By Chris Munro

Feb 28 - (The Insurer) - American Coastal’s share price fell by 12.3% shortly after markets opened on Friday as investors responded to its Q4 2024 earnings miss.

After ending Thursday trading at $12.69, AmCoastal’s share price fell to $11.30 shortly after the opening bell on Friday morning, a 12.3% drop from the previous day’s close.

As of 11:28 a.m. (16:28 GMT) in New York, AmCoastal’s share price had regained much of the lost ground and was trading at $12.25, down 3.5% from the end of business on Thursday.

The St Petersburg, Florida-based company reported Q4 2024 earnings after the markets closed on Thursday, including core income per diluted share of $0.12 that was down on the prior-year period’s result of $0.39 and which fell short of the $0.16 that was the consensus estimate of analysts, as per S&P Capital IQ.

AmCoastal’s fourth quarter 2024 results also included a combined ratio that deteriorated by 32.0 points year on year to 91.9%, with the increase driven by the impact of Hurricane Milton on its business.

On a call with analysts to discuss the results, president and CEO Brad Martz said AmCoastal “continued to perform very well in the fourth quarter”, as he highlighted how the carrier had incurred a full reinsurance retention loss from Hurricane Milton during 2024’s fourth quarter yet still returned a profit for the period.

“During the fourth quarter I was very pleased to see new business growth along with renewal account retention being better than expected,” he said.

“Rates are continuing to decrease due to favorable trends in loss in reinsurance costs, but deductible levels and valuations are holding firm, which creates opportunity for us to grow and maintain our underwriting margins,” the executive noted.

CHANGING MARKET CONDITIONS

During the call, Martz said pricing in the specialist property segments within which it operates “is changing because of expectations of future loss in reinsurance costs”.

“With those coming down, it's our expectation that we'll be able to pass some savings on to our policyholders. So we're excited about that,” he said.

Martz cited several reasons for the shift in pricing: a moderation in inflation, and the impact of insurance reforms within Florida that the executive said “are absolutely having a positive effect in the market, especially in terms of litigation”.

“So there are a number of reasons why we're optimistic about the Florida marketplace today, but it's not going to impact our expected profitability.

“We're still targeting a combined ratio of 65% before cat. So margins are intact despite pricing being down between 5% and 10% year-over-year on the average account renewal,” Martz noted.

In its earnings announcement, AmCoastal provided further details on its new catastrophe aggregate coverage that it bought at 1 January 2025, along with information on its recently renewed all other perils program.

LIMITED IMPACT ON FL RENEWALS FROM CA FIRES

Martz on the call gave an update on AmCoastal’s upcoming mid-year reinsurance renewal, and said he does not expect the California wildfires to have much of an impact on how discussions play out for Floridian carriers.

“My personal opinion on this is that [the California wildfires] may have a small impact on Florida, but I don't think it will have a significant impact,” stated Martz.

“Obviously, capacity was impacted in the global reinsurance market with a pretty big loss being ceded out of California.

“But it's a big global reinsurance market. I think they can handle it. I think they will address their underwriting and pricing for California separately.

“But it could put pressure on capacity for all forms of cat globally just because it is such a big loss. So that could impact some carriers in Florida, but I don't expect it to have much impact on American Coastal,” he added.

Martz said AmCoastal is “actively working on the structure and the placement for mid-year”.