
Reclassification adjustment for realized gains |
|
( |
) |
|
|
|
|
|
( |
) |
|
June 30, 2025 |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
(1) The Company has a valuation allowance on the tax impacts of the unrealized gains (losses) on investments resulting in the net tax (expense) benefit during the period reflecting only the realized position.
The Company's Board of Directors declared no dividends on the Company's outstanding shares of common stock to stockholders of record during the six months ended June 30, 2025 and 2024.
In July 2019, the Company's Board of Directors authorized a stock repurchase plan of up to $
In September 2023, the Company entered into an equity distribution agreement (the “Agreement”) with Raymond James & Associates, Inc., as agent (the “Agent”), of up to
See Note 17 in these Notes to Unaudited Condensed Consolidated Financial Statements for information regarding stock-based compensation activity.
The Company accounts for stock-based compensation under the fair value recognition provisions of ASC Topic 718 - Compensation - Stock Compensation. The Company recognizes stock-based compensation cost over the award’s requisite service period on a
31
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
straight-line basis for time-based restricted stock grants and performance-based restricted stock grants. The Company records forfeitures as they occur for all stock-based compensation.
The following table presents the Company's total stock-based compensation expense:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Employee stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Pre-tax |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Post-tax (1) |
|
|
|
|
|
|
|
|
|
|
|
||||
Director stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Pre-tax |
|
|
|
|
|
|
|
|
|
|
|
||||
Post-tax (1) |
|
|
|
|
|
|
|
|
|
|
|
||||
(1) The after-tax amounts are determined using the 21% corporate federal tax rate.
The Company had approximately $
Restricted stock, restricted stock units and performance stock units
Stock-based compensation cost for restricted stock awards, restricted stock units and performance stock units is measured based on the closing fair market value of the Company's common stock on the date of grant, which vest in equal installments over the requisite service period of typically three years. Restricted stock awards granted to non-employee directors vest over a one-year period. Each restricted stock unit and performance stock unit represents the Company's obligation to deliver to the holder one share of common stock upon vesting.
Performance stock units vest based on the Company's return on average equity compared to a defined group of peer companies. On the grant date, the Company issues the target number of performance stock units. They are subject to forfeitures if performance goals are not met. The actual number of performance stock units earned can vary from zero to 150 percent of the target for the awards.
The Company granted
The following table presents certain information related to the activity of the Company's non-vested restricted common stock grants:
|
Number of |
|
|
Weighted |
|
||
Outstanding as of December 31, 2024 |
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
||
Less: Forfeited |
|
|
|
|
|
||
Less: Vested |
|
|
|
|
|
||
Outstanding as of June 30, 2025 |
|
|
|
$ |
|
||
32
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
Stock options
Stock option fair value was estimated on the grant date using the Black-Scholes-Merton formula. Stock options vest in equal installments over the requisite service period of typically three years.
|
2025 |
|
|
2024 |
|
||
Expected annual dividend yield |
|
% |
|
|
% |
||
Expected volatility |
|
% |
|
|
% |
||
Risk-free interest rate |
|
% |
|
|
% |
||
Expected term |
|
|
|
||||
The expected annual dividend yield for options granted during 2025 and 2024 is based on no dividends being paid in future quarters. The expected volatility is a historical volatility calculated based on the daily closing prices over a period equal to the expected term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date. Expected term takes into account the
The Company granted
The following table presents certain information related to the activity of the Company's stock option grants:
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
Outstanding as of December 31, 2024 |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Less: Forfeited |
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Less: Expired |
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Less: Exercised |
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Outstanding as of June 30, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested as of June 30, 2025 ⁽¹⁾ |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable as of June 30, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
(1) The vested shares are calculated based on all vested shares at June 30, 2025, inclusive of those that have since expired. The weighted average exercise prices, weighted-average remaining contractual term and aggregate intrinsic value is calculated based on only vested shares that are outstanding and exercisable at June 30, 2025.
(2) Presented in ones.
33
AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2025
The Company evaluates all subsequent events and transactions for potential recognition or disclosure in its financial statements.
On July 4, 2025, the "One Big Beautiful Bill Act" ("OBBBA") was signed into law, which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cut and Jobs Act that were set to expire at the end of 2025. The OBBBA also changes certain U.S corporate tax provisions, but many are generally not effective until 2026. The Company is currently evaluating the impact of the new legislation.
On July 21, 2025, the Kroll Bond Rating Agency, LLC announced an upgrade of the Company's issuer and debt ratings from BB+ to BBB-. As a result, pursuant to the Company's agreement, the interest rate of its Senior Notes will decrease from
34
AMERICAN COASTAL INSURANCE CORPORATION
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes appearing elsewhere in this Form 10-Q, as well as with the Consolidated Financial Statements and related footnotes under Part II. Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed or implied in these forward-looking statements as a result of certain known and unknown risks and uncertainties. See "Forward-Looking Statements."
EXECUTIVE SUMMARY
Overview
American Coastal Insurance Corporation (referred to in this document as we, our, us, the Company or ACIC) is a holding company primarily engaged in commercial property and casualty insurance business with investments in the United States. We conduct our business principally through our wholly-owned insurance subsidiary, American Coastal Insurance Company (AmCoastal). Collectively, we refer to the holding company and all our subsidiaries, including non-insurance subsidiaries, as “American Coastal Insurance Corporation,” which is the preferred brand identification for our Company.
Our Company’s primary source of revenue is generated from writing insurance in Florida. Our target market in such areas consists of states where the perceived threat of natural catastrophe has caused large national insurance carriers to reduce their concentration of policies. We believe an opportunity exists for ACIC to write profitable business in such areas. On May 9, 2024, we entered into a Stock Purchase Agreement (the "Sale Agreement") with Forza Insurance Holdings, LLC (Forza) in which ACIC agreed to sell and Forza agreed to acquire 100% of the issued and outstanding stock of IIC. Forza’s application to acquire IIC was approved by the New York Department of Financial Services ("NYDFS") on February 13, 2025, and the sale closed on April 1, 2025. The Company received cash proceeds totaling $25,679,000 from the sale resulting in a loss on disposal of $247,000, net of tax impacts. The Company also recognized a $1,348,000 loss, net of tax impacts, on IIC's fixed maturity portfolio, which was included in accumulated other comprehensive loss on the Company's Consolidated Balance Sheets prior to the sale. As a result, IIC results of operations and assets and liabilities are captured within discontinued operations and can be seen in Note 4 of the Notes to Unaudited Condensed Consolidated Financial Statements above.
We have historically grown our business through strong organic growth, complemented by strategic acquisitions and partnerships, including our acquisitions of AmCo Holding Company, LLC (AmCo) and its subsidiaries, including AmCoastal, in April 2017.
Our policies in-force increased by 11.0% from 3,964 policies in-force at June 30, 2024 to 4,402 policies in-force at June 30, 2025. As of June 30, 2025 and 2024, all of our policies in-force are in the state of Florida.
The following discussion highlights significant factors influencing the consolidated financial position and results of operations of American Coastal Insurance Corporation. In evaluating our results of operations, we use premiums written and earned, policies in-force and new and renewal policies by geographic concentration. We also consider the impact of catastrophe losses and prior year development on our loss ratios, expense ratios and combined ratios. In monitoring our investments, we use credit quality, investment income, cash flows, realized gains and losses, unrealized gains and losses, asset diversification and portfolio duration. To evaluate our financial condition, we consider our liquidity, financial strength, ratings, book value per share and return on equity.
