AmCoastal Q3 Core Income Falls 33% on Lower Earned Premium

AmCoastal (NASDAQ: ACIC) reported lower third-quarter earnings as declining pricing and reduced earned premium pressured revenue, while the specialty property insurer maintained a profitable underwriting margin and continued building its excess-and-surplus-lines business. Core income fell 33.1% year over year to $20.4 million for the quarter ended September 30, 2026, and core diluted earnings per share declined to $0.42 from $0.61.

Net income was $19.4 million, or $0.40 per diluted share, compared with $32.5 million, or $0.65 per share, a year earlier. Total revenue decreased to $70.7 million from $90.4 million, while net premiums earned fell 19.0% to $65.5 million.

The company attributed the earnings decline to lower earned premium as it declined underpriced accounts rather than protecting market share at the expense of returns. Gross written premium still increased 3.2% year over year despite an approximately 26% decline in net pricing, with $8.6 million of E&S premium helping offset the softer market.

Underwriting Margin Remains Profitable

AmCoastal’s combined ratio rose to 64.7% from 56.9% in the prior-year quarter. Excluding catastrophe losses and prior-year reserve development, the underlying combined ratio was 68.4%, compared with 57.8% a year earlier and 68.3% and 68.7% in the first and second quarters of 2026, respectively.

The quarter included $3.1 million of current-year catastrophe losses, equivalent to 4.7 percentage points of the combined ratio, and $5.5 million of favorable prior-year reserve development, which reduced the ratio by 8.4 points. The net loss and loss-adjustment-expense ratio increased to 12.2% from 11.4%, while the expense ratio rose to 52.5% from 45.5%.

Core return on equity was 24.1%, down from 44.5% in the third quarter of 2025. Book value per share reached $7.52, increasing 15.5% from the end of 2025 and 12.1% year over year. Tangible book value per share rose 19.3% from year-end to $6.23. Debt represented 29.6% of total capital.

E&S Business Provides a Growth Avenue

AmCoastal is expanding beyond its Florida admitted commercial-residential franchise through two E&S initiatives. Its quota-share participation in AmRisc’s nationwide commercial property book, which began in March, generated $37.3 million of written premium through the first nine months of 2026. The company expects that initiative to produce $70 million to $80 million of written premium annually.

ACES, the company’s emerging specialty carrier, received a Certificate of Authority from Arizona in early October. Management intends to begin writing business on or around December 1, 2026, with ACES expected to contribute new E&S business in 2027. The company said these initiatives provide a route to broader specialty growth without accepting inadequately priced accounts.

AmCoastal also amended its agreement with underwriting and distribution partner AmRisc during the quarter, making the exclusive arrangement perpetual.

Reinsurance and Investments

The company placed approximately $1.68 billion of per-occurrence catastrophe limit at its June 1, 2026, renewal and expanded its reinsurer panel to 31 participants from 25. The program includes $400 million of cascading coverage down to $50 million for third and subsequent events, while $764 million of limit has been placed ahead of the 2027 renewal, excluding Florida Hurricane Catastrophe Fund coverage. All-perils protection applies above a $23.5 million retention for a first event.

The reinsurance ceding ratio remained relatively stable at 52.8%, including the expanded protection. Ceded premium earned declined 10.9% as the company began earning through its new reinsurance program at reduced pricing. Gross premium earned fell 14.9%.

Cash and investments totaled $707.9 million at September 30. The portfolio had a 2.3-year duration and a 5.09% yield to maturity, with 80.5% of holdings rated A or higher and an overall composite rating of A.

Management continues to prioritize underwriting margin over premium growth as property insurance pricing declines, although it said pricing remains above its long-term mean. Results remain exposed to catastrophe and severe-weather losses, reinsurance cost and availability, regulatory changes, pricing competition, investment-market risks and the company’s ability to execute and integrate its specialty expansion.