American Integrity Insurance Group - Q4 2025

Transcript

Operator (participant)

Hello, thank you for standing by. My name is Sarah, I will be your conference operator today. At this time, I would like to welcome everyone to the American Integrity Insurance Group Q4 and full year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. As a reminder, this call is being recorded. Before we begin, please note that today's remarks may contain forward-looking statements, including comments about the company's outlook, strategy, plans, and expected performance. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially.

A full discussion of the risk factors can be found in the company's SEC filings under its most recently filed annual report on Form 10-K and quarterly report on Form 10-Q. Management undertakes no obligation to update any forward-looking statements. Furthermore, today's remarks may contain non-GAAP financial measures. A reconciliation of non-GAAP financial measures to their most comparable GAAP measures is included in the company's quarterly press release and can be found on its website at www.aii.com. References to American Integrity or the Company prior to the completion of the IPO refer to American Integrity Insurance Group, LLC, and after the completion of the IPO, refer to American Integrity Insurance Group, Inc. With that, I'll turn the call over to American Integrity's Founder and Chief Executive Officer, Bob Ritchie. Please go ahead.

Bob Ritchie (Founder and CEO)

Thank you. Good morning, everyone. This is an extraordinary moment in American Integrity's journey. I'm honored to share it with you today. This past year has been a defining chapter in our company's history. In May of last year, we completed our very successful initial public offering, raising gross proceeds of $100 million. This was a milestone that not only strengthened our balance sheet. It also affirmed a message that American Integrity is a company built for scale, resilience, and durable value creation. Importantly, our IPO was not a destination, it was a catalyst. It was a launching point. Today we're operating from the stronger foundation it created as we diversify our products, as we expand into new markets, and as we serve even more communities.

Our robust quarterly and full-year results are a testament to the strength of our underwriting discipline, the depth of our agent relationships, the trust of our policyholders, the confidence of our employees, and the improving health of the Florida marketplace. I'd like to highlight several key achievements from 2025. First, we grew gross premiums earned by nearly 30% year-over-year to $885 million. We delivered adjusted net income available to common shareholders of $103 million or $5.97 per diluted share, compared to $37.9 million or $2.94 per diluted share in the prior year. We achieved a combined ratio, a record of 63.7%. This is a more than 17-point improvement from 80.9% that we achieved in 2024.

We recorded a 42.1 adjusted return on equity. This is up from 26.8% in 2024. We increased our customer count 19% from 356,000 to nearly 422,000 customers. Like many other leading carriers in Florida, our financial results benefited from well-underwritten, profitable takeouts from Citizens in late 2024 and early 2025. As expected, the phase of large, profitable Citizens takeouts is complete. Importantly, our growth engine today is organic and voluntary, supported by deep agent relationships and disciplined underwriting. Our results are underpinned by strong organic voluntary growth. Our voluntary customer count increased 16% to 327,000 policies during 2025, based upon a total production of 104,000 new voluntary policies written during the year.

In our home state of Florida, which represents 97% of our current in-force premium, we ended the year as the sixth-largest writer based upon policy count, having written the third most policies after excluding national carriers and Citizens. This voluntary growth positions us among the fastest-growing competitors in our entire peer group. Our ongoing policy growth is a direct result of our deep relationships with our agent partners that have been cultivated for over two decades. We believe it positions us for sustained success as we execute our growth initiatives, including our recent re-entry into the Tri-County region of Florida, our expansion into the middle-aged home market, our newly launched commercial residential product, and our recent entry into North Carolina. We believe we are positioned for diversified, profitable growth for years to come, which will create substantial value for our stockholders.

Importantly, we remain disciplined, and we pursue responsible growth as we strive to maintain a strong balance sheet, purposefully built to weather cycles and support our insureds, our distribution partners, our employees, and our shareholders. I've got exciting news. I'm pleased to announce that our board of directors has declared a special cash dividend to our stockholders of $1.02 per share, which aggregates to $20 million. American Integrity has a long history of returning capital to stockholders following periods of exceptional performance, while retaining sufficient capital to pursue our growth opportunities. With that, I'll turn the call over to Jon Ritchie to discuss operational execution and more deeply, our growth initiatives. Jon?