35
AMERICAN COASTAL INSURANCE CORPORATION
|
2025 Highlights
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross premiums written |
$ |
228,346 |
|
|
$ |
229,449 |
|
|
$ |
426,198 |
|
|
$ |
414,050 |
|
Gross premiums earned |
|
165,460 |
|
|
|
155,450 |
|
|
|
327,561 |
|
|
|
315,720 |
|
Net premiums earned |
|
78,443 |
|
|
|
63,381 |
|
|
|
146,715 |
|
|
|
126,012 |
|
Total revenues |
|
86,467 |
|
|
|
68,656 |
|
|
|
158,669 |
|
|
|
135,254 |
|
Income from continuing operations, net of tax |
|
28,037 |
|
|
|
19,073 |
|
|
|
47,748 |
|
|
|
42,782 |
|
Income (loss) from discontinued operations, net of tax |
|
(1,595 |
) |
|
|
(19 |
) |
|
|
42 |
|
|
|
(129 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated net income |
$ |
26,442 |
|
|
$ |
19,054 |
|
|
$ |
47,790 |
|
|
$ |
42,653 |
|
Net income available to ACIC stockholders per diluted share |
|
|
|
|
|
|
|
|
|
|
|
||||
Continuing Operations |
$ |
0.56 |
|
|
$ |
0.39 |
|
|
$ |
0.96 |
|
|
$ |
0.87 |
|
Discontinued Operations |
|
(0.03 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total |
$ |
0.53 |
|
|
$ |
0.39 |
|
|
$ |
0.96 |
|
|
$ |
0.87 |
|
Reconciliation of net income to core income: |
|
|
|
|
|
|
|
|
|
|
|
||||
Plus: Non-cash amortization of intangible assets and goodwill impairment |
$ |
610 |
|
|
$ |
609 |
|
|
$ |
1,219 |
|
|
$ |
1,421 |
|
Less: Income (loss) from discontinued operations, net of tax |
|
(1,595 |
) |
|
|
(19 |
) |
|
|
42 |
|
|
|
(129 |
) |
Less: Net realized gains (losses) on investment portfolio |
|
— |
|
|
|
(121 |
) |
|
|
1,382 |
|
|
|
(121 |
) |
Less: Unrealized gains (losses) on equity securities |
|
2,231 |
|
|
|
49 |
|
|
|
268 |
|
|
|
(1 |
) |
Less: Net tax impact (1) |
|
(340 |
) |
|
|
143 |
|
|
|
(91 |
) |
|
|
324 |
|
Core income(2) |
|
26,756 |
|
|
|
19,611 |
|
|
|
47,408 |
|
|
|
44,001 |
|
Core income per diluted share (2) |
$ |
0.54 |
|
|
$ |
0.40 |
|
|
$ |
0.96 |
|
|
$ |
0.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Book value per share |
|
|
|
|
|
|
$ |
6.00 |
|
|
$ |
4.63 |
|
||
(1) In order to reconcile the net income to the core income measure, we included the tax impact of all adjustments using the 21% corporate federal tax rate.
(2) Core income, a measure that is not based on GAAP, is reconciled above to net income, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this Form 10-Q is in "Definitions of Non-GAAP Measures" below.
36
AMERICAN COASTAL INSURANCE CORPORATION
|
Consolidated Net Income
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
||||
Gross premiums written |
$ |
228,346 |
|
|
$ |
229,449 |
|
|
$ |
426,198 |
|
|
$ |
414,050 |
|
Change in gross unearned premiums |
|
(62,886 |
) |
|
|
(73,999 |
) |
|
|
(98,637 |
) |
|
|
(98,330 |
) |
Gross premiums earned |
|
165,460 |
|
|
|
155,450 |
|
|
|
327,561 |
|
|
|
315,720 |
|
Ceded premiums earned |
|
(87,017 |
) |
|
|
(92,069 |
) |
|
|
(180,846 |
) |
|
|
(189,708 |
) |
Net premiums earned |
|
78,443 |
|
|
|
63,381 |
|
|
|
146,715 |
|
|
|
126,012 |
|
Net investment income |
|
5,793 |
|
|
|
5,347 |
|
|
|
10,304 |
|
|
|
9,364 |
|
Net realized investment gains (losses) |
|
— |
|
|
|
(121 |
) |
|
|
1,382 |
|
|
|
(121 |
) |
Net unrealized gains (losses) on equity securities |
|
2,231 |
|
|
|
49 |
|
|
|
268 |
|
|
|
(1 |
) |
Total revenue |
|
86,467 |
|
|
|
68,656 |
|
|
|
158,669 |
|
|
|
135,254 |
|
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
||||
Losses and loss adjustment expenses |
|
15,540 |
|
|
|
15,277 |
|
|
|
26,929 |
|
|
|
27,751 |
|
Policy acquisition costs |
|
24,257 |
|
|
|
13,939 |
|
|
|
47,723 |
|
|
|
23,534 |
|
General and administrative expenses |
|
7,778 |
|
|
|
11,938 |
|
|
|
17,284 |
|
|
|
23,190 |
|
Interest expense |
|
2,719 |
|
|
|
3,426 |
|
|
|
5,436 |
|
|
|
6,145 |
|
Total expenses |
|
50,294 |
|
|
|
44,580 |
|
|
|
97,372 |
|
|
|
80,620 |
|
Income before other income |
|
36,173 |
|
|
|
24,076 |
|
|
|
61,297 |
|
|
|
54,634 |
|
Other income |
|
1,379 |
|
|
|
811 |
|
|
|
2,449 |
|
|
|
1,621 |
|
Income before income taxes |
|
37,552 |
|
|
|
24,887 |
|
|
|
63,746 |
|
|
|
56,255 |
|
Provision for income taxes |
|
9,515 |
|
|
|
5,814 |
|
|
|
15,998 |
|
|
|
13,473 |
|
Net income from continuing operations, net of tax |
$ |
28,037 |
|
|
$ |
19,073 |
|
|
$ |
47,748 |
|
|
$ |
42,782 |
|
Loss from discontinued operations, net of tax |
|
(1,595 |
) |
|
|
(19 |
) |
|
|
42 |
|
|
|
(129 |
) |
Net income |
$ |
26,442 |
|
|
$ |
19,054 |
|
|
$ |
47,790 |
|
|
$ |
42,653 |
|
Earnings available to ACIC common stockholders per diluted share |
$ |
0.53 |
|
|
$ |
0.39 |
|
|
$ |
0.96 |
|
|
$ |
0.87 |
|
Book value per share |
|
|
|
|
|
|
$ |
6.00 |
|
|
$ |
4.63 |
|
||
Return on equity based on GAAP net income |
|
|
|
|
|
|
|
37.1 |
% |
|
|
51.1 |
% |
||
Loss ratio, net (1) |
|
19.8 |
% |
|
|
24.1 |
% |
|
|
18.4 |
% |
|
|
22.0 |
% |
Expense ratio (2) |
|
40.8 |
% |
|
|
40.8 |
% |
|
|
44.3 |
% |
|
|
37.1 |
% |
Combined ratio (3) |
|
60.6 |
% |
|
|
64.9 |
% |
|
|
62.7 |
% |
|
|
59.1 |
% |
Effect of current year catastrophe losses on combined ratio |
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
0.2 |
% |
Effect of prior year development on combined ratio |
|
(1.6 |
)% |
|
|
(1.5 |
)% |
|
|
(2.4 |
)% |
|
|
(0.8 |
)% |
Underlying combined ratio (4) |
|
62.2 |
% |
|
|
66.4 |
% |
|
|
65.0 |
% |
|
|
59.7 |
% |
(1) Loss ratio, net is calculated as losses and loss adjustment expense (LAE) net of losses ceded to reinsurers, relative to net premiums earned. Management uses this operating metric to analyze our loss trends and believes it is useful for investors to evaluate this component separately from our other operating expenses.
