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Accelerant Holdings Class A (ARX)
NYSE:ARX
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Accelerant Holdings Class A
(NYSE:ARX)
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Rating:72Outperform
Price Target:
$13.00
▲(26.71% Upside)
Action:ReiteratedDate:01/23/26
The score is driven primarily by strong financial performance (notably cash generation and improving profitability) and a constructive earnings outlook with clear multi-year targets and strong retention/member growth. These positives are partially offset by weak technical signals (below key moving averages with negative momentum) and limited valuation visibility due to missing P/E and dividend yield data.
Positive Factors
Free Cash Flow Strength
Sustained free cash flow growth underpins durable operational flexibility: it funds platform investments, supports working capital for premium flows, and reduces dependency on external financing. Over 2–6 months this cash conversion ability strengthens the balance sheet and enables strategic scaling of underwriting support.
High Net Revenue Retention & Member Growth
Very high net revenue retention and rapid member additions indicate strong product-market fit and high client stickiness. This drives organic premium growth and predictable fee revenue over the medium term, supporting margin sustainability as new members scale and cross-sell opportunities compound.
Data & Platform Advantage
Substantially richer exposure data strengthens underwriting models and pricing accuracy, a durable competitive advantage for specialty MGA platforms. Better risk segmentation supports lower loss ratios, scalable take-rates, and long-term margin improvement as the analytics moat makes the platform more attractive to underwriters and capital partners.
Negative Factors
Concentration Risk (Hadron)
Heavy reliance on a single capital partner for a large share of third‑party premium creates persistent counterparty and pricing concentration risk. If Hadron changes terms or reduces capacity, program economics and growth targets could be materially affected, making diversification execution a critical medium-term governance and execution issue.
Member Transition & Implementation Timing
Operational and regulatory timing delays in migrating business to third‑party capital slow realization of intended capital-light economics. These execution frictions can persist for multiple quarters, slowing margins and the pace of fee-based revenue growth until integrations and regulatory workflows are standardized.
Low Underwriting Retention & Modest Underwriting Margins
Low retained underwriting and single-digit medium-term margins limit the company's ability to capture underwriting upside and buffer earnings cyclicality. Reliance on fee income without substantial retained margin compresses earnings resilience during adverse loss periods and constrains durable ROE expansion absent higher retention or improved underwriting economics.
Accelerant Holdings Class A (ARX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.34B
Dividend YieldN/A
Average Volume (3M)1.13M
Price to Earnings (P/E)―
Beta (1Y)1.50
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees451
SectorFinancial
Sector Strength70
IndustryInsurance - Brokers
Share Statistics
EPS (TTM)0.38
Shares Outstanding114,578,610
10 Day Avg. Volume1,064,798
30 Day Avg. Volume1,134,822
Financial Highlights & Ratios
PEG Ratio-1.04
Price to Book (P/B)10.76
Price to Sales (P/S)7.52
P/FCF Ratio5.86
Enterprise Value/Market Cap0.22
Enterprise Value/Revenue0.63
Enterprise Value/Gross Profit0.96
Enterprise Value/Ebitda4.27
Forecast
1Y Price Target
$18.15Price Target Upside76.90% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)0.64
Revenue Forecast (FY)$1.03B
Accelerant Holdings Class A Business Overview & Revenue Model
Company DescriptionAccelerant Holdings, together with its subsidiaries, operate a data-driven risk exchange that connects selected specialty insurance underwriters with risk capital partners. The Exchange Services segment consists of risk exchange, its operating platform that incorporates various technology, data ingestion, and agency operations that serve the needs of its members and risk capital partners. Its Risk capital partners write premiums directly through the Risk Exchange pay us a fixed-percentage, volume-based fee for sourcing, managing, and monitoring the business they write. The MGA Operations segment includes the fees earned by members, predominantly for originating and underwriting a portfolio of insurance policies, reduced by the expenses associated with providing services. The Underwriting segment is involved in underwriting insurance policies and assumption of reinsurance policies issued or accepted by consolidated insurance companies. Its Underwriting segment is a strategic asset that enables access to portfolio for current and prospective risk capital partners. The activities of insurance companies include property and casualty insurance, policy issuance, and reinsurance arrangements. The company focuses on small-to-medium sized commercial clients primarily in the United States, Europe, Canada, and the United Kingdom. The company was founded in 2018 and is based in Grand Cayman, the Cayman Islands.
