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Reinsurance

12 Months Ended

Dec. 31, 2025

10)

REINSURANCE

Our catastrophe reinsurance programs are designed primarily by utilizing third-party catastrophe modeling software and consulting with third-party reinsurance experts to project our exposure to catastrophe events. We evaluate modeled expected losses developed by the catastrophe modeling software using our risk portfolio data to estimate probable maximum losses ("PML") across multiple return periods and the average annual loss. The Company monitors and manages its catastrophe risk using this model output along with other internal and external data sources, such as our historical loss experience and industry loss experience, to develop our view of catastrophe risk.

Our catastrophe reinsurance coverage consists of three separate placements:

AmCoastal’s core catastrophe reinsurance program, including catastrophe bonds (effective April 2024 and December 2024), in effect June 1 through May 31, annually, which includes excess of loss and quota share treaties providing coverage for catastrophe losses from named or numbered windstorms;

AmCoastal’s all other perils catastrophe excess of loss agreement in effect January 1 through December 31, annually, which provides protection from catastrophe loss events other than named or numbered windstorms and earthquakes; and

AmCoastal's catastrophe aggregate excess of loss coverage, in effect Jan 1 through December 31, annually, which provides protection from all catastrophe loss events, including named windstorms, severe convective storms and winter storm events.

This reinsurance protection is an essential part of our catastrophe risk management strategy. It is intended to provide our stockholders with an acceptable return on the risks assumed by our insurance entity, and to reduce the variability of earnings, while providing surplus protection. Although reinsurance agreements contractually obligate our reinsurers to reimburse us for the agreed-upon portion of our gross paid losses, they do not discharge our primary liability. In the event one or more of our reinsurers fail to fulfill their obligation, the surplus of our statutory entity may decline, and we may not be able to fulfill our obligation to policyholders, or we may not be able to maintain compliance with various regulatory financial requirements. Additionally, we face the risk that actual losses incurred from one or more catastrophic events may be above the modeled expected loss resulting in losses exceeding our reinsurance coverage, which may result in a decline in surplus, and as a result we may not be able to fulfill our obligations to policyholders, or we may not be able to maintain compliance with various regulatory financial requirements. The details of our programs and the likelihood of a catastrophic event exceeding these two coverages are outlined below.

AmCoastal’s core catastrophe reinsurance program provides occurrence-based coverage up to an exhaustion point of approximately $1,330,000,000 for a first occurrence and $1,676,000,000 in the aggregate. Under this program, the Company's GAAP retention on a first event is $29,750,000 ($14,000,000 retained by AmCoastal under statutory accounting principles (STAT retained), $15,750,000 (retained separately by the Company's captive)). The Company has purchased second and third event retrocession coverage, reducing its second event GAAP retention to $18,500,000 ($14,000,000 STAT retained by AmCoastal, $4,500,000 retained separately by the Company's captive) and third event GAAP retention to $3,750,000, based on three $100,000,000 loss events. AmCoastal’s program provides sufficient coverage for approximately a 1-in-203-year return period, indicating that the probability of a single occurrence exceeding protection purchased is roughly 0.5% estimated by blending the AIR 10, AIR 11.5, RMS 22 and RMS 23 catastrophe models using long-term catalogs including demand surge and based on total insured value at September 30, 2025 of $69 billion. AmCoastal’s program also provides sufficient coverage for a 1-in-100-year event followed by a 1-in-50-year event in the same treaty year, the probability of which is less than 0.1%. While we believe these catastrophe models are very good tools and their output provides reasonable proxies for the probability of exhausting our reinsurance protections, they are imperfect, so actual results could vary dramatically from those expected.

AmCoastal’s all other perils catastrophe excess of loss agreement provides protection from catastrophe loss events other than named windstorms and earthquakes up to $88,200,000 for a first and second event, totaling $176,400,000 in the aggregate. This agreement provides sufficient coverage for approximately a 1-in-450-year return period, indicating that the probability of a single occurrence exceeding protection purchased is no more than 0.2%.

In addition to the programs described above, AmCoastal purchased a new catastrophe aggregate excess of loss coverage (the “CAT Agg” agreement) to mitigate our catastrophe frequency risk. This agreement provides coverage for in-force, new and renewal business. Effective January 1, 2025, the new CAT Agg agreement provides $40,000,000 of aggregate limit (with a $20,000,000 per occurrence cap) in excess of zero after the $40,000,000 annual aggregate deductible has been met. The CAT Agg agreement limits our losses from all catastrophe loss events, including named windstorms, severe convective storms and winter storm events for the full year ending December 31, 2025.

Effective December 15, 2023, we agreed to commute a private reinsurer’s share of core catastrophe reinsurance coverage and replace this gap in coverage with new coverage provided by one of our other private reinsurers. This transaction resulted in a reduction in expense of approximately $6,300,000 and $15,700,000 during the three and six months ended June 30, 2024, respectively.

Where we think prudent, particularly where premium rates are high relative to the risk, we retain risk whereby AmCoastal purchases reinsurance from Shoreline Re, our captive reinsurance entity. Shoreline Re participates on AmCoastal's all other perils catastrophe excess of loss agreement and AmCoastal's excess per risk agreement. In addition, Shoreline Re participates in a 45% quota share agreement with AmCoastal, which provides coverage for all catastrophe perils as well as attritional losses incurred.