(2) Expense ratio is calculated as the sum of all operating expenses less interest expense relative to net premiums earned. Management uses this operating metric to analyze our expense trends and believes it is useful for investors to evaluate this component separately from our loss expenses.
(3) Combined ratio is the sum of the loss ratio, net and the expense ratio, net. Management uses this operating metric to analyze our total expense trends and believes it is a key indicator for investors when evaluating the overall profitability of our business.
(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 Form 10-Q is in "Definitions of Non-GAAP Measures" below.
37
AMERICAN COASTAL INSURANCE CORPORATION
|
Definitions of Non-GAAP Measures
We believe that investors' understanding of ACIC's performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.
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. We believe that this ratio is useful to investors and it is used by management to highlight the trends in our business that may be obscured by current year catastrophe losses and prior year development. Current year catastrophe losses cause our loss trends to vary significantly between periods as a result of their frequency of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year development is caused by unexpected loss development on historical reserves. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our 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 our 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. We use underlying loss and LAE figures to analyze our loss trends that may be impacted by current year catastrophe losses and prior year development on our reserves. As discussed previously, these two items can have a significant impact on our loss trends in a given period. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our 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 our business.
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, which 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 our investment portfolio, net of tax, and unrealized gains (losses) on our 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 our operations. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. The most directly comparable GAAP measure is net income (loss). The core income (loss) measure should not be considered a substitute for net loss and does not reflect the overall profitability of our business.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
When we prepare our consolidated financial statements and accompanying notes in conformity with GAAP, we must make estimates and assumptions about future events that affect the amounts we report. Certain of these estimates result from judgments that can be subjective and complex. As a result of that subjectivity and complexity, and because we continuously evaluate these estimates and assumptions based on a variety of factors, actual results could materially differ from our estimates and assumptions if changes in one or more factors require us to make accounting adjustments. During the six months ended June 30, 2025, we reassessed our critical accounting policies and estimates as disclosed in Note 2 to the Notes to Unaudited Condensed Consolidated Financial Statements and our Annual Report on Form 10-K for the year ended December 31, 2024. We have made no material changes or additions with regard to those policies and estimates.
RECENT ACCOUNTING STANDARDS
Please refer to Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recent accounting standards that may affect us.
38
AMERICAN COASTAL INSURANCE CORPORATION
|
ANALYSIS OF FINANCIAL CONDITION - JUNE 30, 2025 COMPARED TO DECEMBER 31, 2024
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our accompanying unaudited condensed consolidated interim financial statements and related notes, and in conjunction with the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Investments
The primary goals of our investment strategy are to preserve capital, maximize after-tax investment income, maintain liquidity and minimize risk. To accomplish our goals, we purchase debt securities in sectors that represent the most attractive relative value, and we maintain a moderate equity exposure. Limiting equity exposure manages risks and helps to preserve capital for two reasons: first, bond market returns are less volatile than stock market returns, and second, should the bond issuer enter bankruptcy liquidation, bondholders generally have a higher priority than equity holders in a bankruptcy proceeding.
We must comply with applicable state insurance regulations that prescribe the type, quality and concentrations of investments our insurance subsidiaries can make; therefore, our current investment policy limits investment in non-investment-grade fixed maturities and limits total investment amounts in preferred stock, common stock and mortgage notes receivable. We do not invest in derivative securities.
Two outside asset management companies, which have authority and discretion to buy and sell securities for us, manage our investments subject to (i) the guidelines established by our Board of Directors and (ii) the direction of management. The Investment Committee of our Board of Directors reviews and approves our investment policy on a regular basis.
Our cash, cash equivalents, restricted cash and investment portfolio totaled $726,243,000 at June 30, 2025, compared to $540,811,000 at December 31, 2024.
The following table summarizes our investments, by type:
|
June 30, 2025 |
|
December 31, 2024 |
||||||||||||||
|
Estimated Fair Value |
|
|
Percent of Total |
|
Estimated Fair Value |
|
|
Percent of Total |
||||||||
U.S. government and agency securities |
$ |
109,590 |
|
|
|
15.1 |
|
% |
|
$ |
154,660 |
|
|
|
28.7 |
|
% |
Corporate securities |
|
66,292 |
|
|
|
9.1 |
|
|
|
|
61,535 |
|
|
|
11.3 |
|
|
Mortgage-backed securities |
|
31,567 |
|
|
|
4.3 |
|
|
|
|
30,462 |
|
|
|
5.6 |
|
|
States, municipalities and political subdivisions |
|
21,709 |
|
|
|
3.0 |
|
|
|
|
17,197 |
|
|
|
3.2 |
|
|
Asset-backed securities |
|
12,891 |
|
|
|
1.8 |
|
|
|
|
11,436 |
|
|
|
2.1 |
|
|
Public utilities |
|
6,298 |
|
|
|
0.9 |
|
|
|
|
5,284 |
|
|
|
1.0 |
|
|
Foreign government |
|
597 |
|
|
|
0.1 |
|
|
|
|
427 |
|
|
|
0.1 |
|
|
Total fixed maturities |
|
248,944 |
|
|
|
34.3 |
|
% |
|
|
281,001 |
|
|
|
52.0 |
|
% |
Mutual funds |
|
35,480 |
|
|
|
4.9 |
|
|
|
|
31,818 |
|
|
|
5.9 |
|
|
Other common stocks |
|
5,022 |
|
|
|
0.7 |
|
|
|
|
4,976 |
|
|
|
0.9 |
|
|
Total equity securities |
|
40,502 |
|
|
|
5.6 |
|
% |
|
|
36,794 |
|
|
|
6.8 |
|
% |
Other investments |
|
29,585 |
|
|
|
4.1 |
|
|
|
|
23,623 |
|
|
|
4.4 |
|
|
Total investments |
|
319,031 |
|
|
|
44.0 |
|
% |
|
|
341,418 |
|
|
|
63.2 |
|
% |
Cash and cash equivalents |
|
315,485 |
|
|
|
43.4 |
|
|
|
|
137,036 |
|
|
|
25.3 |
|
|
Restricted cash |
|
91,727 |
|
|
|
12.6 |
|
|
|
|
62,357 |
|
|
|
11.5 |
|
|
Total cash, cash equivalents, restricted cash and investments |
$ |
726,243 |
|
|
|
100.0 |
|
% |
|
$ |
540,811 |
|
|
|
100.0 |
|
% |
We classify all of our fixed-maturity investments as available-for-sale. Our investments at June 30, 2025 and December 31, 2024 consisted mainly of U.S. government and agency securities, securities of investment-grade corporate issuers, mortgage-backed securities, and states, municipalities and political subdivisions. Our equity holdings as of June 30, 2025 and December 31, 2024 consisted of mutual funds and common stock. At June 30, 2025, approximately 86.8% of our fixed maturities were U.S. Treasuries or corporate bonds rated “A” or better, and 13.2% were corporate bonds rated “BBB” or "BB".
