8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities and Exchange Act of 1934

Date of Report (or Date of Earliest Event Reported): March 7, 2024

HCI Group, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Florida	001-34126	20-5961396
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

3802 Coconut Palm Drive

Tampa, Florida 33619

(Address of Principal Executive Offices)

(813) 405-3600

(Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	HCI	NYSE

Item 2.02 Results of Operations and Financial Condition

On March 7, 2024, we released our earnings for the three and twelve months ended December 31, 2023. We plan to host an earnings conference call that same day at 4:45 p.m. Eastern time during which our chief executive officer, chief operating officer and chief financial officer will discuss the results.

Interested parties may listen to the live presentation by dialing the listen-only number below or by clicking the webcast link available on the Investor Information section of the company’s website at www.hcigroup.com.

Date: Thursday, March 7, 2024

Time: 4:45 p.m. Eastern time (1:45 p.m. Pacific time)

Listen-only toll-free number: (888) 506-0062

Listen-only international number: (973) 528-0011

Entry Code: 409252

Please call the conference telephone number 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 Gateway Investor Relations at (949) 574-3860.

A replay of the call will be available by telephone after 8:00 p.m. Eastern time on the same day as the call and via the Investor Information section of the HCI Group website at www.hcigroup.com.

Toll-free replay number: (877) 481-4010

International replay number: (919) 882-2331

Replay ID: 49845

Our earnings release appears as Exhibit 99.1 to this form 8-K

Item 9.01 Exhibits.

Exhibit 99.1 Earnings Release

Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 7, 2024.

HCI GROUP, INC.
BY:	/s/ James Mark Harmsworth
	Name: James Mark Harmsworth Title: Chief Financial Officer

A signed original of this Form 8-K has been provided to HCI Group, Inc. and will be retained by HCI Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

 

HCI Group Reports Fourth Quarter and Full Year 2023 Results

Fourth Quarter Diluted EPS of $3.40

Fourth Quarter Gross Loss Ratio of 30.4%

Fourth Quarter Pre-Tax Income of $54.2 million

Tampa, Fla. – March 7, 2024 – HCI Group, Inc. (NYSE:HCI), a holding company with operations in homeowners insurance, information technology services, real estate, and reinsurance, reported pre-tax income of $54.2 million and net income of $40.9 million, or $3.40 diluted earnings per share, in the fourth quarter of 2023, compared with net income of $2.7 million, or $0.18 diluted earnings per share, in the fourth quarter of 2022.

Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the fourth quarter of 2023 was $38.8 million, or $3.22 diluted earnings per share compared with adjusted net income of $1.6 million, or $0.06 diluted earnings per share, in the fourth quarter of 2022. This press release includes an explanation of adjusted net income as well as a reconciliation to net income and earnings per share calculated in accordance with generally accepted accounting principles (known as “GAAP”).

Management Commentary

“Several major achievements were accomplished since the end of the third quarter, including completing four assumptions from Citizens, growing premiums-in-force by approximately 30%, further reducing the gross loss ratio to 30%, and commencing operations of a new insurance carrier,” said HCI Group Chairman and Chief Executive Officer Paresh Patel. “We also redeemed all outstanding preferred shares from Centerbridge and completed a secondary common stock offering for proceeds of $85 million.”

Fourth Quarter 2023 Commentary

Consolidated gross premiums earned in the fourth quarter increased to $215.2 million from $183.0 million in the fourth quarter of 2022. Gross premiums earned in the fourth quarter of 2023 include $23 million of premium from the assumption of policies from Citizens.

Premiums ceded for reinsurance in the fourth quarter decreased to $66.6 million from $77.0 million in the fourth quarter of 2022. Premiums ceded represented 30.9% of gross premiums earned in the fourth quarter of 2023 compared with 42.1% in the fourth quarter of 2022.

Net investment income in the fourth quarter was $10.3 million compared with $7.4 million in the fourth quarter of 2022. The increase was attributable to higher yields on fixed maturity securities, cash, and cash equivalents as well as a higher cash balance.

Losses and loss adjustment expenses in the fourth quarter decreased to $65.4 million from $72.1 million in the fourth quarter of 2022. The gross loss ratio in the fourth quarter declined to 30.4% from 39.4% in the fourth quarter of 2022. The decrease is primarily due to the continued improvement in claims experience in Florida including lower claims and litigation frequency.

Policy acquisition and other underwriting expenses in the fourth quarter decreased to $22.7 million from $24.0 million in the fourth quarter of 2022 and declined to 10.6% of gross premiums earned from 13.1%, reflecting lower commissions and lower policy acquisition expense related to policies assumed from Citizens.

