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HCI Group Reports First Quarter 2018 Results
Tampa, Fla. May 1, 2018 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 quarter ended March 31, 2018.
First Quarter 2018 - Financial Results
Net income for the first quarter of 2018 totaled $10.8 million or $1.11 diluted earnings per share compared with $12 million or $1.15 diluted earnings per share in the first quarter of 2017. Adjusted net income (a non-GAAP measure which excludes unrealized gains or losses on equity securities) for the quarter was $12.7 million or $1.26 per fully diluted share. 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.
Gross premiums earned totaled $85.8 million compared with $91.6 million in the same period in 2017. The decrease in 2018 was primarily attributable to policy attrition.
Gross premiums written were $70.1 million compared with $71.4 million in the same quarter of 2017.
Premiums ceded increased to $32.3 million or 37.6% of gross premiums earned from $28.6 million or 31.2% of gross premiums earned in the first quarter of 2017. The increase was primarily due to a net increase of ceded premiums attributable to retrospective provisions under certain reinsurance contracts as opposed to a net reduction in ceded premiums in the same period in 2017.
Net premiums earned (defined as gross premiums earned less premiums ceded to reinsurance) were $53.5 million compared with $63 million in the same period in 2017.
Net premiums written (defined as gross premiums written less premiums ceded to reinsurance) were $37.9 million compared with $42.8 million in the same period in 2017.
Net realized investment gains were $2.2 million compared with $0.7 million in the same period in 2017. The gains in 2018 resulted primarily from sales intended to rebalance the companys investment portfolio. Net unrealized investment losses were $2.6 million representing a net unfavorable change in the fair value of equity securities during the first quarter of 2018 subsequent to the adoption of a new accounting standard requiring unrealized holding gains and losses on equity securities to be reported in the statement of income.
Losses and loss adjustment expenses were $19.7 million compared with $25.5 million in the same period in 2017. There were two reasons for the decrease. The $25.5 million in 2017 included loss reserve strengthening of $2.5 million in response to trends involving assignment of insurance benefits and related litigation, and there was no material reserve strengthening in the first quarter of 2018. Second, there was a substantial decrease in the number of non-catastrophe claims in the first quarter of 2018 compared to the first quarter of 2017.
General and administrative personnel expenses were $6.3 million compared with $7 million in the same period in 2017.
The decrease related to lower stock-based compensation and payroll costs associated with the processing and settlement of Hurricane Irma claims which are recoverable from reinsurers.
Interest expense was $4.5 million compared with $3.5 million in the same period in 2017. The change primarily resulted from interest expense related to the 4.25% convertible debt offering which was completed in March 2017.
The following information was filed by Hci Group, Inc. (HCI) on Tuesday, May 1, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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