Accelerant Holdings Ltd's Earnings Call Contradictions: Premium Growth Attributed to Cancellation, Retention Forecasts Split Between 5% and 10%

Date of Call: Mar 19, 2026

Financials Results

• Revenue: $248M, up 30% YOY; Exchange Written Premium $1.1B, up 24% YOY (32% excluding terminated member)
• EPS: $0.23 adjusted net income per share, up from prior year
• Operating Margin: Adjusted EBITDA margin 28%, up from 24% last year

Guidance:

• Q1 2026 Exchange Written Premium expected to be $1.07B-$1.13B.
• Q1 2026 Adjusted EBITDA expected to be $64M-$66M.
• Full year 2026 Exchange Written Premium expected to be at least $5.1B.
• Full year 2026 Adjusted EBITDA expected to be at least $275M (does not assume non-recurring investment gains).
• Third-party direct written premium for full year 2026 expected to be at least $2.2B.

Business Commentary:

Strong Financial Performance and AI Integration:

• Accelerant reported $1.1 billion in Exchange Written Premium for Q4, which is a 24% year-over-year increase, or 32% excluding a terminated member.
• The company's Adjusted EBITDA rose to $71 million, marking a 52% year-over-year increase, with a margin expansion to 28%.
• The growth was driven by the integration of AI into their business model, enhancing underwriting precision, and increasing operational efficiency.

Member Growth and Supply-Side Expansion:

• Accelerant added 15 new members in Q4, bringing the total to 280, with a Net Revenue Retention of 126%.
• Existing members accounted for 75% of the growth in 2025, with more than 80% of that from volume.
• The increase in members and retention is attributed to the value and efficiency Accelerant's platform provides, supported by AI-driven tools.

Third-Party Insurance and Portfolio Diversification:

• The third-party direct written premium represented 40% of Exchange Written Premium in Q4, up from 19% in Q1.
• The largest risk capital partner, Hadron, decreased its share from 67% in Q1 to 47% in Q4.
• This shift is due to Accelerant's strategy to diversify its portfolio and increase the proportion of premium written with third-party insurers.

Captive Business Expansion:

• Accelerant added over $40 million of captives premium in 2025, with expectations to exceed $100 million in 2026.
• The growth in captive business is driven by opportunities where insureds feel the market insurance rate is mispricing them, leading to self-selected outperforming books of business.

Low Net Retention and Capital Efficiency:

• Accelerant's Net Retention was 9% in Q4, aligning with expectations and allowing for a reduction in the use of risk-taking entities.
• The low Net Retention is primarily due to regulatory minimum retention requirements, and the company expects this to remain around 10% in 2026.
• This capital lightness improves the company's overall profitability and efficiency.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated 'We had a fantastic quarter, beating our expectations' and '2025 was another exceptional year.' CFO noted 'Adjusted EBITDA grew 52% year-over-year' and 'strong growth and meaningful acceleration.' Guidance for 2026 shows significant top and bottom-line growth.

Q&A:

• Question from Jay Richard Wenger (RBC Capital Markets): I just wanted to understand kind of what the upside was in the quarter (Q4 Adjusted EBITDA was almost 15% above guidance high end).
  Response: Unusual upside was driven by all three segments outperforming expectations due to higher volume, increased take rates, and favorable loss ratios.

• Question from Jay Richard Wenger (RBC Capital Markets): On the quarterly and annual guidance for written premiums, it implies Q2-Q4 have much higher growth than Q1. Is that due to the MGA cancellation?
  Response: Yes, the high growth in subsequent quarters is due to the terminated Canadian member, which impacted Q1 and will also impact Q2, but is baked into guidance.

• Question from Elyse Greenspan (Wells Fargo): On Hadron, is the guidance for it to be around 35%-40% of third-party premium in 2026 still valid?
  Response: Yes, the guidance remains comfortable and progress is being made, with Hadron's share continuing to decline as stated.

• Question from Elyse Greenspan (Wells Fargo): For 2026, how are you thinking about member count increasing throughout the year?
  Response: Historically added ~15 members per quarter over last 9-12 quarters; pipeline is the largest ever, providing confidence in continued member growth.

• Question from Michael Zaremski (BMO Capital Markets): Regarding cash flow, how should we think about the trajectory relative to EBITDA growth, and any context on capital into the subsidiaries?
  Response: Free cash flow conversion is expected to improve and grow slightly faster than Adjusted EBITDA in 2026, with no material capital expected to be put into underwriting subsidiaries.

• Question from Michael Zaremski (BMO Capital Markets): On the small reserve addition for Gross Loss Ratio, can you give context on the gross and net impact?
  Response: Management feels great about the Gross Loss Ratios by accident year; small inter-year adjustments are not meaningful, and risk capital partners continue to see strong returns.

• Question from Robert Cox (Analyst): Given 95% of accounts are sub $10K, what are the hurdles of this business going direct or digital, and how can members still win?
  Response: A shift to digital/AI distribution would be great news for Accelerant and members, as it would increase data efficiency and member response speed, where they currently have advantages.

