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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 001-35761

American Coastal Insurance Corporation

(Exact Name of Registrant as Specified in its Charter)

      
     Delaware

     75-3241967

      
     (State or Other Jurisdiction of 
Incorporation or Organization)

     (IRS Employer Identification Number)

727-633-0851

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.0001 par value per share	ACIC	Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑	Emerging growth company	☐
Non-accelerated filer	☐	Smaller reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

As of November 3, 2025, 48,765,302 shares of common stock, par value $0.0001 per share, were outstanding.

AMERICAN COASTAL INSURANCE CORPORATION


PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements	4
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5
	Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	35
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	49
	Item 4. Controls and Procedures	50
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings	51
	Item 1A. Risk Factors	51
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	51
	Item 3. Defaults Upon Senior Securities	52
	Item 4. Mine Safety Disclosures	52
	Item 5. Other Information	52
	Item 6. Exhibits	52
Signatures		54

Throughout this Quarterly Report on Form 10-Q (Form 10-Q), the Company presents amounts in all tables in thousands, except for share amounts, per share amounts, policy counts or where more specific language or context indicates a different presentation. In the narrative sections of this Form 10-Q, the Company shows full values rounded to the nearest thousand.

AMERICAN COASTAL INSURANCE CORPORATION

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about anticipated growth in revenues, gross written premium, earnings per share, estimated unpaid losses on insurance policies, investment returns, and diversification and expectations about our liquidity, our ability to meet our investment objectives, our ability to manage and mitigate market risk with respect to our investments and our ability to continue as a going concern. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “endeavor,” “project,” “believe,” “plan,” “anticipate,” “intend,” “could,” “would,” “estimate,” or “continue” or the negative variations thereof or comparable terminology are intended to identify forward-looking statements. These statements are based on current expectations, estimates and projections about the industry and market in which we operate, and management's beliefs and assumptions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. The risks and uncertainties include, without limitation:

•

our exposure to catastrophic events and severe weather conditions;

•

the regulatory, economic and weather conditions present in Florida the state in which we write business;

•

our ability to cultivate and maintain agent relationships, particularly our relationship with AmRisc, LLC (AmRisc);

•

the possibility that actual claims incurred may exceed our loss reserves for claims;

•

assessments charged by various governmental agencies;

•

our ability to implement and maintain adequate internal controls over financial reporting;

•

our ability to maintain information technology and data security systems, and to outsource relationships;

•

our reliance on key vendor relationships, and the ability of our vendors to protect the personally identifiable information of our customers, claimants or employees;

•

our ability to attract and retain the services of senior management;

•

risks and uncertainties relating to our mergers, dispositions and other strategic transactions;

•

risks associated with investments in which we share ownership or management with third parties;

•

our ability to generate sufficient cash to service all of our indebtedness and comply with covenants and other requirements related to our indebtedness;

•

our ability to maintain our market share;

•

changes in the regulatory environment present in the states in which we operate;

•

the impact of new federal or state regulations that affect the insurance industry;

•

the cost, viability and availability of reinsurance;

•

our ability to collect from our reinsurers or others on our reinsurance claims;

•

our ability to accurately price risks we underwrite and apply loss limitation methods;

•

our ability to pay claims accurately and timely;

•

dependence on investment income and the composition of our investment portfolio and related market risks;

•

the possibility of the pricing and terms for our products to decline due to the historically cyclical nature of the property and casualty insurance and reinsurance industry;

•

the outcome of litigation pending against us, including the terms of any settlements;

•

downgrades in our financial strength or stability ratings;

•

the impact of future transactions of substantial amounts of our common stock by us or our significant stockholders on our stock price;

•

our ability to pay dividends in the future, which may be constrained by our holding company structure;

•

the ability of our subsidiaries to pay dividends in the future, which may affect our liquidity and our ability to meet our obligations;

•

the ability of R. Daniel Peed and his affiliates to exert significant control over us due to substantial ownership of our common stock, subject to certain restrictive covenants that may restrict our ability to pursue certain opportunities;

•

the impact of transactions by R. Daniel Peed and his affiliates on the price of our common stock;

•

provisions in our charter documents that may make it harder for others to obtain control of us; and

•

other risks and uncertainties described in the section entitled "Risk Factors" in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2024 and in Part II, Item 1A of this Form 10-Q.

