AMERICAN COASTAL INSURANCE Corp (ACIC) Business
This page reproduces the company's own Item 1 Business text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
Informational only - not investment advice. See Disclaimer.
Item 1. Business
INTRODUCTION
Company Overview
American Coastal Insurance Corporation (referred to in this Form 10-K as we, our, us, the Company or ACIC) is a holding company primarily engaged in the commercial property and casualty insurance business with investments in the United States. On July 10, 2023, we changed our corporate name from United Insurance Holdings Corp. to American Coastal Insurance Corporation. We conduct our business principally through our wholly owned insurance subsidiary, American Coastal Insurance Company (AmCoastal). The Company also previously wrote insurance outside of Florida 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. Collectively, we refer to the holding company and all our subsidiaries, including non-insurance subsidiaries, as “American Coastal Insurance Corporation,” which is the preferred brand identification for our Company.
Our Company’s revenue is generated from writing insurance in Florida. Our target market in such areas consists of states where the perceived threat of natural catastrophe has caused large national insurance carriers to reduce their concentration of policies. We believe an opportunity exists for ACIC to write profitable business in such areas. In 2023, our former insurance subsidiary that wrote personal residential business in six states, United Property & Casualty Insurance Company (UPC) was placed into receivership with the Florida Department of Financial Services (the "DFS"), which divested our ownership of UPC. The results of this subsidiary for periods prior to receivership, now included within discontinued operations, can be seen in Note 4 of the Notes to Consolidated Financial Statements below. Discussion of 2023 and 2024 related to UPC can be found in our 2023 and 2024 Forms 10-K.
We have historically grown our business through strong organic growth, complemented by strategic acquisitions and partnerships, including our acquisitions of AmCo Holding Company, LLC (AmCo) and its subsidiaries, including AmCoastal, in April 2017.
On May 9, 2024, we entered into a Stock Purchase Agreement (the "Sale Agreement") with Forza Insurance Holdings, LLC (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 New York Department of Financial Services ("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 impacts. The Company also recognized a $1,348,000 loss, net of tax impacts, 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. As a result, IIC results of operations and assets and liabilities are captured within discontinued operations and can be seen in Note 4 of the Notes to Consolidated Financial Statements below.
Financial strength or stability ratings are important to insurance companies in establishing their competitive position and may impact an insurance company’s ability to write policies. We are rated by Demotech and Kroll Bond Rating Agency (Kroll). Demotech maintains a letter-scale financial stability rating system ranging from A’’ (A double prime) to L (licensed by insurance regulatory authorities). Kroll maintains a letter-scale financial strength rating system for insurance companies ranging from AAA (extremely strong operations and no risk) to R (operating under regulatory supervision). The financial strength or stability ratings of our insurance company subsidiary as of December 31, 2025 are listed below. With these ratings, we expect our property insurance policies will be acceptable to the secondary mortgage marketplace and mortgage lenders.
| Subsidiary | Demotech Rating | Kroll Rating | ||
|---|---|---|---|---|
| AmCoastal | A | A- | ||
| ACIC | BBB- |
Our Strategy
Our vision is to be a top-quartile underwriter of catastrophe-exposed property insurance. Our plan is to focus primarily on low-rise commercial property insurance in Florida. We write our condominium product through our exclusive managing general agency agreement and long-term partnership with AmRisc. In addition, in 2025 we began writing our apartment and assisted living products through our affiliated managing general agency Skyway Underwriters. The Company’s continuous portfolio optimization process strives to balance our risk appetite and underwriting profit opportunities with our available capital and reinsurance capacity to achieve consistent and sustainable underwriting profitability for the Company and its reinsurers over time.
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We desire to have the right combination of price, underwriting rules, deductibles and coverages to earn a return on capital that exceeds our cost of capital throughout the insurance market cycle. The Company also seeks to have risks maintain an appropriate insurance to value through re-underwriting and inspections of each property every three years to ensure it meets or exceeds our underwriting guidelines with verified data quality and integrity regarding the key risk characteristics of our covered properties.
PRODUCTS AND DISTRIBUTION
Commercial Residential Products
We provide commercial multi-peril property insurance for residential condominium associations, apartments and assisted living facilities in Florida. We include coverage to policyholders for loss or damage to buildings, inventory or equipment caused by covered causes of loss such as fire, wind, hail, water, theft and vandalism.
