Ategrity (ASIC) Q1 2026 Earnings Transcript

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DATE

Wednesday, April 29, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Justin Cohen
• President & Chief Underwriting Officer — Chris Schenk
• Chief Financial Officer — Neelam Patel

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TAKEAWAYS

• Adjusted Net Income -- $25.6 million, up from $8.5 million in the same quarter last year, reflecting top-line and margin growth.
• Gross Written Premiums -- up 23.1%, with broad-based gains despite a flat industry backdrop.
• Casualty Premium Growth -- 27%, outpacing Property growth at 13%.
• Net Written Premiums -- Increased 32%, attributed to higher overall retention.
• Net Earned Premiums -- Up 34%, supporting higher fee and underwriting income.
• Fee Income -- $2.2 million, compared to $0.6 million; growth linked to new standard policy fees instituted in 2025.
• Combined Ratio -- 87.4% versus 90.9%, as both loss and expense ratios improved.
• Loss Ratio -- 58.8%, down 1 point, led by strong property results.
• Favorable Loss Development -- 0.5% of net earned premium, primarily reserved releases in Property.
• Catastrophe Losses -- 4% of net earned premium, declining from 6.2% due to reduced cat event incidence.
• Expense Ratio -- 28.6%, improving 2.5 points, with operating expense down to 10.9% of net earned premium.
• Policy Acquisition Cost Ratio -- 17.6% versus 18.8%; lower due to favorable mix shift and higher ceding commissions.
• Net Investment Income -- $12.0 million, up from $7.9 million, on a larger portfolio.
• Realized and Unrealized Gains -- $9.5 million, driven by the utility and infrastructure portfolio performance.
• Effective Tax Rate -- 20.6%, resulting in net income of $25.5 million.
• Book Value per Share -- $13.13, rising 24% since IPO, with total book value up by $17 million this quarter.
• Cash & Investments -- Rose by $42 million sequentially from Q4, to $1.15 billion, reflecting strong operating cash flow.
• Retention Rate -- Achieved the highest level since becoming public, described as a "record renewal base" and "larger renewal pool."
• Regional Strategies -- Launched in Texas, Florida, and New England, with explicit focus at city and neighborhood levels.
• Segment Focus -- Growth concentrated in small and medium-sized businesses, particularly within construction, hotels, restaurants, retail, residential real estate, and emerging wholesale trade verticals.
• Operating Leverage -- Expense improvements reflect earned premium growth exceeding operating expenses, with further opportunity cited from upcoming AI and automation initiatives.
• Guidance -- Direct written premium growth targeted at 20 percentage points above the E&S market, with continued improvement in combined ratio guidance ("in the 87s").
• Reinsurance -- Cessation of quota share in casualty business drove retention ratio into the low-80s; management described this as the ongoing benchmark.
• Paid-to-Incurred Losses -- "in the mid-50s." percentage range, according to direct management comment.
• Quote Production and Submission Growth -- Both cited as hitting all-time highs, attributed to investments in distribution and technology.
• Conversion Rate -- Moderated modestly, aligning with management expectations; offset by higher win rates in regional segments.
• Fee-Driven Expense Leverage -- Higher fee income contributed to reduced overall expense and acquisition ratios.

SUMMARY

Ategrity Specialty Insurance Company Holdings (NYSE:ASIC) reported record earnings with sharp improvements in both scale and underwriting performance, driven by targeted regional expansion and increased retention. Management emphasized that growth was disproportionately fueled by proprietary strategies and specialized underwriting in attractive submarkets. The company indicated further upside from scalable AI deployments and planned technologic innovations, with stated confidence in sustaining above-industry premium growth.

• Direct management commentary stated, Rate change remained positive, supported by a disciplined approach to selective rate reductions on well-performing accounts while maintaining overall portfolio pricing.
• Regional initiatives are generating immediate new business contributions even ahead of formal launch events, particularly noted in New England, Texas, and Florida.
• Fee income growth was explicitly linked to the introduction of standard policy fees, marking a revenue stream distinct from traditional insurance lines.
• Management articulated that the current competitive environment impacted larger CAT property accounts, but ASIC’s focus on smaller, non-CAT risks insulated results.
• Company highlighted its differentiated approach of analyzing municipal and neighborhood economic and legal trends, using insights to preemptively identify and target profitable micro-markets.
• Management described leveraging interactive technology for wholesale partners, stating such tools direct business coming out of the admitted market into ASIC’s customized solutions.

