Prepared remarks
Hello and thank you for standing by. My name is Joel and I will be your conference operator today. At this time, I would like to welcome everyone to the American Integrity Group second quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question, please press 1 to raise your hand. To withdraw your question, press 1 again. As a reminder, this call is being recorded. But before we begin, please note that today's remarks may contain forward-looking statements, including comments about the company's outlook, strategy, plans, and expected performance. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially. A full discussion of the risk factors can be found in the company's SEC filings, including its most recently filed annual report on Form 10-K and quarterly report on Form 10-Q. Management undertakes no obligation to update any forward-looking statements. Furthermore, today's remarks may contain non-GAAP financial measures. A reconciliation of non-GAAP financial measures to their most comparable GAAP measures is included in the company's quarterly press release and can also be found on its website at www.aii.com. References to American Integrity or the company prior to the consummation of the IPO refer to American Integrity Insurance Group LLC and after the consummation of the IPO refer to American Integrity Insurance Group Inc. With that, I will turn the call over to American Integrity's founder and chief executive officer, Bob Ritchie. Please go ahead.
Thank you, and good morning, everyone. We had an outstanding second quarter with record performance across several important measures and meaningful acceleration across our major strategic growth initiatives. Last quarter, we wrote approximately 43,000 voluntary new business policies during the quarter. This is a company record, the first time ever, representing growth of approximately 54% compared with the second quarter of last year and 44% sequentially from the first quarter of this year. At the same time, we generated a record $46.4 million of income before taxes, a record for the entire company for a single quarter. I am happy to report we also ended the quarter with more than $1 billion of in-force premium and approximately 462,000 policies in force. These are both important milestones and they demonstrate the scale our platform is achieving. Taken together, we believe these results demonstrate the increasing strength of American Integrity's organic growth engine. It has never been stronger. The platform we have built for over two decades is generating meaningful voluntary growth through our established distribution relationships. And while the improved Florida insurance environment is allowing us to expand thoughtfully in the markets and risk categories where we have significant experience and underwriting expertise. As we discussed last quarter, we believe voluntary market opportunities, expansion into very attractive segments of the Florida market, and thoughtfully selected geographic expansion throughout the Southeast will drive our growth. We believe that the second quarter provided further evidence that these initiatives are working and, more importantly, our momentum is broad based. As many of you know, over these last several quarters, we have consistently highlighted three primary areas of opportunity: 1) the Tri-County region of Florida; 2) middle-aged homes; and 3) our expansion states in the Southeast. During the second quarter, I am pleased to report that every one of these initiatives continues to gain meaningful traction. Let's start with Tri-County. We wrote more than 7,600 voluntary new business policies during the quarter. This compares to fewer than 200 in the prior year period — that is obviously a 40x increase. Second, in middle-aged homes, we wrote more than 9,000 voluntary new business policies during the quarter. This compares to fewer than 450 in the prior year period — that is a 21x increase. These are particularly attractive areas for us because they represent markets and risks where we have considerable underwriting expertise and experience, historical data, and importantly, very deep and long-standing existing agency relationships. So we are not pursuing growth by moving outside our core competencies. As the economics of the Florida insurance market have improved, we are expanding participation in markets that we know very well. Importantly, our voluntary growth is being generated through our traditional distribution channels and underwriting platform, and we believe that type of growth creates a broader, more sustainable, and increasingly diversified earnings engine for American Integrity. Outside of Florida, production also accelerated very meaningfully as we continued to expand our presence across the Southeast. During the second quarter, new business policies written in Georgia, South Carolina, and North Carolina increased 40% year-over-year, up from a 23% increase year-over-year in Q1 2026. Momentum is happening. These markets complement our existing builder and agency distribution relationships and they provide another avenue for disciplined organic growth. While all these markets remain a relatively small portion of our overall portfolio today, we believe they represent a very attractive opportunity to generate profitable growth while we further diversify our business over time. These markets also allow us to deepen our relationships with existing homeowner-affiliated agents and other distribution partners, both nationally and regionally, who already know American Integrity and want to do more business with us across multiple markets. Another important driver of our success continues to be our distribution network. What is particularly