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

HCI Group Reports Second Quarter 2024 Results