Jon Ritchie (President)

Bob. I'll focus on how we believe our disciplined execution this quarter positions us for sustainable growth into 2026. Starting with our results, we continue to grow in our core Florida market. In the Q4, we wrote 26,025 new policies in the voluntary market, bringing our full year total to over 104,000, representing a 17% increase over the full year, 2024. Combined with improving retention levels, reaching 82.7% this quarter, our voluntary policies in force has increased 16% over the past year to 332,780 policies. We also assumed almost 8,000 Citizens' residential takeout policies in the Q4, representing $24.2 million of assumed unearned premium, as compared to approximately 68,200 policies in the Q4 of 2024.

Our Citizens' takeouts decreased as fewer policies met our underwriting and target profitability standards. Importantly, we expected this, and our voluntary policy growth remains the driver of our policy growth, given the many strategic initiatives that we have implemented over the last year. Starting with the Tri-County region of Florida, we reentered this market in the Q3 of 2025 and have been building momentum through the Q4 and into the new year. At year-end 2025, we had 29,226 policies in force in the Tri-County region, representing 7% of our book, which we believe is well below our potential market share for an area representing about 28% of Florida's households.

While most of this business in the Tri-County region has come from the Citizens' takeouts over the last year, we are pleased with the early results we are seeing in our voluntary policy writing in this area. We believe our growth in the Tri-County region will continue through 2026 and represents a multi-year opportunity. Another growth avenue is our renewed focus on middle-aged homes, which represents another large market opportunity. In fact, middle-aged homes represented 76% of our HO-3 policies in force as of 2016, prior to the litigation crisis that gripped Florida the last decade, and which declined to 26% of our policies in force as of 2025, as we managed the risk profile of our business.

Given the legislative reforms that were passed in 2022, this market has become attractive once again, and we have reoriented our sales and production efforts to ramp up our writings. Importantly, we have completed our extensive underwriting efforts to refine and price our go-to-market and are pleased with the early acceleration we are seeing in our production numbers. We launched our commercial residential product in October 2025, which is designed to deliver comprehensive and reliable protection for Florida's condominium, townhouse, and residential homeowners associations. The Q4 of 2025, we assumed 149 commercial residential policies from Citizens, representing $5.9 million assumed unearned premium, and began writing commercial residential policies in the voluntary market. Likewise, we are pleased with the early results, which are consistent with our desire to leverage early insights to refine the product and scale responsibly.

We also continue to have success growing our writings in Georgia and South Carolina, largely through our Florida home builder agent relationships, and have begun writing policies in North Carolina, though Florida will remain our core market for years to come. At year-end 2025, our out-of-state policies had more than doubled to 26,732 policies in force. Finally, from a growth perspective, I am pleased to report that we reduced our non-cat quota share from a 40% cession rate to 25% and renewed the treaty with significantly improved pricing. We expect that this will drive additional revenue and reduce the cost of our quota share by approximately 50% during 2026. In 2025, we ceded $248 million of earned premium and generated $276 million of revenue.

With the newly lowered cession rate, we would have ceded $155 million of earned premium and generated revenue of $369 million. We believe these changes will have a positive impact on net income in 2026. The underlying or non-cat loss environment and our results continue to be favorable. For every dollar of gross premiums we earn, we paid out $0.17 in non-cat losses in 2025, consistent with 2024. A strong ratio representative of our underwriting focus and higher market share of newer homes. We introduced this metric in our earnings release and annual report on Form 10-K to reduce the noise that is inherent in the net loss ratio due to large changes in the quota share and excess of loss cat expenses, which we believe helps investors better understand our trends.

We would expect this number to increase modestly as we increase the proportion of policies in our book in Tri-County and for homes with middle-age roofs. This has also been a favorable year for catastrophe losses, given that we did not experience a catastrophe loss for the first time in many years. That is certainly welcome news for Florida, our policyholders, and our stockholders. Importantly, the combination of the catastrophe loss for a year in Florida and increased capital availability in the global reinsurance market, expectations for favorable pricing for our reinsurance renewal are high. Many market commentators estimate that, depending on region, risk-adjusted rate decreases will range from 10%-20% for 2026 renewals. With that, let me turn the call over to Ben to walk through the financials.

