Revenue and Premiums - In 2024, the company assumed 52,805 policies from Citizens Property Insurance Corporation, generating annualized gross premiums of $315,062,000, compared to 59,860 policies and $224,789,000 in 2023[23]. - Revenues from insurance operations represented 82.3% of total revenues in 2024, down from 86.9% in 2023 and 95.4% in 2022[25]. - TypTap Group's revenues accounted for 12.5% of total revenues in 2024, up from 11.6% in 2023 and 0.6% in 2022[46]. - Net premiums earned increased to $677.6 million in 2024, up from $495.9 million in 2023, representing a growth of 36.6%[59]. - Total revenue rose to $750.1 million in 2024, compared to $550.7 million in 2023, marking an increase of 36.2%[59]. - Gross premiums earned for 2024 were approximately $1,083,220,000, an increase of $317,708,000 from $765,512,000 in 2023, primarily due to policies assumed from Citizens and premium rate increases[181]. - Net premiums written increased to approximately $761,108,000 in 2024 from $628,995,000 in 2023, representing a year-over-year increase of 21%[182]. Financial Performance - Net income for 2024 was $127.6 million, a significant rise from $89.3 million in 2023, reflecting a growth of 43%[59]. - Total investments reached $874.7 million at the end of 2024, up from $520.3 million in 2023, indicating a growth of 67.9%[59]. - The total assets increased to $2,230.2 million in 2024, compared to $1,811.3 million in 2023, showing a growth of 23.1%[59]. - Total liabilities rose to $1,761.1 million in 2024, up from $1,388.0 million in 2023, reflecting an increase of 27%[59]. - Net investment income for 2024 was approximately $59,148,000, up from $46,234,000 in 2023, driven by a $17,758,000 increase in interest income[183]. - The loss ratio for 2024 was 55.3%, compared to 51.3% in 2023, indicating an increase in losses relative to net premiums earned[191]. - The expense ratio for 2024 improved to 27.8% from 33.7% in 2023, reflecting better management of expenses relative to net premiums earned[192]. - The combined ratio for 2024 was 83.1%, a decrease from 85.0% in 2023, indicating improved underwriting profitability[193]. Operational Strategy - The company utilizes internally developed software technologies to enhance efficiency in claims processing and identify profitable underwriting opportunities[20]. - The company focuses on exceptional service, disciplined underwriting, and effective use of technology as part of its competitive strategy[28]. - The company has a strategy to optimize its existing book of insurance business and expand organically while managing costs and diversifying operations[175]. - The company has engaged in a "take-out program" to acquire additional policies from Citizens, a Florida state-sponsored insurance carrier[174]. - The company has a strong focus on developing and deploying new technologies to streamline operational processes[175]. Risk Factors - The company aims to establish adequate loss reserves, but the process is complex and uncertain, potentially leading to material variances from reserved amounts[83]. - Future financial condition and results of operations may be adversely affected if actual losses exceed current loss reserves[84]. - The company relies on claims personnel for accurate claims evaluation, and any failure in this process could lead to litigation and negatively impact financial results[85]. - The insolvency of United Property & Casualty Insurance Company in 2023 could have a material adverse effect on the company's financial position and results of operations[103]. - The company may require additional capital in the future, which could be unavailable or only available on unfavorable terms, impacting growth and financial condition[106]. - The company’s operations in India expose it to additional risks, including compliance with complex foreign laws, which could negatively impact business and financial results[101]. - The company’s ability to recover amounts due from reinsurers is subject to their financial strength, and any failure could adversely affect financial condition[90]. - The company’s financial results may be negatively affected by fluctuating interest rates impacting investment income generated from available cash[110]. - The company faces competition for independent agents, and failure to attract them could negatively affect revenues[98]. - The company faces risks from unpredictable catastrophes, which can materially impact financial results, especially in regions prone to severe weather events[138]. - Cybersecurity risks are a significant concern, with potential data breaches leading to financial and reputational damage[130]. - The company is subject to various environmental regulations that could incur substantial costs if violated[129]. - Changing climate conditions may adversely impact business operations and financial condition due to increased frequency and severity of weather events[137]. Regulatory Environment - The company has regulatory approvals to underwrite residential property and casualty insurance in various states, aiming for geographical expansion[28]. - The insurance holding company is subject to extensive state regulation, which may limit growth and profitability, with potential penalties for non-compliance[121]. - Regulatory authorities may impose restrictions on premium rates and underwriting practices, potentially affecting profitability[127]. - Legal and regulatory risks in the insurance industry may lead to increased costs and deterioration of reserves, particularly due to rising jury awards and litigation trends[115]. Dividends and Shareholder Returns - The company maintained dividends per share at $1.60 for 2024, consistent with the previous two years[59]. - The company declared a quarterly dividend of $0.40 per common share, payable on March 21, 2025, to stockholders of record on February 21, 2025[177]. Workforce and Employment - The company employed 552 full-time individuals as of February 15, 2025, indicating a stable workforce[65].

