By Chris Munro

Feb 27 - (The Insurer) - American Coastal Insurance Corporation’s Q4 2024 combined ratio deteriorated by 32.0 points to 91.9% with the increase driven by the impact of Hurricane Milton on its business, while the company provided further details on its new catastrophe aggregate excess of loss coverage.

• CR deteriorates 32.0 points YoY to 91.9%

• Hurricane Milton net losses total $20.4 million, contribute 27.8 points to CR

• Core income per diluted share of $0.12 misses analyst consensus forecast

• GPW up 9.7% YoY to $140.7 million

• Provides details on new cat agg cover and renewed AOP coverage

The St Petersburg, Florida-based company’s pre-tax Hurricane Milton losses totalled $20.4 million and accounted for 27.8 points of its Q4 2024 combined ratio.

ACIC benefitted from 1.8 points of favourable prior-year reserve development, equal to $1.3 million, during the final three months of 2024, compared with 3.0 points, or $1.5 million, of positive development in the prior-year period.

Excluding the impact of Hurricane Milton and prior-year reserve development, ACIC’s fourth quarter 2024 underlying combined ratio was 65.9%, an increase of 2.2 points from Q4 2023.

The company booked $6.0 million of core income in 2024’s fourth quarter, down from the $18.0 million it generated in the same stretch in 2023.

Its core income per diluted share totalled $0.12 in Q4 2024, compared with the prior-year period’s $0.39.

The fourth quarter 2024 core income per diluted share of $0.12 fell short of the $0.16 that was the consensus estimate of analysts, as per S&P Capital IQ.

ACIC’s gross premiums written increased 9.7% year on year to $140.7 million.

Net investment income increased from $2.1 million in 2023’s fourth quarter to $5.3 million in the final three months of last year.

ACIC CEO Bradford Martz said the company’s insurance subsidiary American Coastal “remains a leader in the Florida commercial residential market”.

“The company remained profitable in the 2024 fourth quarter with a combined ratio of 91.9%, despite the devastating impact and full catastrophe retention from Hurricane Milton, leading to a 67.5% combined ratio for the full year.

“This underscores the strength of our reinsurance strategy in safeguarding our balance sheet while mitigating the financial impact of catastrophic events,” he said.

“In December, we announced the launch of our apartment program, and, to date, we have received hundreds of high-quality submissions from our six broker partners, affirming the strong demand for American Coastal’s products,” Martz added.

ACIC also provided an update on developments since the start of 2025.

The company said it had successfully launched its new apartment product, and through to February 25, 2025, it had bound 19 policies and generated $2.3 million of premium.

As previously reported, ACIC bought a new catastrophe aggregate program at January 1 that provides the company with $40 million of limit with a $20 million per occurrence cap.

The company’s new cat agg attaches excess of zero after its $40 million annual aggregate deductible has been hit, and then limits its losses from all cat loss events, including named windstorms, severe convective storms and winter storm events, to a cost of $6.6 million.

The company at the beginning of the year also renewed its all other perils cover, which provides it with up to $90 million of occurrence limit above a $10 million retention.

ACIC renewed the AOP cover with a retention that was $4 million lower than on its expiring treaty. The company said it had renewed the program at a risk-adjusted cost that was 8% lower than in the prior year.

The AOP program limits ACIC’s losses from cat events other than named windstorms and earthquakes.

ACIC’s reinsurance operation Shoreline Re is participating in the AOP cat program, which reduces the company’s consolidated retention to $9.8 million per occurrence net of inuring quota share reinsurance coverage.

ACIC renewed the AOP cover for approximately $11.9 million, a decrease of some 8% on a risk-adjusted basis. Six new reinsurers took a position on the AOP program.

“All incumbents increased [their] authorized line size from prior year,” said ACIC.

Removing ACIC’s retention, the newly secured AOP program provides the company with some $88.2 million of protection for a first event and the same for a second event, totalling $176.4 million in the aggregate, an increase of $4.4 million, or 2.6%, compared with the 2024 program.

The AOP program’s attachment point reduced by $4 million, or 28.6%, year on year to $10 million.