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What changed in AMERICAN COASTAL INSURANCE Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AMERICAN COASTAL INSURANCE Corp's 2023 and 2024 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 2024 report.

+318 added−343 removedSource: 10-K (2025-03-10) vs 10-K (2024-03-15)

Top changes in AMERICAN COASTAL INSURANCE Corp's 2024 10-K

318 paragraphs added · 343 removed · 248 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

58 edited+9 added−7 removed40 unchanged
Biggest change(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.
Biggest changeEffective June 1, 2022, we merged JIC into AmCoastal, with AmCoastal being the surviving entity. On May 9, 2024, the Company entered into a Stock Purchase Agreement (the "Sale Agreement") with Forza Insurance Holdings, LLC ("Forza") in which ACIC will sell and Forza will acquire 100% of the issued and outstanding stock of IIC.
Governance Matters Our Board of Directors oversee and monitor our management in the interest and for the benefit of our stockholders. Our Board is currently comprised of nine directors, divided into two classes. Each class of directors is elected for a two-year term, in accordance with our Certificate of Incorporation.
Governance Matters Our Board of Directors oversee and monitor our management in the interest and for the benefit of our stockholders. Our Board of Directors is currently comprised of nine directors, divided into two classes. Each class of directors is elected for a two-year term, in accordance with our Certificate of Incorporation.
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).
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 SEC.
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.
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 through a network of independent agencies managed by AmRisc that specialize in commercial residential insurance.
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.
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 property and casualty insurance business with investments in the United States.
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.
Personal residential products are offered in 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.
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.
Commercial Residential Products We 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 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.
These regulations: (i) created “market assistance plans” under which insurers are induced to provide certain coverage; (ii) restrict the ability of insurers to reject insurance coverage applications, to rescind or otherwise cancel certain policies in mid-term, and to terminate agents; (iii) restrict certain policy non-renewals and require advance notice on certain policy non-renewals; and (iv) limit rate increases or decrease rates permitted to be charged.
These regulations: (i) create “market assistance plans” under which insurers are induced to provide certain coverage; (ii) restrict the ability of insurers to reject insurance coverage applications, to rescind or otherwise cancel certain policies in mid-term, and to terminate agents; (iii) restrict certain policy non-renewals and require advance notice on certain policy non-renewals; and (iv) limit rate increases or decrease rates permitted to be charged.
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).
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. 11 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).
As a result, we have taken the following steps to improve our environmental footprint and reduce our contribution to climate change: • Reducing waste: paperless policy document delivery option and investment in paperless technologies; • Eco-friendly disposal of retired equipment and electronics; • Installed filtered water dispensers to promote re-usable bottles over disposables; • Utilization of recycling bins throughout our offices; • Implemented a remote work environment to both enhance productivity and curb the impact of daily commuting; and • Use of energy efficient LED lighting, motion-activated lighting, and programmable thermostats to reduce energy use.
As a result, we have taken the following steps to improve our environmental footprint and reduce our contribution to climate change: • Reducing waste: paperless policy document delivery option and investment in paperless technologies; • Eco-friendly disposal of retired equipment and electronics; • Installed filtered water dispensers throughout our offices to promote re-usable bottles over disposables; • Utilization of recycling bins throughout our offices; • Maintenance of a hybrid and remote work environment to both enhance productivity and curb the impact of daily commuting; and • Use of energy-efficient LED lighting, motion-activated lighting, and programmable thermostats to reduce energy use.
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.
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, 2024 are listed below.
We seek to optimize our portfolio by managing our probable maximum loss, total insured value and average annual loss. As part of this optimization process, we use the output from third-party modeling software to analyze our risk exposures, including wind exposures, by zip code or street address.
We seek to optimize our portfolio by managing our probable maximum loss (PML), total insured value (TIV) and average annual loss. As part of this optimization process, we use the output from third-party modeling software to analyze our risk exposures, including wind exposures, by zip code or street address.
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.
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, 2024 and how this diversity has changed from December 31, 2023.
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.
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.
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
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. 14 AMERICAN COASTAL INSURANCE CORPORATION
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).
Not-At-Risk Offerings On our equipment breakdown, identity theft and cybersecurity 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).
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.
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 4 of the Notes to Consolidated Financial Statements below.
With 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 .
With 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 BBB+ ACIC BB+ 5 AMERICAN COASTAL INSURANCE CORPORATION Our Strategy Our vision is to be a top-quartile underwriter of catastrophe-exposed property insurance .
There is intense competition in our industry which could lead to higher than expected employee turnover or difficulty attracting new employees. Finally, technological advancements and innovation in the insurance industry provide opportunities for a competitive advantage. Advancements and innovation are being used in all aspects of the industry including digital-based distribution methods, underwriting and claims handling.
There is intense competition in our industry which could lead to higher-than-expected employee turnover or difficulty attracting new employees. Finally, technological advancements and innovation in the insurance industry provide opportunities for a competitive advantage. Advancements and innovation are being used in all aspects of the industry 9 AMERICAN COASTAL INSURANCE CORPORATION including digital-based distribution methods, underwriting and claims handling.
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.
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 factor is that we must attract and retain key employees and highly skilled people in order to be successful in the market.
We believe we have built significant credibility and loyalty with the independent agent communities in the states in which we operate through (i) our extensive training for full-service insurance agencies that distribute our products and (ii) periodic business reviews using established benchmarks and goals for premium volume and profitability.
We believe we have built significant credibility and loyalty with the independent agent communities in the states in which we 7 AMERICAN COASTAL INSURANCE CORPORATION operate through (i) our extensive training for full-service insurance agencies that distribute our products and (ii) periodic business reviews using established benchmarks and goals for premium volume and profitability.
Risk-Based Capital Requirements To enhance the regulation of insurer solvency, the NAIC has published risk-based capital (RBC) guidelines for insurance companies designed to assess capital adequacy and to raise the level of protection statutory surplus provides for policyholders.
Risk-Based Capital Requirements To enhance the regulation of insurer solvency, the National Association of Insurance Commissioners (NAIC) has published risk-based capital (RBC) guidelines for insurance companies designed to assess capital adequacy and to raise the level of protection statutory surplus provides for policyholders.
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.
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 5.9% for the year ended December 31, 2024. CORPORATE INFORMATION American Coastal Insurance Corporation was incorporated in Delaware in 2007.
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.
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. 10 AMERICAN COASTAL INSURANCE CORPORATION The level of required RBC 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. 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.
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.
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.
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.
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.
Statutory RBC 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 RBC requirements.
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.
Subsidiary RBC Ratio AmCoastal 1,470 % IIC 461 % 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.
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.
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 2024, commercial policies produced written premium of $647,805,000 and accounted for 94.2% of our total gross written premium.
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.
The table below outlines each of our subsidiaries’ RBC ratios, all of which were in excess of minimum requirements, as of December 31, 2024.
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.
The graphs below show our product mix distribution based on gross written premium, including our premiums attributable to IIC, but excluding UPC, which is no longer a subsidiary of the Company. 6 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.
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 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 570 Carillon Parkway, Suite 100, St. Petersburg, FL 33716 and our telephone number at that location is (727) 633-0851.
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.
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.
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.
HUMAN CAPITAL MANAGEMENT Diversity and Employment Statistics As of December 31, 2024, we had 65 full-time employees, of which 15 worked in our Claims Department, and 5 worked in our Sales and Underwriting Department, 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.
PRODUCTS AND DISTRIBUTION In July 2020, we implemented a strategy to de-risk the Company by reducing premiums and exposure from our personal lines portfolio that was offset with growth in our commercial lines portfolio. Upon closing of the sale of IIC, we will have completed our exit of the personal lines market.
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.
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. These values and the expectations of our people are outlined within our code of conduct, which is reviewed by all team members.
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.
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 the definitive agreements to sell IIC and our desire to focus on commercial lines, we expect AmCoastal to be our only operating insurance subsidiary following the sale of IIC.
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.
GEOGRAPHIC MARKETS The table below shows the geographic distribution of our policies in-force as of December 31, 2024, 2023 and 2022, including our policies in-force attributable to IIC, but excluding UPC, which is no longer a subsidiary of the Company. The graphs below exclude states with policies that are less than 0.2% of our total policies in-force.
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.
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.
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.
Gender (1) Change from December 31, 2023 Race (1) Change from December 31, 2023 Executive Officers 28.6% 8.6 points 28.6% (11.4) points Management Team (2) 38.7% (6.0) points 6.5% (8.4) points All Other Employees 48.1% 6.0 points 22.2% 6.4 points (1) Information regarding gender and race is based on information provided by employees.
Policies In-Force By State (1) 2023 2022 2021 New York 18,640 35,868 43,529 Florida 4,208 5,348 5,909 Texas — 26 88 South Carolina — — 28 Total 22,848 41,242 49,554 (1) We are no longer writing in Texas or South Carolina as of May 31, 2022. 7 AMERICAN COASTAL INSURANCE CORPORATION The table below shows the geographic distribution of our total insured value (TIV) of all polices in-force as of December 31, 2023, 2022 and 2021, excluding our policies attributable to discontinued operations.
Policies In-Force By State (1) 2024 2023 2022 New York 18,961 18,640 35,868 Florida 4,099 4,208 5,348 Texas — — 26 Total 23,060 22,848 41,242 (1) We are no longer writing in Texas as of May 31, 2022. 8 AMERICAN COASTAL INSURANCE CORPORATION The table below shows the geographic distribution of our TIV of all polices in-force as of December 31, 2024, 2023 and 2022, including TIV attributable to IIC, but excluding UPC, which is no longer a subsidiary of the Company.
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.
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, and IIC in April 2016, and our strategic partnership with a subsidiary of Tokio Marine Kiln Group Limited (Tokio Marine), which formed Journey Insurance Company (JIC) in August 2018.
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.
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.
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 addition, in connection with the filed plan of withdrawal in New York for our former insurance subsidiary, UPC, our subsidiary, IIC, agreed not to pay ordinary dividends until January 1, 2025, without the prior approval of the NYDFS. For additional information regarding those restrictions, see Part II, Item 5 and Part I, Item 1A of this report.
Environmental Matters As a data driven organization some of the facts surrounding climate change have our attention.
Highlights from our Company-wide ESG practices can also be seen below. Environmental Matters As a data driven organization, some of the facts surrounding climate change have our attention.
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.
The Company has 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.
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.
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 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.
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.
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.
ACIC continuously monitors our environmental footprint and will continue to make steps to reduce this footprint where possible. Previously, we made an aspirational commitment to achieve net-zero carbon emissions in our operations and through our value chain by no later than 2030.
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.
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. 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.
AmRisc, LLC is an unaffiliated third-party and represents 100% of our commercial lines revenue based on our exclusive agreement in Florida.
