American Integrity's profit more than doubles, but expense ratio climbs

What happened

American Integrity Insurance Group, Inc. (NYSE: AII) reported third-quarter net income of $28.4 million, up 115.4% from a year earlier. Diluted earnings per share were $1.44, compared with $0.67 in the third quarter of 2025.

Underwriting margin improved sharply. The combined ratio adds losses and expenses as a share of net premiums earned plus policy fees. It fell to 70.6% from 78.9%, an 8.3 percentage point improvement by OptimistFi's calculation.

Adjusted net income was $28.3 million. It leaves out items such as realized investment gains and IPO-related costs. Adjusted earnings per diluted share matched the reported figure, so one-time items barely moved the quarter.

Chief Executive Robert Ritchie said the company wrote about 41,000 voluntary new business policies, up 57% from a year earlier. That beat the 54% pace in the second quarter.

Where the underwriting gain came from

Net premiums earned almost doubled, rising 94.5% to $101.2 million from $52.0 million, an increase of $49.2 million. Part of that reflects lower reinsurance spending. Ceded premiums earned fell $16.1 million to $153.9 million after the non-catastrophe quota share was cut from 40% to 25% on Jan. 1.

Losses improved faster than premiums grew. The loss and loss adjustment expense ratio dropped to 36.6% from 54.1%. The net underlying ratio, which excludes catastrophe losses and prior-year reserve development, fell to 31.7% from 49.9%.

Current-year net catastrophe losses were $5.06 million. In dollars, net losses and loss adjustment expenses still rose 29.1% to $38.3 million.

Expenses moved the other way. The expense ratio climbed to 34.0% from 24.8%. Policy acquisition expenses were $18.0 million against $6.3 million. General and administrative expenses were $17.6 million against $7.3 million. The company ties the rise to new business production, the quota share cut and the benefit of Citizens take-outs in 2025.

Growth, and a pass on Citizens

Gross premiums written grew 22.7% to $293.3 million, mainly from voluntary market writings. Policies in force reached 481,446 on Sept. 30, up 18.6% from a year earlier. In-force premium rose 17.4% to $1.07 billion. The voluntary market produced 117,814 new and renewal policies, up 28.6%.

Two Florida categories stand out. The company wrote 8,003 voluntary new residential policies in the Tri-County region, compared with 233 a year earlier. It wrote 8,561 in its middle-aged home category outside Tri-County, compared with 568.

American Integrity took on no policies from Citizens Property Insurance Corporation. It said none met its underwriting and profit standards.

Reinsurance terms in the investor presentation

The investor presentation says first-event retention is $35 million, in line with last year's program despite 19% exposure growth. It also says retention across a four-event season fell from $95 million to $75 million, a $20 million cut by OptimistFi's calculation. Those terms bear directly on the reinsurance piece of the investment case.

Why it matters

OptimistFi has argued that American Integrity works if local risk selection, reinsurance access and claims execution keep catastrophe exposure priced better than the market fears. The quarter strengthens that view. Underwriting margin widened as premiums grew, and the company turned away Citizens business that missed its standards.

The nine-month figures are less clean. Net income rose only 4.6% to $82.4 million. The combined ratio worsened to 69.2% from 64.0%. Return on equity fell to 30.2% from 43.9%. The 2025 period included a $9.7 million deferred income tax benefit tied to the IPO-related change in tax status. The effective tax rate was 27.3% against 8.2%.

The company also says it does substantially all of its business in Florida and that catastrophe frequency is unpredictable. One quarter with light catastrophe losses is not proof that exposure is priced better than feared.

What's next

American Integrity will discuss third-quarter results on a conference call at 9:30 a.m. Eastern on Nov. 11. Management's explanation of the higher expense ratio is the test. Costs tied to growth and the quota share change would support the case. A cost level that stays high as premiums mature would weaken it.