How the Company Makes MoneyAccelerant Holdings generates revenue primarily through the underwriting of insurance policies, where it collects premiums from policyholders in exchange for coverage against specified risks. The company employs a data-driven approach to assess risk accurately, which helps in setting competitive premium rates while maintaining profitability. Additionally, Accelerant may earn income through investment returns on the premiums it collects before claims are paid. Strategic partnerships with other insurance providers and technology firms also contribute to its revenue model, allowing for shared resources and expanded market reach. The ongoing development of proprietary technology and platforms may provide additional revenue opportunities through licensing or service fees.
Accelerant Holdings Class A Earnings Call Summary
Earnings Call Date:Nov 12, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Mar 19, 2026
Earnings Call Sentiment Positive
The call presented a predominantly positive operational and financial picture: strong exchange written premium, very high net revenue retention (135%), robust member growth and pipeline, substantial improvement in adjusted EBITDA and margins, meaningful progress in diversifying third‑party capital (including a Lloyd's facility), and significant expansion of the company’s data assets. Lowlights were mostly transitional and nonrecurring: timing/implementation delays in moving premium to third‑party insurers, two atypical members that affected comparatives, concentration considerations with Hadron (being actively diversified), and sizeable one‑off IPO/GAAF accounting items that reduce GAAP clarity. Management provided concrete guidance and multi‑year targets (e.g., $5B EWP and $2.1B third‑party DWP for 2026) and emphasized platform momentum and margin durability.Q3-2025 Updates
Positive Updates
Strong Exchange Written Premium
Exchange written premium of $1.04 billion in Q3 2025 (+17% year‑over‑year; +29% YoY excluding two atypical members). Guidance for Q4 2025 EWP of $1.06–$1.10 billion and full‑year 2026 target of at least $5.0 billion.
High Net Revenue Retention and Member Growth
Net revenue retention of 135% for the quarter. Member count increased to 265 (17 additions in Q3; up from 204 a year ago — ~30% YoY), supporting organic growth and $3.0+ billion of annualized premium in the pipeline.
Improved Profitability and Margin Expansion
Adjusted EBITDA of $105 million in Q3 (over +300% YoY) with adjusted EBITDA margin of 39% vs 17% prior year. Underlying EBITDA (ex $39M irregular investment gains) was $66 million (+153% YoY) with an underlying margin of 29%.
Exchange Services Take Rate and Cash Strength
Exchange Services revenue of $85 million (+34% YoY) driven by take rate expansion to 8% (from 7.1% a year ago). Strong liquidity: $547 million cash held outside the underwriting segment.
Third‑Party Capital Momentum
Third‑party direct written premium of $336 million (32% of EWP), up from 27% the prior quarter. Q4 2025 third‑party DWP guide $415–$430 million and full‑year 2026 target of $2.1 billion (with $1.8B under contract + $200M starting soon + $100M convertible).
Low and Stable Loss Ratio
Gross loss ratio ~50% for the quarter (50.0–50.1%), consistent with management’s target of low‑50s, supported by portfolio design (many small, low‑limit policies) and favorable prior‑year development primarily in property.
Strategic New Risk Capital Partners
Signed 4 new risk exchange insurers including a Lloyd’s of London facility and Ozark Specialty; total third‑party insurers increased to 17. Management expects continued diversification and material third‑party growth in 2026.
Data and Platform Strength
Major data expansion: ingestion of unique exposure attributes increased from 23,000 to 57,000, enhancing risk models and underwriting analytics — cited as a key driver of superior loss performance and organic growth.
Negative Updates
Timing and Implementation Delays for Member Transitions
Delays in member transitions to third‑party insurers caused Q3 and Q4 third‑party DWP to be slightly below prior expectations; management attributed this to member‑driven operational timing and regulatory/implementation steps required.
Two Atypical Member Impacts and Runoff
Two larger members distorted year‑over‑year comparatives: one produced concentrated premium at onboarding; another (~$50–$55M quarterly historically) was placed into runoff due to poor unit economics, reducing near‑term EWP comparables.
Concentration Risk with Hadron (Though Declining)
Hadron expected to represent ~35–40% of third‑party DWP in 2026 (management anticipates this percentage will drift down). Concentration remains a consideration during the multi‑partner ramp.
Irregular, Non‑Recurring Investment Gains and GAAP Adjustments
Q3 included $39 million of irregular investment gains (unrealized/realized) that boosted reported results; large IPO‑related noncash GAAP charges ($1.45 billion, mostly noncash profit interest distribution) complicate GAAP comparability.
Underwriting Net Retention and Medium‑Term Underwriting Margins
Net retention on Accelerant's balance sheet was 7% for the quarter (management expects to trend closer to 10% in the near term). Underwriting segment expected to generate single‑digit margins in the medium term.