notable about our recent growth is that it is being driven primarily by long-standing agency relationships rather than brand-new distribution partnerships. For markets such as Tri-County and middle-aged homes, our agency partners already know our underwriting philosophy. They understand our operating platform and they are ready to respond as we expand our appetite for these risks. We continue to hear a consistent message from our agents: they value stability, responsiveness, and ease of doing business. We are also seeing increased engagement from agency partners who are looking to consolidate more of their business with a smaller number of trusted carriers and we are one of them. We believe our service level, our underwriting consistency, and our long-standing commitment to the market position us extremely well to capture a larger share of business within existing agency relationships. This is a very important competitive advantage that is unique to American Integrity. Much of our strongest growth again is coming from these established relationships. So we believe this allows us not only to generate more submissions and more volume, but also to attract very high-quality business from partners who understand who we are and what we write. That is the value of the distribution franchise that has taken over 20 years to build. This leads to another really important point: the evidence continues to reinforce our view that Florida's legislative reforms are producing the intended results from the reform nearly four years ago. Litigation activity for the entire industry, especially for us, continues a solid decline. Loss-cost trends remain very favorable and reinsurance pricing has meaningfully improved. At the same time, consumers are beginning to benefit with increased insurance availability and more moderate pricing. We view the current environment as evidence of a very healthy and sustainable marketplace, and there is not irrational competition. Importantly, as consumers increasingly experience these benefits, we believe the reforms become more durable over time. From our perspective, that durability creates a much more stable operating environment for both insurers and policyholders. So despite a somewhat softer market environment nationally, our premium per policy remains generally stable across our portfolio. Given the mix shift of our portfolio — growth in higher valued homes, Tri-County, middle-aged homes, and commercial residential business — those factors have largely offset modest rate reductions elsewhere in the book. Additionally, our inflation guard provides support as rates modestly decline. Overall, we believe as we enter the second half of this year we will roll into it from a position of considerable strength. We are generating record voluntary production, we are expanding successfully and thoughtfully across multiple growth channels, and benefiting from favorable market dynamics, all while maintaining very attractive underwriting economics. We believe that combination expands the long-term earning power of American Integrity. With that, let me now turn the call over to John.
Thanks, Bob. I will spend a few minutes going a bit deeper on what we are seeing in the business and how that is translating into our results, and then provide an update on our recently completed catastrophe reinsurance renewal. Starting with our results, we continue to see strong growth in our core Florida market and across our expansion states in the Southeast. During the second quarter, gross premiums written increased 13.8% to approximately $327 million. Retention continued to climb to 84.4%, up from 83.6% in the first quarter, and policies in force increased to approximately 462,000, up 15.7% year over year and 5.6% sequentially from the first quarter. The growth reflects strong voluntary production across the business. Looking first at Tri-County, production levels are encouraging but we remain substantially underpenetrated relative to the size of the opportunity. As a reminder, Tri-County represents approximately 28% of Florida households while accounting for only a modest portion of our current policies in force. We believe this represents substantial opportunity for profitable growth over time. In addition, approximately one-third of our Florida voluntary new business gross premium written production during the quarter came from Tri-County policies compared with only a very small contribution in the prior-year quarter, highlighting the momentum we are currently seeing in the market. We believe we have strong support from our distribution partners, increasing consumer demand, and favorable economics that will allow us to pursue growth while maintaining our underwriting discipline. The same is true for middle-aged homes. As we have discussed previously, this was historically the core of our business and an area where we have deep underwriting experience and long-standing agency relationships. We reduced our participation in this market during the height of Florida's litigation crisis, and the legislative reforms have enabled us to reenter this segment in a measured and profitable way. Since expanding our participation, results have been very encouraging. Middle-aged homes represented 24% of our voluntary new business gross written premium during the quarter compared to approximately 4% in the prior year period. We view this as an attractive opportunity because it combines significant market size with an area where we have considerable operating history and underwriting expertise. Importantly, we believe both Tri-County and middle-aged homes provide meaningful growth opportunities without requiring us to depart from our core underwriting