Pre-Tax Income of $76 million
Diluted EPS of $4.24
Gross Loss Ratio of 29.7%
TAMPA, Fla., Aug. 08, 2024 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE:HCI), a holding company with operations in homeowners insurance, information technology services, real estate, and reinsurance, reported pre-tax income of $76.0 million and net income of $57.1 million in the second quarter of 2024. Net income after noncontrolling interests was $54.1 million compared with $12.4 million in the second quarter of 2023. Diluted earnings per share were $4.24 in the second quarter of 2024, compared with $1.28 diluted earnings per share, in the second quarter of 2023.
Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the second quarter of 2024 was $56.7 million, or $4.21 diluted earnings per share compared with adjusted net income of $14.2 million, or $1.22 diluted earnings per share, in the second quarter of 2023. This press release includes an explanation of adjusted net income as well as a reconciliation to net income and earnings per share calculated in accordance with generally accepted accounting principles (known as "GAAP").
Management Commentary
"In the second quarter, HCI Group delivered another quarter of solid profitability driven by strong underwriting execution," said HCI Group Chairman and Chief Executive Officer Paresh Patel. "The results highlight the power of our technology. In future periods, we plan not only to replicate this success but also to explore new ways to exploit our technology and capitalize on new opportunities."
Second Quarter 2024 Commentary
Consolidated gross premiums earned in the second quarter increased to $263.6 million from $181.9 million in the second quarter of 2023 driven primarily by growth in Florida, including the assumption of policies from Citizens.
Premiums ceded for reinsurance in the second quarter were $76.7 million compared with $66.4 million in the second quarter of 2023. Premiums ceded represented 29.1% of gross premiums earned in the second quarter of 2024 compared with 36.5% in the second quarter of 2023.
Net investment income in the second quarter was $16.9 million compared with $8.8 million in the second quarter of 2023. The $8.1 million increase was primarily attributable to an increase in interest income from cash, cash equivalents, available-for-sale securities, and an increase in income from real estate investments.
Losses and loss adjustment expenses in the second quarter were $78.3 million compared with $61.9 million in the second quarter of 2023. The gross loss ratio in the second quarter was 29.7% compared to 34.0% in the second quarter of 2023. The decline in the gross loss ratio was driven primarily by the continued decline of claims and litigation frequency in Florida.
Policy acquisition and other underwriting expenses in the second quarter were $23.5 million compared with $22.6 million in the second quarter of 2023, representing 8.9% of gross premiums earned in the second quarter of 2024 compared with 12.4% in the second quarter of 2023.
General and administrative personnel expenses in the second quarter increased to $17.5 million from $14.3 million in the second quarter of 2023. General and administrative personnel expenses represented 6.6% of gross premiums earned in the second quarter of 2024 down from 7.8% in the second quarter of 2023.
Year-to-Date 2024 Results
For the six months ended June 30, 2024, the company reported pre-tax income of $153.5 million and net income of $114.1 million. Net income after noncontrolling interests was $101.7 million compared with $27.8 million for the first six months ended June 30, 2023. Diluted earnings per share were $8.04 for the first six months ended June 30, 2024, compared with $2.81 diluted earnings per share, for the six months ended June 30, 2023.
Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the six-month period was $111.7 million, or $7.86 diluted earnings per share compared with adjusted net income of $31.6 million, or $2.72 diluted earnings per share, in the same period of 2023. An explanation of this non-GAAP financial measure and reconciliations to the applicable GAAP numbers accompany this press release.
Consolidated gross premiums earned for the six months of 2024 increased to $520.2 million from $362.0 million in the same period of 2023 driven primarily by growth in Florida, including the assumption of policies from Citizens.
Premiums ceded for reinsurance for the six months of 2024 were $144.8 million compared with $136.9 million for the six months of 2023. Premiums ceded represented 27.8% of gross premiums earned for the six months of 2024 compared with 37.8% in the six months of 2023.
Net investment income for the six months of 2024 was $30.9 million compared with $26.5 million for the six months of 2023. The increase was primarily attributable to an increase in interest income from cash, cash equivalents, and available-for-sale securities, offset by a decrease in income from real estate investments.