We caution you not to rely on these forward-looking statements, which are valid only as of the date they were made. Except as may be required by applicable law, we undertake no obligation to update or revise any forward-looking statements to reflect new information, the occurrence of unanticipated events or otherwise.

AMERICAN COASTAL INSURANCE CORPORATION

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (Unaudited)


	September 30, 2025			December 31, 2024
ASSETS
Investments, at fair value:
Fixed maturities, available-for-sale (amortized cost of $256,026 and $295,547, respectively)	$	246,499		$	281,001
Equity securities		52,585			36,794
Other investments (amortized cost of $36,167 and $22,969, respectively)		36,827			23,623
Total investments	$	335,911		$	341,418
Cash and cash equivalents		267,872			137,036
Restricted cash		91,264			62,357
Total cash, cash equivalents and restricted cash	$	359,136		$	199,393
Accrued investment income		3,226			2,964
Property and equipment, net		2,807			5,736
Premiums receivable, net (credit allowance of $0 and $26, respectively)		30,335			46,564
Reinsurance recoverable on paid and unpaid losses, net (credit allowance of $39 and $75, respectively)		144,261			263,419
Ceded unearned premiums		184,366			160,893
Goodwill		59,476			59,476
Deferred policy acquisition costs, net		44,214			40,282
Intangible assets, net		4,080			5,908
Other assets		11,042			16,816
Assets held for sale		—			73,243
Total Assets	$	1,178,854		$	1,216,112
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses	$	188,703		$	322,087
Unearned premiums		293,047			285,354
Reinsurance payable on premiums		143,058			83,130
Accounts payable and accrued expenses		64,936			86,140
Operating lease liability		3,193			3,323
Notes payable, net		149,270			149,020
Other liabilities		9,426			1,456
Liabilities held for sale		—			49,942
Total Liabilities	$	851,633		$	980,452
Commitments and Contingencies (Note 12)
Stockholders' Equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding	$	—		$	—
Common stock, $0.0001 par value; 100,000,000 shares authorized; 48,977,385 and 48,417,045 issued, respectively; 48,765,302 and 48,204,962 outstanding, respectively		5			5
Additional paid-in capital		440,549			436,524
Treasury shares, at cost: 212,083 shares		(431	)		(431	)
Accumulated other comprehensive loss		(8,403	)		(15,666	)
Retained earnings (deficit)		(104,499	)		(184,772	)
Total Stockholders' Equity	$	327,221		$	235,660
Total Liabilities and Stockholders' Equity	$	1,178,854		$	1,216,112

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

AMERICAN COASTAL INSURANCE CORPORATION

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2025			2024			2025			2024
REVENUE:
Gross premiums written	$	71,812		$	93,016		$	498,010		$	507,066
Change in gross unearned premiums		90,945			67,162			(7,692	)		(31,168	)
Gross premiums earned		162,757			160,178			490,318			475,898
Ceded premiums earned		(81,939	)		(85,692	)		(262,785	)		(275,400	)
Net premiums earned		80,818			74,486			227,533			200,498
Net investment income		6,416			6,110			16,720			15,474
Net realized investment gains (losses)		—			(3	)		1,382			(124	)
Net unrealized gains on equity securities		3,161			1,543			3,429			1,542
Total revenue		90,395			82,136			249,064			217,390
EXPENSES:
Losses and loss adjustment expenses		9,211			11,774			36,140			39,525
Policy acquisition costs		25,439			20,942			73,162			44,476
General and administrative expenses		11,321			10,289			28,605			33,479
Interest expense		2,719			3,067			8,155			9,212
Total expenses		48,690			46,072			146,062			126,692
Income before other income		41,705			36,064			103,002			90,698
Other income		665			453			3,114			2,074
Income before income taxes		42,370			36,517			106,116			92,772
Provision for income taxes		9,887			8,848			25,885			22,321
Income from continuing operations, net of tax	$	32,483		$	27,669		$	80,231		$	70,451
Income from discontinued operations, net of tax		—			450			42			321
Net income	$	32,483		$	28,119		$	80,273		$	70,772
OTHER COMPREHENSIVE INCOME:
Change in net unrealized gains on investments		1,391			7,529			8,645			7,404
Reclassification adjustment for net realized investment losses (gains)		—			3			(1,382	)		124
Total comprehensive income	$	33,874		$	35,651		$	87,536		$	78,300