AmRisc is an unaffiliated third party and represents 100% of our commercial lines revenue based on our exclusive agreement in Florida. As of December 31, 2024, we marketed and distributed our personal lines policies to consumers through approximately 400 independent agencies.
TIV By State (1) 2023 2022 2021 Florida $ 56,340,145 $ 68,961,070 $ 72,638,543 New York 13,255,735 26,697,590 32,012,956 Texas — 615,670 372,633 South Carolina — — 1,650,412 Total $ 69,595,880 $ 96,274,330 $ 106,674,544 (1) We are no longer writing in Texas or South Carolina as of May 31, 2022.
TIV By State (1) 2024 2023 2022 Florida $ 58,868,191 $ 56,340,145 $ 68,961,070 New York 13,522,408 13,255,735 26,697,590 Texas — — 615,670 Total $ 72,390,599 $ 69,595,880 $ 96,274,330 (1) We are no longer writing in Texas as of May 31, 2022. COMPETITION The property and casualty insurance market in the United States is highly competitive and rapidly changing.
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.
In addition, in January 2024, we appointed a new female leader from outside of our organization to serve as our Chief Financial Officer.
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.
In 2024, personal residential property policies (by which we mean both standard homeowners’, dwelling fire, renters’ and condo owners’ policies) produced written premium of $39,704,000 and accounted for 5.8% of our total gross written premium. Loss and loss adjustment expenses related to our personal residential products tend to be higher during periods of severe or inclement weather.
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.
For more information regarding our products and distribution, as well as the agreements in place with managing general agents and underwriters, please refer to Part 1 Item 1. “ Products and Distribution” as well as Part 1 Item 1. “Insurance Holding Company Regulation”.
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.
To show our commitment to conducting business that supports ESG matters, in the third quarter of 2024 we published our 2024 ESG Highlights, which outlines key decisions and accomplishments made by the Company during 2024. These highlights are available on the Investor Relations page of our company website under “ESG”.
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).
We are listed on the Nasdaq stock exchange under ticker symbol “ACIC.” Segments We conduct our operations under one reportable operating segment. Our chief operating decision maker is our President, who makes decisions to allocate resources and assesses performance.
Removed
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.
Added
The aggregate purchase price for the shares will be equal to IIC's GAAP shareholder’s equity on the closing date. Closing is subject to customary closing conditions, including New York Department of Financial Services ("NYDFS") approval of Forza's application for acquisition of control, and NYDFS approval of a new rate and form filing.
Removed
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).
Added
On February 13, 2025, Forza’s application to acquire IIC was approved by the NYDFS. The Company and Forza have agreed to close on April 1, 2025.
Removed
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.
Added
Given IIC is our last remaining personal lines entity and represents the final step in our strategic shift to becoming a specialty commercial underwriter, IIC results of operations and assets and liabilities are captured within discontinued operations and can be seen in Note 4 of the Notes to Consolidated Financial Statements below.
Removed
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.
Added
In 2023, the FLOIR notified the Company of a statutory financial examination of AmCoastal as of December 31, 2023, which commenced in 2024, is scheduled to conclude prior to June 30, 2025, and has had no significant findings to date.
Removed
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.
Added
While we continue to evaluate data and guidance as it becomes clearer, we believe further analysis and strategy is necessary than we initially believed. As a result, we may need to change or recalibrate our goals in line with improved data and as climate science, regulatory requirements and market practices regarding standards, methodologies and measurements evolve.
Removed
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.
Added
Our climate risk analysis and strategy remain under development and subject to evolution over time. As such, as of December 31, 2024, we cannot provide a timeline for achieving a net-zero carbon emission commitment. 12 AMERICAN COASTAL INSURANCE CORPORATION Social Responsibility We understand that research shows diverse teams perform better, innovate more and are more effective at managing risks.
Removed
“ Products and Distribution” as well as Part 1 Item 1. “Insurance Holding Company Regulation”.
Added
In 2024, the Company made donations to the Volunteer Florida Foundation and the Community Foundation Tampa Bay Rapid Response Fund, totaling $150,000 for local disaster relief needed due to Hurricanes Helene and Milton. Over the past several years we have provided support to numerous non-for-profit organizations.
Added
All members of these committees qualify as independent directors under Securities and Exchange Commission (SEC) and Nasdaq standards, as well as under the independence standards specific to their committees. Our Nominating and Corporate Governance Committee is responsible for oversight of our ESG processes and initiatives.
Added
With three of the seven members of our executive leadership team as of December 31, 2024, comprised of underrepresented groups, we believe this is strong evidence of our commitment to our ESG goals. 13 AMERICAN COASTAL INSURANCE CORPORATION 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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

71 edited+23 added−18 removed118 unchanged
Biggest changeOur efforts to manage these risks through underwriting guidelines, collateral requirements, financial strength ratings and other oversight mechanisms may not be successful. As a result, our exposure to counterparty risk under our reinsurance agreements may have a material adverse effect on our results of operations, financial condition and cash flow.
Biggest changeA 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. 22 AMERICAN COASTAL INSURANCE CORPORATION Our efforts to manage these risks through underwriting guidelines, collateral requirements, financial strength ratings and other oversight mechanisms may not be successful.
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.
Department of Treasury to collect data on the insurance industry, recommend changes to the state system of insurance regulation and preempt certain state insurance laws.
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.
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 covenants 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.
Such strategic transactions could pose numerous risks to our operations, including risks relating to: • incurring substantial unanticipated integration costs; • diverting significant management attention and financial resources from our other operations and disrupting our ongoing business during the integration process; • losing key employees, particularly those of the merged operations; • keeping existing customers and retaining the merged business’ customers; • failing to realize the strategic benefits or the potential cost savings or other financial benefits of the mergers; • incurring unanticipated liabilities or claims from the acquired businesses and contractually-based time and monetary limitations on the seller’s obligation to indemnify us for such liabilities or claims; and • limitations on our ability to access additional capital when needed.
Such strategic transactions could pose numerous risks to our operations, including risks relating to: • incurring substantial unanticipated integration costs; • diverting significant management attention and financial resources from our other operations and disrupting our ongoing business during the integration process; • losing key employees, particularly those of the merged operations; • keeping existing customers and retaining the acquired or merged business’ customers; • failing to realize the strategic benefits, the potential cost savings or other financial benefits of the acquisitions or mergers; • incurring unanticipated liabilities or claims from the acquired businesses and contractually-based time and monetary limitations on the seller’s obligation to indemnify us for such liabilities or claims; and • limitations on our ability to access additional capital when needed.
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.
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 perform their duties in accordance with applicable law, could impact our financial position.
Even if we enter into an agreement in respect of a merger with another business, disposition of a business or other strategic transaction, we may not be able to finalize a transaction after significant investments of time and resources due to, among other things, a lack of regulatory approval or imposition of a burdensome condition by the regulator.
Even if we enter into an agreement in respect of an acquisition of another business, merger with another business, disposition of a business or other strategic transaction, we may not be able to finalize a transaction after significant investments of time and resources due to, among other things, a lack of regulatory approval or imposition of a burdensome condition by the regulator.
Peed has the ability to exert significant influence over the following: • the nomination, election and removal of our Board of Directors; • the adoption of amendments to our charter documents; • management and policies; • our day-to-day operations; and • the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets.
Peed has the ability to exert significant influence over the following: • the nomination, election and removal of our Board of Directors; • the adoption of amendments to our charter documents; • management and policies; • our day-to-day operations; and • the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including acquisitions, mergers, consolidations and the sale of all or substantially all of our assets.
We may be unable to reduce per event or aggregate retentions when renewing or replacing our coverage due, in part, to the frequency of storms in prior years and the litigation trends in the state of Florida, which would increase our risk exposure and could ultimately lead to us paying higher claims.
We may be unable to reduce per event or aggregate retentions when renewing or replacing our coverage due, in part, to the frequency and severity of storms in prior years and the litigation trends in the state of Florida, which would increase our risk exposure and could ultimately lead to us paying higher claims.
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.
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.
Part of our continuing business strategy is to evaluate opportunities to merge with companies that complement our business model or enter into other strategic transactions that facilitate or expedite the accomplishment of our business goals. We may be unable to identify suitable counterparties to such a transaction.
Part of our continuing business strategy is to evaluate opportunities to acquire companies or merge with companies that complement our business model or enter into other strategic transactions that facilitate or expedite the accomplishment of our business goals. We may be unable to identify suitable counterparties to such a transaction.
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.
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, 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 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.
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 and severity of catastrophe events in recent years.
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.
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. 15 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.
Our mergers, dispositions and other strategic transactions may not be as successful as we anticipate, and could be difficult to integrate, divert management resources, result in unanticipated costs or dilute our existing stockholders.
Our acquisitions, mergers, dispositions and other strategic transactions may not be as successful as we anticipate, and could be difficult to integrate, divert management resources, result in unanticipated costs or dilute our existing stockholders.
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.
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 majority 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.
In connection with a merger, disposition or other strategic transaction, we could incur debt, amortization expenses related to intangible assets, large and immediate write-offs, assume liabilities or issue stock that would dilute our current stockholders’ percentage of ownership. As a result, there is a risk of transaction-related litigation.
In connection with an acquisition, merger, disposition or other strategic transaction, we could incur debt, amortization expenses related to intangible assets, large and immediate write-offs, assume liabilities or issue stock that would dilute our current stockholders’ percentage of ownership. As a result, there is a risk of transaction-related litigation.
We are also subject to a certain level of risk regarding the actual condition of the businesses that we acquire. Until we actually assume operating control of such businesses and their assets and operations, we may not be able to ascertain the actual value or understand the potential liabilities of the acquired entities and their operations.
We are also subject to a certain level of risk regarding the actual condition of the businesses that we acquire or merge with. Until we actually assume operating control of such businesses and their assets and operations, we may not be able to ascertain the actual value or understand the potential liabilities of the acquired entities and their operations.
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.
If our reserves are inadequate, it may cause us to overstate our earnings for the periods during which our reserves for expected losses were insufficient and result in higher losses in future periods. We may experience government-levied assessments.
In October 2017, the National Association of Insurance Commissioners (NAIC) adopted a new Insurance Data Security Model Law, which is intended to establish the standards for data security and standards for the investigation and notification of data breaches applicable to insurance licensees in states adopting such law, with provisions that are generally consistent with the NYDFS cybersecurity regulation.
In October 2017, the NAIC adopted a new Insurance Data Security Model Law, which is intended to establish the standards for data security and standards for the investigation and notification of data breaches applicable to insurance licensees in states adopting such law, with provisions that are generally consistent with the NYDFS cybersecurity regulation.