Quarterly Variability and Operational Complexity
MGA Operations can be volatile quarter‑to‑quarter due to small cohort effects and renewals; moving more business to third‑party insurers will shift certain costs and requires regulatory setup and systems integration, introducing short‑term operational complexity.
Company Guidance
Accelerant guided Q4 2025 Exchange Written Premium of $1.06–$1.10 billion, third‑party direct written premium of $415–$430 million and adjusted EBITDA of $57–$62 million (the midpoint implies full‑year 2025 EWP of ~$4.18 billion and adjusted EBITDA of ~$270 million including irregular investment gains). For full‑year 2026 management reiterated targets of at least $5.0 billion of exchange written premium, $2.1 billion of third‑party direct written premium and roughly $269 million of adjusted EBITDA, with net retention on Accelerant’s balance sheet expected to approximate 10% in calendar 2026; Hadron is expected to account for ~35–40% of 2026 third‑party premium (below one‑third in Q4 2026). Management said $1.8 billion of the $2.1 billion third‑party target is already under contract and flowing, another $200 million is under contract to start in the next few months and $100 million is expected to convert from a >$500 million live pipeline, and noted Q4 third‑party/DWP guidance is slightly lower than prior expectations due to member transition delays and assumes the member placed into runoff will write close to $0 (it wrote $54 million in Q4 2024), which yields an adjusted Q4 midpoint year‑over‑year growth of about 31%.Accelerant Holdings Class A Financial Statement Overview
Summary
Strong overall fundamentals supported by high cash-flow strength (robust free cash flow growth and strong cash conversion) and improving profitability with solid revenue growth. Balance sheet is stable with moderate leverage and improving ROE, though margins and leverage management remain areas to watch.Income Statement
Accelerant Holdings Class A has shown impressive revenue growth, with a significant increase in total revenue over the past year. The company has transitioned from a net loss to a net profit, indicating improved profitability. Gross profit margins remain strong, although there is room for improvement in EBIT and EBITDA margins. Overall, the income statement reflects a positive growth trajectory and improving profitability.82
Very Positive
Balance Sheet
The balance sheet of Accelerant Holdings Class A shows a stable financial position with a moderate debt-to-equity ratio, indicating a balanced approach to leveraging. The return on equity has turned positive, reflecting improved efficiency in generating profits from shareholders' equity. The equity ratio is healthy, suggesting a strong capital structure. However, there is a need to maintain this stability to mitigate potential risks.75
Positive
Cash Flow
The cash flow statement reveals robust free cash flow growth, demonstrating strong cash generation capabilities. The free cash flow to net income ratio is high, indicating efficient conversion of profits into cash. Operating cash flow has significantly increased, supporting the company's operational needs. Overall, the cash flow position is strong, providing a solid foundation for future investments and growth.88
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 823.50M | 584.64M | 325.50M | 213.10M | 103.20M |
| Gross Profit | 543.00M | 335.94M | 195.30M | 78.60M | 63.50M |
| EBITDA | 122.20M | 77.94M | -18.50M | -74.30M | -15.50M |
| Net Income | -1.40B | 27.20M | -48.80M | -91.70M | -21.50M |
Balance Sheet | |||||
| Total Assets | 7.86B | 6.09B | 3.74B | 2.20B | 1.16B |
| Cash, Cash Equivalents and Short-Term Investments | 1.74B | 1.29B | 783.40M | 509.00M | 340.10M |
| Total Debt | 121.90M | 121.40M | 120.30M | 100.50M | 49.90M |
| Total Liabilities | 7.16B | 5.67B | 3.45B | 1.85B | 899.40M |
| Stockholders Equity | 676.10M | 408.70M | 310.50M | 354.50M | 257.90M |
Cash Flow | |||||
| Free Cash Flow | 615.70M | 751.10M | 257.30M | 39.00M | 98.00M |
| Operating Cash Flow | 624.80M | 785.50M | 289.90M | 65.70M | 112.70M |
| Investing Cash Flow | -387.20M | -380.10M | -11.70M | -147.50M | -132.50M |
| Financing Cash Flow | 323.20M | 110.30M | 10.30M | 254.70M | 233.70M |
Accelerant Holdings Class A Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $2.34B | ― | ― | ― | ― | ― | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
55 Neutral | $47.69M | 40.16 | 5.88% | ― | 16.79% | ― | |
55 Neutral | $147.24M | -12.60 | 16.44% | ― | 13.16% | ― | |
46 Neutral | $19.98M | 8.14 | 4.56% | ― | 19.30% | -17.56% | |
44 Neutral | $26.55M | -0.10 | -142.05% | ― | 7.56% | -344.04% | |
43 Neutral | $4.70M | -0.01 | -11.18% | ― | 624.24% | 85.46% |
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.