American Integrity Insurance Group, Inc.

Hello and thank you for standing by. My name is Jade 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 2026 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. As a reminder, this call is being recorded. Before we begin, please note that today's remarks may contain forward-looking statements, including comments about the company's 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 the risk factors can be found in the company's SEC filings, including its most recently filed annual report on Form 10-K and quarterly report on Form 10-Q. Management undertakes 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 the company's quarterly press release and can also be found on its website at www.aii.com. References to American Integrity or the company prior to the consummation of the IPO refer to American Integrity Insurance Group, LLC, and after the consummation of the IPO refer to American Integrity Insurance Group, Incorporated. With that, I'll turn the call over to American Integrity's founder and chief executive officer, Bob Ritchie. Please go ahead.

Thank you, and good morning, everyone. Before we get into the quarter, I want to take a minute to recognize the change. for our executive management team. And Ben Lurie is right here with us. Ben, I want to thank you for everything you've done over the past two years. You played a key role in our successful public listing. You helped guide us through our very first year as a public company. I'm happy to report Ben will continue to support us through the transition, and he'll remain on the insurance company board and is with us here this morning to answer questions during the Q&A portion of the call. I and our entire team are very grateful, Ben, for your contributions, particularly around capital markets execution and IPO readiness. We want to wish you all the best as you return to Salon Company, our lead investor. Thank you for your support. Thank you for helping us achieve this important milestone as a public company. I also want to officially welcome Brian Foley, who is here with us. as our new chief financial officer. Brian brings impressive and significant capital markets and insurance experience, including his personal and professional work as one of our lead investment bankers when we went public at KBW. And the tireless nights that Ben knows especially in David, 24-7 sometimes you were there. You worked closely with our team as we prepared for and successfully executed our public listing. You've been a trusted advisor with us for many years. And Brian, you played a meaningful role in helping position the company for the public markets. Brian's familiarity with our business and investor base allows for immediate continuity as we scale as a public company. And I and David Clark are executive chairman and John our president. couldn't be any happier to welcome Brian and we're really excited to have you on board. Now let's turn to the quarter. It's been remarkable. The business is performing in line with our expectations and the underlying trends are consistent with the normal earnings profile that we've outlined to all of you post our initial public offering. In fact, our performance this quarter reflects the continued execution across our core growth drivers with improving visibility into the forward earnings and growth of this business. At a high level, the quarter represents and reflects a business that is transitioning toward more durable, voluntary-driven growth with a more normalized earnings profile. Our results also reflect our continued expansion into this very voluntary production with early traction in new product lines, which John will talk about, and incremental geographic diversification across the southeast. To put data behind that positioning, our multi-channel distribution model continues to deliver consistent diversified growth. Through March, policies in force are growing double digits across nearly every channel. with independent agents up approximately 9%, company alliances up nearly 40%, builders up over 38%, and national accounts up in excess of 40%. This consistency across our channels reinforces that our 18% year-over-year voluntary customer growth is not dependent on a single source, but reflects broad-based demand and execution across the platform. While we have clear momentum, there has been much discussion on the state of the property market, particularly in Florida, where increased capital formation and new entrants are influencing pricing dynamics. Our view is straightforward. Florida needs more carriers, not fewer. Eleven companies are out of business. large portions of the market continue to remain underserved. And we see the continued meaningful room to grow on a disciplined and profitable basis. I'm pleased to report this is particularly evident in the tri-county region and the middle-aged home market that we've been describing to you. We're executing on that. As we've told you, these are areas where we previously reduced exposure due to historical unfavorable litigation environments that are a little longer. With the recent legislative reforms, the market has become much more rational, and it's allowed us to reengage profitably across a series of new markets. And