HCI Group Reports Third Quarter 2021 Results
HCI Group reported a net loss of $4.9 million or $0.72 per share for Q3 2021, down from a profit of $15.4 million in Q3 2020, which included a one-time gain of $37 million. Adjusted net loss was $3.5 million. Despite the loss, book value per share rose 16% to $30.39 due to the conversion of $82.8 million in convertible notes. Gross written premiums surged 49.6% to $174.3 million, driven by TypTap's growth. However, losses increased to $62.7 million, partly due to storm-related events. For the nine months ended September 30, 2021, net income was $5.8 million, down from $24.9 million in 2020.
- Book value per share increased by 16% to $30.39.
- Gross written premiums rose by 49.6% to $174.3 million in Q3 2021.
- Net investment income increased to $2.5 million from $1.8 million in Q3 2020.
- Q3 2021 net loss of $4.9 million compared to a net income of $15.4 million in Q3 2020.
- Losses and loss adjustment expenses increased to $62.7 million from $51.7 million in the same period of 2020.
- Nine-month net income decreased to $5.8 million from $24.9 million in the prior year.
TAMPA, Fla., Nov. 08, 2021 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE:HCI), a holding company with operations in homeowners insurance, reinsurance, real estate and information technology services, reported results for the three and nine months ended September 30, 2021.
Third Quarter 2021 - Financial Results
In the third quarter of 2021, the company experienced a net loss of
Even though the company recorded a net loss in the third quarter, book value per share increased by approximately
Subsequent to third quarter, in the month of October the company converted or exchanged an additional
Consolidated gross written premiums of
Consolidated gross premiums earned of
Premiums ceded for reinsurance for the third quarter of 2021 increased to
Net investment income increased to
Net realized investment gains for the third quarter of 2021 increased to
Net unrealized investment losses were
Losses and loss adjustment expenses for the third quarter of 2021 were
Policy acquisition and other underwriting expenses for the third quarter of 2021 were
Nine Months Ended September 30, 2021 - Financial Results
Net income for the nine months ended September 30, 2021 totaled
Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the nine months ended September 30, 2021 was
Consolidated gross written premiums for the nine-month periods increased
Consolidated gross premiums earned for the nine months ended September 30, 2021 increased to
Premiums ceded for the nine months ended September 30, 2021 were
Net investment income for the nine months ended September 30, 2021 was
Losses and loss adjustment expenses for the nine months ended September 30, 2021 and 2020 were
Policy acquisition and other underwriting expenses for the nine months ended September 30, 2021 were
Management Commentary
“As TypTap continues to expand, we are making important investments to maximize TypTap’s opportunity,” said HCI Group Chairman and Chief Executive Officer Paresh Patel. “We are confident the long-term payback on these investments will outweigh any short-term impact.”
Conference Call
HCI Group will hold a conference call tomorrow, November 9, 2021, 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: 775232
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 December 9, 2021.
Toll-free replay number: (877) 481-4010
International replay number: (919) 882-2331
Replay ID: 42978
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.
Investor Relations Contact:
Matt Glover
Gateway Group, Inc.
Tel (949) 574-3860
HCI@gatewayir.com
Media Contact:
Jordan Schmidt
Gateway Group, Inc.
