HCI Group Reports Fourth Quarter and Full Year 2023 Results
- HCI Group reported a pre-tax income of $54.2 million and net income of $40.9 million in the fourth quarter of 2023.
- Adjusted net income for the fourth quarter of 2023 was $38.8 million, with $3.22 diluted earnings per share.
- Consolidated gross premiums earned in the fourth quarter increased to $215.2 million, including $23 million from the assumption of policies from Citizens.
- Losses and loss adjustment expenses decreased to $65.4 million in the fourth quarter, with a gross loss ratio of 30.4%.
- For the full year 2023, HCI Group reported net income of $89.3 million, with adjusted net income of $86.8 million.
- Net investment income increased to $46.2 million for the twelve months of 2023.
- Policy acquisition and other underwriting expenses decreased to $90.8 million for the twelve months of 2023.
- None.
Insights
The reported pre-tax income of $54.2 million and net income of $40.9 million for HCI Group, Inc. indicate a robust financial performance in the fourth quarter of 2023, especially when compared to the net income of $2.7 million in the same quarter of the previous year. The substantial increase in diluted earnings per share (EPS) from $0.18 to $3.40 highlights a significant improvement in profitability. This surge in EPS is a critical metric for investors as it suggests a higher return on their investment. Additionally, the company's ability to reduce the gross loss ratio from 39.4% to 30.4% reflects improved operational efficiency and claims management, potentially leading to increased investor confidence in the company's risk management practices.
The decrease in premiums ceded for reinsurance from 42.1% to 30.9% of gross premiums earned is indicative of a strategic shift in the company's reinsurance program, possibly aimed at retaining more premium revenue. This could be a response to favorable market conditions or an improved risk profile. However, it is essential to monitor this closely as it may also imply an increased exposure to potential losses. The assumption of policies from Citizens, contributing $23 million in premiums, represents an aggressive growth strategy in the competitive insurance market and could impact market share dynamics. The reduction in policy acquisition and other underwriting expenses as a percentage of gross premiums earned suggests cost-efficiency measures that could enhance the company's competitive position.
From a market perspective, the successful completion of a secondary common stock offering raising $85 million demonstrates market confidence in HCI Group's growth prospects and financial health. This capital infusion could support further strategic initiatives or strengthen the company's financial position. The reported increase in net investment income, partly due to higher yields on fixed maturity securities, cash and cash equivalents, aligns with the broader interest rate environment, which has seen a rise in yields. This increase in investment income complements the company's primary revenue streams and may contribute to overall financial stability.
Fourth Quarter Diluted EPS of
Fourth Quarter Gross Loss Ratio of
Fourth Quarter Pre-Tax Income of
TAMPA, Fla., March 07, 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
Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the fourth quarter of 2023 was
Management Commentary
“Several major achievements were accomplished since the end of the third quarter, including completing four assumptions from Citizens, growing premiums-in-force by approximately
Fourth Quarter 2023 Commentary
Consolidated gross premiums earned in the fourth quarter increased to
Premiums ceded for reinsurance in the fourth quarter decreased to
Net investment income in the fourth quarter was
Losses and loss adjustment expenses in the fourth quarter decreased to
Policy acquisition and other underwriting expenses in the fourth quarter decreased to
Full Year 2023 Results
For the year ended December 31, 2023, the company reported net income of
Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the twelve-month period was
Consolidated gross premiums earned for the twelve months of 2023 increased to
Premiums ceded for reinsurance for the twelve months of 2023 increased to
Net investment income for the twelve months of 2023 increased to
Losses and loss adjustment expenses for the twelve months of 2023 decreased to
Policy acquisition and other underwriting expenses for the twelve months of 2023 decreased to
Conference Call
HCI Group will hold a conference call later today, March 7, 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: 409252
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 March 7, 2025.
