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What changed in AMERICAN COASTAL INSURANCE Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AMERICAN COASTAL INSURANCE Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+325 added−413 removedSource: 10-K (2024-03-15) vs 10-K (2023-04-17)

Top changes in AMERICAN COASTAL INSURANCE Corp's 2023 10-K

325 paragraphs added · 413 removed · 241 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

64 edited+12 added−37 removed29 unchanged
Biggest changeThe financial strength or stability ratings of our insurance company subsidiaries as of December 31, 2022 are listed below. As of December 31, 2022, our insurance subsidiary, UPC is no longer rated by Kroll or Demotech. With these ratings, we expect our property insurance policies will be acceptable to the secondary mortgage marketplace and mortgage lenders.
Biggest changeWith these ratings, we expect our property insurance policies will be acceptable to the secondary mortgage marketplace and mortgage lenders. Subsidiary Demotech Rating Kroll Rating AmCoastal A A- IIC A A- ACIC BB+ 4 AMERICAN COASTAL INSURANCE CORPORATION Our Strategy Our vision is to be a top-quartile underwriter of catastrophe exposed property insurance .
To show our commitment to conducting business that supports ESG matters, in the second quarter of 2021 we published our inaugural Sustainability & Responsibility report, which outlines our ESG practices and goals. Highlights from the report can be seen below, and the full report is available on our company website under Environmental, Social and Governance.
To show our commitment to conducting business that supports ESG matters, in the second quarter of 2021 we published our Sustainability & Responsibility report, which outlines our ESG practices and goals. Highlights from the report can be seen below, and the full report is available on our company website under Environmental, Social and Governance.
COMPETITION The property and casualty insurance market in the United States is highly competitive and rapidly changing. Our primary competitors range from large national property and casualty insurance companies that write most classes of business using traditional products and pricing to small and mid-size regional insurance companies who provide specialty coverages.
COMPETITION The property and casualty insurance market in the United States is highly competitive and rapidly changing. Our primary competitors range from large national property and casualty insurance companies that write most classes of business using traditional products and pricing to small and mid-size regional insurance companies that provide specialty coverages.
Available Information We make available, free of charge through our website, www.upcinsurance.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the Securities and Exchange Commission (SEC).
Available Information We make available, free of charge through our website, www.amcoastal.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the Securities and Exchange Commission (SEC).
We desire to have the right combination of price, underwriting rules and coverages to earn a return on capital that exceeds our cost of capital throughout the insurance market cycle.
We desire to have the right combination of price, underwriting rules, deductibles and coverages to earn a return on capital that exceeds our cost of capital throughout the insurance market cycle.
All members of these committees qualify as independent directors under SEC and Nasdaq standards as well as under the independence standards specific to their committees. UPC Insurance has also committed to adding at least two new Directors to our Board of Directors to improve overall diversity at the highest level of corporate governance.
All members of these committees qualify as independent directors under SEC and Nasdaq standards as well as under the independence standards specific to their committees. ACIC has also committed to adding at least two new Directors to our Board of Directors to improve overall diversity at the highest level of corporate governance.
For a discussion of statutory financial information and regulatory contingencies, see Note 15 to our Notes to Consolidated Financial Statements in Part II, Item 8 of this report.
For a discussion of statutory financial information and regulatory contingencies, see Note 16 to our Notes to Consolidated Financial Statements in Part II, Item 8 of this report.
In addition to our social responsibility as an employer within the community, UPC Insurance also seeks to support our community through various initiatives intended to give back and promote goodwill. Over the past several years we have provided support to numerous non-for-profit organizations.
In addition to our social responsibility as an employer within the community, ACIC also seeks to support our community through various initiatives intended to give back and promote goodwill. Over the past several years we have provided support to numerous non-for-profit organizations.
We have historically grown our business through organic growth, complemented by strategic acquisitions and partnerships, including our acquisitions of AmCo Holding Company, LLC (AmCo) and its subsidiaries, including ACIC, in April 2017, IIC in April 2016, and Family Security Holdings, LLC (FSH), including its subsidiary Family Security Insurance Company, Inc.
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, IIC in April 2016, and Family Security Holdings, LLC (FSH), including its subsidiary Family Security Insurance Company, Inc.
In addition to our cultural goals, we are committed to conducting business in a manner that supports environmental, social, and governance (ESG) matters. UPC Insurance believes that an effective ESG strategy leads to improved decision making, associate engagement, and financial results over time.
In addition to our cultural goals, we are committed to conducting business in a manner that supports environmental, social, and governance (ESG) matters. ACIC believes that an effective ESG strategy leads to improved decision making, associate engagement, and financial results over time.
Any purchaser of 5% or more of the outstanding shares of our common stock could be presumed to have acquired control of us unless the insurance regulatory authority, upon application, determines otherwise. Insurance holding company regulations also govern the amount any affiliate of the holding company may charge our insurance affiliates for services (i.e., management fees and commissions).
Any purchaser of 5% or more of the outstanding shares of our common stock could be presumed to have acquired control of us unless the insurance regulatory authority, upon application, determines otherwise. 10 AMERICAN COASTAL INSURANCE CORPORATION Insurance holding company regulations also govern the amount any affiliate of the holding company may charge our insurance affiliates for services (i.e., management fees and commissions).
Our long and successful track record writing homeowners’ insurance in catastrophe-exposed areas has enabled us to develop sophisticated pricing techniques that endeavor to accurately reflect the risk of loss while allowing us to be competitive in our target markets.
Our track record writing homeowners’ insurance in catastrophe-exposed areas has enabled us to develop sophisticated pricing techniques that endeavor to accurately reflect the risk of loss while allowing us to be competitive in our target markets.
Such regulations have a substantial effect on certain areas of our business, including: • insurer solvency, • reserve adequacy, • insurance company licensing and examination, • agent and adjuster licensing, • rate setting, • investments, • assessments or other surcharges for guaranty funds, • transactions with affiliates, • the payment of dividends, • reinsurance, • protection of personally identifiable information, • risk solvency assessment and enterprise risk management, • cybersecurity, 11 UNITED INSURANCE HOLDINGS CORP. • statutory accounting methods, and • numerous requirements relating to other areas of insurance operations, including policy forms, underwriting standards and claims practices.
Such regulations have a substantial effect on certain areas of our business, including: • insurer solvency, • reserve adequacy, • insurance company licensing and examination, • agent and adjuster licensing, • rate setting, underwriting rules and coverage forms, • investments, • assessments or other surcharges for guaranty funds, • transactions with affiliates, • the payment of dividends, • reinsurance, • protection of personally identifiable information, • risk solvency assessment and enterprise risk management, • cybersecurity, • statutory accounting methods, and • numerous requirements relating to other areas of insurance operations, including policy forms, underwriting standards and claims practices.
One factor is the financial strength or stability ratings assigned to our insurance subsidiaries by independent rating agencies. A downgrade in these ratings could negatively impact our position in the market. Another, is that we must attract and retain key employees and highly skilled people in order to be successful in the market.
One factor is the financial strength or stability ratings assigned to our insurance subsidiaries by independent rating agencies. A downgrade in these ratings could negatively impact our position in the market. Another, is that we must attract and retain key employees and highly skilled people in order to be successful in 8 AMERICAN COASTAL INSURANCE CORPORATION the market.
Most states, including Florida and New York, have enacted the NAIC guidelines as statutory requirements, and insurers having less statutory surplus than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. The level of required risk-based capital is calculated and reported annually.
Most states, including Florida and New York, have enacted the NAIC guidelines as statutory requirements, and insurers having less statutory surplus than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. 9 AMERICAN COASTAL INSURANCE CORPORATION The level of required risk-based capital is calculated and reported annually.
In addition to this, the leaders in each department assist our Executive Officers in maintaining our culture and implementing our core values at all levels of the organization. Total Rewards We believe that our future success largely depends upon our ability to attract and retain highly skilled employees.
In addition to this, the leaders in each department assist our Executive Officers in maintaining our culture and implementing our core values at all levels of the organization. 12 AMERICAN COASTAL INSURANCE CORPORATION Total Rewards We believe that our future success largely depends upon our ability to attract and retain highly skilled employees.
AmRisc, a managing general underwriter, handles the underwriting, claims processing and premium collection for our ACIC commercial business written in Florida. In return, AmRisc is reimbursed through monthly management fees. The Company does not utilize a managing general agent structure in New York. Instead, UPC Insurance allocates a portion of relevant expenses to IIC for statutory accounting purposes at cost.
The Company allocates a portion of relevant expenses to AmCoastal for statutory accounting purposes at cost. AmRisc, a managing general underwriter, handles the underwriting, claims processing and premium collection for our AmCoastal commercial business written in Florida. In return, AmRisc is reimbursed through monthly management fees. The Company does not utilize a managing general agent structure in New York.
Some of the causes we have provided support to include, but are not limited to, youth education, work force development, medical care and research, domestic violence shelters and prevention, and child-care services. We are committed to giving back and investing in the communities we serve.
Some of the causes we have provided support to include, but are not limited to, youth 11 AMERICAN COASTAL INSURANCE CORPORATION education, work force development, medical care and research, domestic violence shelters and prevention, and child-care services. We are committed to giving back and investing in the communities we serve.
Not-At-Risk Offerings On our equipment breakdown, identity theft, cyber security, and flood policies (excluding our inland flood policies) we earn a commission while retaining no risk of loss, since all such risk is ceded to the federal government via the National Flood Insurance Program (flood risk) and other private companies (other risks).
Not-At-Risk Offerings On our equipment breakdown, identity theft, and cyber security policies we earn a commission while retaining no risk of loss, since all such risk is ceded to other private companies (other risks). Previously, we offered flood policies that were ceded to the federal government via the National Flood Insurance Program (NFIP).
We are not party to any collective bargaining agreements and we have not experienced any work stoppages or strikes as a result of labor disputes. 14 UNITED INSURANCE HOLDINGS CORP. The following table shows the diversity in our workforce population at December 31, 2022 and how this diversity has changed from December 31, 2021.
We are not party to any collective bargaining agreements and we have not experienced any work stoppages or strikes as a result of labor disputes. The following table shows the diversity in our workforce population at December 31, 2023 and how this diversity has changed from December 31, 2022.
Oversight and Management We recognize the diversity of our policyholders, team, and geographic markets, and believe in creating an inclusive environment that represents a variety of backgrounds. Working under these principles, our Employee Success Department is tasked with recruiting and hiring, onboarding, performance management, and managing employee-related matters.
Oversight and Management We recognize the diversity of our policyholders, team, and geographic markets, and believe in creating an inclusive environment that represents a variety of backgrounds. Working under these principles, our Human Resources Department is tasked with recruiting and hiring, onboarding, performance management, and managing employee-related matters. We believe in transparency at all levels at ACIC.
(FSIC), in February 2015, and our strategic partnership with a subsidiary of Tokio Marine Kiln Group Limited (Tokio Marine), which formed Journey Insurance Company (JIC) in August 2018. Effective June 1, 2022, we acquired all of the minority interest in JIC from Tokio Marine and then merged JIC into ACIC, with ACIC being the surviving entity.
(FSIC), in February 2015, and our strategic partnership with a subsidiary of Tokio Marine Kiln Group Limited (Tokio Marine), which formed Journey Insurance Company (JIC) in August 2018. Effective June 1, 2022, we merged JIC into AmCoastal, with AmCoastal being the surviving entity.
The insurance regulatory authorities may prohibit entry into a new market by not granting a license or by withholding approval. 12 UNITED INSURANCE HOLDINGS CORP.
The insurance regulatory authorities may prohibit entry into a new market by not granting a license or by withholding approval.
Underwriting and Marketing Restrictions During the past several years, various regulatory and legislative bodies have adopted or proposed new laws or regulations to address the cyclical nature of the insurance industry, catastrophic events and insurance capacity and pricing.
Subsidiary RBC Ratio ACIC 979 % IIC 477 % Underwriting and Marketing Restrictions During the past several years, various regulatory and legislative bodies have adopted or proposed new laws or regulations to address the cyclical nature of the insurance industry, catastrophic events and insurance capacity and pricing.
The Company uses pricing algorithms, judgement-based rating and consent to rate methodologies that consider insurance credit scores (where allowable) and historical attritional loss costs for the rating territory in which the risk resides, as well as projected reinsurance costs based on the specific geographic and structural characteristics of the property.
The Company uses pricing algorithms, judgement-based rating and consent to rate methodologies that consider historical attritional loss costs for the rating territory in which the risk resides, as well as modeled expected losses for catastrophes and projected reinsurance costs based on the specific geographic and structural characteristics of the property.
As a part of our retention efforts, we also invest in ongoing development for all employees, and attempt to fill vacant senior or leadership roles through internal promotion when possible. Voluntary attrition was 39.3% for the year ended December 31, 2022. CORPORATE INFORMATION United Insurance Holdings Corp. was incorporated in Delaware in 2007.
As a part of our retention efforts, we also invest in ongoing development for all employees, and attempt to fill vacant senior or leadership roles through internal promotion when possible. Voluntary attrition was 31.0% for the year ended December 31, 2023. CORPORATE INFORMATION American Coastal Insurance Corporation was incorporated in Delaware in 2007.
We include coverage to policyholders for loss or damage to dwellings, detached structures or equipment caused by covered causes of loss such as fire, wind, hail, water, theft and vandalism.
Personal residential products are offered New York. We include coverage to policyholders for loss or damage to dwellings, detached structures or equipment caused by covered causes of loss such as fire, wind, hail, water, theft and vandalism.
Environmental Matters 13 UNITED INSURANCE HOLDINGS CORP. As a data driven organization some of the facts surrounding climate change have our attention.
Environmental Matters As a data driven organization some of the facts surrounding climate change have our attention.
You may also access this information at the SEC’s website (www.sec.gov). This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. 16 UNITED INSURANCE HOLDINGS CORP.
You may also access this information at the SEC’s website (www.sec.gov). This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. 13 AMERICAN COASTAL INSURANCE CORPORATION
Our vision is to be a top-quartile underwriter of catastrophe exposed property insurance . Our plan is to focus primarily on low-rise commercial property insurance in Florida, through our exclusive managing general agency agreement and long-term partnership with AmRisc, LLC.
Our plan is to focus primarily on low-rise commercial property insurance in Florida, through our exclusive managing general agency agreement and long-term partnership with AmRisc, LLC.
We compete primarily on the basis of product features, the strength of our distribution network, the quality of our services to our agents and policyholders, and our long-term financial stability.
We compete primarily on the basis of policy features, the strength of our distribution network and the quality of our services to our agents and policyholders.
We have committed to achieve net-zero carbon emissions in our operations and through our value chain by no later than 2030. Social Responsibility We understand that research shows diverse teams perform better, innovate more, and are more effective at managing risks.
ACIC continuously monitors our environmental footprint and will continue to make steps to reduce this footprint where possible. We have committed to achieve net-zero carbon emissions in our operations and through our value chain by no later than 2030. Social Responsibility We understand that research shows diverse teams perform better, innovate more, and are more effective at managing risks.
UPC and ACIC are domiciled in Florida, and IIC is domiciled in New York. UPC Insurance is also regulated by the NAIC. In general, these regulations are designed to protect the interests of insurance policyholders.
AmCoastal is domiciled in Florida and IIC is domiciled in New York. In general, these regulations are designed to protect the interests of insurance policyholders.
Item 1. Business INTRODUCTION Company Overview United Insurance Holdings Corp. (referred to in this Form 10-K as we, our, us, the Company or UPC Insurance) is a holding company engaged in the personal residential and commercial residential property and casualty insurance business in the United States.
Item 1. Business INTRODUCTION Company Overview American Coastal Insurance Corporation (referred to in this Form 10-K as we, our, us, the Company or ACIC) is a holding company primarily engaged in the commercial and personal property and casualty insurance business with investments in the United States.
To demonstrate this culture our leaders must lead by example and clear standards of behavior should be well understood by the entire company. We maintain six core values; teamwork, trust, accountability, integrity, bias to action, and persistence, to accomplish this goal.
To demonstrate this culture our leaders must lead by example and clear standards of behavior should be well understood by the entire company. We maintain five core values; collaboration, communication, loyalty, resiliency, and integrity, to accomplish this goal.
HUMAN CAPITAL MANAGEMENT Diversity and Employment Statistics As of December 31, 2022, we had 269 employees, of which 148, 34, and five worked in Claims, the Client Experience Center, and Underwriting, respectively. These employees have regular direct contact with our vendors, agencies, or customers.