INDUSTRY GLOSSARY

• E&S (Excess & Surplus): Insurance market segment that covers unique, unconventional, or higher-risk exposures not typically written by standard (admitted) carriers.
• AOCI (Accumulated Other Comprehensive Income): Cumulative unrealized gains or losses recognized directly in shareholders’ equity, not in net income, largely from investments.
• Quota Share: A type of reinsurance contract in which the insurer and reinsurer share premiums and losses according to a fixed percentage.
• CAT (Catastrophe): Refers to losses arising from significant natural disaster events such as storms, hurricanes, or wildfires.

Full Conference Call Transcript

Justin Cohen: Good evening, and thank you all for joining Ategrity Specialty Holdings LLC’s first quarter earnings call. This is Justin Cohen, and I am joined today by Chris Schenk, our President and Chief Underwriting Officer, and Neelam Patel, our CFO. Ategrity Specialty Holdings LLC delivered another quarter of record earnings, generating outstanding margins while gaining market share. We produced a combined ratio of 87.4% and grew gross written premiums by 23.1% in an industry that was relatively flat, with both metrics better than guidance. We are winning by identifying underserved segments, building solutions that give our distribution partners an advantage, and improving the quality and renewability of our portfolio.

While competition is increasing, we are defining distinct markets where we can compete on our own terms. This quarter, we extended that momentum by launching several new strategic initiatives, including new regional strategies in Texas, Florida, and New England, while maintaining strict technical rigor in risk selection and pricing. We will discuss these initiatives in more detail later in the call. As our footprint expands, we are demonstrating operating leverage. Our expense ratio improved 2.5 percentage points year over year as earned premium growth outpaced expenses. We continue to optimize our business mix and leverage our centralized underwriting model to improve profitability and lower unit costs.

At the same time, we are investing in the business, both to support our growth initiatives and to advance automation and AI across the organization. Turning to the market, competitive pressure continued to intensify in parts of the E&S market this quarter, but its impact on our business remained limited. By focusing on small and medium-sized businesses, and delivering differentiated solutions, we continue to operate outside the more commoditized parts of the market. We are seeing this play out consistently across the portfolio, reinforcing our confidence that we can continue to build profitable market share. With that, I will turn it over to Neelam to review our financials, followed by Chris to discuss our underwriting performance and go-to-market strategy.

Thanks, Neelam.

Neelam Patel: We delivered another strong quarter with adjusted net income of $25.6 million, up from $8.5 million in the same quarter last year, driven by top-line growth, improving margins, and continued strength in our investment income. Gross written premiums were up 23% in the quarter, and growth was broad based. Casualty premiums grew 27%, and property premiums grew 13%. Net written premiums increased 32%, which reflects higher retention year over year, while net earned premiums were up 34%. Fee income was $2.2 million compared to $0.6 million a year ago, reflecting standard policy fees introduced over the course of 2025. Our underwriting income for the quarter was $13.3 million, up 87% year over year.

That translates into a combined ratio of 87.4% compared to 90.9% last year due to reductions in both our loss and expense ratio. Our loss ratio came in at 58.8%, down one point year over year, driven by strong underlying results in our property business. We had favorable development this period equal to 0.5% of net earned premium. Catastrophe losses were 4% of net earned premium, down from 6.2% last year due to very few cat events in the first quarter compared to the prior year where we had modest losses from California wildfires. On expenses, the overall expense ratio improved 2.5 points to 28.6%. Operating expense was 10.9% of net earned premiums, down 1.4 points year over year.

That improvement was driven by earned premiums growing faster than operating expenses along with the benefit of higher fee income. Policy acquisition costs as a percentage of net earned premiums declined to 17.6% from 18.8%. The improvement was primarily mix driven as growth has been concentrated in lines of business carrying lower acquisition costs and higher ceding commission. Moving on to investment results, net investment income was $12.0 million, up from $7.9 million last year, reflecting a larger investment portfolio. Realized and unrealized gains were $9.5 million, supported by strong results in our utility and infrastructure portfolio. Our effective tax rate was 20.6%, bringing the net income to $25.5 million.

Adjusted net income was $25.6 million or $0.51 per diluted share. Turning to the balance sheet, cash and investments increased by $42 million from the fourth quarter to $1.15 billion, reflecting strong operating cash flow. Book value increased by $17 million, driven by retained earnings offset by a decrease in AOCI. Our book value per share ended the quarter at $13.13, up 24% since the IPO. Overall, the quarter reflects strong growth, underwriting discipline, and increased operating leverage. With that, I will turn it over to Chris to discuss underwriting and operating performance.