Toll-free replay number: (877) 481-4010
International replay number: (919) 882-2331
Replay ID: 49845
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@gatewayir.com
- Tables to follow -
| HCI GROUP, INC. AND SUBSIDIARIES Selected Financial Metrics (Dollar amounts in thousands, except per share amounts) | |||||||||||||||||||||||||
| FY 2023 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | FY 2022 | ||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Insurance Operations | |||||||||||||||||||||||||
| Gross Written Premiums: | |||||||||||||||||||||||||
| Homeowners Choice | $ | 535,070 | $ | 182,038 | $ | 127,334 | $ | 140,544 | $ | 85,153 | $ | 377,860 | |||||||||||||
| TypTap Insurance Company | 363,552 | 138,482 | 70,931 | 39,438 | 114,701 | 348,159 | |||||||||||||||||||
| Total Gross Written Premiums | 898,622 | 320,520 | 198,265 | 179,982 | 199,854 | 726,019 | |||||||||||||||||||
| Gross Premiums Earned: | |||||||||||||||||||||||||
| Homeowners Choice | 417,202 | 125,796 | 102,075 | 96,875 | 92,456 | 426,501 | |||||||||||||||||||
| TypTap Insurance Company | 348,310 | 89,394 | 86,233 | 85,071 | 87,612 | 298,215 | |||||||||||||||||||
| Total Gross Premiums Earned | 765,512 | 215,190 | 188,308 | 181,946 | 180,068 | 724,716 | |||||||||||||||||||
| Gross Premiums Earned Loss Ratio | 33.3 | % | 30.4 | % | 35.4 | % | 34.0 | % | 33.6 | % | 51.3 | % | |||||||||||||
| Per Share Metrics | |||||||||||||||||||||||||
| GAAP Diluted EPS | $ | 7.62 | $ | 3.40 | $ | 1.34 | $ | 1.28 | $ | 1.54 | $ | (6.24 | ) | ||||||||||||
| Non-GAAP Adjusted Diluted EPS | $ | 7.41 | $ | 3.22 | $ | 1.41 | $ | 1.22 | $ | 1.50 | $ | (5.48 | ) | ||||||||||||
| Dividends per share | $ | 1.60 | $ | 0.40 | $ | 0.40 | $ | 0.40 | $ | 0.40 | $ | 1.60 | |||||||||||||
| Book value per share at the end of period | $ | 33.36 | $ | 33.36 | $ | 23.27 | $ | 21.92 | $ | 20.97 | $ | 18.91 | |||||||||||||
| Shares outstanding at the end of period | 9,738,183 | 9,738,183 | 8,590,824 | 8,594,764 | 8,596,673 | 8,598,682 | |||||||||||||||||||
| HCI GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Dollar amounts in thousands) | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Fixed-maturity securities, available for sale, at fair value (amortized cost: | $ | 383,238 | $ | 483,901 | ||||
| Equity securities, at fair value (cost: | 45,537 | 34,583 | ||||||
| Limited partnership investments | 23,583 | 25,702 | ||||||
| Investment in unconsolidated joint venture, at equity | — | 18 | ||||||
| Real estate investments | 67,893 | 71,388 | ||||||
| Total investments | 520,251 | 615,592 | ||||||
| Cash and cash equivalents | 536,478 | 234,863 | ||||||
| Restricted cash | 3,287 | 2,900 | ||||||
| Receivable from maturities of fixed-maturity securities | 91,085 | — | ||||||
| Accrued interest and dividends receivable | 3,507 | 1,952 | ||||||
| Income taxes receivable | — | 2,807 | ||||||
| Deferred income taxes, net | 512 | — | ||||||
| Premiums receivable, net (allowance: | 38,037 | 34,998 | ||||||
| Assumed premium receivable | 19,954 | — | ||||||
| Prepaid reinsurance premiums | 86,232 | 66,627 | ||||||
| Reinsurance recoverable, net of allowance for credit losses: | ||||||||
| Paid losses and loss adjustment expenses (allowance: | 19,690 | 71,594 | ||||||
| Unpaid losses and loss adjustment expenses (allowance: | 330,604 | 616,765 | ||||||
| Deferred policy acquisition costs | 42,910 | 45,522 | ||||||
| Property and equipment, net | 29,251 | 17,910 | ||||||
| Right-of-use-assets - operating leases | 1,407 | 777 | ||||||
| Intangible assets, net | 7,659 | 10,578 | ||||||
| Funds withheld for assumed business | 30,087 | 48,772 | ||||||
| Other assets | 50,365 | 31,671 | ||||||
| Total assets | $ | 1,811,316 | $ | 1,803,328 | ||||
| Liabilities and Equity | ||||||||
| Losses and loss adjustment expenses | $ | 585,073 | $ | 863,765 | ||||
| Unearned premiums | 501,157 | 368,047 | ||||||
| Advance premiums | 15,895 | 18,587 | ||||||
| Reinsurance payable on paid losses and loss adjustment expenses | 3,145 | 8,606 | ||||||
| Ceded reinsurance premiums payable | 8,921 | 17,646 | ||||||
