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HCI Group Reports First Quarter 2025 Results

1. HCI Group's Q1 2025 net income rose to $74.2 million. 2. Diluted EPS increased to $5.35 compared to $3.81 in Q1 2024. 3. Gross premiums earned increased by 17% due to new policies. 4. Exzeo is set for a tax-free spin-off to HCI shareholders. 5. Decrease in loss adjustment expenses indicates improved claims management.

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FAQ

Why Very Bullish?

The strong financial results and upcoming spin-off support significant investor confidence, similar to past successful spin-offs in the sector.

How important is it?

The financial health and strategic spin-off directly enhance investor attractiveness, strong pricing power is anticipated.

Why Short Term?

Immediate impacts expected from Q1 results and spin-off news, reminiscent of prior quick price jumps post-announcements.

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CINFRLIALL
May 08, 2025 16:15 ET  | Source: HCI Group, Inc. First Quarter Diluted EPS of $5.35First Quarter Pre-Tax Income of $100.3 millionExzeo Ready to be Standalone Company TAMPA, Fla., May 08, 2025 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE:HCI) reported pre-tax income of $100.3 million and net income of $74.2 million for the first quarter of 2025. Net income after noncontrolling interests was $69.7 million compared with $47.6 million in the first quarter of 2024. Diluted earnings per share were $5.35 in the first quarter of 2025, compared with $3.81 diluted earnings per share, in the first quarter of 2024. Management Commentary“HCI Group had a terrific first quarter,” said HCI Group Chairman and Chief Executive Officer Paresh Patel. “We are happy to announce that Exzeo is ready to be a standalone company. Consequently, our Board has determined to pursue a potential tax-free spin-off of Exzeo to existing HCI shareholders that, subject to customary conditions, is targeted for completion by the end of the year.” First Quarter 2025 CommentaryConsolidated gross premiums earned in the first quarter of 2025 increased by 17.0% to $300.4 million from $256.6 million in the first quarter of 2024 driven primarily by assumptions of policies from Citizens Property Insurance Corporation. Premiums ceded for reinsurance in the first quarter of 2025 were $99.6 million compared with $68.1 million in the first quarter of 2024. The increase was primarily attributable to higher reinsurance costs due to growth in the number of policies in force and total insured value. Net investment income in the first quarter of 2025 was $13.8 million compared with $14.1 million in the first quarter of 2024. The decrease was primarily attributable to a decrease in income from limited partnership investments. Losses and loss adjustment expenses in the first quarter of 2025 were $59.3 million compared with $79.9 million in the first quarter of 2024 despite the growth in gross premiums earned. The decrease is primarily driven by a decline in claims and litigation frequency. The gross loss ratio in the first quarter was 19.7% compared to 31.1% in the first quarter of 2024. Policy acquisition and other underwriting expenses in the first quarter of 2025 were $27.3 million compared with $22.1 million in the first quarter of 2024 driven by higher gross premiums earned. General and administrative personnel expenses in the first quarter of 2025 increased to $20.5 million from $16.3 million in the first quarter of 2024. The increase was primarily attributable to higher accrued discretionary bonus, stock-based compensation and employee health benefits. Conference CallHCI Group will hold a conference call later today, May 8, 2025, 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 4:45 p.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) 506-0062Listen-only international number: (973) 528-0011Entry Code: 325047 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 May 8, 2026. Toll-free replay number: (877) 481-4010International replay number: (919) 882-2331 Replay ID: 52364 About HCI Group, Inc.HCI Group, Inc. is a holding company with two distinct operating units. The first unit includes four top-performing insurance companies, a captive reinsurance company, and operations in claims management and real estate. The second unit, called Exzeo Group, is a leading innovator of insurance technology that utilizes advanced underwriting algorithms and data analytics. Exzeo empowers property and casualty insurers to transform underwriting outcomes and achieve industry-leading results. 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 StatementsThis 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. In addition, there can be no assurance the Internal Revenue Service will determine the company’s proposed spinoff will be tax free to HCI shareholders. 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:Bill Broomall, CFAInvestor RelationsHCI Group, Inc.Tel (813) 776-1012wbroomall@typtap.com Investor Relations Contact:Matt GloverGateway Group, Inc.Tel (949) 574-3860HCI@gateway-grp.com  - Tables to follow - HCI GROUP, INC. AND SUBSIDIARIESSelected Financial Metrics(Dollar amounts in thousands, except per share amounts)  Q1 2025 Q1 2024 FY 2024  (Unaudited) (Unaudited)   Insurance Operations      Gross Written Premiums:      Homeowners Choice$117,133 $91,875 $593,943 TypTap Insurance Company 142,396  143,624  491,413 Condo Owners Reciprocal Exchange 7,731  19,487  81,411 Tailrow Reciprocal Exchange 21,985  -  - Total Gross Written Premiums 289,245  254,986  1,166,767        Gross Premiums Earned:      Homeowners Choice 156,489  149,271  589,137 TypTap Insurance Company 124,447  103,748  442,876 Condo