HUMAN CAPITAL MANAGEMENT Diversity and Employment Statistics As of December 31, 2023, we had 71 employees, of which 17 worked in Claims, and eight worked in Sales and Underwriting, respectively. These employees have regular direct contact with our vendors, agencies, or customers.
PRODUCTS AND DISTRIBUTION In July of 2020, we implemented a strategy to de-risk the Company by reducing premiums and exposure from our personal lines segment that was offset with growth in our commercial lines segment . The graphs below show our product mix distribution based on gross written premium. 7 UNITED INSURANCE HOLDINGS CORP.
PRODUCTS AND DISTRIBUTION In July of 2020, we implemented a strategy to de-risk the Company by reducing premiums and exposure from our personal lines segment that was offset with growth in our commercial lines segment.
With UPC in receivership, the Company’s personal lines business is limited to IIC in New York. As a result of our desire to focus on commercial lines, we expect to divest of IIC leaving us with just ACIC at some point in the future.
With UPC in receivership, the Company’s personal lines business is limited to IIC in New York and activities supporting the run-off and liquidation of UPC. As a result of our desire to focus on commercial lines, we expect to divest IIC, which would result in ACIC being our only operating insurance subsidiary at some point in the future.
In 2022, personal residential property policies (by which we mean both standard homeowners’, dwelling fire, renters and condo owners’ policies) produced written premium of $596,374,000 and accounted for 53.1% of our total gross written premium. Approximately 37.8% of the personal residential gross written premium was written outside of Florida.
In 2023, personal residential property policies (by which we mean both standard homeowners’, dwelling fire, renters and condo owners’ policies) produced written premium of $34,334,000 and accounted for 5.1% of our total gross written premium. All of the personal residential gross written premium was written in New York.
Statutory risk-based capital requirements may further restrict our insurance subsidiaries’ ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause statutory surplus to fall below minimum risk-based capital requirements. For additional information regarding those restrictions, see Part II, Item 5 and Part I, Item 1A of this report.
Statutory risk-based capital requirements may further restrict our insurance subsidiaries’ ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause statutory surplus to fall below minimum risk-based capital requirements.
In 2021, we appointed a female leader within our organization to serve as our General Counsel. With two of the five members of our executive leadership team comprised of underrepresented groups, we believe this is strong evidence of our commitment to our ESG goals.
In addition, in January 2024 we appointed a new female leader from outside of our organization to serve as our Chief Financial Officer. With two of the five members of our executive leadership team as of December 31, 2023 comprised of underrepresented groups, we believe this is strong evidence of our commitment to our ESG goals.
Gender (1) Change from December 31, 2021 Race (1) Change from December 31, 2021 Executive Officers 20.0% (22.9) points 40.0% 11.4 points Management Team (2) 39.0% 0 points 26.8% 0.2 points All Other Employees 45.3% (2.4) points 34.3% (0.4) points (1) Information regarding gender and race is based on information provided by employees.
Gender (1) Change from December 31, 2022 Race (1) Change from December 31, 2022 Executive Officers 20.0% 0 points 40.0% 0 points Management Team (2) 44.7% 5.7 points 14.9% (11.9) points All Other Employees 42.1% (2.8) points 15.8% (18.5) points (1) Information regarding gender and race is based on information provided by employees.
The Company continues to explore all strategic options for IIC, but remain focused on selling IIC to a third-party. Our commercial lines portfolio is concentrated in Florida and personal lines portfolio in New York (excluding UPC) with an ongoing threat of natural catastrophes which exposes our company to risk and volatility.
Our commercial lines portfolio is concentrated in Florida and personal lines portfolio is concentrated in New York with an ongoing threat of natural catastrophes which exposes the Company to risk and volatility.
The Company focused on the independent agency distribution channel since its inception, and we believe independent agents and agencies build relationships in their communities that can lead to profitable business and policyholder satisfaction.
As of December 31, 2023, we marketed and distributed our personal lines policies to consumers through approximately 400 independent agencies. 6 AMERICAN COASTAL INSURANCE CORPORATION The Company focused on the independent agency distribution channel since its inception, and we believe independent agents and agencies build relationships in their communities that can lead to profitable business and policyholder satisfaction.
For more information regarding our personal lines and commercial lines products and distribution, as well as the agreements in place with managing general agents and underwriters for each of our reportable segments, please refer to Part 1 Item 1. “ Products and Distribution” as well as Part 1 Item 1. “Insurance Holding Company Regulation”.
Our chief operating decision maker is our President, who makes decisions to allocate resources and assesses performance at both segment levels. For more information regarding our personal lines and commercial lines products and distribution, as well as the agreements in place with managing general agents and underwriters for each of our reportable segments, please refer to Part 1 Item 1.
Insurance Holding Company Regulation As a holding company of insurance subsidiaries, we are subject to laws governing insurance holding companies in Florida and New York.
For additional information regarding those restrictions, see Part II, Item 5 and Part I, Item 1A of this report. Insurance Holding Company Regulation As a holding company of insurance subsidiaries, we are subject to laws governing insurance holding companies in Florida and New York.
Loss and loss adjustment expenses related to our personal residential products tend to be higher during periods of severe or inclement weather, which varies from state to state. With UPC in receivership, the Company’s personal lines business is limited to IIC in New York.
Loss and loss adjustment expenses related to our personal residential products tend to be higher during periods of severe or inclement weather, which varies from state to state. We are actively working to divest of IIC and its exposure to complete our exit from personal lines.
Demotech maintains a letter-scale financial stability rating system ranging from A’’ (A double prime) to L (licensed by insurance regulatory authorities). Kroll maintains a letter-scale financial strength rating system for insurance companies ranging from AAA (extremely strong operations and no risk) to R (operating under regulatory supervision).
Kroll maintains a letter-scale financial strength rating system for insurance companies ranging from AAA (extremely strong operations and no risk) to R (operating under regulatory supervision). The financial strength or stability ratings of our insurance company subsidiaries as of December 31, 2023 are listed below.
(2) Our management team is comprised of employees in supervisory roles at the manager and director level or above. As seen in the table above, our commitment to diversity and inclusion can be seen as our gender and racial diversity remains mostly consistent year over year. We believe that inclusion and diversity starts at the top.
(2) Our management team is comprised of employees in supervisory roles at the manager and director level or above. We believe that inclusion and diversity starts at the top. In 2021, we appointed a female leader within our organization to serve as our General Counsel.
Effective May 31, 2022, we no longer write commercial policies in Texas and South Carolina. We include coverage to policyholders for loss or damage to buildings, inventory or equipment caused by covered causes of loss such as fire, wind, hail, water, theft and vandalism.
We include coverage to policyholders for loss or damage to buildings, inventory or equipment caused by covered causes of loss such as fire, wind, hail, water, theft and vandalism. In 2023, commercial policies produced written premium of $635,709,000 and accounted for 94.9% of our total gross written premium.
Effective May 31, 2022, we merged FSIC into UPC, with UPC being the surviving entity. Financial strength or stability ratings are important to insurance companies in establishing their competitive position and may impact an insurance company’s ability to write policies. We are rated by Demotech and Kroll Bond Rating Agency (Kroll).
Financial strength or stability ratings are important to insurance companies in establishing their competitive position and may impact an insurance company’s ability to write policies. We are rated by Demotech and Kroll Bond Rating Agency (Kroll). Demotech maintains a letter-scale financial stability rating system ranging from A’’ (A double prime) to L (licensed by insurance regulatory authorities).
The table below outlines each of our subsidiary’s RBC ratios, all of which were in excess of minimum requirements, as of December 31, 2022. Subsidiary RBC Ratio UPC (1) — % ACIC 504 % IIC 564 % (1) RBC ratio was not calculated for UPC as the entity was insolvent at December 31, 2022.
The table below outlines each of our subsidiary’s RBC ratios, all of which were in excess of minimum requirements, as of December 31, 2023.
We are actively working to divest of IIC and its exposure to complete our exit from personal lines. Commercial Residential Products We primarily provide commercial multi-peril property insurance for residential condominium associations and apartments in Florida. In 2020, we began writing commercial policies in Texas and South Carolina.
Commercial Residential Products We primarily provide commercial multi-peril property insurance for residential condominium associations and apartments in Florida. In 2020, we began writing commercial policies in Texas and South Carolina. Effective May 31, 2022, we no longer write commercial policies in Texas and South Carolina.
Our principal executive offices are located at 800 2nd Avenue S., St. Petersburg, FL 33701 and our telephone number at that location is (727) 895-7737. We are listed on the Nasdaq stock exchange under ticker symbol “UIHC.” 15 UNITED INSURANCE HOLDINGS CORP.
On July 10, 2023, we changed our corporate name from United Insurance Holdings Corp. to American Coastal Insurance Corporation. Our principal executive offices are located at 800 2nd Avenue S., St. Petersburg, FL 33701 and our telephone number at that location is (727) 633-0851.
On June 9, 2022, we entered into a renewal rights agreement with Wright National Flood Insurance Company to sell our entire NFIP Write Your Own flood insurance business. Other Offerings In addition to our personal and commercial residential products, in December 2019, we began offering Inland Flood insurance.
However, on June 9, 2022, we entered into a renewal rights agreement with Wright National Flood Insurance Company to sell our entire NFIP Write Your Own flood insurance business and are no longer offering flood policies. Underwriting We price our products at levels that we project will generate an acceptable underwriting profit.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of this report for further details on our combined ratio. 8 UNITED INSURANCE HOLDINGS CORP.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of this report for further details on our combined ratio. Distribution Channels Our commercial lines policies are marketed and distributed to condominium associations by AmRisc, LLC through a network of independent agencies managed by AmRisc, LLC that specialize in commercial residential insurance.
GEOGRAPHIC MARKETS The table below shows the geographic distribution of our policies in-force as of December 31, 2022, 2021 and 2020.
GEOGRAPHIC MARKETS The table below shows the geographic distribution of our policies in-force as of December 31, 2023, 2022 and 2021, excluding our policies attributable to discontinued operations. The graphs below exclude states with policies that are less than 0.2% of our total policies in-force.
The Consent Order provides formal approval of UPC's Plan of Run-Off (the "Plan") to facilitate a solvent wind down of its affairs in an orderly fashion. Additionally, in connection with the Plan, IIC has agreed to not pay ordinary dividends without the prior approval of the New York Department of Financial Services until January 1, 2025.
In addition, in connection with the filed plan of withdrawal in New York for our former insurance subsidiary, UPC, our subsidiary, IIC, has agreed not to pay ordinary dividends until January 1, 2025, without the prior approval of the New York Department of Financial Services.
In 2021, the Florida Office of Insurance Regulation (FLOIR) began a statutory examination of JIC for the year ended December 31, 2020. This examination concluded in 2022, with no significant findings. Effective January 1, 2019, three of our insurance subsidiaries, UPC, FSIC and ACIC, entered into an intercompany property and casualty reinsurance pooling arrangement.
In 2021, the Florida Office of Insurance Regulation (FLOIR) began a statutory examination of JIC for the year ended December 31, 2020. This examination concluded in 2022, with no significant findings. In 2023, the FLOIR notified the Company of a statutory financial examination of AmCoastal as of December 31, 2023, to commence in 2024.
Distribution Channels Our commercial lines policies are marketed and distributed to condominium associations by AmRisc, LLC through a network of independent agencies managed by AmRisc, LLC that specialize in commercial residential insurance. AmRisc, LLC is an unaffiliated third-party owned by Truist Financial Corporation (NYSE: TFC) and represents 100% of our commercial lines revenue based on our exclusive agreement in Florida.
AmRisc, LLC is an unaffiliated third-party and represents 100% of our commercial lines revenue based on our exclusive agreement in Florida.
On February 10, 2023, we announced that a solvent run-off for UPC was unlikely and on February 27, 2023, UPC was placed into receivership with the Florida Department of Financial Services (DFS) which divested our ownership of UPC. Our Company, together with wholly-owned subsidiaries UPC and United Insurance Management L.C.
In addition, during 2022 we wrote personal residential business in six other states, however on February 27, 2023, our former insurance subsidiary, United Property & Casualty Insurance Company (UPC) was placed into receivership with the Florida Department of Financial Services (the "DFS"), which divested our ownership of UPC.
Personal Residential Products Policies we issue under our homeowners’ program provide structure, content and liability coverage for standard single-family homeowners, renters and condominium unit owners. Personal residential products are offered in all states in which we write business.
The graphs below show our product mix distribution based on gross written premium, excluding our premiums attributable to discontinued operations. 5 AMERICAN COASTAL INSURANCE CORPORATION Personal Residential Products Policies we issue under our homeowners’ program provide structure, content and liability coverage for standard single-family homeowners, renters and condominium unit owners through our subsidiary IIC.
While the effect of climate change on weather-related catastrophe events remains somewhat limited, we recognize current trends and potential financial impact are not sustainable.
There is a growing consensus today that the frequency and severity of catastrophic events or severe weather conditions is increasing as a result of climate change. We recognize current trends and potential financial impact are not sustainable.
Segments We conduct our operations under two reportable segments, personal residential property and casualty insurance policies (personal lines) and commercial residential property and casualty insurance policies (commercial lines). Our chief operating decision maker is our President, who makes decisions to allocate resources and assesses performance at both segment levels.
We are listed on the Nasdaq stock exchange under ticker symbol “ACIC.” Segments We conduct our operations under two reportable segments, commercial residential property and casualty insurance policies (commercial lines) and personal residential property and casualty insurance policies (personal lines).
Removed
At the end of 2022, our insurance subsidiaries included two Florida domiciled carriers, United Property & Casualty Insurance Company (UPC) and American Coastal Insurance Company (ACIC), plus one New York domiciled carrier, Interboro Insurance Company (IIC).
Added
On July 10, 2023, we changed our corporate name from United Insurance Holdings Corp. to American Coastal Insurance Corporation. We conduct our business principally through our two wholly-owned insurance subsidiaries: American Coastal Insurance Company (AmCoastal); and Interboro Insurance Company (IIC).
Removed
At the beginning of 2022, we had two other Florida domiciled insurance subsidiaries, Family Security Insurance Company, which was merged into UPC and Journey Insurance Company, which was merged into ACIC. Our insurance subsidiaries provide personal residential and commercial property and casualty insurance products that protect our policyholders against losses due to damages to structures and their contents.
Added
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 and New York.
Removed
Some of our insurance subsidiaries sell policies that protect against liability for accidents as well as property damage. Our non-insurance subsidiaries support our insurance and investment operations. As of December 31, 2022, approximately 52.5% of our policies in-force were written in Florida. Our Company’s other primary source of revenue is generated from writing insurance in New York, Louisiana and Texas.
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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.
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Our commercial lines business in-force underwritten by ACIC was 100% in Florida at the end of 2022. During 2022, the Company made the strategic decision to exit the personal lines business underwritten by UPC and accelerated the winding down of its affairs.
Added
During 2022, we also wrote commercial residential insurance in South Carolina and Texas, however, effective May 1, 2022, we no longer write in these states.
Removed
Effective December 1, 2022, we no longer write in the state of North Carolina, where renewal rights have been sold and all premiums and losses are ceded. Effective October 1, 2022, we no longer write in the state of Georgia. Effective June 1, 2022, we no longer write in the state of South Carolina.
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The events leading to receivership and results of this subsidiary for periods prior to receivership, now included within discontinued operations, can be seen in Note 3 of the Notes to Consolidated Financial Statements below.
Removed
Effective April 1, 2022, we no longer write in the state of Massachusetts, and effective January 15, 2022, we no longer write in the state of New Jersey. Effective January 1, 2021, we no longer write in the state of Hawaii. Effective December 1, 2021, we no longer write in the states of Connecticut or Rhode Island.
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Effective May 31, 2022, we merged FSIC into our former subsidiary, UPC, with UPC being the surviving entity. As of October 6, 2023 we were seeking a buyer for IIC to complete our exit from the personal lines business and expect the sale price to be the book value of the entity.
Removed
On August 25, 2022, we announced that UPC had filed plans for withdrawal in the states of Florida, Louisiana, and Texas and intended to file a plan for withdrawal in the state of New York. All filed plans entail non-renewing personal lines policies in these states.
Added
The Company entered into a non-binding term sheet on October 6, 2023 for the sale of IIC whereby the buyer will acquire 100% of the issued and outstanding common stock of IIC in exchange for a cash purchase price equal to the GAAP book value of IIC at the time of closing, subject to negotiating and entering into definitive documents containing customary terms and conditions and obtaining regulatory approval(s).