As a result, we may face certain operating, financial, legal, regulatory, compliance and other risks relating to these entities, including, but not limited to, risks related to the financial strength of other investors; the willingness of other investors to provide adequate funding for the entity; differing goals, strategies, priorities or objectives between us and other investors; our inability to unilaterally implement actions, policies or procedures with respect to the entity that we believe are favorable; legal and regulatory compliance risks relating to actions of the entity or other investors; and the risk that we will be unable to resolve disputes with other investors.
As a result, we may face certain operating, financial, legal, regulatory, compliance and other risks relating to these entities, including, but not limited to, risks related to the financial strength of other investors; the willingness of other investors to provide adequate funding for the entity; differing goals, 19 AMERICAN COASTAL INSURANCE CORPORATION strategies, priorities or objectives between us and other investors; our inability to unilaterally implement actions, policies or procedures with respect to the entity that we believe are favorable; legal and regulatory compliance risks relating to actions of the entity or other investors; and the risk that we will be unable to resolve disputes with other investors.
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.
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 FLOIR by 250% generally, and 500% for violations stemming from a state of emergency such as a hurricane.
Our business is highly dependent upon our information technology systems and the ability of key vendors and third-party administrators’ to perform necessary business functions efficiently and without interruption.
Our business is highly dependent upon our information technology systems and the ability of key vendors and third-party administrators to perform necessary business functions efficiently and without interruption.
These dispositions pose risks to our operations in addition to those previously mentioned, including risks related to: • the ability to price a sale transaction appropriately and otherwise negotiate acceptable terms; • the ability to replace legacy earnings from the business position with new revenues; • the ability to collect proceeds from the disposition in a timely manner, which may be earmarked for other strategic transactions and may hinder our ability to carry out those strategic transactions; and • the ability to run-off segments of our business while staying compliant with all applicable regulatory requirements.
These dispositions pose risks to our operations in addition to those previously mentioned, including risks related to: • the ability to price a sale transaction appropriately and otherwise negotiate acceptable terms; • the ability to replace legacy earnings from the business position with new revenues; • the ability to collect proceeds from the disposition in a timely manner, which may be earmarked for other strategic transactions and may hinder our ability to carry out those strategic transactions; and • the ability to complete these transactions while staying compliant with all applicable regulatory requirements.
The potential impact on our business as a result of the Dodd-Frank Act and the FIO’s current and future recommendations remains unclear; however, the implementation of any federal insurance regulations that constrain our business opportunities or reduce investment flexibility could negatively impact our business. In recent years, the state insurance regulatory framework has come under increased federal scrutiny.
The potential impact on our business as a result of the Dodd-Frank Act and the FIO’s current and future recommendations remains unclear; however, the implementation of any federal insurance regulations that constrain our business opportunities or reduce investment flexibility could negatively impact our business. 21 AMERICAN COASTAL INSURANCE CORPORATION In recent years, the state insurance regulatory framework has come under increased federal scrutiny.
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.
As of December 31, 2024, 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 financing or other share issuances by us could adversely affect the market price of our common stock.
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.
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.
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.
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.
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.
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.
Although we may have the ability to collect this assessment from our policyholders, the timing of collection may have a material adverse effect on our results of operations. Our insurance subsidiaries are subject to assessments levied by various governmental and quasi-governmental entities in the states in which we operate.
Although we may have the ability to collect this assessment from our policyholders, the timing of collection may have a material adverse effect on our results of operations. 16 AMERICAN COASTAL INSURANCE CORPORATION Our insurance subsidiaries are subject to assessments levied by various governmental and quasi-governmental entities in the states in which we operate.
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.
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. We may engage in future dispositions or wind-downs of certain 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.
Following the termination or expiration of the MGA contract, AmCoastal’s ability to compete for and solicit renewals of business previously underwritten by AmRisc may be limited by legal, commercial and other impediments, including AmRisc’s relationship with other insurance producers that control the business.
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.
The declaration and payment of dividends are 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 25 AMERICAN COASTAL INSURANCE CORPORATION Board of Directors deems relevant.
The propensity of policyholders and third-party claimants to litigate and the willingness of courts to expand causes of loss and the size of awards may result in increased costs associated with litigation, render our loss reserves inadequate and may be material to our operating results and cash flows for a particular quarter or annual period and to our financial condition.
The propensity of policyholders and third-party claimants to litigate and the willingness of courts to expand causes of loss and the 24 AMERICAN COASTAL INSURANCE CORPORATION size of awards may result in increased costs associated with litigation, render our loss reserves inadequate and may be material to our operating results and cash flows for a particular quarter or annual period and to our financial condition.
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.
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. 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.
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.
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.
From time to time, states pass legislation, and regulators take action, that has the effect of limiting the ability of insurers to manage risk, such as legislation prohibiting insurers from reducing exposures or withdrawing from catastrophe-prone areas, or mandating that insurers participate in residual markets.
From time to time, states pass legislation, and regulators take action, that has the effect of limiting the ability of insurers to manage risk, such as legislation prohibiting insurers from reducing 20 AMERICAN COASTAL INSURANCE CORPORATION exposures or withdrawing from catastrophe-prone areas, or mandating that insurers participate in residual markets.
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.
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 Income (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.
Additionally, in the absence of overarching federal law, individual states are adopting their own privacy and cybersecurity laws and regulations. For example, in an effort to protect information systems, the New York State Department of Financial Services (NYDFS) adopted regulation providing minimum standards for an organization’s cybersecurity program and requiring additional certification confirming compliance.
Additionally, in the absence of overarching federal law, individual states are adopting their own privacy and cybersecurity laws and regulations. For example, in an effort to protect information systems, the NYDFS adopted regulation providing minimum standards for an organization’s cybersecurity program and requiring additional certification confirming compliance.
Trends in the insurance industry regarding claims and coverage issues, such as increased litigation and the willingness of courts to expand covered causes of loss, may contribute to increased litigation costs and increase our loss exposure under the policies that we underwrite.
Trends in the insurance industry regarding claims and coverage issues, such as increased litigation and the willingness of courts to expand covered causes of loss, and juries awarding large damage awards, may contribute to increased litigation costs and increase our loss exposure under the policies that we underwrite.
Our senior executive officers play an integral role in the development and management of our business given their skills, knowledge of our business, years of industry experience and the potential difficulty of promptly finding qualified replacement employees.
Our senior executive officers play an integral role in the development and management of our business given their skills, knowledge of our business, years of industry experience and the potential difficulty of promptly finding qualified replacement 18 AMERICAN COASTAL INSURANCE CORPORATION employees.
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.
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 AmCoastal will maintain their current A (Exceptional) or higher ratings by Demotech.
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.
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.
Our investments are subject to market risks that may result in reduced returns or losses. Our investment assets are invested by professional investment management firms under the direction of our management team in accordance with investment guidelines approved by the Investment Committee of the Board of Directors. Our investments are subject to market risks and risks inherent in individual securities.
Our investment assets are invested by professional investment management firms under the direction of our management team in accordance with investment guidelines approved by the Investment Committee of the Board of Directors. Our investments are subject to market risks and risks inherent in individual securities.
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.
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.
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.
Daniel Peed, our Executive Chairman of the Board of Directors, beneficially owned approximately 29% of our issued and outstanding common stock at December 31, 2024. Mr. Peed also has a proxy from another member of RDX Holding, LLC, the former parent company of AmCo, who beneficially owns approximately 7% of our issued and outstanding common stock. As a result, Mr.
Such shares may also be resold into the public markets in accordance with an exemption from registration under the Securities Act, including Rule 144, subject to the volume limitations, manner of sale requirements and notice requirements thereof. Sales of our common stock by Mr. Peed and his affiliates could have the effect of lowering our stock price.
Such shares may also be resold into the public markets in accordance with an exemption from 26 AMERICAN COASTAL INSURANCE CORPORATION registration under the Securities Act, including Rule 144, subject to the volume limitations, manner of sale requirements and notice requirements thereof. Sales of our common stock by Mr.
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.
As of December 31, 2024, a significant number of our policies in-force were concentrated in Florida and a majority of our TIV was concentrated in Florida.
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.
In addition, actual or anticipated downward pressure on our stock price due to actual or anticipated sales of stock by Mr. 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.
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.
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 currently do not pay an ordinary quarterly dividend.
In addition, Congress and some federal agencies from time to time investigate the current condition of insurance regulation in the United States to determine whether to impose federal or national regulation or to allow an optional federal charter, similar to the option available to most banks.
In addition, Congress and some federal agencies from time to time investigate the current condition of insurance regulation in the United States to determine whether to impose federal or national regulation or to allow an optional federal charter, which would allow insurance companies to choose to be regulated by state insurance regulations or a single federal regulatory agency, similar to the option available to most banks.
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.
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.
General economic conditions, stock market conditions, geopolitical events and many other factors beyond our control can adversely affect the fair value of our equity securities or other investments and could adversely affect our realization of net investment income.
Moreover, our private equity limited partnership interests are subject to transfer restrictions and may be illiquid. General economic conditions, stock market conditions, geopolitical events and many other factors beyond our control can adversely affect the fair value of our equity securities or other investments and could adversely affect our realization of net investment income.
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.
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.
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.
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.
AmCoastal, in particular, processes sensitive personal information of its policyholders, which exposes AmCoastal to heightened risk. Many regulators have indicated an intention to take more aggressive enforcement actions regarding cybersecurity matters, and private litigation resulting from such matters is increasing and resulting in progressively larger judgments and settlements.
Many regulators have indicated an intention to take more aggressive enforcement actions regarding cybersecurity matters, and private litigation resulting from such matters is increasing and resulting in progressively larger judgments and settlements.
Future 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.
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.
Third parties to whom we outsource certain functions are also subject to the risks outlined above, any one of which may result in our incurring substantial costs and other negative consequences, including a material adverse effect on our business, financial condition and results of operations.
Third parties to whom we outsource certain functions are also subject to the risks outlined above, any one of which may result in our incurring substantial costs and other negative consequences, including a material adverse effect on our business, financial condition and results of operations. 17 AMERICAN COASTAL INSURANCE CORPORATION In addition, we may transmit, receive and store personally identifiable, confidential and proprietary information by any number of standard data transmission methods or other electronic means.
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.
Because we rely on insurance agents, the loss of these agent relationships, particularly our relationship with AmRisc, or our inability to attract and incentivize new agents could have an adverse impact on our business.
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.
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.
The perceived risk associated with the possible sale of a large number of shares by these stockholders could cause some of our other stockholders to sell their stock, thus causing the price of our stock to decline. In addition, actual or anticipated downward pressure on our stock price due to actual or anticipated sales of stock by Mr.
