Business Context and Reporting Period
This Form 8-K filing by American Coastal Insurance Corp. (ACIC) reports on the renewal of its core catastrophe reinsurance program (Core CAT) effective June 1, 2025. The report details the structure, limits, and costs of the 2025/26 reinsurance program for its subsidiary, American Coastal Insurance Company (AmCoastal).
Key Financial Metrics
- Total Occurrence-Based Limit: Approximately $1.676 billion for the 2025/26 program.
- First Event Limit: Estimated at $1.33 billion.
- First Event Retention: Up to $29.75 million (12.6% of stockholders' equity as of December 31, 2024).
- Second Event Retention: Up to $18.5 million (7.9% of stockholders' equity as of December 31, 2024).
- Reinsurance Cost: Approximately $201.85 million (excluding the 15.0% quota share and potential reinstatement premiums).
- Maximum Reinstatement Exposure: $5.9 million.
- FHCF Coverage: 90% coverage elected; projected total Florida-only coverage of approximately $534.1 million.
Material Changes Versus Prior Period
- Limit Increase: Total occurrence-based limit increased by $62.4 million (3.9%) from the 2024/25 program.
- First Event Limit Increase: Increased by $68.4 million (5.4%) compared to the prior year.
- Retention Increase: First event retention increased by $9.25 million; second event retention increased by $5.5 million.
- Cost Reduction: The risk-adjusted open market rate decreased by 12.2% compared to the 2024/25 Core CAT program.
- Reinstatement Exposure Reduction: Maximum reinstatement/additional premium exposure decreased by $10.5 million (64.0%).
Outlook, Management Commentary, and Risks
Management highlights that the renewed program provides sufficient coverage for approximately a 1-in-201-year event and covers scenarios involving a 1-in-100-year event followed by a 1-in-50-year event in the same season. The program includes an external quota share at a 15.0% cession rate with an unaffiliated reinsurer holding an AM Best rating of A+. The filing notes that the total cost is provisional and subject to change based on actual exposure as of September 30, 2025.
Investor Verification Checklist
- Verify the final reinsurance cost once actual exposure is determined as of September 30, 2025.
- Confirm the impact of the increased retention levels ($29.75 million first event) on the company's capital adequacy.
- Review the specific terms of the 15.0% quota share arrangement with the A+ rated reinsurer.
- Assess the implications of the 90% FHCF coverage election on the overall Florida catastrophe risk profile.