HCI Group Reports Second Quarter 2022 Results
HCI Group reported a net loss of $8.5 million or $1.04 per share for Q2 2022, a turnaround from a net income of $3.8 million in Q2 2021. Gross premiums earned rose by 29.9% to $181.1 million. Rate increases of 10% and 12% at Homeowners Choice and TypTap respectively were implemented to counteract inflation's impact on loss ratios. Year-to-date, losses reached $5.8 million compared to a profit of $10.7 million in the same period last year. Total gross written premiums increased by 16.9% to $363.4 million.
- Gross premiums earned grew 29.9% to $181.1 million for Q2 2022.
- Implemented rate increases of 10% and 12% to bolster underwriting margins.
- Raised over $170 million through a convertible note offering for strategic flexibility.
- Consolidated gross written premiums increased by 16.9% to $363.4 million year-to-date.
- Net loss of $8.5 million in Q2 2022 compared to a net income of $3.8 million in Q2 2021.
- Adjusted net loss was $5.4 million vs. adjusted net income of $2.7 million in Q2 2021.
- Losses and loss adjustment expenses increased to $86.8 million from $55.9 million year-over-year.
Gross Premiums Earned Grew
Implemented Rate Increases to Offset Inflation
TAMPA, Fla., Aug. 08, 2022 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE:HCI), a holding company with operations in homeowners insurance, information technology services, real estate, and reinsurance, reported a net loss of
Management Commentary
“Inflation accelerated in the quarter which led to an increase in our gross loss ratio. We responded swiftly, increasing rates
“We remain optimistic about the future. In May, we raised over
Second Quarter 2022 Commentary
Consolidated gross written premiums of
Consolidated gross premiums earned of
Premiums ceded for reinsurance of
Net investment income of
Net realized and unrealized investment losses were
Losses and loss adjustment expenses of
Policy acquisition and other underwriting expenses of
General and administrative expenses of
Year-to-Date 2022 Results
For the six months ended June 30, 2022, the company reported a net loss of
Consolidated gross written premiums of
Consolidated gross premiums earned of
Premiums ceded for reinsurance of
Net realized and unrealized investment losses were
Losses and loss adjustment expenses of
Policy acquisition and other underwriting expenses of
General and administrative expenses of
Conference Call
HCI Group will hold a conference call tomorrow, August 9, 2022, 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 8:30 a.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: 781380
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 September 8, 2022.
Toll-free replay number: (877) 481-4010
International replay number: (919) 882-2331
Replay ID: 46129
About HCI Group, Inc.
HCI Group, Inc. owns subsidiaries engaged in diverse, yet complementary business activities, including homeowners insurance, reinsurance, real estate and information technology services. HCI’s leading insurance operation, TypTap Insurance Company, is a rapidly growing, technology-driven insurance company that is expanding nationwide to provide homeowners and flood insurance. 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:
Simon Rosenberg
Investor Relations
HCI Group, Inc.
Tel (813) 405-5261
srosenberg@hcigroup.com
Investor Relations Contact:
Matt Glover
Gateway Group, Inc.
Tel (949) 574-3860
HCI@gatewayir.com
Media Contact:
Catherine Adcock
Gateway Group, Inc.
