American Coastal Insurance Corporation

greetings and welcome to the american coastal insurance corporation first quarter 2024 financial results conference call and webcast at this time all participants are in a listen-only mode a brief question and answer session will follow the formal presentation if anyone should require operator assistance during the conference please press star 0 on your telephone keypad as a reminder this conference is being recorded at this time i'd like to turn the call over to karen daly Vice President at the Equity Group and American Coastal's Investor Relations Representative.

Thank you, John, 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 released 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, Chief Financial Officer, Svetlana Castle, and President, Bennett Bradford-Marx. On behalf of the company, I'd like to note that statements made during this call that are not historical facts or 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 a company's filings with the U.S. Securities and Exchange Commission in the risk factor section of the 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. Hello, and thank you for joining us on the Marin Coastal's first quarter 2024 earnings call. I plan to provide an update on activities from the first quarter, touch on strategic initiatives that we expect will have a positive impact on the bottom line in the near term, and then I will turn it over to Brad Marks and Mauna Kaso, who will provide more detail on the first quarter financial results. First, as announced in January, we enhanced the bench strength of our leadership team. Lana Castle joined as the CFO of all entities. Lana has 15 years of experience in the insurance industry with extensive experience in shared service operations, enterprise risk management, and all aspects of finance and accounting. With the addition of Lana as CFO, Brad March's role as president shifted to strategic initiatives that enhance shareholder value. In line with our commitment to risk management and compliance, we promoted Andy Gray to chief compliance and risk officer. Andy is a CPA with more than 30 years of experience in tax, accounting, internal audit, and risk management within the Florida insurance space. We are excited about these changes, and our results show that Lana and Andy have provided immediate value. Next, I'm happy to report that our earnings continue to be very strong. The first quarter 2024 ended with a core return on equity of 69.7% driven by an underlying combined ratio of 57.8% and favorable prior year development in both commercial and personal line segments. The book value per share increased by 18.3% from the end of 2023 to March 31st, 2024. First quarter net income continued to trend upward to $23.6 million or up 38% from the fourth quarter of 2023. This highlights our expanding net earned premium margin as direct rate increases that took effect in 2023 earned through the book and catch up to the reinsurance premium levels established at 6-1-2023. Furthermore, we expect net written and earned premiums to increase substantially over the next 18 months accelerated by our planned reduction of external quota share at June 1, 2024. At the same time, we have increased our multi-year reinsurance commitments, enhancing stability. Our 2024 catastrophe reinsurance program was marketed with a structure that further protects the balance sheet. We have been able to increase the expected exhaustion point with the successful placement of AmCoastal's multi-year cap bond which was oversubscribed at the lower end of the expected coupon range. To reduce earnings volatility, we also continue to target a first event retention of less than one quarter's expected underwriting profit before CAT losses. AmCostal enjoys a mature and defensible portfolio with both a low underlying combined ratio and net catastrophe exposure near an all-time low. We enjoy a solid reputation developed over a dozen years strong reinsurance relationships with long-term partners, and an exclusive distribution partner for Florida Condominium Associations. These are AmCoastal's unmatched competitive advantages in a specialty niche combined with an ongoing firm market expected to continue well above average for several years. Finally, I am excited to announce that we signed definitive documents for the sale of Interboro Insurance Companies. Closing is subject to customary regulatory approvals, but we anticipate that process will be smooth, and we look forward to a seamless transition of InterBRL. This represents a milestone in our divestment of our personal lines operations.