Ben Lurie (CFO)

Thanks, Jon. Now that we've covered the annual results fairly comprehensively, I'll walk us through the Q4 of 2025, where our results continue to demonstrate the strength of our distribution network, driving organic growth, prudent underwriting, a favorable loss environment, and increasingly attractive reinsurance pricing environment, which resulted in net income available to common shareholders for the Q4 of $20.9 million, or $1.07 per diluted share. Adjusted net income was $21.8 million, or $1.11 per diluted share. Our return on equity was 25.6%, compared to 21.2% for the Q4 of 2024. Adjusted return on equity was 26.7%, compared to 21.2% in the Q4 of 2024.

During the quarter, we wrote 87,000 new and renewal policies in the voluntary market, an increase of 17% compared to the Q4 of 2024. As Jon indicated, we are pleased with the early results from our various growth initiatives. Gross premiums written in the Q4 of 2025 decreased by $31.2 million-$206.4 million, from $237.6 million in the Q4 of 2024. The decrease in gross premium written was primarily due to our assumption of more policies from Citizens during the Q4 of 2024 as compared to the Q4 of 2025.

Gross premiums written from the voluntary market in the Q4 of 2025 increased by $15.5 million-$137.9 million, from $122.4 million in the Q4 of 2024. Gross premiums earned in the Q4 of 2025 increased by $29.3 million-$229.1 million, from $199.8 million in the Q4 of 2024. The increase in gross premiums earned was driven primarily by new and renewal policies written through the voluntary market and from our strategic participation in the Citizens Takeout program.

Ceded premiums earned in the Q4 of 2025 increased by $31.7 million-$169.8 million, compared to $138.1 million in the Q4 of 2024, due to the increase in gross premiums earned and the placement of our 2025-2026 catastrophe excess of loss reinsurance program, effective June 1st of 2025. The company purchased more reinsurance coverage compared to prior years, reflecting an increase in force premium and total insured value. Net premiums earned in the Q4 of 2025 decreased by $2.4 million-$59.4 million, from $61.8 million in the Q4 of 2024.

The decrease in net premiums earned was driven primarily by the Citizens' takeout in the Q4 of 2024, which created temporary catastrophe reinsurance windfall savings that bolstered net premiums earned in that quarter. Net investment income in the Q4 of 2025 increased $2.1 million-$5.9 million, compared to $3.8 million in the Q4 of 2024, which was primarily driven by an increase in invested assets resulting from increased premiums in force and the proceeds from our IPO. Turning to underwriting performance, losses and loss adjustment expenses for the Q4 of 2025 decreased $6.5 million-$26.3 million, compared to $32.8 million for the Q4 of 2024, primarily driven by the lack of catastrophe losses from current year events during the period. The loss ratio was 42.6% for the Q4 of 2025, compared to 51.6% for the Q4 of 2024. We believe the gross underlying non-cat loss and LAE ratio to also be a useful to investors, as it shows our underwriting performance before the impact of reinsurance.

This number remains consistent increasing from 16.5% in 4Q 2024 to 17.1% in 4Q 2025. Favorable development of $3 million for the quarter resulted in favorable development for the year of $1.8 million. Policy acquisition expenses for the Q4 of 2025 decreased 51% to $5.8 million, compared to $11.8 million for the Q4 of 2024. General and administrative costs for the Q4 of 2025 decreased 43.2% to $6.7 million, compared to $11.7 million in the Q4 of 2024, both driven by an increase in non-catastrophe ceding commissions. As a result, the expense ratio was 20.2% for the Q4 of 2025, compared to 37.1% for the Q4 of 2024.

The combined ratio was 62.8% for the Q4 of 2025, compared to 88.7% for the Q4 of 2024. Income tax expense was $8.4 million and $2.3 million for the Q4 of 2025 and 2024, respectively. The increase from the Q4 of this year versus last year is primarily due to a change in tax status of American Integrity, coincident with our IPO. Shareholders' equity increased to $337 million at year-end, reflecting strong earnings generation and the capital raised in our IPO. Our balance sheet remains well positioned to support continued profitable growth. Overall, 2025 was an exciting year of execution and transformation for American Integrity. We strengthened the balance sheet through our IPO, continued to grow our voluntary network, and delivered outstanding earnings. With that, I'll turn the call back over to the operator to open the line for questions.

