American Coastal Insurance (ACIC -0.78%), a specialist in Florida commercial residential insurance, reported its second quarter 2025 financial results on August 6, 2025. The company posted diluted earnings per share of $0.53 in Q2 2025, exceeding consensus estimates of $0.38 non-GAAP and representing a 35.9% increase from the prior year period. However, GAAP revenue in Q2 2025 was $86.5 million, below expectations of $243.2 million (GAAP), reflecting shifts in reinsurance strategy rather than a decline in underlying business. Overall, the quarter demonstrated robust profitability and margin improvement, although some cost pressures emerged.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP, Diluted) | $0.53 | $0.38 | $0.39 | 35.9 % |
| Revenue (GAAP) | $86.5 million | $243.2 million | N/A | N/A |
| Core EPS (Non-GAAP) | $0.54 | $0.40 | 35.0 % | |
| Net Premiums Earned | $78.4 million | $63.4 million | 23.8 % | |
| Combined Ratio | 60.6 % | 64.9 % | (4.3) pts |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Focus Areas
American Coastal Insurance is an insurer focused on providing coverage for condominiums, homeowner associations, and apartments in Florida. Its primary business centers on underwriting policies designed to protect commercial residential properties, a market where risk from hurricanes and catastrophic weather is high and careful risk management is vital.
The company’s recent efforts have centered on disciplined underwriting, market share growth, and enhancing efficiency through its exclusive distribution partnership with AmRisc Group. Maintaining robust reinsurance protection, careful expense management, and growth in key segments—especially the new apartment portfolio—are central to its ongoing strategy and performance.
Quarterly Highlights and Financial Developments
Non-GAAP earnings in Q2 2025 surpassed expectations, with GAAP diluted EPS of $0.53 and Non-GAAP Core EPS of $0.54. The company delivered year-over-year growth in both total revenue (GAAP) and underwriting profit, supported by a sharp improvement in underlying loss ratios. The combined ratio, a key insurance profitability metric that indicates the ratio of claims and costs to premium income, improved to 60.6% from 64.9%. Lower combined ratios point to more profitable underwriting, and figures below 100% signal that the company is earning more in premiums than it pays out in claims and expenses.
GAAP revenue in Q2 2025 was significantly below analyst estimates, even though net premiums earned (GAAP) and core profitability (non-GAAP) both rose sharply year over year.
The company’s apartment insurance initiative—a line focused on providing property coverage for apartment buildings—continued to contribute, with a run-rate annualized premium of $18–20 million for the first four months of 2025 and about 15 new policies issued per month during the early months of 2025. Competition in this segment was higher than anticipated, so management is expanding cautiously.
Expense trends were mixed. Policy acquisition costs increased 74.8% in Q2 2025, driven by the shift to lower quota share reinsurance—which reduces commission income—and an increase in the AmRisc management fee. These increases were partially offset by a one-time benefit related to an employee retention tax credit, which lowered general and administrative expenses by 34.5% in Q2 2025. Absent these non-recurring items, ongoing expense management remains a key watch area for the business.
Catastrophe losses during the quarter were minimal, with no significant weather-related insurance losses reported. Reserve development was favorable, subtracting from the combined ratio and supporting profitability.
The company exited its Interboro Insurance business, recognizing a GAAP loss of $1.6 million in Q2 2025. This closure affects results for discontinued operations.
No dividend was declared during the quarter. ACIC does not currently pay a dividend.
Reinsurance, Capital Strength, and Product Developments
American Coastal Insurance continued refining its reinsurance program, a core practice for property insurers to mitigate exposure to catastrophic events. The quota share reinsurance—the portion of premiums and risk transferred to reinsurance partners—was reduced from 20% to 15%, effective June 1, 2025. This results in higher net retention, meaning the company bears more risk but can generate more profit from policies it underwrites, while also absorbing more premium-related costs.
The company also invested in additional excess-of-loss reinsurance, a form of protection that covers losses above a certain threshold. These layers now provide up to $1.35 billion in protection per event for 2025, compared to $1.16 billion in 2024, reflecting greater caution and increased exposure. Retention per catastrophic event increased to $29.75 million for 2025. Management emphasized that catastrophe protection has become broader, including improved protection against multiple events in a single season.
Exclusive arrangements with AmRisc Group for product distribution continued to shape growth and costs. The new AmRisc contract includes both a 1% higher management fee—impacting acquisition costs—and a profit-sharing element further incentivizing performance. These changes led to higher near-term costs.
Book value per common share rose 22.6%, from $4.89 at December 31, 2024 to $6.00 at June 30, 2025, a measure of shareholder equity per outstanding share. This reflected not only profit generation but also improved investment results in the company’s large portfolio—fixed maturities comprised approximately 78.0% of the company’s $726.2 million in cash and investment holdings as of June 30, 2025. The company’s balance sheet continued to strengthen, with equity reaching $292.3 million as of Q2 2025.
Looking Ahead: Guidance and Key Trends
Management did not provide explicit financial guidance for the next quarter or the full fiscal year. However, leadership flagged continued focus on maintaining strong reinsurance capacity, measured expansion in new lines such as apartment insurance, and a disciplined approach to underwriting risks in the competitive Florida market.
The resilience of book value growth, protection from adverse reserve development, and additional changes in the partnership structure or reinsurance program will remain central to the company’s near-term prospects.
ACIC does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