39
AMERICAN COASTAL INSURANCE CORPORATION
|
Reinsurance
We follow the industry practice of reinsuring a portion of our risks. Reinsurance involves transferring, or "ceding", all or a portion of the risk exposure on policies we write to another insurer, known as a reinsurer. To the extent that our reinsurers are unable to meet the obligations they assume under our reinsurance agreements, we remain primarily liable for the entire insured loss under the policies we write.
Our catastrophe reinsurance coverage consists of two separate placements:
This reinsurance protection is an essential part of our catastrophe risk management strategy. It is intended to provide our stockholders with an acceptable return on the risks assumed by our insurance entity, and to reduce the variability of earnings, while providing surplus protection. Although reinsurance agreements contractually obligate our reinsurers to reimburse us for the agreed-upon portion of our gross paid losses, they do not discharge our primary liability. In the event one or more of our reinsurers fail to fulfill their obligation, the surplus of our statutory entity may decline, and we may not be able to fulfill our obligation to policyholders, or we may not be able to maintain compliance with various regulatory financial requirements. Additionally, we face the risk that actual losses incurred from one or more catastrophic events may be above the modeled expected loss resulting in losses exceeding our reinsurance coverage, which may result in a decline in surplus, and as a result we may not be able to fulfill our obligations to policyholders, or we may not be able to maintain compliance with various regulatory financial requirements. The details of our programs and the likelihood of a catastrophic event exceeding these two coverages are outlined below.
AmCoastal’s core catastrophe reinsurance program 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. Under this program, the Company's GAAP retention on a first event is $29,750,000 ($14,000,000 retained by AmCoastal under statutory accounting principles (STAT retained), $15,750,000 (retained separately by the Company's captive). The Company has purchased second and third event retrocession coverage, reducing its second event GAAP retention to $18,500,000 ($14,000,000 STAT retained by AmCoastal, $4,500,000 retained separately by the Company's captive) and third event GAAP retention to $3,750,000, based on three $100,000,000 loss events. AmCoastal’s program provides sufficient coverage for approximately a 1-in-201-year return period, indicating that the probability of a single occurrence exceeding protection purchased is roughly 0.5% estimated by blending the AIR 10, AIR 11.5, RMS 22 and RMS 23 catastrophe models using long-term catalogs including demand surge and based on projected total insured value at September 30, 2025 of $60 billion.. AmCoastal’s program also provides sufficient coverage for a 1-in-100-year event followed by a 1-in-50-year event in the same treaty year, the probability of which is less than 0.1%. While we believe these catastrophe models are very good tools and their output provides reasonable proxies for the probability of exhausting our reinsurance protections, they are imperfect, so actual results could vary dramatically from those expected.
AmCoastal’s all other perils catastrophe excess of loss agreement provides protection from catastrophe loss events other than named windstorms and earthquakes up to $88,200,000 for a first and second event, totaling $176,400,000 in the aggregate. This agreement provides sufficient coverage for approximately a 1-in-450-year return period, indicating that the probability of a single occurrence exceeding protection purchased is no more than 0.2%.
In addition to the programs described above, AmCoastal purchased a new catastrophe aggregate excess of loss agreement (the “CAT Agg” agreement) to mitigate our catastrophe frequency risk. This agreement provides coverage for in-force, new and renewal business. Effective January 1, 2025, the new CAT Agg agreement provides $40,000,000 of aggregate limit (with a $20,000,000 per occurrence cap) in excess of zero after the $40,000,000 annual aggregate deductible has been met. The CAT Agg agreement limits our losses from all catastrophe loss events, including named windstorms, severe convective storms and winter storm events for the full year ending December 31, 2025.
Effective December 15, 2023, the Company agreed to commute a private reinsurer’s share of core catastrophe reinsurance coverage and replace this gap in coverage with new coverage provided by one of the Company's other private reinsurers. This transaction resulted in a reduction in expense of approximately $6,300,000 and $15,700,000 during the three and six months ended June 30, 2024, respectively.
40
AMERICAN COASTAL INSURANCE CORPORATION
|
Where we think prudent, particularly where premium rates are high relative to the risk, we retain risk whereby AmCoastal purchases reinsurance from Shoreline Re, our captive reinsurance entity. Shoreline Re participates on AmCoastal's all other perils catastrophe excess of loss agreement and AmCoastal's excess per risk agreement. In addition, Shoreline Re participates in a 45% quota share agreement with AmCoastal, which provides coverage for all catastrophe perils as well as attritional losses incurred. The table below outlines the participation of Shoreline Re for each program, including premium received and capital at risk.
Treaty |
|
Effective Dates |
|
Premium Collected / Cession Rate |
|
|
Capital at Risk (1) |
|
|
||
Quota Share Agreement |
|
06/01/2025 - 06/01/2026 |
|
45% (2) |
|
|
$ |
33,346,000 |
|
(3) |
|
All Other Perils Catastrophe |
|
01/01/2025 - |
|
|
|
|
|
|
|
||
Excess of Loss Agreement |
|
12/31/2025 |
|
$ |
1,296,000 |
|
|
|
2,304,000 |
|
|
All Other Perils Catastrophe |
|
01/01/2024 - |
|
|
|
|
|
|
|
||
Excess of Loss Agreement |
|
01/01/2025 |
|
|
— |
|
|
|
4,500,000 |
|
(4) |
Excess Per Risk Agreement |
|
02/01/2024 - 02/01/2025 |
|
|
1,867,000 |
|
|
|
633,000 |
|
|
Quota Share Agreement (5) |
|
06/01/2024 - 06/01/2026 |
|
30% (2) |
|
|
$ |
4,200,000 |
|
(6) |
|
(1) Capital at risk is calculated by taking the aggregate losses Shoreline Re is subject to under the contract, less net premiums earned under the contract.
(2) This treaty provides or provided coverage for all catastrophe perils and attritional losses incurred. For all catastrophe perils, the quota share agreement provides or provided ground-up protection, effectively reducing our retention for catastrophe losses.
(3) Net premiums earned based on estimated subject premiums at 06/01/2025.
(4) This treaty was amended on June 1, 2025 to include reinstatement, resulting in additional premium and aggregate losses.
(5) This treaty was commuted on June 1, 2025 with no impact on our consolidated results.
(6) Net premiums earned based on estimated subject premiums at 06/01/2024.
The table below outlines our external quota share agreements in effect for the six months ended June 30, 2025 and 2024.
Reinsurer |
|
Companies in Scope |
|
Effective Dates |
|
Cession Rate |
|
States in Scope |
External third-party |
|
AmCoastal |
|
06/01/2024 - 06/01/2026 |
|
20% (1)(2) |
|
Florida |
External third-party |
|
AmCoastal |
|
06/01/2023 - 06/01/2024 |
|
40% (1) |
|
Florida |
(1) This treaty provides or provided coverage for all catastrophe perils and attritional losses incurred. For all catastrophe perils, the quota share agreement provides or provided ground-up protection, effectively reducing our retention for catastrophe losses.
(2) The cession rate of this treaty is reduced from 20% to 15% effective 06/01/2025 - 06/01/2026.