• Question from Robert Cox (Analyst): On the new third-party insurer added, what role do you expect it to play and what is the pipeline like?
  Response: The new insurer is specialized and will participate in specific books; long-term goal of two-thirds of premium from third-party insurers is achievable with existing relationships, though new ones will be added.

• Question from Paul Newsome (Piper Sandler): Can you give more commentary on the expansion in the captive businesses and how they compare to traditional MGA sources?
  Response: Captive book is expected to contribute over $100M in 2026, targeting medium-term significance; focuses on small-to-medium-sized companies seeking efficiency, avoiding large corporate captives and coastal catastrophe exposures.

• Question from Craig Moyer (FT Partners): Regarding the Net Retention ratio, is there a natural limit to how low it can go as you shift to fee-based segments?
  Response: Net Retention is driven by regulatory minimums and will remain slightly below 10%; as business shifts to third-party insurers, it is expected to trend lower, potentially around 5%.

Contradiction Point 1

Premium Growth and Member Cancellations

Contradiction on the primary driver and future trajectory of premium growth.

Jay Richard Wenger (RBC Capital Markets) - Jay Richard Wenger (RBC Capital Markets)

2025Q4: The higher growth in Q1 is due to the impact of a terminated member with a premium size of approximately $50 million per quarter, and this impact is also reflected in Q2 2026 guidance. - Ryan Schiller(Head of Strategy)

Can you provide guidance on quarterly and annual written premiums, including the growth expectations for Q2-Q4 compared to Q1, and clarify the impact of the MGA cancellation in Canada, including its timing and premium size? - Roland Major (RBC Capital Markets)

2025Q3: As business transitions to third-party insurers, gross written premium on the Accelerant side will moderate and eventually flatline. - Ryan Schiller(Head of Strategy)

Contradiction Point 2

Medium-Term Goal for Third-Party Insurer Participation

Contradiction on the achievability and pace of achieving the target for third-party insurer participation.

Robert Cox (Analyst) - Robert Cox (Analyst)

2025Q4: The company has sufficient third-party insurer relationships to achieve its medium-term goal of two-thirds of business going to third-party insurers. Achieving the goal does not require creating new relationships. - Jeff Radke(CEO), Ryan Schiller(Head of Strategy)

What role is the new third-party insurer expected to play in the portfolio over time, and what is the pipeline for additional third-party insurers? - Charlie Letterer (BMO Capital Markets)

2025Q3: Acceleration is expected through the quarters, but this should be moderated by the quarterly flow of total exchange-rated premium. - Ryan Schiller(Head of Strategy)

Contradiction Point 3

Third-Party Insurer (Hadron) Growth and Contribution

Contradiction on whether Hadron's share is expected to mix down over time.

Elyse Greenspan (Wells Fargo) - Elyse Greenspan (Wells Fargo)

2025Q4: The guidance remains unchanged. The company is making terrific progress in diversifying away from its largest third-party insurer, with the goal of having third-party insurers represent approximately two-thirds of Exchange Written Premium in the medium term. - Jeff Radke(CEO)

Is the guidance for Hadron's third-party premium percentage (35%-40% in 2026, below 33% in Q4, and long-term decline) still valid as announced today? - Bob Wang (Morgan Stanley)

2025Q2: Hadron's growth has been impressive, but their share is expected to mix down over time. - Jeff Radke(CEO)

Contradiction Point 4

Net Retention Ratio Target

Contradiction on the expected long-term trend for the Net Retention ratio.

Craig Moyer (FT Partners) - Craig Moyer (FT Partners)

2025Q4: Net Retention is largely driven by regulatory minimum retention requirements in different jurisdictions, which are not controllable. As the business shifts more to third-party insurers, the Net Retention is expected to trend around 5%. - Jeff Radke(CEO)

Is there a natural limit to how low the Net Retention ratio can go as the company shifts to fee-based segments, given its recent fluctuations below the 10% target? - Charles Lederer (BMO Capital Markets)

2025Q2: Over time, net retention is expected to trend toward the historic norm of approximately 10%. - Jay Green(CFO)

Contradiction Point 5

Business Mix from Risk Capital Sources

Contradiction on the ideal long-term mix between different types of third-party risk capital providers.

Robert Cox (Analyst) - Robert Cox (Analyst)

2025Q4: The goal is a well-balanced spread between the three risk capital sources (third-party insurers, professional reinsurers, institutional investors), roughly similar proportions. - Jeff Radke(CEO)

What role is the new third-party insurer expected to play in the portfolio over time, and what is the pipeline for additional third-party insurers? - Charles Peters (Raymond James)

2025Q2: Hybrid fronting companies like Hadron are capital-efficient conduits for accessing institutional investors. Their presence indicates successful access to institutional capital. The ideal is a diversified mix, with comfort from traditional specialty companies and confidence from hybrid fronts in accessing new capital sources. - Jeff Radke(CEO)