importantly, rate adequacy remains regulated and actuarially supported, which we believe limits the sustainability of any particular irrational pricing behavior over time. In our core Florida market, we're seeing strong traction, as I told you, in middle-aged homes in Tri-County for HO3 homeowners policies. These are markets we recently reentered because of these reforms. And during the first quarter, here's what's important. We wrote 120 new policies per business day in these markets, up from only six policies a day in the same period last year. That's a 20x increase year over year. These markets represent more than half of the homes in Florida, reinforcing both the scale and durability of the opportunity. This momentum is being driven across all distribution channels, as I mentioned, and supported by longstanding agency relationships, continued discipline underwriting, and expanded product availability. This is a large and unpenetrated segment of the market for us. and one where our product positioning and underwriting discipline are clearly resonating. I'm happy to report we're also seeing that momentum translates into our expansion states. As of March 31, South Carolina policies enforced increased 119% year over year, albeit a small base, but important growth. Georgia increased 332%, and our brand new state of North Carolina In just the first quarter, we wrote 360 policies after we entered there. So while Florida remains our core and will continue to remain our core, this is early evidence that our model is portable and it's scalable beyond the state of Florida. While you may see some headline rate movement across our peers and our own business, the effective pricing impact is actually much more modest than it appears. given the inflation guard that we have in place for our residential business. Why? Because inflation is not gone and homes continue to rise in the cost to rebuild. As a result, the reported rate changes can overstate the true earned premium impact when adjusted for exposure growth and, as I mentioned, inflation guard mechanisms. Additionally, I'm happy to report we're seeing very meaningful reinsurance market improvement and expect substantial and meaningful rate softening on our June 1st renewal, which we're nearly done with. And John's going to touch on this in more detail in just a minute. So taken together, we expect to deliver consistent profitability with improving earnings and quality driven by a voluntary mix and reinsurance tailwinds. Additionally, I want to touch on one of our core advantages, our agent distribution network. Florida is an agent-driven market. We spent two decades building strong partnership with agents throughout the state, as well as with national firms. One example of this engagement is our annual Diamond and Gold agent event, which we just had a few weeks ago. We bring together our top performing partners and they compete every year for this. What continues to stand out is the depth of these relationships and their willingness to direct incremental business toward us as we expand our appetite. Their feedback is consistent and valuable. They value how we operate and they view us as a differentiated partner in this marketplace. And this translates directly into the production flow and improved quality of submissions that we're seeing day after day, week after week, and quarter after quarter. Importantly, this growth continues to be concentrated within our highest performing distribution partners. Among our leading agencies, three-year gross non-cat loss ratios are consistently below 20%, and in many cases, significantly lower. We're growing exactly where we want to grow, with the partners, the segments, the geographies that align with our profitability objectives. We're seeing particularly strong momentum with partners such as Goosehead, Advantage Allstate, Brightway, State Insurance, and Sand Group, among others, where growth is being driven by both scale and sustained underwriting profitability. And this gives all of us here the confidence that we're not just growing, but we're growing with discipline and continued strong underlying profitability. From a product standpoint, we have a product solution for the vast majority of approximately 9 million homes in Florida. on our terms, conditions, and prices, and we remain broadly open for business across our expansion states, which continues to support growth momentum and geographic diversification. We also believe we're well positioned to support future consolidation of competitor books as market conditions have normalized. Our API-enabled single entry capabilities are also increasingly important, particularly with large agent partners. And this improves the ease of doing business and it drives incremental submission flow. So in closing, when we talk about growth across areas like tri-county or middle age homes, it really comes back to that foundation of longstanding relationships that we have built combined with improved legislative and market conditions. We believe American Integrity is well positioned to continue scaling our business with improved earnings quality and disciplined growth across our targeted markets. With that, I'll turn the call over to John to walk through these very growth drivers in more detail.

