TAMPA, Fla., May 07, 2020 (GLOBE NEWSWIRE) — HCI Group, Inc. (NYSE:HCI), an InsurTech company with operations in insurance, software development and real estate, reported results for the quarter ended March 31, 2020.
First Quarter 2020 – Financial Results
Net income for the first quarter of 2020 totaled $0.5 million or $0.07 diluted earnings per share compared with $6.7 million or $0.82 diluted earnings per share in the first quarter of 2019. Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the quarter was $4.2 million or $0.54 diluted earnings per share compared with $2.8 million or $0.35 diluted earnings per share in the first quarter of 2019. The company has included in this press release 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”).Net income for the quarter was impacted by $4.8 million of net unrealized losses on equity securities, $2.2 million of net realized losses on investment sales, and $3.0 million of reductions in the estimated value of limited partnership investments resulting from declines in the financial markets caused by economic uncertainty attributable to the effects of the COVID-19 pandemic crisis.The combined ratio, a measure of overall underwriting profitability before other income, was 88.8% for the first quarter of 2020 compared with 100.3% in the same prior year period.Consolidated gross written premiums of $76.5 million for the first quarter of 2020 were up 13.2% from $67.6 million in the first quarter of 2019, reflecting the continued growth of TypTap Insurance Company, HCI’s technology-driven insurance subsidiary. TypTap gross written premiums grew to $18.4 million in the first quarter compared with $6.1 million in the first quarter of 2019.Consolidated gross premiums earned of $92.4 million for the first quarter of 2020 were up 11.8% from $82.6 million in the first quarter of 2019, again driven by the growth of TypTap.Net investment loss of $0.2 million in the first quarter of 2020 includes the effect of a reduction in the estimated value of limited partnership interests in the amount of $3.0 million.  Net realized investment losses were $2.2 million in the first quarter of 2020 compared with $0.4 million in 2019. The losses in the first quarter of 2020 were primarily due to sales intended to rebalance our investment portfolio. Net unrealized investment losses were $4.8 million in the first quarter of 2020 compared with net unrealized gains of $5.3 million in 2019. The unrealized investment losses in the first quarter of 2020 reflect an adverse change in the fair value of equity securities due to the economic uncertainty caused by COVID-19.Losses and loss adjustment expenses were $28.1 million compared with $27.0 million in the same period in 2019. The increase of $1.1 million was primarily due to an increase in loss reserves related to the growth of TypTap premiums, offset by lower loss reserves related to a severe storm event in March 2019.Policy acquisition expenses were $11.8 million compared with $9.7 million in the same quarter of 2019. The increase relates to premium growth in TypTap.Interest expense was $3.0 million compared with $4.3 million in the same period in 2019. The decrease was primarily due to the repayment of the 3.875% Convertible Senior Notes in March 2019.On April 1, 2020, approximately 41,000 Anchor policies representing approximately $66 million in annualized premiums were replaced with policies from Homeowners Choice Property & Casualty Insurance Company. The premiums from these policies will begin to come into written and earned premium in the second quarter of this year. Management Commentary“With the exception of unrealized investment losses, we had a very good quarter,” said HCI Group’s chairman and chief executive officer Paresh Patel. “Our cash flow is healthy and our balance sheet remains strong.”Conference CallHCI Group will hold a conference call later today, May 7, 2020, to discuss these financial results. Chairman and Chief Executive Officer Paresh Patel and Chief Financial Officer Mark Harmsworth will host the call starting at 4:45 p.m. Eastern time. A question and answer session will follow management’s presentation.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: (844) 369-8774
Listen-only international number: (862) 298-0844Please 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 June 7, 2020.Toll-free replay number: (877) 481-4010
International replay number: (919) 882-2331
Replay ID: 34545About HCI Group, Inc.HCI Group, Inc. is an InsurTech company with operations in insurance, software development and real estate. HCI’s leading insurance operation, TypTap Insurance Company, is a rapidly growing, technology-driven insurance company, which provides homeowners’ insurance and flood insurance primarily in Florida. TypTap’s operations are powered in large part by insurance-related information technology developed by HCI’s software subsidiary, Exzeo USA, Inc.  HCI’s largest subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., provides homeowners’ insurance primarily in Florida. HCI’s real estate subsidiary, Greenleaf Capital, LLC, owns and operates multiple properties in Florida, including office buildings, retail centers and marinas.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:
Rachel Swansiger, Esq.
Investor Relations
HCI Group, Inc.
Tel (813) 405-3206
[email protected]Investor Relations Contact:
Matt Glover
Gateway Investor Relations
Tel (949) 574-3860
[email protected]Media Contact:
Amber Brinkley
Kippen Communications
Tel (727) 466-7695
[email protected]–    Tables to follow    –A summary of the numerator and denominator of basic and diluted income per common share calculated in accordance with GAAP is presented below.Non-GAAP Financial MeasuresAdjusted net income is a non-GAAP financial measure that removes from net income 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 IncomeHCI GROUP, INC. AND SUBSIDIARIES
(Amounts in thousands, except per share amounts)A summary of the numerator and denominator of the basic and diluted income per common share calculated with the non-GAAP financial measure Adjusted net income is presented below.Reconciliation of GAAP Diluted EPS to non-GAAP Adjusted Diluted EPS
 
 

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