Weighted average shares outstanding
Basic		48,664,597			48,066,358			48,413,364			47,742,744
Diluted		49,917,729			49,521,246			49,713,535			49,255,071

Earnings available to ACIC common stockholders per share
Basic
Continuing operations	$	0.67		$	0.58		$	1.66		$	1.48
Discontinued operations		—			0.01			—			0.01
Total	$	0.67		$	0.59		$	1.66		$	1.49
Diluted
Continuing operations	$	0.65		$	0.56		$	1.61		$	1.43
Discontinued operations		—			0.01			—			0.01
Total	$	0.65		$	0.57		$	1.61		$	1.44

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

AMERICAN COASTAL INSURANCE CORPORATION

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended

(Unaudited)


	Common Stock				Additional					Accumulated Other			Retained			Total
	Number				Paid-in		Treasury			Comprehensive			Earnings			Stockholders'
	of Shares		Dollars		Capital		Stock			Loss			(Deficit)			Equity
June 30, 2024		48,132,370	$	5	$	436,383	$	(431	)	$	(19,149	)	$	(193,735	)	$	223,073
Net income	—		—		—		—			—				28,119			28,119
Other comprehensive income, net	—		—		—		—				7,532		—				7,532
Stock compensation		12,592	—			694	—			—			—				694
Issuance of common stock, including exercise of stock options		60,000	—			164	—			—			—				164
September 30, 2024		48,204,962	$	5	$	437,241	$	(431	)	$	(11,617	)	$	(165,616	)	$	259,582


	Common Stock				Additional					Accumulated Other			Retained			Total
	Number				Paid-in		Treasury			Comprehensive			Earnings			Stockholders'
	of Shares		Dollars		Capital		Stock			Loss			(Deficit)			Equity
June 30, 2025		48,746,722	$	5	$	439,502	$	(431	)	$	(9,794	)	$	(136,982	)	$	292,300
Net income	—		—		—		—			—				32,483			32,483
Other comprehensive income, net	—		—		—		—				1,391		—				1,391
Stock compensation		18,580	—			1,047	—			—			—				1,047
Issuance of common stock, including exercise of stock options		—	—			—	—			—			—				—
September 30, 2025		48,765,302	$	5	$	440,549	$	(431	)	$	(8,403	)	$	(104,499	)	$	327,221

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

AMERICAN COASTAL INSURANCE CORPORATION

Condensed Consolidated Statements of Stockholders’ Equity for the Nine Months Ended

(Unaudited)


	Common Stock				Additional					Accumulated Other			Retained			Total
	Number				Paid-in		Treasury			Comprehensive			Earnings			Stockholders'
	of Shares		Dollars		Capital		Stock			Loss			(Deficit)			Equity
December 31, 2023		46,777,006	$	5	$	423,717	$	(431	)	$	(17,137	)	$	(237,389	)	$	168,765
Net income	—		—		—		—			—				70,772			70,772
Other comprehensive income, net	—		—		—		—				7,528		—				7,528
Stock compensation		332,956	—			1,903	—			—			—				1,903
Issuance of common stock, including exercise of stock options		1,095,000	—			11,621	—			—			—				11,621
Impact of deconsolidation of discontinued operations	—		—		—		—				(2,008	)		1,001			(1,007	)
September 30, 2024		48,204,962	$	5	$	437,241	$	(431	)	$	(11,617	)	$	(165,616	)	$	259,582


