Contradictions Emerge in Reinsurance Costs, Market Diversification, and Legislative Impact on Underwriting Strategies

Date of Call: November 12, 2025

Financials Results

• Revenue: $222M gross premiums earned, up 34% YOY (from $165M in 3Q24); gross premiums written $239M, up 49% YOY (from $161M)
• EPS: $0.67 per diluted share; adjusted net income $0.71 per diluted share (based on ~19.5M weighted average common shares)

Guidance:

• Expect first commercial residential (HOA/townhome/condo) writings in Q4 and modest participation in the Nov 2025 Citizens takeout.
• Maintain disciplined underwriting while scaling Tri-County expansion and middle-aged home segment growth into 2026.
• 2025 gross non-cat losses running ~17% of premium ($0.17 per $1) and in line with expectations.
• Anticipate favorable 1/1 reinsurance market if Florida remains loss-free; plan to gradually reduce quota share in 2026.
• North Carolina entry planned in December; no other immediate state expansions.

Business Commentary:

* Strong Financial Performance and Growth: - American Integrity Insurance Group reported gross premiums written increasing by 49% to $239 million compared to $161 million in Q3 of the previous year. - The company's net premiums earned rose by 28% to $52 million compared to $40 million in the same period last year. - This growth was driven by consistent profitable policy growth, favorable operating conditions with benign catastrophe losses, and softening reinsurance rates.

• Operational Execution and Market Expansion:
• The company's voluntary policies in force increased by 19% over the past year to 315,000 policies, driven by a 25% increase in new policies written year-to-date.
• American Integrity expanded its reach in Florida, including entering the Tri-County region and focusing on middle-aged homes, which represented 7.9% of their portfolio.

• These strategic initiatives were aimed at leveraging market opportunities and diversifying product offerings.

• Underwriting and Loss Ratio Stability:

• The company maintained a consistent underlying non-catastrophe loss ratio of approximately 17%, which aligns with expectations.

• American Integrity's focus on disciplined underwriting has contributed to this stability, particularly with a reduction in frequency and manageable severity trends.

• Capitalization and Financial Position:

• Shareholders' equity increased by 95% to $316 million at September 30, 2025, compared to $162 million at the end of 2024.
• The company intends to lower its use of quota share reinsurance over time, aiming to retain more premium on their books, enhancing profitability.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly described results as "a continuation of a very strong year" and stated they are "well positioned to deliver strong growth and profits." CFO highlighted improved metrics: combined ratio 79% vs 94% prior year and book value per share up 28.2% YTD, supporting a positive tone.

Q&A:

• Question from Michael Phillips (Oppenheimer & Co. Inc.): I guess I was hoping you could talk about any impacts you expect going forward on your core loss ratios from going after those middle-age roofed homes?
  Response: Middle‑aged homes should perform in line with expectations—loss costs higher than new construction but premiums support profitable underwriting; management is comfortable with expected results.

• Question from Michael Phillips (Oppenheimer & Co. Inc.): Can you talk about how your homeowners pricing/actuarial experience translates to the commercial side—will this be new learning or leveraged expertise?
  Response: They spent ~18 months preparing; commercial residential rollout will be small, measured and profitable initially, leveraging existing underwriting, claims and distribution expertise.

• Question from Michael Phillips (Oppenheimer & Co. Inc.): When you say the market's hard, is there a difference between condo versus HOA subsectors?
  Response: HOA (garden‑style) market is hard with scarce capacity; pricing for the targeted HOA business is attractive and presents opportunity.

• Question from Thomas Mcjoynt-Griffith (Keefe, Bruyette, & Woods, Inc.): Help explain the mechanics of the quota share and XOL structure and how to model quarterly volatility in underlying loss ratios for next year.
  Response: Look at gross basis: YTD gross non‑cat losses ~17.4% ($0.17 per $1). Stripping quota share yields ~33% net underlying loss ratio; quota share/XOL create quarter‑to‑quarter noise (no‑cat periods can show higher net ratios).