Chris Schenk: Thanks, Neelam. Last quarter, we described our business as having multiple differentiated pathways for growth and how that has allowed us to operate independently of market cycles. This quarter is another validation of that model. In a competitive environment, Ategrity Specialty Holdings LLC delivered another record quarter, with all of our key metrics trending favorably. Top-line growth of 23.1%, more than 50% coming from strategies unique to us. Expense ratio decline, even as we continued investing in production capacity, technology, marketing, and partnership management. Rate change remained positive. Cost-of-product indicators continued to track favorably.

We are succeeding because our model is built on two key principles: a long-term view of customer value, and a deliberate approach to creating new markets for growth. These are uncommon in E&S. At a fundamental level, all carriers operate within the same growth equation: renewal contribution plus new business production. These are driven by the same inputs—what is your renewal base, what is your retention ratio, average premium, submission growth, quote ratio, and bind ratio. The difference in carrier results is driven by which levers they can move and which levers they are willing to move.

For us, what we adjust is driven by our view of risk taking, and that long-term view is measured in terms of customer lifetime value. For several years, we have optimized the inputs that matter to us, and as the market shifted, these became a clear structural advantage. On renewal inputs, since 2021 we have focused on writing durable, sticky business. That showed up this quarter in a record renewal base and our highest retention since going public. We optimized our retention rate through targeted rate actions while maintaining positive rate across the portfolio. On new business, the levers we can actively manage are submission growth, quote production, and average premium. Submission growth was strong.

This was driven by our distribution investments as well as our strategic initiatives. Quote production reached an all-time high supported by the submission volume as well as the quality of those submissions. Our investments in AI and our operating model allowed us to process that volume efficiently while maintaining fast turnaround. Shifting to conversion, conversion moderated modestly, but that was expected. Conversion is often the least controllable lever for a technical underwriting organization. We were able to win at a higher rate in areas where we have a regional strategy. And finally, average premium. As the competition intensified in larger accounts, we leaned into small and middle-market risk in our core verticals where precision, speed, and consistency matter most.

Those dynamics combined improve the overall quality and renewability of the portfolio. Our results this quarter are straightforward. We retained more of what we wanted, and we added new business with higher expected lifetime value. Our model only works if we acquire business on the right terms, which is why we continue to build targeted growth pathways that position us where competition is less aggressive. This quarter, we launched three new regional strategies in areas with attractive economics and lower competition. Let me take you through how we did this. While headlines suggest that the E&S market is losing share to admitted carriers, the reality is there is a two-way flow, and we are focused on the inflows.

Ultimately, there are 50 state-level markets each with its own distinct dynamics and even more localized submarkets beneath that. These locations are constant, and our advantage is identifying them early. To be clear, what we are doing goes beyond simply tracking state-level trends. We analyze municipal-level economic, legal, and policy trends. We look at submission flows and loss experience. And we even look at the admitted market filings to pinpoint opportunity. That work drove targeted strategies in Texas, New England, and Florida in the last quarter. Those strategies are focused at a city and even at a neighborhood level.

For example, along the I-10 Corridor in Texas, we have seen wholesale trade moving into the E&S space, while in Springfield, Massachusetts, older mixed-use properties are flowing into the market. We have built strategies around these specific profiles, and we are offering solutions. Furthermore, we equip our partners with the insights through interactive city guides and targeted marketing, enabling them to source the business more effectively. In doing so, we are establishing ourselves as the go-to market for these risks. This will in turn drive future submission growth, provide offsets should there be any declines in conversion rate, and it will allow us to win on our terms. And finally, this will all feed back into our future renewal base.

Combined with our focus on lifetime value, these strategies create a compounding growth model while preserving underwriting discipline. And this ultimately positions us for superior results going forward. With that, I will turn it back to Justin.

Justin Cohen: Thanks, Chris. Our model is standing out in an increasingly competitive market, as we have built a repeatable advantage and are executing against it with discipline. Turning to our outlook, our top-line guidance for 2026 remains consistent with last quarter. We expect direct written premium growth of approximately 20 percentage points above the E&S market, reflecting continued market share gains and the strength of our model. From an underwriting margin perspective, we expect a combined ratio in the 87s, representing continued year-over-year improvement. We thank you for your time listening. Operator, can you please open the line for questions?

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 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. Our first question comes from the line of Elyse Greenspan with Wells Fargo. Your line is now open. Please go ahead.