	Common Stock				Additional					Accumulated Other			Retained			Total
	Number				Paid-in		Treasury			Comprehensive			Earnings			Stockholders'
	of Shares		Dollars		Capital		Stock			Loss			(Deficit)			Equity
December 31, 2024		48,204,962	$	5	$	436,524	$	(431	)	$	(15,666	)	$	(184,772	)	$	235,660
Net income	—		—		—		—			—				80,273			80,273
Other comprehensive income, net	—		—		—		—				7,263		—				7,263
Stock compensation		319,894	—			3,251	—			—			—				3,251
Issuance of common stock, including exercise of stock options		240,446	—			774	—			—			—				774
September 30, 2025		48,765,302	$	5	$	440,549	$	(431	)	$	(8,403	)	$	(104,499	)	$	327,221

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

AMERICAN COASTAL INSURANCE CORPORATION

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
	2025			2024
OPERATING ACTIVITIES
Net income	$	80,273		$	70,772
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		5,042			6,614
Bond amortization and accretion		481			553
Net realized losses on investments		411			190
Net unrealized gains on equity securities		(3,429	)		(1,542	)
Provision for uncollectable premiums		(26	)		32
Provision for uncollectable reinsurance recoverables		(36	)		58
Deferred income taxes, net		11,741			(2,558	)
Stock based compensation		3,251			1,903
Fixed asset disposal		61			129
Loss on sale of subsidiary		328			—
Gain on disposition of former subsidiary		—			(1,007	)
Changes in operating assets and liabilities:
Accrued investment income		(242	)		(1,579	)
Premiums receivable		14,687			26,425
Reinsurance recoverable on paid and unpaid losses		119,188			193,719
Ceded unearned premiums		(21,402	)		(45,792	)
Deferred policy acquisition costs, net		(4,746	)		(22,067	)
Other assets		2,519			26,368
Unpaid losses and loss adjustment expenses		(133,492	)		(175,543	)
Unearned premiums		11,029			35,857
Reinsurance payable on premiums		55,961			124,656
Accounts payable and accrued expenses		(22,161	)		999
Operating lease liability		(134	)		(739	)
Other liabilities		(527	)		4,459
Net cash provided by operating activities	$	118,777		$	241,907
INVESTING ACTIVITIES
Proceeds from sales, maturities and repayments of:
Fixed maturities		112,781			12,687
Equity securities		9,982			—
Other investments		20,622			12,111
Purchases of:
Fixed maturities		(76,069	)		(140,667	)
Equity securities		(21,028	)		(23,995	)
Other investments		(33,392	)		(23,029	)
Cost of property, equipment and capitalized software acquired		(96	)		(11	)
Net proceeds from sale of former subsidiary		4,495			—
Net cash provided by (used in) investing activities	$	17,295		$	(162,904	)
FINANCING ACTIVITIES
Proceeds from issuance of common stock, including exercise of stock options		774			11,621
Net cash provided by financing activities	$	774		$	11,621
Increase in cash, cash equivalents and restricted cash, including cash classified as assets held for sale		136,846			90,624
Cash, cash equivalents and restricted cash at beginning of period		222,290			171,832
Cash, cash equivalents and restricted at end of period	$	359,136		$	262,456
Supplemental Cash Flows Information
Interest paid	$	5,438		$	5,438
Income taxes refunded	$	(1,039	)	$	(6,564	)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

AMERICAN COASTAL INSURANCE CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

ORGANIZATION, CONSOLIDATION AND PRESENTATION

(a)

Business

American Coastal Insurance Corporation (referred to in this document as we, our, us, the Company or ACIC) is a property and casualty insurance holding company that sources, writes and services residential commercial and casualty insurance policies using a network of agents and one wholly-owned insurance subsidiary, American Coastal Insurance Company (AmCoastal), acquired via merger on April 3, 2017. The Company also previously wrote insurance through Interboro Insurance Company (IIC); however, on April 1, 2025, the Company completed the sale of IIC. The details of this transaction are described below.

The Company's other subsidiaries include Skyway Underwriters, LLC, a managing general agent that provides technological and distribution services to the Company's insurance company; AmCo Holding Company, LLC (AmCo), which is a holding company subsidiary that consolidates its respective insurance company; BlueLine Cayman Holdings (BlueLine), which reinsures portfolios of excess and surplus policies; and Shoreline Re, which provides a portion of the reinsurance protection purchased by the Company's insurance subsidiary where management deems prudent. The Company also has several subsidiaries in run-off including United Insurance Management, L.C. (UIM), a managing general agent; Skyway Claims Services, LLC (SCS), which previously provided claims adjusting services to the Company's insurance companies; Skyway Reinsurance Services, LLC, which previously provided reinsurance brokerage services for the Company's insurance companies; and Skyway Legal Services, LLC (SLS), which previously provided claims litigation services to the Company's insurance companies.

On May 9, 2024, the Company entered into a Stock Purchase Agreement (the "Sale Agreement") with Forza Insurance Holdings, LLC (Forza) in which the Company agreed to sell and Forza agreed to acquire 100% of the issued and outstanding stock of IIC. Forza’s application to acquire IIC was approved by the New York Department of Financial Services (NYDFS) on February 13, 2025 and the sale closed on April 1, 2025. The aggregate purchase price for the shares was equal to IIC's shareholders' equity under U.S. generally accepted accounting principles (GAAP) on the closing date. IIC results of operations and assets and liabilities are captured within discontinued operations and are discussed in Note 4 of the Notes to Unaudited Condensed Consolidated Financial Statements below.

The Company's primary product is commercial residential property insurance in Florida. As a result of the Sale Agreement described above and the resulting classification of IIC as discontinued operations, the remaining activity captured within continuing operations supports only the Company's commercial residential insurance offerings. Given this fact pattern, the Company conducts operations under one reportable segment.

(b)

Consolidation and Presentation

The Company prepares its unaudited condensed consolidated interim financial statements in conformity with GAAP. The Company has condensed or omitted certain information and footnote disclosures normally included in the annual consolidated financial statements presented in accordance with GAAP. In management's opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of interim periods. The Company includes all of its subsidiaries in its consolidated financial statements, eliminating intercompany balances and transactions during consolidation. As described in Note 4, the Company's former subsidiary, IIC, qualified as discontinued operations. The Company's unaudited condensed consolidated interim financial statements and footnotes should be read in conjunction with the Company's consolidated financial statements and footnotes in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

While preparing the Company's unaudited condensed consolidated financial statements, the Company makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require the Company to make extensive use of estimates include its reserves for unpaid losses and loss adjustment expenses, investments and goodwill. Except for the captions on the Company's Unaudited Condensed Consolidated Balance Sheets and Unaudited Condensed Consolidated Statements of Comprehensive Income, the Company generally uses the term loss(es) to collectively refer to both loss and loss adjustment expenses.

The Company's results of operations and cash flows as of the end of the interim periods reported herein do not necessarily indicate the Company's results for the remainder of the year or for any other future period.

AMERICAN COASTAL INSURANCE CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

Operating segments are components of the Company's business about which separate financial information is available and evaluated by the Company's chief operating decision maker (CODM) in decisions regarding resource allocations and financial performance assessments. Generally, financial information is required to be reported on the basis that is used internally for evaluating segment performance and deciding how to allocate resources to each segment. Segments are determined based on differences in products, internal reporting, and how operational decisions are made.

As described above, as a result of the sale of IIC, the Company discloses one reportable operating segment, which consists of its commercial lines business.

The Company's CODM is its President and Chief Executive Officer (CEO). The CODM uses net income that is also reported on the Consolidated Statements of Comprehensive Income to make decisions on how to allocate resources, for example deciding whether to reinvest profits for items such as product development or acquisitions, or whether to pay dividends. Net income is used to monitor budget versus actual results. Net income is also used in competitive analysis by benchmarking against the Company's peers. This analysis is used in assessing performance of the Company's operating segment and in establishing targets for management.

In addition, the Company's measure of segment assets is reported on the Consolidated Balance Sheets as total assets. The accounting policies of the Company's operating segment are the same as those described in the Company's summary of significant accounting policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Revenue, profit or loss and significant segment expenses can be seen on the Consolidated Statements of Comprehensive Income. Additional reconciliation of certain expenses can be seen within Note 3, below.

SIGNIFICANT ACCOUNTING POLICIES

(a) Changes to Significant Accounting Policies

There have been no changes to the Company's significant accounting policies as reported in its Annual Report on Form 10-K for the year ended December 31, 2024.