Peed and his affiliates could have the effect of lowering our stock price. The perceived risk associated with the possible sale of a large number of shares by these stockholders could cause some of our other stockholders to sell their stock, thus causing the price of our stock to decline.
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.
Collectability of reinsurance is subject to the solvency of the reinsurers, interpretation of contract language and other factors. As a result, our exposure to counterparty risk under our reinsurance agreements may have a material adverse effect on our results of operations, financial condition and cash flow.
These restrictive covenants may restrict us from pursuing opportunities for expansion, including opportunities to act as or perform functions similar to a managing general agent, and therefore may limit our overall growth potential. Further, we entered into a stockholder’s agreement with Mr. Peed and certain affiliates of Mr.
These restrictive covenants may restrict us from pursuing opportunities for expansion, including opportunities to act as or perform functions similar to a managing general agent, and therefore may limit our overall growth potential. 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.
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.
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.
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.
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.
Conversely, rising interest rates reduce the fair value of existing fixed maturities. The volatility of any losses may force us to liquidate securities, which may cause us to incur capital losses. Realized fixed income and equity and unrealized equity losses in our investment portfolio would generally reduce our book value and, if significant, could affect our ability to conduct business.
Conversely, rising interest rates reduce the fair value of existing fixed maturities. The volatility of any losses may force us to liquidate securities, which may cause us to incur capital losses.
We may experience credit or default losses in our portfolio, including as a result of the failure of the procedures we have implemented to monitor the credit risk of our invested assets, which could adversely affect our results of operations and financial condition.
We may experience credit or default losses in our portfolio, including as a result of the failure of the procedures we have implemented to monitor the credit risk of our invested assets, which could adversely affect our results of operations and financial condition. 23 AMERICAN COASTAL INSURANCE CORPORATION We may decide to invest an additional portion of our assets in equity securities, private equity limited partnership interests or other investments, which are generally subject to greater volatility than fixed maturity investments.
Furthermore, the SEC has made clear their focus on cybersecurity. In August 2023, the SEC adopted new cybersecurity disclosure rules, aimed at enhancing and standardizing disclosures made by public companies regarding cybersecurity risk management, strategy, governance and incident reporting. Some jurisdictions have also enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data.
Furthermore, in recent years the SEC has maintained a focus on cybersecurity. In August 2023, the SEC adopted new cybersecurity disclosure rules, aimed at enhancing and standardizing disclosures made by public companies regarding cybersecurity risk management, strategy, governance and incident reporting.
Loss reserves represent our estimate of ultimate unpaid losses for claims that have been reported and claims that have been incurred but not yet reported. Loss reserves do not represent an exact calculation of liability, but instead represent our best estimate, generally utilizing actuarial expertise, historical information and projection techniques at a given reporting date.
Loss reserves do not represent an exact calculation of liability, but instead represent our best estimate, generally utilizing actuarial expertise, historical information and projection techniques at a given reporting date. The process of estimating our loss reserves involves a high degree of judgment and is subject to a number of variables.
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.
Peed beneficially owned approximately 29% of our issued and outstanding common stock as of December 31, 2024. The Company has granted Mr.
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.
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.
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.
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. We market our homeowners’ insurance product to a broad range of prospective policyholders through approximately 400 independent agencies as of December 31, 2024.
Removed
Florida Statutes sections 627.428 and 57.105 provide that a prevailing party in litigation is entitled to attorney’s fees. In 2021, the Florida legislature enacted omnibus insurance reform that, among other measures, replaced the one-way attorney fee statute with a schedule whereby recovery of attorney fees is contingent upon obtaining a judgment that exceeds the pre-suit offer.
Added
Actual claims incurred may exceed our loss reserves for claims, which could adversely affect our results of operations and financial condition. Loss reserves represent our estimate of ultimate unpaid losses for claims that have been reported and claims that have been incurred but not yet reported.
Removed
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.
Added
We have identified and remediated material weaknesses in our internal control over financial reporting. Our failure to maintain adequate internal controls could have a material adverse effect on our business, financial condition, results of operations and stock price.
Removed
The process of estimating our loss reserves involves a high degree of judgment and is subject to a number of variables.
Added
“Internal control over financial reporting” refers to those processes within a company that are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to annually assess the effectiveness of our internal control over financial reporting.
Removed
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.
Added
Management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2023; however, these weaknesses were remediated as of December 31, 2024 as described in more detail in Part II, Item 9A of this report.
Removed
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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+2 added−3 removed8 unchanged
Biggest changeAs one of our processes, we have implemented cybersecurity incident response plans, including the Security Incident Response Plan and IT Disaster Recovery Plan, that set forth specific frameworks for responding to and managing potential and actual cybersecurity incidents, provide guidance on the roles of, and interactions with, various departments within ACIC and define certain processes and procedures for cybersecurity incident response and management.
Biggest changeThis includes the periodic review and update of IT security policies, employee security awareness training programs complemented by simulated phish testing, and the implementation of firewalls, intrusion prevention and detection systems, anti-malware functionality, and access and identity management controls. 27 AMERICAN COASTAL INSURANCE CORPORATION As one of our processes, we have implemented cybersecurity incident response plans, including the Security Incident Response Plan and IT Disaster Recovery Plan, that set forth specific frameworks for responding to and managing potential and actual cybersecurity incidents, provide guidance on the roles of, and interactions with, various departments within ACIC and define certain processes and procedures for cybersecurity incident response and management.
Item 1C. Cybersecurity Risk Management and Strategy Our cybersecurity program is led by our Chief Information Security Officer (CISO) and overseen by the Audit Committee and the Board. Our cybersecurity program prioritizes threat mitigation, while focusing on maintaining the integrity and resilience of our systems.
Item 1C. Cybersecurity Risk Management and Strategy Our cybersecurity program is led by our Chief Information Security Officer (CISO) and overseen by the Audit Committee and the Board of Directors. Our cybersecurity program prioritizes threat mitigation, while focusing on maintaining the integrity and resilience of our systems.
Board Oversight The Board and Audit Committee are responsible for overseeing our annual enterprise risk assessment, reviewing the guidelines and policies for assessing and managing the Company’s exposure to risks, including cybersecurity risks, and the steps management has taken to monitor and control such exposures. The Board and Audit Committee periodically meet to facilitate oversight of cybersecurity risk.
Board of Directors Oversight The Board of Directors and Audit Committee are responsible for overseeing our annual enterprise risk assessment, reviewing the guidelines and policies for assessing and managing the Company’s exposure to risks, including cybersecurity risks, and the steps management has taken to monitor and control such exposures.
In addition to evaluating the Company’s cybersecurity risks, the Board has oversight of management’s cybersecurity function and is responsible for reviewing and approving of the Company’s cybersecurity program, as well as reviewing the quality and effectiveness of the Company’s technology security.
In addition to evaluating the Company’s cybersecurity risks, the Board of Directors has oversight of management’s cybersecurity function and is responsible for reviewing and approving the Company’s cybersecurity program, as well as reviewing the quality and effectiveness of the Company’s technology security. 28 AMERICAN COASTAL INSURANCE CORPORATION
Finally, our Chief Compliance and Risk Officer (CCRO) has more than 30 years of experience in finance and accounting and has managed tax planning, insurance accounting, internal audit and risk management functions. Our CCRO maintains an active Certified Public Accountant license.
Our CIO has over 25 years of IT experience, nearly all in the insurance space. Finally, our Chief Compliance and Risk Officer (CCRO) has more than 30 years of experience in audit, finance and accounting and has managed tax planning, insurance accounting, internal audit and risk management functions. Our CCRO maintains an active Certified Public Accountant license.
Governance Management Oversight Our CISO has the overall responsibility of implementing its strategy and objectives to build a strong cyber management function. Our CISO has over 25 years of IT experience with specialization in IT compliance, information security and risk management.
Governance Management Oversight Our CISO has the overall responsibility of implementing strategies and objectives to build a strong cyber management function. Our CISO has over 25 years of IT experience with specialization in IT compliance, information security and risk management. Our Chief Information Officer (CIO) has the overall responsibility of establishing and overseeing the Company’s technology infrastructure and security posture.
Our cybersecurity team, in partnership with external vendors and a third-party security operations center, designs and implements data security and cybersecurity programs, risk assessments, monitoring, external and internal penetration tests, controls testing and training for our employees. In 2023, a third-party consultant was engaged to facilitate a table top exercise to test the company’s cyber incident response plan.
Our cybersecurity team, in partnership with external vendors and a third-party security operations center, designs and implements data security and cybersecurity programs, risk assessments, monitoring, external and internal penetration tests, controls testing and training for our employees.
Under the cybersecurity incident response plans and their protocols, incidents are responded to by multidisciplinary teams and are further escalated to the attention of senior management and our Board when applicable.
Under the cybersecurity incident response plans and their protocols, incidents are responded to by multidisciplinary teams and are further escalated to the attention of senior management and our Board of Directors when applicable. The Company reviews and updates these cybersecurity incident response plans annually. The Company’s risk assessment considers cybersecurity threats associated with the use of third-party service providers.
The Board regularly devotes time during its meetings to review and discuss the most significant risks facing the Company over the short-, medium- and long-term, and management’s responses to those risks, including cybersecurity. Within these discussions, the Board receives updates from the CISO on the risks posed by cybersecurity threats and the Company’s cybersecurity program.
The Board of Directors and Audit Committee periodically meet to facilitate oversight of cybersecurity risk. The Board of Directors regularly devotes time during its meetings to review and discuss the most significant risks facing the Company over the short-, medium- and long-term, and management’s responses to those risks, including cybersecurity.
We continue to make investments to enhance our ability to identify and detect cybersecurity risks within our environment and protect the Company from those identified risks. Risk Assessment, Risk Management and Incident Management We employ processes and technologies to proactively address cybersecurity risks.
Risk Assessment, Risk Management and Incident Management We employ processes and technologies to proactively address cybersecurity risks.
Removed
This includes the periodic review and update of IT security policies, employee security awareness training programs complemented by simulated phish testing, and the implementation of firewalls, intrusion prevention and detection systems, anti-malware functionality, and access and identity management controls.
Added
In 2024, third-party consultants were engaged to perform security penetration tests and to facilitate a table top exercise to test the Company’s cyber incident response plan. We continue to make investments to enhance our ability to identify and detect cybersecurity risks within our environment and protect the Company from those identified risks.
Removed
The Company reviews and updates these cybersecurity incident response plans annually. 26 AMERICAN COASTAL INSURANCE CORPORATION The Company’s risk assessment considers cybersecurity threats associated with the use of third-party service providers.
Added
Within these discussions, the Board of Directors receives updates from the CISO on the risks posed by cybersecurity threats and the Company’s cybersecurity program.