Reinsurance costs as a percentage of gross earned premium during the three and six months ended June 30, 2025 and 2024 were as follows:
41
AMERICAN COASTAL INSURANCE CORPORATION
|
|
2025 |
|
|
2024 |
|
||
Three Months Ended June 30, |
|
|
|
|
|
||
Non-at-Risk |
|
(0.3 |
)% |
|
|
(0.2 |
)% |
Quota Share |
|
(15.1 |
)% |
|
|
(26.4 |
)% |
All Other |
|
(37.2 |
)% |
|
|
(32.7 |
)% |
Total Ceding Ratio |
|
(52.6 |
)% |
|
|
(59.3 |
)% |
|
|
|
|
|
|
||
Six Months Ended June 30, |
|
|
|
|
|
||
Non-at-Risk |
|
(0.3 |
)% |
|
|
(0.2 |
)% |
Quota Share |
|
(15.6 |
)% |
|
|
(29.0 |
)% |
All Other |
|
(39.3 |
)% |
|
|
(30.9 |
)% |
Total Ceding Ratio |
|
(55.2 |
)% |
|
|
(60.1 |
)% |
We amortize our ceded unearned premiums over the annual agreement period, and we record that amortization in ceded premiums earned on our Unaudited Condensed Consolidated Statements of Comprehensive Income. The table below summarizes the amounts of our ceded premiums written under the various types of agreements, as well as the amortization of ceded unearned premiums:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Quota Share |
$ |
(22,624 |
) |
|
$ |
(8,040 |
) |
|
$ |
(53,785 |
) |
|
$ |
(66,134 |
) |
Excess-of-loss |
|
(199,174 |
) |
|
|
(208,498 |
) |
|
|
(221,456 |
) |
|
|
(227,820 |
) |
Equipment, identity theft, and cyber security |
|
(854 |
) |
|
|
(824 |
) |
|
|
(1,485 |
) |
|
|
(1,305 |
) |
Ceded premiums written |
|
(222,652 |
) |
|
|
(217,362 |
) |
|
|
(276,726 |
) |
|
|
(295,259 |
) |
Change in ceded unearned premiums |
|
135,635 |
|
|
|
125,293 |
|
|
|
95,880 |
|
|
|
105,551 |
|
Ceded premiums earned |
$ |
(87,017 |
) |
|
$ |
(92,069 |
) |
|
$ |
(180,846 |
) |
|
$ |
(189,708 |
) |
Current year catastrophe losses disaggregated between named and numbered storms and all other catastrophe loss events are shown in the following table.
|
|
2025 |
|
|
2024 |
|
||||||||||||||||||
|
|
Number |
|
|
Incurred |
|
|
Combined |
|
|
Number |
|
|
Incurred |
|
|
Combined |
|
||||||
Three Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current period catastrophe losses incurred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Named and numbered storms |
|
|
— |
|
|
$ |
— |
|
|
|
— |
% |
|
|
— |
|
|
$ |
— |
|
|
|
— |
% |
All other catastrophe loss events |
|
|
— |
|
|
|
— |
|
|
|
— |
% |
|
|
2 |
|
|
|
(8 |
) |
|
|
— |
% |
Total |
|
|
— |
|
|
$ |
— |
|
|
|
— |
% |
|
|
2 |
|
|
$ |
(8 |
) |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current period catastrophe losses incurred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Named and numbered storms |
|
|
— |
|
|
$ |
— |
|
|
|
— |
% |
|
|
— |
|
|
$ |
— |
|
|
|
— |
% |
All other catastrophe loss events |
|
|
— |
|
|
|
— |
|
|
|
— |
% |
|
|
4 |
|
|
|
203 |
|
|
|
0.2 |
% |
Total |
|
|
— |
|
|
$ |
— |
|
|
|
— |
% |
|
|
4 |
|
|
$ |
203 |
|
|
|
0.2 |
% |
(1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves. Shown net of losses ceded to reinsurers. Incurred loss and LAE and number of events includes the development on storms during the year in which it occurred.
See Note 9 in our Notes to Unaudited Condensed Consolidated Financial Statements for additional information regarding our reinsurance program.
Unpaid Losses and Loss Adjustments
We generally use the term “loss(es)” to collectively refer to both loss and LAE. We establish reserves for both reported and unreported unpaid losses that have occurred at or before the balance sheet date for amounts we estimate we will be required to pay in
42
AMERICAN COASTAL INSURANCE CORPORATION
|
the future, including provisions for claims that have been reported but are unpaid at the balance sheet date and for obligations on claims that have been incurred but not reported at the balance sheet date. Our policy is to establish these loss reserves after considering all information known to us at each reporting period. At any given point in time, our loss reserve represents our best estimate of the ultimate settlement and administration costs of our insured claims incurred and unpaid.
Unpaid losses and LAE totaled $219,242,000 and $322,087,000 as of June 30, 2025 and December 31, 2024, respectively.
Since the process of estimating loss reserves requires significant judgment due to a number of variables, such as fluctuations in inflation, judicial decisions, legislative changes and changes in claims handling procedures, our ultimate liability will likely differ from these estimates. We revise our reserve for unpaid losses as additional information becomes available, and reflect adjustments, if any, in our earnings in the periods in which we determine the adjustments as necessary.
See Note 10 in our Notes to Unaudited Condensed Consolidated Financial Statements for additional information regarding our losses and loss adjustments.
43
AMERICAN COASTAL INSURANCE CORPORATION
|
RESULTS OF OPERATIONS - COMPARISON OF THE THREE MONTH PERIODS ENDED JUNE 30, 2025 AND 2024
ACIC net income for the three months ended June 30, 2025 increased $7,388,000, or 38.8%, to net income of $26,442,000 for the second quarter of 2025 from $19,054,000 for the same period in 2024. Of this income, $28,037,000 is attributable to continuing operations for the three months ended June 30, 2025, an increase of $8,964,000 from $19,073,000 for the same period in 2024. Quarter-over-quarter revenues increased, driven by an increase in gross premiums earned and decrease in ceded premiums earned. This was offset by increased expenses quarter-over-quarter, driven by an increase in policy acquisition costs. In addition, the Company's provision for income taxes increased quarter-over-quarter. The Company's loss from discontinued operations also contributed to this change in net income, increasing $1,576,000 quarter-over-quarter, as the sale of IIC was completed during the quarter. The details of this change in discontinued operations can be seen in Note 4 above.
Revenue
Our gross written premiums remained relatively flat, decreasing $1,103,000, or 0.5%, to $228,346,000 for the second quarter ended June 30, 2025 from $229,449,000 for the same period in 2024. The breakdown of the quarter-over-quarter changes in both direct written and assumed premiums and new and renewal policies are shown in the tables below.
($ in thousands) |
Three Months Ended June 30, |
|
|||||||||
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
Direct Written and Assumed Premium |
|
|
|
|
|
|
|
|
|||
Direct premium |
$ |
228,373 |
|
|
$ |
229,449 |
|
|
$ |
(1,076 |
) |
Assumed premium (1) |
|
(27 |
) |
|
|
— |
|
|
|
(27 |
) |
Total commercial property gross written premium |
$ |
228,346 |
|
|
$ |
229,449 |
|
|
$ |
(1,103 |
) |
(1) Assumed premium written for 2025 included commercial property business assumed from unaffiliated insurers that was subsequently cancelled.
|
Three Months Ended June 30, |
|
|||||||||
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
New and Renewal Policies |
|
1,532 |
|
|
|
1,327 |
|
|
|
205 |
|
Expenses
Expenses for the three months ended June 30, 2025 increased $5,714,000, or 12.8%, to $50,294,000 from $44,580,000 for the same period in 2024. The increase in expenses was primarily due to an increase in policy acquisition costs. This was offset by a decrease in general and administrative expenses, while losses and LAE incurred remained relatively flat. The details of these changes can be seen below.