competencies. Outside of Florida, our expansion states continue to gain traction. During the second quarter, new business policies written in Georgia, South Carolina, and North Carolina increased 40% year-over-year, while new business gross premiums written increased 50%. These states represented approximately 18% of voluntary new business policies and 10% of voluntary new business gross premiums written during the quarter. While still a relatively small contributor to our overall portfolio today, we believe these results demonstrate the portability of our distribution relationships and operating model. When we entered these new states, we led with our HO3 product. Given the success we have experienced thus far, we are now evaluating opportunities to broaden our product offerings outside Florida, including products such as dwelling and marine. Our agents have demonstrated demand and we intend to approach that expansion with the same discipline we have applied to our geographic growth. Turning to reinsurance: I am very pleased with the outcome of our June 1 catastrophe excess of loss renewal. We successfully renewed our program with meaningful, risk-adjusted rate reductions at the upper end of the 15% to 20% declines observed in the market while maintaining our target protection levels and improving our overall retention structure. Despite approximately 19% growth in peak-season exposure, our first-event retention remained unchanged at $35 million. Additionally, our aggregate four-event retention declined from $95 million to $75 million, further improving our net risk profile. We also maintained our program at a targeted 1-in-130-year probable maximum loss level. We believe this outcome reflects both favorable market conditions and the strength of our long-standing reinsurance relationships. The renewed program provides approximately $3 billion of total catastrophe protection including approximately $2.25 billion of third-party coverage for a single catastrophic event. In short, we achieved lower risk-adjusted pricing, maintained our targeted protection level, and reduced our aggregate retention, all while growing peak-season exposure by approximately 19%. We believe that is an excellent outcome. The improved economics of the renewal reflect both favorable reinsurance market conditions and the continued benefits of Florida's legislative reforms. We continue to believe reinsurance tailwinds will be an important contributor to earnings and capital generation moving forward. We appreciate the long-standing support of all of our reinsurance partners. Before turning things over to Brian, I want to briefly remind investors that our expected annual catastrophe reinsurance costs remain consistent with the $430 million to $440 million range we provided in connection with our June 1 renewal announcement. To conclude, we believe the operating environment remains highly constructive. Production is strong, our major growth initiatives continue to gain traction, our geographic expansion is progressing, and our renewed reinsurance program provides strong protection with improved economics. With that, let me turn the call over to Brian to walk through the financials.
Thanks, John. We generated net income of $34.1 million, or $1.74 per diluted share, and adjusted net income of $34.9 million, or $1.78 per diluted share during the second quarter. This compares to net income of $27.5 million, or $1.62 per diluted share, and adjusted net income of $31.3 million, or $1.84 per diluted share in the prior year period. Income before taxes was $46.4 million, an increase of 93% from $24.1 million in the prior year quarter and the highest quarterly level in the company's history. The comparison to the prior year period was influenced by elevated Citizens takeout activity during 2025, which created a temporary benefit to earnings, and our IPO in the second quarter of 2025, which resulted in one-time expenses. Turning to premiums: gross premiums written increased to $326.6 million compared to $287 million in the prior year period, representing an increase of 13.8%. This growth was driven by continued expansion in the voluntary market across our key growth initiatives. Gross premiums earned increased 8.3% to $242.3 million compared to $223.7 million in the prior year period. ceded premiums earned decreased to $137.6 million compared to $157.6 million in the prior year period, driven primarily by the reduction in our non-catastrophe quota share cession from 40% to 25% beginning January 1, 2026. As a result, net premiums earned increased 58.2% to $104.7 million compared to $66.2 million in the prior year period. There are two important forces driving this step up in net earned premiums: strong underlying growth in the business and our decision to retain a greater portion of the economics of that business following the quota share reduction. We believe the combination is allowing more of the value created by our underwriting platform to accrue to American Integrity and its stockholders. Net investment income increased 30.8% to $6.3 million compared to $4.8 million in the prior year period. Shortly after quarter end, we deployed just shy of $200 million of cash into high-quality fixed income securities, which positions us well for continued growth in investment income going forward. We expect our duration of approximately two years, our credit quality, and asset mix to remain largely consistent with how we previously managed our investments following the reallocation of cash. Loss and loss adjustment expenses increased to $33.2 million compared to $21.2 million in the prior year period, primarily reflecting growth in net premiums earned driven by continued voluntary production and the