Removed
Our Chief Information Officer (CIO) has the overall responsibility of establishing and overseeing the Company’s technology infrastructure and security posture. Our CIO has over 25 years of experience of IT experience, nearly all in the insurance space.

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 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
Biggest changeItem 2. Properties We use all of our leased properties for office space. We lease in total approximately 15,000 square feet of office space located in Florida and New York. These leases are generally short-term to medium-term leases of commercial office space.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough 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.
Biggest changeAlthough 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 accrued the policy retention amount of $1.5 million in 2023.
Management 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.
Management 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 awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation.
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”).
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 our director and officer’s insurance program (the “Claim”).
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.
The Claim alleges that former officers and directors of UPC were involved in wrongful acts that resulted in UPC’s 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+0 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 2023, we did not pay dividends of our common stock.
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 December 2024, we declared a special cash dividend of $0.50 per share of common stock, which we paid on January 10, 2025, to shareholders of record on January 2, 2025.
Additionally, Florida-domiciled insurers may not make dividend payments or distributions to shareholders without the prior approval of the insurance regulatory authority if the dividend or distribution would exceed the larger of: 1. the lesser of: a. 10% of the insurer’s capital surplus, or b. 100% of the insurer’s net income, not including realized capital gains, plus a two-year carryforward 2. 10% of the insurer’s capital surplus with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains, or 3. the lesser of: a. 10% of the insurer’s capital surplus, or b. 100% of the insurer’s net investment income plus a three-year carryforward with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains.
Additionally, a Florida-domiciled insurer may not make dividend payments or distributions to shareholders without the prior approval of the insurance regulatory authority if the dividend or distribution would exceed the larger of: 1. the lesser of: a. 10% of the insurer’s capital surplus, or b. 100% of the insurer’s net income, not including realized capital gains, plus a two-year carryforward 2. 10% of the insurer’s capital surplus with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains, or 3. the lesser of: a. 10% of the insurer’s capital surplus, or b. 100% of the insurer’s net investment income plus a three-year carryforward with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains.
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.
The insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year, and: 30 AMERICAN COASTAL INSURANCE CORPORATION 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.
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.
Under Florida law, a Florida-domiciled insurer 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.
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.
See Note 16 to our Notes to Consolidated Financial Statements for further discussion of restrictions on future payments of dividends by our insurance affiliates. 31 AMERICAN COASTAL INSURANCE CORPORATION RECENT SALES OF UNREGISTERED SECURITIES During 2024, we did not have any unregistered sales of our equity securities.
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 addition, in connection with the filed plan of withdrawal in New York for our former insurance subsidiary, UPC, our subsidiary, IIC, agreed not to pay ordinary dividends until January 1, 2025, without the prior approval of the NYDFS.
As of December 31, 2023, we were in compliance with these requirements.
As of December 31, 2024, we were in compliance with these requirements.
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.
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 3, 2025, we had 7,171 holders of record of our common stock.
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.
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.
REPURCHASES OF EQUITY SECURITIES During 2023, we did not repurchase any of our equity securities. 31 AMERICAN COASTAL INSURANCE CORPORATION
REPURCHASES OF EQUITY SECURITIES During 2024, we did not repurchase any of our equity securities. 32 AMERICAN COASTAL INSURANCE CORPORATION
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.
During December 2024, we received a $14,300,000 dividend from our insurance subsidiary, AmCoastal. During November 2022, we received a $26,000,000 dividend from our insurance subsidiary, AmCoastal.

Item 7. Management's Discussion & Analysis

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

87 edited+32 added−66 removed60 unchanged
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.
Biggest changeTo evaluate our financial condition, we consider our liquidity, financialstrength, ratings, book value per share and return on equity. 34 AMERICAN COASTAL INSURANCE CORPORATION Consolidated Net Income (Loss) Year Ended December 31, 2024 2023 2022 REVENUE: Gross premiums written $ 647,805 $ 635,709 $ 528,160 Change in gross unearned premiums (9,197) (31,026) (53,972) Gross premiums earned 638,608 604,683 474,188 Ceded premiums earned (364,618) (342,623) (251,259) Net premiums earned 273,990 262,060 222,929 Net investment income 20,795 8,300 6,043 Net realized losses (124) (6,789) (6,512) Net unrealized gains (losses) on equity securities 1,996 814 (1,968) Other revenue — 15 1,181 Total revenues 296,657 264,400 221,673 EXPENSES: Losses and loss adjustment expenses 69,319 46,678 96,109 Policy acquisition costs 70,990 75,436 80,996 General and administrative expenses 44,756 37,559 43,746 Interest expense 11,996 10,875 9,483 Total expenses 197,061 170,548 230,334 Income (loss) before other income 99,596 93,852 (8,661) Other income 2,063 2,228 10,342 Income before income taxes 101,659 96,080 1,681 Provision for income taxes 25,340 10,876 26,233 Income (loss) from continuing operations, net of tax $ 76,319 $ 85,204 $ (24,552) Income (loss) from discontinued operations, net of tax (601) 224,707 (445,414) Net income (loss) $ 75,718 $ 309,911 $ (469,966) Less: Net loss attributable to noncontrolling interests — — (111) Net income (loss) attributable to ACIC $ 75,718 $ 309,911 $ (469,855) Net income (loss) per diluted share $ 1.54 $ 6.98 $ (10.91) Book value per share $ 4.89 $ 3.61 $ (4.21) Return on equity based on GAAP net income (loss) 33.5 % 439.5 % (307.4) % Loss ratio, net (1) 25.3 % 17.8 % 43.1 % Expense ratio (2)(5) 42.2 % 43.1 % 56.0 % Combined ratio (3)(5) 67.5 % 60.9 % 99.1 % Effect of current year catastrophe losses on combined ratio 9.3 % 4.9 % 23.5 % Effect of prior year development on combined ratio (1.4) % (4.9) % (3.6) % Underlying combined ratio (4)(5) 59.6 % 60.9 % 79.2 % (1) Loss ratio, net is calculated as losses and LAE net of losses ceded to reinsurers, relative to net premiums earned.
Due to the adoption of Accounting Standards Update (ASU) 2016-01 (ASU 2016-01) as of January 1, 2018, equity securities are reported at fair value with changes in fair value, including impairment write-downs, being recognized in the revenue section of our Consolidated Statements of Comprehensive Loss.
Due to the adoption of Accounting Standards Update (ASU) 2016-01 (ASU 2016-01) as of January 1, 2018, equity securities are reported at fair value with changes in fair value, including impairment write-downs, being recognized in the revenue section of our Consolidated Statements of Comprehensive Income (Loss).
This reinsurance protection is an essential part of our catastrophe risk management strategy. It is intended to provide our stockholders an acceptable return on the risks assumed by our insurance entities, and to reduce variability of earnings, while providing surplus protection.
This reinsurance protection is an essential part of our catastrophe risk management strategy. It is intended to provide our stockholders with an acceptable return on the risks assumed by our insurance entities, and to reduce the variability of earnings, while providing surplus protection.
Any additional impairment not recorded through an allowance for credit losses is recognized in other comprehensive loss. If the estimated recovery value is less than the amortized cost of the security, a credit loss exists and an allowance for the difference between the estimated recovery value and amortized cost is recorded in earnings.
Any additional impairment not recorded through an allowance for credit losses is recognized in other comprehensive income (loss). If the estimated recovery value is less than the amortized cost of the security, a credit loss exists and an allowance for the difference between the estimated recovery value and amortized cost is recorded in earnings.
Investment Portfolio Credit Allowances For investments classified as available for sale, the difference between fair value and cost or amortized cost for fixed income securities is reported as a component of accumulated other comprehensive loss on our Consolidated Balance Sheet and is not reflected in our net loss of any period until reclassified to net loss upon the consummation of a transaction with an unrelated third party.
Investment Portfolio Credit Allowances For investments classified as available for sale, the difference between fair value and cost or amortized cost for fixed income securities is reported as a component of accumulated other comprehensive income (loss) on our Consolidated Balance Sheets and is not reflected in our net loss of any period until reclassified to net loss upon the consummation of a transaction with an unrelated third party.
(5) Included in both the expense ratio and the combined ratio is amortization expense predominately associated with the AmCo and IIC acquisitions, which cause comparative differences among periods. 33 AMERICAN COASTAL INSURANCE CORPORATION DEFINITIONS OF NON-GAAP MEASURES We believe that investors’ understanding of ACIC’s performance is enhanced by our disclosure of the following non-GAAP measures.
(5) Included in both the expense ratio and the combined ratio is amortization expense predominately associated with the AmCo and IIC acquisitions, which cause comparative differences among periods. 35 AMERICAN COASTAL INSURANCE CORPORATION DEFINITIONS OF NON-GAAP MEASURES We believe that investors’ understanding of ACIC’s performance is enhanced by our disclosure of the following non-GAAP measures.
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.
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.
RECENT ACCOUNTING STANDARDS Please refer to Note 2(u) in our Notes to Consolidated Financial Statements for a discussion of recent accounting standards that may affect us. APPLICATION OF CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the consolidated financial statements.
RECENT ACCOUNTING STANDARDS Please refer to Note 2(v) in our Notes to Consolidated Financial Statements for a discussion of recent accounting standards that may affect us. APPLICATION OF CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the consolidated financial statements.
AmCoastal’s all other perils catastrophe excess of loss agreement in effect January 1, through December 31, annually, which provides protection from catastrophe loss events other than named windstorms and earthquakes; and 3. IIC’s core catastrophe reinsurance program in effect June 1, through May 31, annually, which provides protection from all catastrophe losses.
AmCoastal’s all other perils catastrophe excess of loss agreement in effect January 1 through December 31, annually, which provides protection from catastrophe loss events other than named or numbered windstorms and earthquakes; and 3. IIC’s core catastrophe reinsurance program in effect June 1 through May 31, annually, which provides protection from all catastrophe losses.
The portion of the unrealized loss related to factors other than credit remains classified in accumulated other comprehensive loss.
The portion of the unrealized loss related to factors other than credit remains classified in accumulated other comprehensive income (loss).
We use our cash to pay reinsurance premiums, claims and related costs, policy acquisition costs, salaries and employee benefits, other expenses and stockholder dividends, acquire subsidiaries and pay associated costs, as well as to repay debts and purchase investments.
We use our cash to pay reinsurance premiums, claims and related costs, policy acquisition costs, salaries and employee benefits, other expenses and stockholder dividends, acquire subsidiaries and pay associated costs, as well as to repay debt and purchase investments.
The events leading to receivership and results of this subsidiary, now included within discontinued operations, can be seen in Note 3 of the Notes to Consolidated Financial Statements below.
