American Integrity Insurance Group (NYSE: AII) reported Q2 2026 total revenue of $115.2 million, up 54.6% from $74.5 million, while diluted EPS increased to $1.74 from $1.62. Net premiums earned rose 58.2%, and the combined ratio improved by 9.5 percentage points to 63.4% as premium growth outpaced underwriting expense growth. Record voluntary policy production supported the quarter, although higher taxes and a larger diluted share count limited per-share earnings growth.

Core Earnings Data

Income before taxes nearly doubled to a quarterly record of $46.4 million. However, net income grew more slowly because Q2 2026 included $12.3 million of income tax expense, compared with a $3.4 million tax benefit in the prior-year quarter.

Adjusted net income increased 11.4%, but adjusted diluted EPS declined by about 3.3%. Weighted-average diluted shares rose to 19.6 million from 17.0 million, offsetting the improvement in adjusted earnings.

Adjusted net income and adjusted EPS are non-GAAP measures that exclude realized investment gains or losses and specified nonrecurring or noncash items.

Policy Growth Was Concentrated in the Voluntary Market

Gross premiums written increased 13.8% to $326.6 million, primarily because of higher voluntary-market writings. American Integrity sold a record 43,000 voluntary new business policies, up 54% from Q2 2025 and 44% from Q1 2026. Total new and renewal policies written in the voluntary market reached 126,308, an increase of 27.9%.

The company reported particularly rapid growth in two targeted areas. Voluntary new business policies in Florida’s Tri-County region increased to 7,636 from 185, while policies in the middle-aged home category rose to 9,062 from 437. Management also said premium per policy remained stable across the overall book.

Policies in force reached 461,714 at June 30, 2026, up 15.7% year over year and 5.6% sequentially. In-force premium increased 11.7% to $1.03 billion. American Integrity assumed only 81 policies from Citizens during the quarter because fewer available policies met its underwriting and targeted profitability standards, making voluntary production the primary source of current growth.

Profitability and Book Value

Losses and loss adjustment expenses increased 56.5% to $33.2 million, broadly in line with the increase in net premiums earned. As a result, the reported loss ratio remained unchanged at 30.6%. The non-GAAP net underlying loss and LAE ratio improved to 30.6% from 33.1%, although the gross underlying ratio increased to 18.1% from 15.5%.

The larger underwriting improvement came from expenses. The expense ratio declined to 32.8% from 42.3%. Policy acquisition expenses increased to $17.4 million from $6.3 million amid record new business production and changes in reinsurance, but general and administrative expenses fell 20.7% to $18.2 million, with the prior-year period including one-time IPO-related costs.

Net investment income rose 30.8% to $6.3 million, supported by a larger invested asset base associated with higher in-force premiums and IPO proceeds. Book value per share reached $18.86, up 22.3% year over year and 10.1% from March 31, 2026. Return on equity declined to 38.7% from 45.1% against a larger average shareholders’ equity base.

Lower Ceding Expanded Net Premiums but Increased Retained Exposure

Gross premiums earned grew 8.3% to $242.3 million, far more slowly than the 58.2% increase in net premiums earned. The difference came from ceded premiums earned, which declined by $20.0 million to $137.6 million after American Integrity reduced its non-catastrophe quota-share reinsurance arrangement from 40% to 25% on January 1, 2026.

This change allowed the company to retain more earned premium, supporting revenue and expense-ratio improvement, but it also increased the amount of non-catastrophe underwriting exposure retained on its own books. The company cited the quota-share reduction, record new business production and other items when explaining changes in acquisition and administrative expenses.

Separately, American Integrity renewed its catastrophe excess-of-loss program on June 1. The program provides $3 billion of third-party catastrophe coverage at an estimated total cost of $430 million to $440 million. Risk-adjusted rates declined near the upper end of a 15% to 20% range, while the company maintained protection at its 1-in-130-year probable maximum loss level and reduced aggregate retention to $75 million from $95 million.

Management’s View

CEO Robert Ritchie attributed the quarter’s results to accelerating growth in the Tri-County region, middle-aged homes and expansion states. Management also pointed to lower risk-adjusted catastrophe reinsurance rates and the continuing benefits of Florida’s legislative reforms as factors supporting profitable growth, although it did not provide quantitative earnings or revenue guidance.

Risks Investors Need to Watch

• Higher retained underwriting exposure: The lower non-catastrophe quota-share percentage increased net premiums earned, but it also leaves American Integrity retaining more losses from covered business.
• Catastrophe exposure: The renewed program provides $3 billion of coverage and lowers aggregate retention, but the company still retains $75 million and remains exposed to catastrophe losses.
• Gross underlying loss trends: The gross underlying loss and LAE ratio increased to 18.1% from 15.5%, even as the net underlying ratio improved. Future quarters will show whether that divergence persists.
• Growth-related acquisition costs: Policy acquisition expenses rose 177.2% as new business production accelerated. Continued expense-ratio improvement depends partly on premium growth keeping pace with these costs.
• Per-share earnings conversion: Adjusted net income increased, but adjusted EPS declined because of the higher diluted share count. Taxes also absorbed more of the pretax earnings increase than in the prior-year quarter.

Summary

American Integrity’s Q2 2026 results reflected rapid voluntary policy growth, higher premium retention and a substantially lower expense ratio. Those factors drove a 58.2% increase in net premiums earned and nearly doubled pretax income, while the renewed catastrophe program reduced risk-adjusted rates and aggregate retention. Investors should monitor retained underwriting exposure, gross underlying loss trends and whether earnings growth translates more fully into per-share results.

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