Core Insights - HCI Group reported a revenue of $161.88 million for the quarter ended December 2024, reflecting a decrease of 0.5% year-over-year, and an EPS of $0.31 compared to $3.22 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $163.88 million, resulting in a surprise of -1.22%, while the EPS exceeded expectations with a surprise of +111.27% against a consensus estimate of -$2.75 [1] Financial Performance Metrics - Net investment income was reported at $14.49 million, surpassing the average estimate of $14.26 million, marking a year-over-year increase of +40.1% [4] - Policy fee income matched the estimated $1.30 million, showing a year-over-year growth of +23.7% [4] - Net premiums earned were $146.35 million, below the average estimate of $154.57 million, indicating a decline of -1.5% year-over-year [4] - Other income was reported at $0.59 million, exceeding the estimated $0.52 million, with a significant year-over-year increase of +144.2% [4] Stock Performance - HCI Group's shares have returned -0.5% over the past month, in contrast to the Zacks S&P 500 composite's decline of -2.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

HCI Group (HCI) Q4 2024 Earnings Call February 28, 2025 12:37 AM ET Company Participants Matt Glover - Senior MDKarin Coleman - President of Homeowners Choice Property & Casualty Insurance Company, Inc., COO & DirectorMark Harmsworth - Chief Financial OfficerParesh Patel - Chairman and Chief Executive OfficerMatthew Carletti - Managing Director Conference Call Participants Michael Phillips - Managing Director and Insurance AnalystMark Hughes - Analyst Operator Good afternoon, and welcome to HCI Group's Four ...

Financial Data and Key Metrics Changes - In Q4 2024, HCI Group reported a pretax income of $5.9 million and diluted earnings per share of $0.23, despite the impact of Hurricane Milton [14] - For the full year 2024, pretax income was $173 million and diluted earnings per share were $8.89, demonstrating strong underlying earnings [15] - Book value increased by almost $9 per share from $33.36 at the start of the year to $42.10 at the end of the year [20] - The debt-to-cap ratio improved from 50% at the beginning of the year to 34% by year-end [21] Business Line Data and Key Metrics Changes - HCI handled over 22,600 claims in 2024, with significant claims from Hurricanes Debby, Helen, and Milton, expecting to pay over $0.5 billion for these events [9] - The company increased its policies in-force from 247,000 to more than 272,000, and in-force premium grew by 22% to over $1.2 billion [11] - The underlying net combined ratio improved by 10 percentage points, with a normalized combined ratio now around 75% [18] Market Data and Key Metrics Changes - HCI's retention rate of existing customers remains strong at approximately 90% [10] - The company offered over 68,000 Citizens policyholders a private market option, with nearly 53,000 moving to HCI, resulting in a blended success rate of 77% [10] Company Strategy and Development Direction - HCI Group plans to continue holding rates steady in Florida and aims to leverage its technology to improve underwriting results across the broader market [9][26] - The company has established a new structure with two distinct operating units: one focusing on CAT insurance and claims management, and the other on technology and insurance management operations [26][28] - Exzeo Group, the technology platform, is expected to grow significantly, with a pretax income of approximately $35 million in 2024 and plans for expansion into other states [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite the challenges posed by hurricanes, highlighting the strength of their business model and technology [8][12] - The company anticipates continued growth in gross premiums earned and profitability, with a focus on expanding its market presence beyond Florida [23][24] - Management noted the importance of regulatory stability in Florida, which has allowed the private insurance market to thrive even after significant storm events [90] Other Important Information - HCI Group paid a dividend of $0.40 per share, marking its 57th consecutive quarterly dividend [12] - The company has reduced consolidated debt by $80 million during the year [21] Q&A Session Summary Question: Opportunities outside Florida and Exzeo Group's role - Management acknowledged California's need for viable insurance solutions and indicated flexibility in market entry strategies, potentially leveraging Exzeo Group's technology [34][36] Question: Takeout activity and Citizens policies - Management confirmed ongoing opportunities within Citizens, noting the potential for additional takeouts and the effectiveness of their technology in attracting policyholders [39][42] Question: Favorable development impact on loss numbers - Management confirmed a favorable development impact of approximately $24.5 million in Q4, with a normalized loss ratio of 23.7% for the full year [46] Question: Total Addressable Market (TAM) for Exzeo Group - Management estimated the annual homeowners insurance premium market at around $140 billion, with HCI Group currently holding less than 1% market share, indicating significant growth potential [57][61] Question: Reinsurance market outlook - Management expressed confidence in their operations and stability in Florida, contrasting it with the challenges faced in California, indicating a positive outlook for their business model [92][94]