Losses and loss adjustment expenses for the six months of 2024 were $158.2 million compared with $122.5 million for the six months of 2023. The gross loss ratio decreased to 30.4% compared to 33.8% for the six months ended June 30, 2023. The decline in the gross loss ratio was driven primarily by the continued decline of claims and litigation frequency in Florida.
Policy acquisition and other underwriting expenses for the six months of 2024 were $45.6 million compared with $45.3 million for the six months of 2023, representing 8.8% of gross premiums earned in the six months of 2024 compared with 12.5% in the six months of 2023.
General and administrative personnel expenses for the six months of 2024 increased to $33.7 million from $27.8 million for the six months of 2023. General and administrative personnel expenses represented 6.5% of gross premiums earned in the six months of 2024 down from 7.7% in the six months of 2023.
Conference Call
HCI Group will hold a conference call later today, August 8, 2024, to discuss these financial results. Chairman and Chief Executive Officer Paresh Patel, Chief Operating Officer Karin Coleman and Chief Financial Officer Mark Harmsworth will host the call starting at 4:45 p.m. Eastern time.
Interested parties can listen to the live presentation by dialing the listen-only number below or by clicking the webcast link available on the Investor Information section of the company's website at www.hcigroup.com.
Listen-only toll-free number: (888) 506-0062
Listen-only international number: (973) 528-0011
Entry Code: 357144
Please call the conference telephone number 10 minutes before the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.
A replay of the call will be available by telephone after 8:00 p.m. Eastern time on the same day as the call and via the Investor Information section of the HCI Group website at www.hcigroup.com through August 8, 2025.
Toll-free replay number: (877) 481-4010
International replay number: (919) 882-2331
Replay ID: 50883
About HCI Group, Inc.
HCI Group, Inc. owns subsidiaries engaged in diverse, yet complementary business activities, including homeowners insurance, information technology services, insurance management, real estate, and reinsurance. HCI's leading insurance operation, TypTap Insurance Company, is a technology-driven homeowners insurance company. TypTap's operations are powered in large part by insurance-related information technology developed by HCI's software subsidiary, Exzeo USA, Inc. HCI's largest subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., provides homeowners insurance primarily in Florida. HCI's real estate subsidiary, Greenleaf Capital, LLC, owns and operates multiple properties in Florida, including office buildings, retail centers and marinas.
The company's common shares trade on the New York Stock Exchange under the ticker symbol "HCI" and are included in the Russell 2000 and S&P SmallCap 600 Index. HCI Group, Inc. regularly publishes financial and other information in the Investor Information section of the company's website. For more information about HCI Group and its subsidiaries, visit www.hcigroup.com.
Forward-Looking Statements
This news release may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "estimate," "expect," "intend," "plan," "confident," "prospects" and "project" and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties. For example, the estimation of reserves for losses and loss adjustment expenses is an inherently imprecise process involving many assumptions and considerable management judgment. Some of these risks and uncertainties are identified in the company's filings with the Securities and Exchange Commission. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on the company's business, financial condition and results of operations. HCI Group, Inc. disclaims all obligations to update any forward-looking statements.
Company Contact:
Bill Broomall, CFA
Investor Relations
HCI Group, Inc.
Tel (813) 776-1012
wbroomall@typtap.com
Investor Relations Contact:
Matt Glover
Gateway Group, Inc.