Operator (participant)

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star one again. Please ensure that your phone is not on mute when called upon. Thank you. Your first question comes from Greg Peters with Raymond James. Your line is open.

Greg Peters (Managing Director)

Well, good morning, everyone. On first up, great. I think I'm gonna start with just the competitive environment as we think about 2026. A couple of your peers have reported already, and the common theme seems to be emerging, that there's a lot more competition for both new business and renewal business than there was maybe a year or two ago. Maybe you could update us on how you see competition across the different cohorts, the new homes, the slightly older homes, and then the commercial space, please.

Bob Ritchie (Founder and CEO)

Good morning, Greg. Bob, good hearing your voice. When you see that in here and read that there's 17 new competitors, that's not entirely the story. There's only about seven new capital groups, others have formed reciprocals, sister companies, et cetera. Of the seven, there's only one very large one, it's Slide, who's done a very successful number of deals. The other six or so are very responsible and responsive niche players, and they have continued to take out some take-out business and are beginning to write voluntary. Here's where I don't agree with certain statements that might be made by others, and I don't say it to be brash. It took 20 years, but we are in a leadership position in various distribution channels. Let's start with the IA Florida preferred agents, and it took us 20 years to get there.

Preferred agents are giving us top door business and are awarding us opportunities. We have to earn these every day, but I can tell you over the series of time here, we can't really talk about this quarter, but I want to let you know that we are approaching record numbers of new business days on a continual basis, on our terms, in our pricing. This is a position where it allows us to, as an example, ride in South Florida now, right? Middle-aged, middle-aged homes. We continue to dominate the new builder segment. We continue to ride three out of every 10 new homes being built in Florida. This is a combination, Greg, of course, the independent agents, but especially the builder agents like Westwood and others.

Furthermore, we are doing business with virtually every national carrier, except for State Farm, on our terms. That is providing us opportunities. Finally, we have relationships with mortgage companies, other finance companies, online approaches. You put all that together, it's a very, very strong loaf of bread called new business, that's why we are competing and writing record new business on our terms. I welcome every competitor. We need more, not less. There's 8,000,000 homes in Florida and 130 new homes being built each year. I'm bullish about our growth opportunities at American Integrity.

Greg Peters (Managing Director)

Excellent. Thanks for that color[crosstalk]

Bob Ritchie (Founder and CEO)

Thank you.

Greg Peters (Managing Director)

The other question I have is just, it's coming from some of the investors, is with the change in the quota share for 2026, maybe you could spend a second and walk us through how the expense ratio, both the general admin and the policy acquisition, lines might change because of the change in the quota share. That'd be helpful. Thank you.

Ben Lurie (CFO)

Absolutely. Thank you, Greg. Because of the quota share program, we get ceding commissions that do net against those two expense line items. Even though our underlying expenses will stay constant, pretty much constant, you will see a net increase in those two line items. However, that increase is going to be more than offset by a decrease in seeded premiums we're paying to our quota share partners. The net result of that is going to be slightly higher expenses versus 25 on a net basis, also significantly higher net revenues and revenues. That is what we expect will drive even additional profitability going into this year.

Greg Peters (Managing Director)

Got it. Thanks for the answers.

Operator (participant)

Your next question comes from Paul Newsome with Piper Sandler. Your line is open.

Paul Newsome (Managing Director and Senior Research Analyst)

Hi. I was hoping you could give us a little bit more thoughts on capital management and your how you prioritize where you're going to put the capital in light of the special dividend? Usually, when you see special dividends, that means that there's some sort of signaling that there's not a place to put that capital. Anyway, both prioritization as well as your thoughts on if that is the signal we should be thinking about in terms of [crosstalk] a special dividend?