Not-At-Risk Offerings
On our equipment breakdown, identity theft, and flood policies we earn a commission while retaining no risk of loss, since all such risk is ceded to other private companies (other risks).
Underwriting
We price our products at levels that we project will generate an acceptable underwriting profit. We aim to accurately underwrite the risk and profitability of each potential policy. The Company uses pricing algorithms, judgment-based rating and consent to rate methodologies that consider historical attritional loss costs for the rating territory in which the risk resides, as well as modeled expected losses for catastrophes and projected reinsurance costs based on the specific geographic and structural characteristics of the property. We seek to optimize our portfolio by managing our probable maximum loss (PML), total insured value (TIV) and average annual loss (AAL). As a part of this optimization process, we use the output from third-party modeling software to analyze our risk exposures, including wind exposures, by zip code or street address. We also utilize AI technology to assist with the intake process and the underwriting evaluation process (including both guidelines and building characteristics).
We measure our underwriting profitability by the combined ratio, which is a sum of the ratios of losses, loss adjustment expenses, and underwriting expenses to either gross or net earned premiums. A combined ratio under 100% indicates an underwriting profit. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of this report for further details on our combined ratio.
Distribution Channels
Our condominium policies are marketed and distributed by AmRisc through a network of independent agencies managed by AmRisc that specialize in commercial residential insurance. AmRisc is an unaffiliated third party and represents 100% of our condominium revenue based on our exclusive agreement in Florida.
Our apartment and assisted living facility policies are marketed and distributed by Skyway Underwriters through multiple wholesaler partners that specialize in commercial residential insurance. These wholesalers represented 100% of our apartment and assisted living facility revenue.
The Company believes wholesale partners build relationships in their communities that can lead to profitable business and policyholder satisfaction. We believe we have built significant credibility and loyalty with the wholesale communities in Florida through (i) our frequent in-depth communications on our products and (ii) our expectations and goals for our relationships with each wholesaler.
Typically, our wholesale partners represent several insurance companies for commercial product lines. We depend on these partners to produce new business for us. We compensate our wholesale partners primarily with fixed-rate commissions that we believe are consistent with those generally prevailing in the market. 100% of our premiums and policies are concentrated in the state of Florida.
COMPETITION
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The property and casualty insurance market in the United States is highly competitive and rapidly changing. Our primary competitors range from large national property and casualty insurance companies that write most classes of business using traditional products and pricing to small and mid-size regional insurance companies that provide specialty coverages.
We compete primarily on the basis of policy features, the strength of our distribution network and the quality of our services to our partners and policyholders. This pricing segmentation approach allows us to offer products in areas that have a high demand for property insurance yet are under-served by the national carriers. However, we face the risk that policyholders may be able to obtain more favorable terms from competitors rather than renewing coverage with us.
Our ability to compete is dependent on a number of factors. One factor is the financial strength or stability ratings assigned to our insurance subsidiary by independent rating agencies. A downgrade in these ratings could negatively impact our position in the market. Another factor is that we must attract and retain key employees and highly skilled people in order to be successful in the market. There is intense competition in our industry which could lead to higher-than-expected employee turnover or difficulty attracting new employees. Finally, technological advancements and innovation in the insurance industry, including the use of artificial intelligence, provide opportunities for a competitive advantage. Advancements and innovation are being used in all aspects of the industry including digital-based distribution methods, underwriting and claims handling. We continue to leverage the technology that we have and to make substantial investments into new technology in an effort to gain an advantage over our competitors.
REGULATION
We are subject to extensive regulation in the jurisdiction in which our insurance company subsidiary is domiciled and licensed to transact business, primarily at the state level. AmCoastal is domiciled in Florida. In general, these regulations are designed to protect the interests of insurance policyholders.
Such regulations have a substantial effect on certain areas of our business, including:
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insurer solvency,
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reserve adequacy,
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insurance company licensing and examination,
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agent and adjuster licensing,
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rate setting, underwriting rules and coverage forms,
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investments,
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assessments or other surcharges for guaranty funds,
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transactions with affiliates,
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the payment of dividends,
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reinsurance,
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protection of personally identifiable information,
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risk solvency assessment and enterprise risk management,
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cybersecurity,
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statutory accounting methods, and
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numerous requirements relating to other areas of insurance operations, including policy forms, underwriting standards and claims practices.