The events leading to receivership and results of this subsidiary, now included within discontinued operations, can be seen in Note 4 of the Notes to Consolidated Financial Statements below.
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.
The table below outlines our quota share agreements in effect for the years ended December 31, 2024 and 2023. The impacts of these quota share agreements on the financial statements of our former subsidiary, UPC, are included in discontinued operations in 2023 and 2022.
The details of our programs and likelihood of a catastrophic event exceeding these three coverages are outlined below. AmCoastal’s core catastrophe reinsurance program provides occurrence-based coverage up to an exhaustion point of approximately $1,100,000,000 for a first occurrence and $1,300,000,000 in the aggregate.
The details of our programs and the likelihood of a catastrophic event exceeding these three coverages are outlined below. AmCoastal’s core catastrophe reinsurance program provides occurrence-based coverage up to an exhaustion point of approximately $1,260,000,000 for a first occurrence and $1,610,000,000 in the aggregate.
The following discussion provides an analysis of our results of operations and financial condition for 2023 as compared to 2022.
The following discussion provides an analysis of our results of operations and financial condition for 2024 as compared to 2023.
AmCoastal’s program provides sufficient coverage for a 1-in-150-year return period, indicating that the probability of a single occurrence exceeding protection purchased is roughly 0.7% estimated by equally blending the AIR and RMS catastrophe models using long-term catalogs including demand surge.
AmCoastal’s program provides sufficient coverage for approximately a 1-in-206-year return period, indicating that the probability of a single occurrence exceeding protection purchased is roughly 0.5%, estimated by equally blending the AIR and RMS catastrophe models using long-term catalogs including demand surge.
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.
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. 44 AMERICAN COASTAL INSURANCE CORPORATION See Note 10 in our Notes to Consolidated Financial Statements for additional information regarding our reinsurance program.
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.
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 48 AMERICAN COASTAL INSURANCE CORPORATION cash provided from our operations, are sufficient to meet currently anticipated working capital requirements.
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.
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.
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.
Discussion regarding our results of operations and financial condition for 2023 as compared to 2022 is included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 and the Revised Items of our Form 10-K for the year ended December 31, 2023, filed as Exhibit 99.1 to Form 8-K on October 4, 2024.
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.
Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the year ended December 31, 2024 would have been 7.4%, a decrease of 0.3 points from 7.7% during the year ended December 31, 2023.
The RBC guidelines published by the NAIC may further restrict our insurance subsidiaries’ ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause their respective surplus as it regards policyholders to fall below minimum RBC guidelines.
The risk-based capital (RBC) guidelines published by the National Association of Insurance Commissioners (NAIC) may further restrict our insurance subsidiaries’ ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause their respective surplus as it regards policyholders to fall below minimum RBC guidelines.
AmCoastal’s core catastrophe reinsurance program in effect June 1 through May 31, annually, which includes excess of loss and quota share treaties providing coverage for catastrophe losses from named or numbered windstorms and earthquakes; 2.
Our catastrophe reinsurance coverage consists of three separate placements: 1. AmCoastal’s core catastrophe reinsurance program in effect June 1 through May 31, annually, which includes excess of loss and quota share treaties providing coverage for catastrophe losses from named or numbered windstorms; 2.
Please refer to Note 2(k) and Note 9 in our Notes to Consolidated Financial Statements for further information regarding our measurement of Goodwill and Related Impairment. RELATED PARTY TRANSACTIONS There were no related party transactions for the years ended December 31, 2023, 2022 and 2021.
Please refer to Note 2(k) and Note 9 in our Notes to Consolidated Financial Statements for further information regarding our measurement of Goodwill and Related Impairment. 50 AMERICAN COASTAL INSURANCE CORPORATION RELATED PARTY TRANSACTIONS There were no related party transactions for the years ended December 31, 2024, 2023 and 2022.
The change in our operating assets and liabilities can be attributed to the placement of UPC into receivership in 2023 as a result of the loss above, divesting our ownership of UPC during 2023. 51 AMERICAN COASTAL INSURANCE CORPORATION Investing Activities The principal cash inflows from our investing activities come from repayments of principal, proceeds from maturities and sales of investments.
The change in our operating assets and liabilities is attributed to the placement of UPC into receivership in 2023 as a result of the loss above, divesting our ownership of UPC during 2023. Investing Activities The principal cash inflows from our investing activities come from repayments of principal, proceeds from maturities and sales of investments.
The underlying loss and LAE measure should not be considered a substitute for net loss and LAE and does not reflect the overall profitability of our business. 34 AMERICAN COASTAL INSURANCE CORPORATION RESULTS OF OPERATIONS Consolidated Results Net income attributable to ACIC for the year ended December 31, 2023 increased by $779,766,000 to $309,911,000, compared to a net loss of $469,855,000 for the year ended December 31, 2022.
The underlying loss and LAE measure should not be considered a substitute for net loss and LAE and does not reflect the overall profitability of our business. 36 AMERICAN COASTAL INSURANCE CORPORATION RESULTS OF OPERATIONS Consolidated Results Net income attributable to ACIC for the year ended December 31, 2024 decreased by $234,193,000 to $75,718,000, compared to net income of $309,911,000 for the year ended December 31, 2023.
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.
As of December 31, 2024, our total obligation related to these claim payments was $322,087,000, of which we estimate $124,642,000 to be short-term in nature (due in less than twelve months), based upon our cumulative claims paid over the last 23 years.
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.
Number of Events Incurred Loss and Loss adjustment expense (LAE) (1) Combined Ratio Impact December 31, 2024 Current period catastrophe losses incurred Named and numbered storms 2 $ 122 0.5 % All other catastrophe loss events 15 969 3.6 % Total 17 $ 1,091 4.1 % December 31, 2023 Current period catastrophe losses incurred Named and numbered storms 1 $ 129 — % All other catastrophe loss events 13 2,367 0.9 % Total 14 $ 2,496 0.9 % December 31, 2022 Current period catastrophe losses incurred Named and numbered storms — $ — — % All other catastrophe loss events 11 5,618 12.1 % Total 11 $ 5,618 12.1 % (1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves.
Loss and LAE expense as a percentage of net earned premiums decreased 27.7 points to 22.3% for the year ended December 31, 2023, compared to 50.0% for the year ended December 31, 2022. In addition, during the year ended December 31, 2023, prior year reserve favorable development was higher on both catastrophe and non-catastrophe losses.
Loss and LAE expense as a percentage of net earned premiums increased 7.5 points to 25.3% for the year ended December 31, 2024, compared to 17.8% for the year ended December 31, 2023. In addition, during the year ended December 31, 2024, prior year reserve favorable development was lower on both catastrophe and non-catastrophe losses.
Sales of the Shares under the Agreement will be made in sales deemed to be “at the market offerings”. The Agent is not required to sell any specific amount of Shares but agreed to act as the Company’s sales agent for a commission equal to 3.0% of the gross proceeds from the sales of the Shares.
The Agent is not required to sell any specific amount of Shares but has agreed to act as the Company’s sales agent for a commission equal to 3.0% of the gross proceeds from the sales of the Shares.
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.
During the years ended December 31, 2024, 2023 and 2022, five, two, and two named storms, respectively, made landfall in our geographic footprint, resulting in retained pre-tax catastrophe losses of $25,442,000, $729,000, and $57,906,000, respectively, excluding our former subsidiary, UPC.
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.
Our investments as of December 31, 2024 and 2023 consisted mainly of U.S. government and agency securities, securities of investment-grade corporate issuers, mortgage-backed securities, and states, municipalities and political subdivisions. Our equity holdings as of December 31, 2024 consisted of mutual funds and common stock. We held no equities as of December 31, 2023.
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.
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 are necessary. See Note 11 in our Notes to Consolidated Financial Statements for additional information regarding our losses and LAE.
On and after that date, we may redeem the Senior Notes at par. On December 8, 2022, the Kroll Bond Rating Agency, LLC announced a downgrade of our issuer and debt ratings BBB- to BB+.
On and after that date, we may redeem the Senior Notes at par. On December 8, 2022, the Kroll Bond Rating Agency, LLC announced a downgrade of our issuer and debt ratings from BBB- to BB+. 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.
In September 2023, the Company entered into an equity distribution agreement (the “Agreement”) with Raymond James & Associates, Inc., as agent (the “Agent”), relating to the issuance and sale from time to time by the Company, through the Agent, of up to 8,000,000 shares of the Company’s common stock, par value $0.0001 per share (the “Shares”).
In September 2023, the Company entered into an equity distribution agreement (the “Agreement”) with Raymond James & Associates, Inc., as agent (the “Agent”), of up to 8,000,000 shares of the Company’s common stock, par value $0.0001 per share (the “Shares”). Sales of the Shares under the Agreement will be made in sales deemed to be “at the market offerings”.
(2) This treaty provides coverage for all catastrophe perils and attritional losses incurred. For all catastrophe perils, the quota share agreement provides ground- up protection effectively reducing our retention for catastrophe losses. (3) This treaty provides coverage on our in-force, new and renewal policies until these states are transitioned to HCPCI or TypTap upon renewal.
For all catastrophe perils, the quota share agreement provides or provided ground-up protection, effectively reducing our retention for catastrophe losses. (2) The cession rate of this treaty is reduced from 20% to 15% effective 06/01/2025 - 06/01/2026. (3) This treaty provided coverage on our in-force, new and renewal policies until these states were transitioned to HCPCI and TypTap upon renewal.
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.
The increase in expenses was primarily due to an increase in loss and LAE as a result of Hurricane Milton making landfall in 2024, which caused a large increase in catastrophe losses due to the $20,500,000 retention incurred from the storm. The calculations of our combined loss ratios and underlying loss ratios are shown below.
We use quoted prices from active markets and we use an independent third-party valuation service to assist us in determining fair value. We obtain only one single quote or price for each financial instrument.
We use quoted prices from active markets and an independent third-party valuation service to assist us in determining fair value.
While we believe these catastrophe models are very good tools and their output provides reasonable proxies for the probability of exhausting our reinsurance protections, they are imperfect so actual results could vary dramatically from those expected. AmCoastal’s all other perils catastrophe excess of loss agreement provides protection from catastrophe loss events other than named windstorms and earthquakes up to $101,000,000.
While we believe these catastrophe models are very good tools and their output provides reasonable proxies for the probability of exhausting our reinsurance protections, they are imperfect, so actual results could vary materially from those expected.
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. The impact of the current year catastrophes to IIC, which is now captured within discontinued operations, can be seen in the tables below.
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. The calculations of the Company’s commercial lines operating segment expense ratios are shown below.
Additional information regarding non-GAAP financial measures presented in this document is in the " Definitions of Non-GAAP Measures " section of this Form 10-K. The calculations of our expense ratios are shown below.