The table below outlines the participation of Shoreline Re for each program, including premium received and capital at risk.


Treaty	Effective Dates	Premium Collected / Cession Rate		Capital at Risk (1)
Quota Share Agreement	06/01/2025 - 05/31/2026	45% (2)		$	33,346,000	(3)
All Other Perils Catastrophe	01/01/2025 -
Excess of Loss Agreement	12/31/2025	$	1,296,000		2,304,000
All Other Perils Catastrophe	01/01/2024 -
Excess of Loss Agreement	12/31/2024		—		4,500,000	(4)
Excess Per Risk Agreement	02/01/2024 - 01/31/2025		1,867,000		633,000
Quota Share Agreement (5)	06/01/2024 - 05/31/2026	30% (2)		$	4,200,000	(6)

(1) Capital at risk is calculated by taking the aggregate losses Shoreline Re is subject to under the contract, less net premiums earned under the contract.

(2) This treaty provides or provided coverage for all catastrophe perils and attritional losses incurred. For all catastrophe perils, the quota share agreement provides or provided ground-up protection, effectively reducing our retention for catastrophe losses.

(3) Net premiums earned based on estimated subject premiums at June 1, 2025.

(4) This treaty was amended on June 1, 2025 to include reinstatement, resulting in additional premium and aggregate losses.

(5) This treaty was commuted on June 1, 2025 with no impact on our consolidated results.

(6) Net premiums earned based on estimated subject premiums at June 1, 2024.

The table below outlines our quota share agreements in effect for the years ended December 31, 2025 and 2024.


Reinsurer	Companies in Scope	Effective Dates	Cession Rate	States in Scope
External third-party	AmCoastal	06/01/2024 - 05/31/2026	20% (1)(2)	Florida
External third-party	AmCoastal	06/01/2023 - 05/31/2024	40% (1)	Florida

(1) This treaty provides or provided coverage for all catastrophe perils and attritional losses incurred. For all catastrophe perils, the quota share agreement provides or provided ground-up protection, effectively reducing the Company's retention for catastrophe losses.

(2) The cession rate of this treaty was reduced from 20% to 15% effective June 1, 2025 to May 31, 2026.

Reinsurance recoverable at the balance sheet dates consists of the following:


	December 31, 2025		December 31, 2024
Reinsurance recoverable on unpaid losses and loss adjustment expenses	$	116,772	$	249,276
Reinsurance recoverable on paid losses and loss adjustment expenses		11,433		14,143
Reinsurance recoverable(1)	$	128,205	$	263,419

(1) Our reinsurance recoverable balance is net of our allowance for expected credit losses. More information related to this allowance can be found in Note 14.

The following table depicts written premiums, earned premiums and losses, showing the effects that our reinsurance transactions have on these components of our Consolidated Statements of Comprehensive Income (Loss):


	Year ended December 31,
	2025			2024			2023
Premium written:
Direct	$	612,599		$	642,727		$	635,593
Assumed		(77	)		5,078			116
Ceded		(290,212	)		(370,210	)		(413,462	)
Net premium written	$	322,310		$	277,595		$	222,247
Change in unearned premiums:
Direct	$	32,271		$	(5,730	)	$	(41,227	)
Assumed		3,467			(3,467	)		10,201
Ceded		(51,196	)		5,592			70,839
Net decrease (increase)	$	(15,458	)	$	(3,605	)	$	39,813
Premiums earned:
Direct	$	644,870		$	636,997		$	594,366
Assumed		3,390			1,611			10,317
Ceded		(341,408	)		(364,618	)		(342,623	)
Net premiums earned	$	306,852		$	273,990		$	262,060
Losses and LAE incurred:
Direct	$	5,250		$	231,537		$	120,114
Assumed		(3,051	)		(4,077	)		3,767
Ceded		43,841			(158,141	)		(77,203	)
Net losses and LAE incurred	$	46,040		$	69,319		$	46,678

Ceded losses incurred decreased by $201,982,000 during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily as a result of Hurricane Milton from which we incurred an ultimate loss estimate of $125,000,000 at December 31, 2024. In 2025 we incurred no similar catastrophe activity and this estimated was revised down to $75,500,000 at December 31, 2025.

The following table highlights the effects that our reinsurance transactions have on unpaid losses and loss adjustment expenses and unearned premiums in our Consolidated Balance Sheets:


	December 31,
	2025			2024			2023
Unpaid losses and LAE:
Direct	$	161,560		$	315,412		$	332,396
Assumed		4,141			6,675			15,342
Gross unpaid losses and LAE		165,701			322,087			347,738
Ceded		(116,772	)		(249,276	)		(271,736	)
Net unpaid losses and LAE	$	48,929		$	72,811		$	76,002
Unearned premiums:
Direct	$	249,616		$	281,887		$	276,157
Assumed		—			3,467			—
Gross unearned premiums		249,616			285,354			276,157
Ceded		(109,697	)		(160,893	)		(155,301	)
Net unearned premiums	$	139,919		$	124,461		$	120,856