HCI(US:HCI)2024-03-08 21:04Insurance Operations - HCPCI ceased offering flood insurance policies in Florida during 2023, with gross earned premiums from such policies comprising less than 1% of total HCPCI gross premiums earned in 2022[18]. - In 2023, HCPCI assumed approximately 53,400 policies from Citizens, representing $196.8 million in annualized gross premiums written[19]. - TypTap's gross written premium grew from $2.5 million in 2016 to $363.6 million in 2023, marking significant organic growth[29]. - TypTap generated approximately $87.3 million in written premiums from states outside of Florida during 2023[29]. - Revenues from HCPCI insurance operations represented 63.8% of total revenues of all operating segments for the year ended December 31, 2023[26]. - TypTap Group's revenues represented 34.5% of total revenues of all operating segments for the year ended December 31, 2023[40]. - TypTap assumed approximately 6,700 policies from Citizens in 2023, representing approximately $77.6 million of annualized gross premiums written in aggregate[30]. Financial Performance - Net premiums earned for the year ended December 31, 2023, increased to $495.9 million, up from $463.6 million in 2022, representing a growth of 6.9%[59]. - Total revenue rose to $550.7 million in 2023, compared to $499.6 million in 2022, marking an increase of 10.2%[59]. - Losses and loss adjustment expenses decreased significantly to $254.6 million in 2023 from $371.5 million in 2022, a reduction of 31.5%[59]. - Net income for 2023 was $89.3 million, a turnaround from a net loss of $54.6 million in 2022[59]. - Basic earnings per share for 2023 was $9.13, compared to a loss of $6.24 per share in 2022[59]. - Total assets as of December 31, 2023, were $1,811.3 million, slightly up from $1,803.3 million in 2022[59]. - Total liabilities decreased to $1,388.0 million in 2023 from $1,548.5 million in 2022, a decline of 10.4%[59]. - Cash and cash equivalents increased significantly to $536.5 million in 2023, compared to $234.9 million in 2022[59]. - The company provided $230.7 million in net cash from operating activities in 2023, a notable increase from $96.5 million in 2022[59]. - Dividends per share remained stable at $1.60 for both 2023 and 2022[59]. Risk Factors - Increased competition in the property and casualty insurance industry may adversely impact the company's financial results and premium growth[82]. - The company faces risks if actual losses exceed its loss reserves, potentially affecting financial results and business expansion[84]. - The company must maintain adequate risk-based capital to comply with regulatory requirements and avoid insolvency risks[90]. - The insolvency of United Property & Casualty Insurance Company could have a material adverse effect on the company's financial position[107]. - CORE's entry into the condominium insurance market presents challenges that could impact expected management fee revenue and the company's reputation[108]. - The company may require additional capital in the future, which could be unavailable or only available on unfavorable terms[110]. - The ability to accurately price risks is critical for maintaining profitability and financial stability[101]. - The company relies on independent agents for policy sales, and any inability to attract and retain them could negatively affect revenues[100]. - The company faces uncertainties related to emerging claim and coverage issues that may adversely affect its business[89]. - The company faces restrictions in its credit agreement that limit operational flexibility, including covenants on increasing indebtedness and asset disposals[113]. - An increase in interest rates could negatively impact the company's operating results due to higher interest expenses on variable-rate borrowings[113]. - The company may incur significant losses on its investment portfolio if it needs to sell illiquid investments at a value below their carrying value[114]. - Revenue from real estate investments is dependent on the economic viability of anchor retail tenants, with potential adverse effects if these tenants become insolvent[116]. - The company periodically evaluates long-lived assets for impairment, which could lead to material adverse effects on financial results if impairments are recognized[120]. - Ongoing investments in real estate and information technology carry inherent risks that could burden financial and human resources[121]. - The company is subject to extensive state regulations that may reduce profitability and limit growth, with potential penalties for non-compliance[126]. - Changes in the regulatory environment, including potential federal oversight, could adversely affect the company's operations and competitive position[125]. - Economic activity fluctuations, particularly in the housing market, could materially impact the demand for homeowners insurance and related revenues[139]. - Climate change may negatively affect the frequency and severity of weather events, impacting the company's business and financial condition[140]. - The company is exposed to unpredictable catastrophes, which can materially and adversely affect financial results, particularly in regions like Florida and the northeast and southeast, where policyholders are concentrated[141]. Shareholder Information - The company has a total of $100,000,000 in Series A Preferred Stock redeemed, along with accrued dividends of approximately $2,923,000, funded by cash on hand and $50,000,000 from a revolving credit facility[179]. - The company has declared cash dividends of $0.40 per share for each quarter in 2023, totaling $1.60 for the year[166]. - The company has a total of 590,000 outstanding options under equity compensation plans with a weighted-average exercise price of $51.54[167]. - The company’s common stock trades on the New York Stock Exchange under the symbol "HCI," with a market price of $99.43 as of March 1, 2024[165]. Investment and Growth Strategy - The company has engaged in a strategy to optimize its existing book of insurance business and expand organically, while also managing costs and diversifying operations[178]. - The company continues to pursue geographical expansion and has regulatory approvals to underwrite residential property and casualty insurance in various states[45]. - The new shelf registration allows the company to raise up to $75,000,000 through the issuance of new shares, subject to market conditions[181]. - The company expects to issue approximately 397,000 shares upon the redemption of $23,916,000 principal balance of its 4.25% Convertible Senior Notes due 2037[185]. Investment Performance - Net investment income increased to approximately $46,234,000 in 2023 from $32,447,000 in 2022, driven by higher interest income and gains from fixed-maturity securities[191]. - Gross premiums earned increased to approximately $765,512,000 in 2023 from $724,716,000 in 2022, reflecting a $40,796,000 increase primarily due to the assumption of Citizens insurance policies[187]. - Net premiums written for 2023 totaled approximately $628,995,000, up from $464,875,000 in 2022, marking a $164,120,000 increase driven by the assumption of Citizens insurance policies[188]. - The loss ratio for 2023 improved to 51.3% from 80.1% in 2022, attributed to a decrease in losses and loss adjustment expenses[199]. - The combined ratio for 2023 was 87.3%, significantly lower than 122.5% in 2022, indicating improved underwriting profitability[201].