Removed
Additionally, we announced that Demotech, Inc., an insurance rating agency, notified UPC of its intent to withdraw UPC's Financial Stability Rating. On December 5, 2022, the Florida Office of Insurance Regulation ("FLOIR") issued Consent Order No. 303643-22- CO that provides for the administrative supervision and approval of the plan of run-off for UPC (the "Consent Order").
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We aim to accurately underwrite the risk and profitability of each potential policy.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

56 edited+20 added−34 removed131 unchanged
Biggest changeBecause of the inherent uncertainty in estimating loss reserves, including reserves for catastrophes and litigated claims, additional liabilities resulting from one insured event, or an accumulation of insured events, may exceed our existing loss reserves. If our reserves are inadequate, it may cause us to overstate our earnings for the periods during which our reserves for expected losses was insufficient.
Biggest changeFuture loss experience substantially in excess of our loss reserves could substantially harm our results of operations and financial condition. 15 AMERICAN COASTAL INSURANCE CORPORATION Because of the inherent uncertainty in estimating loss reserves, including reserves for catastrophes and litigated claims, additional liabilities resulting from one insured event, or an accumulation of insured events, may exceed our existing loss reserves.
Customers may turn to our competitors as a result of our failure to deliver on customer expectations, service flaws, technology issues, gaps in operational support or other issues affecting customer experience. We also compete with new companies that continue to enter the insurance market.
Customers may turn to our competitors as a result of price, our failure to deliver on customer expectations, service flaws, technology issues, gaps in operational support or other issues affecting customer experience. We also compete with new companies that continue to enter the insurance market.
However, the declaration and payment of dividends will be at the discretion of our Board of Directors and will be dependent upon our profits, financial requirements and other factors, including legal and regulatory restrictions on the payment of dividends from our subsidiaries (as we are a holding company and do not have any significant operations or assets other than our ownership of the shares of our operating subsidiaries), capital adequacy, liquidity, general business conditions and such other factors as our Board of Directors deem relevant.
However, the declaration and payment of dividends will be at the discretion of our Board of Directors and will be dependent upon our profits, financial requirements and other factors, including legal and regulatory restrictions on the payment of dividends from our subsidiaries (as we are a holding company and do not have any significant operations or assets other than our ownership of the shares of our operating subsidiaries), capital adequacy, liquidity, general business conditions and such other factors as our Board of Directors deems relevant.
AmCo and ACIC are also subject to restrictive covenant agreements that contain non-competition, non-solicitation, confidentiality and other restrictive covenants that prohibit AmCo and ACIC from engaging in certain activities, including activities customarily performed by managing general agents and activities relating to segments of the commercial property insurance market for coastally exposed risks in the United States.
AmCo and AmCoastal are also subject to restrictive covenant agreements that contain non-competition, non-solicitation, confidentiality and other restrictive covenants that prohibit AmCo and AmCoastal from engaging in certain activities, including activities customarily performed by managing general agents and activities relating to segments of the commercial property insurance market for coastally exposed risks in the United States.
Following the termination or expiration of the MGA contract, ACIC’s ability to compete for and solicit renewals of business previously underwritten by AmRisc on their respective behalves may be limited by legal, commercial and other impediments, including AmRisc’s relationship with other insurance producers that control the business.
Following the termination or expiration of the MGA contract, AmCoastal’s ability to compete for and solicit renewals of business previously underwritten by AmRisc on their respective behalves may be limited by legal, commercial and other impediments, including AmRisc’s relationship with other insurance producers that control the business.
The principal assets are the stock of its subsidiaries and the holding company’s directly held investment portfolio. State insurance regulatory authorities limit the payment of dividends by insurance subsidiaries, as described in Note 15 in our Notes to Consolidated Financial Statements. The limitations are based on statutory income and surplus.
The principal assets are the stock of its subsidiaries and the holding company’s directly held investment portfolio. State insurance regulatory authorities limit the payment of dividends by insurance subsidiaries, as described in Note 16 in our Notes to Consolidated Financial Statements. The limitations are based on statutory income and surplus.
Our Senior Notes require us to maintain certain financial ratios and to comply with various operational and other covenants, including limitations on our ability to incur any indebtedness unless certain conditions are met. Details of these covenants can be found in Note 11 in our Notes to Consolidated Financial Statements.
Our Senior Notes require us to maintain certain financial ratios and to comply with various operational and other covenants, including limitations on our ability to incur any indebtedness unless certain conditions are met. Details of these covenants can be found in Note 12 in our Notes to Consolidated Financial Statements.
These material adverse effects could include, but are not limited to: • reducing demand for new sales of insurance products; • requiring us to modify our existing products or services, introduce new products or services or reduce prices for our products and services, in order to remain competitive; • adversely affecting our relationships with our independent agents; • materially increasing the number or amount of policy cancellations and non-renewals by policyholders; • requiring us to post additional collateral under certain of our financing transactions; 27 UNITED INSURANCE HOLDINGS CORP. • limiting financial flexibility and access to capital markets; • adversely affecting our ability to obtain reinsurance at reasonable prices or at all; and • increasing the interest rates on our outstanding Senior Notes.
These material adverse effects could include, but are not limited to: • reducing demand for new sales of insurance products; • requiring us to modify our existing products or services, introduce new products or services or reduce prices for our products and services, in order to remain competitive; • adversely affecting our relationships with our independent agents; • materially increasing the number or amount of policy cancellations and non-renewals by policyholders; • requiring us to post additional collateral under certain of our financing transactions; • limiting financial flexibility and access to capital markets; • adversely affecting our ability to obtain reinsurance at reasonable prices or at all; and • increasing the interest rates on our outstanding Senior Notes.
Under the MGA contract with ACIC, AmRisc must produce a certain volume of business for ACIC. 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.
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.
In addition, legislative initiatives and court decisions can seek to expand insurance coverage for insured losses beyond the original intent of the policies, which could cause our actual loss and loss adjustment expense to exceed our estimates. Further, our ability to increase pricing to the extent necessary to offset rising loss or operating costs requires approval of insurance regulatory authorities.
In addition, legislative initiatives and court decisions can seek to expand insurance coverage for insured losses beyond the original intent of the policies, which could cause our actual loss and loss adjustment expense to exceed our estimates. Further, our ability to adjust pricing to the extent necessary to offset losses or operating costs requires approval of insurance regulatory authorities.
Our ability to appropriately manage our catastrophe exposure by raising prices, modifying underwriting terms or reducing exposure to certain geographies may be limited due to considerations of public policy and the evolving political environment, which may cause a material adverse effect on our results of operations, financial condition and cash flows.
Our ability to appropriately manage our catastrophe exposure by adjusting prices, modifying underwriting terms or reducing exposure to certain geographies may be limited due to considerations of public policy and the evolving political environment, which may have a material adverse effect on our results of operations, financial condition and cash flows.
For example, a trend of more frequent and severe weather-related catastrophes may lead rating agencies to substantially increase their capital requirements. We cannot guarantee that our insurance subsidiaries, IIC and ACIC will maintain their current A (Exceptional) or higher ratings by Demotech and A- ratings by Kroll.
For example, a trend of more frequent and severe weather-related catastrophes may lead rating agencies to substantially increase their capital requirements. 23 AMERICAN COASTAL INSURANCE CORPORATION We cannot guarantee that our insurance subsidiaries, IIC and ACIC will maintain their current A (Exceptional) or higher ratings by Demotech and A- ratings by Kroll.
In the event that one or more of our vendors suffers a bankruptcy, renews its contractual arrangement on terms less favorable to us, fails to comply with legal or regulatory requirements or otherwise becomes unable to continue to provide products or services, or fails to protect personally identifiable information of our customers, claimants or employees, we may suffer operational impairments and financial losses.
In the event that one or more of our vendors suffers a bankruptcy, renews its contractual arrangement on terms less favorable to us, fails to comply with legal or regulatory requirements or otherwise 17 AMERICAN COASTAL INSURANCE CORPORATION becomes unable to continue to provide products or services, or fails to protect personally identifiable information of our customers, claimants or employees, we may suffer operational impairments and financial losses.
As part of its registration, each insurance company must identify material agreements, relationships and transactions with affiliates, including loans, investments, asset transfers, transactions outside of the ordinary course of business, certain management, service, and cost sharing agreements, reinsurance transactions, dividends, and other financial and non-financial components of an insurer’s business.
As part of its registration, each insurance company must identify material agreements, relationships and transactions with affiliates, including loans, investments, asset transfers, transactions outside of the ordinary course of business, certain management, service, and cost sharing agreements, reinsurance transactions, dividends, and other financial and 20 AMERICAN COASTAL INSURANCE CORPORATION non-financial components of an insurer’s business.
Though the NYDFS cybersecurity regulation helps to reduce the third-party risk and imposes specific technical safeguards, the evolving compliance and operational requirements of privacy and cybersecurity laws and regulations impose significant costs that are likely to increase over time and may restrict the way services involving data are offered, all of which may adversely affect our business and results of operations. 20 UNITED INSURANCE HOLDINGS CORP.
Though the NYDFS cybersecurity regulation helps to reduce the third-party risk and imposes specific technical safeguards, the evolving compliance and operational requirements of privacy and cybersecurity laws and regulations impose significant costs that are likely to increase over time and may restrict the way services involving data are offered, all of which may adversely affect our business and results of operations.
Given the concentration of ACIC’s commercial business and operations with AmRisc, AmRisc may have substantial leverage in negotiations with ACIC 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 ACIC 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.
Additionally, ACIC has a managing agency contract (the MGA contract) with AmRisc, pursuant to which AmRisc serves as ACIC’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 ACIC and AmRisc is exclusive.
Additionally, 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.
Further, our Board of Directors has the ability to designate the terms of and issue one or more series of preferred stock, which may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. 29 UNITED INSURANCE HOLDINGS CORP. Item 1B. Unresolved Staff Comments None.
Further, our Board of Directors has the ability to designate the terms of and issue one or more series of preferred stock, which may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. Item 1B. Unresolved Staff Comments None.
Transactions by Mr. Peed and his affiliates involving our common stock may have an adverse effect on the price of our common stock. As noted above, Mr. Peed beneficially owned approximately 32% of our issued and outstanding common stock as of December 31, 2022. The Company has granted Mr.
Transactions by Mr. Peed and his affiliates involving our common stock may have an adverse effect on the price of our common stock. As noted above, Mr. Peed beneficially owned approximately 30% of our issued and outstanding common stock as of December 31, 2023. The Company has granted Mr.
Collectability of reinsurance is subject to the solvency of the reinsurers, interpretation of contract language and other factors. A reinsurer’s insolvency, inability to make payments, or dispute of its obligations under the terms of a reinsurance contract could have a material adverse effect on our business, results of operations, financial condition and cash flow. 25 UNITED INSURANCE HOLDINGS CORP.
Collectability of reinsurance is subject to the solvency of the reinsurers, interpretation of contract language and other factors. A reinsurer’s insolvency, inability to make payments, or dispute of its obligations under the terms of a reinsurance contract could have a material adverse effect on our business, results of operations, financial condition and cash flow.
We revise our evaluations and assessments as conditions change and new information becomes available, and we reflect changes in the credit allowance in our Consolidated Statements of Comprehensive Loss. We base our assessment of whether a credit allowance is required based on our case-by-case evaluation of the underlying reasons for the decline in fair value.
We revise our 22 AMERICAN COASTAL INSURANCE CORPORATION evaluations and assessments as conditions change and new information becomes available, and we reflect changes in the credit allowance in our Consolidated Statements of Comprehensive Loss. We base our assessment of whether a credit allowance is required based on our case-by-case evaluation of the underlying reasons for the decline in fair value.
These developments could include: • an influx of new capital in the marketplace as existing companies attempt to expand their businesses and new companies attempt to enter the insurance business as a result of better premium pricing and/or policy terms; • an increase in programs in which state-sponsored entities provide property insurance in catastrophe-prone areas; • changes in state regulatory climates; and • the passage of federal proposals for an optional federal charter that would allow some competing insurers to operate under regulations different or less stringent than those applicable to us. 23 UNITED INSURANCE HOLDINGS CORP.
These developments could include: • an influx of new capital in the marketplace as existing companies attempt to expand their businesses and new companies attempt to enter the insurance business as a result of better market conditions, more competitive premium pricing and/or more favorable policy terms; • an increase in programs in which state-sponsored entities provide property insurance in catastrophe-prone areas; • changes in state regulatory climates; and • the passage of federal proposals for an optional federal charter that would allow some competing insurers to operate under regulations different or less stringent than those applicable to us.
We are subject to comprehensive regulation and supervision by state insurance departments in all states in which our insurance subsidiaries are domiciled, as well as all states in which they are licensed, sell insurance products, issue policies, or handle claims.
We are subject to comprehensive regulation and supervision by state insurance departments in New York and Florida, the states in which our insurance subsidiaries are domiciled, as well as all states in which they are licensed, sell insurance products, issue policies, or handle claims.
Competition could limit our ability to retain existing business or to write new business at adequate rates, and such limitation may cause a material adverse effect on our results of operations and financial position. In addition, industry developments could further increase competition in our industry.
Competition could limit our ability to retain existing business or to write new business at adequate rates, and such limitation may cause a material adverse effect on our results of operations and financial position. 19 AMERICAN COASTAL INSURANCE CORPORATION In addition, industry developments could further increase competition in our industry.
Federal and/or state tax legislation could be enacted that would lessen or eliminate some or all of the tax advantages we currently benefit from, including those governing received deductions and tax credits, which could adversely affect the value of our investment portfolio. 26 UNITED INSURANCE HOLDINGS CORP.
Federal and/or state tax legislation could be enacted that would lessen or eliminate some or all of the tax advantages we currently benefit from, including those governing received deductions and tax credits, which could adversely affect the value of our investment portfolio.
Any such data breach involving our third-party vendors could result in significant mitigation or legal expenses for us, which could materially and adversely affect our reputation, relationships with our customers, business, results of operations and financial condition.
Any such data breach involving our third-party vendors, or failure to perform their duties, could result in significant mitigation or legal expenses for us, which could materially and adversely affect our reputation, relationships with our customers, business, results of operations and financial condition.
As of December 31, 2022, we had registered up to 101,000,000 of our securities (including both our preferred and common stock) authorized to issue from time to time in one or more offerings. Additional equity financings or other share issuances by us could adversely affect the market price of our common stock.
As of December 31, 2023, we had registered up to 100 million shares of our securities (including both our preferred and common stock) authorized to issue from time to time in one or more offerings. Additional equity financings or other share issuances by us could adversely affect the market price of our common stock.
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. We market our policies to a broad range of prospective policyholders through approximately 2,693 independent agencies as of December 31, 2022.
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. We market our homeowners’ insurance product to a broad range of prospective policyholders through approximately 400 independent agencies as of December 31, 2023.
Such impediments could have a material adverse effect on our financial condition and results of operations due to the concentration of ACIC’s business with AmRisc. 18 UNITED INSURANCE HOLDINGS CORP. Actual claims incurred may exceed our loss reserves for claims, which could adversely affect our results of operations and financial condition.
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. Actual claims incurred may exceed our loss reserves for claims, which could adversely affect our results of operations and financial condition.
Department of Treasury Department to collect data on the insurance industry, recommend changes to the state system of insurance regulation and preempt certain state insurance laws. 24 UNITED INSURANCE HOLDINGS CORP.
Department of Treasury Department to collect data on the insurance industry, recommend changes to the state system of insurance regulation and preempt certain state insurance laws.
Daniel Peed and his affiliates allows him to exert significant control over us, and the Company and R. Daniel Peed are subject to certain restrictive covenants that may restrict our ability to pursue certain opportunities. R.
The substantial ownership of our common stock by R. Daniel Peed and his affiliates allows him to exert significant control over us, and the Company and R. Daniel Peed are subject to certain restrictive covenants that may restrict our ability to pursue certain opportunities. R.
In 2022, the Florida legislature enacted additional insurance reform designed to improve the affordability of property insurance and reduce frivolous lawsuits. We cannot guarantee that this new legislation will further reduce the impact of litigation and expenses related to litigation, or whether additional legislation will be passed to further address one-way attorney fees.
In 2022, the Florida legislature enacted additional insurance reform designed to improve the affordability of property insurance and reduce frivolous lawsuits. We cannot guarantee that this new legislation will further reduce the impact of litigation and expenses related to litigation, or whether additional legislation will be passed that affect the cost of litigation on claims expenses.
