SEC Form DEF 14A filed by HCI Group Inc.

April 29, 2025    

Dear Fellow Shareholders:

Please join us for the HCI Group, Inc. Annual Meeting of Shareholders on Tuesday, June 10, 2025, at 3:00 p.m. (Eastern time). Doors open at 2:30 p.m. We will host our meeting at HCI’s headquarters located east of downtown Tampa, at 3802 Coconut Palm Drive, Tampa, Florida 33619.

In 2024, HCI continued to execute on several key initiatives and the Company remains on a path to reaching our long-term objectives, including profitable growth and prudent management of our balance sheet. Chief among our initiatives in 2024 was an operational reorganization completed in early 2025 to segregate our software development and data analytics strengths into our company TypTap Insurance Group, Inc., now renamed Exzeo Group, Inc. In this year’s proxy statement, we discuss our financial highlights and frameworks for governance and compensation. We continue to actively seek feedback through our shareholder engagement efforts. The Compensation Committee believes that our compensation plan continues to align with the financial performance of the Company. We look forward to continuing an active dialog with our shareholders through our ongoing outreach efforts.

Our proposals this year include:

We value input from each of our shareholders and encourage you to vote your proxy. Please read the accompanying Proxy Statement and follow the voting instructions it contains so your votes will be counted.

On behalf of the Board of Directors of HCI Group, I thank you for your investment in HCI.

Sincerely,

Paresh Patel

Chairman of the Board

Chief Executive Officer

3802 Coconut Palm Drive

Tampa, Florida 33619

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Tuesday, June 10, 2025

3 p.m. Eastern time

HCI Corporate Headquarters

3802 Coconut Palm Drive

Tampa, Florida 33619

The Annual Meeting of Shareholders of HCI Group, Inc. will be held at 3 p.m. Eastern time on Tuesday, June 10, 2025 at HCI Corporate Headquarters, 1^st Floor Auditorium, located at 3802 Coconut Palm Drive, Tampa, Florida 33619. Shareholders will be admitted beginning at 2:30 p.m. The principal purposes of the Annual Meeting will be to cover the following items of business:

You may vote if you were a shareholder of record as of April 14, 2025.

Our 2024 Annual Report to Shareholders accompanies this Proxy Statement.

It is important that your shares be represented at the Annual Meeting and voted in accordance with your instructions. Please indicate your instructions by promptly signing and dating the enclosed proxy card and mailing it in the enclosed postage-paid, pre-addressed envelope, or by following the instructions on the proxy card for telephone or internet voting.

By Order of the Board of Directors,

Andrew L. Graham

Secretary and General Counsel

TABLE OF CONTENTS

PROXY STATEMENT SUMMARY

This summary highlights information that can be found elsewhere in this Proxy Statement. It does not contain all the information that you should consider. You should read the entire Proxy Statement before voting.

Information About the Annual Meeting

Items of Business

We do not anticipate that any other business matters will be brought before the meeting for a vote. However, if any other matters are presented, it is the intention of the persons named in the proxy card accompanying this proxy statement to vote the proxy as recommended by the Board of Directors or, if no recommendation is given, in their own discretion using their best judgment.

How to Vote

By Internet		By Phone		By Mail		In Person
www.proxyvote.com		Call the phone number listed on your proxy card		Follow the instructions on your proxy card		Vote by ballot at our Annual Meeting

Call the phone number listed on your proxy card or HCI’s proxy advisor, Alliance Advisors LLC, at 844-202-6069 (toll free in the United States).

PROXY STATEMENT SUMMARY

Annual Meeting Rules of Conduct

To ensure fair, orderly and constructive meetings, the Board of Directors has adopted rules of conduct for shareholder meetings, including that only shareholders of record as of the record date or their duly authorized representatives are entitled to vote or address the meeting; no one may address the meeting unless called upon by the presiding officer of the meeting; and the use of cameras, audio or video recording equipment, communications devices or similar equipment is prohibited. Individuals who violate these rules may be removed. (See “About the Annual Meeting: Are there rules of Conduct?”)

Important Notice Regarding Availability of Proxy Materials

Upon your written request, we will provide you with a copy of our 2024 Annual Report on Form 10-K, including exhibits, free of charge. Send your request to HCI Group, Inc., c/o Bill Broomall, Vice President – Investor Relations, 3802 Coconut Palm Drive, Tampa, Florida 33619.