Our insurance subsidiary provides audited statutory financial statements to the various insurance regulatory authorities. With regard to periodic examinations of an insurance company’s affairs, insurance regulatory authorities, in general, defer to the insurance regulatory authority in the state in which an insurer is domiciled; however, insurance regulatory authorities from any state in which we operate may conduct examinations at their discretion.
In 2023, the FLOIR notified the Company of a statutory financial examination of AmCoastal as of December 31, 2023, which commenced in 2024 and concluded prior to December 31, 2025, with no findings. In 2025, the FLOIR notified the Company of a targeted market conduct examination related to AmCoastal's Hurricane Ian claims handling operations. This concluded prior to
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December 31, 2025, and the Company agreed to enter into a Consent Order wherein the Company was fined $400,000 related to the findings of the examination.
For a discussion of statutory financial information and regulatory contingencies, see Note 16 to our Notes to Consolidated Financial Statements in Part II, Item 8 of this report.
Risk-Based Capital Requirements
To enhance the regulation of insurer solvency, the National Association of Insurance Commissioners (NAIC) has published risk-based capital (RBC) guidelines for insurance companies designed to assess capital adequacy and to raise the level of protection statutory surplus provides for policyholders. The guidelines measure three major areas of risk facing property and casualty insurers: (i) underwriting risks, which encompass the risk of adverse loss developments and inadequate pricing; (ii) declines in asset values arising from credit risk; and (iii) other business risks. Most states, including Florida, have enacted the NAIC guidelines as statutory requirements, and insurers having less statutory surplus than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy.
The level of required RBC is calculated and reported annually. The table below outlines our subsidiary's RBC ratio, which was in excess of minimum requirements, as of December 31, 2025.
| Subsidiary | RBC Ratio | |||
|---|---|---|---|---|
| AmCoastal | 1,757 | % |
Underwriting and Marketing Restrictions
During the past several years, various regulatory and legislative bodies have adopted or proposed new laws or regulations to address the cyclical nature of the insurance industry, catastrophic events and insurance capacity and pricing. These regulations: (i) create “market assistance plans” under which insurers are induced to provide certain coverage; (ii) restrict the ability of insurers to reject insurance coverage applications, to rescind or otherwise cancel certain policies in mid-term, and to terminate agents; (iii) restrict certain policy non-renewals and require advance notice on certain policy non-renewals; and (iv) limit rate increases or decrease rates permitted to be charged.
Most states also have insurance laws requiring that rate schedules and other information be filed with the insurance regulatory authority, either directly or through a rating organization with which the insurer is affiliated. The insurance regulatory authority may disapprove a rate filing if it finds that the rates are inadequate, excessive or unfairly discriminatory.
Most states require licensure or insurance regulatory authority approval prior to the marketing of new insurance products. Typically, licensure review is comprehensive and includes a review of a company’s business plan, solvency, reinsurance, rates, forms and other financial and non-financial aspects of a company, such as the character of its officers and directors. The insurance regulatory authorities may prohibit entry into a new market by not granting a license or by withholding approval.
Limitations on Dividends by Insurance Subsidiaries
As a holding company with no significant business operations of our own, we rely on payments from our insurance subsidiary as one of the principal sources of cash to pay dividends and meet our obligations. Our insurance affiliate is regulated as a property and casualty insurance company and its ability to pay dividends is restricted by Florida law.
The state laws of Florida permit an insurer to pay dividends or make distributions out of that part of statutory surplus derived from net operating profit and net realized capital gains or adjusted net investment income. The state laws further provide calculations to determine the amount of dividends or distributions that can be made without the prior approval of the insurance regulatory authorities and the amount of dividends or distributions that would require prior approval of the insurance regulatory authorities in those states. Statutory RBC requirements may further restrict our insurance subsidiary's ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause statutory surplus to fall below minimum RBC requirements.
For additional information regarding those restrictions, see Part II, Item 5 and Part I, Item 1A of this report.
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Insurance Holding Company Regulation
As a holding company of an insurance subsidiary, we are subject to laws governing insurance holding companies in Florida. These laws, among other things: (i) require us to file periodic information with the insurance regulatory authority, including information concerning our capital structure, ownership, financial condition and general business operations; (ii) regulate certain transactions between our affiliates and us, including the amount of dividends and other distributions and the terms of surplus notes: and (iii) restrict the ability of any one person to acquire certain levels of our voting securities without prior regulatory approval. Any purchaser of 5% or more of the outstanding shares of our common stock could be presumed to have acquired control of us unless the insurance regulatory authority, upon application, determines otherwise.