(b) Pending Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update requires disaggregated disclosure of income statement expenses for entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for all entities for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is assessing the impact of this new accounting standard on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures. This update amends the Codification to enhance the transparency and decision usefulness of income tax disclosures. This ASU requires additional disaggregation of the reconciliation between the statutory and effective tax rate for an entity and of income taxes paid, both of which are disclosures required by current GAAP. The amendments improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company has assessed the impact of this new accounting standard and intends to adopt the annual disclosure requirements in its 2025 Annual Report on Form 10-K. The Company does not believe this will have a material impact on its consolidated financial statements and related disclosures.

On July 4, 2025, the "One Big Beautiful Bill Act" ("OBBBA") was signed into law, which makes permanent many of the tax
provisions enacted in 2017 as part of the Tax Cut and Jobs Act that were set to expire at the end of 2025. The OBBBA also changes
certain U.S corporate tax provisions, with certain provisions being effective in 2025 and others implemented though 2027. The Company does not expect this legislation to have a material effect on our consolidated financial statements, but we will evaluate the full impact of these legislative changes as additional guidance becomes available.

AMERICAN COASTAL INSURANCE CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

DISAGGREGATION OF RELEVANT EXPENSE CAPTIONS

The Company presents its expenses in four major captions: loss and loss adjustment expenses, policy acquisition costs, general and administrative expenses and interest expense. The Company has presented the disaggregation of its general and administrative expenses below for the three and nine months ended September 30, 2025 and 2024 to enhance disclosure regarding its recast general and administrative expenses.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
General and Administrative Expenses
Employee compensation(1)	$	4,821		$	3,579		$	9,579		$	11,083
Depreciation and amortization		1,020			1,300			3,213			3,993
Association fees		920			812			2,937			2,649
Software & equipment costs		735			1,030			2,567			2,996
Professional services		1,066			876			2,725			3,113
Intangible asset amortization		609			610			1,828			2,030
Audit fees		446			(52	)		1,108			1,460
Liability insurance		412			483			1,158			1,515
Legal fees		147			284			523			1,771
Operating lease expense		107			58			332			103
Provision for (reversal of) expected credit losses		(5	)		(44	)		(62	)		(90	)
Other general and administrative(2)		1,043			1,353			2,697			2,856
Total general and administrative expenses	$	11,321		$	10,289		$	28,605		$	33,479

(1) For the nine months ended September 30, 2025, employee compensation includes $4.5 million, in one-time employee retention tax credit refunds.

(2) For the three and nine months ended September 30, 2025 and 2024, other general and administrative expenses were comprised primarily of regulatory fees, franchise fees, and overhead such as office utilities.

DISCONTINUED OPERATIONS

On May 9, 2024, the Company entered into the Sale Agreement with Forza in which ACIC agreed to sell and Forza agreed to acquire 100% of the issued and outstanding stock of IIC. Forza’s application to acquire IIC was approved by the NYDFS on February 13, 2025 and the sale closed on April 1, 2025. The Company received cash proceeds totaling $25,679,000 from the sale resulting in a loss on disposal of $247,000, net of tax impact. The Company also recognized a $1,348,000 loss, net of tax impact, on IIC's fixed maturity portfolio, which was included in accumulated other comprehensive loss on the Company's Consolidated Balance Sheets prior to the sale. The total tax benefit related to the sale and realized loss on fixed maturity portfolio was $528,000.

AMERICAN COASTAL INSURANCE CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

The results from IIC's discontinued operations for the three and nine months ended September 30, 2025 and 2024 are presented below.