| Assumed premiums payable | 850 | — | ||||||
| Accrued expenses | 19,722 | 14,534 | ||||||
| Income tax payable | 7,702 | — | ||||||
| Deferred income taxes, net | — | 1,704 | ||||||
| Reinsurance recovered in advance on unpaid losses | — | 19,863 | ||||||
| Long-term debt | 208,495 | 211,687 | ||||||
| Lease liabilities - operating leases | 1,408 | 721 | ||||||
| Other liabilities | 35,623 | 23,361 | ||||||
| Total liabilities | 1,387,991 | 1,548,521 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interest | 96,160 | 93,553 | ||||||
| Equity: | ||||||||
| Common stock, (no par value, 40,000,000 shares authorized, 9,738,183 and 8,598,682 shares issued and outstanding in 2023 and 2022, respectively) | — | — | ||||||
| Additional paid-in capital | 89,568 | — | ||||||
| Retained income | 238,438 | 172,482 | ||||||
| Accumulated other comprehensive loss, net of taxes | (3,163 | ) | (9,886 | ) | ||||
| Total stockholders' equity | 324,843 | 162,596 | ||||||
| Noncontrolling interests | 2,322 | (1,342 | ) | |||||
| Total equity | 327,165 | 161,254 | ||||||
| Total liabilities, redeemable noncontrolling interest, and equity | $ | 1,811,316 | $ | 1,803,328 | ||||
| HCI GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) (Dollar amounts in thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | ||||||||||||||||
| Gross premiums earned | $ | 215,190 | $ | 182,954 | $ | 765,512 | $ | 724,716 | ||||||||
| Premiums ceded | (66,576 | ) | (77,036 | ) | (269,627 | ) | (261,144 | ) | ||||||||
| Net premiums earned | 148,614 | 105,918 | 495,885 | 463,572 | ||||||||||||
| Net investment income | 10,341 | 7,365 | 46,234 | 32,447 | ||||||||||||
| Net realized investment (losses) gains | (410 | ) | 17 | (1,996 | ) | (1,187 | ) | |||||||||
| Net unrealized investment gains (losses) | 2,830 | 1,004 | 3,215 | (7,153 | ) | |||||||||||
| Policy fee income | 1,053 | 1,099 | 4,704 | 4,279 | ||||||||||||
| Gain from remeasurement of contingent liabilities | — | 3,117 | — | 3,117 | ||||||||||||
| Other | 242 | 1,423 | 2,628 | 4,488 | ||||||||||||
| Total revenue | 162,670 | 119,943 | 550,670 | 499,563 | ||||||||||||
| Expenses | ||||||||||||||||
| Losses and loss adjustment expenses | 65,398 | 72,135 | 254,579 | 371,463 | ||||||||||||
| Policy acquisition and other underwriting expenses | 22,716 | 24,028 | 90,822 | 104,977 | ||||||||||||
| General and administrative personnel expenses | 12,230 | 11,328 | 53,868 | 56,511 | ||||||||||||
| Interest expense | 2,822 | 2,839 | 11,117 | 7,768 | ||||||||||||
| Impairment loss | — | 2,284 | — | 2,284 | ||||||||||||
| Other operating expenses | 5,344 | 4,586 | 22,634 | 24,978 | ||||||||||||
| Total expenses | 108,510 | 117,200 | 433,020 | 567,981 | ||||||||||||
| Income (loss) before income taxes | 54,160 | 2,743 | 117,650 | (68,418 | ) | |||||||||||
| Income tax expense (benefit) | 13,247 | 92 | 28,393 | (13,815 | ) | |||||||||||
| Net income (loss) | $ | 40,913 | $ | 2,651 | $ | 89,257 | $ | (54,603 | ) | |||||||
| Net income attributable to redeemable noncontrolling interest | (2,360 | ) | (2,305 | ) | (9,370 | ) | (9,106 | ) | ||||||||
| Net (income) loss attributable to noncontrolling interests | (457 | ) | 1,180 | (853 | ) | 5,198 | ||||||||||
| Net income (loss) after noncontrolling interests | $ | 38,096 | $ | 1,526 | $ | 79,034 | $ | (58,511 | ) | |||||||
| Basic earnings (loss) per share | $ | 4.31 | $ | 0.18 | $ | 9.13 | $ | (6.24 | ) | |||||||
| Diluted earnings (loss) per share | $ | 3.40 | $ | 0.18 | $ | 7.62 | $ | (6.24 | ) | |||||||
| Dividends per share | $ | 0.40 | $ | 0.40 | $ | 1.60 | $ | 1.60 | ||||||||
| 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 | Year Ended | |||||||||||||||||||||||
| GAAP | December 31, 2023 | December 31, 2023 | ||||||||||||||||||||||
| Income | Shares (a) | Per Share | Income | Shares (a) | Per Share | |||||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
| Net income | $ | 40,913 | $ | 89,257 | ||||||||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | (2,360 | ) | (9,370 | ) | ||||||||||||||||||||