Tel (949) 574-3860
HCI@gateway-grp.com
- Tables to follow -
| HCI GROUP, INC. AND SUBSIDIARIES Selected Financial Metrics (Dollar amounts in thousands, except per share amounts) | |||||||||
| Q2 2024 | Q2 2023 | ||||||||
| (Unaudited) | (Unaudited) | ||||||||
| Insurance Operations | |||||||||
| Gross Written Premiums: | |||||||||
| Homeowners Choice | $ | 191,775 | $ | 140,544 | |||||
| TypTap Insurance Company | 79,093 | 39,438 | |||||||
| Condo Owners Reciprocal Exchange | 36,034 | - | |||||||
| Total Gross Written Premiums | 306,902 | 179,982 | |||||||
| Gross Premiums Earned: | |||||||||
| Homeowners Choice | 143,703 | 96,875 | |||||||
| TypTap Insurance Company | 107,055 | 85,071 | |||||||
| Condo Owners Reciprocal Exchange | 12,803 | - | |||||||
| Total Gross Premiums Earned | 263,561 | 181,946 | |||||||
| Gross Premiums Earned Loss Ratio | 29.7 | % | 34.0 | % | |||||
| Per Share Metrics | |||||||||
| GAAP Diluted EPS | $ | 4.24 | $ | 1.28 | |||||
| Non-GAAP Adjusted Diluted EPS | $ | 4.21 | $ | 1.22 | |||||
| Dividends per share | $ | 0.40 | $ | 0.40 | |||||
| Book value per share at the end of period | $ | 42.72 | $ | 21.92 | |||||
| Shares outstanding at the end of period | 10,472,741 | 8,594,764 | |||||||
| HCI GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Dollar amounts in thousands) | ||||||||
| June 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Fixed-maturity securities, available for sale, at fair value (amortized cost: $643,892 and $387,687, respectively and allowance for credit losses: $0 and $0, respectively) | $ | 640,242 | $ | 383,238 | ||||
| Equity securities, at fair value (cost: $49,192 and $44,011, respectively) | 53,886 | 45,537 | ||||||
| Limited partnership investments | 21,856 | 23,583 | ||||||
| Real estate investments | 73,507 | 67,893 | ||||||
| Total investments | 789,491 | 520,251 | ||||||
| Cash and cash equivalents | 445,829 | 536,478 | ||||||
| Restricted cash | 3,303 | 3,287 | ||||||
| Receivable from maturities of fixed-maturity securities | 500 | 91,085 | ||||||
| Accrued interest and dividends receivable | 7,067 | 3,507 | ||||||
| Income taxes receivable | 2,820 | — | ||||||
| Deferred income taxes, net | — | 512 | ||||||
| Premiums receivable, net (allowance: $4,321 and $3,152, respectively) | 58,114 | 38,037 | ||||||
| Assumed premium receivable | 7,562 | 19,954 | ||||||
| Prepaid reinsurance premiums | 123,955 | 86,232 | ||||||
| Reinsurance recoverable, net of allowance for credit losses: | ||||||||
| Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively) | 23,367 | 19,690 | ||||||
| Unpaid losses and loss adjustment expenses (allowance: $66 and $118, respectively) | 279,795 | 330,604 | ||||||
| Deferred policy acquisition costs | 52,564 | 42,910 | ||||||
| Property and equipment, net | 29,449 | 29,251 | ||||||
| Right-of-use-assets - operating leases | 1,296 | 1,407 | ||||||
| Intangible assets, net | 6,432 | 7,659 | ||||||
| Funds withheld for assumed business | 14,353 | 30,087 | ||||||
| Other assets | 65,484 | 50,365 | ||||||
| Total assets | $ | 1,911,381 | $ | 1,811,316 | ||||
| Liabilities and Equity | ||||||||
| Losses and loss adjustment expenses | $ | 571,646 | $ | 585,073 | ||||
| Unearned premiums | 542,839 | 501,157 | ||||||
| Advance premiums | 24,119 | 15,895 | ||||||
| Reinsurance payable on paid losses and loss adjustment expenses | — | 3,145 | ||||||
| Ceded reinsurance premiums payable | 7,950 | 8,921 | ||||||
| Assumed premiums payable | — | 850 | ||||||
| Accrued expenses | 27,860 | 19,722 | ||||||
| Income tax payable | 8,962 | 7,702 | ||||||
| Deferred income taxes, net | 4,328 | — | ||||||
| Revolving credit facility | 48,000 | — | ||||||
| Long-term debt | 184,912 | 208,495 | ||||||
| Lease liabilities - operating leases | 1,305 | 1,408 | ||||||
| Other liabilities | 35,426 | 35,623 | ||||||
| Total liabilities | 1,457,347 | 1,387,991 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interest | 791 | 96,160 | ||||||
| Equity: | ||||||||
| Common stock, (no par value, 40,000,000 shares authorized, 10,472,741 and 9,738,183 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively) | — | — | ||||||
| Additional paid-in capital | 117,968 | 89,568 | ||||||
| Retained income | 331,960 | 238,438 | ||||||
| Accumulated other comprehensive loss, net of taxes | (2,579 | ) | (3,163 | ) | ||||
| Total stockholders' equity | 447,349 | 324,843 | ||||||
| Noncontrolling interests | 5,894 | 2,322 | ||||||
| Total equity | 453,243 | 327,165 | ||||||
| Total liabilities, redeemable noncontrolling interest, and equity | $ | 1,911,381 | $ | 1,811,316 | ||||