PROXY STATEMENT SUMMARY

FINANCIAL HIGHLIGHTS

In 2024, we reported record net income of $127.6 million and a 26% increase in book value per share despite the effects of three hurricanes. This outstanding result was due to our resilient business model which utilizes our proven technology to focus on prudent growth, leading to superior underwriting results. The success of our technology and data analytics led to an internal reorganization wherein our underwriting technology, data analytics and insurance management operations were organized into a combined operational unit under our subsidiary Exzeo Group, Inc. Exzeo continues to actively evaluate new strategic opportunities in the future. This is in addition to our continued initiative to position the Company for further profitable growth.

Over the past decade, HCI has delivered solid results for our shareholders. Our return on equity (ROE) has averaged 13.9% over this period, and we have reported strong levels of earnings before interest and taxes (EBIT), despite several hurricanes and storms that had a material impact on our core homeowners insurance business. The Company has been profitable in 64 of the last 69 quarters and has paid dividends in 58 consecutive quarters.

PROXY STATEMENT SUMMARY

SHAREHOLDER ENGAGEMENT

Each year we engage in robust and continuous dialog with our shareholders regarding various issues, including corporate governance, compensation and environmental and social matters. Over the past year, we reached out to shareholders representing approximately 65% of our outstanding common shares. Board members and/or our Investor Relations staff spoke with shareholders representing over 35% of the Company’s outstanding common stock. During these conversations, we discussed our Board composition, operational execution, corporate governance policies and executive compensation practices, as well as our policies on corporate social and environmental responsibility.

SHAREHOLDER ENGAGEMENT

GOVERNANCE HIGHLIGHTS

We are committed to maintaining a high standard of corporate governance to support the creation of shareholder value. We have a Lead Independent Director, a Board comprised of a majority of independent directors and a director share ownership requirement. The Board has established a Share Ownership Policy for the chief executive officer and created a Sustainability Committee to assist the Board in its oversight of environmental and social policies.

We believe that a variety of perspectives, opinions and backgrounds among Board members is important to the Board’s ability to perform its duties. Our Board is diverse in terms of gender, ethnicity, culture, education and business backgrounds, and more than half of our Board members contribute to gender or ethnic diversity.

We have a Code of Conduct to ensure that the conduct of our employees, officers and directors remains in compliance with laws, regulations and ethical principles. Employees, officers and directors are prohibited from engaging in derivative trading or hedging of our securities. We do not have a shareholder rights plan (“poison pill”).

Our executive compensation programs are designed to align the interests of our executives with those of our shareholders through a balanced mix of cash and long-term equity-based incentives that is benchmarked against our industry peers. We have a clawback policy that provides for pay reimbursement by an executive officer under appropriate circumstances.

MATTER NO. 1 ELECTION OF DIRECTORS

Two directors are to be elected at the Annual Meeting. In accordance with the Company’s articles of incorporation, the Board of Directors is divided into three classes. All directors within a class have the same three-year term of office. The class terms expire at successive annual meetings so that each year a class of directors is elected. The current terms of director classes expire in 2025 (Class B directors), 2026 (Class C directors) and 2027 (Class A directors). Each of the Class B directors elected at the 2025 Annual Meeting will be elected to serve a three-year term.

Class B director, Lauren Valiente, informed us in April 2025 that she would not seek re-election to the Board of Directors. A search for qualified independent candidates to fill this open Board seat is ongoing. With the recommendation of the Governance and Nominating Committee, the Board of Directors has nominated the following persons to stand for election as Class B directors at the 2025 Annual Meeting of Shareholders, with terms expiring in 2028:

Paresh Patel

Gregory Politis

Each of the nominees for election as a director has consented to serve if elected. If, as a result of circumstances not now known or foreseen, one or more of the nominees should be unavailable or unwilling to serve as a director, proxies may be voted for the election of such other persons as the Board of Directors may select. The Board of Directors has no reason to believe that any of the nominees will be unable or unwilling to serve.

The persons named in the enclosed proxy card intend, unless otherwise directed, to vote such proxy “FOR” the election of Paresh Patel and Gregory Politis as Class B directors of HCI Group, Inc. The nominees receiving the two highest “FOR” vote totals will be elected as directors.

