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HCI Group Reports Fourth Quarter and Full Year 2019 Results

TAMPA, Fla., March 05, 2020 (GLOBE NEWSWIRE) — HCI Group, Inc. (NYSE:HCI), an InsurTech company with operations in insurance, software development and real estate, reported results for the three and twelve months ended December 31, 2019.
Fourth Quarter 2019 – Financial ResultsNet income for the fourth quarter of 2019 totaled $6.4 million or $0.82 diluted earnings per share compared with a net loss of $8.5 million or $0.95 loss per share in the fourth quarter of 2018. Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the quarter was $5.9 million or $0.76 diluted earnings per share compared with a loss of $4.2 million or $0.48 loss per share in the fourth quarter of 2018. The company has included in this press release an explanation of adjusted net income as well as a reconciliation to GAAP net income and earnings per share calculated in accordance with generally accepted accounting principles (known as “GAAP”). Consolidated gross written premiums of $66.6 million for the fourth quarter of 2019 were up 52.8% from $43.6 million in the fourth quarter of 2018, reflecting the rapid growth of TypTap Insurance Company, HCI’s technology-driven insurance subsidiary. TypTap gross written premiums grew to $24.0 million in the fourth quarter compared with $4.1 million in the fourth quarter of 2018.Consolidated gross premiums earned of $90.2 million for the fourth quarter of 2019 were up 5.8% from $85.2 million in the fourth quarter of 2018.  Losses and loss adjustment expenses were $28.9 million compared with $42.1 million in the same period in 2018. The decrease was primarily due to the pre-tax losses of $16.5 million attributable to Hurricane Michael from the fourth quarter of 2018.Policy acquisition expenses were $11.8 million compared to $9.8 million in the same quarter of 2018. The increase relates to  premium growth in TypTap.Interest expense was $2.9 million compared to $4.6 million in the same period in 2018. The decrease was primarily due to the repayment of the 3.875% Convertible Senior Notes in March of 2019.Full Year 2019 – Financial ResultsNet income for the year ended December 31, 2019 totaled $26.6 million or $3.31 diluted earnings per share compared with $17.7 million or $2.34 diluted earnings per share for the year ended December 31, 2018. The increase was primarily due to an increase in net premiums earned, a net increase in income from our investment portfolio, a decrease in loss expense and a decrease in interest expense, offset by an increase in general and administrative personnel expenses and an increase in policy acquisition expenses.Adjusted net income (a non-GAAP measure which excludes unrealized gains or losses on equity securities) for the year ended December 31, 2019 was $20.6 million or $2.57 diluted earnings per share compared with $25.3 million or $3.23 diluted earnings per share in the same period of 2018. An explanation of this non-GAAP financial measure and reconciliations to the applicable GAAP numbers accompany this press release.Consolidated gross written premiums for the full year increased 8.5% to $365.0 million in 2019 from $336.5 million in 2018 and gross premiums earned for the year decreased 0.3% to $342.1 million from $343.1 million in 2018.Premiums ceded were $125.8 million or 36.8% of gross premiums earned compared with $129.6 million or 37.8% of gross premiums earned during the same period in 2018.Net premiums earned increased to $216.3 million from $213.4 million for the year ended December 31, 2018.Losses and loss adjustment expenses for the years ended December 31, 2019 and 2018 were $107.5 million and $109.3 million, respectively. Storm related loss expenses were lower in 2019 than in 2018 as were loss expenses related to reserve strengthening.  These decreases were offset somewhat by higher loss expenses in TypTap due to the growth in gross premium earned.Interest expense was $13.1 million compared with $18.1 million in the same period in 2018. The decrease primarily resulted from the repayment of the 3.875% Convertible Senior Notes in March 2019.Book value per share, defined as shareholders’ equity divided by common shares outstanding at the end of the period, was $23.90 at December 31, 2019 compared with $21.71 at December 31, 2018.Management Commentary“Our premium growth in the fourth quarter, driven by TypTap, evidences the effectiveness of our internally-developed underwriting and policy production software,” said Paresh Patel, HCI Group’s chairman and chief executive officer. “While we are pleased with our revenue growth, we remain focused on generating profits and shareholder returns.”Conference CallHCI Group will hold a conference call later today, March 5, 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) 602-0380Listen-only international number: (862) 298-0970Please 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 5, 2020.Toll-free replay number: (877) 481-4010
International replay number: (919) 882-2331
Replay ID: 58630
About 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.
HCI Group, Inc.
Tel (813) 405-3206
rswansiger@hcigroup.com
Investor Relations Contact:
Matt Glover
Gateway Investor Relations
Tel (949) 574-3860
HCI@gatewayir.com
Media Contact:
Amber Brinkley
Kippen Communications
Tel (727) 466-7695
amber@kippencommunications.com

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HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollar amounts in thousands)

HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Dollar amounts in thousands, except per share amounts)

HCI GROUP, INC. AND SUBSIDIARIES
(Amounts in thousands, except per share amounts)
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 Income
HCI 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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