| HCI GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) (Dollar amounts in thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | ||||||||||||||||
| Gross premiums earned | $ | 263,561 | $ | 181,946 | $ | 520,205 | $ | 362,014 | ||||||||
| Premiums ceded | (76,713 | ) | (66,390 | ) | (144,819 | ) | (136,899 | ) | ||||||||
| Net premiums earned | 186,848 | 115,556 | 375,386 | 225,115 | ||||||||||||
| Net investment income | 16,881 | 8,794 | 30,948 | 26,509 | ||||||||||||
| Net realized investment gains (losses) | 221 | (230 | ) | 212 | (1,379 | ) | ||||||||||
| Net unrealized investment gains | 533 | 897 | 3,168 | 1,426 | ||||||||||||
| Policy fee income | 1,089 | 1,469 | 2,108 | 2,559 | ||||||||||||
| Other | 682 | 841 | 1,037 | 2,126 | ||||||||||||
| Total revenue | 206,254 | 127,327 | 412,859 | 256,356 | ||||||||||||
| Expenses | ||||||||||||||||
| Losses and loss adjustment expenses | 78,324 | 61,890 | 158,246 | 122,455 | ||||||||||||
| Policy acquisition and other underwriting expenses | 23,452 | 22,618 | 45,591 | 45,338 | ||||||||||||
| General and administrative personnel expenses | 17,471 | 14,272 | 33,745 | 27,774 | ||||||||||||
| Interest expense | 3,452 | 2,667 | 6,601 | 5,468 | ||||||||||||
| Other operating expenses | 7,520 | 5,614 | 15,220 | 11,919 | ||||||||||||
| Total expenses | 130,219 | 107,061 | 259,403 | 212,954 | ||||||||||||
| Income before income taxes | 76,026 | 20,266 | 153,456 | 43,402 | ||||||||||||
| Income tax expense | 18,927 | 5,384 | 39,401 | 10,727 | ||||||||||||
| Net income | $ | 57,099 | $ | 14,882 | $ | 114,055 | $ | 32,675 | ||||||||
| Net income attributable to redeemable noncontrolling interests | — | (2,337 | ) | (10,149 | ) | (4,661 | ) | |||||||||
| Net income attributable to noncontrolling interests | (3,023 | ) | (102 | ) | (2,219 | ) | (233 | ) | ||||||||
| Net income after noncontrolling interests | $ | 54,076 | $ | 12,443 | $ | 101,687 | $ | 27,781 | ||||||||
| Basic earnings per share | $ | 5.18 | $ | 1.45 | $ | 9.95 | $ | 3.23 | ||||||||
| Diluted earnings per share | $ | 4.24 | $ | 1.28 | $ | 8.04 | $ | 2.81 | ||||||||
| Dividends per share | $ | 0.40 | $ | 0.40 | $ | 0.80 | $ | 0.80 | ||||||||
| HCI GROUP, INC. AND SUBSIDIARIES (Amounts in thousands, except per share amounts) | ||||||||||||||||||||||||
| A summary of the numerator and denominator of basic and diluted earnings per common share calculated in accordance with GAAP is presented below. | ||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| GAAP | June 30, 2024 | June 30, 2024 | ||||||||||||||||||||||
| Income | Shares (a) | Per Share | Income | Shares (a) | Per Share | |||||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
| Net income | $ | 57,099 | $ | 114,055 | ||||||||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | — | (10,149 | ) | |||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | (3,023 | ) | (2,219 | ) | ||||||||||||||||||||
| Net income attributable to HCI | 54,076 | 101,687 | ||||||||||||||||||||||
| Less: Income attributable to participating securities | (2,052 | ) | (3,243 | ) | ||||||||||||||||||||
| Basic Earnings Per Share: | ||||||||||||||||||||||||
| Income allocated to common stockholders | 52,024 | 10,041 | $ | 5.18 | 98,444 | 9,897 | $ | 9.95 | ||||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||
| Stock options | — | 298 | — | 290 | ||||||||||||||||||||
| Convertible senior notes | 1,753 | 2,142 | 3,393 | 2,212 | ||||||||||||||||||||
| Warrants | — | 215 | — | 262 | ||||||||||||||||||||
| Diluted Earnings Per Share: | ||||||||||||||||||||||||
| Income available to common stockholders and assumed conversions | $ | 53,777 | 12,696 | $ | 4.24 | $ | 101,837 | 12,661 | $ | 8.04 | ||||||||||||||
| (a) Shares in thousands. | ||||||||||||||||||||||||
Non-GAAP Financial Measures
Adjusted net income is a Non-GAAP financial measure that removes from net income of HCI's portion of the effect of unrealized gains or losses on equity securities required to be included in results of operations in accordance with Accounting Standards Codification 321. HCI Group believes net income without the effect of volatility in equity prices more accurately depicts operating results. This financial measurement is not recognized in accordance with accounting principles generally accepted in the United States of America ("GAAP") and should not be viewed as an alternative to GAAP measures of performance. A reconciliation of GAAP Net income to Non-GAAP Adjusted net income and GAAP diluted earnings per share to Non-GAAP Adjusted diluted earnings per share is provided below.
Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2024 | June 30, 2024 | |||||||||||||||||||
| GAAP Net income | $ | 57,099 | $ | 114,055 | ||||||||||||||||
| Net unrealized investment gains | $ | (533 | ) | $ | (3,168 | ) | ||||||||||||||
| Less: Tax effect at 25.041% | $ | 133 | $ | 793 | ||||||||||||||||
| Net adjustment to Net income | $ | (400 | ) | $ | (2,375 | ) | ||||||||||||||
| Non-GAAP Adjusted Net income | $ | 56,699 | $ | 111,680 | ||||||||||||||||
| HCI GROUP, INC. AND SUBSIDIARIES (Amounts in thousands, except per share amounts) | ||||||||||||||||||||||||
| A summary of the numerator and denominator of the basic and diluted earnings per common share calculated with the Non-GAAP financial measure Adjusted net income is presented below. | ||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| Non-GAAP | June 30, 2024 | June 30, 2024 | ||||||||||||||||||||||
| Income | Shares (a) | Per Share | Income | Shares (a) | Per Share | |||||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
| Adjusted net income (non-GAAP) | $ | 56,699 | $ | 111,680 | ||||||||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | - | $ | (10,149 | ) | ||||||||||||||||||||
| Less: Net loss (income) attributable to noncontrolling interests | (3,018 | ) | (2,206 | ) | ||||||||||||||||||||
| Net income attributable to HCI | 53,681 | 99,325 | ||||||||||||||||||||||
| Less: Income attributable to participating securities | (2,037 | ) | (3,168 | ) | ||||||||||||||||||||
| Basic Earnings Per Share before unrealized gains/losses on equity securities: | ||||||||||||||||||||||||
| Income allocated to common stockholders | 51,644 | 10,041 | $ | 5.14 | 96,157 | 9,897 | $ | 9.72 | ||||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||
| Stock options | — | 298 | — | 290 | ||||||||||||||||||||
| Convertible senior notes | 1,753 | 2,142 | 3,393 | 2,212 | ||||||||||||||||||||
| Warrants | — | 215 | — | 262 | ||||||||||||||||||||
| Diluted Earnings Per Share before unrealized gains/losses on equity securities: | ||||||||||||||||||||||||
| Income available to common stockholders and assumed conversions | $ | 53,397 | $ | 12,696 | $ | 4.21 | $ | 99,550 | $ | 12,661 | $ | 7.86 | ||||||||||||
| (a) Shares in thousands. | ||||||||||||||||||||||||
Reconciliation of GAAP Diluted EPS to Non-GAAP Adjusted Diluted EPS
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2024 | June 30, 2024 | |||||||||||||||||||
| GAAP diluted Earnings Per Share | $ | 4.24 | $ | 8.04 | ||||||||||||||||
| Net unrealized investment gains | $ | (0.04 | ) | $ | (0.25 | ) | ||||||||||||||
| Less: Tax effect at 25.041% | $ | 0.01 | $ | 0.07 | ||||||||||||||||
| Net adjustment to GAAP diluted EPS | $ | (0.03 | ) | $ | (0.18 | ) | ||||||||||||||
| Non-GAAP Adjusted diluted EPS | $ | 4.21 | $ | 7.86 | ||||||||||||||||