MATTER NO. 1 ELECTION OF DIRECTORS

Board of Directors

Board Committee Memberships

Director Tenure

MATTER NO. 1 ELECTION OF DIRECTORS

Board Selection Process

In accordance with the Company’s articles of incorporation, the Board of Directors is divided into three classes. Each class consists of two, three or four directors. All directors within a class have the same three-year terms of office. The class terms expire at successive annual shareholders’ meetings so that each year one class of directors is elected at the Annual Meeting. The Board does not believe arbitrary term limits on a director’s service are appropriate, nor does it believe that directors should expect to be re-nominated upon expiration of a three-year term. Each year the Board of Directors proposes a slate of nominees for election at the Annual Meeting. Directors may be removed by shareholders at any time with or without cause.

The Governance and Nominating Committee is tasked with identifying and selecting individuals believed to be qualified as candidates to serve on the Board and recommending to the Board candidates to stand for election as directors at the Annual Meeting or, if applicable, at a special meeting of the shareholders. The Governance and Nominating Committee identifies director candidates in numerous ways. Generally, the candidates are known to and recommended by members of the Board of Directors or management. The Governance and Nominating Committee also considers director candidates recommended by shareholders. Shareholders may submit recommendations for Board nominees directly to the Board or at the Annual Meeting of Shareholders. See page 56 for information on submitting director nominations to the Board. A shareholder wishing to nominate an individual for election to the Board of Directors at the Annual Meeting rather than recommend a candidate to the Governance and Nominating Committee must comply with the advance notice requirements set forth in the Company’s bylaws, a copy of which can be found on the Company’s website, www.hcigroup.com, by selecting the “Investors” tab followed by “Governance.” Shareholders wishing to nominate an individual for election to the Board of Directors must also comply with the notice requirements of Securities and Exchange Commission Rule 14a-19(b), including a statement that the shareholder intends to solicit at least 67% of the outstanding voting shares.

Qualifications of Board Members

In selecting individuals for Board membership, the Board of Directors considers a variety of attributes, criteria and factors, including experience, skills, expertise, diversity, personal and professional integrity, character, temperament, business judgment, time availability, dedication and conflicts of interest. At a minimum, director candidates must be at least 18 years of age, have sufficient time to devote to their Board duties and have such business, financial, technological or legal experience or education to enable them to make informed decisions on behalf of the Company. A majority of the Board members must be independent, as determined by the Board of Directors, in accordance with the listing standards of the New York Stock Exchange. In general, the Board affirmatively determines whether a director has any direct or indirect material relationship with the Company. All members of the Audit Committee, Compensation Committee, and Governance and Nominating Committee must be independent, with members of the Audit Committee and the Compensation Committee meeting higher levels of independence as required by the rules of the Securities and Exchange Commission. Members of the Audit Committee must be financially literate as determined by the Board and at least one member must be an Audit Committee Financial Expert as described in the rules of the U.S. Securities and Exchange Commission.

MATTER NO. 1 ELECTION OF DIRECTORS

Diversity, Skills and Experience of Directors

*Includes experience in the areas of insurance, technology and real estate.

Diversity and Board Tenure

We believe that a variety of perspectives, opinions and backgrounds among Board members is important to the Board’s ability to perform its duties. Our Board is diverse in terms of gender, ethnicity, culture, education and business backgrounds.

Board tenure diversity is also important, as we seek to achieve an appropriate balance of years of service among Board members. Our senior directors have deep knowledge of our Company and business operations, while new directors provide fresh perspectives. Our current Board of Directors has an average tenure of 11.3 years.

Arrangements as to Selection and Nomination of Directors

We are not aware of any arrangements as to the selection and nomination of directors.

Independent Directors

Based upon recommendations of our Governance and Nominating Committee, the Board of Directors has determined that current directors Gregory Politis, Wayne Burks, Jay Madhu, Sue Watts, Lauren Valiente, and Peter Politis are “independent directors” meeting the independence tests set forth in Section 303A.02 of the New York Stock Exchange Listing Manual, including having no material relationship with the Company either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company. In the case of Gregory Politis and Peter Politis, the Board considered their father-son relationship. Finally, in the case of Lauren Valiente, the Board considered her position as a Partner with Foley & Lardner LLP, which provides legal services to the Company. Ms. Valiente provides no legal services to the Company. She does not participate in fees derived from the Company. The fees Foley & Lardner derives from the Company are a small fraction of the firm’s annual revenues.

MATTER NO. 1 ELECTION OF DIRECTORS

Director Election Results

At our 2024 Annual Meeting of Shareholders, Karin Coleman, Eric Hoffman, and Sue Watts were re-elected to the Board with vote totals detailed below.