Core Viewpoint - HCI Group reported quarterly earnings of $0.31 per share, significantly beating the Zacks Consensus Estimate of a loss of $2.75 per share, although this is a decline from earnings of $3.22 per share a year ago [1] Earnings Performance - The earnings surprise for the quarter was 111.27%, following a previous quarter where the company also exceeded expectations with earnings of $0.47 per share against an estimate of $0.39 per share, resulting in a surprise of 20.51% [2] - Over the last four quarters, HCI Group has consistently surpassed consensus EPS estimates [2] Revenue Analysis - HCI Group reported revenues of $161.88 million for the quarter ended December 2024, which was 1.22% below the Zacks Consensus Estimate and a slight decrease from $162.67 million in the same quarter last year [3] - The company has exceeded consensus revenue estimates in two of the last four quarters [3] Stock Performance - HCI Group shares have increased approximately 4.1% since the beginning of the year, outperforming the S&P 500, which gained 1.3% [4] Future Outlook - The company's future stock performance will largely depend on management's commentary during the earnings call and the revisions in earnings estimates [4][5] - Current consensus EPS estimate for the upcoming quarter is $4.03 on revenues of $228.74 million, and for the current fiscal year, it is $13.50 on revenues of $925.74 million [8] Industry Context - The Insurance - Property and Casualty industry, to which HCI Group belongs, is currently ranked in the top 17% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [9]