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.
Number of Events Incurred Loss and Loss adjustment expense (LAE) (1) Combined Ratio Impact December 31, 2024 Current period catastrophe losses incurred Named and numbered storms 4 $ 25,320 9.2 % All other catastrophe loss events 7 241 0.1 % Total 11 $ 25,561 9.3 % December 31, 2023 Current period catastrophe losses incurred Named and numbered storms 1 $ 600 0.2 % All other catastrophe loss events 10 12,183 4.7 % Total 11 $ 12,783 4.9 % December 31, 2022 Current period catastrophe losses incurred Named and numbered storms 2 $ 52,076 23.4 % All other catastrophe loss events 7 212 0.1 % Total 9 $ 52,288 23.5 % (1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves.
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 obtain only one single quote or price for each financial instrument. 49 AMERICAN COASTAL INSURANCE CORPORATION 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.
Based on IIC’s PML, the program provides sufficient coverage for a 1-in-130 year return period, indicating the probability of a single occurrence exceeding protection purchased is no more than 0.8%. IIC’s program also provides sufficient coverage for a 1-in-100-year event followed by a 1-in-50-year event in the same treaty year, the probability of which is less than 0.1%.
Based on IIC’s probable maximum losses (PML), the program provides sufficient coverage for two 1-in-130-year events in the same season, indicating the probability of a single occurrence exceeding protection purchased is no more than 0.1%.
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.
Historical Reserve Development ($ in thousands, except ratios) 2021 2022 2023 2024 Prior year reserve favorable development $ (4,198) $ (7,982) $ (12,694) $ (3,704) Development as a % of earnings before interest and taxes (184.4) % (71.5) % (11.9) % (3.3) % Consolidated net loss and LAE ratio (LR) 31.1 % 43.1 % 17.8 % 25.3 % Prior year reserve favorable development on LR (2.4) % (3.6) % (4.9) % (1.4) % Current year catastrophe losses on LR 5.4 % 23.5 % 4.9 % 9.3 % Underlying net loss and LAE ratio (1) 28.1 % 23.2 % 17.8 % 17.4 % (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.
This was partially offset by increases to management fees and premium taxes of $19,405,000 and $1,706,000, respectively, both of which fluctuated in conjunction with the year-over-year increase in commercial lines gross written premium.
This was partially offset by increased external management fees of $1,745,000, which fluctuated in conjunction with the year-over-year increase in gross written premium.
Policy acquisition costs decreased by $5,560,000, or 6.9%, to $75,436,000 for the year ended December 31, 2023, from $80,996,000 for the year ended December 31, 2022, driven primarily by an increase in ceding commission of $26,662,000 driven by the changes in the terms of our quota share reinsurance agreements.
Policy acquisition costs decreased by $4,446,000, or 5.9%, to $70,990,000 for the year ended December 31, 2024, from $75,436,000 for the year ended December 31, 2023. The primary driver of the decrease was an increase in ceding commission income of $6,959,000, driven by the changes in the terms of our quota share reinsurance agreement described above.
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.
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. 39 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.
While we believe that historical performance of loss payment patterns is a reasonable source for projecting future claim payments, there is inherent uncertainty in this estimated projected settlement, and as a result these estimates will differ, perhaps significantly, from actual future payments.
While we believe that historical performance of loss payment patterns is a reasonable source for projecting future claim payments, there is inherent uncertainty in these estimated projected settlements, and as a result these estimates will differ, perhaps significantly, from actual future payments. 47 AMERICAN COASTAL INSURANCE CORPORATION In addition to our unpaid loss and LAE, as of December 31, 2024, we have outstanding debt obligations related to our notes payable totaling $150,000,000.
During the year ended December 31, 2023, cash provided by investing activities decreased $239,379,000, driven by the divestiture of UPC which resulted in $232,582,000 in cash being removed. Financing Activities The principal cash inflows from our financing activities come from issuances of debt and other securities. The principal cash outflows come from repayments of debt and payments of dividends.
During the year ended December 31, 2024, cash used in investing activities increased $176,667,000, driven by the purchases of fixed maturities. Financing Activities The principal cash inflows from our financing activities come from issuances of debt and other securities. The principal cash outflows come from repayments of debt and payments of dividends.
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.
Loss and LAE expense as a percentage of net earned premiums decreased 10.4 pts to 71.2% for the year ended December 31, 2024, compared to 81.6% for the same period in 2023.
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.
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. Our short-term obligation related to these notes payable total $10,875,000 in estimated interest payments and no principal payments.
Our cash and investment portfolios totaled $369,022,000 at December 31, 2023 compared to $340,905,000 at December 31, 2022.
Our cash and investment portfolios totaled $540,811,000 at December 31, 2024, compared to $311,874,000 at December 31, 2023.
In addition, we had an increase in our gross written premiums, an increase in ceded premiums earned, favorable prior year loss development during the year, decreased policy acquisition costs and general and administrative expenses, as described below.
Drivers of net income for 2024 include increased gross premiums earned during the year, increased net investment income, an increase in ceded premiums earned, favorable prior year loss development during the year, and decreased policy acquisition costs, as described below.
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, 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. The contribution made to FSIC was made prior to the merging of FSIC into UPC.
Our short-term obligation related to these notes payable total $10,875,000 in estimated interest payments and no principal payments. For more information regarding these outstanding notes, please see Note 12 . In connection with entering into contracts with our outside vendors, we have minimum obligations due to our vendors over the life of the contracts.
For more information regarding these outstanding notes, please see Note 12 in our Notes to Consolidated Financial Statements. In connection with entering into contracts with our outside vendors, we have minimum obligations due to our vendors over the life of the contracts. Our main vendor obligations are related to underwriting tools, claims and policy administration systems.
($ 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.
($ in thousands) Year ended December 31, 2024 2023 Change Net loss and LAE $ 69,319 $ 46,678 $ 22,641 % of Gross earned premiums 10.9 % 7.7 % 3.2 pts % of Net earned premiums 25.3 % 17.8 % 7.5 pts Less: Current year catastrophe losses $ 25,561 $ 12,783 $ 12,778 Prior year reserve favorable development (3,704) (12,694) 8,990 Underlying loss and LAE (1) $ 47,462 $ 46,589 $ 873 % of Gross earned premiums 7.4 % 7.7 % (0.3) pts % of Net earned premiums 17.3 % 17.8 % (0.5) 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.
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.
Excluding catastrophe losses and prior year reserve development, our gross underlying loss and LAE ratio for the year ended December 31, 2024 was 51.2%, an increase of 8.7 pts from 42.5% during the year ended December 31, 2023.
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 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, and IIC in April 2016, and our strategic partnership with a subsidiary of Tokio Marine Kiln Group Limited (Tokio Marine), which formed Journey Insurance Company (JIC) in August 2018.
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.
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 other material facts and circumstances known at the balance sheet date.
($ 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.
Year Ended December 31, 2024 2023 Change Net loss and LAE $ 18,738 $ 16,183 $ 2,555 % of Gross earned premiums 51.5 % 51.7 % (0.2) pts % of Net earned premiums 71.2 % 81.6 % (10.4) pts Less: Current year catastrophe losses $ 1,090 $ 2,496 $ (1,406) Prior year reserve favorable development (955) 400 (1,355) Underlying loss and LAE (1) $ 18,603 $ 13,287 $ 5,316 % of Gross earned premiums 51.2 % 42.5 % 8.7 pts % of Net earned premiums 70.7 % 67.0 % 3.7 pts (1) Underlying loss and LAE is a non-GAAP measure and is reconciled above to net loss and LAE, the most directly comparable GAAP measure.
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.
As a result of claim activity from the current and prior years, we have an obligation related to the unpaid policyholder losses and unpaid LAE associated with the settling of these claims.
Cash Flows for the Year Ended December 31, (in millions) Operating Activities The principal cash inflows from our operating activities come from premium collections, reinsurance recoveries and investment income. The principal cash outflows from our operating activities are the result of claims and related costs, reinsurance premiums, policy acquisition costs and salaries and employee benefits.
Our total obligation related to these two categories of obligations are $1,605,000, and $525,000, respectively. Of these obligations, $1,605,000, and $225,000, respectively are short-term in nature. Cash Flows for the Year Ended December 31, (in millions) Operating Activities The principal cash inflows from our operating activities come from premium collections, reinsurance recoveries and investment income.
As of December 31, 2023, 3,373,000 shares had been sold under the Agreement resulting in commissions paid of approximately $829,000 and net proceeds of approximately $26,792,000 and as of the date of this filing, approximately 4,373,000 shares have been sold under the agreement resulting in commissions paid of approximately $1,181,000 and net proceeds of approximately $38,190,000.
As of December 31, 2024, 4,373,000 shares had been sold under the Agreement resulting in commissions paid of approximately $1,181,000 and net proceeds of approximately $38,190,000. The Agreement will terminate upon the issuance and sale of all Shares subject to the Agreement, or the Agreement may be suspended or discontinued at any time.
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.
In addition, we saw an increase in the use of third parties for audit, tax, and legal services, totaling $1,065,000 and $620,000, respectively. 38 AMERICAN COASTAL INSURANCE CORPORATION 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.
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.
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 DFS, which divested our ownership of UPC. As a result, UPC, as well as the activities related directly to supporting the business conducted by UPC, qualify as a discontinued operation.
This agreement provides sufficient coverage for a 1-in-250-year return period, indicating that the probability of a single occurrence exceeding protection purchased is no more than 0.4%. 44 AMERICAN COASTAL INSURANCE CORPORATION IIC’s core catastrophe reinsurance program provides coverage up to an exhaustion point of approximately $82,000,000 in the aggregate, with a retention of $3,000,000 per occurrence.
AmCoastal’s all other perils catastrophe excess of loss agreement provides protection from catastrophe loss events other than named windstorms and earthquakes up to $172,000,000 in the aggregate. This agreement provides sufficient coverage for a 1-in-450-year return period, indicating that the probability of a single occurrence exceeding protection purchased is no more than 0.2%.
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.
Net investment income increased by $12,495,000, or 150.5%, to $20,795,000 for the year ended December 31, 2024, from $8,300,000 for 2023, driven by increased interest income due to a substantial increase in holdings and higher interest rates year-over-year.
During the year ended December 31, 2023, cash provided by financing activities increased by $52,159,000 due primarily to proceeds from the issuance of our common stock in 2023.
During the year ended December 31, 2024, cash used in financing activities increased by $40,609,000 to cash used of $13,840,000 from proceeds of $26,769,000. This was due primarily to $24,102,000 in dividends declared during 2024 and a decrease in proceeds from the issuance of common stock of $15,172,000 year-over-year.