reduction in our non-cat quota share arrangement. Our net loss ratio was 30.6%, consistent with 30.6% in the prior year period. Our net underlying loss and loss adjustment expense ratio was 30.6%, down from 33.1% in the prior year period. There were no catastrophe losses and no prior-year development recognized during the quarter. Our gross underlying loss and loss adjustment expense ratio was 18.1% during the quarter, which we continue to view as a very attractive result and feel good about both the quality and pricing of the business we are writing today. Policy acquisition expenses increased to $17.4 million compared to $6.3 million in the prior year period. The increase was primarily driven by record levels of voluntary new business production, the absence of the Citizens takeout windfall which carries minimal upfront acquisition costs, and lower ceding commission income resulting from the reduction in our quota share. General and administrative expenses decreased to $18.2 million compared to $22.9 million in the prior year period, primarily driven by the absence of one-time IPO expenses recognized in the second quarter of 2025, partially offset by the reduction of our quota share. Our expense ratio decreased to 32.8% compared to 42.3% in the prior year period. The combined ratio for the quarter was 63.4% compared to 72.9% in the prior year period. We believe the 63.4% combined ratio demonstrates the attractive underwriting economics of the business, particularly alongside the strong growth we generated during the quarter. Return on equity was 38.7% in the quarter compared to 45.1% in the prior year quarter, and adjusted return on equity was 39.6% in the quarter compared to 51.3% in the prior year quarter. As a reminder, the reduction of the quota share increased revenue and earnings but also increased the absolute dollars of expenses given lower ceding commission income and fewer non-catastrophe losses ceded away. This, along with Citizens' takeout benefits in 2025, make the year-over-year changes in some line items and ratios less directly comparable. We believe the underlying trajectory of our business remains strong. Stepping back, we believe the quarter demonstrates a powerful combination of strong organic growth, disciplined underwriting, and increasing retention of the economics generated by our platform. Turning to our balance sheet: shareholders' equity increased to $369.5 million at quarter end compared to $337 million at year end. Book value per share increased to $18.86 representing growth of 22.3% year over year and 10.1% since Q1 2026. We view book value growth as an important measure of the value we are creating for our stockholders; the increase in shareholders' equity reflects strong earnings generation and continued growth in the business. We believe our capital position provides substantial flexibility as we pursue the opportunities ahead of us. With that, I will turn the call back to the operator to open the line for questions.
We will now begin the question-and-answer session. If you would like to ask a question, press 1 to raise your hand. To withdraw your question, press 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please standby while we compile the Q&A roster. Your first question is from Michael Phillips with Oppenheimer. Your line is now open. Please go ahead.
Questions and answers
Thank you. Good morning, everybody, and congrats on the quarter. First question is on the middle-aged home business. It is not new for you, but a new foray back into it. As that continues to grow and becomes a bigger part of your overall book, how do you compare the margin on that business to what has been your traditional business so far?
Michael, Bob Ritchie. Thank you for the question. I am going to start out, John, you can amplify it.
I want to assure you the way we are pricing, underwriting, selecting, binding, and renewing in middle-aged homes is entirely consistent with our combined ratio plans and with the pure premium that we are observing, and most importantly, with the way that the underwriting team is looking at these risks and also ensuring that, as it reaches potentially on the older part of its average age, that a new roof will be applied. Net, we are enjoying the same margins on this book as others. We model and expect the underlying gross loss ratio to be a few points higher than the overall portfolio, but as Bob said, the premium we are collecting accommodates for that. So we are very happy with the business that we are generating and the long-term profitability of that segment.
I will give you an example. Orange County, Orlando: we are back in a substantial market share opportunity where before the reform happened we had to reduce participation. In many cases we are writing with the same agents, even some of the same staff. I am really bullish about middle-aged homes and what it is driving for us.
Okay. That is very helpful. The second question, Bob, is I want to ask you a little bit about one of the comments you made at the end of your opening remarks. You said something about as reforms become more durable over time in Florida. I want to ask on that: what you meant by that? Because I guess what I was thinking was the reforms are here, it seems to be proof that they are working, that maybe they are already durable. The reason I asked, Bob, is the reforms have clearly been in place for a few years now and I wonder if the rate environment has kept up with the benefits we have seen from the reforms. There is often a lag when those two things happen. Maybe some of the lag was, 'are the reforms going to stay?' I think now there is confidence that they are. But I wonder what you meant by reforms being more durable.
