HCI Group Reports Fourth Quarter 2024 Results

February 27, 2025 16:15 ET | Source: HCI Group, Inc. Fourth Quarter Pre-Tax Income of $5.9 million and Diluted EPS of $0.23 Full Year 2024 Pre-Tax Income of $173.4 million and Diluted EPS of $8.89 TAMPA, Fla., Feb. 27, 2025 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE:HCI) reported pre-tax income of $5.9 million and net income of $4.1 million in the fourth quarter of 2024. Net income after noncontrolling interests was $2.6 million compared with $38.1 million in the fourth quarter of 2023. Diluted earnings per share were $0.23 in the fourth quarter of 2024, compared with $3.40 diluted earnings per share, in the fourth quarter of 2023. Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the fourth quarter of 2024 was $5.0 million, or $0.31 diluted earnings per share compared with adjusted net income of $38.8 million, or $3.22 diluted earnings per share, in the fourth quarter of 2023. 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“Even with the hurricanes in 2024, HCI Group is unwavering in its commitment to Florida and supporting our existing and new policyholders. As part of our ongoing efforts, we plan to keep rates flat for the foreseeable future,” said HCI Group Chairman and Chief Executive Officer Paresh Patel. “Given an increased level of catastrophe activity across the country, we are taking initial steps to make our best-in-class technology available to other carriers and in additional geographies.” Fourth Quarter 2024 CommentaryConsolidated gross premiums earned in the fourth quarter increased by 38.0% to $297.5 million from $215.2 million in the fourth quarter of 2023 driven primarily by assumptions of policies from Citizens Property Insurance Corporation. Premiums ceded for reinsurance in the fourth quarter were $151.1 million compared with $66.6 million in the fourth quarter of 2023. The fourth quarter included the reversal of $50.6 million of previously accrued benefits related to retrospective reinsurance provisions as a result of losses caused by Hurricane Milton. Net investment income in the fourth quarter was $14.5 million compared with $10.3 million in the fourth quarter of 2023. The increase was primarily attributable to an increase in interest income from cash, cash equivalents and available-for-sale fixed maturity securities. Losses and loss adjustment expenses in the fourth quarter were $110.7 million compared with $65.4 million in the fourth quarter of 2023. Loss expenses in the fourth quarter of 2024 include a net loss of $78.0 million from Hurricane Milton, partially offset by $24.5 million of favorable development mostly related to the 2024 accident year. Policy acquisition and other underwriting expenses in the fourth quarter were $27.7 million compared with $22.7 million in the fourth quarter of 2023. General and administrative personnel expenses in the fourth quarter decreased to $10.2 million from $12.2 million in the fourth quarter of 2023. The decrease was attributable to lower stock-based compensation as well as higher reinsurance recoveries related to claims processing for Hurricane Milton. Full 2024 Results For the year ended December 31, 2024, the company reported pre-tax income of $173.4 million and net income of $127.6 million. Net income after noncontrolling interests was $110.0 million compared with $79.0 million for the year ended December 31, 2023. Diluted earnings per share were $8.89 for the year ended December 31, 2024, compared with $7.62 diluted earnings per share for the year ended December 31, 2023. Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the twelve month period was $125.6 million, or $8.75 diluted earnings per share compared with adjusted net income of $86.8 million, or $7.41 diluted earnings per share in the same period of 2023. An explanation of this non-GAAP financial measure and reconciliations to the applicable GAAP numbers accompany this press release. Consolidated gross premiums earned for the twelve months of 2024 increased by 41.5% to $1,083.2 million from $765.5 million in 2023 driven primarily by growth in Florida due to assumptions of policies from Citizens Property Insurance Corporation. Premiums ceded for reinsurance for the twelve months of 2024 were $405.7 million compared with $269.6 million for the twelve months of 2023. The twelve months of 2024 included the reversal of $62.9 million of previously accrued benefits related to retrospective reinsurance provisions as a result of losses caused by Hurricanes Helene and Milton. Net investment income for the twelve months of 2024 was $59.1 million compared with $46.2 million for the twelve months of 2023. The increase was primarily