Ben Lurie (CFO)

Paul, thank you so much for that question. It's a great question, and one that we're eager to answer. You know, when we did the IPO in May, it was in anticipation of having significant growth opportunities across all the areas that you've heard about on this call, Tri-County, middle-aged homes, commercial product, and we are more excited than ever about those growth avenues. That said, during our initial conversations, we've always said that to the extent we have windfall earnings, for example, in this year, because of no cat storms, that we would always be looking for opportunities to return excess capital to investors. The fact that we had no cats this year gave us this surplus, and we've got a 20-year history of returning money to the investors whenever we can. That said, the remaining IPO proceeds are still positioned to fund all these growth initiatives that we're so excited about in 2026.

Paul Newsome (Managing Director and Senior Research Analyst)

Pardon me. Special dividends. Sorry, guys, let me talk through it. How do you look at the trade-off versus special dividends versus buybacks?

Ben Lurie (CFO)

Another great question, and something that we've thought a lot about, and it's a question we've taken very seriously. We did a secondary in the last quarter, and the reason we did the secondary was the same reason we did the IPO. We wanted to get our stock in the hands of new public shareholders that understand our business, that are excited the way we are about our future growth prospects, and provide the float and the daily volumes necessary to create liquidity and make our stock attractive to investors. Because that was a decision point, we didn't want to take float out of the market today. We're trying to get the stock in the hands of as many new investors that will hear our story, that we're excited to tell. We'll continue...That continues to be our plan going forward. We believe as we continue to execute on our business plan and deliver positive returns, that folks will increasingly be excited about becoming investors in our stock.

Paul Newsome (Managing Director and Senior Research Analyst)

Thank you. appreciate the help, as always.

Operator (participant)

The next question [crosstalk].

Ben Lurie (CFO)

Thank you.

Operator (participant)

My apologies. The next question comes from Tommy McJoynt with KBW. Your line is open.

Tommy McJoynt (Assistant Vice President and Equity Research Analyst)

Hey, good morning, guys. My first question is asking about the trajectory of the average sort of premium per policy going forward. There's obviously a confluence of inputs from what's happening with primary pricing and homeowners versus your business mix changing by adding Tri-State and middle-aged homes. Then there's also the commercial policies, which are much higher premiums. As you take all of those together, where do you see your average premium per policy going?

Jon Ritchie (President)

Hey, Tommy, it's Jon. Certainly the mix of business that we're writing, and you hit the nail on the head, of middle-aged homes and Tri-County in particular, will elevate the average premium of the overall portfolio as we continue to write a large number of new policies in that space. We're expecting that there is upward trajectory of the average premium of the total portfolio, especially for the voluntary book. In conjunction with that, certainly there is pressure downward on the primary pricing due to the trends that we've seen in the non-cat losses, particularly over the last several years. As we've mentioned in, I believe, the last call, the current average rate decrease for the portfolio for the 2025 annual rate filings is roughly 5%, we'll continue to monitor that and file accordingly.

Lastly, you hit on commercial policies that we're starting to write. That will take time to grow. We're being very prudent and thoughtful as we enter that space, but we are seeing some early success. Long answer to your question, but overall, we're seeing the trend of average premium going up over the next 12 months.

Tommy McJoynt (Assistant Vice President and Equity Research Analyst)

Got it. Thanks for that. To follow up on that, 5% figure that you just referenced, for the average rate decrease, is that referring to your portfolio specifically? As you look out across, you know, Florida homeowners, across competitors, do you have a view on what competitors are doing with that number?

Jon Ritchie (President)

Yeah. That was our, for American Integrity's portfolio, that 5% reference. We do monitor rate filings both through the OIR and then also what we hear in the field from our sales department. Certainly, that range of rate decrease is pretty consistent with what we're seeing in the marketplace. Certainly, we do know that we have an incredibly responsible regulator with Mike Yaworsky at the Office of Insurance Regulation, and that certainly is beneficial, and he's being prudent as rate filings are coming through. We're not seeing anyone out there buying market share at this point in the cycle. It's also worth noting, Tommy, with that rate decrease, we still have our inflation factor that's on the renewal book that partially offsets that rate decrease. Certainly that, in conjunction with everything else that I mentioned previously, gives us the conviction, knowing that the average premium is heading upward at this point.