Financial Performance - Q4 2024 pre-tax income was $5.9 million, with diluted EPS of $0.23, a significant decrease from $38.1 million and $3.40 in Q4 2023 respectively[1][2] - Adjusted net income for Q4 2024 was $5.0 million, or $0.31 diluted EPS, compared to $38.8 million, or $3.22 diluted EPS in Q4 2023[2] - For the full year 2024, pre-tax income was $173.4 million, with diluted EPS of $8.89, compared to $79.0 million and $7.62 in 2023[9] - Net income for the year ended December 31, 2024, was $127,581 thousand, up 43% from $89,257 thousand in 2023[28] - Basic earnings per share for the year ended December 31, 2024, increased to $10.59, compared to $9.13 in 2023, reflecting a growth of 16.0%[28] - Adjusted net income for the three months ended December 31, 2024, was $5,019 thousand, while for the year ended December 31, 2024, it was $125,599 thousand[35] - Basic Earnings Per Share (EPS) before unrealized gains/losses on equity securities for the three months ended December 31, 2024, was $0.33, compared to $10.42 for the year ended December 31, 2024[35] - Diluted EPS before unrealized gains/losses on equity securities for the three months ended December 31, 2024, was $0.31, while for the year ended December 31, 2024, it was $8.75[37] - GAAP diluted EPS for the three months ended December 31, 2024, was $0.23, and for the year ended December 31, 2024, it was $8.89[37] - Non-GAAP Adjusted diluted EPS for the three months ended December 31, 2024, was $0.31, and for the year ended December 31, 2024, it was $8.75[37] - The company reported a net income attributable to HCI of $3,469 thousand for the three months ended December 31, 2024, and $108,169 thousand for the year ended December 31, 2024[35] Revenue and Premiums - Consolidated gross premiums earned in Q4 2024 increased by 38.0% to $297.5 million from $215.2 million in Q4 2023, primarily due to policies from Citizens Property Insurance Corporation[4] - Consolidated gross premiums earned for the full year 2024 increased by 41.5% to $1,083.2 million from $765.5 million in 2023[11] - Gross premiums earned for the year ended December 31, 2024, were $1,083,220 thousand, a significant increase of 41.6% compared to $765,512 thousand in 2023[28] Expenses and Losses - Losses and loss adjustment expenses in Q4 2024 were $110.7 million, compared to $65.4 million in Q4 2023, including a net loss of $78.0 million from Hurricane Milton[7][14] - Losses and loss adjustment expenses for the year ended December 31, 2024, were $374,708 thousand, up from $254,579 thousand in 2023, indicating a rise of 47.2%[28] - General and administrative personnel expenses for the full year 2024 increased to $63.2 million from $53.9 million in 2023[15] Investment Income - Net investment income in Q4 2024 rose to $14.5 million, up from $10.3 million in Q4 2023, driven by increased interest income[6] - The company reported net investment income of $59,148 thousand for the year ended December 31, 2024, up from $46,234 thousand in 2023, a growth of 27.8%[28] Assets and Liabilities - Total assets increased to $2,230,213 thousand as of December 31, 2024, up from $1,811,316 thousand in 2023, representing a growth of 23.1%[26] - Total liabilities increased to $1,761,172 thousand in 2024 from $1,387,991 thousand in 2023, representing a rise of 27.0%[26] Reinsurance and Dividends - Premiums ceded for reinsurance for the full year 2024 were $405.7 million, up from $269.6 million in 2023[12] - The company declared dividends per share of $1.60 for both 2024 and 2023, maintaining consistent shareholder returns[28] Future Plans - The company plans to keep rates flat for the foreseeable future and aims to expand its technology offerings to other carriers and geographies[3] Other Financial Metrics - The effect of dilutive securities included stock options, convertible senior notes, and warrants, impacting the diluted EPS calculations[35] - The company experienced a net loss attributable to noncontrolling interests of $(1,550) thousand for the three months ended December 31, 2024[35] - Net unrealized investment gains contributed $0.10 to GAAP diluted EPS for the three months ended December 31, 2024[37] - The tax effect on net unrealized investment gains was $0.02 for the three months ended December 31, 2024[37]

Core Insights - HCI Group, Inc. reported a significant decline in net income for Q4 2024, with a pre-tax income of $5.9 million and diluted EPS of $0.23, compared to $38.1 million and $3.40 in Q4 2023 [1][9] - The full year 2024 results showed a pre-tax income of $173.4 million and diluted EPS of $8.89, an increase from $7.62 in 2023 [9][10] Financial Performance - Q4 2024 adjusted net income was $5.0 million, or $0.31 diluted EPS, down from $38.8 million, or $3.22 diluted EPS in Q4 2023 [2] - Consolidated gross premiums earned in Q4 2024 increased by 38.0% to $297.5 million from $215.2 million in Q4 2023, primarily due to policy assumptions from Citizens Property Insurance Corporation [4] - For the full year 2024, consolidated gross premiums earned rose by 41.5% to $1,083.2 million from $765.5 million in 2023 [11] Losses and Expenses - Losses and loss adjustment expenses in Q4 2024 were $110.7 million, up from $65.4 million in Q4 2023, including a net loss of $78.0 million from Hurricane Milton [7][14] - Policy acquisition and other underwriting expenses for Q4 2024 were $27.7 million, compared to $22.7 million in Q4 2023 [7] - General and administrative personnel expenses decreased to $10.2 million from $12.2 million in Q4 2023, attributed to lower stock-based compensation [8] Investment Income - Net investment income for Q4 2024 was $14.5 million, an increase from $10.3 million in Q4 2023, mainly due to higher interest income from cash and fixed maturity securities [6][13] Management Commentary - HCI Group's CEO emphasized the company's commitment to Florida and plans to maintain flat rates for the foreseeable future despite increased catastrophe activity [3]