IIC Results from Discontinued Operations


	Three Months Ended September 30,					Nine Months Ended September 30,
	2025 (2)		2024			2025			2024
REVENUE:
Gross premiums written	$	—	$	12,402		$	13,120		$	31,261
Change in gross unearned premiums		—		(3,140	)		(3,336	)		(4,689	)
Gross premiums earned		—		9,262			9,784			26,572
Ceded premiums earned		—		(2,256	)		(2,528	)		(7,025	)
Net premiums earned		—		7,006			7,256			19,547
Net investment income		—		539			538			1,563
Net realized investment losses		—		(13	)		(2	)		(66	)
Other revenue		—		18			16			49
Total revenue		—		7,550			7,808			21,093
EXPENSES:
Losses and loss adjustment expenses		—		4,448			3,179			13,767
Policy acquisition costs		—		2,052			1,906			6,234
General and administrative expenses		—		454			546			2,009
Total expenses		—		6,954			5,631			22,010
Income (loss) before income taxes		—		596			2,177			(917	)
Provision (benefit) for income taxes(1)		—		146			540			(1,238	)
Income from discontinued operations, net of tax	$	—	$	450		$	1,637		$	321

(1) Includes $1,007,000 in tax benefit related to discontinued operations outside of IIC stand-alone results for the nine months ended September 30, 2024.

(2) Excludes loss on sale and realization of unrealized losses on fixed maturity portfolio, the details of which are described above and are not operational results related to IIC.

AMERICAN COASTAL INSURANCE CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

The major classes of IIC assets and liabilities transferred as a result of the sale as of the date of sale and December 31, 2024 are presented below.

IIC Major Classes of Assets and Liabilities Sold and Disposed


	April 1, 2025		December 31, 2024
ASSETS
Fixed maturities, available-for-sale	$	40,925	$	38,523
Other investments		988		978
Cash and cash equivalents		21,206		22,897
Accrued investment income		297		317
Premiums receivable, net		3,174		1,606
Reinsurance recoverable on paid and unpaid losses, net		265		259
Ceded unearned premiums		2,004		4,075
Deferred policy acquisition costs, net		4,462		3,647
Intangible assets, net		775		775
Other assets		488		166
Total assets	$	74,584	$	73,243

LIABILITIES
Unpaid losses and loss adjustment expenses	$	21,391	$	21,499
Unearned premiums		23,574		20,238
Reinsurance payable on premiums		—		3,966
Payments outstanding		2,223		3,091
Accounts payable and accrued expenses		101		1,058
Operating lease liability		65		69
Other liabilities		1,402		21
Total liabilities	$	48,756	$	49,942

During the first quarter of 2024, due to a change in circumstances, the Company evaluated its capitalized software, previously classified as held for disposal at December 31, 2023. As a result of this evaluation, it was determined that the use case of the software by the Company shifted. The Company reclassified this asset and the associated amortization expense in 2024 in accordance with GAAP guidance, resulting in amortization expense for the capitalized software being captured in continuing operations prospectively. The value of this capitalized software at the time of reclassification was $8,095,000. There were no other non-cash transactions during the nine months ended September 30, 2025 and 2024.

AMERICAN COASTAL INSURANCE CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

INVESTMENTS

The following table details fixed-maturity available-for-sale securities, by major investment category, at September 30, 2025 and December 31, 2024:


	Cost or Adjusted/ Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2025
U.S. government and agency securities	$	95,530	$	557	$	—	$	96,087
Corporate securities		79,647		146		4,072		75,721
Mortgage-backed securities		35,273		35		4,203		31,105
States, municipalities and political subdivisions		23,203		74		1,246		22,031
Asset-backed securities		13,404		47		704		12,747
Public utilities		8,376		36		202		8,210
Foreign government		593		5		—		598
Total fixed maturities	$	256,026	$	900	$	10,427	$	246,499

December 31, 2024
U.S. government and agency securities	$	154,096	$	589	$	25	$	154,660
Corporate securities		68,024		6		6,495		61,535
Mortgage-backed securities		35,895		—		5,433		30,462
States, municipalities and political subdivisions		19,104		—		1,907		17,197
Asset-backed securities		12,341		1		906		11,436
Public utilities		5,651		—		367		5,284
Foreign government		436		—		9		427
Total fixed maturities	$	295,547	$	596	$	15,142	$	281,001

Equity securities are summarized as follows:

          
         September 30, 2025

         December 31, 2024

          
         Estimated Fair Value

         Percent of Total

         Estimated Fair Value

570 Carillon Parkway, Suite 100

St. Petersburg,

(Address of Principle Executive Offices)

(Zip Code)

AMERICAN COASTAL INSURANCE Corp 10-Q