Ategrity Specialty Insurance Company Holdings

Good afternoon everyone and thank you for joining us today for integrity's third quarter fiscal year 2025 earnings results conference call. Speaking today are Justin Cohen, chief executive officer. Chris Shank, president and chief underwriting officer and Neelam Patel, chief financial officer. After Justin, Chris and Neelam have made their formal remarks, we will open the call to questions. 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 one again. Thank you. Before we begin, I would like to mention that certain matters discussed in today's conference call are forward-looking statements relating to future events, management's plans and objectives for the business and the future financial performance of the company that are subject to risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are referred to in our press release issued today, our final prospectus, and other filings filed with the SEC. We do not undertake any obligation to update the forward-looking statements made today. Finally, the speakers may refer to certain adjusted or non-GAAP financial measures on this call. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is also available in our press release issued today, a copy of which may be obtained by visiting the Investor Relations website at investors.integrity.com. I will now turn the call over to Justin.

Good evening, and thank you all for joining Integrity's third quarter 2025 earnings call. This is Justin Cohen, and I am joined here today by Chris Schenk, our President and Chief Underwriting Officer, and Neelam Patel, our CFO. Attegrity delivered record results this quarter. Gross written premiums grew 30% year over year, including accelerating growth in property lines. Our combined ratio improved to 88.7% as we began to demonstrate operating leverage. With investment income, our adjusted net income was $22.8 million. translating into 78% year-over-year growth. These results were ahead of guidance despite industry data pointing to a deceleration in the E&S market. We believe that's because we are executing a model that is truly differentiated. It's built on specialization, analytics, automation, and distribution, and we are capitalizing on these strengths to drive sustainable growth and profits. This was a quarter characterized by expanding top line, operating leverage, and improved economics. First on top line growth, we achieved a 30% increase in gross written premiums supported by 70% submission growth. That's seven zero, not one seven. Our distribution network is exceptionally large for a company our size, and we are driving deeper engagement by bringing new and attractive solutions to the market. Second, on operating leverage. Our operating expense ratio improved 2.7 percentage points as prior investments in infrastructure and process efficiency began to deliver. Expense growth moderated while earned premiums accelerated. And we are realizing this upside even as we invest in new lines of business and next-generation technology that are expected to drive the next phase of leverage. Finally, on improved economics. Our policy acquisition ratio improved 1.8 percentage points as we continue to optimize our business mix. We have been deliberately increasing the percentage of our premiums written in our brokerage channel where acquisition costs are lower. This has been underway for several quarters and is now earning through in our results. Now turning back to the broader E&S market where headwinds have emerged in certain areas, competitive intensity has increased but conditions remain rational in the small and medium-sized space. This segment has remained relatively insulated given the challenges that new entrants face in trying to profitably write $10,000 policies without the requisite scale. Against that backdrop, we are focused on extending Ategrity's structural advantages of speed, competitive products, and technical pricing to drive disciplined share gains. So with that, I'll now turn it over to Neelam for the financials.

Thanks, Justin. We delivered another strong quarter of financial performance. Adjusted net income came in at $22.8 million, up from $12.9 million in the same quarter last year, driven by top-line growth, improving margins, and higher investment income. Let me walk you through the main line items, starting with premiums. Gross return premiums grew by 30% in the quarter. Casualty premiums increased by 41%, while property premiums went up by 11%, both contributing meaningfully to our overall growth. Net return premiums grew by 42%, reflecting a higher retention rate year over year. Net earned premiums were up by 29%, reflecting the natural-legged earnings recognition of our growth trajectory and a quota share reinsurance treaty be placed in 2024. Net earned premium growth accelerated sequentially, consistent with our prior comments of abating headwinds in the second half. Our fee income came in at $2.2 million compared to $0.2 million a year ago, reflecting higher policy fees as we continue to implement standard market practices. Turning to underwriting results, our underwriting income for the quarter was $10.6 million, up nearly 208% year over year. This translates into a combined ratio of 88.7%, an improvement from 95.3% last year due to reductions in both our loss and expense ratio. The loss ratio declined 2.1 points to 60% with strong underlying results in our property business. In the current quarter, we had no prior year development compared to 1.7 points last year that were related to a change in how we reserved for legal expenses. Catastrophe losses represented 4% of net earned premium this quarter, down from 12.1% last year, which had an active hurricane season. Our expense ratio declined 4.5 points to 28.7%, reflecting improvements in both operating efficiency and business mix. Operating expenses represented 10.8% of net earned premiums, down 2.7 points from last year, and also lower than the second quarter of 2025. The declines were driven by expense leverage and higher fee income. Policy acquisition costs as a percentage of net earned premiums declined to 17.9% from 19.7%. The improvement was primarily driven by favorable mix shift as growth has been concentrated in lines of businesses carrying lower growth commission rates and higher seeding commissions. Moving on to investment results. Net investment income was 11 million in the third quarter, up from 6.8 million last year, driven by increased assets from our IPO and higher yields on our fixed income portfolio. Realized and unrealized gains contributed another 9.2 million, supported by strong results in our absolute return portfolio. Our effective tax rate for the quarter was 20.6%, bringing the net income to 22.7 million. Adjusted net income, which adds back IPO-related compensation costs, was $22.8 million, or $0.46 per diluted share. Turning briefly to the balance sheet, our cash and investments grew by $86 million from the second quarter to $1.1 billion, reflecting strong operating cash flow. Book value increased by $29 million, driven by $23 million attributable to increased retained earnings and the rest to increased AOCI. Our book value per share ended the quarter at $12.24. With that, I will hand it over to Chris to talk about our underwriting and operating performance.