In particular, interest rates are highly sensitive to many factors, including monetary and fiscal policy, domestic and international economic and political issues, geopolitical events, economic sanctions, blockades, the impact of domestic and international decisions regarding the COVID-19 pandemic and other factors beyond our control.
In particular, interest rates are highly sensitive to many factors, including monetary and fiscal policy, domestic and international economic and political issues, geopolitical events, economic sanctions, blockades, and other factors beyond our control.
These developments and others could make the property and casualty insurance marketplace more competitive by increasing the supply of insurance available. If competition limits our ability to write new business at adequate rates, our future results of operations would be adversely affected. Changes in state regulation may adversely affect our results of operation and financial condition.
These developments and others could make the property and casualty insurance marketplace more competitive by increasing the supply of insurance available. If competition limits our ability to write new business at adequate rates, or reduces our policy retention rates, our future results of operations would be adversely affected.
As a result, we may not be able to complete acquisitions, mergers or other strategic transactions or integrate the operations, products or personnel gained through 21 UNITED INSURANCE HOLDINGS CORP. any such acquisition, merger or other strategic transaction without a material adverse effect on our business, financial condition and results of operations.
As a result, we may not be able to complete acquisitions, mergers or other strategic transactions or integrate the operations, products or personnel gained through any such acquisition, merger or other strategic transaction without a material adverse effect on our business, financial condition and results of operations. 18 AMERICAN COASTAL INSURANCE CORPORATION We may engage in future dispositions or wind-downs of certain business.
These include, for example, vendors of computer hardware and software and vendors of services such as claim adjustment services and payroll and benefits vendors who process sensitive personally identifiable information.
We rely on services and products provided by many third-party vendors. These include, for example, vendors of computer hardware and software and vendors of services such as claim adjustment services and payroll and benefits vendors who process sensitive personally identifiable information.
Failure to grow or maintain our agency relationships, a failure to attract and incentivize new agents or the failure of agents to act as anticipated could adversely affect sales of our insurance products.
The loss of these marketing relationships could adversely impact our ability to attract new agents or retain our agency network and policies in-force. Failure to grow or maintain our agency relationships, a failure to attract and incentivize new agents or the failure of agents to act as anticipated could adversely affect sales of our insurance products.
We may have difficulty controlling our market share while rates are increasing due to an increase in reinsurance costs and losses from the high frequency of catastrophe events in recent years.
We may have difficulty controlling our market share due to an increase in reinsurance costs, inflation which increases actual losses and loss adjustment expenses, and losses from the high frequency of catastrophe events in recent years.
Any of these alternatives may cause a material adverse effect on our results of operations and our financial condition. Our inability to collect from our reinsurers on our reinsurance claims could have a material adverse effect on our business, results of operation, financial condition and cash flow. We use reinsurance as a tool to manage risks associated with our business.
Any of these alternatives may cause a material adverse effect on our results of operations and our financial condition. 21 AMERICAN COASTAL INSURANCE CORPORATION Our inability to collect from our reinsurers on our reinsurance claims could have a material adverse effect on our business, results of operation, financial condition and cash flow.
In addition, application of statistical and actuarial methods in estimating our loss reserves may require the adjustment of overall reserves upward or downward from time to time. Future loss experience substantially in excess of our loss reserves could substantially harm our results of operations and financial condition.
In addition, application of statistical and actuarial methods in estimating our loss reserves may require the adjustment of overall reserves upward or downward from time to time.
As a holding company with operating insurance company subsidiaries, we are subject to the laws and regulations of the various states in which our insurance subsidiaries operate.
Changes in state regulation may adversely affect our results of operation and financial condition. As a holding company with operating insurance company subsidiaries, we are subject to the laws and regulations of the various states in which our insurance subsidiaries operate.
Because we conduct a significant portion of our business in Florida, our financial results substantially depend on, and could be adversely affected by, the regulatory, legal, economic, political, demographic, competitive and weather conditions present in that state. As of December 31, 2022, approximately 52.5% of our policies in-force and 43.4% of our total insured value were concentrated in Florida.
Because we conduct a significant portion of our business in Florida, our financial results substantially depend on, and could be adversely affected by, the regulatory, legal, economic, political, demographic, competitive and weather conditions present in that state.
Peed’s interests may conflict with the interests of other holders of our common stock and he may take actions affecting us with which other stockholders may disagree. Mr.
As a result, Mr. Peed is able to exert substantial control over us. Moreover, Mr. Peed’s interests may conflict with the interests of other holders of our common stock and he may take actions affecting us with which other stockholders may disagree. Mr.
Daniel Peed, our Chief Executive Officer and Chairman of the Board, beneficially owned approximately 32% of our issued and outstanding common stock at December 31, 2022. Mr. Peed also has a proxy from another member of RDX 28 UNITED INSURANCE HOLDINGS CORP.
Daniel Peed, our Chief Executive Officer and Chairman of the Board, beneficially owned approximately 30% of our issued and outstanding common stock at December 31, 2023. Mr. Peed also has a proxy from another member of RDX Holding, LLC, the former parent company of AmCo, who beneficially owns approximately 8% of our issued and outstanding common stock.
However, we remain primarily liable as the direct insurer on all risks for which we obtain reinsurance. Our reinsurance agreements do not eliminate our obligation to pay claims to insureds. As a result, we are subject to counterparty risk with respect to our ability to recover amounts due from reinsurers.
We use reinsurance as a tool to manage risks associated with our business. However, we remain primarily liable as the direct insurer on all risks for which we obtain reinsurance. Our reinsurance agreements do not eliminate our obligation to pay claims to insureds.
The occurrence of one or more catastrophic events or other conditions affecting losses in Florida may cause a disproportionately adverse effect on our results of operations and financial condition. We also face a substantial number of lawsuits arising primarily from assignment of benefits (AOB) in the State of Florida.
The occurrence of one or more catastrophic events or other conditions affecting losses in Florida may cause a disproportionately adverse effect on our results of operations and financial condition. We face an increase in cost of claims as the result of one-way attorney fees in the State of Florida.
Moreover, in the event of a data breach involving any of our third-party vendors, our customers’, claimants’ or employees’ personally identifiable information could also be put at risk.
Moreover, in the event of a data breach involving any of our third-party vendors, our customers’, claimants’ or employees’ personally identifiable information could also be put at risk. The failure of the third-party vendor to adhere to service level standards, or not perform their duties in accordance with applicable law, could impact our financial position.
Because techniques used to obtain unauthorized access or to sabotage systems evolve rapidly, we may be unable to anticipate these techniques or to implement comprehensive counter measures.
There is no assurance that our security measures will provide fully effective protection from such disruptions. Because techniques used to obtain unauthorized access or to sabotage systems evolve rapidly, we may be unable to anticipate these techniques or to implement comprehensive counter measures.
Loss of key vendor relationships or failure of a vendor to protect personally identifiable information of our customers, claimants or employees could have an adverse effect on our business, results of operations or financial condition. We rely on services and products provided by many third-party vendors.
Loss of key vendor relationships, disputes with key vendors, or failure of a vendor to protect personally identifiable information of our customers, claimants or employees, or failure of a vendor to perform its duties in accordance with the contract or the applicable law, could have an adverse effect on our business, results of operations or financial condition.
Deterioration in statutory surplus or earnings, from developments such as catastrophe losses, or changes in market conditions or interest rates, could adversely affect holding company liquidity by impacting the amount of dividends from our subsidiaries or the utilization of invested assets at the holding company to increase statutory surplus or for other corporate purposes.
Deterioration in statutory surplus or earnings, from developments such as catastrophe losses, or changes in market conditions or interest rates, could adversely affect holding company liquidity by impacting the amount of dividends from our subsidiaries or the utilization of invested assets at the holding company to increase statutory surplus or for other corporate purposes. 24 AMERICAN COASTAL INSURANCE CORPORATION In connection with the filed plan of withdrawal in New York for our former insurance subsidiary, UPC, our insurance subsidiary, IIC, has agreed not to pay ordinary dividends until January 1, 2025, without the prior approval of the New York Department of Financial Services.
Future share issuances in connection with merger transactions or other acquisitions could result in substantial additional dilution to our stockholders. Dividend payments on our common stock in the future are uncertain, and our ability to pay dividends may be constrained by our holding company structure. We have paid dividends on our common stock in the past.
Dividend payments on our common stock in the future are uncertain, and our ability to pay dividends may be constrained by our holding company structure. We have paid dividends on our common stock in the past but have paid no dividends since March 16, 2022.
Peed and his affiliates could cause other institutions or individuals to engage in short sales of our common stock, which may further cause the price of our stock to decline. Provisions in our charter documents may make it harder for others to obtain control of us even though some stockholders might consider such a development to be favorable.
Peed and his affiliates could cause other institutions or individuals to engage in short sales of our common stock, which may further cause the price of our stock to decline.
Our Second Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain provisions that may discourage unsolicited takeover proposals our stockholders may consider to be in their best interests.
Provisions in our charter documents may make it harder for others to obtain control of us even though some stockholders might consider such a development to be favorable. 25 AMERICAN COASTAL INSURANCE CORPORATION Our Second Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain provisions that may discourage unsolicited takeover proposals our stockholders may consider to be in their best interests.
If sustained or repeated, such a business interruption, system failure or service denial could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions.
If sustained or repeated, such a business interruption, system failure or service denial could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. 16 AMERICAN COASTAL INSURANCE CORPORATION Despite our continual evaluation of potential attackers’ techniques and tactics and our efforts in monitoring, training, planning and prevention, our information technology systems are vulnerable to computer viruses, natural disasters, unauthorized access, cyber-attacks, system failures, human error and negligence, and similar disruptions.
Furthermore, changes in such conditions in Florida could make doing business in Florida less attractive for us, which could have a more pronounced effect on us than it would on other insurance companies that are more geographically diversified. 17 UNITED INSURANCE HOLDINGS CORP.
Furthermore, changes in such conditions in Florida could make doing business in Florida less attractive for us, which could have a more pronounced effect on us than it would on other insurance companies that are more geographically diversified. 14 AMERICAN COASTAL INSURANCE CORPORATION In addition, due to Florida’s climate, we are subject to increased exposure to certain catastrophic events such as hurricanes, tropical storms and tornadoes, as well as an increased risk of losses from such events.
Florida, Louisiana, North Carolina, South Carolina and Texas, all states in which we write policies, have experienced significant hurricanes in recent years, which some weather analysts believe is consistent with a period of sustained greater hurricane activity.
The frequency and severity of weather conditions are inherently unpredictable, but the frequency and severity of property claims generally increase when severe weather conditions occur. We write a significant number of our policies in Florida, a state that has experienced significant hurricanes in recent years, which some weather analysts believe is consistent with a period of sustained greater hurricane activity.
Removed
The frequency and severity of weather conditions are inherently unpredictable, but the frequency and severity of property claims generally increase when severe weather conditions occur.
Added
As of December 31, 2023, a significant number of our policies in-force were concentrated in Florida and a majority of our total insured value was concentrated in Florida.
Removed
In addition, due to Florida’s climate, we are subject to increased exposure to certain catastrophic events such as hurricanes, tropical storms and tornadoes, as well as an increased risk of losses from such events.
Added
If our reserves are inadequate, it may cause us to overstate our earnings for the periods during which our reserves for expected losses was insufficient and result in higher losses in future periods. We may experience government-levied assessments.
Removed
In recent years, Florida homeowners have been assigning the benefit of their insurance recovery to third parties, leading to increases in the severity and frequency of claims and the amount of litigation under AOB agreements that insureds make with customers.
Added
For example, in May 2023, Florida enacted a consumer protection law that increased the maximum administrative fines that may be levied on insurance companies by the Florida Office of Insurance Regulation by 250% generally, and 500% for violations stemming from a state of emergency such as a hurricane.
Removed
In July 2019, the Florida legislature enacted an AOB reform bill that intends to limit AOB litigation by creating requirements for the execution of an AOB and allowing an insurance policy to prohibit any AOB.
Added
We have identified a material weakness in our internal control over financial reporting, and our management has concluded that our internal control over financial reporting and disclosure controls and procedures were not effective as of the end of the period covered by this report.
Removed
We cannot guarantee that this new legislation will reduce the future impact of AOB practices, or whether additional legislation will be passed to further address AOB. We also face an increase in cost of claims as the result of one-way attorney fees in the State of Florida.
Added
While we are working to remediate the identified material weakness, we cannot assure you that additional material weaknesses or significant deficiencies will not occur in the future. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
Removed
Our exposure in Louisiana and Texas represented approximately 24.9% of our policies in-force and 23.3% of our total insured value at December 31, 2022.
Added
As a result, our stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common stock. The Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
Removed
Therefore, any changes in the prevailing regulatory, legal, economic, political, demographic, competitive, weather and other conditions in these states, when coupled with the conditions in Florida, will likely have a significant impact on our revenues and profitability.
Added
As disclosed in this Annual Report, in the course of preparing our interim financial statements for the fiscal quarter ended June 30, 2023, we identified a material weakness in our internal control over financial reporting, which existed as of March 31, 2023.
Removed
Historically, we have used marketing relationships with national insurance companies and associations of independent insurance agents to attract and retain agents and agency groups. The loss of these marketing relationships could adversely impact our ability to attract new agents or retain our agency network and policies in-force.
Added
The material weakness was caused by inadequate controls over the review of significant unusual transactions, including the effects of the transactions on the preparation of the Company’s tax provision, described in more detail under the heading Part II — Item 9A. Controls and Procedures in this Annual Report.
Removed
As a result of the uncertainties regarding the allocation of reinsurance recoveries, there is substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing and reinsurance coverage.
Added
We have commenced efforts to remediate the material weakness as described in more detail under the heading Part II — Item 9A. Controls and Procedures in this Annual Report.
Removed
As a result of our insurance subsidiary, UPC, being ordered into receivership for purposes of liquidation with the Florida Department of Financial Services (DFS) appointed as the receiver, uncertainty exists regarding the allocation of reinsurance recoveries under the Company’s core catastrophe reinsurance program, which provides coverage for both UPC and our other insurance subsidiary, ACIC.
Added
The material weakness in our internal control over financial reporting will not be considered remediated until the controls operate for a sufficient period of time and management has concluded, through testing, that these controls operate effectively.
Removed
With the DFS having assumed full control of UPC, the reinsurance allocation agreement between UPC and ACIC which was previously approved by the Florida Office of Insurance Regulation, is subject to review by the DFS, the outcome or timing of which is uncertain.
Added
If we do not successfully remediate the material weakness, or if other material weaknesses or other deficiencies arise in the future, we may be unable to accurately report our financial results, which could cause our financial results to be materially misstated and require restatement.
Removed
A significant delay in receiving funds owed to us, or the failure to receive any or all of the funds we believe to be owed to us, could adversely impact our future ability to operate as a going concern.
Added
In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We use all of our leased properties for office space. We lease in total approximately 34,900 square feet of office space located in Florida, New York, and Minnesota. These leases are generally short-term to medium-term leases of commercial office space.
Biggest changeItem 2. Properties We use all of our leased properties for office space. We lease in total approximately 21,700 square feet of office space located in Florida, New York, and Minnesota. These leases are generally short-term to medium-term leases of commercial office space. 27 AMERICAN COASTAL INSURANCE CORPORATION

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+3 added−3 removed1 unchanged
Biggest changeManagement makes revisions to our estimates based on its analysis of subsequent information that we receive 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 August 18, 2021, Jacqueline A.
Biggest changeManagement makes revisions to our estimates based on its analysis of subsequent information that we receive 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.
Removed
Miraglia v. United Insurance Holdings Corp., and United Property & Casualty Insurance Company was filed in the United States District Court for the District of Delaware alleging violations and damages arising under Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967, and seeks damages in an unspecified amount.
Added
On October 20, 2023, we received notice that the DFS filed a notice of claim and demand for tender of insurance policy limits under our director and officer insurance to carriers participating in the our director and officer’s insurance program (the “Claim”).
Removed
On September 27, 2022, venue was transferred to the United States District Court for the Middle District of Florida, Tampa Division. In November, 2022, the plaintiff filed an Amended Complaint styled Jacqueline A. Miraglia vs.
Added
The Claim alleges that former officers and directors of UPC were involved in wrongful acts that resulting in UPCs insolvency and demands immediate tender of our director and officer’s policy limit of $40 million where we have a retention of $1.5 million. The former directors and officers of UPC deny the allegations.
Removed
United Insurance Holdings Corp., United Property & Casualty Insurance Company, and Skyway Claims Services, LLC, alleging violations arising under Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967. The Company denies wrongdoing and believes that an unfavorable outcome is neither probable nor estimable.
