American Coastal Insurance Corporation

AI-generated fair value estimate for this company.

Method: Excess-return / residual-income (Gordon-growth justified price-to-book) model, appropriate for a property insurer where book value and ROE drive value rather than free cash flow: $7.30 book value per share (6/30/26); assumed sustainable long-run ROE of 17% (below the current cyclical 26-29% ROE and Q2 2026 68.7% combined ratio, which reflect a temporarily hard Florida property market and 2022-2023 tort-reform tailwinds management itself has flagged are now softening); 12.5% cost of equity (Florida single-state hurricane/catastrophe concentration risk); 4% long-run book-value growth; value = 7.30 x (0.17-0.04)/(0.125-0.04) = $11.17; 46.67M shares outstanding.

Reasoning: As a mono-line Florida property insurer, ACIC's intrinsic value is best captured by how much it can sustainably earn on its equity capital relative to its cost of equity rather than by a cash-flow DCF; I discounted the currently elevated ROE toward a more sustainable level because management itself cited a softening Florida rate environment even as current underwriting margins remain very strong.