American Coastal Insurance Corporation, a property and casualty insurance holding company, has released its financial results for the first quarter of 2025, reporting net income of $21.3 million.
While this figure represents a slight decrease compared to the $23.6 million seen in Q1 2024, the company highlighted a strong combined ratio of 65%, although is down 11.8pts compared to Q1 2024’s.
The positive drivers of net income during this year’s first quarter included increased gross premiums earned alongside a decrease in ceded premiums earned, driving an overall increase in revenues.
Total revenues saw an 8.4% surge, climbing to $72.2 million from $66.5 million in the same period last year. Gross premiums earned also experienced a slight increase, to $162.1 million, which compared to Q1 2024’s $160.2 million.
Furthermore, American Coastal reported a 7.2% increase in its total gross written premium, which rose to $197.9 million in Q1 2025, from the $184.6 million reported in Q1 2024.
This revenue growth was offset by increased policy acquisition costs quarter-over-quarter. However, this was partially offset by decreased losses and loss adjustment expense (LAE) incurred and general and administrative expenses.
Loss and LAE decreased 8.8% to $11.4 million for the quarter, from $12.5 million seen in Q1 2024. Loss and LAE expense as a percentage of net earned premiums decreased 3.2 points to 16.7% for Q1 2025, compared to 19.9% for the same period last year.
Excluding catastrophe losses and reserve development, the company’s gross underlying loss and LAE ratio for Q1 2025, would have been 8.4%, an increase of 0.8 points from 7.6% for Q1 2024.
American Coastal also reported that its policy acquisition costs increased 144.8%, to $23.5 million for the Q1 2025, from the $9.6 million seen in the first quarter of 2024.
This was primarily due to a decrease in ceding commission income as the result of the company’s decrease in quota share reinsurance coverage from 40% to 20%, effective June 1, 2024.
The company noted that ceded premiums earned related to its catastrophe excess of loss contracts increased year-over-year due to this change, the overall ceding ratio lowered as the replacement excess of loss coverage proved more cost-effective than the non-renewed portion of the quota share contract.
aAdditionally, during the first quarter of 2025, American Coastal’s net income attributable to discontinued operations was $1.6 million, compared to a net loss of $110 thousand attributable to discontinued operations during the first quarter of 2024.
B. Bradford Martz, American Coastal Chief Executive Officer, commented: “We achieved our target combined ratio of 65% and delivered a return on equity over 30% in the first quarter of 2025.
“Strong account retention and selective new business production combined with our strategy to retain more of our business resulted in net premiums earned increasing 9% and net loss and loss adjustment expenses decreasing slightly compared to the same period last year. The Company remains focused on disciplined underwriting to support sustainable profitability and value creation for our shareholders throughout the cycle.”
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