American Integrity Insurance Group, Inc.

Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Integrity Insurance Group first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Before we begin, please note that today's remarks may contain forward-looking statements, including comments about our outlook, strategy, plans, and expected performance. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially. A full discussion of risk factors can be found in our SEC filings, including our most recently filed quarterly report on Form 10Q. We undertake no obligation to update any forward-looking statements. Furthermore, today's remarks may contain non-GAAP financial measures. A reconciliation of non-GAAP financial measures to their most comparable GAAP measures is included in our quarterly press release and can also be found on companies' website at www.aii.com. References to American Integrity or the company prior to the consummation of the IPO refers to American Integrity Insurance Group, LLC, and after the consummation of the IPO refers to American Integrity Insurance Group, Inc. With that, I will turn the call over to our founder and chief executive officer, Bob Ritchie. You may go ahead.

Thank you, Lacey, and good morning, everyone. Before we begin, I want to take a moment to express my deep appreciation for the many individuals that have made our IPO a success. On May 7th, American Integrity Insurance Group began trading on the New York Stock Exchange under the ticker symbol AII. That milestone was the result of nearly two decades of building something special in Florida. So to our employees, our agents, our reinsurers, our early investors, and our supporters, thank you. You believe in our mission to bring integrity, discipline, and innovation to the Florida homeowners' property insurance market. Your belief fueled us, and your partnership now propels us forward in this new chapter of our growth. We raised gross proceeds of $100 million that capital is enabling us to pursue our next phase of growth with strength and purpose through continued Florida expansion, product innovation, and capitalizing on the historic legislative reform in Florida's insurance marketplace. When we founded American Integrity in 2006, in the aftermath of back-to-back hurricane seasons that upended Florida's insurance market, We viewed the inherent volatility as an opportunity to serve the state's homeowners by building a differentiated platform. We believed that capital alone was insufficient to create long-term, sustainable enterprise, and we set forth to build a disciplined, under-running company by investing in best-in-class technology and deep, trusted, independent agency relationships. Thriving in Florida requires the ability to navigate both weather and legal instabilities. And so working with our agency partners and taking advantage of our heavy investment in sophisticated underwriting technologies, allowing for granular risk rating structures and block level analysis, we have been able to focus on newer construction, stricter risk standards, and selected geographic underwriting filters. to steer us away from excessive risk during the period of heightened litigation. Our technology underwriting roadmap now includes enhanced mobile clothing tools and further segmentation by roof covering type and deck attachment integrity. Every product we write is informed by our block level profitability heat maps. And so we don't enter markets we can't model. And we built internal infrastructure to reflect that same philosophy. Our litigation department, our claims organization, our actuarial team work side by side to evaluate cause of loss trends and root out potential leakage. This has helped us drive down severity and improve fraud detection. Combination of our underwriting, claims, sales, and legal expertise, all integrated and working together, allow us to engage and inform lawmakers, trade groups, and the Office of Insurance Regulation Leadership. In fact, our voice has helped to shape the successful Senate Bill 2A reforms in December 2022. So now that the historic legislative reforms of 2022 have been proven and the claims environment has normalized, We have emerged from this period with a healthy balance sheet and profitable book of business, and we're in position to take full advantage of our strong market position and significant growth opportunities. With that, John Ritchie, our president, will walk you through our first quarter operational highlights that underscore our foundation for growth.

Thanks, Bob. I'd like to highlight the operational and growth side of our first quarter results. First, we continue to be pleased with our ability to grow in our core Florida market. In the first quarter of 2025, we wrote 24,554 policies in the voluntary market, up from 14,843 in the first quarter of 2024, and assumed 16,632 additional policies from citizens. Additionally, we experienced policy retention rates of 78.1% during the quarter on renewal business, which represents a positive trend. The combination of these factors increased our in-force policy count and premiums to 383,000 policies and $910 million, respectively. Our policies in-force is up 42.9% over the past year and 7.6% over the past quarter. More than 70% of our enforced premium is voluntary market premium, with 98% of that in our core Florida market and 2% in Georgia and South Carolina, where we have strategically expanded to support and enhance our relationships with our builder agency network. The loss ratio was 30.9% for the three months ending March 31st, 2025, compared to 49.9% for the three months ending March 31st, 2024. a decrease of 19 percentage points. This is the result of the reduction of both our quarterly catastrophe and underlying loss ratios, as well as an increase in net premiums earned, driven largely by our recent participation in the Citizens Takeout Program. Through our voluntary and takeout operations, we are expanding our presence in underserved but stable counties, particularly across northern and central Florida and Palm Beach. with new premium growth driven by our targeted risk appetite, segmentation by construction type, and favorable litigation metrics. Our growth in northern Florida and inland central Florida reflects our strategy to balance exposure concentration while writing the best risks in coastal areas through new home and roof year segmentation. We are finalizing our rate filings for our new voluntary writing program in Miami and Broward County, where we have historically had virtually no exposure and anticipate beginning writing voluntary business there in the fall of 2025 through our existing agent relationships. We were pleased to announce recently the favorable completion of the placement of our Catastrophe Access of Loss Reinsurance Program, which includes the following highlights. We placed $1.93 billion in third-party coverage for a single catastrophic event and $2.59 billion in aggregate, all indemnity-based with reinsurers A- rated or better or fully collateralized. This represents an increase of 45% over the 2024 treaty and a purchase at the 130-year modeled return period. The total incurred net consolidated catastrophe reinsurance premiums ceded to third parties are expected to total $433 million for the treaty year, which is an increase of 28% over the 2024 treaty year estimates. Our net retention is $35 million of the first and second events, dropping to $15.8 million and $10 million on the third and fourth event, respectively. We issued $565 million of cap bonds under Integrity RE-3 Limited, the eighth and largest ILS transaction in our history. While the size of the program and the retentions were consistent with what we had been expecting, The net cost of the program is significantly less than anticipated, representing a meaningful risk-adjusted pricing decrease. Recent public statements by various reinsurance brokers pointing to high single-digit to low double-digit rate decreases with more reductions on the top of the program and less under the Florida Hurricane Catastrophe Fund are consistent with what we have experienced. We believe that the pricing benefits reflect the belief that reinsurers have in the durability and effectiveness of the 2022 reforms, as demonstrated by Hurricane Milton, and that Florida residents will continue to see modest homeowners insurance rate reductions as a result. We have completed three rate filings this quarter, including our voluntary HO3 and DP1 products, incorporating recent court decisions and non-hurricane severity drivers into our actuarial models. Rates are down by a weighted average of approximately 3%. Inflation factors that mirror market conditions will continue to be closely monitored and will represent an offset to these rate filings. Early Office of Insurance Regulation feedback on these filings is positive. And with that, I'll turn it over to Ben Lurie to walk through the financials.