attributable to an increase in interest income from cash, cash equivalents, and available-for-sale fixed maturity securities, offset by a decrease in income from real estate investments. Losses and loss adjustment expenses for the twelve months of 2024 were $374.7 million compared with $254.6 million for the twelve months of 2023. Loss expense included $78.0 million from Hurricane Milton, $43.0 million from Hurricane Helene and $6.5 million from Hurricane Debby. Policy acquisition and other underwriting expenses for the twelve months of 2024 were $99.4 million compared with $90.8 million for the twelve months of 2023. General and administrative personnel expenses for the twelve months of 2024 increased to $63.2 million from $53.9 million for the twelve months of 2023. Conference CallHCI Group will hold a conference call later today, February 27, 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: 835158 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 February 27, 2026. Toll-free replay number: (877) 481-4010International replay number: (919) 882-2331 Replay ID: 51955 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. 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@gatewayir.com - Tables to follow - HCI GROUP, INC. AND SUBSIDIARIESSelected Financial Metrics(Dollar amounts in thousands, except per share amounts) Q4 2024 Q4 2023 FY 2024 FY 2023 (Unaudited) Insurance Operations Gross Written Premiums: Homeowners Choice$145,085 $182,038 $593,943 $535,070 TypTap Insurance Company 174,980 138,482 491,413 363,552 Condo Owners Reciprocal Exchange 14,435 - 81,411 - Total Gross Written Premiums 334,500 320,520 1,166,767 898,622 Gross Premiums Earned: Homeowners Choice 156,342 125,796 589,137 417,202 TypTap Insurance Company 123,807 89,394 442,876 348,310 Condo Owners Reciprocal Exchange 17,348 - 51,207 - Total Gross Premiums Earned 297,497 215,190 1,083,220 765,512 Gross Premiums Earned Loss Ratio 37.2% 30.4% 34.6% 33.3% Per Share Metrics GAAP Diluted EPS$0.23 $3.40 $8.89 $7.62 Non-GAAP Adjusted Diluted EPS$0.31 $3.22 $6.33 $7.41 Dividends per share$0.40 $0.40 $1.60 $1.60 Book value per share at the end of period$42.10 $33.36 $42.10 $33.36 Shares outstanding at the end of period 10,767,184 9,738,183 10,767,184 9,738,183 HCI GROUP, INC. AND SUBSIDIARIESConsolidated Balance Sheets (Dollar amounts in thousands) December 31, 2024 December 31, 2023 Assets Fixed-maturity securities, available for sale, at fair value (amortized cost: $719,536 and $387,687, respectively and allowance for credit losses: $0 and $0, respectively)$718,537 $383,238 Equity securities, at fair value (cost: $52,030 and $44,011, respectively) 56,200 45,537 Limited partnership investments 20,802 23,583 Real estate investments 79,120 67,893 Total investments 874,659 520,251 Cash and cash equivalents 532,471 536,478 Restricted cash 3,714 3,287 Receivable from maturities of fixed-maturity securities — 91,085 Accrued interest and dividends receivable 6,008 3,507 Income taxes receivable 463 — Deferred income taxes, net 72 512 Premiums receivable, net (allowance: $5,891 and $3,152, respectively) 50,582 38,037 Assumed premium receivable — 19,954 Prepaid reinsurance premiums 92,060 86,232 Reinsurance recoverable, net of allowance for credit losses: Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively) 36,062 19,690 Unpaid losses and loss adjustment expenses (allowance: $186 and $118, respectively) 522,379 330,604 Deferred policy acquisition costs 54,303 42,910 Property and equipment, net 29,544 29,251 Right-of-use-assets - operating leases 1,182 1,407 Intangible assets, net 5,206 7,659 Funds withheld for assumed business 11,690 30,087 Other assets 9,818 50,365 Total assets$2,230,213 $1,811,316 Liabilities and Equity Losses and loss adjustment expenses$845,900 $585,073 Unearned premiums 584,703 501,157 Advance premiums 18,867 15,895 Reinsurance payable on paid losses and loss adjustment expenses 2,496 3,145 Ceded reinsurance premiums payable 18,313 8,921 Assumed premiums payable 2,176 850 Accrued expenses 17,677 19,722 Income tax payable 5,451 7,702 Deferred income taxes, net 2,830 — Revolving credit facility 44,000 — Long-term debt 185,254 208,495 Lease liabilities - operating leases 1,185 1,408 Other liabilities 32,320 35,623 Total liabilities 1,761,172 1,387,991 Commitments and contingencies Redeemable noncontrolling interest 1,691 96,160 Equity: Common stock, (no par value, 40,000,000 shares authorized, 10,767,184 and 9,738,183 shares issued and outstanding in 2024 and 2023, respectively) — — Additional paid-in capital 122,289 89,568 Retained income 331,793 238,438 Accumulated other comprehensive loss, net of taxes (749) (3,163)Total stockholders' equity 