HCI (HCI) 8 Aug 24 2024 Q2 Earnings call transcript

Strong Performance and Solid Growth: HCI Group reported a pre-tax income of $76 million and earnings per share of $4.24 for the second quarter of 2024. The company's gross premiums earned increased by 45% to $264 million, with contributions from all insurance divisions. The in-force premiums are above $1 billion, indicating a solid base for future growth. The company's underwriting results showed improvement, with a gross loss ratio of 29.7%. HCI continued to deliver on its commitment to shareholders, paying a dividend of $0.40 per share.

Expansion and Assumption of Policies: HCI made significant strides in expanding its reach, assuming additional policies from Citizens. The total run rate premium for these policies is approximately $70 million. The company also completed its annual reinsurance program, securing a structure similar to last year with largely unchanged retention at both insurance carriers. This move is expected to improve HCI's overall financial position.

Financial Health and Balance Sheet Improvement: The financial health of HCI Group is robust, with a significant improvement in the balance sheet. Over the last 12 months, consolidated cash and investments have increased by $390 million, debt has dropped by $70 million, and shareholder equity has increased by $259 million. The debt-to-cap ratio has dropped from 62% to 34%, and book value per share has grown from $22 to $43. These improvements are a result of careful debt management, capital management, operational efficiency, and growing cash flow.

Innovation and Technology: HCI's innovative technology and strategic initiatives are driving growth and improving the company's bottom line. The company's technology has been proven to select attractive policies and significantly improve the combined ratios, both in tough times and in good times. HCI's technology-driven approach sets it apart from competitors and positions the company for continued success.

Challenges and Opportunities: Despite the positive performance, HCI is not immune to challenges. The company faces the ongoing impact of Hurricane Debby, with losses expected to be within the statutory retention. However, HCI's ability to manage these challenges and continue to focus on growth opportunities, such as the assumption of additional policies from Citizens, underscores the company's resilience and strategic prowess.

Looking Ahead: HCI Group is well-positioned for the future, with a solid financial base, a commitment to innovation, and a focus on growth. The company's strategic initiatives, including the assumption of additional policies from Citizens and the ongoing implementation of its technology-driven approach, are expected to drive continued growth and improve the company's financial performance. Investors and stakeholders will be watching closely to see how HCI navigates the challenges and opportunities ahead.

Investor Questions and Answers: During the Q&A session, analysts probed HCI's management on various aspects of its operations, including the impact of Hurricane Debby, the company's growth strategies, and its financial performance. HCI's executives provided detailed responses, offering insights into the company's plans and outlook. The dialogue between the analysts and management provided a clearer picture of HCI's current state and future prospects.

In conclusion, HCI Group's second quarter 2024 earnings call underscored the company's strong performance, strategic initiatives, and resilience in the face of challenges. With a solid financial base, innovative technology, and a focus on growth, HCI is well-positioned to navigate the complexities of the insurance industry and continue to deliver value to its stakeholders.