Executive Summary

Q3 delivered solid top-line and underwriting results with net income of $13.2M ($0.67 diluted EPS) and adjusted EPS of $0.71, alongside a combined ratio of 78.9% (vs. 94.3% YoY); revenue was $62.0M and net premiums earned $52.0M .
AII beat Wall Street consensus: EPS $0.67 vs $0.635 estimate and revenue $62.0M vs $59.9M estimate; higher net investment income and lower expense ratio offset elevated loss ratio driven by reserve development and reinsurance structure mechanics. Bold beats: EPS and revenue. Values retrieved from S&P Global.*
Policy momentum remains strong (406,094 in-force; +48.6% YoY), aided by Citizens take-outs and voluntary growth; management emphasized disciplined expansion in Tri-County and “middle-aged homes” and launched a Commercial Residential product with modest near-term top-line impact .
2026 setup: management expects a favorable reinsurance environment (ample ILS/traditional capacity) and plans to gradually reduce quota share to retain more profitable premium, a potential medium-term margin catalyst .

What Went Well and What Went Wrong

What Went Well

Scale-to-earnings translation: combined ratio improved to 78.9% (−15.4 pts YoY), driven by a 10+ pt reduction in the expense ratio (24.8% vs. 35.3% YoY), supporting bottom-line growth (net income +192% YoY) .
Investment income tailwind: net investment income rose 83.8% YoY to $6.9M on higher invested assets driven by in-force premium growth and IPO proceeds, supporting earnings quality .
Strategic growth lanes: re-entry into Tri-County, focus on middle-aged homes, and launch of Commercial Residential product broaden future addressable market; tone stresses disciplined underwriting and risk management. Quote: “We remain... unwavering in our commitment to disciplined underwriting, prudent risk management, and responsible expansion” .

What Went Wrong

Higher underlying loss ratio vs. prior year: Q3 underlying loss & LAE ratio rose to 49.9% from 36.4% YoY, with CFO citing quarterly net variability driven by quota share mechanics (no CAT periods can show slightly higher net underlying ratios) and modest unfavorable prior-year reserve development .
QoQ margin compression: combined ratio worsened to 78.9% vs. 72.9% in Q2 as the loss ratio increased (54.1% vs. 30.6% in Q2), though Q2 included elevated one-time IPO-related expenses in G&A/expense ratio .
Limited quantitative guidance: no numerical ranges were provided for key P&L lines; investors must rely on qualitative direction on quota share, reinsurance capacity, and growth mix, increasing model uncertainty .

Financial Results

P&L and underwriting performance (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Total Revenues ($M)	$71.89	$74.50	$62.03
Net Premiums Earned ($M)	$65.40	$66.17	$51.999
Net Investment Income ($M)	$4.10	$4.78	$6.91
Net Income ($M)	$38.10	$27.49	$13.16
Diluted EPS ($)	— (pre-IPO units)	$1.62	$0.67
Adjusted EPS ($)	—	$1.84	$0.71
Loss Ratio (%)	30.9%	30.6%	54.1%
Expense Ratio (%)	12.0%	42.3%	24.8%
Combined Ratio (%)	42.9%	72.9%	78.9%

YoY comparison (Q3)

Metric	Q3 2024	Q3 2025
Total Revenues ($M)	$46.54	$62.03
Net Premiums Earned ($M)	$40.46	$51.999
Net Investment Income ($M)	$3.76	$6.91
Net Income ($M)	$4.51	$13.16
Diluted EPS ($)	$0.33	$0.67
Combined Ratio (%)	94.3%	78.9%

Q3 actuals vs. S&P Global consensus

Metric	Consensus	Actual	Surprise
Diluted EPS ($)	$0.635*	$0.67	+$0.035 (Beat)
Total Revenues ($M)	$59.92*	$62.03	+$2.11M (Beat)

Asterisk denotes: Values retrieved from S&P Global.

KPIs and growth drivers (oldest → newest)

KPI	Q1 2025	Q2 2025	Q3 2025
Gross Premiums Written ($M)	$212.15	$286.99	$239.10
Policies In-Force (period end)	383,332	399,138	406,094
Underlying Loss & LAE Ratio (non-GAAP, QTD)	30.0%	33.1%	49.9%
Annualized ROE (%)	92.9%	48.8%	17.0%

Segment breakdown: not disclosed/applicable in filings .

