AMERICAN COASTAL INSURANCE CORPORATION (NASDAQ: ACIC)

A specialty insurance company spawning new businesses with cashflows from its mature business.

Symbol: ACIC Listing: Nasdaq

Price: $10.89 USD / Share (Feb 20 2026)

Mcap: $531M. EV: $482M

Disclaimer: I own shares of American Coastal Insurance Corporation ($ACIC). Nothing on this blog is investing or financial advice. Please see the full disclaimer here.

American Coastal Insurance Corporation (ACIC) is a holding company with a commercial Property & Casualty (P&C) insurance business in the U.S. ACIC’s primary source of revenue comes from writing insurance in Florida. For most investors, hearing “insurance” and “Florida” in the same sentence is usually a reason to run away. I felt the same when I first came across ACIC — but ACIC isn’t a typical coastal insurance company.

Source: Company Investor Presentation Q4 2025

Before we dive into what the company does, its partners, and its growth plans, it helps to understand the insurance industry and the key players involved.

Insurance Carrier:
The regulated insurance company that ultimately bears the underwriting risk on its balance sheet.
Example: AmCoastal is an insurance carrier.

Reinsurer:
Think of reinsurers as insurance companies for insurance companies.
Example: Arch Re.

AmCoastal would approach a reinsurer to insure a portion (or all) of its risk by transferring, or “ceding,” exposure on policies to the reinsurer. If the reinsurer is unable to meet its obligations, the primary insurer — in this case, AmCoastal — remains ultimately liable for the insured losses under the policies written.

Insurance carriers can purchase different types of reinsurance, such as quota share, excess-of-loss (XOL), and facultative reinsurance.

Managing General Agent (MGA):
MGAs are essentially outsourced underwriting engines that monetize their expertise without taking underwriting risk on their own balance sheet.
Example: AmRisc.

Broker:
Brokers are customer-facing intermediaries that sell insurance policies to end customers.

Source: https://medium.com/pillar-companies/the-insurance-stack-a-battle-for-margin-24aef01620a8

ACIC is a holding company with 4 core operations:

1. AmCoastal

2. Expanded partnership with AmRisc

3. ACES

4. Skyway Underwriters

AmCoastal:

ACIC’s commercial P&C business is called American Coastal Insurance Company (AmCoastal). This is the most mature operation of ACIC, the remaining 3 operations are either yet to be started or just recently started.

AmCoastal was founded in 2007 by Dan Peed (Current chairman of ACIC) with the help of BB&T’s (Truist) capital of $50M. AmCoastal has achieved an underwriting profitability every year since inception. It also has the #1 market share in commercial residential property insurance in Florida with roughly 4,300 policies and ~$610M of premium in-force (latest from company).

Below as of Sep 2025.

Source: Citizens Florida Market Share Report

Source: Company Investor Presentation Mar 2025

Below is the FY 2025 earnings.Note the 2024 numbers from the 2 slides (above & below) are a little different due to discontinued business (Interboro).

Source: Company Investor Presentation Q4 2025

AmCoastal focuses on Low-Rise, Garden-style condos (3-4 story) in Florida, which tend to be further inland. The company avoids oceanfront high rises or hyper-coastal risks. The insurance only covers the building envelope (shell) and excludes flood and all liability ( They do not cover contents or liability inside the units).

AmCoastal is an admitted carrier in Florida, which allows it to access the Florida Hurricane Catastrophe Fund, providing a significant cost advantage that excess and surplus lines carriers lack.

AmCoastal works closely with AmRisc (an MGA) under an exclusive 5-year agreement to underwrite condo policies in Florida. Florida regulators (OIR) do not approve third-party agreements beyond a 5-year term, so the ACIC/AmRisc partnership typically renews the agreement in years 2 or 3 of the current term for another 5 years. The current agreement with AmRisc runs through 2029, and I suspect it will be renewed for another 5 years in either 2026 or 2027.

AmCoastal, together with AmRisc, uses extensive data to underwrite its policies. 100% of AmCoastal’s condo portfolio is inspected, and the team collects hundreds of data points through this inspection process to price policies effectively. This can be viewed as a competitive advantage versus peers and helps the company maintain its leading market share in their condo business.

Source: Company Investor Presentation Feb 2024

Admitted carriers typically go through regulatory approvals and delays to make pricing changes, which can become a significant headwind when costs rise suddenly. However, ACIC largely avoids this constraint because it operates in the commercial residential line with TIVs (Total Insured Value) above $5M in Florida. These policies are individually underwritten and priced, giving the company meaningful flexibility in adjusting pricing.

Florida is one of the world’s peak windstorm zones, so the company relies heavily on reinsurance to manage risk.

Source: Company Investor Presentation Q2 2025

The above illustrates the company’s CAT reinsurance structure. It can look overwhelming to someone outside the insurance industry like me. However, I was told by a fellow investor that the messier it appears, the better — as it suggests the team worked hard to achieve the best price execution. A clean tower, apparently, can indicate either a lazy placement or a hard reinsurance market.