Added
Although no litigation has arisen from the Claim, litigation is anticipated. We anticipate that directors and officers will be successful in their defense; however, due to our indemnification obligation, we have accrued the policy retention amount of $1.5 million.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+1 added−0 removed6 unchanged
Biggest changeThe number of record holders does not include stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. DIVIDENDS During 2022, we paid a dividend of $0.06 per share of our common stock during the first quarter.
Biggest changeThe number of record holders does not include stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. DIVIDENDS During 2023, we did not pay dividends of our common stock.
Alternatively, ACIC may pay a dividend or distribution without the prior written approval of the insurance regulatory authority when: 1. the dividend is equal to or less than the greater of: a. 10% of the insurer’s surplus as to policyholders derived from realized net operating profits on its business and net realized capital gains, or b.
Alternatively, AmCoastal may pay a dividend or distribution without the prior written approval of the insurance regulatory authority when: 1. the dividend is equal to or less than the greater of: a. 10% of the insurer’s surplus as to policyholders derived from realized net operating profits on its business and net realized capital gains, or b.
Under Florida law, Florida-domiciled insurers such as ACIC may not pay any dividend or distribute cash or other property to its shareholders except out of its available and accumulated surplus funds which are derived from realized net operating profits on its business and net realized capital gains.
Under Florida law, Florida-domiciled insurers such as AmCoastal may not pay any dividend or distribute cash or other property to its shareholders except out of its available and accumulated surplus funds which are derived from realized net operating profits on its business and net realized capital gains.
While we did not pay a dividend during any other period in 2022, any future dividend payments will be at the discretion of our Board of Directors and will depend upon our profits, financial requirements and other factors, including legal and regulatory restrictions on the payment of dividends, general business conditions and such other factors as our Board of Directors deems relevant.
While we did not pay a dividend during 2023, any future dividend payments will be at the discretion of our Board of Directors and will depend upon our profits, financial requirements and other factors, including legal and regulatory restrictions on the payment of dividends, general business conditions and such other factors as our Board of Directors deems relevant.
As of December 31, 2022, we were in compliance with these requirements.
As of December 31, 2023, we were in compliance with these requirements.
The insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year, and: 31 UNITED INSURANCE HOLDINGS CORP. i. The insurer will have surplus as to policyholders equal to or exceeding 115% of the minimum required statutory surplus as to policyholders after the dividend or distribution is made, and ii.
The insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year, and: i. The insurer will have surplus as to policyholders equal to or exceeding 115% of the minimum required statutory surplus as to policyholders after the dividend or distribution is made, and 29 AMERICAN COASTAL INSURANCE CORPORATION ii.
During November 2022, we received a $26,000,000 dividend from our insurance subsidiary, ACIC. During February 2021, we received a $3,500,000 dividend from our insurance subsidiary, IIC. During February 2020, we received a $12,000,000 dividend from IIC.
During November 2022, we received a $26,000,000 dividend from our insurance subsidiary, AmCoastal. During February 2021, we received a $3,500,000 dividend from our insurance subsidiary, IIC.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities MARKET INFORMATION Our common stock trades on the Nasdaq Capital Market (Nasdaq) under the symbol “UIHC”. HOLDERS OF COMMON EQUITY As of March 7, 2023, we had 3,763 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities MARKET INFORMATION Our common stock trades on the Nasdaq Capital Market (Nasdaq) under the symbol “ACIC”. HOLDERS OF COMMON EQUITY As of March 4, 2024, we had 5,049 holders of record of our common stock.
See Note 15 to our Notes to Consolidated Financial Statements for further discussion of restrictions on future payments of dividends by our insurance affiliates. 32 UNITED INSURANCE HOLDINGS CORP. RECENT SALES OF UNREGISTERED SECURITIES During 2022, we did not have any unregistered sales of our equity securities.
See Note 16 to our Notes to Consolidated Financial Statements for further discussion of restrictions on future payments of dividends by our insurance affiliates. 30 AMERICAN COASTAL INSURANCE CORPORATION RECENT SALES OF UNREGISTERED SECURITIES During 2023, we did not have any unregistered sales of our equity securities.
REPURCHASES OF EQUITY SECURITIES During 2022, we did not repurchase any of our equity securities. 33 UNITED INSURANCE HOLDINGS CORP.
REPURCHASES OF EQUITY SECURITIES During 2023, we did not repurchase any of our equity securities. 31 AMERICAN COASTAL INSURANCE CORPORATION
Added
In addition, in connection with the filed plan of withdrawal in New York for our former insurance subsidiary, UPC, our subsidiary, IIC, has agreed not to pay ordinary dividends until January 1, 2025, without the prior approval of the New York Department of Financial Services.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

106 edited+45 added−90 removed62 unchanged
Biggest changeConsolidated Net Loss Year Ended December 31, 2022 2021 2020 REVENUE: Gross premiums written $ 1,124,063 $ 1,329,445 $ 1,456,863 Change in gross unearned premiums 99,120 78,998 (49,883) Gross premiums earned 1,223,183 1,408,443 1,406,980 Ceded premiums earned (760,557) (818,682) (641,317) Net premiums earned 462,626 589,761 765,663 Net investment income 14,011 13,772 24,125 Net realized gains (losses) (32,082) 3,567 66,691 Net unrealized gains (losses) on equity securities (6,585) 3,237 (27,562) Other revenue 17,452 24,190 17,739 Total revenues 455,422 634,527 846,656 EXPENSES: Losses and loss adjustment expenses 637,647 422,134 608,316 Policy acquisition costs 156,089 173,574 236,002 Operating expenses 43,632 56,257 52,876 General and administrative expenses 63,317 57,212 72,057 Interest expense 9,613 9,391 9,582 Total expenses 910,298 718,568 978,833 Loss before other income (454,876) (84,041) (132,177) Other income 10,395 184 74 Loss before income taxes (444,481) (83,857) (132,103) Provision (benefit) for income taxes 25,485 (23,989) (36,605) Net loss $ (469,966) $ (59,868) $ (95,498) Less: Net income (loss) attributable to noncontrolling interests (111) (1,949) 956 Net loss attributable to UIHC $ (469,855) $ (57,919) $ (96,454) Net loss per diluted share $ (10.91) $ (1.35) $ (2.25) Book value per share $ (4.21) $ 7.20 $ 9.19 Return on equity based on GAAP net loss (307.4) % (16.9) % (20.2) % Loss ratio, net (1) 137.8 % 71.6 % 79.4 % Expense ratio (2)(5) 56.9 % 48.7 % 47.1 % Combined ratio (3)(5) 194.7 % 120.3 % 126.5 % Effect of current year catastrophe losses on combined ratio 61.2 % 19.3 % 38.5 % Effect of prior year development on combined ratio 24.3 % 4.7 % (0.9) % Underlying combined ratio (4)(5) 109.2 % 96.3 % 88.9 % (1) Loss ratio, net is calculated as losses and LAE net of losses ceded to reinsurers, relative to net premiums earned.
Biggest changeTo evaluate our financial condition, we consider our liquidity, financial strength, ratings, book value per share and return on equity. 32 AMERICAN COASTAL INSURANCE CORPORATION Consolidated Net Income (Loss) Year Ended December 31, 2023 2022 2021 REVENUE: Gross premiums written $ 670,043 $ 572,343 $ 484,527 Change in gross unearned premiums (34,079) (36,974) (18,768) Gross premiums earned 635,964 535,369 465,759 Ceded premiums earned (354,080) (266,023) (244,630) Net premiums earned 281,884 269,346 221,129 Net investment income 10,574 7,673 5,901 Net realized gains (losses) (6,808) (6,483) 138 Net unrealized gains (losses) on equity securities 814 (1,968) 1,471 Other revenue 79 1,223 46 Total revenues 286,543 269,791 228,685 EXPENSES: Losses and loss adjustment expenses 62,861 134,805 89,051 Policy acquisition costs 83,346 95,318 93,199 Operating expenses 10,240 13,729 16,258 General and administrative expenses 29,489 42,281 31,420 Interest expense 10,875 9,483 9,303 Total expenses 196,811 295,616 239,231 Income (loss) before other income 89,732 (25,825) (10,546) Other income 2,239 10,343 129 Income (loss) before income taxes 91,971 (15,482) (10,417) Provision (benefit) for income taxes 9,773 24,522 (6,699) Income (loss) from continuing operations, net of tax $ 82,198 $ (40,004) $ (3,718) Income (loss) from discontinued operations, net of tax 227,713 (429,962) (56,150) Net income (loss) $ 309,911 $ (469,966) $ (59,868) Less: Net loss attributable to noncontrolling interests — (111) (1,949) Net income (loss) attributable to ACIC $ 309,911 $ (469,855) $ (57,919) Net income (loss) per diluted share $ 6.98 $ (10.91) $ (1.35) Book value per share $ 3.61 $ (4.21) $ 7.20 Return on equity based on GAAP net income (loss) 439.5 % (307.4) % (16.9) % Loss ratio, net (1) 22.3 % 50.0 % 40.3 % Expense ratio (2)(5) 43.7 % 56.2 % 63.7 % Combined ratio (3)(5) 66.0 % 106.2 % 104.0 % Effect of current year catastrophe losses on combined ratio 5.4 % 21.5 % 7.1 % Effect of prior year development on combined ratio (4.4) % (4.1) % (2.7) % Underlying combined ratio (4)(5) 65.0 % 88.8 % 99.6 % (1) Loss ratio, net is calculated as losses and LAE net of losses ceded to reinsurers, relative to net premiums earned.
Our investment strategy is the same for both our personal lines and commercial lines operating segments.
Our investment strategy is the same for both our commercial lines and personal lines operating segments.
Our selection of the actuarial estimate is influenced by the analysis of our historical loss and claims experience since inception. For each accident year, we estimate the ultimate incurred losses for both reported and unreported claims. In establishing this estimate, we reviewed the results of various actuarial methods discussed in Note 10 in our Notes to Consolidated Financial Statements.
Our selection of the actuarial estimate is influenced by the analysis of our historical loss and claims experience since inception. For each accident year, we estimate the ultimate incurred losses for both reported and unreported claims. In establishing this estimate, we reviewed the results of various actuarial methods discussed in Note 11 in our Notes to Consolidated Financial Statements.
As discussed in Note 4 in our Notes to Consolidated Financial Statements, we value our investments at fair value using quoted prices from active markets, to the extent available.
As discussed in Note 5 in our Notes to Consolidated Financial Statements, we value our investments at fair value using quoted prices from active markets, to the extent available.
We experienced adverse reserve development in the current year and its historical impact on our net loss and net underlying loss ratios is outlined in the following table.
We experienced favorable reserve development in the current year and its historical impact on our net loss and net underlying loss ratios is outlined in the following table.
These increases were partially offset by a decrease in premiums written in Texas and South Carolina as we are no longer writing business in these states. The breakdown of the year-over-year changes in both direct and assumed written premiums by state are shown in the table below.
These increases were partially offset by a decrease in assumed premiums as we wind-down these contracts, as well as a decrease in premiums written in Texas and South Carolina, as we are no longer writing business in these states. The breakdown of the year-over-year changes in both direct and assumed written premiums by state are shown in the table below.
Reinsurer Companies in Scope (1) Effective Dates Cession Rate States in Scope External third-party UPC, FSIC & ACIC 06/01/2022 - 06/01/2023 10% (2) Florida, Louisiana, Texas TypTap UPC 06/01/2022 - 06/01/2023 100% (3) Georgia, North Carolina, South Carolina External third-party UPC, FSIC & ACIC 12/31/2021 - 12/31/2022 8% (2) Florida, Louisiana, Texas HCPCI UPC 12/31/2021 - 06/01/2022 85% Georgia, North Carolina, South Carolina External third-party UPC & FSIC 12/31/2021 - 12/31/2022 25% (4) Florida, Louisiana, Texas HCPCI / TypTap (5) UPC 06/01/2021 - 06/01/2022 100% (3) Connecticut, New Jersey, Massachusetts, Rhode Island External third-party UPC, FSIC & ACIC (6) 06/01/2021 - 06/01/2022 15% (2) Florida, Georgia, Louisiana, North Carolina, South Carolina, Texas IIC UPC 12/31/2020 - 12/31/2022 100% New York HCPCI UPC 12/31/2020 - 06/01/2021 69.5% Connecticut, New Jersey, Massachusetts, Rhode Island External third-party UPC, FSIC & ACIC 12/30/2020 - 12/31/2021 8% (2) Connecticut, Florida, Georgia, Louisiana, Massachusetts, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas External third-party UPC, FSIC & ACIC (6) 06/01/2020 - 06/01/2021 15% (2) Connecticut, Florida, Georgia, Louisiana, Massachusetts, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas External third-party UPC & FSIC 06/01/2020 - 06/01/2021 7.5% (2) Connecticut, Florida, Georgia, Louisiana, Massachusetts, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas (1) Effective May 31, 2022, FSIC was merged into UPC, with UPC being the surviving entity.
Reinsurer Companies in Scope (1) Effective Dates Cession Rate States in Scope External third-party AmCoastal 06/01/2023 - 06/01/2024 40% (2) Florida External third-party UPC, FSIC & AmCoastal 06/01/2022 - 06/01/2023 10% (2) Florida, Louisiana, Texas TypTap UPC 06/01/2022 - 06/01/2023 100% (3) Georgia, North Carolina, South Carolina External third-party UPC, FSIC & AmCoastal 12/31/2021 - 12/31/2022 8% (2) Florida, Louisiana, Texas HCPCI UPC 12/31/2021 - 06/01/2022 85% Georgia, North Carolina, South Carolina External third-party UPC & FSIC 12/31/2021 - 12/31/2022 25% (4) Florida, Louisiana, Texas HCPCI / TypTap (5) UPC 06/01/2021 - 06/01/2022 100% (3) Connecticut, New Jersey, Massachusetts, Rhode Island External third-party UPC, FSIC & AmCoastal (6) 06/01/2021 - 06/01/2022 15% (2) Florida, Georgia, Louisiana, North Carolina, South Carolina, Texas IIC UPC 12/31/2020 - 12/31/2022 100% New York (1) Effective May 31, 2022, FSIC was merged into UPC, with UPC being the surviving entity.
Fair Value of Investments 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. We are responsible for the determination of fair value of 55 UNITED INSURANCE HOLDINGS CORP. financial assets and the supporting assumptions and methodologies.
Fair Value of Investments 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. We are responsible for the determination of fair value of financial assets and the supporting assumptions and methodologies.
See Note 2(b) in our Notes to Consolidated Financial Statements for further information regarding our credit loss testing. Measurement of Goodwill and Related Impairment Goodwill is the excess of cost over the estimated fair value of net assets acquired.
See Note 2(b) in our Notes to Consolidated Financial Statements for further information regarding our credit loss testing. 53 AMERICAN COASTAL INSURANCE CORPORATION Measurement of Goodwill and Related Impairment Goodwill is the excess of cost over the estimated fair value of net assets acquired.
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. The impact of the current year catastrophes to our commercial lines and personal lines operating segments can be seen in the table below.
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. 47 AMERICAN COASTAL INSURANCE CORPORATION The impact of the current year catastrophes to our commercial lines and personal lines operating segments can be seen in the tables below.
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 Consolidated Financial Statements for additional information regarding our reinsurance program. 51 UNITED INSURANCE HOLDINGS CORP.
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 10 in our Notes to Consolidated Financial Statements for additional information regarding our reinsurance program.
Our short-term obligation related to these notes payable total $1,176,000 in principal payments and $11,015,000 in estimated interest payments. For more information regarding these outstanding notes, please see Note 11 . In connection with entering into contracts with our outside vendors, we have minimum obligations due to our vendors over the life of the contracts.
Our short-term obligation related to these notes payable total $10,875,000 in estimated interest payments and no principal payments. For more information regarding these outstanding notes, please see Note 12 . In connection with entering into contracts with our outside vendors, we have minimum obligations due to our vendors over the life of the contracts.
In addition, during each of the three years we increased our loss and LAE reserves as a result of development trends from 2017’s Hurricane Irma, that indicated our ultimate gross loss estimate should be increased. The following discussion highlights significant factors influencing the consolidated financial position and results of operations of UPC Insurance.
In addition, during 2022 and 2021, we increased our loss and LAE reserves as a result of development trends from 2017’s Hurricane Irma, that indicated our ultimate gross loss estimate should be increased. The following discussion highlights significant factors influencing the consolidated financial position and results of operations of ACIC.