The calculations of our loss ratios and underlying loss ratios are shown below.
|
Three Months Ended June 30, |
|||||||||||
|
2025 |
|
|
2024 |
|
|
Change |
|||||
Net loss and LAE |
$ |
15,540 |
|
|
$ |
15,277 |
|
|
$ |
263 |
|
|
% of Gross earned premiums |
|
9.4 |
% |
|
|
9.8 |
% |
|
|
(0.4 |
) |
pts |
% of Net earned premiums |
|
19.8 |
% |
|
|
24.1 |
% |
|
|
(4.3 |
) |
pts |
Less: |
|
|
|
|
|
|
|
|
|
|||
Current year catastrophe losses |
$ |
— |
|
|
$ |
(8 |
) |
|
$ |
8 |
|
|
Prior year reserve favorable development |
|
(1,275 |
) |
|
|
(968 |
) |
|
|
(307 |
) |
|
Underlying loss and LAE (1) |
$ |
16,815 |
|
|
$ |
16,253 |
|
|
$ |
562 |
|
|
% of Gross earned premiums |
|
10.2 |
% |
|
|
10.5 |
% |
|
|
(0.3 |
) |
pts |
% of Net earned premiums |
|
21.4 |
% |
|
|
25.6 |
% |
|
|
(4.2 |
) |
pts |
(1) Underlying loss and LAE is a non-GAAP measure and is reconciled above to net loss and LAE, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this document is in the "Definitions of Non-GAAP Measures" section of this Form 10-Q.
44
AMERICAN COASTAL INSURANCE CORPORATION
|
The calculations of our expense ratios are shown below.
|
Three Months Ended June 30, |
|||||||||||
|
2025 |
|
|
2024 |
|
|
Change |
|||||
Policy acquisition costs |
$ |
24,257 |
|
|
$ |
13,939 |
|
|
$ |
10,318 |
|
|
General and administrative |
|
7,778 |
|
|
|
11,938 |
|
|
|
(4,160 |
) |
|
Total operating expenses |
$ |
32,035 |
|
|
$ |
25,877 |
|
|
$ |
6,158 |
|
|
% of Gross earned premiums |
|
19.4 |
% |
|
|
16.6 |
% |
|
|
2.8 |
|
pts |
% of Net earned premiums |
|
40.8 |
% |
|
|
40.8 |
% |
|
|
0.0 |
|
pts |
Loss and LAE increased by $263,000, or 1.7%, to $15,540,000 for the second quarter of 2025 from $15,277,000 for the second quarter of 2024. Loss and LAE expense as a percentage of net earned premiums decreased 4.3 points to 19.8% for the second quarter of 2025, compared to 24.1% for the second quarter of 2025. Excluding catastrophe losses and prior year reserve development, our gross underlying loss and LAE ratio for the second quarter of 2025 would have been 10.2%, compared to 10.5% for the second quarter of 2024.
Policy acquisition costs increased by $10,318,000, or 74.0%, to $24,257,000 for the second quarter of 2025 from $13,939,000 for the second quarter of 2024, due to a decrease in reinsurance ceding commission income of $5,756,000, driven by a decrease in our quota share cession rate from 40% to 20%, effective June 1, 2024 and from 20% to 15%, effective June 1, 2025. External management fees also increased by $4,500,000, primarily as the result of a one percent increase in the management fee and profit share accrual pursuant to the renewal terms of the contract with AmRisc, LLC (AmRisc).
General and administrative expenses decreased by $4,160,000, or 34.8%, to $7,778,000 for the second quarter of 2025 from $11,938,000 for the second quarter of 2024, driven by a non-recurring employee retention tax credit refund of $2,939,000 submitted to the Internal Revenue Service in 2022 and received during the second quarter of 2025. This non-recurring refund was previously disclosed in our Quarterly Report on Form 10-Q, filed on May 8, 2025, as a gain contingency. In addition, external spending for professional and consulting services decreased $1,873,000 quarter-over-quarter.
45
AMERICAN COASTAL INSURANCE CORPORATION
|
RESULTS OF OPERATIONS - COMPARISON OF THE SIX MONTH PERIODS ENDED JUNE 30, 2025 AND 2024
ACIC net income for the six months ended June 30, 2025 increased $5,137,000, or 12.0%, to $47,790,000 from $42,653,000 for the same period in 2024. Of this income, $47,748,000 is attributable to continuing operations for the six months ended June 30, 2025, an increase of $4,966,000 from $42,782,000 for the same period in 2024. Year-over-year revenues increased 17.3%, driven by an increase in net premiums earned. This increase in revenue was offset by increased policy acquisition costs year-over-year, partially offset by decreased general and administrative expenses and losses and LAE incurred.
Revenue
Our gross written premiums increased $12,148,000, or 2.9%, to $426,198,000 for the six months ended June 30, 2025 from $414,050,000 for the same period in 2024, driven by the increase in new and renewal policies shown below. The breakdown of the quarter-over-quarter changes in both direct written and assumed premiums and new and renewal policies are shown in the tables below.
($ in thousands) |
Six Months Ended June 30, |
|
|||||||||
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
Direct Written and Assumed Premium |
|
|
|
|
|
|
|
|
|||
Direct premium |
$ |
426,275 |
|
|
$ |
414,050 |
|
|
$ |
12,225 |
|
Assumed premium (1) |
|
(77 |
) |
|
|
— |
|
|
|
(77 |
) |
Total commercial property gross written premium |
$ |
426,198 |
|
|
$ |
414,050 |
|
|
$ |
12,148 |
|
(1) Assumed premium written for 2025 included commercial property business assumed from unaffiliated insurers that was subsequently cancelled.
|
Six Months Ended June 30, |
|
|||||||||
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
New and Renewal Policies |
|
2,728 |
|
|
|
2,389 |
|
|
|
339 |
|
Expenses
Expenses for the six months ended June 30, 2025 increased $16,752,000, or 20.8%, to $97,372,000 from $80,620,000 for the same period in 2024. The increase in expenses was primarily due to an increase in policy acquisition costs year-over-year. This was partially offset by decreased general and administrative expenses and loss and LAE incurred year-over-year. The details of these changes can be seen below.
|
Six Months Ended June 30, |
|||||||||||
|
2025 |
|
|
2024 |
|
|
Change |
|||||
Net loss and LAE |
$ |
26,929 |
|
|
$ |
27,751 |
|
|
$ |
(822 |
) |
|
% of Gross earned premiums |
|
8.2 |
% |
|
|
8.8 |
% |
|
|
(0.6 |
) |
pts |
% of Net earned premiums |
|
18.4 |
% |
|
|
22.0 |
% |
|
|
(3.6 |
) |
pts |
Less: |
|
|
|
|
|
|
|
|
|
|||
Current year catastrophe losses |
$ |
— |
|
|
$ |
203 |
|
|
$ |
(203 |
) |
|
Prior year reserve favorable development |
|
(3,469 |
) |
|
|
(1,022 |
) |
|
|
(2,447 |
) |
|
Underlying loss and LAE (1) |
$ |
30,398 |
|
|
$ |
28,570 |
|
|
$ |
1,828 |
|
|
% of Gross earned premiums |
|
9.3 |
% |
|
|
9.0 |
% |
|
|
0.3 |
|
pts |
% of Net earned premiums |
|
20.7 |
% |
|
|
22.7 |
% |
|
|
(2.0 |
) |
pts |
(1) Underlying loss and LAE is a non-GAAP measure and is reconciled above to net loss and LAE, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this document is in the "Definitions of Non-GAAP Measures" section of this Form 10-Q.
