American Coastal Insurance Q2 2026 net income fell 17% to $21.9M ($0.44/share) as 24% lower Florida pricing cut net earned premium 11% and lifted the combined ratio to 74.3%, while book value per share rose 20% to $7.21.
Combined ratio
74.3%
Net income
$22M
-17.2% YoY
Diluted EPS
$0.44
-17.0% YoY
Loss ratio
27.0%
Catastrophe losses
$3.1M
Book value per share
$7.21
+20.2% YoY
Net premiums written (NPW): insurance sold in the period, after the share passed on to reinsurers. Combined ratio: claims plus expenses per dollar of premium earned; below 100% means the insurance business itself made money before investment income. Loss ratio: the claims part alone.
This period vs a year ago
Same period last year
This period
Net income▼-17.2%
≈$26M
$22M
Diluted EPS▼-17.0%
≈$0.53
$0.44
Book value per share▲+20.2%
≈$6.00
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
American Coastal Insurance (ACIC), a Florida insurer of condominium associations and apartment buildings, earned $21.9 million ($0.44 per diluted share) in the second quarter of 2026, down 17% from $26.4 million ($0.53) a year earlier. The cause is not bad claims experience: it is price. The company says its net pricing fell 24% year over year as Florida's commercial-property market kept softening, so it collected and booked less premium while its costs stayed roughly flat. Only a small spring catastrophe bill and a smaller one-off both went against it; no hurricane touched the quarter.
At a glance
Net premiums earned fell 11.1% to $69.7 million. This is the premium the company keeps after paying reinsurers, and it is the main source of profit; lower prices are shrinking it.
Combined ratio of 74.3%, up from 60.6%. For every $100 of premium kept, ACIC spent $74.30 on claims and running costs, still a large underwriting profit but a much thinner one than a year ago.
Book value per share of $7.21, up 20.2% from $6.00 a year earlier. The company's net worth per share keeps growing even as quarterly profit shrinks.
Results versus a year ago
Metric
Q2 2026
Q2 2025
YoY Change
Gross premiums written
$216.3M
$228.3M
-5.3%
Net premiums earned
$69.7M
$78.4M
-11.1%
Total revenue
$82.6M
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$7.21
$86.5M
-4.5%
Net income
$21.9M
$26.4M
-17.2%
Diluted EPS
$0.44
$0.53
-17.0%
Core income (non-GAAP)
$16.5M
$26.8M
-38.5%
Loss ratio (net)
27.0%
19.8%
+7.2 pts
Expense ratio (net)
47.3%
40.8%
+6.5 pts
Combined ratio
74.3%
60.6%
+13.7 pts
Underlying combined ratio (non-GAAP)
68.7%
62.2%
+6.5 pts
Current-year catastrophe losses (net, pre-tax)
$3.1M
$0
n/m
Book value per share
$7.21
$6.00
+20.2%
Two ratios carry this report. The loss ratio is claims (plus the cost of handling them) as a share of the premium the company keeps. The expense ratio is everything else it costs to run the business (commissions, management fees, salaries) as a share of the same premium. Add them and you get the combined ratio: below 100% means the insurer made money on its policies before counting any investment income. ACIC's 74.3% is still very profitable by industry standards, but the jump of 13.7 points is the story of the quarter.
Where the margin went
Price, not claims, is the main driver. Gross premiums earned fell 16.2% to $138.7 million. The 10-Q attributes both the written and earned declines to "a 24% decrease in our net pricing year-over-year as the market continued to soften." The number of new and renewal policies actually rose, to 1,705 from 1,532, so ACIC is keeping or winning buildings but charging each one less.
The expense ratio rose because the premium base shrank. Total operating expenses were almost unchanged at $33.0 million (from $32.0 million), but spread over $8.7 million less net earned premium, they took 47.3% of it instead of 40.8%. Within that:
Policy acquisition costs fell 6.4% to $22.7 million, mainly because management fees paid to outside agents, which scale with premium, dropped by $5.1 million. That saving was partly eaten by $2.3 million less ceding commission (the fee reinsurers pay ACIC for sharing its business), since ACIC cut its quota share (the slice of every policy handed to reinsurers) from 20% to 15% on June 1, 2025.
General and administrative expense rose 32% to $10.3 million. The main reason is a one-off in the comparison year: a $2.9 million employee retention tax credit refund lowered Q2 2025 salary costs.
