Ategrity Specialty (NYSE:ASIC) reported third-quarter underwriting income growth of 83.7% and its lowest combined ratio to date, as the specialty insurer cited favorable loss experience, lower expense ratios and continued growth in submissions.
Chief Executive Officer Justin Cohen said the company generated a combined ratio of 84.7% during the quarter, compared with 88.7% a year earlier. Gross written premiums rose approximately 15% year over year, while submissions increased 30%.
“Our rigorous technical underwriting and centralized operating model are driving lower loss and expense ratios while our differentiated products and solutions are generating strong business momentum and market share gains,” Cohen said.
Premium and Underwriting Results
Chief Financial Officer Neil Adler said gross written premiums increased 14.7% from the prior-year quarter. Property premiums climbed 25%, while casualty premiums increased 10%. Net written premiums rose 25.8%, reflecting higher retention, and net earned premiums grew 35.7%.
Underwriting income totaled $19.5 million. The 84.7% combined ratio included a 57.5% loss ratio, down 2.5 percentage points year over year, and a 27.2% expense ratio, down 1.5 points.
- The loss ratio benefited from underwriting performance across property and casualty lines, including 1.6 points of favorable prior-year development.
- Catastrophe losses represented 4.2% of net earned premiums, compared with 4% a year earlier.
- The operating expense ratio declined 0.8 points to 10% of net earned premiums.
- Policy acquisition costs fell to 17.2% of net earned premiums from 17.9%, which Adler attributed in part to a greater share of business flowing through the brokerage channel.
Fee income rose to $2.6 million from $2.2 million in the previous year, driven by standard policy fees introduced during 2025.
Investment Results and Balance Sheet
Adjusted net income was $14.7 million, or $0.29 per diluted share, compared with $22.8 million a year earlier. Adler said higher underwriting income and a 19.1% increase in net investment income were offset by realized and unrealized investment losses.
Net investment income rose to $13.1 million from $11 million, reflecting a larger investment portfolio and higher interest rates. Realized and unrealized losses totaled $17.2 million, or $13.7 million after non-controlling interests, primarily because of a normalization from substantial earlier gains in utility and infrastructure investments.
The company said year-to-date returns on those investments remained above its long-term annual return assumption of 5.5%. Cohen said Ategrity intends to increase fixed-income investments to about 90% of its portfolio from approximately 80% currently, citing the higher-rate environment.
Cash and investments increased by $33.5 million sequentially to $1.24 billion. Book value declined by $6.7 million from the second quarter, as retained earnings were offset by a decline in accumulated other comprehensive income associated with a material move in U.S. Treasury yields. Book value per share was $13.72, up 30% since the company’s IPO.
Product Expansion and Technology Rollout
President and Chief Underwriting Officer Chris Schenk said Ategrity launched four specialty products during the quarter: Life Sciences, Energy, Environmental Liability, and Sports & Entertainment. The company used artificial intelligence to shorten total development time to four weeks from an originally budgeted 12 weeks, according to Schenk.
Schenk said the insurer is seeking to bring more predictable, faster and simpler underwriting to lines that have often been handled as complex or bespoke risks. He said the company’s microsegmentation, risk-modeling and pricing methods are intended to support a repeatable underwriting process.
The company also deployed its Next-Gen underwriting platform across established brokerage businesses. Schenk said productivity temporarily declined during the rollout as underwriting teams adopted the new system, but the company entered the fourth quarter expecting improved throughput, quicker response times and more competitive quotes.
Ategrity also redesigned several casualty offerings to address what management described as growing demand for coverage certainty from insureds, lenders, regulators and contractual counterparties. The company raised rates on new casualty business to account for the cost of expanded coverage.
In response to analyst questions, Schenk said Ategrity would not disclose specific coverage changes for competitive reasons. He cited evolving requirements including habitability-related coverage, human-trafficking coverage and certain requirements affecting real estate investment companies.
“We will provide what is required,” Schenk said. “That is consistent with our approach, but we will charge for it.”
Fourth-Quarter Outlook and Capital Management
For the fourth quarter, Cohen said Ategrity expects gross written premium growth to exceed excess-and-surplus market growth by 15 to 20 percentage points. The company expects its combined ratio to remain below 87%.
Cohen said the company’s regional strategy, expanding distribution relationships and increased underwriting capacity remain important drivers of growth. Schenk said regional strategies have contributed more than half of the company’s growth, while distribution expansion in New England, Texas and the Midwest has supported submission growth.
Ategrity did not repurchase shares during the third quarter. Cohen said the company bought shares in the high teens during the second quarter, but a higher stock price in the third quarter made open-market purchases more difficult. The company plans to seek additional purchases in the fourth quarter using the $47 million remaining under its repurchase authorization.
Management said excess capital exceeds the remaining capacity under that buyback program.
About Ategrity Specialty (NYSE:ASIC)
Ategrity Specialty is a specialty property and casualty insurance company focused on the excess and surplus (E&S) insurance market. The company provides coverage for risks that may be difficult to place in the standard insurance market because of their size, complexity, unusual characteristics or limited loss history.
Its business is centered on underwriting specialty commercial insurance products, including coverage for property and liability exposures. Ategrity Specialty works with insurance brokers and other distribution partners to develop tailored solutions for businesses with specialized insurance needs.
The company primarily serves the U.S.