Additional information regarding non-GAAP financial measures presented in this Form 10-K can be found in the “ Definitions of Non-GAAP Measures ” section, above. 40 UNITED INSURANCE HOLDINGS CORP.
Additional information regarding non-GAAP financial measures presented in this Form 10-K can be found in the “ Definitions of Non-GAAP Measures ” section, above.
In addition to our unpaid loss and loss adjustment expenses, as of December 31, 2022 we have outstanding debt obligations related to our notes payable totaling $154,118,000. This is exclusive of interest costs, which we estimate will total $54,669,000 over the life of the debt, based on the current fixed and variable interest rates of these notes.
In addition to our unpaid loss and loss adjustment expenses, as of December 31, 2023 we have outstanding debt obligations related to our notes payable totaling $150,000,000. This is exclusive of interest costs, which we estimate will total $43,500,000 over the life of the debt, based on the current fixed interest rates of these notes.
Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the year ended December 31, 2022 would have been 19.8%, a decrease of 0.1 points from 19.9% during the year ended December 31, 2021.
Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the year ended December 31, 2023 would have been 9.4%, a decrease of 7.0 points from 16.4% during the year ended December 31, 2022.
Our investments at December 31, 2022 and 2021 consisted mainly of U.S. government and agency securities, states, municipalities and political subdivisions, mortgage-backed securities and securities of investment-grade corporate issuers. Our equity holdings in 2022 and 2021 consisted mainly of securities issued by 46 UNITED INSURANCE HOLDINGS CORP. companies in the financial, utilities and industrial sectors or mutual funds.
Our investments at December 31, 2023 and 2022 consisted mainly of U.S. government and agency securities, states, municipalities and political subdivisions, mortgage-backed securities and securities of investment-grade corporate issuers. Our equity holdings in 2022 consisted mainly of securities issued by companies in the financial, utilities and industrial sectors or mutual funds. We held no equities as of December 31, 2023.
During the periods presented, we conducted our business principally through three wholly-owned insurance subsidiaries: United Property & Casualty Insurance Company (UPC); American Coastal Insurance Company (ACIC); and Interboro Insurance Company (IIC). Collectively, we refer to the holding company and all our subsidiaries, including non-insurance subsidiaries, as “UPC Insurance,” which is the preferred brand identification for our Company.
During the periods presented, we conducted our business principally through two wholly-owned insurance subsidiaries: American Coastal Insurance Company (AmCoastal) and Interboro Insurance Company (IIC). Collectively, we refer to the holding company and all our subsidiaries, including non-insurance subsidiaries, as “ACIC,” which is the preferred brand identification for our Company.
Please note that the catastrophe events may have impacted both operating segments. As a result, the sum of the number of events in the tables below will not reconcile to the consolidated number of events above.
Please note that the catastrophe events may have impacted both operating segments. As a result, the sum of the number of events in the tables below will not reconcile to the consolidated number of events above. In addition, the combined ratio impact is calculated and sum of the ratios in the tables below will not reconcile to the ratios above.
As of December 31, 2022, our total obligation related to these claim payments was $1,946,938,000, of which we estimate $874,255,000 to be short-term in nature (due in less than twelve months), based upon our cumulative claims paid over the last 22 years.
As of December 31, 2023, our total obligation related to these claim payments was $370,221,000, of which we estimate $132,176,000 to be short-term in nature (due in less than twelve months), based upon our cumulative claims paid over the last 22 years.
(4) This treaty provides coverage on non-catastrophe losses on policies in-force on the effective date of the agreement. (5) Cessions are split 50% to HCPCI and 50% to TypTap. (6) This treaty was amended effective December 31, 2020 to include ACIC.
(4) This treaty provides coverage on non-catastrophe losses on policies in-force on the effective date of the agreement. (5) Cessions are split 50% to HCPCI and 50% to TypTap.
See Note 15 in our Notes to Consolidated Financial Statements and Part II, Item 5 for additional information. During the year ended December 31, 2022, we contributed $81,000,000 and $11,200,000 to our insurance subsidiaries, UPC and FSIC, respectively. The contribution made to FSIC was made prior to the merging of FSIC into UPC.
See Note 16 in our Notes to Consolidated Financial Statements and Part II, Item 5 for additional information. During the year ended December 31, 2023, we made no capital contributions to our subsidiaries. During the year ended December 31, 2022, we contributed $81,000,000 and $11,200,000 to our former insurance subsidiaries, UPC and FSIC, respectively.
During the year ended December 31, 2022, as a result of UPC’s plan of run-off, management determined that it was more likely than not that we would be required to sell a portion or all of our fixed-income securities attributable to the entity before recovery of their amortized cost basis.
Treasuries, or corporate bonds rated “A” or better, and 16.8% were corporate bonds rated “BBB” or “BB”. 43 AMERICAN COASTAL INSURANCE CORPORATION During the year ended December 31, 2022, as a result of UPC’s plan of run-off, management determined that it was more likely than not that we would be required to sell a portion or all of our fixed-income securities attributable to the entity before recovery of their amortized cost basis.
Goodwill is impaired when it is determined that the carrying value of a reporting segment is in excess of the fair value of that reporting segment. The valuation methodologies utilized are subject to key judgments and assumptions that are sensitive to change.
Goodwill is impaired when it is determined that the carrying value of a reporting segment is in excess of the fair value of that reporting segment. The valuation methodologies utilized are subject to key judgments and assumptions that are sensitive to change. Estimates of fair value are inherently uncertain and represent only management’s reasonable expectation regarding future developments.
Loss and LAE expense as a percentage of net earned premiums increased 8.2 points to 39.8% for the year ended December 31, 2022, compared to 31.6% for the year ended December 31, 2021.
Loss and LAE expense as a percentage of net earned premiums decreased 21.4 points to 18.4% for the year ended December 31, 2023, compared to 39.8% for the year ended December 31, 2022.
Commercial Lines Operating Segment Results Pretax earnings attributable to our commercial lines operating segment for the year ended December 31, 2022 increased by $3,820,000 to pretax income of $35,841,000, compared to pretax income of $32,021,000 for the year ended December 31, 2021.
Commercial Lines Operating Segment Results Pretax earnings attributable to our commercial lines operating segment for the year ended December 31, 2023 increased by $82,287,000 to pretax income of $118,128,000, compared to pretax income of $35,841,000 for the year ended December 31, 2022.
ANALYSIS OF FINANCIAL CONDITION The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our accompanying consolidated financial statements and related notes in Part II, Item 8 in this Form 10-K.
There was no similar impairment during 2023. 42 AMERICAN COASTAL INSURANCE CORPORATION ANALYSIS OF FINANCIAL CONDITION The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our accompanying consolidated financial statements and related notes in Part II, Item 8 in this Form 10-K.
Reinsurance costs as a percent of gross earned premium for our commercial lines and personal lines operating segments during the years ended December 31, 2022 and 2021 were as follows: Personal Commercial 2022 2021 2022 2021 Non-at-Risk (3.3) % (2.9) % (0.5) % (0.2) % Quota Share (29.1) (28.7) (15.3) (15.1) All Other (35.5) (26.7) (37.2) (42.5) Total Ceding Ratio (67.9) % (58.3) % (53.0) % (57.8) % Please note that the sum of the percentages above will not reconcile to the consolidated percentages as they are calculated using each operating segments’ gross earned premium rather than our consolidated gross earned premium.
(6) This treaty was amended effective December 31, 2020 to include AmCoastal. 45 AMERICAN COASTAL INSURANCE CORPORATION Reinsurance costs as a percent of gross earned premium during the years ended December 31, 2023 and 2022 were as follows: 2023 2022 Non-at-Risk (0.4) % (0.6) % Quota Share (20.7) (13.2) All Other (34.7) (35.9) Total Ceding Ratio (55.8) % (49.7) % Reinsurance costs as a percent of gross earned premium for our commercial lines and personal lines operating segments during the years ended December 31, 2023 and 2022 were as follows: Personal Commercial 2023 2022 2023 2022 Non-at-Risk (2.2) % (1.1) % (0.3) % (0.5) % Quota Share — — (22.1) (15.3) All Other (25.6) (28.0) (35.2) (37.2) Total Ceding Ratio (27.8) % (29.1) % (57.6) % (53.0) % Please note that the sum of the percentages above will not reconcile to the consolidated percentages as they are calculated using each operating segments’ gross earned premium rather than our consolidated gross earned premium.
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 Consolidated Financial Statements for additional information regarding our losses and LAE.
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.
In addition, we contributed $9,574,000 to our reinsurance subsidiary, UPC Re. During the year ended December 31, 2021, we contributed $17,000,000, $8,000,000 and $17,500,000 to our insurance subsidiaries, UPC, FSIC, and ACIC, respectively. We may make future contributions of capital to our insurance subsidiaries as circumstances require. During 2022, we received a dividend of $26,000,000 from ACIC.
The contribution made to FSIC was made prior to the merging of FSIC into UPC. In addition, we contributed $9,574,000 to our reinsurance subsidiary, UPC Re. During the year ended December 31, 2021, we contributed $17,000,000, $8,000,000 and $17,500,000 to our former insurance subsidiaries, UPC, FSIC, and ACIC, respectively. During 2022, we received a dividend of $26,000,000 from ACIC.
The following discussion provides an analysis of our results of operations and financial condition for 2022 as compared to 2021. Discussion regarding our results of operations and financial condition for 2021 as compared to 2020 is included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021.
Discussion regarding our results of operations and financial condition for 2022 as compared to 2021 is included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 and the Revised Items of our Form 10-K for the year ended December 31, 2022, filed as Exhibit 99.1 to Form 8-K on September 19, 2023.
Net investment income attributable to our commercial lines operating segment increased by $1,097,000, or 23.0%, to $5,861,000 for the year ended December 31, 2022 from $4,764,000 for 2021. This increase is driven by a $999,000 increase in income from our cash and cash equivalent holdings, as a result of increased holdings year-over-year.
Net investment income attributable to our commercial lines operating segment increased by $1,495,000, or 25.5%, to $7,356,000 for the year ended December 31, 2023 from $5,861,000 for 2022. This increase is driven by a $3,513,000 increase in income from our cash and cash equivalent holdings, as a result of increased holdings and higher interest rates experienced year-over-year.
Commercial Lines Operating Segment Impact Number of Events Incurred Loss and Loss adjustment expense (LAE) (1) Combined Ratio Impact December 31, 2022 Current period catastrophe losses incurred Named and numbered storms 2 $ 43,173 19.7 % All other catastrophe loss events 7 212 0.1 % Total 9 $ 43,385 19.8 % December 31, 2021 Current period catastrophe losses incurred Named and numbered storms 4 $ 158 0.1 % All other catastrophe loss events 4 9,372 5.4 % Total 8 $ 9,530 5.5 % December 31, 2020 Current period catastrophe losses incurred Named and numbered storms 8 $ 16,684 8.5 % All other catastrophe loss events 9 7,978 4.1 % Total 17 $ 24,662 12.6 % (1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves.
Incurred loss and LAE and number of events includes the development on storms during the year in which it occurred. 48 AMERICAN COASTAL INSURANCE CORPORATION Commercial Lines Operating Segment Impact Number of Events Incurred Loss and Loss adjustment expense (LAE) (1) Combined Ratio Impact December 31, 2023 Current period catastrophe losses incurred Named and numbered storms 1 $ 600 0.2 % All other catastrophe loss events 10 12,183 4.9 % Total 11 $ 12,783 5.1 % December 31, 2022 Current period catastrophe losses incurred Named and numbered storms 2 $ 43,173 19.7 % All other catastrophe loss events 7 212 0.1 % Total 9 $ 43,385 19.8 % December 31, 2021 Current period catastrophe losses incurred Named and numbered storms 4 $ 158 0.1 % All other catastrophe loss events 10 9,372 5.4 % Total 14 $ 9,530 5.5 % (1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves.
Total shareholders’ equity (deficit) was not impacted by such charge; however, our net loss for the year ended December 31, 2022 worsened and other comprehensive income improved by $22,718,000, before tax impacts, in offsetting amounts.
Total shareholders’ equity (deficit) was not impacted by such charge; however, our net loss for the year ended December 31, 2022 worsened and other comprehensive income improved by $22,718,000, before tax impacts, in offsetting amounts. The impact on our net loss is captured within our discontinued operations. Reinsurance We follow industry practice of reinsuring a portion of our risks.
Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the year ended December 31, 2022 would have been 11.1%, a decrease of 1.0 point from 12.1% during the year ended December 31, 2021. 44 UNITED INSURANCE HOLDINGS CORP.
Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the year ended December 31, 2023 would have been 7.8%, a decrease of 3.3 points from 11.1% during the year ended December 31, 2022.
($ in thousands) Year ended December 31, 2022 2021 Change Net loss and LAE $ 87,143 $ 54,718 $ 32,425 % of Gross earned premiums 18.8 % 13.3 % 5.5 pts % of Net earned premiums 39.8 % 31.6 % 8.2 pts Less: Current year catastrophe losses $ 43,385 $ 9,530 $ 33,855 Prior year reserve favorable development (7,899) (4,353) (3,546) Underlying loss and LAE (1) $ 51,657 $ 49,541 $ 2,116 % of Gross earned premiums 11.1 % 12.1 % (1.0) pts % of Net earned premiums 23.6 % 28.6 % (5.0) pts (1) Underlying loss and LAE is a non-GAAP financial measure and is reconciled above to net loss and LAE, the most directly comparable GAAP measure.
($ in thousands) Year ended December 31, 2023 2022 Change Net loss and LAE $ 46,299 $ 87,143 $ (40,844) % of Gross earned premiums 7.8 % 18.8 % (11.0) pts % of Net earned premiums 18.4 % 39.8 % (21.4) pts Less: Current year catastrophe losses $ 12,783 $ 43,385 $ (30,602) Prior year reserve favorable development (12,694) (7,899) (4,795) Underlying loss and LAE (1) $ 46,210 $ 51,657 $ (5,447) % of Gross earned premiums 7.8 % 11.1 % (3.3) pts % of Net earned premiums 18.3 % 23.6 % (5.3) pts (1) Underlying loss and LAE is a non-GAAP financial measure and is reconciled above to net loss and LAE, the most directly comparable GAAP measure.
During February 2021, we received a dividend of $3,500,000 from IIC. During February 2020, we received a dividend of $12,000,000 from IIC. 52 UNITED INSURANCE HOLDINGS CORP.
During February 2021, we received a dividend of $3,500,000 from IIC.
Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the year ended December 31, 2022 would have been 25.1%, an increase of 2.0 points from 23.1% during the year ended December 31, 2021.
Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the year ended December 31, 2023 would have been 33.1%, a decrease of 17.6 points from 50.7% during the year ended December 31, 2022.
Additional cash outflows relate to the purchase of fixed assets. The primary liquidity concerns with respect to these cash flows are the risk of default by debtors and market disruption.
We closely monitor and manage these risks through our comprehensive investment risk management process. The principal cash outflows relate to purchases of investments. Additional cash outflows relate to the purchase of fixed assets. The primary liquidity concerns with respect to these cash flows are the risk of default by debtors and market disruption.
The increase in expenses was primarily due to an increase in loss and LAE as a result of Hurricane Ian making landfall in Florida as a category four hurricane and exhausting our personal lines reinsurance coverage for the event. The calculations of our combined loss ratios and underlying loss ratios are shown below.
The decrease in expenses was primarily due to a decrease in loss and LAE as a result of Hurricane Ian making landfall in 2022, which caused a large increase in 2022. The calculations of our combined loss ratios and underlying loss ratios are shown below.
LIQUIDITY AND CAPITAL RESOURCES We generate cash through premium collections, reinsurance recoveries, investment income, the sale or maturity of invested assets, the issuance of debt and the issuance of additional shares of our stock.
For more information regarding the results of our discontinued operations, see Note 3 in our Notes to Consolidated Financial Statements. LIQUIDITY AND CAPITAL RESOURCES We generate cash through premium collections, reinsurance recoveries, investment income, the sale or maturity of invested assets, the issuance of debt and the issuance of additional shares of our stock.
Operating and underwriting expenses attributable to our commercial lines operating segment decreased by $947,000, or 19.4%, to $3,926,000 for the year ended December 31, 2022, from $4,873,000 for the year ended December 31, 2021, primarily due to decreased expenses related to our investment in technology of $1,164,000.
Operating and underwriting expenses attributable to our personal lines operating segment decreased by $2,558,000, or 27.3%, to $6,809,000 for the year ended December 31, 2023, from $9,367,000 for the year ended December 31, 2022, primarily due to decreased expenses related to our investment in technology of $1,187,000.
