Homeowners Choice, Inc. (NASDAQ:HCII), a Florida-based provider of homeowners’ insurance, today announced its results of operations for the three months and year ended Dec. 31, 2008.

Net income for the fourth quarter 2008 was $5,117,000, or $0.71 per diluted share, compared with net income of $1,410,000 or $0.27 per diluted share for the fourth quarter 2007. For the year ended Dec. 31, 2008, net income was $12,655,000, or $2.08 per diluted share, compared with net income of $1,017,000 or $0.29 per diluted share for the prior year period. Net premiums earned for the fourth quarter and year ended Dec. 31, 2008 were $18,957,000 and $47,266,000 respectively.

Homeowners Choice first began operations in July of 2007. Consequently certain period to period results are not comparable.

Year 2008 Highlights:

  • Income before income taxes of $20,795,000
  • Increased policy count from 13,000 to 70,000
  • Cash on hand and short term investments at year end of $108,642,000
  • No mark to market losses in its investment portfolio
  • Remained debt free
  • Increased book value per share from $2.77 to $5.42
  • Moved headquarters from Port St Lucie to Clearwater, Florida
  • Completed initial public offering on July 31, 2008

“Our disciplined strategy has resulted in steady growth while maintaining profitability,” said Richard Allen, the company’s chief financial officer. “We are also pleased to report that we are debt free and did not incur any mark to market losses for the year.”

Chief Executive Officer F.X. McCahill added, “By choosing our policyholders carefully, we have been able to provide them lower premiums while building a solid company. I am proud that in this time of uncertainty we achieved significant growth during 2008 and continued to be profitable.”

The company will host an earnings conference call Tuesday, March 10, 2009, at 4:30 p.m. E.D.T., during which McCahill and Allen will discuss the fourth quarter and year end results. The call will be available live at 877- 407-9210 (toll-free). International callers should call 201-689-8049. Analysts wishing to participate in the call should contact Jay Madhu, vice president-marketing and investor relations, at 727-213-3660. A live audio webcast of the call will be available at http://www.ir-site.com/hcpci/events.asp. Replays of the webcast will be available until June 10, 2009.

About Homeowners Choice, Inc.

Homeowners Choice, Inc. is a Florida-based insurance holding company headquartered in Clearwater, Fla. The company was founded by individuals who were themselves Florida homeowners. Its wholly-owned subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., which began operations in July 2007, provides property and casualty homeowners' insurance, condominium owners' insurance and tenants' insurance solely to Florida property owners. The company’s principal executive offices are located at 2340 Drew St., Suite 200, Clearwater, Fla. 33765. More information about Homeowners Choice, Inc. is available at www.hcpci.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” 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 registration statement filed 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. Homeowners Choice, Inc. disclaims all obligations to update any forward-looking statements.

HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)

At December 31,

At December 31,
20082007
Assets
Cash and cash equivalents $ 81,060 15,729
Short-term investments 27,582 17,055
Accrued interest and dividends receivable 63 60
Premiums receivable 5,021 3,256
Note receivable 450 —
Ceded reinsurance balances receivable 157 —
Prepaid reinsurance premiums 7,122 —
Deferred policy acquisition costs 6,292 3,163
Property and equipment, net 267 36
Deferred income taxes 3,563 653
Other assets 412 41
Total assets $ 131,989 39,993
Liabilities and Stockholders’ Equity
Losses and loss adjustment expenses 14,763 1,688
Unearned premiums 67,219 19,814
Ceded reinsurance balances payable 6,136 1,060
Assumed reinsurance balances payable — 833
Accrued expenses 1,535 832
Income taxes payable 4,704 1,266
Other liabilities 239 162
Total liabilities 94,596 25,655
Stockholders’ equity:
Preferred stock (no par value 20,000,000 shares authorized, no shares issued or outstanding) — —
Common stock, (no par value, 40,000,000 shares authorized,
6,892,668 and 5,182,000 shares issued and outstanding in 2009 and 2008) — —
Additional paid-in capital 23,783 13,383
Retained earnings 13,610 955
Total stockholders’ equity 37,393 14,338
Total liabilities and stockholders’ equity $ 131,989 39,993

HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES

Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)

Three Months Ended

Twelve Months Ended

December 31,December 31,
2008200720082007
Revenue
Net premiums earned $ 18,957 5,342 47,266 7,034
Net investment income 469 312 1,622 602
Other 53 - 645 24
Total revenue 19,479 5,654 49,533 7,660
Expenses
Losses and loss adjustment expenses 10,516 1,758 21,528 2,742
Policy acquisition and other underwriting expenses 317 1,680 7,210 2,868
Pre-opening expenses - - — 419
Total expenses 10,833 3,438 28,738 6,029
Income before income taxes 8,646 2,216 20,795 1,631
Income tax expense 3,529 806 8,140 614
Net income $ 5,117 1,410 12,655 1,017
Basic earnings per share $ 0.74 0.27 2.15 0.29
Diluted earnings per share $ 0.71 0.27 2.08 0.29
Dividends per share $ — — — —
Gross written premium $ 58,101 21,532 109,330 29,360
Net written premium $ 52,119 20,011 94,671 26,848