American Coastal Insurance Corp Reports Mixed Q3 Results; Core Income Rises Amidst Challenges
ACIC's gross premiums written saw a marginal increase of 0.7% year-over-year.
Net income available to stockholders per diluted share from continuing operations improved significantly.
Book value per share increased by 49.5% compared to the same period last year.
On November 13, 2023, American Coastal Insurance Corp (NASDAQ:ACIC) released its 8-K filing, detailing the financial results for the third quarter ended September 30, 2023. The company reported a slight increase in gross premiums written, up 0.7% to $103,872 thousand, and a more substantial rise in gross premiums earned, which jumped 19.8% to $165,760 thousand. However, net premiums earned saw a significant decline of 20.5%, and total revenues decreased by 19.3% year-over-year.
Financial Performance Overview
ACIC's earnings from continuing operations, net of tax, showed a remarkable turnaround from a net loss of $27,446 thousand in Q3 2022 to a net income of $14,373 thousand in Q3 2023. The consolidated net income attributable to ACIC also shifted from a net loss of $70,884 thousand to a net income of $10,568 thousand. The core income, a non-GAAP measure, turned positive at $14,873 thousand compared to a core loss of $18,070 thousand in the prior year.
Income Statement Highlights
ACIC's diluted earnings per share from continuing operations improved from a loss of $0.64 to a gain of $0.33. The core income per diluted share also showed a positive change, with a current figure of $0.34 against a loss of $0.42 in the previous year. The book value per share increased significantly by 49.5% to $2.78.
Balance Sheet and Cash Flow Insights
The company's cash, restricted cash, and investment holdings decreased from $340.9 million at the end of 2022 to $286.9 million at the end of Q3 2023. The book value per common share saw a substantial increase, indicating an improvement in the company's retained earnings and overall net worth.
CEO Commentary
We are pleased to again deliver value to our shareholders. Our book value per share at September 30th increased to $2.78, and our continuing operations reported a core return on equity of 170.3%, with $14.4 million in third quarter earnings. American Coastal continues to outperform its peers and expectations. Although our personal lines segment experienced a pre-tax loss of $5.5 million, this is a significant improvement quarter-over-quarter, and we continue to take pricing and underwriting actions that improve the outlook of the personal lines segment. Consolidated net income for the third quarter was $10.6 million, including a loss on discontinued operations of $3.8 million, which shows the strength of American Coastals earnings power. Our focus on expense reduction and the quality of our book of business has delivered results, said Dan Peed, Chief Executive Officer of ACIC.
Operational Highlights and Future Outlook
ACIC's commercial lines operating segment reported pre-tax earnings of $25.9 million, a significant increase from the previous year, primarily due to decreased catastrophe losses and policy acquisition costs. The personal lines segment reduced its pre-tax loss to $5.5 million from $26.5 million, reflecting the company's strategic shift towards specialty commercial lines underwriting.
While the company faces challenges in its personal lines segment and a decrease in total revenues, the improvement in core income and book value per share demonstrates ACIC's resilience and strategic focus on profitability. Investors and stakeholders can anticipate continued efforts in expense management and underwriting discipline as ACIC navigates the evolving insurance landscape.
For more detailed information, investors are encouraged to review the full earnings presentation on the company's website and join the quarterly conference call.
Explore the complete 8-K earnings release (here) from American Coastal Insurance Corp for further details.
This article first appeared on GuruFocus.