Notes on non-GAAP: Q3 adjusted EPS excludes items including post-IPO transition costs and net realized gains and applies a standardized tax effect; reconciliation provided in filings .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cat reinsurance capacity/pricing	2026 renewals (cat bonds in Jan; XOL mid-year)	Favorable tone post-H1 2025	Management expects ample ILS/traditional capacity; favorable lens on pricing	Qualitative positive
Quota share utilization	2026	Reduce over time (prior stated)	Expect to gradually reduce QS to retain more profitable premium; exact amount TBD	Qualitative positive
Revenue/EPS	2025–2026	Not provided	Not provided	Maintained (no numeric guidance)
Dividends/Capital returns	2025–2026	Not provided	Not provided	Maintained (no update)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1–Q2 2025)	Current Period (Q3 2025)	Trend
Tri-County expansion (South FL)	Q2: Voluntary rate filing approved in Miami-Dade & Broward; re-entering later in Aug; surpassed 400k policies .	26,493 policies in force in Tri-County; ramping voluntary writings through 2026 .	Expanding penetration
“Middle-aged homes” underwriting	Q1: Growth via Citizens and voluntary market . Q2: Emphasis on underserved stable counties .	Reoriented sales to middle-aged homes; attractive post-reform; disciplined underwriting .	Increasing focus
Commercial Residential product	Not discussed in Q1; Q2 emphasis on expansion .	Product launched in Oct; modest initial take-out; controlled distribution (65–70 authorized distributors) .	Early launch; prudent ramp
Reinsurance/Quota share	Q1: Strong capital/reinsurance tower; no numeric guidance . Q2: XOL program placed effective June 1 .	Favorable 2026 capacity outlook; plan to reduce quota share gradually; cat bonds renewal in Jan .	Constructive; margin upside over time
Underlying loss ratio & reserve development	Q1 underlying 30.0% ; Q2 underlying 33.1% .	Q3 underlying 49.9% (YoY higher), with CFO citing QS mechanics (no-CAT period) and modest unfavorable PYD (~$1M YTD) .	Volatile quarterly; in line YTD
Florida legislative reforms	Q1: Beneficial backdrop . Q2: Continued operating leverage .	CEO: High confidence reforms won’t be undone; supports growth/IPO rationale .	Stable policy tailwind

Management Commentary

“We delivered another quarter of robust results... Legislative reform in Florida continues to have a profound and positive impact… Our re-entry into the Tri-County region… and focus on middle-aged homes… [and] commercial residential market” .
“The theme is converting scale into earnings while maintaining discipline… expense ratio decreased by 10 percentage points to 25%… combined ratio was 79%” .
On reinsurance and quota share: “Capacity and appetite for Florida is ample… expectation to lower our quota share for next year… to keep more of this profitable premium” .
On commercial residential: “18 months studying… small initial takeout… meaningful, measured, profitable… guarded distribution (65–70 authorized)” .

Q&A Highlights

Underlying loss ratio mechanics: Net underlying ratio can be higher in quarters without CATs due to quota share structure; YTD gross underlying losses at ~17.4% are on plan; net underlying ~33% if stripping out QS .
Reserve development: Slightly unfavorable PYD in Q3; ~+$1M YTD unfavorable, viewed as immaterial; E&Y engaged; underlying non-CAT book continues favorable development .
Growth mix: Middle-aged homes expected to perform in line with pricing/underwriting expectations, albeit not as strong as new construction; Tri-County opportunity is multi-year and increasing voluntary writings .
Commercial Residential: Hard market with scarce capacity; controlled distributor list; intent is steady, profitable growth rather than top-line needle-mover .
2026 outlook: Favorable ILS/traditional cat capacity; management plans to gradually reduce quota share; specifics to be communicated as decisions are finalized .

Estimates Context

S&P Global consensus for Q3 2025: EPS $0.635 (6 estimates) and revenue $59.92M (2 estimates); actuals: EPS $0.67 and revenue $62.03M. AII beat both metrics (EPS +$0.035; revenue +$2.11M; ~3.5% beat), helped by higher net investment income and a sharply lower expense ratio YoY, partly offset by a higher loss ratio due to reserve development/QS mechanics . Values retrieved from S&P Global.*

Where estimates may need to adjust:

2026 margin trajectory could improve if quota share is reduced and reinsurance pricing remains favorable; underlying loss trends remain in line gross, but quarterly net variability should be expected due to program structure .

Key Takeaways for Investors

Beat on both EPS and revenue in Q3; operating leverage evident in expense ratio improvement YoY; near-term narrative positive for fundamentals .
Loss ratio optics are noisier QoQ given PYD and quota share mechanics; evaluate gross underlying loss trends and YTD metrics rather than single-quarter net ratios .
Medium-term catalysts: potential quota share reduction in 2026 and favorable cat capacity/pricing—both supportive of higher net retention and margins .
Growth runway: disciplined Tri-County expansion, middle-aged homes, and nascent commercial residential provide multi-year policy growth while maintaining underwriting standards .
Investment income tailwind persists as invested assets scale post-IPO, augmenting earnings quality amid underwriting expansion .
Modeling note: Expect quarterly variability in net ratios absent CATs; focus on full-year cadence and disclosures on reinsurance/quota share adjustments at renewal .

Footnote: * Values retrieved from S&P Global.

Citations:

Q3 2025 8-K and Exhibit 99.1 press release:
Q3 2025 press release (Business Wire):
Q3 2025 earnings call transcript:
Q2 2025 8-K and release:
Q1 2025 8-K and release:

American Integrity Insurance Group, Inc. (AII)·Q3 2025 Earnings Summary