Tel (949) 386-6332
jordan@gatewayir.com
- Tables to follow -
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollar amounts in thousands)
| September 30, 2021 | December 31, 2020 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Fixed-maturity securities, available for sale, at fair value (amortized cost: | $ | 46,053 | $ | 71,722 | ||||
| Equity securities, at fair value (cost: | 50,223 | 51,130 | ||||||
| Limited partnership investments | 26,039 | 27,691 | ||||||
| Investment in unconsolidated joint venture, at equity | 370 | 705 | ||||||
| Real estate investments | 73,663 | 74,472 | ||||||
| Total investments | 196,348 | 225,720 | ||||||
| Cash and cash equivalents | 569,134 | 431,341 | ||||||
| Restricted cash | 2,400 | 2,400 | ||||||
| Accrued interest and dividends receivable | 463 | 588 | ||||||
| Income taxes receivable | — | 4,554 | ||||||
| Premiums receivable, net (allowance: | 43,078 | 68,382 | ||||||
| Prepaid reinsurance premiums | 47,968 | 36,376 | ||||||
| Reinsurance recoverable, net of allowance for credit losses: | ||||||||
| Paid losses and loss adjustment expenses (allowance: | 9,658 | 14,127 | ||||||
| Unpaid losses and loss adjustment expenses (allowance: | 39,468 | 71,019 | ||||||
| Deferred policy acquisition costs | 47,129 | 43,858 | ||||||
| Property and equipment, net | 13,946 | 12,767 | ||||||
| Right-of-use-assets - operating leases | 2,576 | 4,002 | ||||||
| Intangible assets, net | 10,807 | 3,568 | ||||||
| Funds held in trust for assumed business | 79,965 | — | ||||||
| Other assets | 13,174 | 22,611 | ||||||
| Total assets | $ | 1,076,114 | $ | 941,313 | ||||
| Liabilities and Equity | ||||||||
| Losses and loss adjustment expenses | $ | 203,177 | $ | 212,169 | ||||
| Unearned premiums | 334,299 | 269,399 | ||||||
| Advance premiums | 19,062 | 11,370 | ||||||
| Assumed reinsurance balances payable | 88 | 87 | ||||||
| Reinsurance payable on paid losses and loss adjustment expenses | 4,727 | — | ||||||
| Accrued expenses | 15,187 | 10,181 | ||||||
| Income taxes payable | 3,574 | — | ||||||
| Deferred income taxes, net | 3,708 | 11,925 | ||||||
| Revolving credit facility | — | 23,750 | ||||||
| Long-term debt | 78,083 | 156,511 | ||||||
| Lease liabilities - operating leases | 2,578 | 4,014 | ||||||
| Other liabilities | 31,372 | 40,771 | ||||||
| Total liabilities | 695,855 | 740,177 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interest | 87,731 | — | ||||||
| Equity: | ||||||||
| Common stock, (no par value, 40,000,000 shares authorized, 9,591,079 and 7,785,617 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively) | — | — | ||||||
| Additional paid-in capital | 39,905 | — | ||||||
| Retained income | 250,808 | 199,592 | ||||||
| Accumulated other comprehensive income, net of taxes | 799 | 1,544 | ||||||
| Total stockholders' equity | 291,512 | 201,136 | ||||||
| Noncontrolling interests | 1,016 | — | ||||||
| Total equity | 292,528 | 201,136 | ||||||
| Total liabilities, redeemable noncontrolling interest, and equity | $ | 1,076,114 | $ | 941,313 | ||||
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
(Dollar amounts in thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| Revenue | |||||||||||||||||||
| Gross premiums earned | $ | 149,809 | $ | 106,694 | $ | 420,191 | $ | 306,862 | |||||||||||
| Premiums ceded | (55,577 | ) | (44,231 | ) | (145,112 | ) | (109,304 | ) | |||||||||||
| Net premiums earned | 94,232 | 62,463 | 275,079 | 197,558 | |||||||||||||||
| Net investment income | 2,520 | 1,832 | 9,749 | 3,244 | |||||||||||||||
| Net realized investment gains (losses) | 1,232 | 177 | 4,952 | (632 | ) | ||||||||||||||
| Net unrealized investment (losses) gains | (1,869 | ) | 1,340 | (649 | ) | (581 | ) | ||||||||||||
| Credit losses on investments | — | (70 | ) | — | (596 | ) | |||||||||||||
| Policy fee income | 1,000 | 895 | 2,962 | 2,571 | |||||||||||||||
| Gain on involuntary conversion | — | 36,969 | — | 36,969 | |||||||||||||||
| Other | 2,102 | 421 | 3,502 | 1,591 | |||||||||||||||
| Total revenue | 99,217 | 104,027 | 295,595 | 240,124 | |||||||||||||||
| Expenses | |||||||||||||||||||