453,333 324,843 Noncontrolling interests 14,017 2,322 Total equity 467,350 327,165 Total liabilities, redeemable noncontrolling interest, and equity$2,230,213 $1,811,316 HCI GROUP, INC. AND SUBSIDIARIESConsolidated Statements of Income(Unaudited)(Dollar amounts in thousands, except per share amounts) Three Months Ended Years Ended December 31, December 31, 2024 2023 2024 2023 Revenue Gross premiums earned$297,497 $215,190 $1,083,220 $765,512 Premiums ceded (151,146) (66,576) (405,659) (269,627) Net premiums earned 146,351 148,614 677,561 495,885 Net investment income 14,486 10,341 59,148 46,234 Net realized investment gains (losses) 326 (410) 3,384 (1,996)Net unrealized investment (losses) gains (1,181) 2,830 2,644 3,215 Policy fee income 1,302 1,053 4,639 4,704 Other 591 242 2,675 2,628 Total revenue 161,875 162,670 750,051 550,670 Expenses Losses and loss adjustment expenses 110,727 65,398 374,708 254,579 Policy acquisition and other underwriting expenses 27,707 22,716 99,402 90,822 General and administrative personnel expenses 10,231 12,230 63,152 53,868 Interest expense 3,322 2,822 13,344 11,117 Other operating expenses 3,997 5,344 26,018 22,634 Total expenses 155,984 108,510 576,624 433,020 Income before income taxes 5,891 54,160 173,427 117,650 Income tax expense 1,757 13,248 45,846 28,393 Net income$4,134 $40,912 $127,581 $89,257 Net income attributable to redeemable noncontrolling interests — (2,360) (10,149) (9,370)Net income attributable to noncontrolling interests (1,550) (457) (7,479) (853) Net income after noncontrolling interests$2,584 $38,095 $109,953 $79,034 Basic earnings per share$0.24 $4.31 $10.59 $9.13 Diluted earnings per share$0.23 $3.40 $8.89 $7.62 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 common share calculated in accordance with GAAP is presented below. Three Months Ended Year Ended GAAPDecember 31, 2024 December 31, 2024 Income Shares (a) Per Share Income Shares (a) Per Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net income$4,134 $127,581 Less: Net income attributable to redeemable noncontrolling interest — (10,149) Less: Net income attributable to noncontrolling interests (1,550) (7,479) Net income attributable to HCI 2,584 109,953 Less: Income attributable to participating securities (118) (4,110) Basic Earnings Per Share: Income allocated to common stockholders 2,466 10,143 $0.24 105,843 9,997 $10.59 Effect of Dilutive Securities: * Stock options — 323 — 294 Convertible senior notes — — 6,908 2,177 Warrants — 143 — 218 Diluted Earnings Per Share: Income available to common stockholders and assumed conversions$2,466 10,609 $0.23 $112,751 12,686 $8.89 (a) Shares in thousands. *For the three months ended December 31, 2024, 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 of 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 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, 2024 December 31, 2024GAAP Net income $4,134 $127,581 Net unrealized investment losses (gains)$1,181 $(2,644) Less: Tax effect at 25.041%$(296) $662 Net adjustment to Net income $885 $(1,982) Non-GAAP Adjusted Net income $5,019 $125,599 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 common share calculated with the Non-GAAP financial measure Adjusted net income is presented below. Three Months Ended Year Ended Non-GAAPDecember 31, 2024 December 31, 2024 Income Shares (a) Per Share Income Shares (a) Per Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Adjusted net income (non-GAAP)$5,019 $125,599 Less: Net income attributable to redeemable noncontrolling interest - $(10,149) Less: Net loss (income) attributable to noncontrolling interests (1,550) (7,281) Net income attributable to HCI 3,469 108,169 Less: Income attributable to participating securities (158) (4,043) Basic Earnings Per Share before unrealized gains/losses on equity securities: Income allocated to common stockholders 3,311 10,143 $0.33 104,126 9,997 $10.42 Effect of Dilutive Securities: * Stock options — 323 — 294 Convertible senior notes — — 6,908 2,177 Warrants — 143 — 218 Diluted Earnings Per Share before unrealized gains/losses on equity securities: Income available to common stockholders and assumed conversions$3,311 10,609 $0.31 $111,034 12,686 $8.75 (a) Shares in thousands. *For the three months ended December 31, 2024, 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, 2024 December 31, 2024GAAP diluted Earnings Per Share $0.23 $8.89 Net unrealized investment gains$0.10 $(0.20) Less: Tax effect at 25.041%$(0.02) $0.06 Net adjustment to GAAP diluted EPS $0.08 $(0.14) Non-GAAP Adjusted diluted EPS $0.31 $8.75

HCI Group Reports Fourth Quarter 2024 Results

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