Tel (949) 574-6860
catherine@gatewayir.com
- Tables to follow -
HCI GROUP, INC. AND SUBSIDIARIES
Selected Financial Metrics
(Dollar amounts in thousands, except per share amounts)
| Q2 2022 | Q1 2022 | FY 2021 | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Insurance Operations | ||||||||||||
| Gross Written Premiums: | ||||||||||||
| Homeowners Choice | $ | 113,139 | $ | 91,141 | $ | 426,910 | ||||||
| TypTap Insurance Company | 73,013 | 86,153 | 247,479 | |||||||||
| Total Gross Written Premiums | 186,152 | 177,294 | 674,389 | |||||||||
| Gross Premiums Earned: | ||||||||||||
| Homeowners Choice | 113,681 | 118,303 | 401,137 | |||||||||
| TypTap Insurance Company | 67,443 | 60,622 | 175,907 | |||||||||
| Total Gross Premiums Earned | 181,124 | 178,925 | 577,044 | |||||||||
| Gross Premiums Earned Loss Ratio | 47.9 | % | 40.6 | % | 39.4 | % | ||||||
| Per Share Metrics | ||||||||||||
| GAAP Diluted EPS | $ | (1.04 | ) | $ | 0.09 | $ | 0.21 | |||||
| Non-GAAP Adjusted Diluted EPS | $ | (0.71 | ) | $ | 0.34 | $ | 0.10 | |||||
| Dividends per share | $ | 0.40 | $ | 0.40 | $ | 1.60 | ||||||
| Book value per share at the end of period | $ | 26.39 | $ | 31.66 | $ | 31.92 | ||||||
| Shares outstanding at the end of period | 9,047,972 | 10,125,927 | 10,131,399 | |||||||||
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollar amounts in thousands)
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Fixed-maturity securities, available for sale, at fair value (amortized cost: respectively and allowance for credit losses: | $ | 398,571 | $ | 42,583 | ||||
| Equity securities, at fair value (cost: | 35,719 | 51,740 | ||||||
| Limited partnership investments | 26,695 | 28,133 | ||||||
| Investment in unconsolidated joint venture, at equity | 858 | 363 | ||||||
| Real estate investments | 72,723 | 73,896 | ||||||
| Total investments | 534,566 | 196,715 | ||||||
| Cash and cash equivalents | 360,488 | 628,943 | ||||||
| Restricted cash | 2,600 | 2,400 | ||||||
| Accrued interest and dividends receivable | 1,421 | 353 | ||||||
| Income taxes receivable | 1,789 | 4,084 | ||||||
| Premiums receivable, net (allowance: | 52,302 | 68,157 | ||||||
| Prepaid reinsurance premiums | 81,023 | 26,355 | ||||||
| Reinsurance recoverable, net of allowance for credit losses: | ||||||||
| Paid losses and loss adjustment expenses (allowance: | 11,134 | 11,985 | ||||||
| Unpaid losses and loss adjustment expenses (allowance: | 42,348 | 64,665 | ||||||
| Deferred policy acquisition costs | 48,305 | 57,695 | ||||||
| Property and equipment, net | 17,244 | 14,232 | ||||||
| Right-of-use-assets - operating leases | 1,861 | 2,204 | ||||||
| Intangible assets, net | 14,358 | 10,636 | ||||||
| Funds withheld for assumed business | 82,468 | 73,716 | ||||||
| Other assets | 28,796 | 14,717 | ||||||
| Total assets | $ | 1,280,703 | $ | 1,176,857 | ||||
| Liabilities and Equity | ||||||||
| Losses and loss adjustment expenses | $ | 238,824 | $ | 237,165 | ||||
| Unearned premiums | 370,140 | 366,744 | ||||||
| Advance premiums | 25,428 | 13,771 | ||||||
| Reinsurance payable on paid losses and loss adjustment expenses | 4,302 | 4,017 | ||||||
| Ceded reinsurance premiums payable | 24,641 | 19,318 | ||||||
| Accrued expenses | 17,093 | 15,453 | ||||||
| Deferred income taxes, net | 6,168 | 11,739 | ||||||
| Revolving credit facility | — | 15,000 | ||||||
| Long-term debt | 211,648 | 45,504 | ||||||
| Lease liabilities - operating leases | 1,824 | 2,203 | ||||||
| Other liabilities | 48,737 | 31,485 | ||||||
| Total liabilities | 948,805 | 762,399 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interest | 91,963 | 89,955 | ||||||
| Equity: | ||||||||
| Common stock, (no par value, 40,000,000 shares authorized, 9,047,972 and 10,131,399 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively) | — | — | ||||||
| Additional paid-in capital | 12,887 | 76,077 | ||||||
| Retained income | 229,621 | 246,790 | ||||||
| Accumulated other comprehensive (loss) income, net of taxes | (3,760 | ) | 498 | |||||
| Total stockholders' equity | 238,748 | 323,365 | ||||||
| Noncontrolling interests | 1,187 | 1,138 | ||||||
| Total equity | 239,935 | 324,503 | ||||||
| Total liabilities, redeemable noncontrolling interest, and equity | $ | 1,280,703 | $ | 1,176,857 | ||||
