HCI Group to Acquire Insurance Business in Four Northeast States from United Insurance Holdings Corp.

Rhea-AI Summary

HCI Group (NYSE: HCI) has reached an agreement to acquire United Insurance's personal lines insurance business across Connecticut, New Jersey, Massachusetts, and Rhode Island, valued at approximately $130 million in annual premiums. Under the deal, HCI will provide 69.5% quota share reinsurance on in-force policies until May 31, 2021, while paying United $4.4 million for catastrophe reinsurance and a cash payment up to $3.1 million based on transitioned premiums. This move supports HCI's national expansion strategy and includes a non-compete clause for United until July 2024.

Positive

• Acquisition of $130 million in annual premiums enhances market presence.
• Secures established agent network and data, accelerating national expansion.
• Financial commitment to support growth with a cash allowance and reinsurance.

Negative

• Transaction pending regulatory approval poses execution risk.
• Potential operational challenges associated with integrating new business.

TAMPA, Fla., Dec. 17, 2020 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE: HCI), an InsurTech company with operations in insurance, software development and real estate, and United Insurance Holding Corp. (NASDAQ: UIHC) have reached an agreement in principle for United’s primary insurance subsidiary, United Property & Casualty Insurance Company, to transfer all its personal lines insurance business in the states of Connecticut, New Jersey, Massachusetts and Rhode Island to HCI. The business to be transferred represents approximately $130 million of annual premiums. HCI’s insurance operations are primarily in Florida. However, it recently announced plans to expand nationwide.

Under the agreement, HCI will provide 69.5% quota share reinsurance on all of United’s in-force, new and renewal policies in Connecticut, Massachusetts, New Jersey, and Rhode Island from December 31, 2020 through May 31, 2021. In exchange, HCI will pay United an allowance of $4.4 million towards already purchased catastrophe reinsurance and a provisional ceding commission of 25% of premium. That percentage could increase up to 31.5% depending on the direct loss ratio results for the reinsured business.

In addition, United and HCI will enter into a policy replacement agreement pursuant to which HCI will replace all of United’s personal lines policies in the four states. As part of the transaction, HCI will provide United 100,000 shares of HCI common stock. HCI will also pay United a cash payment of up to $3.1 million depending on the amount of premium transitioned to HCI. In connection with the transaction, United will agree not to compete with HCI for the issuance of personal lines for homeowners business in the four states until July 1, 2024.

The transaction is subject to negotiation of definitive agreements and customary closing conditions, including receipt of all applicable regulatory approvals.

“This transaction with United is a win for both HCI and United,” said HCI Group Chairman and Chief Executive Officer Paresh Patel. “It accelerates HCI’s plan to expand nationally by acquiring a seasoned book of business, established agent network and associated data. HCI has the financial strength to support and grow these new business opportunities.”

About HCI Group, Inc.
HCI Group, Inc. is an InsurTech company with operations in insurance, software development and real estate. HCI’s leading insurance operation, TypTap Insurance Company, is a rapidly growing, technology-driven insurance company, which provides homeowners’ insurance and flood insurance primarily in Florida. 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, there can be no assurance that insurance regulators will permit HCI to operate in the applicable states and approve the proposed terms of the transaction. 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 proposed transaction and HCI’s business, financial condition and results of operations. HCI Group, Inc. disclaims all obligations to update any forward-looking statements.

Company Contact:
Rachel Swansiger, Esq.
HCI Group, Inc.
Tel (813) 405-3206
rswansiger@hcigroup.com

Investor Relations Contact:
Matt Glover
Gateway Investor Relations
Tel (949) 574-3860
HCI@gatewayir.com

Media Contact:
Amber Brinkley
Kippen Communications
Tel (727) 466-7695
amber@kippencommunications.com

FAQ

What is the significance of HCI Group's acquisition of United Insurance?

The acquisition significantly increases HCI Group's premiums by $130 million, supporting its national expansion strategy.

How much will HCI pay United Insurance as part of the acquisition?

HCI will pay United a $4.4 million allowance for catastrophe reinsurance plus a potential cash payment of up to $3.1 million based on premium transitions.

What are the regulatory implications of HCI's acquisition of United Insurance?

The transaction is subject to regulatory approvals, which could impact the timing and execution of the deal.

What impact does this acquisition have on HCI's market strategy?

The acquisition aligns with HCI's strategy to expand nationally by integrating United's established personal lines business.

When will the agreements related to the acquisition be finalized?

The definitive agreements are subject to customary closing conditions and regulatory approvals.