Elyse Greenspan: Hi. Thanks. Good evening. I was hoping, tying it a little bit to your growth outlook, you could give us a sense—when you think you are going to be 20% above the industry for the second quarter—what are you thinking about in terms of property versus casualty top-line growth?

Justin Cohen: Thanks, Elyse, and good evening. At this stage, we are not breaking out the growth by property and casualty, although what I would say is that we do believe there is an opportunity in the second quarter for property to accelerate a little bit compared to the first quarter.

Elyse Greenspan: And then if that is the case, what are you seeing from a pricing perspective, both in property as well as within casualty?

Chris Schenk: The catalyst for growth, as we mentioned, are the regional strategies, and those are all packaged products. So that alone should give you a signal in terms of how they will move.

Elyse Greenspan: Okay. That is helpful. But then what are you seeing—we have heard of a lot of pretty substantial price cuts on the property side within the E&S market. What are you seeing from a pricing perspective in property and casualty?

Chris Schenk: There are two dynamics. There is CAT property where there is very aggressive competition—those tend to be larger accounts. We are not in that space; that is not core to us. So we have not observed those dynamics as severely as our peers have. When it comes to large non-CAT accounts, we see some more pressure there, and we chose to walk away because the rates were not right. We had more than enough opportunities in small and medium to compensate.

Elyse Greenspan: Okay. Thanks. And then you said there was half a point of favorable development for the quarter. What drove that? Any color on line and accident years?

Justin Cohen: If you recall from the last earnings call, we talked about how we have been very conservative in recent years on both booking in property and casualty. In particular, we spoke about how in property we were booking the current accident year ratio conservatively, though we had not quite seen the losses come through. As we went through this quarter, that continued. We have not seen that development that we expected, and into this quarter as well that trend continues. We think we are very prudently reserved there, and this quarter included a release of some of those reserves in property 2025.

Elyse Greenspan: Okay. Thank you.

Justin Cohen: Thanks, Elyse.

Operator: Our next question comes from the line of Pablo Singzon with JPMorgan. Your line is now open. Please go ahead.

Pablo Singzon: Hi. Thank you. Your attritional loss ratio, I think, was up year over year, and if you take a step back and look at it on an annual basis, it seems like it has been going up as well, and I assume that is mainly mix. Could you talk about what is going on beneath the surface there? And then second, on reinsurance retention: that stepped up year over year as you had communicated before. How will that ratio look for the balance of the year, and is there more appetite to bring it up in subsequent years?

Justin Cohen: We have not changed our underlying liability loss picks, so there is a component of mix. The other component is that, again this year, we are booking our attritional property in a conservative way relative to last year and relative to the losses that actually emerged in the first quarter. As for reinsurance retention, this year should be relatively consistent. We had non-renewed a casualty quota share formally this year—we did a half step in early 2025 and a half step in 2026—so what you have seen in the first quarter is relatively consistent. There is some mix amongst quarters because there is more property in some quarters than others, but this is a good benchmark.

Pablo Singzon: Thanks, Justin.

Justin Cohen: Great.

Operator: Our next question comes from the line of Andrew Kligerman with TD Cowen. Your line is now open. Please go ahead.

Andrew Kligerman: I would like to get a sense of pricing a little more granularly. On the property that you are writing—likely a lot of smaller property accounts—as well as casualty, could you talk about the rate that you are getting there?

Chris Schenk: Part of our renewal playbook is managing lifetime value. We had accounts that performed really well, and we gave back some rates there. Overall, we had net positive rate change. In terms of what we are seeing on new business, there is pressure on CAT-exposed business and pressure in certain parts of Texas and Florida. We have a regional strategy for Texas and Florida, and in the parts where we are, there is less competition. Most of the market is competing on price in Houston and Galveston; we are in Laredo, Waco, El Paso, and San Antonio. It is a different risk profile and smaller markets.

That is driving the new business growth, and as a result, new business rate levels are slightly above what we would expect, if not flat.

Andrew Kligerman: With regard to those regional strategies and being in some of the smaller markets in Texas, could you elaborate a little more on what industries you are looking for with these smaller businesses and smaller markets?

Chris Schenk: The binding constraint is that we do not go beyond our core verticals as we enter a region and build our playbook. We look for opportunities within our core verticals—construction, hotels, restaurants, retail, residential real estate. We have emerging verticals like wholesale trade, which we write in small business and are now expanding into middle market; a lot of that is emerging in Texas. In addition, we have mixed-use retail—occupancies that are a bit more complex with multiple businesses on the first floor and apartments above. That type of mixed occupancy requires specialized knowledge, which we have. We are not deviating from our specialist classes because the specialized knowledge makes the difference.