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, | ||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Revenue | |||||||||||||||||
| Gross premiums earned | $ | 181,124 | $ | 139,440 | $ | 360,049 | $ | 270,382 | |||||||||
| Premiums ceded | (56,205 | ) | (46,436 | ) | (109,367 | ) | (89,535 | ) | |||||||||
| Net premiums earned | 124,919 | 93,004 | 250,682 | 180,847 | |||||||||||||
| Net investment income | 3,684 | 2,635 | 6,552 | 7,229 | |||||||||||||
| Net realized investment (losses) gains | (6 | ) | 2,607 | (320 | ) | 3,720 | |||||||||||
| Net unrealized investment (losses) gains | (4,234 | ) | 1,489 | (7,810 | ) | 1,220 | |||||||||||
| Policy fee income | 1,052 | 992 | 2,109 | 1,962 | |||||||||||||
| Other | 511 | 777 | 1,753 | 1,400 | |||||||||||||
| Total revenue | 125,926 | 101,504 | 252,966 | 196,378 | |||||||||||||
| Expenses | |||||||||||||||||
| Losses and loss adjustment expenses | 86,830 | 55,917 | 159,534 | 101,668 | |||||||||||||
| Policy acquisition and other underwriting expenses | 26,863 | 23,169 | 56,271 | 46,234 | |||||||||||||
| General and administrative personnel expenses | 15,301 | 10,546 | 29,335 | 20,196 | |||||||||||||
| Interest expense | 1,515 | 2,000 | 2,116 | 4,079 | |||||||||||||
| Other operating expenses | 6,977 | 4,775 | 13,269 | 9,002 | |||||||||||||
| Total expenses | 137,486 | 96,407 | 260,525 | 181,179 | |||||||||||||
| (Loss) income before income taxes | (11,560 | ) | 5,097 | (7,559 | ) | 15,199 | |||||||||||
| Income tax (benefit) expense | (3,018 | ) | 1,267 | (1,808 | ) | 4,524 | |||||||||||
| Net (loss) income | $ | (8,542 | ) | $ | 3,830 | $ | (5,751 | ) | $ | 10,675 | |||||||
| Net (loss) income attributable to redeemable noncontrolling interest | (2,268 | ) | (2,179 | ) | (4,516 | ) | (2,973 | ) | |||||||||
| Net loss attributable to noncontrolling interests | 829 | 266 | 1,189 | 363 | |||||||||||||
| Net income after noncontrolling interests | $ | (9,981 | ) | $ | 1,917 | $ | (9,078 | ) | $ | 8,065 | |||||||
| Basic (loss) earnings per share | $ | (1.04 | ) | $ | 0.25 | $ | (0.92 | ) | $ | 1.02 | |||||||
| Diluted (loss) earnings per share | $ | (1.04 | ) | $ | 0.24 | $ | (0.92 | ) | $ | 0.98 | |||||||
| 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 (loss) per common share calculated in accordance with GAAP is presented below.
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| GAAP | June 30, 2022 | June 30, 2022 | ||||||||||||||||||||
| Loss | Shares (a) | Per Share | Loss | Shares (a) | Per Share | |||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||
| Net loss | $ | (8,542 | ) | $ | (5,751 | ) | ||||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | (2,268 | ) | (4,516 | ) | ||||||||||||||||||
| Less: TypTap Group's net loss attributable to non-HCI common stockholders and TypTap Group's participating securities | 829 | 1,189 | ||||||||||||||||||||
| Net loss attributable to HCI | (9,981 | ) | (9,078 | ) | ||||||||||||||||||
| Less: Loss attributable to participating securities | 635 | 590 | ||||||||||||||||||||
| Basic Loss Per Share: | ||||||||||||||||||||||
| Loss allocated to common stockholders | (9,346 | ) | 9,022 | $ | (1.04 | ) | (8,488 | ) | 9,249 | $ | (0.92 | ) | ||||||||||
| Effect of Dilutive Securities:* | ||||||||||||||||||||||
| Stock options | — | — | — | — | ||||||||||||||||||
| Convertible senior notes | — | — | — | — | ||||||||||||||||||
| Warrants | — | — | — | — | ||||||||||||||||||
| Diluted Loss Per Share: | ||||||||||||||||||||||
| Loss available to common stockholders and assumed conversions | $ | (9,346 | ) | 9,022 | $ | (1.04 | ) | $ | (8,488 | ) | 9,249 | $ | (0.92 | ) | ||||||||
| (a) Shares in thousands. | ||||||||||||||||||||||
| * For the three and six months ended June 30, 2022, convertible senior notes, stock options, and warrants were excluded due to anti-dilutive effect. | ||||||||||||||||||||||
Non-GAAP Financial Measures
Adjusted net income (loss) is a Non-GAAP financial measure that removes from net income (loss) 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 (loss) to Non-GAAP Adjusted net income (loss) and GAAP diluted earnings (loss) per share to Non-GAAP Adjusted diluted earnings (loss) per share is provided below.