MATTER NO. 1 ELECTION OF DIRECTORS

Biographies of Directors Standing for Election (Class B)

MATTER NO. 1 ELECTION OF DIRECTORS

MATTER NO. 1 ELECTION OF DIRECTORS

Biographies of Directors Continuing in Office

Directors whose present terms continue until 2026 (Class C)

MATTER NO. 1 ELECTION OF DIRECTORS

MATTER NO. 1 ELECTION OF DIRECTORS

MATTER NO. 1 ELECTION OF DIRECTORS

MATTER NO. 1 ELECTION OF DIRECTORS

Directors whose present terms continue until 2027 (Class A)

MATTER NO. 1 ELECTION OF DIRECTORS

MATTER NO. 1 ELECTION OF DIRECTORS

Director Compensation

Directors who are employees of the Company do not receive any additional compensation for their service as directors. Our director compensation plan aligns with shareholder interests and market practice. During 2024, each non-employee director received a cash payment of $25,000 per quarter and an annual stock award of 750 shares.

The following table sets forth information with respect to compensation earned by each of our directors (other than employee directors) during the year ended December 31, 2024.

MATTER NO. 1 ELECTION OF DIRECTORS

The aggregate number of stock awards outstanding for each non-employee director as of December 31, 2024 was as follows:

Principal Shareholders

The following table sets forth information regarding the beneficial ownership of our common stock as of April 14, 2025 by:

MATTER NO. 1 ELECTION OF DIRECTORS

The number and percentage of shares beneficially owned are based on 10,764,836 common shares outstanding as of April 14, 2025. Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, which generally require that the individual have voting or investment power with respect to the shares. In computing the number of shares beneficially owned by an individual listed below and the percentage ownership of that individual, shares underlying options, warrants and convertible securities held by each individual that are exercisable or convertible within 60 days of April 14, 2025, are deemed owned and outstanding, but are not deemed outstanding for computing the percentage ownership of any other individual. Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all individuals listed have sole voting and investment power for all shares shown as beneficially owned by them. Unless otherwise indicated in the footnotes, the address for each principal shareholder is HCI Group, Inc., 3802 Coconut Palm Drive, Tampa, Florida 33619.

MATTER NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Company’s Audit Committee has appointed Forvis Mazars, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2025. Shareholders will be asked to ratify the Audit Committee’s appointment at the Annual Meeting. Regardless of the outcome of this vote, the Audit Committee will retain the sole authority to appoint the Company’s independent registered public accounting firm. If the appointment is not ratified, then the Audit Committee will reconsider its appointment. Even if the appointment is ratified, the Audit Committee may appoint a different independent registered public accounting firm for the Company.

Representatives from Forvis Mazars, LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement and will be available to respond to appropriate questions.

The persons named in the enclosed proxy card intend, unless otherwise directed, to vote such proxy “FOR” ratification of the appointment of Forvis Mazars, LLP as the Company’s independent registered public accounting firm. This proposal will be approved if the number of votes for the proposal exceeds the number of votes against the proposal.

Auditing Fees

The following table sets forth the aggregate fees for services provided by Forvis Mazars, LLP related to the years ended December 31, 2024 and 2023:

MATTER NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Pre-Approval Policies

All auditing and non-auditing services are pre-approved by the Audit Committee. The Audit Committee delegates this authority to the Chair of the Audit Committee for situations when pre-approval by the full Audit Committee is not convenient. Any decisions made by the Chair of the Audit Committee must be disclosed at the next Audit Committee meeting.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

We are seeking an advisory vote to approve the compensation of our named executive officers for 2024.

This say-on-pay vote is advisory and non-binding on our Board, but our Compensation Committee will take into consideration the outcome of the vote when making future compensation decisions.

Our Board believes that our current executive compensation program appropriately links the compensation realized by our executive officers to performance and properly aligns the interests of executive officers with those of our shareholders. A description of our executive compensation programs and a discussion of the pay decisions for 2024 for the Chief Executive Officer and our other named executive officers are included in the Compensation Discussion and Analysis below.

Our Board recommends that our shareholders vote in favor of the following resolution:

“RESOLVED” that the shareholders approve compensation paid to the Company’s named executive officers as disclosed in the Company’s Proxy Statement with respect to the Company’s 2025 Annual Meeting of Shareholders pursuant to Item 402 of Regulation S-K including the Compensation Discussion and Analysis section, the Summary Compensation Table and other compensation tables and related discussion and disclosure.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Compensation Discussion and Analysis

The following discussion describes the principal objectives of our executive compensation programs with respect to our named executive officers, outlines the elements of those programs and describes how we believe they meet our objectives. Named executive officers include the chief executive officer, the chief financial officer and the three most highly compensated executive officers. The following individuals served as named executive officers during 2024:

Under our Compensation Committee charter, the Compensation Committee has the authority to set the compensation of the named executive officers and to grant equity awards under the Company’s 2012 Omnibus Incentive Plan.