The company had a CAT quota share agreement with Arch Re of 15% in 2025, down from 20% in the prior year. Management plans to reduce this to 0% over the next few years, which would help lower reinsurance expenses.

AmCoastal is also pursuing growth by selectively expanding into a new apartment program, leveraging expertise similar to its core condo business. The company launched the apartment program in 2024 and expected to write about $20M of premiums in 2025, with plans to scale the business to $100M–$200M in annual premiums by 2029. Per latest updates from management, they fell a little short of the 2025 goal.

Source: Company Investor Day Presentation 2024

Expanded partnership with AmRisc:

ACIC recently (Jan 2026) announced they are expanding their partnership with AmRisc, which is fantastic news! It provides ACIC the opportunity to deploy capital with a long-standing, reliable partner and gives AmRisc the necessary capital to grow profitably. Win(ACIC)-Win(AmRisc)-Win(Customer)!!!

In addition to its admitted-market condominium business—produced exclusively for ACIC in Florida—AmRisc also underwrites a large portfolio of CAT-exposed commercial property insurance on an excess and surplus (E&S) lines basis across the U.S.

Based on ACIC management commentary, AmRisc writes over $1B of E&S business, and ACIC is expected to provide capacity with a 6% participation. This could translate to roughly $75M of forecast gross written premiums for ACIC in 2026, assuming a March 2026 start.

I think this provides a good avenue of growth for ACIC over the long run, especially considering how E&S market share is increasing over the years in the insurance industry compared to admitted line!

Note: Dan Peed (Chairman of ACIC) is also the co-founder of AmRisc, he doesn’t have any ownership currently in AmRisc.

Source: Company Investor Presentation Jan 2026

ACES:

ACES is ACIC’s new E&S insurance carrier—hence the name ACES. Its long-term vision is to become a leading specialty commercial property E&S insurer nationwide. ACES is still in the process of being formed and will be capitalized with a $30M cash contribution from the ACIC holding company.

ACES’ preliminary E&S strategy will focus on underwriting commercial property through Skyway Underwriters (ACIC’s in-house MGA, discussed in the next section) in Florida, South Carolina, and Texas. The company expects ACES to be operational in 2026.

ACIC has prior underwriting experience in commercial property in South Carolina and Texas. Expanding first into areas where the company already has experience and expertise is a sensible strategy. The E&S opportunity for ACES in these states is quite large (see below).

Source: Company Investor Presentation Jan 2026

More on ACES from the Q4 2025 earnings call

Source: Tikr, Company Q4 2025 earnings call

SKYWAY UNDERWRITERS:

ACIC developed capabilities to underwrite and manage policies through their wholly owned MGA called Skyway Underwriters in late 2024.

Source: Company Investor Day Presentation 2024

The MGA, Skyway, will help with underwriting the apartment program for AmCoastal as well as underwriting for the new ACES business. Over the long run, the company will scale by underwriting for other carriers as well and generating service fee income. Management has stated multiple times that they are not competing with AmRisc via Skyway.

The below slide summarizes all the underwriting strategies of the holding company ACIC. Their main mantra is underwriting profitability!

Source: Company Investor Presentation Jan 2026

To better understand how the company navigated the tumultuous years post-COVID, including regulatory changes in Florida, I recommend reading a few write-ups and a video that covers this period in detail.

• VIC Writeup by frostybluebird: Link: Here

• Writeup by Daikoku Capital. Link: Here

• The interview with Brad M (CEO) by TheDailyCompounder is really good and a gold mine of information. Link: Here

RISKS:

• CAT Risk:
  The company does it’s best to earn a return and manage risk by buying reinsurance. In 2025, the company bought Core CAT reinsurance up to the 201-year return time exhaustion point.

  See below transcript regarding reinsurance philosophy from the company’s 2024 Investor day.

  

  Source: Company Investor Day 2024

  
  The chairman (Founder and Ex-CEO), Dan Peed owns a large stake (~36%) in the company, this helps knowing that the management team is unlikely to prioritize short term profits (take on more risk) over doing what is right for the long term.
  

• AmRisc partnership Risk:

  If AmRisc and AmCoastal were to terminate their exclusive partnership, it would be quite disruptive for both parties. I think the chances of this happening are low (not impossible).
  
  It is a mutually beneficial partnership, so why mess with it?
  

  AmRisc could likely find another carrier relatively easily. While it might take AmCoastal a year or two to build the necessary capabilities—either scaling through Skyway or partnering with another MGA—it would not be a fatal outcome for the company. However, pricing would likely come under pressure as both parties compete for the same business, meaning neither would truly win.
  
  The long-standing partnership spanning multiple decades—and the fact that both businesses share the same founder—makes it less likely that either party would act in a way that materially harms the other’s business.