Full Year 2023 Results

For the year ended December 31, 2023, the company reported net income of $89.3 million, or $7.62 diluted earnings per share, compared with a net loss of $54.6 million, or $6.24 loss per share, for the year ended December 31, 2022.

Adjusted net income (a non-GAAP measure which excludes net unrealized gains or losses on equity securities) for the twelve-month period was $86.8 million, or $7.41 diluted earnings per share compared with adjusted net loss of $47.5 million, or $5.48 loss per share, in the same period of 2022. An explanation of this non-GAAP financial measure and reconciliations to the applicable GAAP numbers accompany this press release.

1

Consolidated gross premiums earned for the twelve months of 2023 increased to $765.5 million from $724.7 million in the year ended December 31, 2022. Gross premiums earned for the twelve months of 2023 include $23 million of premium from the assumption of policies from Citizens.

Premiums ceded for reinsurance for the twelve months of 2023 increased to $269.6 million from $261.1 million in the twelve months of 2022. Premiums ceded represented 35.2% and 36.0% of gross premiums earned in the twelve months of 2023 and 2022, respectively.

Net investment income for the twelve months of 2023 increased to $46.2 million from $32.4 million in the twelve months of 2022. Results for the twelve months of 2023 included a $8.9 million gain from the sale of two real estate investment properties and results for the twelve months of 2022 included a $13.4 million gain from the sale of real estate investment property. Excluding real estate gains, net investment income for the twelve months of 2023 increased to $37.3 million from $19.0 million for the twelve months of 2022. The increase was attributable to higher yields on fixed maturity securities, cash, and cash equivalents as well as a higher cash balance.

Losses and loss adjustment expenses for the twelve months of 2023 decreased to $254.6 million from $371.5 million in the twelve months of 2022. The twelve months of 2022 included $64.6 million of loss expense related to Hurricane Ian. After adjusting for this, the gross loss ratio for the twelve months of 2023 improved to 33% compared to an adjusted gross loss ratio of 42% for the twelve months of 2022 reflecting the continued improvement in claims experience in Florida including lower claims and litigation frequency.

Policy acquisition and other underwriting expenses for the twelve months of 2023 decreased to $90.8 million from $105.0 million in the twelve months of 2022 and declined to 11.9% of gross premiums earned from 14.5%, reflecting lower commissions, the transition of business from United Property & Casualty Insurance Company and lower policy acquisition expenses related to the policies assumed from Citizens.

Conference Call

HCI Group will hold a conference call later today, March 7, 2024, to discuss these financial results. Chairman and Chief Executive Officer Paresh Patel, Chief Operating Officer Karin Coleman and Chief Financial Officer Mark Harmsworth will host the call starting at 4:45 p.m. Eastern time.

Interested parties can listen to the live presentation by dialing the listen-only number below or by clicking the webcast link available on the Investor Information section of the company's website at www.hcigroup.com.

Listen-only toll-free number: (888) 506-0062

Listen-only international number: (973) 528-0011

Entry Code: 409252

Please call the conference telephone number 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 Gateway Investor Relations at (949) 574-3860.

A replay of the call will be available by telephone after 8:00 p.m. Eastern time on the same day as the call and via the Investor Information section of the HCI Group website at www.hcigroup.com through March 7, 2025.

Toll-free replay number: (877) 481-4010

International replay number: (919) 882-2331

Replay ID: 49845

About HCI Group, Inc.

HCI Group, Inc. owns subsidiaries engaged in diverse, yet complementary business activities, including homeowners insurance, information technology services, insurance management, real estate, and reinsurance. HCI’s leading insurance operation, TypTap Insurance Company, is a technology-driven homeowners insurance company. TypTap’s operations are powered in large part by insurance-related information technology developed by HCI’s software subsidiary, Exzeo USA, Inc. HCI’s largest subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., provides homeowners insurance primarily in Florida. HCI’s real estate subsidiary, Greenleaf Capital, LLC, owns and operates multiple properties in Florida, including office buildings, retail centers and marinas.

The company's common shares trade on the New York Stock Exchange under the ticker symbol "HCI" and are included in the Russell 2000 and S&P SmallCap 600 Index. HCI Group, Inc. regularly publishes financial and other information in the Investor Information section of the company’s website. For more information about HCI Group and its subsidiaries, visit www.hcigroup.com.

2

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. For example, the estimation of reserves for losses and loss adjustment expenses is an inherently imprecise process involving many assumptions and considerable management judgment. 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.

Company Contact:

Bill Broomall, CFA

Investor Relations

HCI Group, Inc.

Tel (813) 776-1012

wbroomall@typtap.com

Investor Relations Contact:

Matt Glover

Gateway Group, Inc.

