TAMPA, Fla., Aug. 1, 2013 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE:HCI) reported results today for the three and six months ended June 30, 2013.
Second Quarter 2013 - Financial Results
Income available to common stockholders in the second quarter of 2013 totaled $16.2 million or $1.40 diluted earnings per common share, an improvement from $7.2 million or $0.74 diluted earnings per common share in the second quarter of 2012.
Gross premiums earned in the second quarter of 2013 increased 52.4% to $82.0 million from $53.8 million in the same period in 2012. The increase was primarily due to policies assumed from Citizens Property Insurance Corporation in November 2012.
Net premiums earned (defined as gross premiums earned less premiums ceded to reinsurance companies) in the second quarter of 2013 increased 54.7% to $57.3 million from $37.1 million in the same period in 2012. Premiums ceded in the second quarter of 2013 were 30.0% of the company's gross premiums earned, compared with 31.1% during the same period in 2012.
Net investment income in the second quarter of 2013 was $295,000 compared with $302,000 in the same period in 2012.
Losses and loss adjustment expenses during the second quarter of 2013 were $17.4 million compared with $16.2 million in the same period in 2012.
Policy acquisition and other underwriting expenses in the second quarter of 2013 were $7.3 million compared with $6.2 million in the comparable period in 2012. The increase was primarily attributable to commissions and premium taxes related to the increase in policy renewals. Other operating expenses, which include a variety of general and administrative expenses, totaled $7.4 million in the second quarter of 2013 compared with $4.4 million in the second quarter of 2012. The change was primarily due to increases in compensation and related expenses.
Interest expense from the company's senior notes issued in January 2013 totaled $846,000 in the second quarter of 2013.
Second Quarter 2013 - Financial Ratios
The company's loss ratio applicable to the second quarter of 2013 (defined as losses and loss adjustment expenses related to net premiums earned) was 30.4% compared with 43.7% in the second quarter of 2012. The loss ratio was positively impacted by a significant increase in premiums earned during Q2 2013 as compared to Q2 2012.
The expense ratio applicable to the second quarter of 2013 (defined as underwriting expenses, interest and other operating expenses related to net premiums earned) was 27.0% compared with 28.7% in the same year-ago period.
Expressed as a total of all expenses related to net premiums earned, the combined loss and expense ratio to net premiums earned was 57.4% in the second quarter of 2013 compared with 72.4% in the same year-ago period.
Six Months Ended June 30, 2013 - Financial Results
Income available to common stockholders for the six months ended June 30, 2013 totaled $36.6 million or $3.20 diluted earnings per common share, compared with $14.0 million or $1.60 diluted earnings per common share for the six months ended June 30, 2012.
Gross premiums earned for the six months ended June 30, 2013 increased 51.7% to $164.5 million from $108.5 million in the same year-ago period. The increase was primarily due to policies assumed from Citizens Property Insurance Corporation in November 2012.
Net premiums earned for the six months ended June 30, 2013 increased 52.1% to $117.9 million from $77.5 million in the same period in 2012. Premiums ceded for the six months ended June 30, 2013 were 28.3% of the company's gross premiums earned, compared with 28.6% during the same period in 2012.
Net investment income for the six months ended June 30, 2013 and 2012 was $434,000 and $824,000, respectively.
Losses and loss adjustment expenses for the six months ended June 30, 2013 and 2012 were $33.3 million and $35.4 million, respectively.
Policy acquisition and other underwriting expenses for the six months ended June 30, 2013 were $13.3 million compared with $13.1 million for the six months ended June 30, 2012. Other operating expenses totaled $13.5 million for the six months ended June 30, 2013 compared with $8.7 million for the six months ended June 30, 2012.
Interest expense from the company's senior notes issued in January 2013 totaled $1.5 million for the six months ended June 30, 2013.
Six Months Ended June 30, 2013 - Financial Ratios
The company's loss ratio applicable to the six months ended June 30, 2013 was 28.2% compared with 45.6% in the six months ended June 30, 2012.
The expense ratio applicable to the six months ended June 30, 2013 was 24.0% compared with 28.1% in the same period in 2012.
Expressed as a total of all expenses related to net premiums earned, the combined loss and expense ratio to net premiums earned was 52.2% in the six months ended June 30, 2013 compared with 73.7% in the same period in 2012.
Management Commentary
"Our second quarter results reflect continued strength in our core business. We remain diligently focused on our strict underwriting standards and on strategically growing and diversifying our business," said Paresh Patel, HCI Group's chairman and chief executive officer.
Conference Call
HCI Group will hold a conference call later today (August 1, 2013) to discuss these financial results. Chairman and chief executive officer, Paresh Patel, and chief financial officer, Richard Allen, will host the call starting at 4:30 p.m. Eastern time. A question and answer session will follow management's presentation.
Listen-Only Number: 877-407-9210
International: 201-689-8049
Investors or analysts that wish to participate in the Q&A portion of the call should contact Les Holland at lholland@hcigroup.com or (813) 405-3281.
The conference call will be broadcast simultaneously and will be available for replay via the investor section of the company's website at www.hcigroup.com.
Please call the conference telephone number 5 to 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 Group at (949) 574-3860.
A replay of the call will be available after 8:00 p.m. Eastern time on the same day through August 9, 2013.
