KBRA Upgrades the Ratings for American Coastal Insurance Corp. and Its Debt, Affirms the Rating for American Coastal Insurance Company and Revises all Outlooks to Positive
21 Jul 2025 | New York
KBRA upgrades the Issuer Rating to BBB- from BB+ for American Coastal Insurance Corp (ACIC) and upgrades the Debt Rating to BBB- from BB+ for ACIC's $150 million 10-year 6.25% senior unsecured notes due 2027. KBRA also affirms the Insurance Financial Strength Rating (IFSR) of A- for American Coastal Insurance Company (AmCoastal). The Outlook for all ratings has been changed to Positive from Stable.
The upgrade of ACIC’s Issuer and Debt ratings reflect the continued improvement in its financial leverage metrics and maintenance of strong double digit EBIT interest coverage. KBRA also views positively the completion of ACIC's sale of wholly owned subsidiary Interboro Insurance Company on April 1, 2025 for $25.7 million in cash.
The change in Outlook to Positive from Stable reflects KBRA’s expectation that AmCoastal will continue to report favorable operating results and maintain its strong risk-adjusted capitalization, robust reinsurance programs with strong counterparties and high credit quality investment portfolio. Additionally, it is KBRA’s expectation that financial leverage will continue to improve in the line with the business plan and that EBIT interest coverage levels will be maintained or improved.
The IFSR of AmCoastal reflects its strong risk-based capitalization, low commercial lines loss ratios, sound catastrophe program, favorable market position, experienced management team and conservative investment portfolio. AmCoastal has been profitable every year since 2007 inclusive of major hurricane losses, except for 2019-2021 when it was part of a pooling arrangement with ACIC's former personal lines subsidiaries that were divested in the first quarter of 2023. AmCoastal is the leading provider of commercial residential property insurance in Florida. These strengths are balanced by the company's exposure to event risk and heavy reliance on reinsurance. As a single state writer with high catastrophe exposure, the availability and affordability of adequate reinsurance is critical to the company's ability to manage exposure within its capital resources.
Factors that could positively impact the ratings include sustained operating profitability, continued improvement in financial leverage, controlled geographic expansion into other states outside of Florida, a steady trend in organic surplus growth, or a favorable change in risk profile.
Factors that could negatively impact the ratings include deterioration in risk adjusted capitalization and/or underwriting leverage, inability to obtain reinsurance on acceptable terms and pricing, causing an increase in loss exposure, a reduction in the company’s ability to underwrite policies or a drag on earnings, a material decline in the credit quality of the reinsurance panel and/or inability to collect on reinsurance causing a material adverse effect on operating results and overall financial condition, an unfavorable change in risk profile, or a sustained deterioration in financial leverage.
To access ratings and relevant documents, click here.
Click here to view the report.