Sure. So my comments were not meant to be tentative. They relate directly to the strength of Florida inasmuch as both public and private investors are returning. As respects the rate environment, three things drive rate increases: what I call the lawyer tax, which the 2022/2023 reforms more than solved — those have been worked through the system largely with all carriers in the form of rate reductions because the loss costs have leveled. But what is also a dynamic for rate increases are reinsurance, which John talked about, and then, of course, inflation. Inflation is not zero, so we are still seeing increased severity and increased coverage. Reinsurance has enjoyed a remarkable reduction, and for that, we have positioned product so that as you look at the entire pricing dynamic, that has been accomplished. So my comment on it is in no way meant to imply that it is tentative or yet to be realized; it is the strength of the investors that are returning to Florida that truly is allowing for new markets, allowed us to go public, and has restored confidence with investors and reinsurers. That is the topic.
Okay. That is super clarification. Thank you for that, and again, congrats on the quarter.
Your next question is from Thomas McJoynt-Griffith with KBW. Your line is now open. Please go ahead.
Hey, good morning. Thanks for taking our questions. To start off, in the third quarter of last year, when there was no major hurricane loss, the quota share reinsurance created some noise resulting in a big upswing in the net underlying loss ratio. Can you talk about what we can expect in that net underlying loss ratio in the third quarter of this year if, knock on wood, we get a similarly benign weather pattern? Thanks.
Sure. I am going to ask John to start out, and we can rely upon Brian for some of the optics. John?
Go ahead, Brian.
Tommy, the quota share is a non-catastrophe quota share, but it actually allows us to cede some de minimis catastrophe losses to that treaty. So what you said was correct whereby in a clean catastrophe year that can create a little bit of an elevated core loss ratio in that quarter. But then what happens is we actually get that back through increased ceding commission going forward, though we do not fully settle that until the end of the treaty, which would be in Q4. So there is a bit of a timing dynamic there.
Okay. Got it. That makes sense. And then switching over, you are generating very strong ROEs this year, but you are still growing net premiums pretty significantly too, especially with the quota share reinsurance coming down. Can you talk about your capacity — how much room you still have to grow? Should we be simply looking at premium leverage, or are there other measures that help frame your capacity?
Thanks for the question, Tommy. We feel very good about the trajectory of our growth and we certainly have the capital to continue to do that. We will see what the wind season has in store for us, but you should feel pretty confident that we can continue to execute with our current capital base. When you look at all the numbers in terms of gross and net writings, RBC ratios — all very healthy — we have the wherewithal and the capital to continue this significant growth rate.
Thank you.
Your next question is from Paul Newsome with Piper Sandler. Your line is now open. Please go ahead.
Good morning. Thanks for the call. Maybe a few additional thoughts and color on the new products that you are implementing. It sounds like these are a little bit different demographic — I think dwelling fire being more modest homes. I'm curious about the impact that would have on the overall portfolio, particularly from a catastrophe exposure perspective.
Morning, Paul. Thanks for the question. John?
They are new to the states, not new to us. We launched in Georgia, South Carolina, and North Carolina just with our homeowners' line of business. What we are looking to do and are building out for the remainder of this year to launch in 2027 is a dwelling fire product and a small boat/marine product that we currently have in Florida but our agency partners in those states have requested that we broaden the portfolio offering. So it is complementary in terms of what we are doing in Florida; we are just expanding in those three states with those lines.
Maybe a little bit of an update on what you think is happening with your probable maximum loss and your overall catastrophe exposure as you expand both in Tri-County and in the Southeast. Is PML going up, or is there a diversification benefit? How should we think about that?
Certainly PML is increasing with exposure growth at the rate that it is, but it is not increasing at the same rate as exposure because the growth in Tri-County and the reemergence back into Central Florida with middle-aged homes is allowing diversification of the PML from an exposure perspective and taking some pressure off some peak zones that we had prior to this expansion. So we view it as accretive net, and we are really pleased with how that balanced out for our June 1 renewal and as we look toward next year's renewal.
Thanks, guys. Congratulations.
Of course. Thanks, Paul, for your support and questions.
Your next question is from Mitchell Rubin with Raymond James. Your line is now open. Please go ahead.