See “ Forward-Looking Statements .” OVERVIEW United Insurance Holding Corp. is a holding company primarily engaged in residential personal and commercial property and casualty insurance business with investments in the United States.
See “ Forward-Looking Statements .” OVERVIEW American Coastal Insurance Corporation is a holding company primarily engaged in commercial and personal property and casualty insurance business with investments in the United States. On July 10, 2023, we changed our corporate name from United Insurance Holdings Corp. to American Coastal Insurance Corporation.
($ in thousands) Year ended December 31, 2022 2021 Change Policy acquisition costs $ 80,996 $ 80,198 $ 798 Operating and underwriting 3,926 4,873 (947) General and administrative 9,579 7,599 1,980 Total Operating Expenses $ 94,501 $ 92,670 $ 1,831 % of Gross earned premiums 20.4 % 22.6 % (2.2) pts % of Net earned premiums 43.2 % 53.5 % (10.3) pts Loss and LAE attributable to our commercial lines operating segment increased by $32,425,000, or 59.3%, to $87,143,000 for the year ended December 31, 2022, from $54,718,000 for the year ended December 31, 2021.
($ in thousands) Year ended December 31, 2023 2022 Change Policy acquisition costs $ 75,436 $ 80,996 $ (5,560) Operating and underwriting 3,008 3,926 (918) General and administrative 10,620 9,579 1,041 Total Operating Expenses $ 89,064 $ 94,501 $ (5,437) % of Gross earned premiums 15.0 % 20.4 % (5.4) pts % of Net earned premiums 35.3 % 43.2 % (7.9) pts Loss and LAE attributable to our commercial lines operating segment decreased by $40,844,000, or 46.9%, to $46,299,000 for the year ended December 31, 2023, from $87,143,000 for the year ended December 31, 2022.
During the years ended December 31, 2022, 2021 and 2020, two, seven, and thirteen named storms, respectively, made landfall in our geographic footprint, resulting in retained pre-tax catastrophe losses of $203,896,000, $35,872,000, and $208,157,000, respectively.
During the years ended December 31, 2023, 2022 and 2021, two, two, and four named storms, respectively, made landfall in our geographic footprint, resulting in retained pre-tax catastrophe losses of $729,000, $57,906,000, and $15,696,000, respectively, excluding discontinued operations.
Loss and LAE expense as a percentage of net earned premiums increased 137.7 points to 225.9% for the year ended December 31, 2022, compared to 88.2% for the year ended December 31, 2021.
Loss and LAE expense as a percentage of net earned premiums decreased 39.0 points to 55.5% for the year ended December 31, 2023, compared to 94.5% for the year ended December 31, 2022.
As a result, the Company has approximately $508 million of occurrence limit remaining for Ian, all of which is attributable to ACIC only. After reinstatement premiums of approximately $15.4 million, the Company has approximately $993 million of aggregate limit remaining after Ian, based on our estimated ultimate net loss subject to the core catastrophe reinsurance program.
After reinstatement premiums of approximately $15.4 million, the Company, with its former subsidiary UPC, has approximately $980 million of aggregate limit remaining for events subsequent to Hurricane Ian, based on our estimated ultimate net loss subject to the core catastrophe reinsurance program.
As a result of claim activity from the current and prior years, we have an obligation related to the unpaid policyholder losses and unpaid loss adjustment expenses associated with the settling of these claims.
As a result, pursuant to our agreement, the interest rate of our Senior notes increased from 6.25% to 7.25% effective on June 15, 2023. 50 AMERICAN COASTAL INSURANCE CORPORATION As a result of claim activity from the current and prior years, we have an obligation related to the unpaid policyholder losses and unpaid loss adjustment expenses associated with the settling of these claims.
Revenues Our gross written premiums attributable to our commercial lines operating segment increased by $86,005,000, or 20.4%, to $508,243,000 for the year ended December 31, 2022, from $422,238,000 for the year ended December 31, 2021, primarily reflecting the impact of rate increases on renewal business generated in the state of Florida, as we focus on increasing commercial written premiums and transitioning to a specialty commercial lines underwriter.
Revenues Our gross written premiums attributable to our commercial lines operating segment increased by $127,466,000, or 25.1%, to $635,709,000 for the year ended December 31, 2023, from $508,243,000 for the year ended December 31, 2022, driven entirely by increased written premiums in Florida as we continue to focus on increasing commercial written premiums and transitioning to a specialty commercial lines underwriter.
Our main vendor obligations are related to underwriting tools, claims and policy administration systems, and software used by our information technology department in their daily operations. Our total obligation related to these three categories of obligations are $1,285,000, $2,200,000, and $6,250,000, respectively. Of these obligations, $597,000, $1,763,000, and $1,250,000, respectively are short-term in nature.
Our main vendor obligations are related to underwriting tools, claims and policy administration systems. Our total obligation related to these two categories of obligations are $1,394,000, and $591,000, respectively. Of these obligations, $697,000, and $285,000, respectively are short-term in nature.
Net investment income attributable to our personal lines operating segment decreased by $865,000, or 9.7%, to $8,097,000 for the year ended December 31, 2022 from $8,962,000 for the year ended December 31, 2021.
Net investment income attributable to our personal lines operating segment increased by $1,360,000, or 77.3%, to $3,119,000 for the year ended December 31, 2023 from $1,759,000 for 2022.
Most of the corporate bonds we hold reflected a similar diversification. At December 31, 2022, approximately 84.4% of our fixed maturities were U.S. Treasuries, or corporate bonds rated “A” or better, and 15.6% were corporate bonds rated “BBB” or “BB”.
Most of the corporate bonds we hold reflected a similar diversification. At December 31, 2023, approximately 83.2% of our fixed maturities were U.S.
Our cash and investment portfolios totaled $715,721,000 at December 31, 2022 compared to $964,844,000 at December 31, 2021.
Our cash and investment portfolios totaled $369,022,000 at December 31, 2023 compared to $340,905,000 at December 31, 2022.
We have historically grown our business through organic growth complemented by strategic acquisitions and partnerships, including our acquisitions of AmCo Holding Company (AmCo) and its subsidiaries, including ACIC, in April 2017, IIC in April 2016, and Family Security Holdings, LLC (FSH), including its subsidiary FSIC in February 2015, and our strategic partnership with a subsidiary of Tokio Marine Kiln Group Limited (Kiln), which formed JIC in August 2018.
We have historically grown our business organically, complemented by strategic acquisitions and partnerships, including our acquisitions of AmCo Holding Company, LLC (AmCo) and its subsidiaries, including AmCoastal, in April 2017, IIC in April 2016, and Family Security Holdings, LLC (FSH), including its subsidiary Family Security Insurance Company, Inc.
We believe our current capital resources, together with cash provided from our operations, are sufficient to meet currently anticipated working capital requirements.
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.
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 reinsurance program is designed, utilizing our risk management methodology, to address our exposure to catastrophes.
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.
The increase in net losses was primarily driven by an increase in loss & LAE expense for the year, as a result of Hurricane Ian making landfall in Florida as a category four hurricane and exhausting our personal lines reinsurance coverage for the event.
The increase in net income was primarily driven by a decrease in loss & LAE for the year, as a result of Hurricane Ian making landfall in Florida in 2022, which caused large losses in 2022.
Historical Reserve Development ($ in thousands, except ratios) 2018 2019 2020 2021 2022 Prior year reserve favorable (unfavorable) development $ (4,318) $ (33,134) $ 6,786 $ (27,856) $ (112,636) Development as a % of earnings before interest and taxes (76.7) % 145.2 % (5.5) % 37.4 % 26.0 % Consolidated net loss and LAE ratio (LR) 59.3 % 66.4 % 79.4 % 71.6 % 137.8 % Prior year reserve unfavorable (favorable) development on LR 0.6 % 4.4 % (0.9) % 4.7 % 24.3 % Current year catastrophe losses on LR 14.6 % 12.9 % 38.5 % 19.3 % 61.2 % Underlying net loss and LAE ratio (1) 44.1 % 49.1 % 41.8 % 47.6 % 52.3 % (1) Underlying net loss and LAE Ratio is a non-GAAP measure and is reconciled above to the Consolidated net loss and LAE Ratio, the most directly comparable GAAP measure.
Historical Reserve Development ($ in thousands, except ratios) 2020 2021 2022 2023 Prior year reserve favorable development $ 2,602 $ 6,132 $ 10,787 $ 12,294 Development as a % of earnings before interest and taxes (51.6) % (550.4) % (179.8) % (12.0) % Consolidated net loss and LAE ratio (LR) 49.8 % 40.3 % 50.0 % 22.3 % Prior year reserve favorable development on LR (1.0) % (2.7) % (4.1) % (4.4) % Current year catastrophe losses on LR 16.8 % 7.1 % 21.5 % 5.4 % Underlying net loss and LAE ratio (1) 34.0 % 35.9 % 32.6 % 21.3 % (1) Underlying net loss and LAE Ratio is a non-GAAP measure and is reconciled above to the Consolidated net loss and LAE Ratio, the most directly comparable GAAP measure.
On February 10, 2023, we announced that a solvent run-off for UPC was unlikely and on February 27, 2023, UPC was placed into receivership with the Florida Department of Financial Services (DFS) which divested our ownership of UPC. Our Company, together with wholly-owned subsidiaries UPC and United Insurance Management, L.C.
See Note 11 in our Notes to Consolidated Financial Statements for additional information regarding our losses and LAE. 49 AMERICAN COASTAL INSURANCE CORPORATION Discontinued Operations On February 10, 2023, we announced that a solvent run-off for UPC was unlikely and on February 27, 2023, UPC was placed into receivership with the Florida Department of Financial Services (DFS) which divested our ownership of UPC.
Unpaid losses and LAE totaled $1,946,938,000 and $1,084,450,000 as of December 31, 2022 and 2021, respectively. Of this total, $816,489,000 and $230,377,000 is related to our commercial lines operating segment, respectively. The remaining $1,130,449,000 and $854,073,000 is related to our personal lines operating segment, respectively.
Unpaid losses and LAE totaled $370,221,000 and $842,958,000 as of December 31, 2023 and 2022, respectively. Of this total, $347,738,000 and $816,489,000 is related to our commercial lines operating segment, respectively. The remaining $22,483,000 and $26,469,000 is related to our personal lines operating segment, respectively.
Commercial Lines Operating Segment Impact Year Ended December 31, 2022 2021 2020 Quota Share (53,010) (75,277) (21,445) Excess-of-loss (168,107) (171,709) (190,113) Equipment, identity theft, and cyber security (2,269) (751) (2,077) Ceded premiums written $ (223,386) $ (247,737) $ (213,635) Change in ceded unearned premiums (21,907) 10,681 19,158 Ceded premiums earned $ (245,293) $ (237,056) $ (194,477) Current year catastrophe losses disaggregated between named and numbered storms and all other catastrophe loss events are shown in the following table.
These values can be reconciled to the table above. 46 AMERICAN COASTAL INSURANCE CORPORATION Personal Lines Operating Segment Year Ended December 31, 2023 2022 2021 Excess-of-loss (8,297) (20,006) (9,886) Equipment, identity theft, and cyber security (931) (798) (748) Ceded premiums written $ (9,228) $ (20,804) $ (10,634) Change in ceded unearned premiums (2,188) 74 3,060 Ceded premiums earned $ (11,416) $ (20,730) $ (7,574) Commercial Lines Operating Segment Impact Year Ended December 31, 2023 2022 2021 Quota Share (201,315) (53,010) (75,277) Excess-of-loss (211,016) (168,107) (171,709) Equipment, identity theft, and cyber security (1,172) (2,269) (751) Ceded premiums written $ (413,503) $ (223,386) $ (247,737) Change in ceded unearned premiums 70,839 (21,907) 10,681 Ceded premiums earned $ (342,664) $ (245,293) $ (237,056) Current year catastrophe losses disaggregated between named and numbered storms and all other catastrophe loss events are shown in the following table.
These reserves represent management’s best estimate of the amount we will ultimately pay for losses and we base the amount upon the application of various actuarial reserve estimation techniques as well as considering other material facts and circumstances known at the balance sheet date.
These reserves represent management’s best estimate of the amount we will ultimately pay for losses and we base the amount upon the application of various actuarial reserve estimation techniques as well as considering other material facts and circumstances known at the balance sheet date. 52 AMERICAN COASTAL INSURANCE CORPORATION As discussed in Note 11 in our Notes to Consolidated Financial Statements, we determine our ultimate losses by using multiple actuarial methods to determine an actuarial estimate within a relevant range of indications that we calculate using generally accepted actuarial techniques.
The table below outlines our quota share agreements in effect for the years ended December 31, 2022 and 2021.
The table below outlines our quota share agreements in effect for the years ended December 31, 2023 and 2022. The impacts of these quota share agreements on our former subsidiary, UPC's financial statements are included in discontinued operations.
DEFINITIONS OF NON-GAAP MEASURES We believe that investors’ understanding of UPC Insurance’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.
Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.
Ceded premiums earned attributable to our personal lines operating segment decreased by $66,362,000, or 11.4%, to $515,264,000 for the year ended December 31, 2022 from $581,626,000 for the year ended December 31, 2021. The decrease is primarily driven by a $65,755,000 decrease in ceded premiums earned from our quota share agreements.
Ceded premiums earned attributable to our personal lines operating segment decreased by $9,314,000 or 44.9%, to $11,416,000 for the year ended December 31, 2023 from $20,730,000 for the year ended December 31, 2022. The decrease is primarily driven by a $9,455,000 decrease in ceded premiums earned from our core catastrophe reinsurance program year-over-year.
Personal Lines Operating Segment Impact Number of Events Incurred Loss and Loss adjustment expense (LAE) (1) Combined Ratio Impact December 31, 2022 Current period catastrophe losses incurred Named and numbered storms 2 $ 160,723 66.0 % All other catastrophe loss events 38 79,082 32.4 % Total 40 $ 239,805 98.4 % December 31, 2021 Current period catastrophe losses incurred Named and numbered storms 7 $ 35,715 8.6 % All other catastrophe loss events 40 68,495 16.4 % Total 47 $ 104,210 25.0 % December 31, 2020 Current period catastrophe losses incurred Named and numbered storms 13 $ 191,473 33.6 % All other catastrophe loss events 33 78,402 13.7 % Total 46 $ 269,875 47.3 % (1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves.
Personal Lines Operating Segment Impact Number of Events Incurred Loss and Loss adjustment expense (LAE) (1) Combined Ratio Impact December 31, 2023 Current period catastrophe losses incurred Named and numbered storms 1 $ 129 0.4 % All other catastrophe loss events 13 2,367 8.0 % Total 14 $ 2,496 8.4 % December 31, 2022 Current period catastrophe losses incurred Named and numbered storms 1 $ 8,903 17.7 % All other catastrophe loss events 11 5,618 11.1 % Total 12 $ 14,521 28.8 % December 31, 2021 Current period catastrophe losses incurred Named and numbered storms 3 $ 3,984 8.3 % All other catastrophe loss events 7 2,182 4.6 % Total 10 $ 6,166 12.9 % (1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves.
The remainder of this change can be attributed to rising interest rates and unfavorable market conditions in 2022 resulting in unrealized losses on our investment portfolio. Expenses Expenses for the year ended December 31, 2022 increased $191,730,000, or 26.7%, to $910,298,000, from $718,568,000 for 2021.
The remainder of this change can be attributed to more favorable market conditions in 2023 resulting in decreased unrealized losses on our investment portfolio. Expenses Expenses for the year ended December 31, 2023 decreased $98,805,000, or 33.4%, to $196,811,000, from $295,616,000 for 2022.
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 UNITED INSURANCE HOLDINGS CORP.
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.
General and administrative expenses attributable to our personal lines operating segment increased by $4,391,000, or 9.2%, to $52,318,000 for the year ended December 31, 2022, from $47,927,000 for the year ended December 31, 2021, as the result of impairment of goodwill attributable to our personal lines operating segment of $13,569,000.
General and administrative expenses attributable to our commercial lines operating segment increased by $1,041,000, or 10.9%, to $10,620,000 for the year ended December 31, 2023, from $9,579,000 for the year ended December 31, 2022.