Claims were little changed underneath. Net losses rose $3.3 million to $18.8 million, but $3.1 million of that was catastrophe losses from two non-hurricane events ("all other catastrophe loss events"; no named storms in the quarter or year to date), and $0.8 million was unfavorable development on prior-year claims, versus $1.3 million of favorable development a year earlier. Strip out both and the underlying net loss ratio was 21.5% against 21.4%: essentially flat.
What the headline numbers hide
Investment gains prop up net income. Of $28.4 million pre-tax income, $3.3 million came from realized investment gains and $4.2 million from unrealized gains on stocks, together about a quarter of the total. The company's own "core income" measure, which removes these gains and intangible amortization, fell 38.5% to $16.5 million ($0.33 per share), more than twice the 17% drop in reported net income. Core income is the better read on the underlying business.
Other income is gone. Other income swung from $1.4 million to a $48,000 loss because income from the company's intellectual-property transaction "came to its conclusion." This will not come back.
The tax rate helped slightly. Tax took 22.9% of pre-tax income versus 25.3% a year earlier.
Buybacks barely moved this quarter's EPS. ACIC bought back 1.37 million shares in May and June at about $10.50-$10.71, but because the purchases came late in the quarter, diluted share count fell less than 1% (49.3 million vs 49.6 million). Shares outstanding are down 3.1% since December (47.3 million vs 48.8 million), so the effect shows up more in Q3.
Cash flow is positive but much lower. Operating cash flow for the first half was $52.8 million against net income of $41.2 million, but down from $154.4 million a year earlier. The 10-Q attributes this to lower premium collections outpacing lower paid losses, as older catastrophe claims continue to settle. Unpaid claim reserves fell from $165.7 million to $118.9 million since December.
The rise in premiums receivable is seasonal. The jump from $70.4 million to $119.9 million since December lines up with the June 1 renewal season rather than a collections problem; reinsurance premiums payable jumped the same way ($66.8 million to $203.9 million).
Cash went back to shareholders. In the first half, ACIC paid $36.6 million in dividends (no new dividend was declared in 2026) and $19.4 million in buybacks, funded by an $87 million dividend from its insurance subsidiary.
Net premiums written is not a useful figure this quarter. ACIC doesn't report net premiums written. Working it out from the reported lines distorts it anyway, because most of the year's reinsurance premium is booked at the June 1 renewal, so it is left out here.
Hurricane season: how protected is it?
Florida hurricanes are the main risk for this company, and the second quarter ends just as the season starts. What the filing says about protection:
The core catastrophe reinsurance program, renewed June 1, 2026, covers losses up to about $1.68 billion for a first storm ($1.92 billion in total). The company says this covers about a 1-in-286-year event, i.e. a roughly 0.4% annual chance that a single storm exceeds it.
On a first storm, ACIC pays the first $49 million itself under GAAP, split between the insurer and its captive reinsurer. After quarter-end, on August 1, 2026, it bought extra cover that lowers that first-event retention to $23.5 million. Second- and third-event retentions are $25 million and $2 million.
Management says lower reinsurance prices let it buy more protection for less money. Reinsurance cost fell to 49.8% of gross earned premium from 52.6%, which "mitigates much of the impact of rate change on net premiums earned," per CEO Brad Martz.
Year to date and outlook
For the first six months, net income was $41.2 million ($0.83 per share) versus $47.8 million ($0.96), and the combined ratio was 70.3% versus 62.7%. ACIC gives no earnings guidance. What management points to is growth in its E&S (excess and surplus lines: specialty property cover written outside standard state rate rules) platform, which added $28.7 million of premium year to date. After the quarter, Kroll Bond Rating Agency upgraded the insurer's financial strength rating to A from A- (July 21), and the board added another $25 million to the buyback authorization, bringing the total to $50 million.
Our read: underlying claims costs are stable, so the key question is how far Florida commercial pricing falls from here. With net pricing down 24% and a largely fixed expense base, the expense ratio will stay elevated unless E&S growth or cheaper reinsurance offsets the lost premium. The third quarter is peak hurricane season. The lower $23.5 million first-event retention caps how much a single storm could cost ACIC. But any named storm would fall straight on a smaller earnings base than last year's.
Takeaway: ACIC's claims experience is unchanged (underlying loss ratio 21.5% vs 21.4%). Profit is falling because Florida prices are down 24%, and core income dropped 38.5%, twice as fast as reported earnings, once investment gains are stripped out. Book value per share is still up 20% in a year. The business is healthy but its earnings are shrinking, and cheaper reinsurance is the main offset.