American Coastal Insurance Corporation (ACIC) experienced a pre-market plunge of 5.41% on Friday, following the release of its Q4 2024 earnings results. Despite reporting a profitable quarter, concerns emerged surrounding the impact of Hurricane Milton, rising expenses, and potential pricing pressures.

During the earnings call, ACIC reported a core income of $6 million for Q4 2024, a decrease of $12 million year-over-year. This decline was attributed to the full retention loss from Hurricane Milton, which contributed 27.8% to the company's combined ratio of 91.9%.

Additionally, operating expenses increased by $15.1 million, driven by higher policy acquisition costs and fees paid to managing general agents (MGAs). While gross premium earned grew by $3.6 million, reaching $162.7 million, the underlying combined ratio excluding catastrophe losses and prior year development stood at 65.9%.

Looking ahead, ACIC anticipates pricing pressure, with rates expected to decrease by 5% to 10% year-over-year on average account renewals. This development, coupled with ongoing challenges in finalizing the reinsurance structure and retention for 2025, has raised concerns among investors.

Despite these challenges, ACIC remains optimistic about its future prospects. The company successfully launched a new apartment program in Florida, generating approximately $2.3 million in premiums from 19 new apartment risks. Furthermore, ACIC enhanced its reinsurance protections with a new three-year catastrophe bond, increasing coverage from $100 million to $200 million.