Thanks, Bob. I'll spend a few minutes going a bit deeper on what we are seeing in the business and how that's translating into our results, and then spend much of my time on the many opportunities that we have in front of us to expand our franchise. Starting with our results, we continue to see growth in our core Florida market. In the first quarter, we wrote over 94,000 new and renewal policies in the voluntary market, reflecting continued momentum in our core business. Combined with healthy retention levels of approximately 83.6% this quarter, our policies and force increased to over 437,000 policies, representing approximately 14% growth year over year. As we've discussed, that growth only includes very modest citizens takeout activity. What you're seeing now is more representative of the underlying run rate of the business. At the same time, we're seeing an increasing contribution from our targeted growth areas. which is starting to show up in our new business production. So when we step back, production remains strong, retention remains stable, and we're seeing growth come through clearly in the areas we've been focused on. Starting with our entry into the Tri-County, this is one of the largest and most important insurance markets in Florida. To put that in perspective, the region represents roughly 28% of the state's households, while today it represents approximately 7% of our policies in force. While early from a penetration standpoint, we are seeing substantial writings growth in our new business production as we reengage with our agent partners and reestablish our presence. During the first quarter, we saw approximately a quarter of our voluntary Florida new business gross written premium come from tri-county HO3 policies, up from low single digits in the year-ago first quarter. We believe our reentry into middle-aged homes represent an equally large market opportunity. Like the Tri-County, we are under-penetrated relative to the size of that market opportunity. Additionally, this has historically been the core of our book of business, our bread and butter, in an area where we have deep underwriting experience and long-standing agent relationships. We stepped away from this area of the market due to the litigation environment, which made it difficult to write that business profitably. As we have discussed over prior calls, the recent reforms in Florida have changed the dynamic and we're now able to move back into that market in a way that meets our return expectations. And importantly, that's not just a market opportunity, it's an area we have a proven track record. We understand the risk characteristics, we have established pricing and underwriting frameworks, and we have longstanding relationships with agents who specialize in this type of business. We are pleased with our early results here as well. In the first quarter, voluntary HO3 middle-aged homes, excluding Troy County, contributed approximately one quarter of our Florida new business voluntary gross written premium, up from the low single digits in the comparable quarter last year. We're also seeing encouraging early progress in our commercial residential product. This is a program we launched late last year, focused on providing coverage for garden style, two and three story condo associations, townhome communities, and homeowners associations across Florida. We are pleased with our modest pace of new business writings in this new line of business, having written 81 policies during the first quarter, inclusive of takeouts. In addition to our opportunities within Florida, we're also continuing to make progress in our expansion across the Southeast, including North Carolina, South Carolina, and Georgia. In South Carolina and Georgia, where we already have an established presence, we're seeing continued growth as we build on our existing home builder relationships and gradually expand our footprint. In North Carolina, we've more recently entered the market, and our focus is on building the business in a measured way, consistent with how we approach new markets more broadly. While these markets are still a smaller portion of the overall portfolio today at less than 4% of our in-force premium, They represent an attractive long-term opportunity to carefully extend our operating model beyond Florida. Finally, on reinsurance, we are actively working on our 6 renewal. As we've discussed previously, market conditions have continued to improve both in terms of pricing and overall available capacity for growth. We're seeing strong engagement from our reinsurance partners, and the environment is more constructive on both pricing and terms than what we have experienced in recent years. It's too early to talk about the final results, but we anticipate a meaningful reduction in risk-adjusted pricing at renewal. This reflects a combination of factors, including improved underwriting performance across the industry, a broader normalization of the market, and most importantly, the improved litigation environment in Florida, given the legislative changes passed over the last few years. So when you step back across all of these areas, the tri-county, middle-aged homes, commercial residential, and our expansion across the Southeast, we're seeing not only a significant opportunity set, but just as important, early signs of traction and accelerating new business. Production is strong, policy growth is improving, and we have a long runway ahead of us as we execute on our growth initiatives. With that, let me also welcome Brian to the company. Brian has been a tremendous partner over the years, and I'm looking forward to working with him as we continue to build our business With that, let me turn the call over to Brian to walk through the financials.