HCI(HCI) - 2024 Q3 - Quarterly Results

Third Quarter 2024 Financial Highlights HCI Group's Q3 2024 pre-tax income and net income decreased due to hurricane losses, with diluted EPS at $0.52 | Financial Metric | Q3 2024 ($M) | Q3 2023 ($M) | | :--- | :--- | :--- | | Pre-Tax Income | $14.1 | $20.1 | | Net Income | $9.4 | $15.7 | | Net Income (after noncontrolling interests) | $5.7 | $13.2 | | Diluted EPS | $0.52 | $1.34 | | Adjusted Net Income (Non-GAAP) | $8.9 | $16.5 | | Adjusted Diluted EPS (Non-GAAP) | $0.47 | $1.41 | - Despite the impact of Hurricanes Debby and Helene, the company successfully reported positive earnings for the quarter[3] - The company continued its growth by assuming approximately 42,000 policies from Citizens in October 2024[3] Year-to-Date 2024 Financial Highlights HCI Group achieved substantial year-over-year growth for the nine months ending September 30, 2024, with pre-tax income surging | Financial Metric | Nine Months 2024 ($M) | Nine Months 2023 ($M) | | :--- | :--- | :--- | | Pre-Tax Income | $167.5 | $63.5 | | Net Income | $123.4 | $48.3 | | Net Income (after noncontrolling interests) | $107.4 | $40.9 | | Diluted EPS | $8.59 | $4.16 | | Adjusted Net Income (Non-GAAP) | $120.6 | $48.1 | | Adjusted Diluted EPS (Non-GAAP) | $8.39 | $4.13 | Third Quarter 2024 Operational Review Q3 2024 gross premiums earned rose to $265.5 million, with increased losses and a higher gross loss ratio due to hurricanes | Operational Metric | Q3 2024 ($M) | Q3 2023 ($M) | | :--- | :--- | :--- | | Gross Premiums Earned | $265.5 | $188.3 | | Premiums Ceded | $109.7 | $66.2 | | Ceded Ratio | 41.3% | 35.1% | | Losses and LAE | $105.7 | $66.7 | | Gross Loss Ratio | 39.8% | 35.4% | | Net Investment Income | $13.7 | $9.4 | - Losses and loss adjustment expenses for the quarter included $40.0 million from Hurricane Helene and $6.5 million from Hurricane Debby[6] - Policy acquisition and general/administrative expenses as a percentage of gross premiums earned decreased to 9.8% and 7.2% respectively, showing improved operational efficiency[7][8] Year-to-Date 2024 Operational Review YTD 2024 gross premiums earned grew to $785.7 million, with an improved gross loss ratio and higher net investment income | Operational Metric | Nine Months 2024 ($M) | Nine Months 2023 ($M) | | :--- | :--- | :--- | | Gross Premiums Earned | $785.7 | $550.3 | | Premiums Ceded | $254.5 | $203.1 | | Ceded Ratio | 32.4% | 36.9% | | Losses and LAE | $264.0 | $189.2 | | Gross Loss Ratio | 33.6% | 34.4% | | Net Investment Income | $44.7 | $35.9 | - The decline in the gross loss ratio was primarily driven by the continued decrease in claims and litigation frequency in Florida[14] - The increase in net investment income was mainly from higher interest income, which was partially offset by lower income from real estate investments compared to 2023, as the prior year included an $8.9 million gain from property sales[13] About HCI Group, Inc. HCI Group, Inc. is a diversified holding company listed on the NYSE, with subsidiaries in insurance, IT, and real estate - HCI Group's business activities encompass homeowners insurance, IT services, insurance management, real estate, and reinsurance[20] - Key subsidiaries include TypTap Insurance Company (a technology-driven homeowners insurer), Homeowners Choice Property & Casualty Insurance Company, Inc. (primarily serving Florida), and Exzeo USA, Inc. (a software subsidiary)[20] - The company's common shares are part of the Russell 2000 and S&P SmallCap 600 Index[21] Financial Statements and Reconciliations HCI's financial statements detail its position and performance, with total assets at $1.99 billion and total equity at $466.7 million Selected Financial Metrics Q3 2024 total gross written premiums increased to $270.4 million, with book value per share rising to $43.45 | Gross Written Premiums (Q3) | 2024 ($M) | 2023 ($M) | | :--- | :--- | :--- | | Homeowners Choice | $165.2 | $127.3 | | TypTap Insurance Company | $93.7 | $70.9 | | Condo Owners Reciprocal Exchange | $11.5 | $0 | | Total | $270.4 | $198.3 | | Per Share Metrics (Q3) | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | GAAP Diluted EPS | $0.52 | $1.34 | | Non-GAAP Adjusted Diluted EPS | $0.47 | $1.41 | | Dividends per share | $0.40 | $0.40 | | Book value per share | $43.45 | $23.27 | Consolidated Balance Sheets As of September 30, 2024, HCI's total assets increased to $1.99 billion, with total equity growing to $466.7 million | Balance Sheet Item | Sep 30, 2024 ($M) | Dec 31, 2023 ($M) | | :--- | :--- | :--- | | Total Investments | $823.6 | $520.3 | | Cash and cash equivalents | $518.8 | $536.5 | | Total Assets | $1,987.4 | $1,811.3 | | Total Liabilities | $1,519.2 | $1,388.0 | | Total Equity | $466.7 | $327.2 | Consolidated Statements of Income For the nine months ended September 30, 2024, total revenue reached $588.2 million, driving net income to $123.4 million | Income Statement (Nine Months Ended Sep 30) | 2024 ($M) | 2023 ($M) | | :--- | :--- | :--- | | Total Revenue | $588.2 | $388.0 | | Total Expenses | $420.6 | $324.5 | | Income Before Income Taxes | $167.5 | $63.5 | | Net Income | $123.4 | $48.3 | | Income Statement (Three Months Ended Sep 30) | 2024 ($M) | 2023 ($M) | | :--- | :--- | :--- | | Total Revenue | $175.3 | $131.6 | | Total Expenses | $161.2 | $111.6 | | Income Before Income Taxes | $14.1 | $20.1 | | Net Income | $9.4 | $15.7 | GAAP to Non-GAAP Reconciliation HCI provides non-GAAP measures like Adjusted Net Income and Adjusted Diluted EPS to exclude unrealized investment gains or losses - The non-GAAP measure 'Adjusted net income' is used to remove the effect of unrealized gains or losses on equity securities from GAAP net income, which management believes more accurately depicts operating results[31] | Reconciliation to Non-GAAP (Q3 2024) | Amount ($M) | Per Diluted Share ($) | | :--- | :--- | :--- | | GAAP Net Income / EPS | $9.4 | $0.52 | | Adjustment for unrealized gains, net of tax | ($0.5) | ($0.05) | | Non-GAAP Adjusted Net Income / EPS | $8.9 | $0.47 | | Reconciliation to Non-GAAP (YTD 2024) | Amount ($M) | Per Diluted Share ($) | | :--- | :--- | :--- | | GAAP Net Income / EPS | $123.4 | $8.59 | | Adjustment for unrealized gains, net of tax | ($2.9) | ($0.20) | | Non-GAAP Adjusted Net Income / EPS | $120.6 | $8.39 |