Akshay Fola

Akshay Fola requested an update on the regulatory approval status for the new E&S entity, ACES, and sought insights into its forecasted gross premiums for 2026, long-term market share ambitions, and target combined ratios compared to American Coastal's Florida book.

Answer

President and CEO Bennett Bradford Martz confirmed that ACES's regulatory approval in Arizona is still pending, with Q4 2025 dedicated to completing background checks. He stated that ACES's premium ambition for 2026 is relatively small, less than 5% of total revenue guidance, with significant growth expected from 2027 onwards. Martz noted that ACES will initially operate as a collateralized reinsurer, with plans to pursue AM Best ratings for direct writing. While market leadership is the ultimate goal, he views ACES as likely smaller than American Coastal for the next 3-5 years. Martz considered a 65% combined ratio for ACES aggressive, citing the unique advantages of the Florida condo book, and expects ACES to operate with an underlying combined ratio more in line with the historical 65-75% range for commercial residential property. Regarding share repurchases, Martz acknowledged the stock's undervaluation but stated it hasn't been a top priority, preferring the optionality of special dividends after hurricane season, but confirmed the company is monitoring the stock and is a buyer at current levels.