American Integrity Insurance Group, Inc. (AII)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered exceptionally strong profitability and growth: total revenues rose 62.2% YoY to $71.9M, net income was $38.1M, and the combined ratio improved to 42.9% from 75.9% YoY, driven by Citizens take-outs, voluntary growth, and a meaningfully lower loss and expense ratio .
• Results beat thin S&P Global consensus: EPS $2.92 vs $2.85 and revenue $71.9M vs $68.0M; estimate breadth remains minimal (1 estimate each), so revisions and coverage builds are key next catalysts for multiples* .
• The company placed a larger, lower cost reinsurance program ($1.93B single-event/$2.59B aggregate; expected $433M seeded premiums; retentions of $35M for 1st/2nd events) and executed a $565M ILS transaction, supporting capacity and risk transfer heading into hurricane season .
• Strategic updates: weighted-average rate filings down ~3% (offset by inflation vigilance); planned Tri-County (Miami-Dade/Broward) entry in fall 2025 via existing agency relationships; focus remains on disciplined underwriting and geographic balance .
• Near-term narrative drivers: sustainability of unusually low combined ratio as Citizens denominator effects normalize, reinsurance cost tailwinds, pace of voluntary growth, and execution on South Florida expansion .

What Went Well and What Went Wrong

What Went Well

• Material profitability inflection: combined ratio fell to 42.9% (loss 30.9%, expense 12.0%), with underlying loss ratio at 30.0%, reflecting litigation reform benefits, favorable severity/frequency trends, and operating leverage from Citizens take-outs .
• Scaled growth with higher quality mix: net premiums earned +66.5% YoY; policies in-force +42.9% YoY to 383,332; in-force premium +34.6% YoY to $909.5M, aided by voluntary growth and Citizens take-outs, with retention of 78.1% and targeted geographic expansion .
• Risk transfer and pricing: reinsurance program expanded with significant risk-adjusted price decreases; rate filings (HO3/DP1) completed with weighted-average ~3% cuts, reflecting improved market structure post-2022 reforms .

Management quote: “We do not write every policy. We write the right policy… built to deliver predictable results across very unpredictable environments.” .
Management quote: “These results reflect disciplined, strategic execution… and a culture aligned around a mission that matters.” .

What Went Wrong

• Temporary denominator effect; normalization ahead: management flagged that Citizens take-outs temporarily depress loss/expense ratios by boosting net earned premium without corresponding cat costs; ratios should revert toward more normal levels as reinsurance expenses amortize .
• Concentration/Florida macro and inflation: company remains highly exposed to Florida regulatory/weather dynamics; management is monitoring ~5% inflation impacts on severity and ITV even as frequency trends improve .
• Citizens take-out tailwind likely fades: management expects the pool to shrink; “best days for large scalable takeouts are already behind us,” placing more emphasis on voluntary growth and new geographies for 2H25/2026 .

Financial Results

Income Statement and Ratios (YoY)

Notes: Net investment income: $3.248M (Q1’24) to $4.103M (Q1’25) . Ceded premiums earned: $117.645M to $144.754M .

EPS and Revenue vs S&P Global Consensus (Q1 2025)

Values with asterisks (*) retrieved from S&P Global.

Source note: Actual revenue also disclosed as $71.886M in the 8-K .

KPIs and Capital

Non-GAAP Reconciliation (Adjusted Net Income)

Guidance Changes

Earnings Call Themes & Trends

Note: We searched for Q4’24/Q3’24 public transcripts/8-Ks and found none; company was private until May 2025 .

Management Commentary

• Strategy and discipline: “We do not write every policy. We write the right policy… we view underwriting, claims and capital markets as… a single system built to deliver predictable results” .
• Market positioning and execution: “These results reflect disciplined, strategic execution… and a culture aligned around a mission that matters” .
• Reinsurance/costs: “Net cost of the [reinsurance] program is significantly less than anticipated… consistent with broker commentary of high single-digit to low double-digit rate decreases” .
• Growth targets: Entering Miami-Dade/Broward in fall 2025 via existing agencies; appointments underway; underwriting standards unchanged .
• Underwriting performance: Underlying loss ratio improved to 30.0% from 43.1% YoY; combined ratio 42.9% .

Q&A Highlights

• Claims normalization and pricing: Litigation frequency dropped sharply post-December 2022 reforms; management still models ~5% inflation in severity/ITV; frequency declines outpacing industry due to portfolio quality .
• Ratio sustainability: Citizens take-out effects temporarily depress loss/expense ratios via higher net earned premium; ratios should normalize as reinsurance costs amortize .
• Tri-County expansion and reinsurance: Geographic diversification into Tri-County seen as accretive to reinsurance program risk-adjusted costs; expected to support portfolio balance .
• Citizens pool outlook: Pool shrinking; expect fewer large take-outs going forward; focus shifts to voluntary growth .
• Competitive landscape: Management not deterred; emphasizes breadth/quality of agency relationships and disciplined pricing; no evidence of underpriced approvals by OIR .

Estimates Context

• S&P Global consensus (very thin coverage) indicated Q1 2025 EPS of $2.85 (1 estimate) and revenue of $68.0M (1 estimate); AII delivered EPS of $2.92 and revenue of $71.9M, modest beats on both lines* .
• Given the denominator-driven ratio benefit and reinsurance amortization ahead, models may need to moderate run-rate margins while lifting near-term revenue/earnings trajectories for voluntary growth and pricing tailwinds; watch for coverage expansion and estimate dispersion over coming quarters as a new issuer .

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

• Profitability inflection: Sub-50% combined ratio (42.9%) and 30.0% underlying loss ratio reflect a structurally improved Florida market and underwriting discipline; durability through 2H depends on reinsurance amortization and cat activity .
• Beat vs consensus with thin coverage: Early post-IPO beats on EPS/revenue against sparse estimates; catalysts include sell-side initiation, coverage broadening, and estimate revisions*.
• Reinsurance tailwinds: Larger, more cost-effective program and sizable ILS issuance de-risk cat exposure and support growth capacity into hurricane season .
• Growth pivot to voluntary and South Florida: As Citizens tailwind fades, voluntary momentum and Tri-County entry in fall 2025 become central to sustaining top-line and agency share gains .
• Pricing moderation with vigilance: Rate cuts (~3%) reflect better market dynamics; inflation (severity/ITV) remains monitored—important for sustaining attritional margins .
• Risk concentration: Florida exposure, regulation, and weather remain key macro risks; portfolio mix and geographic balancing are active mitigants .
• Trading setup: Near-term narrative hinges on how quickly ratios normalize vs. stronger premium growth and reinsurance cost relief; updates on Tri-County ramp and 2025 hurricane season outcomes likely to drive volatility .

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Additional data detail from Q1 2025 8-K press release:

• Gross premiums written $212.2M (+43.9% YoY), gross premiums earned $210.2M (+33.9% YoY), net premiums earned $65.4M (+66.5% YoY) .
• Net investment income $4.1M (+26.3% YoY) .
• Policy acquisition expenses $3.1M (-42.0% YoY); G&A $5.0M (-5.2% YoY) .
• Policies In-force 383,332 (+42.9% YoY; +7.6% QoQ) and in-force premium $909.5M (+34.6% YoY) .
• Q1 net income $38.1M; adjusted net income $38.1M (minimal adjustment) .