Hey, good morning. This is Mitch on for Greg. You mentioned in the prepared remarks that you deployed around $200 million into fixed income securities after the quarter. What yield are you earning on that relative to your book yield? And how should we think about net investment income in the third and fourth quarters against the tougher post-IPO comp?
Thanks, Mitchell. So we took $200 million of cash and deployed that into our fixed income portfolio after the quarter. You can think about book yield in the mid-fours. New money rates are in the high-fours and maybe approaching 5%, depending on the product. So we expect kind of continued steady growth in net investment income going forward.
Got it. Thank you. Could you provide some color on what you are seeing in new construction volumes across your builder partners right now? And how sensitive your new business pace is to elevated mortgage rates?
We have seen a plateau of new builds and new construction in Florida. With that being said, we are still getting a very healthy share of wallet from our builder agents. The diversification of our distribution — national accounts, independent agents — is allowing us to diversify production on a daily basis, along with expansion into Tri-County and reemergence into middle-aged homes. So that diversification is allowing us to continue very healthy new business production, which we saw this quarter. We are still receiving a good share of new builds in Florida.
What this means is that while Florida new construction remains strong, it may have slowed a bit due to mortgage rates, but the strength of our sales and underwriting teams and our distributor relationships have more than made up for any lesser amount in Florida with growth in other states. Net, we are writing a similar amount of new construction and new business policies each day, which is exciting.
I appreciate the answers, and congrats on the quarter.
We have now reached the end of the Q&A session. I will now turn the call back to Bob for concluding remarks. Thank you, Joel.
I'm going to spend just a few minutes closing, given what this quarter means. As we close, I want to put this quarter in perspective for you as investors, reinsurers, shareholders, employees, and leaders of the company. This was an exceptional quarter for American Integrity and by many measures the strongest quarter in our company's history over 20 years. We delivered record voluntary new business production and record pretax earnings, we surpassed $1 billion of in-force premium, and we generated strong returns while broadening our opportunities for growth as we have explained here to you. We have improved our reinsurance economics. These results demonstrate the increasing strength, scale, and earnings power of American Integrity. For nearly two decades we have navigated dramatically different market cycles. We have proven through hurricanes, difficult insurance markets, legal crisis, reinsurance disruptions, and extraordinary change that this company was built not just to last but to grow as opportunity is available, and today it is. Through it all, we have remained grounded in disciplined underwriting, thoughtful risk selection, and responsible stewardship. But here's the deal: numbers alone do not tell the story of this quarter. Our people do. I am extraordinarily proud of the leadership team and all 350 American Integrity employees, some of you who are listening this morning. Behind every result we reported this morning are people who care deeply about this company, about one another, and about the people that we serve. Many of our people have been with us for years, some for decades, some for the entire part of our journey, and they have helped build this company through some of the most challenging periods that our industry has ever experienced. They stayed. They persevered. They adapted. They continued to believe in one another and in American Integrity. Through the good years and the difficult ones, they showed up every day and did the work. They took care of our policyholders. They supported our agency partners. They helped one another. And they continue to live the values upon which this company was founded. I want our people to know how deeply grateful I am for what they have given to American Integrity. Their commitment, resilience, and belief in this company has helped make everything we reported this morning possible. In concluding, while today we are celebrating an exceptional quarter, I am even more proud of the company and the culture we have built over two decades. I am equally proud of our leaders across the organization; you would be proud of every one of them. They understand that leadership is not simply about producing one great quarter — it is about building an enduring company. It is about developing people, making disciplined decisions, protecting our culture, and leaving American Integrity stronger for those who follow. That loyalty matters to me. That leadership matters. And that culture matters. Because integrity is not simply our name — it is a standard we have abided by since the first day we thought of this company. The culture built around that standard is indeed one of our greatest competitive advantages. So to our employees, agency partners, policyholders, investors, and reinsurers: thank you. These record results belong to all of you. As we enter the home stretch of 2026 with tremendous momentum, an exceptional team, and a company stronger than at any point in our history, I have never been more proud of our people or more confident in American Integrity. In closing, I firmly believe our best years are still ahead of us. Thank you for your confidence in American Integrity. Have an amazing day.
This concludes today's call. Thank you so much for attending. You may now disconnect.