Compensation Highlights

In 2024, HCI reported strong financial results, including $173.4 million of pre-tax income. The Company successfully navigated multiple catastrophe events and reported positive earnings each quarter of 2024. The Company’s financial performance for the year resulted in the named executive officers being awarded a bonus in 2024.

Principal Objectives and Approach

In designing our executive compensation programs, the Compensation Committee’s principal objectives are to attract and retain highly skilled executives, incentivize executives to achieve strong risk-adjusted returns, and align the interests of our executives with the interests of our shareholders. Our compensation plans are designed to incentivize executive behavior that drives positive financial performance, which leads to increased shareholder returns.

The Compensation Committee uses a common-sense approach to setting executive compensation. It considers objective measures of business performance as well as the judgment and knowledge of Committee members as to the talents, work habits and contributions of our executive officers. The Company’s financial performance and progress on its strategic goals are important factors in our compensation decisions.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

The Company has delivered positive financial results over the long-term. The Committee understands that financial performance may vary from year to year depending on many factors including hurricanes and other weather events. While hurricanes are a factor our management cannot control, management can control how the Company prepares for and responds to these events. In the opinion of the Compensation Committee, the Company’s response to the hurricanes and tropical storms of the past several storm seasons was well-planned and well-executed.

Elements of Executive Compensation

The Compensation Committee uses a balanced set of pay elements to determine executive compensation levels, including base salaries, short-term cash performance bonuses and long-term equity incentives comprised of restricted stock awards and, in the case of the chief executive officer, stock purchase option awards. We believe these elements create appropriate incentives for driving strong corporate performance, align the interests of our executives with those of our shareholders, and enable us to retain and reward outstanding executive talent.

Restricted stock awards may vest over time or if the Company stock price reaches certain target levels. In either case, the awards create a significant incentive for achieving long-term financial and strategic goals and serve to retain talented executives. When determining equity awards, the Committee considers competitive market dynamics, peer-group compensation levels and the Company’s overall financial performance.

The Compensation Committee believes equity-linked compensation further enhances alignment between our management team and our shareholders.

The compensation program for our chief executive officer is designed to reward outstanding performance and align pay with the interests of shareholders. During 2024, our chief executive officer was paid a base salary, a discretionary bonus tied to the overall profitability of HCI Group, one-time multi-year grants awarded in 2021 and entered into a new employment agreement that included a long-term equity incentive. Certain financial targets must be achieved for the equity incentive award to vest. Additionally, the long-term equity incentive includes certain clawback provisions.

Benchmarking for 2024 CEO Compensation Decisions

To attract and retain key executives, we carefully consider our market environment when setting pay levels for our executives, recognizing that we are in a highly competitive industry in which talented people are a significant driver of value. To facilitate our evaluation of CEO compensation, we identify peers with which to make comparisons.

Due to substantial market changes in 2023 as well as progress in our own business, our previous peer group was no longer useful for benchmarking CEO compensation. Therefore, CEO pay was benchmarked in November 2024 using 2021-2023 compensation data for the comparably sized property and casualty companies listed below. 

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

2025 Peer Group

For 2025, we established new peer groups representing the principal potential talent market: the property and casualty insurance industry and the software industry. While the Company’s primary business is property and casualty insurance, its success relies on the internal development and implementation of custom software. The two new peer groups comprise the following companies:

As stated above, the companies listed above differ from those used in prior years and are the result of an effort to refresh and update our peer groups for 2025 in response to growth of the Company. Due to material changes to the market and our own company’s evolution, we evaluated and added companies more appropriately comparable based on lines of business, market capitalization, revenue, and assets. The companies within each peer group are all U.S.-based publicly held companies similar in size to our Company. Based on a $100 investment on December 31, 2019, HCI Group’s total shareholder return at December 31, 2024 was $289 compared to $105 for its previous core peer group, and $146 for its new core peer group.

Using the peer group data, the Committee will review the compensation, financial performance and shareholder returns of these companies when finalizing the total compensation award for our chief executive officer in 2025. The cash bonus and total compensation for our CEO may be higher or lower than the target reference point for chief executive officers in that peer group because of factors such as performance and retention, as well as size and complexity of the job.

