Exhibit 99.1

 

LOGO

HCI Group Reports Third Quarter and Nine-Month 2017 Results

Tampa, Fla. – November 2, 2017 – HCI Group, Inc. (NYSE:HCI), a holding company primarily engaged in homeowners insurance, with additional operations in reinsurance, real estate and information technology, reported results for the three and nine months ended September 30, 2017.

Third Quarter 2017 - Financial Results

The company’s results of operations for the third quarter of 2017 were significantly impacted by Hurricane Irma, which crossed Florida from south to north in early September. The results include $53.6 million of retained losses from Hurricane Irma as well as a $15.6 million reduction in benefits under retrospective provisions within multi-year reinsurance contracts.

The company’s net loss for the third quarter of 2017 totaled $40.5 million or $4.44 loss per diluted share compared with net income of $11.3 million, or $1.10 earnings per diluted share in the third quarter of 2016.

Gross premiums earned for the third quarter 2017 decreased to $88.7 million from $92.5 million in the same period in 2016. The decrease in 2017 was attributable to policy attrition, policy mix, and rate reductions. Gross premiums written were $94.9 million compared with $93.2 million in the same quarter of 2016. The increase was driven by strong growth in the company’s flood insurance business.

Premiums ceded increased to $44.7 million or 50.4% of gross premiums earned from $29.2 million or 31.6% of gross premiums earned in the third quarter of 2016. The increase was primarily attributable to the adjustment to benefits and deferred reinsurance premiums related to retrospective provisions under certain reinsurance contracts.

Net premiums earned (defined as gross premiums earned less premiums ceded to reinsurance companies) were $44 million compared with $63.3 million in the same period in 2016.

Net premiums written (defined as gross premiums written less premiums ceded to reinsurance companies) were $50.2 million compared with $64 million in the same quarter in 2016.

Investment related income was $2.7 million compared with $3.4 million in the same period in 2016.

Results for the third quarter of 2016 included a one-time bargain purchase gain of $2.1 million related to the company’s August 2016 acquisition of a newly built retail shopping center located in Sorrento, Florida.

Losses and loss adjustment expenses were $89.2 million compared with $25.9 million in the same period in 2016. The increase was attributable to $53.6 million of net estimated losses related to Hurricane Irma, an increase of $2.5 million to the company’s estimate of Hurricane Matthew ultimate losses, and continued reserve strengthening for prior years in response to the continuing effect of assignment of insurance benefits and related litigation.

Policy acquisition and other underwriting expenses were $9.9 million compared with $10.5 million in the comparable period in 2016. The decrease was due to a reduction in commissions and premium taxes resulting from policy attrition.

Salaries and wages were $4.6 million compared with $5.9 million in the same period in 2016. The decrease was attributable to capitalized payroll costs related to software development and lower cash bonuses for senior management.


Interest expense was $4.4 million compared with $2.7 million in the same period in 2016. The increase resulted from the effect of the issuance of 4.25% convertible senior notes in March 2017 offset in part by the redemption of the company’s 8% senior notes in April 2017.

Third Quarter 2017 - Financial Ratios

The loss ratio (defined as losses and loss adjustment expenses related to net premiums earned) for the third quarter of 2017 was 203% compared with 40.9% for the third quarter of 2016.

The expense ratio (defined as underwriting expenses, salaries and wages, interest and other operating expenses related to net premiums earned) was 55.2% compared with 37.7% for the same prior year period.

Expressed as a total of all expenses related to net premiums earned, the combined loss and expense ratio was 258.2% compared with 78.6% for the third quarter of 2016.

Nine Months Ended September 30, 2017 - Financial Results

Net loss for the nine months ended September 30, 2017 totaled $19 million or $2.05 loss per diluted share compared with $24.4 million of net income, or $2.41 earnings per diluted share, for the nine months ended September 30, 2016. The decrease was primarily due to estimated net pre-tax losses of approximately $69 million resulting from Hurricane Irma.

Gross premiums earned for the nine months ended September 30, 2017 decreased to $270.4 million from $286.3 million in the same period in 2016. The decrease in 2017 was attributable primarily to policy attrition. Gross premiums written were $300.7 million compared with $308.3 million in the same nine-month period of 2016.

Premiums ceded were $101.5 million or 37.6% of gross premiums earned compared with $106 million or 37% of gross premiums earned during the same period in 2016.

Net premiums earned decreased to $168.9 million from $180.3 million for the nine months ended September 30, 2016. Net premiums written were $199.2 million compared with $202.3 million in the same period in 2016.

Investment related income was $10.9 million compared with $6.9 million in the same period in 2016. The increase in 2017 was primarily due to increased income from limited partnership investments and greater realized net gains from the sale of securities.