| Losses and loss adjustment expenses | 62,664 | 51,743 | 164,332 | 119,664 | |||||||||||||||
| Policy acquisition and other underwriting expenses | 23,340 | 14,210 | 69,574 | 39,027 | |||||||||||||||
| General and administrative personnel expenses | 11,537 | 9,871 | 31,733 | 27,969 | |||||||||||||||
| Interest expense | 1,664 | 2,856 | 5,743 | 8,846 | |||||||||||||||
| Loss on repurchases of convertible senior notes | — | — | — | 150 | |||||||||||||||
| Loss on extinguishment of debt | — | 98 | — | 98 | |||||||||||||||
| Debt conversion expense | 1,273 | — | 1,273 | — | |||||||||||||||
| Other operating expenses | 5,243 | 3,713 | 14,245 | 10,354 | |||||||||||||||
| Total expenses | 105,721 | 82,491 | 286,900 | 206,108 | |||||||||||||||
| (Loss) income before income taxes | (6,504 | ) | 21,536 | 8,695 | 34,016 | ||||||||||||||
| Income tax (benefit) expense | (1,636 | ) | 6,146 | 2,888 | 9,143 | ||||||||||||||
| Net (loss) income | $ | (4,868 | ) | $ | 15,390 | $ | 5,807 | $ | 24,873 | ||||||||||
| Net income attributable to redeemable noncontrolling interest | (2,202 | ) | — | (5,175 | ) | — | |||||||||||||
| Net loss attributable to noncontrolling interests | 833 | — | 1,196 | — | |||||||||||||||
| Net (loss) income after noncontrolling interests | $ | (6,237 | ) | $ | 15,390 | $ | 1,828 | $ | 24,873 | ||||||||||
| Basic (loss) earnings per share | $ | (0.72 | ) | $ | 1.97 | $ | 0.23 | $ | 3.21 | ||||||||||
| Diluted (loss) earnings per share | $ | (0.72 | ) | $ | 1.70 | $ | 0.22 | $ | 3.03 | ||||||||||
| Dividends per share | $ | 0.40 | $ | 0.40 | $ | 1.20 | $ | 1.20 | |||||||||||
HCI GROUP, INC. AND SUBSIDIARIES
(Amounts in thousands, except per share amounts)
A summary of the numerator and denominator of basic and diluted income per common share calculated in accordance with GAAP is presented below.
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| GAAP | September 30, 2021 | September 30, 2021 | ||||||||||||||||||||||
| Loss | Shares (a) | Per Share | Income | Shares (a) | Per Share | |||||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
| Net (loss) income | $ | (4,868 | ) | $ | 5,807 | |||||||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | (2,202 | ) | (5,175 | ) | ||||||||||||||||||||
| Less: TypTap Group's net loss attributable to non-HCI common stockholders and TypTap Group's participating securities | 774 | 1,191 | ||||||||||||||||||||||
| Net (loss) income attributable to HCI | (6,296 | ) | 1,823 | |||||||||||||||||||||
| Less: (Loss) income attributable to participating securities | 537 | (37 | ) | |||||||||||||||||||||
| Basic (Loss) Earnings Per Share: | ||||||||||||||||||||||||
| (Loss) income allocated to common stockholders | (5,759 | ) | 8,023 | $ | (0.72 | ) | 1,786 | 7,676 | $ | 0.23 | ||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||
| Stock options* | — | — | — | 182 | ||||||||||||||||||||
| Warrants* | — | — | — | 234 | ||||||||||||||||||||
| Diluted (Loss) Earnings Per Share: | ||||||||||||||||||||||||
| (Loss) income available to common stockholders and assumed conversions | $ | (5,759 | ) | 8,023 | $ | (0.72 | ) | $ | 1,786 | 8,092 | $ | 0.22 | ||||||||||||
| (a) Shares in thousands. | ||||||||||||||||||||||||
| * For the three months ended September 30, 2021, 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 Group'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) Income to Non-GAAP Adjusted Net (Loss) Income
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, 2021 | September 30, 2021 | |||||||||||||||||||
| GAAP Net (loss) income | $ | (4,868 | ) | $ | 5,807 | |||||||||||||||
| Net unrealized investment losses | $ | 1,869 | $ | 649 | ||||||||||||||||
| Less: Tax effect at | $ | (458 | ) | $ | (159 | ) | ||||||||||||||
| Net adjustment to Net (loss) income | $ | 1,411 | $ | 490 | ||||||||||||||||
| Non-GAAP Adjusted Net (loss) income | $ | (3,457 | ) | $ | 6,297 | |||||||||||||||
HCI GROUP, INC. AND SUBSIDIARIES
(Amounts in thousands, except per share amounts)
A summary of the numerator and denominator of the basic and diluted income per common share calculated with the Non-GAAP financial measure Adjusted net income is presented below.
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| Non-GAAP | September 30, 2021 | September 30, 2021 | ||||||||||||||||||||||
| Loss | Shares (a) | Per Share | Income | Shares (a) | Per Share | |||||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
| Adjusted net (loss) income (non-GAAP) | $ | (3,457 | ) | $ | 6,297 | |||||||||||||||||||
| Less: Net income attributable to redeemable noncontrolling interest | (2,202 | ) | $ | (5,175 | ) | |||||||||||||||||||
| Less: TypTap Group's net loss attributable to non-HCI common stockholders and TypTap Group's participating securities | 42 | 41 | ||||||||||||||||||||||
| Net (loss) income attributable to HCI | (5,617 | ) | 1,163 | |||||||||||||||||||||
| Less: Income attributable to participating securities | 482 | 16 | ||||||||||||||||||||||
| Basic (Loss) Earnings Per Share before unrealized gains/losses on equity securities: | ||||||||||||||||||||||||
| (Loss) income allocated to common stockholders | (5,135 | ) | 8,023 | $ | (0.64 | ) | 1,179 | 7,676 | $ | 0.15 | ||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||
| Stock options* | — | — | — | 182 | ||||||||||||||||||||
| Warrants* | — | — | — | 234 | ||||||||||||||||||||
| Diluted (Loss) Earnings Per Share before unrealized gains/losses on equity securities: | ||||||||||||||||||||||||
| (Loss) income available to common stockholders and assumed conversions | $ | (5,135 | ) | $ | 8,023 | $ | (0.64 | ) | $ | 1,179 | $ | 8,092 | $ | 0.15 | ||||||||||
| (a) Shares in thousands. | ||||||||||||||||||||||||
| * For the three months ended September 30, 2021, 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 | Nine Months Ended | |||||||||||||||||||
| September 30, 2021 | September 30, 2021 | |||||||||||||||||||
| GAAP diluted (Loss) Earnings Per Share | $ | (0.72 | ) | $ | 0.22 | |||||||||||||||
| Net unrealized investment losses | $ | 0.23 | $ | 0.08 | ||||||||||||||||
| Less: Tax effect at | $ | (0.16 | ) | $ | (0.15 | ) | ||||||||||||||
| Net adjustment to GAAP diluted EPS | $ | 0.08 | $ | (0.07 | ) | |||||||||||||||
| Non-GAAP Adjusted diluted EPS | $ | (0.64 | ) | $ | 0.15 | |||||||||||||||
FAQ
What were HCI Group's financial results for Q3 2021?
How did HCI Group's premiums change in Q3 2021?
What caused the increase in HCI Group's losses in Q3 2021?
What was the adjusted net loss for HCI Group in Q3 2021?
How did HCI Group's book value per share change?
