American Coastal Insurance (ACIC) risk factors, FY2024 10-K

RISKS RELATED TO OUR BUSINESS

1. 01We cannot predict how legal, regulatory and social responses to concerns around climate change may impact our business. Governmental entities may also respond to climate change by enacting laws and regulations that may increase our cost of providing insurance in the future, which could adversely affect demand
2. 02Because we conduct a significant portion of our business in Florida, our financial results substantially depend on, and could be adversely affected by, the regulatory, legal, economic, political, demographic, competitive and weather conditions present in that state
3. 03AMERICAN COASTAL INSURANCE CORPORATION
4. 04Because we rely on insurance agents, the loss of these agent relationships, particularly our relationship with AmRisc, or our inability to attract and incentivize new agents could have an adverse impact on our business
5. 05Actual claims incurred may exceed our loss reserves for claims, which could adversely affect our results of operations and financial condition
6. 06operations and stock price
7. 07If we experience difficulties with our information technology or data security systems and/or outsourcing relationships, our ability to conduct our business could be negatively impacted, which could adversely affect our financial condition or results of operations
8. 08Our success has been and will continue to be greatly influenced by our ability to attract and retain the services of senior management, the loss of any of whom could have an adverse effect on our business, financial condition or results of operations
9. 09Our acquisitions, mergers, dispositions and other strategic transactions may not be as successful as we anticipate, and could be difficult to integrate, divert management resources, result in unanticipated costs or dilute our existing stockholders
10. 10We face risks associated with investments in which we share ownership or management with third parties
11. 11Our Senior Notes place certain restrictions on our operations and our failure to comply with such restrictions, including as a result of events beyond our control, could result in an event of default, which could materially and adversely affect our liquidity, financial condition and results of operations

RISKS RELATED TO THE INSURANCE INDUSTRY

1. 12Because we are operating in a highly competitive market, we may lack the resources to control our market share, which could adversely impact our business and results of operations
2. 13Changes in state regulation may adversely affect our results of operation and financial condition
3. 14The insurance industry is heavily regulated and further restrictive regulation may reduce our profitability and limit our growth
4. 15Our inability to obtain reinsurance on acceptable terms could increase our loss exposure or limit our ability to underwrite policies, which could adversely affect our results of operations and financial condition
5. 16Our inability to collect from our reinsurers on our reinsurance claims could have a material adverse effect on our business, results of operation, financial condition and cash flow
6. 17Our success depends on our ability to accurately price the risks we underwrite. Further, failure of any loss limitation methods we employ could have a material adverse effect on our results of operations and financial condition
7. 18Our investments are subject to market risks that may result in reduced returns or losses
8. 19The property and casualty insurance and reinsurance industry is historically cyclical and the pricing and terms for our products may decline, which would adversely affect our profitability
9. 20Trends in the insurance industry regarding claims and coverage issues, such as increased litigation and the willingness of courts to expand covered causes of loss, and juries awarding large damage awards, may contribute to increased litigation costs and increase our loss exposure under the policies that we underwrite
10. 21A downgrade in or withdrawal of our financial strength or stability ratings could adversely impact our business volume and our ability to access additional debt or equity financing

RISKS RELATED TO AN INVESTMENT IN OUR COMMON STOCK

1. 22Future sales of substantial amounts of our common stock by us or our existing stockholders could cause our stock price to decrease
2. 23Dividend payments on our common stock in the future are uncertain, and our ability to pay dividends may be constrained by our holding company structure
3. 24The ability of our subsidiaries to pay dividends may affect our liquidity and ability to meet our obligations
4. 25In connection with the filed plan of withdrawal in New York for our former insurance subsidiary, UPC, our insurance subsidiary, IIC, has agreed not to pay ordinary dividends until January 1, 2025, without the prior approval of the NYDFS
5. 26Transactions by Mr. Peed and his affiliates involving our common stock may have an adverse effect on the price of our common stock
6. 27Provisions in our charter documents may make it harder for others to obtain control of us even though some stockholders might consider such a development to be favorable