Losses and loss adjustment expenses for the nine months ended September 30, 2017 and 2016 were $142.4 million and $79.3 million, respectively. Losses and loss adjustment expenses in 2017 included $53.6 million of estimated net losses related to Hurricane Irma, an increase of $2.5 million to the company’s estimate of Hurricane Matthew losses, and continued reserve strengthening for prior years in response to the continuing effect of assignment of insurance benefits and related litigation. Loss and loss adjustment expenses for the comparable period in 2016 were also impacted by weather related events including Hurricane Hermine.

Policy acquisition and other underwriting expenses were $29.6 million compared with $32.5 million for the nine months ended September 30, 2016.

Salaries and wages were $15.1 million compared with $17 million in the same period in 2016. The decrease was primarily attributable to capitalized payroll costs related to software development and lower cash bonuses for senior management.

Book value per share, defined as shareholders’ equity divided by common shares outstanding at the end of the period, was $21.37 at September 30, 2017 compared with $25.23 at December 31, 2016.

 

2


Nine Months Ended September 30, 2017 - Financial Ratios

The loss ratio for the nine months ended September 30, 2017 was 84.4% compared with 44% in the nine months ended September 30, 2016.

The expense ratio was 43.2% compared with 39.9% in the same period in 2016. Expressed as a total of all expenses related to net premiums earned, the combined loss and expense ratio to net premiums earned was 127.5% compared with 83.8% in the same period in 2016.

Management Commentary

“To assist the investing public in understanding Irma’s breadth, we have released a map, produced by our Atlas Viewer claims tracking technology, showing our Irma-related claims,” said Paresh Patel, HCI’s chairman and chief executive officer. “That map demonstrates that Hurricane Irma was a massive storm impacting Florida from coast to coast. Nevertheless, we used only about one-third of our reinsurance tower and neither HCI nor any of its three insurance related companies requires additional operating capital.”

Conference Call

HCI Group will hold a conference call later today, November 2, 2017, 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: (877) 407-8033

Listen-only international number: (201) 689-8033

Please 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 Liolios 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 December 2, 2017.

Toll-free replay number: (877) 481-4010

International replay number: (919) 882-2331

Replay ID: 20578

About HCI Group, Inc.

HCI Group, Inc. owns subsidiaries engaged in diverse, yet complementary business activities, including homeowners’ insurance, reinsurance, real estate and information technology services. The company’s largest subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., is a leading provider of property and casualty insurance in the state of Florida.

The company’s common shares trade on the New York Stock Exchange under the ticker symbol “HCI” and are included in the Russell 2000 Index and the 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.

 

3


Forward-Looking Statements

This 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:

Kevin Mitchell, Vice President of Investor Relations

HCI Group, Inc.

Tel (813) 405-3603

kmitchell@hcigroup.com

Investor Relations Contact:

Matt Glover or Najim Mostamand, CFA

Liolios Group, Inc.

Tel (949) 574-3860

HCI@liolios.com

 

4


HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollar amounts in thousands)

 

     At September 30, 2017      At December 31, 2016  
     (Unaudited)         
Assets              

Fixed-maturity securities, available for sale, at fair value (amortized cost: $253,162 and $167,231, respectively)

   $ 256,102        166,248  

Equity securities, available for sale, at fair value (cost: $58,242 and $47,750, respectively)

     63,023        53,035  

Equity securities, trading, at fair value (cost: $929 and $0, respectively)

     1,003        —    

Limited partnership investments, at equity

     20,998        29,263  

Investment in unconsolidated joint venture, at equity

     1,664        2,102  

Real estate investments (inclusive of $4,472 and $3,404 of consolidated variable interest entities, respectively)

     48,961        48,086  
  

 

 

    

 

 

 

Total investments

     391,751        298,734  

Cash and cash equivalents (inclusive of $90 and $65 of consolidated variable interest entities, respectively)

     292,438        280,531  

Accrued interest and dividends receivable

     2,241        1,654  

Income taxes receivable

     24,081        2,811  

Premiums receivable

     27,179        17,276  

Prepaid reinsurance premiums

     28,352        24,554  

Reinsurance recoverable:

     

Paid losses and loss adjustment expenses

     17        —    

Unpaid losses and loss adjustment expenses

     213,729        —    

Deferred policy acquisition costs

     21,150        16,639  

Property and equipment, net

     12,356        11,374  

Intangible assets, net

     4,498        4,899  

Deferred income taxes, net

     —          250  

Other assets (inclusive of $139 and $0 of consolidated variable interest entities, respectively)

     11,461        11,342  
  

 

 

    

 

 

 

Total assets

   $ 1,029,253        670,064  
  

 

 

    

 

 

 
Liabilities and Stockholders’ Equity      

Losses and loss adjustment expenses

   $ 344,672        70,492  

Unearned premiums

     206,174        175,803  

Advance premiums

     10,248        4,651  

Assumed reinsurance balances payable

     243        3,294  

Accrued expenses (inclusive of $59 and $68 of consolidated variable interest entities, respectively)