Tel (949) 574-3860

HCI@gatewayir.com

- Tables to follow -

3

HCI GROUP, INC. AND SUBSIDIARIES

Selected Financial Metrics

(Dollar amounts in thousands, except per share amounts)

	FY 2023			Q4 2023			Q3 2023			Q2 2023			Q1 2023			FY 2022
				(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Insurance Operations
Gross Written Premiums:
Homeowners Choice	$	535,070		$	182,038		$	127,334		$	140,544		$	85,153		$	377,860
TypTap Insurance Company		363,552			138,482			70,931			39,438			114,701			348,159
Total Gross Written Premiums		898,622			320,520			198,265			179,982			199,854			726,019
Gross Premiums Earned:
Homeowners Choice		417,202			125,796			102,075			96,875			92,456			426,501
TypTap Insurance Company		348,310			89,394			86,233			85,071			87,612			298,215
Total Gross Premiums Earned		765,512			215,190			188,308			181,946			180,068			724,716
Gross Premiums Earned Loss Ratio		33.3	%		30.4	%		35.4	%		34.0	%		33.6	%		51.3	%
Per Share Metrics
GAAP Diluted EPS	$	7.62		$	3.40		$	1.34		$	1.28		$	1.54		$	(6.24	)
Non-GAAP Adjusted Diluted EPS	$	7.41		$	3.22		$	1.41		$	1.22		$	1.50		$	(5.48	)
Dividends per share	$	1.60		$	0.40		$	0.40		$	0.40		$	0.40		$	1.60
Book value per share at the end of period	$	33.36		$	33.36		$	23.27		$	21.92		$	20.97		$	18.91
Shares outstanding at the end of period		9,738,183			9,738,183			8,590,824			8,594,764			8,596,673			8,598,682

4

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollar amounts in thousands)

	December 31, 2023			December 31, 2022
Assets
Fixed-maturity securities, available for sale, at fair value (amortized cost: $387,687 and $494,197, respectively and allowance for credit losses: $0 and $0, respectively)	$	383,238		$	483,901
Equity securities, at fair value (cost: $44,011 and $36,272, respectively)		45,537			34,583
Limited partnership investments		23,583			25,702
Investment in unconsolidated joint venture, at equity		—			18
Real estate investments		67,893			71,388
Total investments		520,251			615,592
Cash and cash equivalents		536,478			234,863
Restricted cash		3,287			2,900
Receivable from maturities of fixed-maturity securities		91,085			—
Accrued interest and dividends receivable		3,507			1,952
Income taxes receivable		—			2,807
Deferred income taxes, net		512			—
Premiums receivable, net (allowance: $3,152 and $5,362, respectively)		38,037			34,998
Assumed premium receivable		19,954			—
Prepaid reinsurance premiums		86,232			66,627
Reinsurance recoverable, net of allowance for credit losses:
Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively)		19,690			71,594
Unpaid losses and loss adjustment expenses (allowance: $118 and $454, respectively)		330,604			616,765
Deferred policy acquisition costs		42,910			45,522
Property and equipment, net		29,251			17,910
Right-of-use-assets - operating leases		1,407			777
Intangible assets, net		7,659			10,578
Funds withheld for assumed business		30,087			48,772
Other assets		50,365			31,671
Total assets	$	1,811,316		$	1,803,328
Liabilities and Equity
Losses and loss adjustment expenses	$	585,073		$	863,765
Unearned premiums		501,157			368,047
Advance premiums		15,895			18,587
Reinsurance payable on paid losses and loss adjustment expenses		3,145			8,606
Ceded reinsurance premiums payable		8,921			17,646
Assumed premiums payable		850			—
Accrued expenses		19,722			14,534
Income tax payable		7,702			—
Deferred income taxes, net		—			1,704
Reinsurance recovered in advance on unpaid losses		—			19,863
Long-term debt		208,495			211,687
Lease liabilities - operating leases		1,408			721
Other liabilities		35,623			23,361
Total liabilities		1,387,991			1,548,521
Commitments and contingencies
Redeemable noncontrolling interest		96,160			93,553
Equity:
Common stock, (no par value, 40,000,000 shares authorized, 9,738,183 and 8,598,682 shares issued and outstanding in 2023 and 2022, respectively)		—			—
Additional paid-in capital		89,568			—
Retained income		238,438			172,482
Accumulated other comprehensive loss, net of taxes		(3,163	)		(9,886	)
Total stockholders' equity		324,843			162,596
Noncontrolling interests		2,322			(1,342	)
Total equity		327,165			161,254
Total liabilities, redeemable noncontrolling interest, and equity	$	1,811,316		$	1,803,328

5

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(Dollar amounts in thousands, except per share amounts)

