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Commitments and Contingencies | 6 Months Ended
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Jun. 30, 2025
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Litigation The Company is involved in claims-related legal actions arising in the ordinary course of business. The Company accrues amounts resulting from claims-related legal actions in unpaid losses and LAE during the period when that it determines an unfavorable outcome becomes probable and can estimate the amounts. Management makes revisions to estimates based on its analysis of subsequent information that the Company receives regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation. On October 20, 2023, the Company received notice that the Florida Department of Financial Services ("DFS") filed a notice of claim and demand for tender of policy limits under the Company's director and officer insurance policy (the "Claim"). The Claim alleges that former officers and directors of United Property & Casualty Insurance Company ("UPC") were involved in wrongful acts that resulted in UPC's insolvency. The Claim demands immediate tender of the Company's director and officer’s policy limit of $40,000,000 where the Company has a retention of $1,500,000. The former directors and officers of UPC deny the allegations. Although no litigation has arisen from the Claim, litigation is anticipated. The directors and officers plan to vigorously defend against the Claim; however, due to the Company's indemnification obligation, during 2023, the Company accrued the policy retention amount of $1,500,000. This claim remains open as of June 30, 2025. Commitments to fund partnership investments The Company has fully funded one limited partnership investment and partially funded two additional limited partnership investments. The amount of unfunded commitments was $2,300,000 and $1,400,000 at June 30, 2025 and December 31, 2024, respectively. Leases The Company, as a lessee, has entered into leases of commercial office space of various term lengths. In addition to office space, the Company leases office equipment under operating leases. The classification of operating and lease asset and liability balances within the Unaudited Condensed Consolidated Balance Sheets was as follows:
| Financial Statement Line |  | June 30, 2025 |  |  | December 31, 2024 |
Assets |  |  |  |  |  |  |
Operating lease assets | Other assets |  | $ | 3,078 |  |  | $ | 3,209 |
Liabilities |  |  |  |  |  |  |
Operating lease liabilities | Operating lease liability |  | $ | 3,248 |  |  | $ | 3,323 |
The components of lease expenses were as follows:
| Three Months Ended June 30, |  |  | Six Months Ended June 30, |
| 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Operating lease expense | $ | 108 |  |  | $ | (36 | ) |  | $ | 225 |  |  | $ | 44 |
At June 30, 2025, future minimum gross lease payments relating to these non-cancellable operating lease agreements were as follows:
| Estimated Remaining Payments |
Remaining in 2025 | $ | 203 |
2026 |  | 398 |
2027 |  | 407 |
2028 |  | 419 |
2029 |  | 432 |
Thereafter |  | 2,444 |
Total undiscounted future minimum lease payments |  | 4,303 |
Less: Imputed interest |  | (1,055 | )
Present value of lease liabilities | $ | 3,248 |
Weighted average remaining lease term and discount rate related to operating leases were as follows:
| June 30, 2025 |  |  | December 31, 2024 |
Weighted average remaining lease term (months) |  | 116 |  |  | 121 |
Weighted average discount rate |  | 5.64 | % |  |  | 5.64 | %
There were no other cash or non-cash related activities during the six months ended June 30, 2025 and 2024. Capital lease amortization expenses are included in depreciation expense in the Company's Unaudited Condensed Consolidated Statements of Comprehensive Income. See Note 7 of these Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding depreciation expense, Note 11 for information regarding commitments related to long-term debt, and Note 14 for information regarding commitments related to regulatory actions. Subleases The Company previously leased and occupied office space in which it no longer operates. Effective October 1, 2022, this office space was subleased to a third-party. The sublease was effective from October 1, 2022 through July 31, 2025, with no option to extend. However, on February 29, 2024, this sublease was cancelled as a part of an agreement to terminate the original lease associated with the office space. During the six months ended June 30, 2024, the Company recognized $33,000 of income related to this sublease, exclusive of the lease expense associated with the original lease. Employee Retention Credit A series of legislation was enacted in the United States during 2020 and 2021 in response to the COVID-19 pandemic that provided financial relief for businesses impacted by government-mandated shutdowns, work stoppages, or other losses suffered by employers. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided an employee retention credit, which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers. The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee. During the second quarter of 2022, the Company evaluated its eligibility and filed for a $10,161,000 refund in connection with its Employee Retention Tax Credit for the tax year ended December 31, 2021. During the three and six months ended June 30, 2025 the Company received refunds of $2,939,000 and $4,469,000, respectively, that were outstanding as of December 31, 2024. These were recorded as a contra-expense to payroll tax in the periods received. With these receipts, as of June 30, 2025, the Company has received all requested funds from the Internal Revenue Service related to this refund and no longer has an unrecorded gain contingency related to this balance. Quota Share Commission Loss Contingency AmCoastal participates in shared quota-share reinsurance agreements with the Company's former subsidiary, UPC, which are subject to a variable ceding commission based on loss experience. With the receivership of UPC in 2023, the Company has not received data related to UPC losses that could unfavorably shift AmCoastal’s commission related to these contracts. In addition, the Company cannot reasonably determine how this shift will be allocated between the contracted parties. Until the Company receives this loss data and provides the updated calculations to both the Company's reinsurance partners and the DFS, as receiver of UPC, the Company is unable to estimate the impact; however, the Company believes a loss contingency related to these commissions may exist as of June 30, 2025. The Company will continue to monitor the matter for further developments that could affect the outcome of these contingencies and will make any appropriate adjustments each quarter.

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