Oct 29, 2026 earnings call — ACES licensed; Skyway to start underwriting E&S
Company licensed E&S carrier ACES Specialty and reported a combined ratio of 64.7%.
Revenue $0.1B (est $0.1B) · EPS $0.42 (est $0.47)
Key quotes
"During the quarter, we announced our new E&S carrier, ACES Specialty, was formally licensed, and it will be the cornerstone of controlling our E&S growth strategy over the long term."
"Thus, I'm compelled to reiterate that while top line growth is nice when new business makes sense, our focus remains locked in on underwriting profitability and risk-adjusted returns on capital."
"ACIC will not require any additional capital to achieve our primary goal of earnings growth over time."
Analyst Q&A 2
Fee income versus underwriting risk in 2027
Q (Michael Phillips · Oppenheimer): He asked how much fee income in 2027 might differ from the amount ACIC retains on an underwriting risk basis. He also asked how to model policy acquisition costs, whether to back out $8.6 million of E&S, and about retention, renewals and share repurchases.
A: They said it is a bit early but they are sourcing capacity for Skyway and expect some premium and underwriting next year to create fee income growth beginning in 2027, with specifics to be previewed early next year. They said the policy acquisition cost ratio should stay relatively consistent next year, though E&S PACs are slightly higher because of fronting fees. They agreed backing out $8.6 million is fair, said renewals retention is strong, and confirmed there were no share repurchases in the third quarter.
"So some of the premium we expect to generate and business we expect to underwrite next year will lead to growth in fee income beginning in 2027." — B. Martz (CEO)
Why pricing declines should slow next year
Q (William Dezellem · Tieton Capital Management): He asked why management expects price declines to moderate next year. He also asked how Skyway will move from using other carriers' balance sheets to ACES's balance sheet and whether ACES capital could limit growth.
A: They said rate declines should moderate because they will only write business that produces a solid return on capital, reinsurers expect similar changes, and the current velocity of rate change is already slowing. On E&S, they said the shift is mostly simple: partners provide capacity so Skyway can underwrite more now, and initially the business will be transformed to ACES's balance sheet while ACES gets ratings and state approvals; they can also manage net risk with reinsurance and don't see ACES capital being exceeded in the near term.
"Initially, the business will be transformed to our balance sheet because we want to utilize our capital and continue to earn strong returns on our capital." — B. Martz (CEO)