Homeowners Choice, Inc. (NASDAQ:HCII), a Florida-based provider of homeowners insurance, today announced its results of operations for the three and nine months ended Sept. 30, 2008.

Net income for the third quarter 2008 was $802,000, or $0.12 per diluted share, compared with a net loss of $114,000, or $0.02 loss per diluted share, for the third quarter 2007, and for the nine months ended Sept. 30, 2008, net income was $7,538,000, or $1.33 per diluted share, compared with a net loss of $393,000, or $0.12 loss per diluted share for the prior year period. Net premiums earned for the three and nine months ended Sept. 30, 2008 were $8,051,000 and $28,309,000, respectively.

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

We ended the quarter with approximately 17,000 policies outstanding, in part because we did not want to increase our loss exposure at the height of the 2008 hurricane season, said the companys CEO, F.X. McCahill. We are pleased to report that after our October assumption of policies from Citizens, we currently have approximately 63,000 policies.

Richard Allen, the companys CFO, added, The take-out of more than 45,000 policies from Citizens qualified us for a reduction of commissions ceded to Citizens from 16 percent to 6 percent, which should result in recognition of a pre-tax gain of approximately $3.6 million during the fourth quarter of 2008.

Citizens is a state-sponsored homeowners insurance company. The State of Florida has a policy of encouraging private insurance companies to assume or take-out policies from Citizens to reduce the governments risk exposure. Homeowners Choice recently announced approval from Citizens and the Florida Office of Insurance Regulation to take out up to 24,000 additional policies in December, 2008.

The company will host an earnings conference call today at 4:30 p.m. ET during which McCahill and Allen will discuss the third quarter 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, investor relations director, at 813-263-5007. 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 Feb. 12, 2009.

About Homeowners Choice, Inc.

Homeowners Choice, Inc. is a Florida-based insurance holding company, headquartered in Clearwater, Fla. and founded by 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 companys 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. The forward-looking statements in this news release include statements regarding the potential earnings from an expected reduction in commissions to Citizens. 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 companys 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 companys business, financial condition, and results of operations. Homeowners Choice, Inc. disclaims all obligations to update any forward-looking statements.

Condensed Consolidated Balance Sheets
(Dollars in thousands)

At September



At December



Cash and cash equivalents $ 26,169 15,729
Short-term investments 26,382 17,055
Accrued interest and dividends receivable 55 60
Premiums receivable 12,888 3,256
Ceded reinsurance balances receivable 2,830
Assumed reinsurance balances receivable 497
Deferred policy acquisition costs 5,424 3,163
Office equipment, net 237 36
Deferred income taxes, net 1,161 653
Income taxes receivable 152
Other assets 223 41
Total assets $ 76,018 39,993
Liabilities and Stockholders Equity
Losses and loss adjustment expenses 7,323 1,688
Unearned premiums 34,233 19,814
Ceded reinsurance balances payable 1,060
Assumed reinsurance balances payable 833
Accrued expenses 1,711 832
Income taxes payable 1,266
Other liabilities 733 162
Total liabilities 44,000 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,
6,848,668 and 5,182,000 shares issued and outstanding in 2008 and 2007)
Additional paid-in capital 23,525 13,383
Retained earnings 8,493 955
Total stockholders equity 32,018 14,338
Total liabilities and stockholders equity $ 76,018 39,993

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

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net premiums earned $ 8,051 1,692 28,309 1,692
Net investment income 425 203 1,152 314
Other 189 591
Total revenue 8,665 1,895 30,052 2,006
Losses and loss adjustment expenses 4,565 984 11,011 984
Policy acquisition and other underwriting expenses 2,774 1,182 6,893 1,188
Pre-opening expenses 75 419
Total expenses 7,339 2,241 17,904 2,591
Income (loss) before income taxes 1,326 (346) 12,148 (585)
Income tax expense (benefit) 524 (232) 4,610 (192)
Net income (loss) $ 802 (114) 7,538 (393)
Basic earnings (loss) per share $ 0.13 (0.02) 1.36 (0.12)
Diluted earnings (loss) per share $ 0.12 (0.02) 1.33 (0.12)
Dividends per share $