Toll-Free Replay Number: 877-660-6853
International Replay Number: 201-612-7415
Conference ID#: 418494
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. Its 8% Senior Notes trade on the New York Stock Exchange under the ticker symbol "HCJ." Its 7% Series A, cumulative redeemable preferred shares trade on the NASDAQ Capital Market under the ticker symbol "HCIIP." For more information about HCI Group, visit www.hcigroup.com.
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. 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.
| HCI GROUP, INC. AND SUBSIDIARIES | ||
| Consolidated Balance Sheets | ||
| (Amounts in thousands, except share amounts) | ||
| At June 30, 2013 | At December 31, 2012 | |
| (Unaudited) | ||
| Assets | ||
| Fixed-maturity securities, available-for-sale, at fair value | $ 40,119 | 35,953 |
| Equity securities, available-for-sale, at fair value | 10,335 | 8,876 |
| Other investments | 16,014 | 16,087 |
| Total investments | 66,468 | 60,916 |
| Cash and cash equivalents | 296,812 | 230,214 |
| Accrued interest and dividends receivable | 410 | 375 |
| Premiums and reinsurance receivable | 28,305 | 10,642 |
| Prepaid reinsurance premiums | 31,236 | 9,112 |
| Deferred policy acquisition costs | 18,608 | 10,032 |
| Property and equipment, net | 13,008 | 10,853 |
| Deferred income taxes | — | 3,848 |
| Other assets | 6,934 | 2,296 |
| Total assets | $ 461,781 | 338,288 |
| Liabilities and Stockholders' Equity | ||
| Losses and loss adjustment expenses | $ 44,749 | 41,168 |
| Unearned premiums | 191,446 | 154,249 |
| Advance premiums | 11,273 | 4,029 |
| Assumed reinsurance balances payable | 1,466 | 1,377 |
| Accrued expenses | 7,725 | 3,041 |
| Dividends payable | 34 | 42 |
| Income taxes payable | 124 | 8,813 |
| Deferred income taxes | 1,529 | — |
| Long-term debt | 40,250 | — |
| Other liabilities | 9,600 | 4,316 |
| Total liabilities | 308,196 | 217,035 |
| Stockholders' equity: | ||
| 7% Series A cumulative convertible preferred stock (liquidation preference $10.00 per share), no par value, 1,500,000 shares authorized,191,750 and 241,182 shares issued and outstanding in 2013 and 2012 | — | — |
| Preferred stock (no par value 18,500,000 shares authorized, no shares issued or outstanding) | — | — |
| Common stock, (no par value, 40,000,000 shares authorized, 11,434,216 and 10,877,537 shares issued and outstanding in 2013 and 2012) | — | — |
| Additional paid-in capital | 65,394 | 63,875 |
| Retained income | 87,294 | 55,758 |
| Accumulated other comprehensive income | 897 | 1,620 |
| Total stockholders' equity | 153,585 | 121,253 |
| Total liabilities and stockholders' equity | $ 461,781 | 338,288 |
| HCI GROUP, INC. AND SUBSIDIARIES | ||||
| Consolidated Statements of Income | ||||
| (Unaudited) | ||||
| (Amounts in thousands, except per share amounts) | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, | June 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Revenue | ||||
| Gross premiums earned | $ 81,952 | 53,772 | $ 164,499 | 108,470 |
| Premiums ceded | (24,617) | (16,702) | (46,613) | (30,969) |
| Net premiums earned | 57,335 | 37,070 | 117,886 | 77,501 |
| Net investment income | 295 | 302 | 434 | 824 |
| Policy fee income | 1,426 | 1,028 | 2,198 | 1,543 |
| Net realized investment (losses) gains | (8) | 9 | 12 | 30 |
| Gain on bargain purchase | — | 179 | — | 179 |
| Other | 285 | 267 | 614 | 430 |
| Total revenue | 59,333 | 38,855 | 121,144 | 80,507 |
| Expenses | ||||
| Losses and loss adjustment expenses | 17,414 | 16,197 | 33,286 | 35,365 |
| Policy acquisition and other underwriting expenses | 7,308 | 6,243 | 13,276 | 13,079 |
| Interest expense | 846 | — | 1,532 | — |
| Other operating expenses | 7,358 | 4,406 | 13,473 | 8,673 |
| Total expenses | 32,926 | 26,846 | 61,567 | 57,117 |
| Income before income taxes | 26,407 | 12,009 | 59,577 | 23,390 |
| Income taxes | 10,172 | 4,747 | 22,955 | 9,160 |
| Net income | $ 16,235 | 7,262 | $ 36,622 | 14,230 |
| Preferred stock dividends | (32) | (63) | (66) | (244) |
| Income available to common stockholders | $ 16,203 | 7,199 | $ 36,556 | 13,986 |
| Basic earnings per common share | $ 1.44 | 0.85 | $ 3.31 | 1.89 |
| Diluted earnings per common share | $ 1.40 | 0.74 | $ 3.20 | 1.60 |
| Dividends per common share | $ 0.23 | 0.20 | $ 0.45 | 0.35 |
CONTACT: Company Contact:
Les Holland, Investor Relations
HCI Group, Inc.
Tel (813) 405-3281
lholland@hcigroup.com
Investor Relations Contact:
Matt Glover or Michael Koehler
Liolios Group, Inc.
Tel (949) 574-3860
hci@liolios.com