46
AMERICAN COASTAL INSURANCE CORPORATION
|
The calculations of our expense ratios are shown below.
|
Six Months Ended June 30, |
|||||||||||
|
2025 |
|
|
2024 |
|
|
Change |
|||||
Policy acquisition costs |
$ |
47,723 |
|
|
$ |
23,534 |
|
|
$ |
24,189 |
|
|
General and administrative |
|
17,284 |
|
|
|
23,190 |
|
|
|
(5,906 |
) |
|
Total operating expenses |
$ |
65,007 |
|
|
$ |
46,724 |
|
|
$ |
18,283 |
|
|
% of Gross earned premiums |
|
19.8 |
% |
|
|
14.8 |
% |
|
|
5.0 |
|
pts |
% of Net earned premiums |
|
44.3 |
% |
|
|
37.1 |
% |
|
|
7.2 |
|
pts |
Loss and LAE decreased $822,000, or 3.0%, to $26,929,000 for the six months ended June 30, 2025 from $27,751,000 for the same period in 2024. Loss and LAE expense as a percentage of net earned premiums decreased 3.6 points to 18.4% for the six months ended June 30, 2025, compared to 22.0% for the same period in 2024. Excluding catastrophe losses and prior year reserve development, our gross underlying loss and LAE ratio for the six months ended June 30, 2025 was 9.3%, an increase of 0.3 points from 9.0% during the six months ended June 30, 2024.
Policy acquisition costs increased $24,189,000, or 102.8%, to $47,723,000 for the six months ended June 30, 2025 from $23,534,000 for the same period in 2024. The primary driver of the decrease was a decrease in ceding commission income of $15,163,000 as the result of the Company's decrease in quota share reinsurance coverage from 40% to 20%, effective June 1, 2024 and from 20% to 15%, effective June 1, 2025. External management fees also increased $8,917,000 as a result of a one percent increase in the management fee and profit share accrual pursuant to the renewal terms of the contract with AmRisc in 2024.
General and administrative expenses decreased $5,906,000, or 25.5%, to $17,284,000 for the six months ended June 30, 2025 from $23,190,000 for the same period in 2024, driven by a non-recurring employee retention tax credit refund of $4,469,000 submitted to the Internal Revenue Service in 2022 and received during the first half of 2025. This non-recurring refund was previously disclosed in our Annual Report on Form 10-K, filed on March 10, 2025, as a gain contingency. In addition, external spending for professional and consulting services decreased $2,540,000 quarter-over-quarter.
LIQUIDITY AND CAPITAL RESOURCES
We generate cash through premium collections, reinsurance recoveries, investment income, the sale or maturity of invested assets, the incurrence of debt and the issuance of additional shares of our stock. We use cash to pay reinsurance premiums, claims and related costs, policy acquisition costs, salaries and employee benefits, other expenses and stockholder dividends, acquire subsidiaries and pay associated costs, as well as to repay debts, repurchase stock and purchase investments.
As a holding company, we do not conduct any business operations of our own and, as a result, we rely on cash dividends or intercompany loans from our management subsidiaries to pay our general and administrative expenses. Insurance regulatory authorities heavily regulate our insurance subsidiary, including restricting any dividends paid by our insurance subsidiary and requiring approval of any management fees our insurance subsidiary pays to our management subsidiaries for services rendered; however, nothing restricts our non-insurance company subsidiaries from paying us dividends other than state corporate laws regarding solvency. Our management subsidiaries pay us dividends primarily using cash from the collection of management fees from our insurance subsidiary, pursuant to the management agreements in effect between those entities. In accordance with state laws, our insurance subsidiary may pay dividends or make distributions out of that part of its statutory surplus derived from its net operating profit and its net realized capital gains. The Risk-Based Capital (RBC) guidelines published by the National Association of Insurance Commissioners may further restrict our insurance subsidiary's ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause their respective surplus as it regards policyholders to fall below minimum RBC guidelines. See Note 14 in our Notes to Unaudited Condensed Consolidated Financial Statements for additional information.
The Company made a capital contribution of $8,269,000 to its reinsurance subsidiary, Shoreline Re during the six months ended June 30, 2025. During the six months ended June 30, 2024, the Company made capital contributions of $1,265,000 to its reinsurance subsidiary, Shoreline Re. We may make future contributions of capital to our insurance subsidiaries as circumstances require.
During the six months ended June 30, 2025, the Company received a dividend of $23,000,000 from AmCoastal.
In September 2023, we entered into an equity distribution agreement (the “Agreement”) with Raymond James & Associates, Inc., as agent (the “Agent”), of up to 8,000,000 shares of the Company’s common stock, par value $0.0001 per share (the “Shares”). Sales of the Shares under the Agreement will be made in sales deemed to be “at the market offerings”. The Agent is not required to sell any
47
AMERICAN COASTAL INSURANCE CORPORATION
|
specific amount of Shares but has agreed to act as our sales agent for a commission equal to 3.0% of the gross proceeds from the sales of the Shares. As of June 30, 2025, 4,373,000 shares had been sold under the Agreement resulting in commissions paid of approximately $1,181,000 and net proceeds of approximately $38,190,000. The Agreement will terminate upon the issuance and sale of all Shares subject to the Agreement, or the Agreement may be suspended or discontinued at any time.
Cash Flows for the Six Months Ended June 30, 2025 and 2024 (in thousands)
|
Six Months Ended June 30, |
|
|||||
|
2025 |
|
|
2024 |
|
||
Net cash provided by operating activities |
$ |
154,392 |
|
|
$ |
250,886 |
|
Net cash provided by (used in) investing activities |
|
29,756 |
|
|
|
(152,814 |
) |
Net cash provided by financing activities |
$ |
774 |
|
|
$ |
11,458 |
|
Operating Activities
The principal cash inflows from our operating activities come from premium collections, reinsurance recoveries and investment income. The principal cash outflows from our operating activities are the result of claims and related costs, reinsurance premiums, policy acquisition costs and salaries and employee benefits. A primary liquidity concern with respect to these cash flows is the risk of large magnitude catastrophe events.
During the six months ended June 30, 2025, we experienced cash inflows of $154,392,000 compared to $250,886,000 during the six months ended June 30, 2024. This change was driven by a decrease in the change in reinsurance payable of $93,500,000 and a decrease in the change in reinsurance recoverable of $40,509,000, partially offset by a decrease in the change in unpaid loss and loss adjustment expenses of $34,920,000. The change in reinsurance payable can be attributed to the pricing change in the renewal of our core catastrophe program in 2025, with the risk adjusted decrease being -12.4%. The change in unpaid loss and loss adjustment expenses and the corresponding reinsurance recoverable balance can be attributed to the continued settlement of catastrophe claims with no similar activity occurring in 2025.