Core Insights - HCI Group, Inc. announced that Tailrow Insurance Exchange has successfully assumed nearly 14,000 policies from Citizens Property Insurance Corporation, representing approximately $35 million in in-force premium [1][3]. Company Operations - Tailrow Insurance Exchange is a reciprocal insurer sponsored by HCI, focusing on personal residential policies [1]. - The company was approved for 20,000 policies, made around 18,000 offers, and achieved a 76% acceptance rate for the policies assumed [3]. Management Commentary - HCI's CEO, Paresh Patel, expressed excitement about the successful assumption and highlighted the technology and management expertise that facilitated the identification of attractive policies [2]. Company Structure - HCI Group, Inc. operates in various sectors including homeowners insurance, information technology services, real estate, and reinsurance [5]. - The company's leading insurance operation, TypTap Insurance Company, is technology-driven and supported by HCI's software subsidiary, Exzeo USA, Inc. [5]. Market Presence - HCI Group's common shares are traded on the New York Stock Exchange under the ticker symbol "HCI" and are included in the Russell 2000 and S&P SmallCap 600 Index [6].

Core Insights - HCI Group (HCI) is projected to announce a quarterly loss of $2.75 per share, reflecting a significant decline of 185.4% year over year [1] - Revenue estimates for HCI are expected to reach $163.88 million, which is a slight increase of 0.7% compared to the same quarter last year [1] - There have been no revisions in the consensus EPS estimate over the last 30 days, indicating stability in analysts' forecasts [1] Financial Metrics - Analysts estimate 'Net investment income' to be $14.26 million, representing a year-over-year increase of 37.9% [4] - 'Net premiums earned' are forecasted to reach $154.57 million, indicating a growth of 4% from the prior-year quarter [4] - The 'Loss Ratio' is predicted to be 99.1%, a significant increase from the previous year's figure of 30.4% [4] Stock Performance - Over the past month, HCI Group shares have declined by 4.1%, while the Zacks S&P 500 composite has decreased by 0.5% [5] - HCI Group holds a Zacks Rank of 3 (Hold), suggesting that its performance is expected to align with the overall market in the near term [5]

Company Overview - HCI Group's stock closed at $117.91, reflecting a decrease of 1.12% from the previous trading session, which is less than the S&P 500's daily loss of 0.43% [1] - The stock has experienced a decline of 5.03% over the past month, underperforming compared to the Finance sector's gain of 3.13% and the S&P 500's gain of 2.6% [1] Upcoming Financial Results - HCI Group is set to announce its earnings on February 27, 2025, with an anticipated EPS of -$2.75, indicating a significant decline of 185.4% compared to the same quarter last year [2] - The consensus estimate for revenue is projected at $163.88 million, which represents a slight increase of 0.74% compared to the year-ago quarter [2] Analyst Estimates and Market Sentiment - Recent changes to analyst estimates for HCI Group reflect shifting short-term business dynamics, with positive revisions indicating analysts' confidence in the company's performance and profit potential [3] - The Zacks Rank system, which evaluates estimate changes, suggests that these adjustments are linked to imminent stock price performance [4] Zacks Rank and Valuation - HCI Group currently holds a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate remaining unchanged over the past month [5] - The company has a Forward P/E ratio of 8.83, which is lower than the industry average Forward P/E of 10.99, indicating a valuation discount [6] Industry Context - HCI Group operates within the Insurance - Property and Casualty industry, which is part of the Finance sector and currently holds a Zacks Industry Rank of 64, placing it in the top 26% of over 250 industries [6][7] - The Zacks Industry Rank measures the strength of industry groups based on the average Zacks Rank of individual stocks, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [7]