American Coastal Insurance (NASDAQ:ACIC) executives said the company delivered strong fourth-quarter and full-year 2025 results, aided by lower catastrophe losses compared with the prior-year period and supported by what management described as continued underwriting discipline amid a more competitive commercial property market.
President and CEO Bennett Bradford Martz told investors that the company’s full-year net income of $106.8 million exceeded its initial 2025 guidance range of $70 million to $90 million. Martz also noted that over the last three years the company produced more than $336 million of pre-tax profits and returned more than $60 million to shareholders through special dividends.
Quarterly and full-year profitability
For the full year, Castle said net income was $106.8 million and core income was $103.7 million, an increase of $26.8 million. The company’s combined ratio was 58.6% for the quarter and 60.1% for the full year. American Coastal’s non-GAAP underlying combined ratio—excluding current-year catastrophe losses and prior-year development—was 58.9% for the quarter, down 7 points from the prior year, and 61.5% for the full year, which management said was below its 65% target.
Castle added that the company continues to maintain what it described as a strong reserve position.
Premium trends and market conditions
Martz said premiums written in the quarter “rebounded nicely” on a sequential basis, up approximately 59% compared with the third quarter of 2025, but declined 19% year-over-year, “due primarily to rate decreases.” He characterized the rate environment as falling, which he linked to Florida legislative reforms that he said are “clearly working as evidenced by reduced reinsurance costs and lower losses incurred.”
For the full year, Martz said net premiums earned were $306.8 million, above the midpoint of the company’s 2025 guidance range of $290 million to $320 million. Castle said full-year revenues increased $38.8 million, or 13.1%, driven largely by changes in quota share arrangements.
On the call, Martz cautioned that softer market conditions in commercial property insurance could continue to weigh on premium production, noting that the company’s risk appetite is “highly correlated to modeled expected returns on capital.” In response to an analyst question about the year-over-year drop in written premiums, Martz emphasized the quarter-over-quarter rebound and said the company intentionally managed exposures in the third quarter to meet average annual loss targets tied to its catastrophe reinsurance program. He also said the company is walking away from risks that no longer meet return hurdles as pricing softens, which could contribute to volatility in written premiums.
Reinsurance and expense items
Castle said net premiums earned drove higher revenue compared with 2024, aided by a reduction in the company’s gross catastrophe quota share from 20% to 15% effective June 1, 2025. She also cited a prior step-down from 40% to 20% effective June 1, 2024 that affected 2024 results.
Operating expenses for the quarter were described as relatively flat, decreasing $1.3 million, or 3.4%. For the full year, Castle said total expenses were flat year-over-year, though operating costs increased $22.6 million “largely as a result of reduced ceding commissions,” which she said was offset by the retention related to Hurricane Milton.
Martz told investors that reinsurance costs have been trending lower. He pointed to a “very successful placement” of the company’s Jan. 1 all-other-perils catastrophe program and catastrophe aggregate program, saying pricing was down year-over-year on a risk-adjusted basis. Looking ahead to the June 1 renewal, he said the company would push for loss costs and reinsurance costs to decline in line with premium rate changes to protect margins, and he indicated the company could become more selective if those offsets do not materialize.
Addressing a question on general and administrative expenses, Martz said he had nothing notable to call out, but noted that the first half of 2025 included payroll tax credits that reduced recurring operating expense levels, making comparisons less straightforward.
Balance sheet, capital actions, and growth initiatives
On the balance sheet, Castle said cash and investments grew 19.8% in 2025 to $647.7 million. Stockholders’ equity increased 34.8% to $317.6 million, driven by underwriting results, and book value per share rose to $6.51, a 33.2% increase from year-end 2024. She said those figures include a special dividend of $0.75 per share declared in the fourth quarter, totaling $36.6 million.
Management also discussed plans to expand revenue sources through the excess and surplus (E&S) market. Martz said the company is looking to add “new revenue and earnings growth pathways” and sees opportunities to underwrite profitable commercial residential property insurance inside and outside Florida, while not necessarily targeting near-term growth in commercial property exposure. He described the E&S effort as focused on positioning the company for long-term success rather than “chasing growth” in the current part of the cycle.
In Q&A, Martz provided an update on ACES, the company’s new E&S-related entity, saying its certificate of authority remains pending regulatory approval in Arizona after the company completed required background checks and filings. He said ACES’ 2026 premium ambition is “relatively small,” estimating 5% or less of total revenue guidance for the year, and characterized 2027 and beyond as more meaningful. Martz added that in its first 12 months of operation, ACES is expected to operate as a collateralized reinsurer and would take time to secure an AM Best rating and become a direct writer.
Martz also discussed a nationwide E&S commercial property partnership with AmRisc, calling it a “modest line” expected to produce roughly $100 million of full-year premiums, with premium recognition starting in March. He described the arrangement as flexible depending on market conditions, but said it is a two-year deal that is “done” and “off and running.”
On leverage, Martz said the company’s debt matures at the end of 2027 and there is no immediate need to address it, but reiterated a desire to reduce financial leverage over time. He said that when refinancing occurs, the company would likely reduce total debt rather than execute a straight refinance, and he cited a possible debt level of $50 million to $75 million as a range the company would be comfortable with, depending on earnings and cash flow.
Regarding capital return, Martz said the company has valued the “optionality” of special dividends, particularly after hurricane season when excess capital can be better assessed. He said share repurchases are an option and that management views the stock as undervalued, but indicated buybacks have not been the company’s top priority, while adding that it may receive more consideration going forward.
About American Coastal Insurance (NASDAQ:ACIC)
American Coastal Insurance Company (NASDAQ:ACIC) is a specialized property and casualty insurer focused on coastal residential and commercial lines across the Southeastern United States. Headquartered in St. Petersburg, Florida, the company underwrites policies designed to address windstorm and non-windstorm perils in areas exposed to hurricane risk. Since its founding in 2007, American Coastal has positioned itself to meet the insurance needs of homeowners, condominium associations, and small business owners operating near coastal zones.
Through a diversified portfolio of personal lines products, American Coastal offers homeowners insurance, dwelling fire, mobile home, condominium unitowners and renters policies.