• Question from Thomas Mcjoynt-Griffith (Keefe, Bruyette, & Woods, Inc.): If Q3 2026 includes catastrophe losses, would net underlying loss ratio come down year‑over‑year?
  Response: Yes; presence of cats shifts more losses to quota share and can lower net underlying ratio; they also expect to lower quota share next year which will be a modeling consideration.

• Question from Thomas Mcjoynt-Griffith (Keefe, Bruyette, & Woods, Inc.): How does the 17% gross non‑cat rate compare to the prior year's 9‑month period?
  Response: It's effectively unchanged—the 17.4% YTD is in line with the prior 9‑month period and close to the 17.3% projection.

• Question from Thomas Mcjoynt-Griffith (Keefe, Bruyette, & Woods, Inc.): Any expectation for divergence from the ~17% gross loss trend over the next 9–12 months?
  Response: Conservative expectation is an increase of about one percentage point over 12 months due to inflation and mix (Citizens book), but change should be muted.

• Question from Charles Peters (Raymond James & Associates, Inc.): Is the ~33% gross AOP/net underlying loss ratio fairly consistent quarter‑to‑quarter or has there been variability?
  Response: Gross loss dollars per premium are consistent; observed net variability is driven by denominator effects from Citizens takeouts and reinsurance structuring.

• Question from Charles Peters (Raymond James & Associates, Inc.): How do you reconcile political risk of potentially undoing legislative reforms that helped the market?
  Response: Management is confident reforms are durable—two of three key leaders support continuing reform and they view undoing as unlikely, supporting their growth strategy.

• Question from Charles Peters (Raymond James & Associates, Inc.): Any details on potential lower quota share or reinsurance changes in 2026?
  Response: Reinsurance capacity/pricing signals are favorable; they intend to gradually reduce quota share to retain more profitable premium but exact reduction TBD and will be communicated.

• Question from Jon Paul Newsome (Piper Sandler & Co.): Can you explain the recent prior‑year reserve development and whether the pattern or philosophy has changed?
  Response: YTD unfavorable development ≈ $1M (immaterial); prior‑year development has been largely favorable on core non‑cat book; actuarial reviews (including EY) support current reserving approach.

• Question from Jon Paul Newsome (Piper Sandler & Co.): Any state expansion plans beyond those mentioned?
  Response: Only planned near‑term expansion is North Carolina (Dec); no immediate plans beyond that.

Contradiction Point 1

Reinsurance Costs and Market Diversification

It involves the impact of geographic diversification on reinsurance costs, which are key financial factors for the insurance industry.

Can you discuss potential lower retention or reinsurance changes in 2026? - Charles Peters (Raymond James & Associates, Inc., Research Division)

2025Q3: Directionally, we view the reinsurance capacity and pricing environment in a favorable light. Capacity and appetite for Florida are ample, and a loss-free year will be favorable for the entire Florida market. - Jon Ritchie(President)

What are the benefits of geographic expansion on reinsurance costs without increasing PML? - Thomas McJoynt-Griffith (KBW)

2025Q2: Expanding in tri-county reduces exposure aggregation, benefiting PML. However, other states may not significantly impact PML. It aids in portfolio balance and reduces concentration in certain Florida regions. - Jon Ritchie(Executive)

Contradiction Point 2

Impact of Legislative Reform on Underwriting

It highlights differing perspectives on the impact of legislative reforms on underwriting strategies, which directly affects business operations and growth.

Will targeting middle-aged homes affect your core loss ratios going forward? - Michael Phillips (Oppenheimer & Co. Inc., Research Division)

2025Q3: We expect that the middle-aged home will perform in line with our expectations, not to the same extent of our new construction, given the loss cost comparatively. But given the premium that we're collecting, we feel comfortable with where this is going to land once it settles back in for us. - Jon Ritchie(President)

How does expanding into older roofs affect PMLs? - Mitchell Rubin (Raymond James)

2025Q2: We are tactical in our approach, ensuring a balanced portfolio. - Jon Ritchie(Executive)