     11,803        6,513  

Reinsurance recovered in advance on unpaid losses

     9,882        —    

Deferred income taxes, net

     3,092        —    

Long-term debt

     236,311        138,863  

Other liabilities (inclusive of $42 and $11 of consolidated variable interest entities, respectively)

     13,772        26,702  
  

 

 

    

 

 

 

Total liabilities

     836,197        426,318  
  

 

 

    

 

 

 

Stockholders’ equity:

     

7% Series A cumulative convertible preferred stock (no par value, 1,500,000 shares authorized, no shares issued and outstanding)

     —          —    

Series B junior participating preferred stock (no par value, 400,000 shares authorized, no shares issued or outstanding)

     —          —    

Preferred stock (no par value, 18,100,000 shares authorized, no shares issued or outstanding)

     —          —    

Common stock, (no par value, 40,000,000 shares authorized, 9,035,609 and 9,662,761 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively)

     —          —    

Additional paid-in capital

     —          8,139  

Retained income

     188,313        232,964  

Accumulated other comprehensive income, net of taxes

     4,743        2,643  
  

 

 

    

 

 

 

Total stockholders’ equity

     193,056        243,746  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 1,029,253        670,064  
  

 

 

    

 

 

 


HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(Dollar amounts in thousands, except per share amounts)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2017     2016     2017     2016  

Revenue

        

Gross premiums earned

   $ 88,669       92,542     $ 270,376       286,273  

Premiums ceded

     (44,705     (29,242     (101,529     (105,998
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums earned

     43,964       63,300       168,847       180,275  

Net investment income

     2,878       2,785       8,522       6,000  

Net realized and unrealized investment (losses) gains

     (152     583       2,350       899  

Net other-than-temporary impairment losses recognized in income:

        

Total other-than-temporary impairment losses

     (474     (575     (864     (1,211

Portion of loss recognized in other comprehensive income, before taxes

     —         351       —         (230
  

 

 

   

 

 

   

 

 

   

 

 

 

Net other-than-temporary impairment losses

     (474     (224     (864     (1,441

Policy fee income

     905       972       2,721       2,967  

Gain on repurchases of convertible senior notes

     —         —         —         153  

Gain on bargain purchase

     —         2,071       —         2,071  

Other

     369       321       1,207       1,151  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     47,490       69,808       182,783       192,075  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

        

Losses and loss adjustment expenses

     89,231       25,909       142,425       79,261  

Policy acquisition and other underwriting expenses

     9,926       10,536       29,645       32,525  

Salaries and wages

     4,605       5,945       15,051       17,009  

Interest expense

     4,408       2,672       12,328       8,112  

Loss on repurchase of senior notes

     —         —         743       —    

Other operating expenses

     5,338       4,717       15,162       14,213  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     113,508       49,779       215,354       151,120  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) Income before income taxes

     (66,018     20,029       (32,571     40,955  

Income tax (benefit) expense

     (25,472     8,696       (13,587     16,542  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (40,546     11,333     $ (18,984     24,413  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic (loss) earnings per share

   $ (4.44     1.17     $ (2.05     2.48  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted (loss) earnings per share

   $ (4.44     1.10     $ (2.05     2.41  
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends per share

   $ 0.35       0.30     $ 1.05       0.90  


HCI GROUP, INC. AND SUBSIDIARIES

(Amounts in thousands, except per share amounts)

A summary of the numerator and denominator of the basic and diluted loss per common share is presented below.    

 

     Three Months Ended
September 30, 2017
 
     Loss     Shares      Per Share  
     (Numerator)     (Denominator)      Amount  

Net loss

   $ (40,546     

Less: Loss attributable to participating securities

     2,737       
  

 

 

      

Basic Loss Per Share:

       

Loss allocated to common stockholders

     (37,809     8,519      $ (4.44
       

 

 

 

Effect of Dilutive Securities:

       

Stock options*

     —         —       

Convertible senior notes*

     —         —       
  

 

 

   

 

 

    

Diluted Loss Per Share:

       

Loss available to common stockholders and assumed conversions

   $ (37,809     8,519      $ (4.44
  

 

 

   

 

 

    

 

 

 
     Nine Months Ended
September 30, 2017
 
     Loss     Shares      Per Share  
     (Numerator)     (Denominator)      Amount  

Net loss

   $ (18,984     

Less: Loss attributable to participating securities

     1,236       
  

 

 

      

Basic Loss Per Share:

       

Loss allocated to common stockholders

     (17,748     8,648      $ (2.05
       

 

 

 

Effect of Dilutive Securities:

       

Stock options*

     —         —       

Convertible senior notes*

     —         —       
  

 

 

   

 

 

    

Diluted Loss Per Share:

       

Loss available to common stockholders and assumed conversions

   $ (17,748     8,648      $ (2.05
  

 

 

   

 

 

    

 

 

 

 

* Excluded due to anti-dilutive effect.    

View differences made from one to another to evaluate Hci Group, Inc.'s financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Hci Group, Inc..

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account