Tommy McJoynt (Assistant Vice President and Equity Research Analyst)

Thanks. Switching over to the reinsurance side, it seems like it's an advantageous time to be a buyer of reinsurance. You have options coming up at the six-one renewal to either take savings to buy more reinsurance up in the tower, perhaps lower attachment points. How do you weigh the pros and cons of those different decisions as you approach this upcoming reinsurance renewal?

Jon Ritchie (President)

Yeah. Certainly the reinsurance market is advantageous for buyers this cycle. Capacity is abundant, pricing is going down on a risk-adjusted basis. We have seen early signs of this as we're in the ILS market issuing our cat bonds that are closing this week. Certainly, in the traditional market, early conversations that we've had with our trading partners in Bermuda and London are very favorable. In terms of our buying habits, they will be consistent with prior year, certainly from a vertical perspective of limit, but also horizontal. We will have third and fourth event cover to cover the 2004 storm season on both a frequency and severity basis, and it's our intent as we continue to place our reinsurance cover for the 2026 renewal cycle, that retentions will be consistent with prior treaty year.

Tommy McJoynt (Assistant Vice President and Equity Research Analyst)

Thank you.

Jon Ritchie (President)

Thanks, Tommy.

Operator (participant)

Your next question is a follow-up from Greg Peters with Raymond James. Your line is open.

Greg Peters (Managing Director)

Hey, thanks for letting me come back with a couple of follow-up questions. First of all, it sounded like poor Paul was about choking on something, so I hope he's okay. I wanted to just go back to this reinsurance comment. You know, one of the things that we have to be mindful of is that, you know, the Q3 and Q4 is hurricane season, and you said in your comments on about the changing reinsurance conditions that the retentions, the third and fourth events. I'm just trying to map out what you think the retention might be for your first event and second event this year. Obviously, knowing that there's still some uncertainty about your placements, but how are you thinking about that?

Jon Ritchie (President)

Yeah. We are finalizing the structure as we go to market to place our cover for this year. On a first event basis, the retention will be consistent with the 25, 26 treaty year, and we're looking at options on second event. Certainly on a third and fourth event basis, we have been able to get additional cover for those events, and particularly some cascading features in the ILS market have returned, and we're able to attach lower for those tranches of cover that we're placing. We are finalizing our thoughts on third and fourth event, but retention is something that's incredibly important to us to keep that as low as... [crosstalk].

Bob Ritchie (Founder and CEO)

Especially, Greg, this is Bob on post first event. We're being thoughtful, creative, and these cat bonds and their flexibility and pricing are creating, I think, some really good opportunities this year for us. Stay tuned, and I think you'll, as a group of analysts and shareholders, will like the outcome.

Greg Peters (Managing Director)

Yeah, I think you mentioned in your answer, the 2004 hurricane season as sort of a benchmark of trying to...[crosstalk]

Bob Ritchie (Founder and CEO)

Yes, yep.

Greg Peters (Managing Director)

Issue your reinsurance.

Bob Ritchie (Founder and CEO)

Yep.

Greg Peters (Managing Director)

Is that correct?

Bob Ritchie (Founder and CEO)

It is. It, it's always been my mantra, and I'm very grateful, except for a year or two during the worst of this crisis. 2004, four majors hitting single state, single year, hadn't happened for a century in 2004. It's always been our testament and our risk management approach to be protected in the event of multiplicity of major hurricanes again.

Greg Peters (Managing Director)

Excellent. That's good color. The other comment that was made during the comments was you talked about the non-cat loss ratio, $0.17, I think, of gross. It's non-cat or AOP or I'm not sure what the right acronym is, but 17 seems low. Maybe that's just a reflection of that your business mix was skewed towards new homes. I would think that the markets may be twice that, but maybe you could give us some perspective on the comment that you said that you expect that to go up.

Jon Ritchie (President)

Yeah, certainly we're very proud of that 17% gross loss ratio for the book, and that's consistent with the prior year. It's a combination of the mix of business, the quality of reunderwriting of the portfolio that we've done in recent years, and then certainly the legislative reform benefiting us and the entire marketplace. It is our belief that at that 17-point gross loss ratio, certainly it will begin to increase modestly, a point or two as we continue to write in Tri-County, and we write middle-aged homes. The premium we're collecting for that type of business is appropriate and offsets that, and we're happy with directionally where the loss ratio is going.