Insurance holding company regulations also govern the amount any affiliate of the holding company may charge our insurance affiliate for services (i.e., management fees and commissions). The Company allocates a portion of relevant expenses to AmCoastal for statutory accounting purposes at cost.
AmRisc, a managing general underwriter, handles the underwriting, claims processing and premium collection for our AmCoastal condominium business written in Florida. In return, AmRisc is reimbursed through monthly management fees.
Skyway Underwriters, our managing general agency, handles the underwriting and premiums collection for our AmCoastal apartment and assisted living business written in Florida. In return, Skyway Underwriters is reimbursed through monthly management fees.
CORPORATE RESPONSIBILITY AND SUSTAINABILITY
As a company with more than 20 years of history and experience, we strive to create and maintain a culture within our business where people are empowered to address risks as they emerge, and where we expect all associates to hold themselves and their teammates accountable for personal integrity and professionalism. To demonstrate this culture our leaders must lead by example and clear standards of behavior should be well understood by the entire company. We maintain five core values; collaboration, communication, loyalty, resiliency, and integrity, to accomplish this goal. These values and the expectations of our people are outlined within our code of conduct, which is reviewed by all team members.
In addition to our cultural goals, we are committed to conducting business in a manner that supports environmental, social, and governance (ESG) matters. ACIC believes that an effective ESG strategy leads to improved decision making, associate engagement, and financial results over time.
To show our commitment to conducting business that supports ESG matters, in the third quarter of 2024 we published our 2024 ESG Highlights, which outlines key decisions and accomplishments made by the Company during 2024. These highlights are available on the Investor Relations page of our company website under “ESG”. Highlights from our Company-wide ESG practices can also be seen below.
Environmental Matters
As a data driven organization, some of the facts surrounding climate change have our attention. Several factors, including the rise in carbon dioxide concentration levels in the atmosphere, higher global mean air and water temperatures, and sea and Arctic ice levels have been identified as potential culprits of the higher frequency and severity of catastrophe losses we have incurred over the past five years.
There is a growing consensus today that the frequency and severity of catastrophic events or severe weather conditions is increasing as a result of climate change. We recognize current trends and potential financial impact are not sustainable. As a result, we have taken the following steps to improve our environmental footprint and reduce our contribution to climate change:
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Reducing waste: paperless policy document delivery option and investment in paperless technologies;
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Eco-friendly disposal of retired equipment and electronics;
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Installed filtered water dispensers throughout our offices to promote re-usable bottles over disposables;
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Utilization of recycling bins throughout our offices;
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Maintenance of a hybrid and remote work environment to both enhance productivity and curb the impact of daily commuting; and
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Use of energy-efficient LED lighting, motion-activated lighting, and programmable thermostats to reduce energy use.
ACIC continuously monitors our environmental footprint and will continue to take steps to reduce this footprint where possible. Previously, we made an aspirational commitment to achieve net-zero carbon emissions in our operations and through our value chain by no later than 2030. While we continue to evaluate data and guidance as it becomes clearer, we believe further analysis is necessary and achieving net-zero will take longer than we initially believed. As a result, we may need to change or recalibrate our goals in line with improved data and as climate science, regulatory requirements and market practices regarding standards, methodologies and measurements evolve. Our climate risk analysis and strategy remain under development and subject to evolution over time. As such, as of December 31, 2025, we cannot provide a timeline for achieving a net-zero carbon emission commitment.
Social Responsibility
We understand that research shows diverse teams perform better, innovate more and are more effective at managing risks. As a result, our organization has a vested interest in hiring associates and building teams that reflect the diversity of society and the communities that we seek to serve. Details of our accomplishments creating a diverse and inclusive workplace can be seen in Part I, Item 1. “Human Capital Management”.
In addition to our social responsibility as an employer within the community, ACIC also seeks to support our community through various initiatives intended to give back and promote goodwill. Over the past several years we have provided support to numerous non-for-profit organizations. Some of the causes we have provided support to include, but are not limited to, youth education, work force development, medical care and research, domestic violence shelters and prevention, and child-care services. We are committed to giving back and investing in the communities we serve.