Investing Activities
The principal cash inflows from our investing activities come from repayments of principal, proceeds from maturities and sales of investments. We closely monitor and manage these risks through our comprehensive investment risk management process. The principal cash outflows relate to sales of investments. The primary liquidity concerns with respect to these cash flows are the risk of default by debtors and market disruption. During the six months ended June 30, 2025, net sales of investments totaled $25,357,000 compared to net purchases of investments of $152,814,000 during the six months ended June 30, 2024. We also had net proceeds from the sale of our former subsidiary, IIC, of $4,495,000 in 2025.
Financing Activities
The principal cash outflows from our financing activities come from repayments of debt and payments of dividends. The primary liquidity concern with respect to these cash flows is market disruption in the cost and availability of credit. We believe our current capital resources, together with cash provided from our operations, are sufficient to meet currently anticipated working capital requirements. During the six months ended June 30, 2025, cash provided by financing activities totaled $774,000, compared to $11,458,000 provided by financing activities for the six months ended June 30, 2024. The decrease in inflow in 2025 is attributed to the proceeds received from the issuance of our common stock, primarily under our at the market program described above during 2024.
OFF-BALANCE SHEET ARRANGEMENTS
At June 30, 2025, we did not have any off-balance sheet arrangements or material changes to our contractual obligations during the quarter.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risks, including interest rate risk related to changes in interest rates in the Company's fixed-maturity securities, credit risk related to changes in the financial condition of the issuers of the Company's fixed-maturities and equity price risk related to changes in equity security prices. These risks are disclosed in Part II, Item 7A. "Quantitative and Qualitative Disclosures about Market Risk" of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. The Company had no material changes in market risk during the quarter ended June 30, 2025.
48
AMERICAN COASTAL INSURANCE CORPORATION
|
Item 4. Controls and Procedures
The Company maintains a set of disclosure controls and procedures designed to ensure that the information required to be disclosed in reports the Company files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. The Company designed its disclosure controls with the objective of ensuring the Company accumulates and communicates this information to its management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of the Company's management, including its principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of the design and operations of its disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on the Company's evaluation, the Company's management concluded that its internal control over financial reporting was effective as of June 30, 2025.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2025, there was no change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of the Company's internal control performed during the fiscal year ended December 31, 2024, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
49
AMERICAN COASTAL INSURANCE CORPORATION
|
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in routine claims-related legal actions arising in the ordinary course of business. The Company accrues amounts resulting from claims-related legal actions in unpaid losses and loss adjustment expenses during the period that the Company determines an unfavorable outcome becomes probable and can estimate the amounts. Management makes revisions to the Company's estimates based on its analysis of subsequent information that the Company receives regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation.
On October 20, 2023, the Company received notice that the Florida Department of Financial Services ("DFS") filed a notice of claim and demand for tender of policy limits under the Company's director and officer insurance policy (the “Claim”). The Claim alleges that former officers and directors of UPC were involved in wrongful acts that resulted in UPC's insolvency. The Claim demands immediate tender of the Company's director and officer’s policy limit of $40,000,000 where the Company has a retention of $1,500,000. The former directors and officers of UPC deny the allegations. Although no litigation has arisen from the Claim, litigation is anticipated. The directors and officers plan to vigorously defend against the Claim; however, due to the Company's indemnification obligation, during 2023, the Company accrued the policy retention amount of $1,500,000. This claim remains open as of June 30, 2025.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in Part I. Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2024, except as set forth below.
Because we rely on insurance agents, the loss of these agent relationships, particularly our relationship with AmRisc, LLC (AmRisc), or our inability to attract and incentivize new agents could have an adverse impact on our business.
AmCoastal has a managing agency contract (the MGA contract) with AmRisc, pursuant to which AmRisc serves as AmCoastal’s managing general agent for binding and writing commercial residential property lines for condominium, townhome and homeowners association insurance written in Florida. The contract between AmCoastal and AmRisc is exclusive. Under the MGA contract with AmCoastal, AmRisc must produce a certain volume of business for AmCoastal. Therefore, failure of AmRisc to produce the required volume of business could cause us to lose substantial premiums and could require us to seek one or more alternative managing general agents. If we were unable to find a replacement managing general agent, our revenues could decrease, which could have a material adverse effect on our business, financial condition and results of operations. Given the concentration of AmCoastal’s commercial business and operations with AmRisc, AmRisc may have substantial leverage in negotiations with AmCoastal regarding the MGA contract, and amendments to the terms and conditions of the MGA contract or other changes to the commercial relationship between AmRisc and AmCoastal could have a material adverse effect on our business, financial condition and results of operations. Following the termination or expiration of the MGA contract, AmCoastal’s ability to compete for and solicit renewals of business previously underwritten by AmRisc may be limited by legal, commercial and other impediments, including AmRisc’s relationship with other insurance producers that control the business. Such impediments could have a material adverse effect on our financial condition and results of operations due to the concentration of AmCoastal’s business with AmRisc.
As of June 30, 2025, we market our apartment insurance product through a network of 10 independent wholesalers. These wholesalers and their brokers own the customer relationships and are not under our direct control. Our contracts restrict us from directly soliciting their policyholders, and most brokers also represent competing insurers. As a result, we must continually compete for their attention and business. Competitors may offer broader product options, lower premiums, or higher broker commissions. Consequently, our success depends heavily on the strength of our broker relationships and our ability to offer competitive, well-aligned insurance solutions. Losing any of these wholesale relationships—or failing to attract, retain, or motivate new brokers—could negatively impact new business production and retention of in-force policies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the six months ended June 30, 2025, the Company did not sell any unregistered equity securities or repurchase any of its equity securities.
50
AMERICAN COASTAL INSURANCE CORPORATION
|
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
51
AMERICAN COASTAL INSURANCE CORPORATION
|
Item 6. Exhibits
The following exhibits are filed or furnished herewith or are incorporated herein by reference:
Exhibit |
|
Description |
|
|
|
3.1 |
|
Second Certificate of Amendment to American Coastal Insurance Corporation’s Certificate of Incorporation (included as Exhibit 3.1 to Form 8-K filed on July 14, 2023, and incorporated herein by reference.) |
|
|
|
3.2 |
|
First Amendment to American Coastal Insurance Corporation’s Amended and Restated Bylaws (included as Exhibit 3.2 to Form 8-K filed on July 14, 2023, and incorporated herein by reference.) |
|
|
|
31.1 |
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act. |
|
|
|
31.2 |
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act. |
|
|
|
32.1 |
|
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act. |
|
|
|
32.2 |
|
Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act. |
|
|
|
101.INS |
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). |
52
AMERICAN COASTAL INSURANCE CORPORATION
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
AMERICAN COASTAL INSURANCE CORPORATION |
|
|
|
August 7, 2025 |
By: |
/s/ B. Bradford Martz |
|
|
B. Bradford Martz, President & Chief Executive Officer (principal executive officer and duly authorized officer) |
August 7, 2025 |
By: |
/s/ Svetlana Castle |
|
|
Svetlana Castle, Chief Financial Officer (principal financial officer and principal accounting officer) |
53
Source:
FAQ
How much cash does BioAtla (BCAB) have after Q2-25?
What is BioAtla鈥檚 quarterly net loss for Q2-25?
Did BioAtla issue a going-concern warning?
How has BioAtla reduced its operating expenses?
What is the status of the December 2024 warrants?
Which programs consumed the most R&D spend in H1-25?