Bob Ritchie (Founder and CEO)

Then also, Greg, as you know, look, the loss ratio is an important number, both for comparison and for analysis of a company's performance. It's all about frequency and severity. As the top line with modest rate decreases happens, then it's mathematics. Of course, that ratio becomes 1 or 2 points higher. I am pleased to tell you, very pleased to tell you a couple of things. Number one, the frequency has normalized to a market performing more normally post-reform. That's remarkable. For us, our frequency is a bit lower, we feel, than competitors because of the robust new business, new construction. On the severity side, inflation is not zero, so we'll see some uptick occasionally on the severity side. Net-net, it's about pure premium divided into the gross premium. You had a comment?

Ben Lurie (CFO)

Yeah. Greg, just real quick, on the math side of it, just to make sure that we're being clear and consistent. We are introducing the gross underlying ratio to take away the effects of reinsurance, both quota share and cat reinsurance. Typically, when you talk about net underlying loss ratio, you're talking about after your cat reinsurance load, which can be, you know, 40%-50% of every dollar. That would bring you to underlying ratios along the lines of what you're talking about. We just think it's important to show our losses without the effect of reinsurance, because as we've talked about, changing our quota share arrangements will have impacts on these numbers, and we want to be very transparent with our investors in the community as far as what our actual loss experiences are.

Greg Peters (Managing Director)

Thank you. I guess the one final question I'll have, it just give you an opportunity to remind everyone and myself included in this, is, you know, you've grown the book substantially, you know, over the last year. I'm just curious about your process about managing risk aggregation and concentration as you've, you know, expanded into these other areas of the market and how you think about those type of concerns, you know, considering what your objectives are on a long-term basis.

Jon Ritchie (President)

Yeah, that's a great question. Greg, thank you for that. Certainly, where the growth initiatives in Florida, where we're targeting in Tri-County and then also middle-aged homes, it complements the portfolio geographically and takes some pressure off some peak zones for the company within the state, particularly Southwest Florida, which we're very happy with our market share there. Writing in Tri-County and middle-aged homes coming disproportionately from Central Florida is a region where we had to nonrenew a healthy amount of business during the litigation crisis that we faced over the last 10 years. The strategy that we're deploying offsets the concern that you're raising in terms of disproportionate concentration of risk, and we're really pleased with our new business writings, where they're coming geographically within Florida.

Greg Peters (Managing Director)

Thanks. Thanks for letting me ask the additional questions.

Jon Ritchie (President)

Thanks.

Operator (participant)

This concludes the question and answer session. I'll turn the call to Bob Ritchie for closing remarks.

Bob Ritchie (Founder and CEO)

Thank you, and thanks for joining us on our call this morning. I'm very proud of our results. I am incredibly proud of our employees, 'cause over this past year, we have created remarkable success, and the new chapter ahead of us is even more exciting. I want to thank everyone for their hard work and for all that everybody does each and every day to make us more successful. As we look at the year ahead, I've got three things to close with. Number one, we surpassed our objectives for 2025 and continued to responsibly return excess capital to our investors. Fueled by our IPO proceeds, as Ben mentioned, we have the capital to grow organically, sustainably, and in the right markets. Number two, momentum is on our side.

You heard me talk about record growth, responsible, profitable record growth. Momentum is our thread. We're seeing early successes in exploiting various growth opportunities. Finally, number three, we have the people. Some of them are listening today. I'm grateful for every one of you. In excess of 310 dedicated employees. A leadership team that has been with us for at least five years and running some 10, 12, 15 years. We're aligned, and we're pulling in the same direction. We built a strong culture, I'm very proud of it, that has positioned us for success through market cycles. In conclusion, we remain focused on the drivers we control: underwriting quality, expense discipline, and thoughtful yet aggressive growth. Now is our time to grow. We believe our performance remains durable and repeatable. Here's the thing: We're not just growing, we're building something enduring. I want to thank you for your time today.

Operator (participant)

This concludes today's conference call. Thank you for joining. You may now disconnect.