For the recently updated core peer group for 2025, the following table shows the compensation of chief executive officers based on the disclosures in their most recently available proxy statements.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

The following table summarizes the share price performance and dividend payouts of companies in our core peer group based on the disclosures in their filings with the Securities and Exchange Commission.

The Company’s share price performance and record of consistent dividend payments have provided solid returns to shareholders, both in absolute terms and relative to the Company’s core peer group. The illustration below shows that the total shareholder return of HCI shares over the past five years was 189% compared with lesser or negative returns for the Company’s core peer group over the same period. The Compensation Committee views total shareholder return as highly indicative of Company performance over the long-term.

Comparison of HCI to its core peer group using total shareholder return for the last five years:

Role of the Board of Directors, Management and Consultants in Compensation Decisions

The Compensation Committee views the determination of compensation as a collaborative effort, and it welcomes and seeks input from executive officers, other directors and shareholders.

At least annually the Compensation Committee briefs the Board of Directors on decisions regarding executive compensation programs. The Chair reports to the Committee and the Board of Directors any material issues raised during shareholder discussions, and the Committee and the Board of Directors, in good faith, address those issues.

In setting compensation for the named executive officers other than the chief executive officer, the Compensation Committee invites the chief executive officer to provide recommendations regarding each executive’s base salary, performance bonus and equity compensation. The Committee has full authority to accept, modify or reject these recommendations.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Decisions regarding the chief executive officer’s compensation are made by the Committee and reviewed by the Board without Mr. Patel present.

In 2024, the Compensation Committee undertook an assessment of the compensation program for the chief executive officer and retained Marakon Management Consulting (a division of Charles River Associates), a leading executive compensation firm, to assist with this review. The purpose of the review was to analyze the compensation package proposed to be included in a new long-term employment agreement with the CEO.

2024 Company Performance

Progress towards the Company’s financial and strategic goals drive our compensation decisions. Measuring performance is inherently subjective and includes the evaluation of both financial and nonfinancial factors including the Company’s success in advancing strategic initiatives, responding to hurricanes and other catastrophic events, and satisfying policyholders and regulators.

No formula or set of metrics can properly measure all aspects of our Company’s performance in a given year. Therefore, the Compensation Committee retains discretion in awarding cash, equity and other benefits to executives.

HCI Group reported a net income in 2024 of $127.6 million, or $8.89 diluted earnings per share. Gross earned premiums increased 42% to $1,083.2 million for the twelve months of 2024 and included $178 million of premium from the assumption of policies from Citizens Property Insurance Corporation. In 2024, our consolidated gross loss ratio was 34.6%, and included over $127 million of losses from three catastrophe events during the year. Customer retention remains a key success factor for our business, and on that measure, we have retained approximately 90% of our policyholders during the year. We believe customer retention indicates an excellent level of customer service, among other factors.

In 2024, HCI also had several notable accomplishments that demonstrate the strength and operational efficiency of the Company. These include the assumption of approximately 53,000 policies and over $315 million of annual in-force premiums from Citizens Property Insurance Corporation. In February 2024, Condo Owners Reciprocal Exchange became fully operational and grew to approximately $70 million of in-force premium. HCI successfully handled over 22,000 claims during the year, with over half coming from Hurricanes Debby, Helene, and Milton. HCI expects to pay over half a billion dollars to help our policyholders rebuild as a result of these catastrophe events.

Capital allocation continues to be a keystone of our corporate strategy. We ended the year with over $1.4 billion of total invested assets, including over $530 million of cash and cash equivalents. We continue to best position the investment portfolio to take advantage of the current interest rate environment. These actions helped to increase our investment income by more than 27% during the year. Lastly, we again paid over $16 million in dividends to our shareholders.

Over the long term, the Company has generated steady profitability, consistently improving profit margins and consistent dividend payments. Our return on equity (ROE) has averaged 13.9% over the past decade, with strong levels of earnings before interest and taxes (EBIT) in years we were not impacted by natural catastrophes. Weather-related events including hurricanes impact our financial results in certain years but are outside the control of management. However, our risk management programs and responses to these events are within the control of management. In the opinion of the Compensation Committee, the Company’s response to recent hurricanes was well planned and well executed. HCI reported positive net income each quarter of 2024, despite the Company experiencing three catastrophe events during the year.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Executive Officers of the Company

The following table provides information with respect to our named executive officers as of April 14, 2025: