American Coastal Insurance Corporation

Hello, and welcome to the American Coastal Insurance Corporation's third quarter 2023 earnings conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may press star one at any time to be placed into question queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Karen Daly, Investor Relations with the Equity Group. Please go ahead, Karen.

Thank you, Kevin, and good afternoon, everyone. American Coastal Insurance Corporation has also made this broadcast available on its website at www.amcoastal.com. A replay will be available for approximately 30 days following the call. Additionally, you can find copies of the latest earnings release and presentation in the investor section of the company's website. Speaking today will be Chairman of the Board and Chief Executive Officer, R. Daniel Pede, and President and Chief Financial Officer Bennett Bradford Martz. On behalf of the company, I'd like to note that statements made during this call that are not historical facts are forward-looking statements. The company believes these statements are based on reasonable estimates, assumptions, and plans. However, if the estimates, assumptions, or plans underlying the forward-looking statements prove inaccurate, or if other risks or uncertainties arise, actual results could differ materially from those expressed in or implied by the forward-looking statements. Factors that could cause actual results to differ materially may be found in the company's filings with the U.S. Securities and Exchange Commission in the risk factor section of their most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. Forward-looking statements speak only as of the date on which they are made and, except as required by applicable law, the company undertakes no obligation to update or revise any forward-looking statements. With that, it's my pleasure to turn the call over to Mr. Daniel Pede. Dan, you may begin.

Thanks, Karen. Hello, and thanks for joining us on our third quarter earnings call. I plan to provide an overview of activities from the third quarter and year to date, including focusing on the operating results of our continuing operations. I will then turn it over to Brad Martz, who will expand on the financial results. Our commercial line segment now comprises over 90% of the third quarter gross written premium and 95% of the gross earned premium with pre-tax income of 25.9 million in the third quarter and 90.2 million year to date. The net loss ratio for commercial lines was 19.5% in the third quarter and 19.7% year to date in line with expectations. Commercial lines net expense ratio continues to trend downwards, 33% in the third quarter and 35.6% year-to-date, down from 43% and 44.2% respectively last year. The net combined ratio attributable to the commercial line segment was 52.5% in the third quarter and 55.3% year-to-date. down from 100.5% and 80.3% year-over-year, respectively. Still addressing the commercial line segment, prior year development continued to be favorable at 6.2% in the third quarter and 5.5% year-to-date. The CAT loss ratio was 9.7% in the third quarter and 6.5% year-to-date, which is in line with expectations and accounts for seasonal AOP activity as well as Hurricane Idalia. American Coastal was largely unimpacted by Idalia, with our current loss estimate well below the reinsurance attachment point of $10 million. Nevertheless, we are aware that Floridians along the northern Gulf Coast were impacted by Idalia, and our thoughts and support goes out to them. American Coastal's commercial segment underlying combined ratio was 48.9%, in the third quarter and 54.3% year-to-date, down from 57.7% and 66.1% respectively year-over-year. This demonstrates the improvement in profitability produced by the Commercial Alliance portfolio and the earnings power of our commercial book of business. Turning to our underwriting metrics, the commercial portfolio continues to be well-positioned given the current marketplace post-hurricane Ian. Commercial total insured value was down 14%, while the probable maximum loss at the 100-year return period was down 23% on a year-over-year basis. The gross written premium is up 22% through the third quarter, as well as 31% year-to-date. Valuation is up an average of 9%. American Coastal continues to be a commercial residential leader in Florida, and we believe that our commercial line segment will be an earnings leader for the foreseeable future. Florida continues to be a hard market, and we continue to see the benefits of Florida's insurance reform. Litigation is down, and we've been able to effectively utilize the pre-suit notification of intent to mitigate to settle claims. and get the insured's funds to make appropriate repairs, which allows us to continue to provide capacity to Floridians. As we have mentioned several times before, we continue with our efforts to divest of Interboro, our New York domicile personal lines carrier. Once Interboro is sold, American Coastal will have achieved its multi-year strategy to divest of personal lines and focus on commercial lines. In conclusion, while the hard market creates challenges, it also creates excellent opportunities for American Coastal with the number one market share for admitted commercial residential exposure in Florida. My outlook on Florida, Florida's commercial marketplace remains unchanged. The market remains hard, and I expect it to remain that way for both the near and intermediate terms. With that, I'll turn it over to Brad Marks.