• Growth:
  I usually get a bit uneasy when insurance companies talk about expanding into new lines of business. The incentive to misprice policies in the pursuit of growth is real. However, ACIC appears to be expanding into areas where it already has expertise and experience. Management also isn’t trying to “hit it out of the park” in year one; instead, they plan to grow slowly and steadily, which is reassuring. The high insider ownership further helps ease some of that discomfort.
  

• Insurance Cycle and Competition:
  Insurance is a cyclical business. When excess capital chases policy growth, insurance rates typically decline, creating a soft market. Conversely, when capital becomes scarce, rates rise, resulting in a hard market.
  

  Insurance rates for commercial residential property insurance (CRES) in Florida rose sharply post-COVID due to hurricane losses and inflation, and they are now beginning to normalize. However, reinsurance costs are also declining, which should help ACIC manage margins. Additionally, the company’s various growth initiatives should help cushion the impact if rates continue to soften.
  
  The company’s core mature business (AmCoastal) has faced many competitors over the years, but its proprietary data, partnership with a leading MGA (AmRisc), and strong relationships with reinsurers have helped keep costs low and maintain a competitive edge. I expect these advantages to remain durable, allowing AmCoastal to continue operating profitably over the long term.
  

  

  Source: Company Investor Presentation Jan 2026
  

  
  VALUATION:

  I really do not want to spit out an exact valuation price/number in this section as it is going to be 100% wrong. What I want to show instead here is if the business is likely underpriced, priced fairly or overpriced?
  

  The company’s 2026 FY Guidance is below and for context the company did $142.7M of Earnings before income tax in 2025.

  

  Source: Company Investor Presentation Jan 2026

Assuming ~25% tax rate (Federal + State), gives us 2026 Net Income range of ~$64M - $75M. On a market cap of ~$530M (@$10.89/share) that is a P/E multiple of 7.1x - 8.3x. For a company with a mature business which has never had an underwriting loss (since inception in 2007) and multiple avenues to grow the business profitably, the valuation seems low. Although, in the near term the insurance rates could come down, the company has multiple avenues to make up for this lost revenue via growth in other areas (ACES, Skyway, and the extended partnership with AmRisc).

Keep in mind, we also have Dan Peed as the chairman who founded 2 very successful businesses (AmCoastal and AmRisc). What are the chances management succeeds in their new growth areas over the long term?

Let’s look at another way of valuing the business.

Source: Company Investor Presentation 2023-06

From above, we can see that the AmCoastal business has had an average pre-tax income of ~$49M(I haven’t considered 2023, 2024 or 2025 years where earnings were much higher, so this is conservative imo). Lets consider that as the base pre-tax income of the mature AmCoastal business.

We need to make some adjustments to the average pre-tax income as the company now holds more cash and invested assets than before and thus will be earning more interest income.

Ex: In 2015, the company had cash & investments of ~$107.6M , $248.4M in 2019 and now the company has ~$648M (as of Q4 2025)! The company earned investment income of $2.6M in 2015 , $7.3M in 2019 and earned ~$24M in 2025. So I think it would still be conservative if we bump the average pre-tax income of $49M by $10M to account for the higher investment income.

Source for 2015 and 2019 filings are here and here. These are the only few filings of AmCoastal I could find from pre-covid era.

Source: Company Investor Presentation Q4 2025

The company expects to write $100M–$200M of premiums by 2029 through its new apartment program. Let’s assume it writes $40M in 2026. Based on historical norms, roughly 50% may be ceded to reinsurance. If we assume a 70% combined ratio on the retained book, pre-tax income would be approximately:

$40M × 50% × 30% ≈ $6M

The expanded partnership with AmRisc is expected to generate approximately $75M of additional gross written premiums. Assuming 50% is ceded to reinsurance and the business is written at an 80% combined ratio, the implied pre-tax income would be:

$75M × 50% × 20% ≈ $7.5M

Let’s assume we get the Skyway MGA business and the new ACES carrier business for free.

Summing the pre-tax income estimates, we get:
$49M + $10M + $6M + $7.5M = $72.5M.

Assuming a 25% tax rate, this translates to roughly $54M of net income. At the current market cap of approximately $530M, that implies about a ~10× earnings multiple, with additional upside from optionality around Skyway MGA growth and ACES.

In my view, the stock is likely undervalued, especially given the conservative nature of these assumptions and the free option on Skyway and ACES. Over the next 3–10 years, if management continues to grow the business with a strong focus on underwriting profitability, both the business and the stock should perform well. I believe the investment can meet or exceed my hurdle rate of a 15% CAGR over the long term and across a full insurance cycle.

Disclaimer: I own shares of American Coastal Insurance Corporation ACIC 0.00%↑. Nothing on this blog is investing or financial advice. Please see the full disclaimer here.