• HCI Group Reports Second Quarter 2022 Results

    المصدر: Nasdaq GlobeNewswire / 08 أغسطس 2022 16:30:00   America/New_York

    Gross Premiums Earned Grew 30%
    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 $8.5 million, or $1.04 per share, in the second quarter of 2022 compared with net income of $3.8 million, or $0.24 diluted earnings per share, in the second quarter of 2021. Adjusted net loss (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) was $5.4 million, or $0.71 per share, in the second quarter of 2022 compared with adjusted net income of $2.7 million, or $0.11 diluted earnings per share, in the second quarter of 2021. This press release includes 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”).

    Management Commentary

    “Inflation accelerated in the quarter which led to an increase in our gross loss ratio. We responded swiftly, increasing rates 10% at Homeowners Choice and 12% at TypTap effective August 2022,” said HCI Group Chairman and Chief Executive Officer Paresh Patel. “These actions will offset higher severity and improve our underwriting margins in the future. Inflation aside, we continue to see benefits from operating leverage as our business expands.

    “We remain optimistic about the future. In May, we raised over $170 million of capital through our convertible note offering, which gives added flexibility to our strategy. The strategy remains unchanged: to maximize returns for our shareholders.”

    Second Quarter 2022 Commentary

    Consolidated gross written premiums of $186.2 million increased from $185.0 million in the second quarter of 2021. Homeowners Choice gross written premiums declined to $113.1 million from $124.2 million as the quota share with United Property and Casualty (UPC) transitioned to TypTap. TypTap Insurance Company gross written premiums grew to $73.0 million from $60.7 million.

    Consolidated gross premiums earned of $181.1 million increased 29.9% from $139.4 million in the second quarter of 2021. Homeowners Choice gross premiums earned grew to $113.7 million from $100.4 million, and TypTap gross premiums earned grew to $67.4 million from $39.0 million.

    Premiums ceded for reinsurance of $56.2 million increased from $46.4 million in the second quarter of 2021 primarily due to the growth of both Homeowners Choice and TypTap and declined as a percentage of gross premiums earned to 31.0% from 33.3% in the second quarter of 2021.

    Net investment income of $3.7 million increased from $2.6 million in the second quarter of 2021. The increase was attributable to higher income from fixed maturity securities offset by reductions in income from limited partnership investments.

    Net realized and unrealized investment losses were $4.2 million compared to net realized and unrealized gains of $4.1 million in the second quarter of 2021.  Combined, changes in realized and unrealized gains/losses accounted for $8.3 million of the $16.6 million change in pre-tax net income from the second quarter of 2021.

    Losses and loss adjustment expenses of $86.8 million increased from $55.9 million in the same period of 2021. The increase was primarily attributable to the company’s growing premium base as well as inflation and prior year loss development.

    Policy acquisition and other underwriting expenses of $26.9 million increased from $23.2 million in the same quarter of 2021 but declined from 16.6% of gross premiums earned to 14.8% reflecting lower commission rates at TypTap.

    General and administrative expenses of $15.3 million increased from $10.5 million for the second quarter of 2021 due to an increase in personnel and related expenses in connection with the growth of the business.

    Year-to-Date 2022 Results

    For the six months ended June 30, 2022, the company reported a net loss of $5.8 million, or $0.92 per share, compared with net income of $10.7 million, or $0.98 diluted earnings per share, for the six months ended June 30, 2021. Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the six-month period was $0.08 million, which, after adjustments for the purpose of calculating earnings per share, equates to a loss of $0.33 per share compared with adjusted net income of $9.8 million, or $0.87 diluted earnings per share, in the same period of 2021. An explanation of this non-GAAP financial measure and reconciliations to the applicable GAAP numbers accompany this press release.

    Consolidated gross written premiums of $363.4 million increased 16.9% from $310.8 million in the six months ended June 30, 2021. Homeowners Choice gross written premiums were $204.3 million compared with $205.2 million. TypTap Insurance Company gross written premiums grew to $159.2 million from $105.6 million. The increase was primarily due to the UPC quota share arrangement and organic growth.

    Consolidated gross premiums earned of $360.0 million increased 33.2% from $270.4 million in the six months ended June 30, 2021.  Homeowners Choice gross premiums earned grew to $232.0 million from $202.6 million, and TypTap gross premiums earned grew to $128.1 million from $67.8 million.

    Premiums ceded for reinsurance of $109.4 million increased from $89.5 million in the first six months of 2021 primarily due to the growth of both Homeowners Choice and TypTap and declined as a percentage of gross premiums earned from 33.1% to 30.4% in the first half of 2021.

    Net realized and unrealized investment losses were $8.1 million compared with net realized and unrealized investment gains of $4.9 million in the six months ended June 30, 2021. Combined, changes in realized and unrealized gains/losses accounted for $13.1 million of the $22.8 million change in pre-tax net income from the first six months of 2021. 

    Losses and loss adjustment expenses of $159.5 million increased from $101.7 million in the six months ended June 30, 2021. The increase was primarily attributable to the company’s growing premium base as well as inflation and prior year loss development.

    Policy acquisition and other underwriting expenses of $56.3 million increased from $46.2 million in the six months ended June 30, 2021 but declined from 17.1% of gross premiums earned to 15.6% reflecting lower commission rates at TypTap.

    General and administrative expenses of $29.3 million increased from $20.2 million in the six months ended June 30, 2021 due to an increase in personnel and related expenses in connection with the growth of the business including higher stock based compensation. 

    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: $403,844 and $41,953,
    respectively and allowance for credit losses: $0 and $0, respectively)
     $398,571  $42,583 
    Equity securities, at fair value (cost: $38,065 and $46,276, respectively)  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: $3,935 and $1,750, respectively)  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: $0 and $0, respectively)  11,134   11,985 
    Unpaid losses and loss adjustment expenses (allowance: $62 and $90, respectively)  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 25.345% $(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 25.345% $(0.13)     $(0.25)     
    Net adjustment to GAAP diluted EPS    $0.33      $0.59   
    Non-GAAP Adjusted diluted EPS    $(0.71)     $(0.33)  

    Primary Logo

شارك على،