Business Context and Reporting Period
This Form 8-K, dated May 29, 2024, reports on American Coastal Insurance Corporation's renewal of catastrophe reinsurance programs for its subsidiaries, American Coastal Insurance Company (AmCoastal) and Interboro Insurance Company (IIC), effective June 1, 2024.
Key Financial Metrics and Program Details
The filing details the structure and costs of the 2024/25 reinsurance programs rather than general corporate financial statements.
- AmCoastal Coverage: Purchased approximately $1.454 billion in aggregate occurrence-based limits, covering windstorms in Florida and other perils.
- AmCoastal Cost: Total cost for catastrophe excess of loss programs is approximately $208.2 million (excluding reinstatement premiums and a 20% quota share).
- IIC Coverage: Purchased $82.5 million in catastrophe reinsurance limits per occurrence for New York perils, with an aggregate limit of $165.0 million.
- IIC Cost: Total cost for catastrophe excess of loss programs is approximately $8.2 million.
- Retentions: AmCoastal first event retention is up to $20.5 million; IIC first and second event retention is $2.5 million.
Material Changes Versus Prior Period
Comparisons to the 2023/24 programs show the following material changes:
- AmCoastal Limits: Increased by $132 million (10.0%) to $1.454 billion.
- AmCoastal Costs: Decreased by $19.3 million (8.5%) to $208.2 million.
- AmCoastal Retention: Increased by $8.2 million, with the captive's retention rising from $2.3 million to $10.5 million.
- IIC Limits: Per occurrence limit increased by $0.5 million (1.0%); aggregate limit increased by $51.0 million (44.7%).
- IIC Costs: Decreased by $0.9 million (9.7%) to $8.2 million.
- IIC Retention: Decreased by $0.5 million to $2.5 million per occurrence.
Outlook, Risks, and Contingencies
Management notes that the filing contains forward-looking statements regarding attachment points, total coverage, and costs, which are subject to estimates and assumptions. Actual outcomes may differ materially based on reinsurers' capacity to pay claims and adjustment provisions in private agreements. The AmCoastal program includes a 20.0% external quota share with an unaffiliated reinsurer holding an A+ AM Best rating.
Investor Verification Checklist
- Verify the impact of the increased retention levels on the company's capital adequacy and risk exposure.
- Confirm the financial stability and claims-paying capacity of the unaffiliated reinsurer providing the 20% quota share.
- Monitor the actual cost of reinstatement premiums, which are excluded from the reported $208.2 million and $8.2 million figures.
- Assess the sufficiency of the 1-in-208-year event coverage for AmCoastal against evolving climate risk models.