Number of Events Incurred Loss and Loss adjustment expense (LAE) (1) Combined Ratio Impact December 31, 2022 Current period catastrophe losses incurred Named and numbered storms 2 $ 203,896 44.1 % All other catastrophe loss events 38 79,294 17.1 % Total 40 $ 283,190 61.2 % December 31, 2021 Current period catastrophe losses incurred Named and numbered storms 7 $ 35,872 6.1 % All other catastrophe loss events 40 77,868 13.2 % Total 47 $ 113,740 19.3 % December 31, 2020 Current period catastrophe losses incurred Named and numbered storms 13 $ 208,157 27.2 % All other catastrophe loss events 35 86,380 11.3 % Total 48 $ 294,537 38.5 % (1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves.
Number of Events Incurred Loss and Loss adjustment expense (LAE) (1) Combined Ratio Impact December 31, 2023 Current period catastrophe losses incurred Named and numbered storms 2 $ 729 0.3 % All other catastrophe loss events 20 14,550 5.1 % Total 22 $ 15,279 5.4 % December 31, 2022 Current period catastrophe losses incurred Named and numbered storms 2 $ 52,076 19.3 % All other catastrophe loss events 11 5,830 2.2 % Total 13 $ 57,906 21.5 % December 31, 2021 Current period catastrophe losses incurred Named and numbered storms 4 $ 4,142 1.9 % All other catastrophe loss events 10 11,554 5.2 % Total 14 $ 15,696 7.1 % (1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves.
General and administrative expenses attributable to our commercial lines operating segment increased by $1,980,000, or 26.1%, to $9,579,000 for the year ended December 31, 2022, from $7,599,000 for the year ended December 31, 2021. This increase was driven by a $1,131,000 increase of allocated external fees related to legal, audit, actuarial and tax services provided during the year.
This increase was driven by a $1,144,000 increase of allocated external fees related to legal, audit, actuarial and tax services provided during the year. 39 AMERICAN COASTAL INSURANCE CORPORATION Personal Lines Operating Segment Results Pretax losses attributable to our personal lines operating segment for the year ended December 31, 2023 decreased by $38,300,000 to a pretax loss of $13,854,000, compared to a pretax loss of $52,154,000 for the year ended December 31, 2022.
We are also licensed to write property and casualty insurance in an additional six states; however, we have not commenced writing or no longer write in these states. 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.
Our Company’s primary source of revenue is generated from writing insurance in Florida and New York. 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.
In addition, we experienced a decline in written premiums across the personal lines business, due to underwriting actions taken throughout 2021 and 2022. The breakdown of the year-over-year changes in both direct and assumed written premiums by region and gross written premium by line of business are shown in the table below.
This was offset by a decrease in written premiums across the personal lines business, driven by the cancellation of the quota share with our former subsidiary, UPC. The breakdown of the year-over-year changes in both direct and assumed written premiums by state and gross written premium by line of business are shown in the table below.
Ceded premiums earned attributable to our commercial lines operating segment increased by $8,237,000 or 3.5%, to $245,293,000 for the year ended December 31, 2022 from $237,056,000 for the year ended December 31, 2021.
(2) We are no longer writing in Texas or South Carolina as of May 31, 2022. Ceded premiums earned attributable to our commercial lines operating segment increased by $97,371,000 or 39.7%, to $342,664,000 for the year ended December 31, 2023 from $245,293,000 for the year ended December 31, 2022.
The increase is primarily driven by a $8,621,000 increase in ceded premiums earned from our quota share agreements, driven by the increase in gross written premium, described above resulting in increased cessions to these contracts during 2022. 43 UNITED INSURANCE HOLDINGS CORP.
The increase is primarily driven by a $60,804,000 increase in ceded premiums earned from our quota share agreements, driven by changes to our quota share reinsurance contracts resulting in increased cessions to these contracts during 2023. In addition, costs of our core catastrophe reinsurance program increased year-over-year.
The increase in pretax earnings was primarily due to an increase in revenue driven by increased gross written premium described below. This increase was partially offset by increased loss & LAE expense for the year as a result of Hurricane Ian making landfall in Florida as a category four hurricane.
The increase in pretax earnings was primarily due to an increase in revenue driven by increased gross written premium described below. This was partially offset by increased ceded premiums, driven by the changes in our quota share contracts. In addition, all of our expenses related to commercial lines decreased year-over-year, as described below.
New and Renewal Policies (1) By State 2022 2021 Change Florida 5,497 6,131 (634) Texas 32 99 (67) South Carolina 2 30 (28) Total 5,531 6,260 (729) (1) Only includes new and renewal commercial policies written during the year.
(2) Assumed premium written for 2023 and 2022 is primarily commercial property business assumed from unaffiliated insurers. 37 AMERICAN COASTAL INSURANCE CORPORATION New and Renewal Policies (1) by State (2) 2023 2022 Change Florida 4,255 5,497 (1,242) Texas — 32 (32) South Carolina — 2 (2) Total 4,255 5,531 (1,276) (1) Only includes new and renewal commercial policies written during the year.
A primary liquidity concern with respect to these cash flows is the risk of large magnitude catastrophe events. During the year ended December 31, 2022, several balance sheet items were impacted by Hurricane Ian, which made landfall in the state of Florida as a category four hurricane.
A primary liquidity concern with respect to these cash flows is the risk of large magnitude catastrophe events. During the year ended December 31, 2023, we experienced cash outflows of $136,003,000 compared to outflows of $173,113,000 during the year ended December 31, 2022.
($ in thousands) Year ended December 31, 2022 2021 Change Net loss and LAE $ 550,504 $ 367,416 $ 183,088 % of Gross earned premiums 72.5 % 36.8 % 35.7 pts % of Net earned premiums 225.9 % 88.2 % 137.7 pts Less: Current year catastrophe losses $ 239,805 $ 104,210 $ 135,595 Prior year reserve unfavorable (favorable) development 120,535 32,209 88,326 Underlying loss and LAE (1) $ 190,164 $ 230,997 $ (40,833) % of Gross earned premiums 25.1 % 23.1 % 2.0 pts % of Net earned premiums 78.0 % 55.5 % 22.5 pts (1) Underlying loss and LAE is a non-GAAP financial measure and is reconciled above to net loss and LAE, the most directly comparable GAAP measure.
($ in thousands) Year ended December 31, 2023 2022 Change Net loss and LAE $ 16,562 $ 47,662 $ (31,100) % of Gross earned premiums 40.2 % 67.0 % (26.8) pts % of Net earned premiums 55.5 % 94.5 % (39.0) pts Less: Current year catastrophe losses $ 2,496 $ 14,521 $ (12,025) Prior year reserve unfavorable (favorable) development 400 (2,970) 3,370 Underlying loss and LAE (1) $ 13,666 $ 36,111 $ (22,445) % of Gross earned premiums 33.1 % 50.7 % (17.6) pts % of Net earned premiums 45.8 % 71.6 % (25.8) pts (1) Underlying loss and LAE is a non-GAAP financial measure and is reconciled above to net loss and LAE, the most directly comparable GAAP measure.
($ in thousands) Year ended December 31, 2022 2021 Change Net loss and LAE $ 637,647 $ 422,134 $ 215,513 % of Gross earned premiums 52.1 % 30.0 % 22.1 pts % of Net earned premiums 137.8 % 71.6 % 66.2 pts Less: Current year catastrophe losses $ 283,190 $ 113,740 $ 169,450 Prior year reserve unfavorable development 112,636 27,856 84,780 Underlying loss and LAE (1) $ 241,821 $ 280,538 $ (38,717) % of Gross earned premiums 19.8 % 19.9 % (0.1) pts % of Net earned premiums 52.3 % 47.6 % 4.7 pts (1) Underlying loss and LAE is a non-GAAP financial measure and is reconciled above to net loss and LAE, the most directly comparable GAAP measure.
($ in thousands) Year ended December 31, 2023 2022 Change Net loss and LAE $ 62,861 $ 134,805 $ (71,944) % of Gross earned premiums 9.9 % 25.2 % (15.3) pts % of Net earned premiums 22.3 % 50.0 % (27.7) pts Less: Current year catastrophe losses $ 15,279 $ 57,906 $ (42,627) Prior year reserve favorable development (12,294) (10,869) (1,425) Underlying loss and LAE (1) $ 59,876 $ 87,768 $ (27,892) % of Gross earned premiums 9.4 % 16.4 % (7.0) pts % of Net earned premiums 21.2 % 32.6 % (11.4) pts (1) Underlying loss and LAE is a non-GAAP financial measure and is reconciled above to net loss and LAE, the most directly comparable GAAP measure.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+3 added−8 removed6 unchanged
Biggest changeThe unrealized gains or losses related to our equity securities are recorded on the income statement per the guidance in ASU 2016-01. INTEREST RATE RISK Fixed-income securities are sensitive to potential losses resulting from unfavorable changes in interest rates. We manage the risk by analyzing anticipated movements in interest rates and considering our future capital and liquidity requirements.
Biggest changeThe unrealized gains or losses related to our equity securities are recorded on the income statement per the guidance in ASU 2016-01. INTEREST RATE RISK Fixed-income securities are sensitive to potential losses resulting from unfavorable changes in interest rates.
Based on our analysis, a 300-basis point decrease or increase in interest rates from the December 31, 2022 rates would have a material impact on our results of operations and cash flows in the event divesting of these holdings was necessary.
Based on our analysis, a 300-basis point decrease or increase in interest rates from the December 31, 2023 rates would have a material impact on our results of operations and cash flows in the event divesting of these holdings was necessary.
We are unable to predict the use of alternate reference rates and corresponding interest rate risk at this time. CREDIT RISK Credit risk can expose us to potential losses arising principally from adverse changes in the financial condition of the issuer of our fixed-maturity securities.
However, we do not anticipate the need to sell securities in an unrealized loss position as of December 31, 2023. CREDIT RISK Credit risk can expose us to potential losses arising principally from adverse changes in the financial condition of the issuer of our fixed-maturity securities.
Removed
The following table illustrates the impact of hypothetical changes in interest rates on the fair value of our fixed-income securities at December 31, 2022 and 2021: 57 UNITED INSURANCE HOLDINGS CORP.
Added
We manage the risk by analyzing anticipated movements in interest rates and considering our future capital and liquidity requirements. 54 AMERICAN COASTAL INSURANCE CORPORATION The following table illustrates the impact of hypothetical changes in interest rates on the fair value of our fixed-income securities at December 31, 2023 and 2022: Percentage Increase Change in (Decrease) in Estimated Estimated Estimated Hypothetical Change in Interest Rates Fair Value Fair Value Fair Value 2023 300 basis point increase $ 161,844 $ (18,859) (10.4) % 200 basis point increase 168,124 (12,579) (7.0) 100 basis point increase 174,408 (6,295) (3.5) Fair value 180,703 — — 100 basis point decrease 186,989 6,286 3.5 200 basis point decrease 193,285 12,582 7.0 300 basis point decrease $ 199,580 $ 18,877 10.4 % 2022 300 basis point increase $ 179,372 $ (25,310) (12.4) % 200 basis point increase 187,803 (16,879) (8.2) 100 basis point increase 196,240 (8,442) (4.1) Fair value 204,682 — — 100 basis point decrease 213,131 8,449 4.1 200 basis point decrease 221,586 16,904 8.3 300 basis point decrease $ 230,032 $ 25,350 12.4 % Our calculations of the potential effects of hypothetical interest rate changes are based on several assumptions, including maintenance of the existing composition of fixed-income investments, and should not be considered indicative of future results.
Removed
Percentage Increase Change in (Decrease) in Estimated Estimated Estimated Hypothetical Change in Interest Rates Fair Value Fair Value Fair Value 2022 300 basis point increase $ 332,474 $ (43,989) (11.7) % 200 basis point increase 347,123 (29,340) (7.8) 100 basis point increase 361,783 (14,680) (3.9) Fair value 376,463 — — 100 basis point decrease 391,134 14,671 3.9 200 basis point decrease 405,825 29,362 7.8 300 basis point decrease $ 420,443 $ 43,980 11.7 % 2021 300 basis point increase $ 585,416 $ (78,186) (11.8) % 200 basis point increase 611,472 (52,130) (7.9) 100 basis point increase 637,534 (26,068) (3.9) Fair value 663,602 — — 100 basis point decrease 689,131 25,529 3.8 200 basis point decrease 707,396 43,794 6.6 300 basis point decrease $ 711,488 $ 47,886 7.2 % Our calculations of the potential effects of hypothetical interest rate changes are based on several assumptions, including maintenance of the existing composition of fixed-income investments, and should not be considered indicative of future results.
Added
We mitigate this risk by generally investing in investment grade securities and by diversifying our investment portfolio to avoid concentrations in any single issuer or market sector. 55 AMERICAN COASTAL INSURANCE CORPORATION The following table presents the composition of our fixed-income security portfolio by rating at December 31, 2023 and 2022: % of Total Amortized Amortized % of Total Comparable Rating Cost Cost Fair Value Fair Value 2023 AAA $ 51,217 25.5 % $ 45,272 25.1 % AA+, AA, AA- 62,495 31.1 58,605 32.4 A+, A, A- 52,741 26.2 46,427 25.7 BBB+, BBB, BBB- 34,298 17.1 30,213 16.7 BB+, BB, BB- 200 0.1 186 0.1 Total $ 200,951 100.0 % $ 180,703 100.0 % 2022 AAA $ 60,189 25.3 % $ 52,892 25.8 % AA+, AA, AA- 39,834 16.8 34,917 17.1 A+, A, A- 86,587 36.4 74,131 36.3 BBB+, BBB, BBB- 50,277 21.1 42,034 20.5 BB+, BB, BB- 848 0.4 708 0.3 Total $ 237,735 100.0 % $ 204,682 100.0 % In addition, we are exposed to credit risk through our reinsurance program.
Removed
However, we do not anticipate the need to sell securities in an unrealized loss position as of December 31, 2022. In line with the anticipated LIBOR phase out, the last one-week and two-month LIBOR settings were published on December 31, 2021. However, the Intercontinental Exchange will continue to publish one-month, three-month, six-month and twelve-month LIBOR settings through 2023.
Added
For more information regarding our credit loss allowance, please refer to Note 14 . 56 AMERICAN COASTAL INSURANCE CORPORATION
Removed
We mitigate this risk by generally investing in investment grade securities and by diversifying our investment portfolio to avoid concentrations in any single issuer or market sector.
Removed
The following table presents the composition of our fixed-income security portfolio by rating at December 31, 2022 and 2021: 58 UNITED INSURANCE HOLDINGS CORP. % of Total Amortized Amortized % of Total Comparable Rating Cost Cost Fair Value Fair Value 2022 AAA $ 78,033 19.1 % $ 70,735 18.8 % AA+, AA, AA- 124,602 30.3 119,686 31.8 A+, A, A- 139,631 34.1 127,176 33.8 BBB+, BBB, BBB- 66,211 16.2 57,967 15.4 BB+, BB, BB- 1,040 0.3 899 0.2 Total $ 409,517 100.0 % $ 376,463 100.0 % 2021 AAA $ 125,869 18.7 % $ 124,370 18.7 % AA+, AA, AA- 214,542 31.9 210,900 31.8 A+, A, A- 218,407 32.5 216,778 32.7 BBB+, BBB, BBB- 112,244 16.7 110,469 16.6 BB+, BB, BB- 1,077 0.2 1,085 0.2 Total $ 672,139 100.0 % $ 663,602 100.0 % In addition, we are exposed to credit risk through our reinsurance program.
Removed
For more information regarding our credit loss allowance, please refer to Note 13 . EQUITY PRICE RISK Our equity investment portfolio at December 31, 2022 consisted of common stocks and non-redeemable preferred stocks. We may incur potential losses due to adverse changes in equity security prices. We manage this risk primarily through industry and issuer diversification and asset allocation techniques.
Removed
During 2022, we increased our equity portfolio from 5.4% of our total investments (excluding cash, restricted cash and cash equivalents) at December 31, 2021 to 9.0% of our total investments (excluding cash, restricted cash and cash equivalents) at December 31, 2022. 59 UNITED INSURANCE HOLDINGS CORP.
Removed
The following table illustrates the composition of our equity portfolio at December 31, 2022 and 2021: % of Total Stocks by Sector Fair Value Fair Value 2022 Funds $ 35,485 90.9 % Financial 2,867 7.4 Utilities 551 1.4 Industrial 117 0.3 Total $ 39,020 100.0 % 2021 Funds $ 33,064 87.1 % Financial 3,723 9.8 Utilities 1,008 2.7 Industrial 163 0.4 Total $ 37,958 100.0 % 60 UNITED INSURANCE HOLDINGS CORP.

Other ACIC 10-K year-over-year comparisons