| Less: TypTap Group's net (income) attributable to non-HCI common stockholders and TypTap Group's participating securities | (457 | ) | (853 | ) | ||||||||||||||||||||
| Net income attributable to HCI | 38,096 | 79,034 | ||||||||||||||||||||||
| Less: Income attributable to participating securities | (1,166 | ) | (2,625 | ) | ||||||||||||||||||||
| Basic Earnings Per Share: | ||||||||||||||||||||||||
| Income allocated to common stockholders | 36,930 | 8,567 | $ | 4.31 | 76,409 | 8,367 | $ | 9.13 | ||||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||
| Stock options | — | 155 | — | 83 | ||||||||||||||||||||
| Convertible senior notes | 1,938 | 2,538 | 7,732 | 2,538 | ||||||||||||||||||||
| Warrants | — | 192 | — | 56 | ||||||||||||||||||||
| Diluted Earnings Per Share: | ||||||||||||||||||||||||
| Income available to common stockholders and assumed conversions | $ | 38,868 | 11,452 | $ | 3.40 | $ | 84,141 | 11,044 | $ | 7.62 | ||||||||||||||
| (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 | Year Ended | |||||||||||||||
| December 31, 2023 | December 31, 2023 | |||||||||||||||
| GAAP Net income | $ | 40,913 | $ | 89,257 | ||||||||||||
| Net unrealized investment gains | $ | (2,830 | ) | $ | (3,215 | ) | ||||||||||
| Less: Tax effect at | $ | 709 | $ | 805 | ||||||||||||
| Net adjustment to Net income | $ | (2,121 | ) | $ | (2,410 | ) | ||||||||||
| Non-GAAP Adjusted Net income | $ | 38,792 | $ | 86,847 | ||||||||||||
| 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 | Year Ended | |||||||||||||||||||||||
| Non-GAAP | December 31, 2023 | December 31, 2023 | ||||||||||||||||||||||
| Income | Shares (a) | Per Share | Income | Shares (a) | Per Share | |||||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
| Adjusted net income (non-GAAP) | $ | 38,792 | $ | 86,847 | ||||||||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | (2,360 | ) | $ | (9,370 | ) | |||||||||||||||||||
| Less: TypTap Group's net income attributable to non-HCI common stockholders and TypTap Group's participating securities | (433 | ) | (841 | ) | ||||||||||||||||||||
| Net income attributable to HCI | 35,999 | 76,636 | ||||||||||||||||||||||
| Less: Income attributable to participating securities | (1,101 | ) | (2,545 | ) | ||||||||||||||||||||
| Basic Earnings Per Share before unrealized gains/losses on equity securities: | ||||||||||||||||||||||||
| Income allocated to common stockholders | 34,898 | 8,567 | $ | 4.07 | 74,091 | 8,367 | $ | 8.86 | ||||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||
| Stock options | — | 155 | — | 83 | ||||||||||||||||||||
| Convertible senior notes | 1,938 | 2,538 | 7,732 | 2,538 | ||||||||||||||||||||
| Warrants | — | 192 | — | 56 | ||||||||||||||||||||
| Diluted Earnings Per Share before unrealized gains/losses on equity securities: | ||||||||||||||||||||||||
| Income available to common stockholders and assumed conversions | $ | 36,836 | $ | 11,452 | $ | 3.22 | $ | 81,823 | $ | 11,044 | $ | 7.41 | ||||||||||||
| (a) Shares in thousands. | ||||||||||||||||||||||||
Reconciliation of GAAP Diluted EPS to Non-GAAP Adjusted Diluted EPS
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, 2023 | December 31, 2023 | |||||||||||||||
| GAAP diluted Earnings Per Share | $ | 3.40 | $ | 7.62 | ||||||||||||
| Net unrealized investment gains | $ | (0.25 | ) | $ | (0.29 | ) | ||||||||||
| Less: Tax effect at | $ | 0.07 | $ | 0.08 | ||||||||||||
| Net adjustment to GAAP diluted EPS | $ | (0.18 | ) | $ | (0.21 | ) | ||||||||||
| Non-GAAP Adjusted diluted EPS | $ | 3.22 | $ | 7.41 | ||||||||||||
FAQ
What was HCI Group's diluted earnings per share in the fourth quarter of 2023?
How much did HCI Group's net income increase in the fourth quarter of 2023 compared to the same period in 2022?
What were HCI Group's gross premiums earned in the fourth quarter of 2023?
What was the gross loss ratio for HCI Group in the fourth quarter of 2023?
How much did HCI Group's net investment income increase for the twelve months of 2023 compared to the twelve months of 2022?
What were HCI Group's policy acquisition and other underwriting expenses for the twelve months of 2023?