Reconciliation of GAAP Net Loss to Non-GAAP Adjusted Net (Loss) Income
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2022 | June 30, 2022 | |||||||||||||||||||
| GAAP Net loss | $ | (8,542 | ) | $ | (5,751 | ) | ||||||||||||||
| Net unrealized investment losses | $ | 4,234 | $ | 7,810 | ||||||||||||||||
| Less: Tax effect at | $ | (1,073 | ) | $ | (1,979 | ) | ||||||||||||||
| Net adjustment to Net loss | $ | 3,161 | $ | 5,831 | ||||||||||||||||
| Non-GAAP Adjusted Net (loss) income | $ | (5,381 | ) | $ | 80 | |||||||||||||||
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 (loss) per common share calculated with the Non-GAAP financial measure Adjusted net income (loss) is presented below.
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| Non-GAAP | June 30, 2022 | June 30, 2022 | ||||||||||||||||||||
| Loss | Shares (a) | Per Share | Loss | Shares (a) | Per Share | |||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||
| Adjusted net (loss) income (non-GAAP) | $ | (5,381 | ) | $ | 80 | |||||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | (2,268 | ) | (4,516 | ) | ||||||||||||||||||
| Less: TypTap Group's net loss attributable to non-HCI common stockholders and TypTap Group's participating securities | 810 | 1,153 | ||||||||||||||||||||
| Net loss attributable to HCI | (6,839 | ) | (3,283 | ) | ||||||||||||||||||
| Less: Loss attributable to participating securities | 437 | 220 | ||||||||||||||||||||
| Basic Loss Per Share before unrealized gains/losses on equity securities: | ||||||||||||||||||||||
| Loss allocated to common stockholders | (6,402 | ) | 9,022 | $ | (0.71 | ) | (3,063 | ) | 9,249 | $ | (0.33 | ) | ||||||||||
| Effect of Dilutive Securities:* | ||||||||||||||||||||||
| Stock options | — | — | — | — | ||||||||||||||||||
| Convertible senior notes | — | — | — | — | ||||||||||||||||||
| Warrants | — | — | — | — | ||||||||||||||||||
| Diluted Loss Per Share before unrealized gains/losses on equity securities: | ||||||||||||||||||||||
| Loss available to common stockholders and assumed conversions | $ | (6,402 | ) | $ | 9,022 | $ | (0.71 | ) | $ | (3,063 | ) | $ | 9,249 | $ | (0.33 | ) | ||||||
| (a) Shares in thousands. | ||||||||||||||||||||||
| * For the three and six months ended June 30, 2022, convertible senior notes, stock options, and warrants were excluded due to anti-dilutive effect. | ||||||||||||||||||||||
Reconciliation of GAAP Diluted EPS to Non-GAAP Adjusted Diluted EPS
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 30, 2022 | June 30, 2022 | ||||||||||||||||||
| GAAP diluted (Loss) Earnings Per Share | $ | (1.04 | ) | $ | (0.92 | ) | |||||||||||||
| Net unrealized investment losses | $ | 0.46 | $ | 0.84 | |||||||||||||||
| Less: Tax effect at | $ | (0.13 | ) | $ | (0.25 | ) | |||||||||||||
| Net adjustment to GAAP diluted EPS | $ | 0.33 | $ | 0.59 | |||||||||||||||
| Non-GAAP Adjusted diluted EPS | $ | (0.71 | ) | $ | (0.33 | ) | |||||||||||||
FAQ
What were HCI's net losses in Q2 2022?
How much did HCI's gross premiums earned increase in Q2 2022?
What steps did HCI take to address inflation impacts?
What was the year-to-date net loss for HCI as of June 30, 2022?
How much capital did HCI raise in May 2022?