Owners Reciprocal Exchange 15,325  3,625  51,207 Tailrow Reciprocal Exchange 4,122  -  - Total Gross Premiums Earned 300,383  256,644  1,083,220        Gross Premiums Earned Loss Ratio 19.7% 31.1% 34.6%       Per Share Metrics      Diluted EPS$5.35 $3.81 $8.89        Dividends per share$0.40 $0.40 $1.60        Book value per share at the end of period$48.55 $38.50 $42.10        Shares outstanding at the end of period 10,765,336  10,276,463  10,767,184   HCI GROUP, INC. AND SUBSIDIARIESConsolidated Balance Sheets(Dollar amounts in thousands)  March 31, 2025  December 31, 2024  (Unaudited)    Assets     Fixed-maturity securities, available for sale, at fair value (amortized cost: $651,071 and $719,536, respectively and allowance for credit losses: $0 and $0, respectively)$652,861  $718,537 Equity securities, at fair value (cost: $52,962 and $52,030, respectively) 55,226   56,200 Limited partnership investments 20,176   20,802 Real estate investments 80,151   79,120 Total investments 808,414   874,659       Cash and cash equivalents 754,481   532,471 Restricted cash 3,722   3,714 Accrued interest and dividends receivable 7,650   6,008 Income taxes receivable —   463 Deferred income taxes, net 1,502   72 Premiums receivable, net (allowance: $4,684 and $5,891, respectively) 54,704   50,582 Prepaid reinsurance premiums 38,009   92,060 Reinsurance recoverable, net of allowance for credit losses:     Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively) 46,335   36,062 Unpaid losses and loss adjustment expenses (allowance: $151 and $186, respectively) 481,434   522,379 Deferred policy acquisition costs 56,398   54,303 Property and equipment, net 30,237   29,544 Right-of-use-assets - operating leases 1,124   1,182 Intangible assets, net 4,565   5,206 Funds withheld for assumed business 8,451   11,690 Other assets 9,642   9,818       Total assets$2,306,668  $2,230,213       Liabilities and Equity     Losses and loss adjustment expenses$798,146  $845,900 Unearned premiums 573,565   584,703 Advance premiums 37,807   18,867 Reinsurance payable on paid losses and loss adjustment expenses —   2,496 Ceded reinsurance premiums payable 19,779   18,313 Assumed premiums payable 3,582   2,176 Accrued expenses 29,110   17,677 Income tax payable 33,378   5,451 Deferred income taxes, net 3,661   2,830 Revolving credit facility 42,000   44,000 Long-term debt 185,332   185,254 Lease liabilities - operating leases 1,131   1,185 Other liabilities 34,708   32,320       Total liabilities 1,762,199   1,761,172       Commitments and contingencies     Redeemable noncontrolling interest 1,637   1,691       Equity:     Common stock, (no par value, 40,000,000 shares authorized, 10,765,336 and 10,767,184 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively) —   — Additional paid-in capital 124,170   122,289 Retained income 397,171   331,793 Accumulated other comprehensive loss, net of taxes 1,342   (749)Total stockholders' equity 522,683   453,333 Noncontrolling interests 20,149   14,017 Total equity 542,832   467,350       Total liabilities, redeemable noncontrolling interest, and equity$2,306,668  $2,230,213   HCI GROUP, INC. AND SUBSIDIARIESConsolidated Statements of Income(Unaudited)(Dollar amounts in thousands, except per share amounts)  Three Months Ended  March 31,  2025  2024 Revenue           Gross premiums earned$300,383  $256,644 Premiums ceded (99,635)  (68,106)      Net premiums earned 200,748   188,538       Net investment income 13,751   14,067 Net realized investment gains 1,167   — Net unrealized investment (losses) gains (1,906)  2,635 Policy fee income 2,229   1,019 Other 444   355       Total revenue 216,433   206,614       Expenses           Losses and loss adjustment expenses 59,291   79,922 Policy acquisition and other underwriting expenses 27,287   22,139 General and administrative personnel expenses 20,483   16,274 Interest expense 3,384   3,149 Other operating expenses 5,649   7,700       Total expenses 116,094   129,184       Income before income taxes 100,339   77,430       Income tax expense 26,109   20,474       Net income$74,230  $56,956 Net income attributable to redeemable noncontrolling interests —   (10,149)Net (income) loss attributable to noncontrolling interests (4,546)  804       Net income after noncontrolling interests$69,684  $47,611       Basic earnings per share$6.47  $4.76       Diluted earnings per share$5.35  $3.81       Dividends per share$0.40  $0.40   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 common share calculated in accordance with GAAP is presented below.  Three Months Ended  Three Months Ended  March 31, 2025  March 31, 2024  Income  Shares (a)  Per Share  Income  Shares (a)  Per Share  (Numerator)  (Denominator)  Amount  (Numerator)  (Denominator)  Amount Net income$74,230        $56,956       Less: Net income attributable to redeemable noncontrolling interests —         (10,149)      Less: Net (income) loss attributable to noncontrolling interests (4,546)        804       Net income attributable to HCI 69,684         47,611       Less: Income attributable to participating securities (3,103)        (1,218)      Basic Earnings Per Share:                 Income allocated to common stockholders 66,581   10,286  $6.47   46,393   9,751  $4.76                   Effect of Dilutive Securities:                 Stock options —   350      —   280    Convertible senior notes 1,873   2,142      1,640   2,282    Warrants —   7      —   305                      Diluted Earnings Per Share:                 Income available to common stockholders and assumed conversions$68,454   12,785  $5.35  $48,033   12,618  $3.81                   (a) Shares in thousands.   

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