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.
Most of the corporate bonds we hold reflected a similar diversification. At December 31, 2024, approximately 87.8% of our fixed maturities were U.S. Treasuries, or corporate bonds rated “A” or better, and 12.2% were corporate bonds rated “BBB” or “BB”. 40 AMERICAN COASTAL INSURANCE CORPORATION Reinsurance We follow the industry practice of reinsuring a portion of our risks.
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.
In addition, we contributed $9,574,000 to our reinsurance subsidiary, Shoreline Re. During December 2024, we received a $14,300,000 dividend from our insurance subsidiary, AmCoastal. During 2022, we received a dividend of $26,000,000 from AmCoastal.
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.
In addition, during 2022, 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. 33 AMERICAN COASTAL INSURANCE CORPORATION For the year ended December 31, 2024, we have consolidated our Operating and Underwriting Expenses and General and Administrative Expenses lines within our Consolidated Statements of Comprehensive Income into the General and Administrative Expenses line.
This change in outflows was driven by an increase in net income of $485,333,000, net of adjustments to reconcile net income to cash. This was partially offset by a decrease in changes to our balance sheet operating assets and liabilities of $448,223,000.
During the year ended December 31, 2024, we experienced cash inflows of $243,509,000 compared to outflows of $136,003,000 during the year ended December 31, 2023. This change was driven by changes in our operating assets and liabilities of $398,841,000, offset by a decrease in net income, net of adjustments to reconcile net income to cash of $19,329,000.
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 is primarily driven by a $12,334,000 increase in ceded premiums earned from our quota share agreements. This increase is attributed to the change in AmCoastal’s quota share reinsurance coverage during 2024.
The following table summarizes our investments, by type: December 31, 2023 December 31, 2022 Estimated Fair Value Percent of Total Estimated Fair Value Percent of Total U.S. government and agency securities $ 27,432 7.4 % $ 2,385 0.7 % Foreign governments — — % 991 0.3 % States, municipalities and political subdivisions 23,865 6.5 % 26,895 7.9 % Public utilities 5,134 1.4 % 7,694 2.3 % Corporate securities 61,849 16.7 % 83,343 24.4 % Mortgage-backed securities 46,310 12.5 % 56,115 16.5 % Asset-backed securities 16,113 4.4 % 27,259 8.0 % Total fixed maturities 180,703 48.9 % 204,682 60.1 % Mutual fund — — % 15,657 4.6 % Total equity securities — — % 15,657 4.6 % Other investments 16,487 4.5 % 3,675 1.1 % Total investments 197,190 53.4 % 224,014 65.8 % Cash and cash equivalents 153,762 41.7 % 70,903 20.7 % Restricted cash 18,070 4.9 % 45,988 13.5 % Total cash, cash equivalents, restricted cash and investments $ 369,022 100.0 % $ 340,905 100.0 % We classify all of our investments as available-for-sale.
The following table summarizes our investments, by type: December 31, 2024 December 31, 2023 Estimated Fair Value Percent of Total Estimated Fair Value Percent of Total U.S. government and agency securities $ 154,660 28.7 % $ 26,002 8.3 % Corporate securities 61,535 11.3 % 48,026 15.5 % Mortgage-backed securities 30,462 5.6 % 34,622 11.1 % States, municipalities and political subdivisions 17,197 3.2 % 16,964 5.4 % Asset-backed securities 11,436 2.1 % 9,485 3.0 % Public utilities 5,284 1.0 % 3,288 1.1 % Foreign governments 427 0.1 % — — % Total fixed maturities 281,001 52.0 % 138,387 44.4 % Mutual fund 31,818 5.9 % — — % Other common stocks 4,976 0.9 % — — % Total equity securities 36,794 6.8 % — — % Other investments 23,623 4.4 % 16,487 5.3 % Total investments 341,418 63.2 % 154,874 49.7 % Cash and cash equivalents 137,036 25.3 % 138,930 44.5 % Restricted cash 62,357 11.5 % 18,070 5.8 % Total cash, cash equivalents, restricted cash and investments $ 540,811 100.0 % $ 311,874 100.0 % We classify all of our investments as available-for-sale.
Under this program, our retention on a first and second event is $10,000,000 each, plus $2,250,000 retained separately by our captive.
Under this program, our GAAP retention on a first event is $20,500,000 ($10,000,000 retained by AmCoastal under statutory accounting principles (STAT retained), $10,500,000 retained separately by our captive). We have purchased second and third event retrocession coverage, reducing our second and third event GAAP retentions to $13,000,000 ($10,000,000 STAT retained by AmCoastal, $3,000,000 retained separately by our captive).
($ 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 $87,143,000 for the year ended December 31, 2022.
($ in thousands) Year ended December 31, 2024 2023 Change Policy acquisition costs $ 70,990 $ 75,436 $ (4,446) General and administrative 44,756 37,559 7,197 Total Operating Expenses $ 115,746 $ 112,995 $ 2,751 % of Gross earned premiums 18.1 % 18.7 % (0.6) pts % of Net earned premiums 42.2 % 43.1 % (0.9) pts Loss and LAE increased by $22,641,000, or 48.5%, to $69,319,000 for the year ended December 31, 2024, from $46,678,000 for the year ended December 31, 2023.
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.
Reinsurer Companies in Scope Effective Dates Cession Rate States in Scope External third-party AmCoastal 06/01/2024 - 06/01/2026 20% (1)(2) Florida External third-party AmCoastal 06/01/2023 - 06/01/2024 40% (1) Florida External third-party UPC, FSIC & AmCoastal 06/01/2022 - 06/01/2023 10% (1) Florida, Louisiana, Texas TypTap UPC 06/01/2022 - 06/01/2023 100% (3) Georgia, North Carolina, South Carolina (1) This treaty provides or provided coverage for all catastrophe perils and attritional losses incurred.
Net investment income increased by $2,901,000, or 37.8%, to $10,574,000 for the year ended December 31, 2023 from $7,673,000 for 2022, driven by increased interest income due to increased holdings and higher interest rates year-over-year. 35 AMERICAN COASTAL INSURANCE CORPORATION Net realized investment losses and net unrealized gains (losses) on equity securities increased by $2,457,000, or 29.1%, to a net loss of $5,994,000 for the year ended December 31, 2023 from a net loss of $8,451,000 for the year ended December 31, 2022, driven by the liquidation of our fixed maturity securities in an unrealized loss position during 2022 to satisfy liquidity needs.
Net realized investment losses and net unrealized gains (losses) on equity securities increased by $7,847,000, or 131.3%, to a net gain of $1,872,000 for the year ended December 31, 2024, from a net loss of $5,975,000 for the year ended December 31, 2023, driven by decreased investment sales in 2024 resulting in decreased realized losses of $6,665,000 on our investment portfolio.
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.
Revenues Our gross written premiums increased by $12,096,000, or 1.9%, to $647,805,000 for the year ended December 31, 2024, from $635,709,000 for the year ended December 31, 2023. 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe 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.
Biggest changeThe following table presents the composition of our fixed-income security portfolio by rating at December 31, 2024 and 2023: Comparable Rating Amortized Cost % of Total Amortized Cost Fair Value % of Total Fair Value 2024 AAA $ 42,367 14.3 % $ 37,180 13.2 % AA+, AA, AA- 180,971 61.3 178,417 63.5 A+, A, A- 37,495 12.7 34,199 12.2 BBB+, BBB, BBB- 34,714 11.7 31,205 11.1 Total $ 295,547 100.0 % $ 281,001 100.0 % 2023 AAA $ 36,452 23.4 % $ 31,482 22.7 % AA+, AA, AA- 50,997 32.8 47,689 34.5 A+, A, A- 42,692 27.4 37,094 26.8 BBB+, BBB, BBB- 25,545 16.4 22,122 16.0 Total $ 155,686 100.0 % $ 138,387 100.0 % In addition, we are exposed to credit risk through our reinsurance program.
Our investment policy was established by the Investment Committee of our Board of Directors and is reviewed regularly. Pursuant to this investment policy, our fixed-maturity portfolio is classified as available for sale and we report any unrealized gains or losses, net of deferred income taxes, as a component of other comprehensive loss within our stockholders’ equity (deficit).
Our investment policy was established by the Investment Committee of our Board of Directors and is reviewed regularly. Pursuant to this investment policy, our fixed-maturity portfolio is classified as available for sale and we report any unrealized gains or losses, net of deferred income taxes, as a component of other comprehensive income (loss) within our stockholders’ equity (deficit).
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.
Based on our analysis, both a 200 and 300-basis point decrease or increase in interest rates from the December 31, 2024, rates would have a material impact on our results of operations and cash flows in the event divesting of these holdings was necessary.
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.
However, we do not anticipate the need to sell securities in an unrealized loss position as of December 31, 2024. 51 AMERICAN COASTAL INSURANCE CORPORATION 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.
The 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.
The 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.
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.
The following table illustrates the impact of hypothetical changes in interest rates on the fair value of our fixed-income securities at December 31, 2024 and 2023: Hypothetical Change in Interest Rates Estimated Fair Value Change in Estimated Fair Value Percentage Increase (Decrease) in Estimated Fair Value 2024 300 basis point increase $ 262,720 $ (18,281) (6.5) % 200 basis point increase 268,811 (12,190) (4.3) 100 basis point increase 274,904 (6,097) (2.2) Fair value 281,001 — — 100 basis point decrease 287,101 6,100 2.2 200 basis point decrease 293,204 12,203 4.3 300 basis point decrease 299,310 18,309 6.5 % 2023 300 basis point increase $ 123,323 $ (15,064) (10.9) % 200 basis point increase 128,341 (10,046) (7.3) 100 basis point increase 133,362 (5,025) (3.6) Fair value 138,387 — — 100 basis point decrease 143,416 5,029 3.6 200 basis point decrease 148,447 10,060 7.3 300 basis point decrease 153,482 15,095 10.9 % 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
For more information regarding our credit loss allowance, please refer to Note 14 . 56 AMERICAN COASTAL INSURANCE CORPORATION
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.
Added
For more information regarding our credit loss allowance, please refer to Note 14 . EQUITY PRICE RISK Our equity investment portfolio at December 31, 2024 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.
Added
During 2024, we re-entered the equities market. Equities represent 10.8% of our total investments (excluding cash, restricted cash and cash equivalents) at December 31, 2024. We held no equity investments at December 31, 2023.
Added
The following table illustrates the composition of our equity portfolio at December 31, 2024: % of Total Stocks by Sector Fair Value Fair Value 2024 Funds $ 31,818 86.5 % Financial 4,976 13.5 Total $ 36,794 100.0 % 52 AMERICAN COASTAL INSURANCE CORPORATION

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