Governance Matters
Our Board of Directors oversee and monitor our management in the interest and for the benefit of our stockholders. Our Board of Directors is currently comprised of nine directors, divided into two classes. Each class of directors is elected for a two-year term, in accordance with our Certificate of Incorporation. Eight of our directors, or 88.9%, are considered to be independent.
Our Board of Directors has several committees, including an Audit Committee, a Compensation and Benefits Committee, a Nominating and Corporate Governance Committee, Risk Management Committee, and an Investment Committee. All members of these committees qualify as independent directors under Securities and Exchange Commission (SEC) and Nasdaq standards, as well as under the independence standards specific to their committees. Our Nominating and Corporate Governance Committee is responsible for oversight of our ESG processes and initiatives. ACIC has also committed to adding at least two new directors to our Board of Directors to improve overall diversity at the highest level of corporate governance.
HUMAN CAPITAL MANAGEMENT
Diversity and Employment Statistics
As of December 31, 2025, we had 68 employees, of which 11 worked in our Claims Department, and 10 worked in our Sales and Underwriting Department, respectively. These employees have regular direct contact with our vendors, agencies, or customers. We are not party to any collective bargaining agreements and we have not experienced any work stoppages or strikes as a result of labor disputes.
The following table shows the diversity in our workforce population at December 31, 2025 and how this diversity has changed from December 31, 2024.
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| Gender (1) | Change from December 31, 2024 | Race (1) | Change from December 31, 2024 | |||||
|---|---|---|---|---|---|---|---|---|
| Executive Officers | 28.6% | 0.0 points | 28.6% | 0.0 points | ||||
| Management Team (2) | 44.6% | 5.7 points | 13.9% | 7.4 points | ||||
| All Other Employees | 44.0% | 7.9 points | 12.0% | (10.2) points |
(1) Information regarding gender and race is based on information provided by employees.
(2) Our management team is comprised of employees in supervisory roles at the manager and director level or above.
We believe that inclusion and diversity start at the top. In 2021, we appointed a female leader within our organization to serve as our General Counsel. In addition, in January 2024, we appointed a new female leader from outside of our organization to serve as our Chief Financial Officer. Furthermore, AmCoastal appointed two female directors in 2024. With three of the seven members of our executive leadership team as of December 31, 2025 comprised of underrepresented groups, we believe this is strong evidence of our commitment to our ESG goals.
Oversight and Management
We recognize the diversity of our policyholders, team, and geographic markets, and believe in creating an inclusive environment that represents a variety of backgrounds. Working under these principles, our Human Resources Department is tasked with recruiting, hiring, onboarding, performance management, and managing employee-related matters.
We believe in transparency at all levels at ACIC. On a monthly basis, an all-employee meeting is held where our executive officers and senior management recognize employees for their continued success, discuss new and ongoing company initiatives, and address any concerns our employees may have. In addition, the leaders in each department assist our executive officers in maintaining our culture and implementing our core values at all levels of the organization.
Total Rewards
We believe that our future success largely depends upon our ability to attract and retain highly skilled employees. To ensure we are successful in this, we provide our employees with the following:
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Competitive salaries and bonuses;
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Tuition reimbursement;
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Paid parental leave; and
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Robust employee benefit packages that include:
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Health care;
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Vision;
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Dental;
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Retirement program;
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Paid time off; and
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Employee assistance program that provides emotional support, legal services and financial services.
As a part of our retention efforts, we also invest in ongoing development for all employees, and attempt to fill vacant senior or leadership roles through internal promotion when possible. Voluntary attrition was 3.0% for the year ended December 31, 2025.
CORPORATE INFORMATION
American Coastal Insurance Corporation was incorporated in Delaware in 2007. On July 10, 2023, we changed our corporate name from United Insurance Holdings Corp. to American Coastal Insurance Corporation. Our principal executive offices are located at 570 Carillon Parkway, Suite 100, St. Petersburg, FL 33716 and our telephone number at that location is (727) 633-0851. We are listed on the Nasdaq stock exchange under ticker symbol “ACIC.”
Segments
We conduct our operations under one reportable operating segment. Our chief operating decision maker is our President and CEO, who makes decisions to allocate resources and assesses performance.
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For more information regarding our products and distribution, as well as the agreements in place with managing general agents and underwriters, please refer to Part 1 Item 1. “Products and Distribution” as well as Part 1 Item 1. “Insurance Holding Company Regulation”.
Available Information
We make available, free of charge through our website, www.amcoastal.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC.