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HCI Group Reports Fourth Quarter and Full Year 2020 Results
المصدر: Nasdaq GlobeNewswire / 11 مارس 2021 15:15:00 America/Chicago
TAMPA, Fla., March 11, 2021 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE:HCI), an InsurTech company with operations in insurance, software development and real estate, reported results for the three and twelve months ended December 31, 2020.
Fourth Quarter 2020 - Financial Results
Net income for the fourth quarter of 2020 totaled $2.7 million or $0.35 diluted earnings per share compared with $6.4 million or $0.82 diluted earnings per share in the fourth quarter of 2019. Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the quarter was $1.8 million or $0.22 diluted earnings per share compared with $5.9 million or $0.76 diluted earnings per share in the fourth quarter of 2019. The company has included in this press release an explanation of adjusted net income as well as a reconciliation to net income and earnings per share calculated in accordance with generally accepted accounting principles (known as “GAAP”).Consolidated gross written premiums of $139.3 million for the fourth quarter of 2020 were up 109.2% from $66.6 million in the fourth quarter of 2019. The increase was due to the growth of Homeowners Choice gross written premiums from $42.5 million to $97.2 million and the growth of TypTap Insurance Company gross written premium from $24 million to $42.1 million. Included in the gross written premiums of Homeowners Choice was $44.6 million assumed from United Property & Casualty Insurance Company as part of a quota share agreement.
Consolidated gross premiums earned of $109.1 million for the fourth quarter of 2020 were up 21.0% from $90.2 million in the fourth quarter of 2019.
Premiums ceded for reinsurance for the fourth quarter of 2020 increased to $44.2 million from $31.5 million in the fourth quarter of 2019 and represented 40.5% and 34.9%, respectively, of gross premiums earned.
Net investment income was $1.3 million compared with $2.5 million in the fourth quarter of 2019. The decrease was primarily due to a decrease in income from limited partnership investments and lower interest income from fixed-maturity securities and cash balances.
Net unrealized investment gains were $1.3 million in the fourth quarter of 2020 compared with $0.7 million in 2019.
Losses and loss adjustment expenses were $40.4 million compared with $28.9 million in the same period in 2019. The increase was driven by growth in gross premiums earned as well as reserves recorded for Tropical Storm Eta of $10.0 million. These increases were offset somewhat by lower prior year development.
Policy acquisition and other underwriting expenses were $14.8 million compared with $11.8 million in the same quarter of 2019. The increase primarily relates to growth in gross premiums earned.
Full Year 2020 - Financial Results
Net income for the twelve months ended December 31, 2020 totaled $27.6 million or $3.49 diluted earnings per share compared with $26.6 million or $3.31 diluted earnings per share for the twelve months ended December 31, 2019.Adjusted net income (a non-GAAP measure which excludes unrealized gains or losses on equity securities) for the twelve-month period was $27.1 million or $3.44 diluted earnings per share compared with $20.6 million or $2.57 diluted earnings per share in the same period of 2019. An explanation of this non-GAAP financial measure and reconciliations to the applicable GAAP numbers accompany this press release.
Consolidated gross written premiums of $504.2 million for the year 2020 were up 38% from $364.9 million in 2019. The increase was due to the growth of Homeowners Choice gross written premiums from $304.7 million to $399.3 million and the growth of TypTap Insurance Company gross written premium from $60.3 million to $104.9 million. Included in the gross written premiums of Homeowners Choice was $44.6 million assumed from United Property & Casualty Insurance Company as part of a quota share agreement.
In-force premiums for TypTap at December 31, 2020 were $105.4 million compared with $59.6 million at December 31, 2019.
Gross premiums earned increased 21.6% to $415.9 million from $342.1 million in 2019.
Premiums ceded were $153.5 million or 36.9% of gross premiums earned compared with $125.8 million or 36.8% of gross premiums earned during 2019.
Net investment income was $4.6 million compared with $13.6 million in the year ended December 31, 2019. The decrease was primarily due to a decrease in income from limited partnership investments and lower interest income from fixed-maturity securities and cash balances.
The gain on involuntary conversion of $37.0 million for the year ended December 31, 2020 was attributable to an eminent domain proceeding by the Florida Department of Transportation related to a highway expansion project in Tampa, Florida.
Losses and loss adjustment expenses for the years ended December 31, 2020 and 2019 were $160.0 million and $107.5 million, respectively. The increase was driven by increases in gross premiums earned and losses related to Hurricane Sally of $20.3 million and losses related to Tropical Storm Eta of $10.0 million.
Policy acquisition and other underwriting expenses were $53.9 million compared with $42.5 million in 2019. The increase relates primarily to higher agent commission rates and property inspection costs associated with the organic growth of TypTap.
Management Commentary
“Despite the pandemic and the most active hurricane season on record, we were profitable in all four quarters and gross written premiums grew $139.2 million, driven primarily by organic policy growth at TypTap Insurance Company,” said HCI Group Chairman and Chief Executive Officer Paresh Patel. “We remain focused on generating profits and shareholder returns.”Conference Call
HCI Group will hold a conference call later today, March 11, 2021, to discuss these financial results. Chairman and Chief Executive Officer Paresh Patel and Chief Financial Officer Mark Harmsworth will host the call starting at 4:45 p.m. Eastern time. A question-and-answer session will follow management's presentation.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: 559623Please 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 April 11, 2021.
Toll-free replay number: (877) 481-4010
International replay number: (919) 882-2331
Replay ID: 39938About 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 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:
Rachel Swansiger, Esq.
Investor Relations
HCI Group, Inc.
Tel (813) 405-3206
rswansiger@hcigroup.comInvestor Relations Contact:
Matt Glover
Gateway Investor Relations
Tel (949) 574-3860
HCI@gatewayir.comMedia Contact:
Amber Brinkley
Kippen Communications
Tel (727) 466-7695
amber@kippencommunications.com- Tables to follow -
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets(Dollar amounts in thousands)
At December 31, 2020 At December 31, 2019 Assets Fixed-maturity securities, available for sale, at fair value (amortized cost: $70,265 and $199,954, respectively) (allowance for credit losses: $588 and $0, respectively) $ 71,722 $ 202,839 Equity securities, at fair value (cost: $47,029 and $31,863, respectively) 51,130 35,285 Short-term investments, at fair value — 491 Limited partnership investments, at equity 27,691 28,346 Investment in unconsolidated joint venture, at equity 705 762 Real estate investments 74,472 73,763 Total investments 225,720 341,486 Cash and cash equivalents 431,341 229,218 Restricted cash 2,400 700 Accrued interest and dividends receivable 588 1,616 Income taxes receivable 4,554 1,040 Premiums receivable, net 68,382 20,255 Prepaid reinsurance premiums 36,376 17,983 Reinsurance recoverable, net of allowance for credit losses: Paid losses and loss adjustment expenses (allowance: $0 in 2020 and 2019) 14,127 16,155 Unpaid losses and loss adjustment expenses (allowance: $85 and $0, respectively) 71,019 116,523 Deferred policy acquisition costs 43,858 21,663 Property and equipment, net 12,767 14,698 Right-of-use-assets - operating lease 4,002 484 Intangible assets, net 3,568 4,192 Other assets 22,611 16,596 Total assets $ 941,313 $ 802,609 Liabilities and Stockholders’ Equity Losses and loss adjustment expenses $ 212,169 $ 214,697 Unearned premiums 269,399 181,163 Advance premiums 11,370 5,589 Assumed reinsurance balances payable 87 76 Accrued expenses 10,181 10,059 Deferred income taxes, net 11,925 4,008 Revolving credit facility 23,750 9,750 Long-term debt 156,511 163,695 Lease liabilities - operating leases 4,014 513 Other liabilities 40,771 27,516 Total liabilities 740,177 617,066 Stockholders’ equity: 7% Series A cumulative convertible preferred stock (no par value, 1,500,000 shares authorized, no shares issued and outstanding) — — Series B junior participating preferred stock (no par value, 400,000 shares authorized, no shares issued or outstanding) — — Preferred stock (no par value, 18,100,000 shares authorized, no shares issued or outstanding) — — Common stock, (no par value, 40,000,000 shares authorized, 7,785,617 and 7,764,564
shares issued and outstanding in 2020 and 2019, respectively)— — Additional paid-in capital — — Retained income 199,592 183,365 Accumulated other comprehensive income, net of taxes 1,544 2,178 Total stockholders’ equity 201,136 185,543 Total liabilities and stockholders’ equity $ 941,313 $ 802,609 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, 2020 2019 2020 2019 Revenue Gross premiums earned $ 109,057 $ 90,165 $ 415,918 $ 342,079 Premiums ceded (44,155 ) (31,467 ) (153,458 ) (125,765 ) Net premiums earned 64,902 58,698 262,460 216,314 Net investment income 1,320 2,517 4,564 13,642 Net realized investment gains (losses) 1,632 281 1,000 (254 ) Net unrealized investment gains 1,260 689 679 7,950 Net other-than-temporary impairment losses — (289 ) — (289 ) Credit losses on investments (15 ) — (611 ) — Policy fee income 951 823 3,522 3,229 Gain on involuntary conversion — — 36,969 — Other 263 512 1,854 1,882 Total revenue 70,313 63,231 310,437 242,474 Expenses Losses and loss adjustment expenses 40,372 28,898 160,036 107,514 Policy acquisition and other underwriting expenses 14,832 11,759 53,859 42,497 General and administrative personnel expenses 5,860 7,799 33,829 31,112 Interest expense 2,888 2,927 11,734 13,055 Loss on repurchases of convertible senior notes — — 150 — Loss on extinguishment of debt — — 98 — Other operating expenses 3,449 3,072 13,803 12,203 Total expenses 67,401 54,455 273,509 206,381 Income before income taxes 2,912 8,776 36,928 36,093 Income tax expense 205 2,344 9,348 9,517 Net income $ 2,707 $ 6,432 $ 27,580 $ 26,576 Basic earnings per share $ 0.35 $ 0.84 $ 3.55 $ 3.32 Diluted earnings per share $ 0.35 $ 0.82 $ 3.49 $ 3.31 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 share calculated in accordance with GAAP is presented below.
Three Months Ended Year Ended GAAP December 31, 2020 December 31, 2020 Income Shares Per Share Income Shares Per Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net income $ 2,707 $ 27,580 Less: Income attributable to participating securities (145 ) (1,462 ) Basic Earnings Per Share: Income allocated to common stockholders 2,562 7,357 $ 0.35 26,118 7,351 $ 3.55 Effect of Dilutive Securities: Stock options — 39 — 23 Convertible senior notes* — — 7,705 2,320 Diluted Earnings Per Share: Income available to common stockholders and
assumed conversions$ 2,562 7,396 $ 0.35 $ 33,823 9,694 $ 3.49 *For the three months ended December 31, 2020, convertible senior notes were excluded due to anti-dilutive effect.
Non-GAAP Financial Measures
Adjusted net income is a non-GAAP financial measure that removes from net income 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, 2020 December 31, 2020 GAAP net income $ 2,707 $ 27,580 Net unrealized investment losses (gains) $ (1,260 ) $ (679 ) Less: Tax effect at 24.52182% $ 309 $ 167 Net adjustment to Net income $ (951 ) $ (512 ) Non-GAAP Adjusted Net income $ 1,756 $ 27,068 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 share calculated with the non-GAAP financial measure Adjusted net income is presented below.
Three Months Ended Year Ended Non-GAAP December 31, 2020 December 31, 2020 Income Shares Per Share Income Shares Per Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Adjusted net income (non-GAAP) $ 1,756 $ 27,068 Less: Income attributable to participating securities (92 ) (1,434 ) Basic Earnings Per Share before unrealized
gains/losses on equity securities:Income allocated to common stockholders 1,664 7,357 $ 0.23 25,634 7,351 $ 3.49 Effect of Dilutive Securities: Stock options — 39 — 23 Convertible senior notes* — — 7,705 2,320 Diluted Earnings Per Share before unrealized
gains/losses on equity securities:Income available to common stockholders and
assumed conversions$ 1,664 7,396 $ 0.22 $ 33,339 9,694 $ 3.44 *For the three months ended December 31, 2020, convertible senior notes were excluded due to anti-dilutive effect. Reconciliation of GAAP Diluted EPS to Non-GAAP Adjusted Diluted EPS
Three Months Ended Year Ended December 31, 2020 December 31, 2020 GAAP diluted Earnings Per Share $ 0.35 $ 3.49 Net unrealized investment losses (gains) $ (0.17 ) $ (0.07 ) Less: Tax effect at 24.52182% $ 0.04 $ 0.02 Net adjustment to GAAP diluted EPS $ (0.13 ) $ (0.05 ) Non-GAAP Adjusted diluted EPS $ 0.22 $ 3.44 