Business Context and Reporting Period
Company: American Coastal Insurance Corp (ACIC)
Filing Type: Form 8-K (Current Report)
Date of Report: May 15, 2026
Event: Renewal of the core catastrophe reinsurance program (Core CAT) effective June 1, 2026, through its subsidiary American Coastal Insurance Company (AmCoastal).
Key Financial Metrics and Program Details
- Total Occurrence-Based Limit: Approximately $1.918 billion for the 2026/27 period.
- First Event Limit: Estimated at $1.68 billion (285.7 YR RT in AIR v.13 LTwDS + 10% LAE).
- First Event Retention: Up to $49 million (15.4% of stockholders' equity as of Dec 31, 2025), split between AmCoastal ($26.5 million) and an affiliated captive ($22.5 million).
- Second Event Retention: Up to $25 million (7.9% of stockholders' equity as of Dec 31, 2025) in a multi-event scenario.
- Reinsurance Cost: Approximately $179.5 million (excluding unaffiliated quota share and potential reinstatement premiums).
- Reinstatement Exposure: Maximum additional premium exposure of $0.9 million.
- Quota Share: 15.0% cession rate with an unaffiliated reinsurer (AM Best A+ rating) covering catastrophe perils and attritional losses.
- Catastrophe Bonds: $200 million in new multi-year limit placed in two $100 million tranches.
Material Changes Versus Prior Period
- Limit Increase: Total occurrence-based limit increased by $241.5 million (14.4%) from the 2025/26 program ($1.676 billion).
- First Event Limit Growth: Increased by $349.5 million (26.3%) compared to the prior year.
- Retention Increase: First event retention increased by $19.25 million; second event retention increased by $6.5 million.
- Cost Reduction: Provisional reinsurance cost decreased by $22.35 million (11.1%) from $201.85 million in 2025/26 to $179.5 million in 2026/27.
- Reinstatement Exposure Reduction: Decreased by $4.9 million (84.0%) from the prior year.
- Structure Change: Introduction of $200 million in multi-year Catastrophe Bond limits and a new 15.0% external quota share.
Guidance, Outlook, and Risks
- Coverage Scope: All catastrophe perils are covered, including windstorms named or numbered by the National Hurricane Center.
- FHCF Coverage: ACIC elected 90% coverage for the Florida Hurricane Catastrophe Fund (FHCF) Reimbursement Contract. The mandatory FHCF layer is projected to provide approximately $571.5 million of Florida-only coverage.
- Multi-Event Protection: The program includes cascading limits totaling $435 million for multiple event scenarios.
- Cost Contingency: The $179.5 million cost is provisional and subject to change based on actual exposure as of September 30, 2026.
- Modeling: Coverage levels are deemed sufficient for single and multi-event scenarios based on catastrophe models approved by the Florida Office of Insurance Regulation.
Investor Verification Checklist
- Verify the final reinsurance cost against actual exposure data available after September 30, 2026.
- Confirm the specific terms and attachment points of the new $200 million multi-year Catastrophe Bond tranches.
- Review the impact of the 15.0% external quota share on net underwriting results and attritional loss coverage.
- Assess the adequacy of the increased retention levels ($49 million first event) relative to current stockholders' equity and capital adequacy ratios.
- Monitor the status of the FHCF reimbursement contract and any potential changes in state-mandated coverage requirements.