Andrew Kligerman: With policy acquisition costs at 17.6% and operating expense at 10.9%, these seem sustainable. So 28.6% on the expense ratio seems like a decent run rate. Am I thinking about it right?

Justin Cohen: I think that is right. The 17.6% acquisition cost ratio is strong and has been going down because we have been mixing into brokerage, which has lower commissions. There will be a very modest upward trend as the earning of ceding commissions on the quota share goes away, but that will be very modest. We still believe we have meaningful opportunity on the expense ratio over time because we have a scalable model.

Chris Schenk: We have talked about AI and technology that is in development right now. We have a number of solutions in pilot phase, and as those get fully implemented, they will provide further leverage. We are developing them in a cost-effective way, avoiding legacy tech debt that historically has driven higher costs for these types of solutions.

Andrew Kligerman: Excellent. Thank you.

Justin Cohen: Thanks, Andrew.

Operator: Our next question comes from the line of Alex Scott with Barclays. Your line is now open. Please go ahead.

Alex Scott: First one is on distribution. Can you talk me through the timing of when you launched some of these new initiatives like the Texas- and New England-based initiatives? Are we starting to get new business coming through from that, or are we still in a phase where we are building out distribution? If we are still building out distribution, how does that roll in over the next 12 months?

Chris Schenk: The way we approach a regional strategy starts with an appointment strategy, which begins well ahead of our official launches. New England launched two weeks ago, for example, but starting in September, the distribution build-up was in progress, so we actually did get contributions from New England even though the official launch event was just two weeks ago. Similar approach for Texas and Florida. There is a market engagement phase where we get feedback on the solutions we plan to offer, and that alone starts to generate interest. Then there is an appointment phase, followed by the official launch event, which is more of a marker.

Alex Scott: Could you talk about gross versus net premiums—how we should think about your retention and how that is expected to trend?

Justin Cohen: As you probably saw, retention is up meaningfully year over year, which we expected. That is due to the cessation of the quota share on our primary casualty business, which was opportunistic in nature. We are deploying capital through that, and that is why our retention ratio has gone up into the low 80s, which we think is the right place to think about it going forward.

Alex Scott: Got it. Thank you.

Operator: If you would like to ask an additional question, you may press star 1 to raise your hand. Our next question comes from the line of Matthew Heimermann with Citi. Your line is now open. Please go ahead.

Matthew Heimermann: Hi. Good evening. Two quick ones. Do you have paid losses in the quarter by chance?

Justin Cohen: We do. It will be in the Q, but the paid-to-incurred—just to back into it—we are in the mid-50s.

Matthew Heimermann: Okay. And then with the regional strategy focused on smaller account sizes, which competitors are you potentially displacing there? Is it legacy carriers, traditional MGAs, or tech-enabled MGAs where the cost structure is less advantageous than what you can do?

Chris Schenk: On the E&S side, very few carriers truly have a playbook for the places where we are competing. We are positioning ourselves to absorb business coming out of the admitted market. Part of this is studying what is flowing into E&S and proactively designing solutions. That is very different from many of our peers. A more traditional E&S playbook would be to take whatever comes in and build bespoke solutions for whatever crosses the underwriter’s desk. We are studying what is exiting the market and building a solution.

As I mentioned, we have city guides—interactive tools our wholesale partners can pull up on their iPhone—to have a conversation with their retailer: “This is what is coming out of admitted markets; I have a home for it at Ategrity Specialty Holdings LLC.” It is less about displacing and more about guerrilla marketing, creating a direct path for the business to find us.

Matthew Heimermann: And just to clarify the channel dynamics—are wholesalers previously taking a shotgun approach in these risks, or were retailers going directly to traditional carriers without a wholesaler?

Justin Cohen: We are primarily enabling our wholesale partners with targeted solutions and insights, so they can create a more direct path for retailers to place these risks with us rather than broadly shopping the market. In some cases, that business may previously have found a home in the admitted market without going through a wholesaler, but as it exits admitted, our approach gives wholesalers a clear, efficient destination.

Operator: We have time for one final question.

Analyst: I wanted to see if you could give us a feel for how persistency has been running—any metrics you can share, particularly as you have lapped some of these bigger initiatives. How is that trending?

Justin Cohen: Our retention rate was the highest since we have gone public, and we had a larger renewal pool. That supports our theory of high lifetime value for each account acquired and is starting to prove out across the overall book.

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