	Three Months Ended						Years Ended
	December 31,						December 31,
	2023			2022			2023			2022
Revenue
Gross premiums earned	$	215,190		$	182,954		$	765,512		$	724,716
Premiums ceded		(66,576	)		(77,036	)		(269,627	)		(261,144	)
Net premiums earned		148,614			105,918			495,885			463,572
Net investment income		10,341			7,365			46,234			32,447
Net realized investment (losses) gains		(410	)		17			(1,996	)		(1,187	)
Net unrealized investment gains (losses)		2,830			1,004			3,215			(7,153	)
Policy fee income		1,053			1,099			4,704			4,279
Gain from remeasurement of contingent liabilities		—			3,117			—			3,117
Other		242			1,423			2,628			4,488
Total revenue		162,670			119,943			550,670			499,563
Expenses
Losses and loss adjustment expenses		65,398			72,135			254,579			371,463
Policy acquisition and other underwriting expenses		22,716			24,028			90,822			104,977
General and administrative personnel expenses		12,230			11,328			53,868			56,511
Interest expense		2,822			2,839			11,117			7,768
Impairment loss		—			2,284			—			2,284
Other operating expenses		5,344			4,586			22,634			24,978
Total expenses		108,510			117,200			433,020			567,981
Income (loss) before income taxes		54,160			2,743			117,650			(68,418	)
Income tax expense (benefit)		13,247			92			28,393			(13,815	)
Net income (loss)	$	40,913		$	2,651		$	89,257		$	(54,603	)
Net income attributable to redeemable noncontrolling interest		(2,360	)		(2,305	)		(9,370	)		(9,106	)
Net (income) loss attributable to noncontrolling interests		(457	)		1,180			(853	)		5,198
Net income (loss) after noncontrolling interests	$	38,096		$	1,526		$	79,034		$	(58,511	)
Basic earnings (loss) per share	$	4.31		$	0.18		$	9.13		$	(6.24	)
Diluted earnings (loss) per share	$	3.40		$	0.18		$	7.62		$	(6.24	)
Dividends per share	$	0.40		$	0.40		$	1.60		$	1.60

6

HCI GROUP, INC. AND SUBSIDIARIES

(Amounts in thousands, except per share amounts)

A summary of the numerator and denominator of basic and diluted earnings per common share calculated in accordance with GAAP is presented below.

	Three Months Ended							Year Ended
GAAP	December 31, 2023							December 31, 2023
	Income			Shares (a)		Per Share		Income			Shares (a)		Per Share
	(Numerator)			(Denominator)		Amount		(Numerator)			(Denominator)		Amount
Net income	$	40,913						$	89,257
Less: Net income attributable to redeemable noncontrolling interest		(2,360	)						(9,370	)
Less: TypTap Group's net (income) attributable to non-HCI common stockholders and TypTap Group's participating securities		(457	)						(853	)
Net income attributable to HCI		38,096							79,034
Less: Income attributable to participating securities		(1,166	)						(2,625	)
Basic Earnings Per Share:
Income allocated to common stockholders		36,930			8,567	$	4.31		76,409			8,367	$	9.13
Effect of Dilutive Securities:
Stock options		—			155				—			83
Convertible senior notes		1,938			2,538				7,732			2,538
Warrants		—			192				—			56
Diluted Earnings Per Share:
Income available to common stockholders and assumed conversions	$	38,868			11,452	$	3.40	$	84,141			11,044	$	7.62
(a) Shares in thousands.

Non-GAAP Financial Measures

Adjusted net income is a Non-GAAP financial measure that removes from net income of HCI's portion of the effect of unrealized gains or losses on equity securities required to be included in results of operations in accordance with Accounting Standards Codification 321. HCI Group believes net income without the effect of volatility in equity prices more accurately depicts operating results. This financial measurement is not recognized in accordance with accounting principles generally accepted in the United States of America ("GAAP") and should not be viewed as an alternative to GAAP measures of performance. A reconciliation of GAAP Net income to Non-GAAP Adjusted net income and GAAP diluted earnings per share to Non-GAAP Adjusted diluted earnings per share is provided below.

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income

	Three Months Ended						Year Ended
	December 31, 2023						December 31, 2023
GAAP Net income				$	40,913					$	89,257
Net unrealized investment gains	$	(2,830	)				$	(3,215	)
Less: Tax effect at 25.041%	$	709					$	805
Net adjustment to Net income				$	(2,121	)				$	(2,410	)
Non-GAAP Adjusted Net income				$	38,792					$	86,847

7

HCI GROUP, INC. AND SUBSIDIARIES

(Amounts in thousands, except per share amounts)

A summary of the numerator and denominator of the basic and diluted earnings per common share calculated with the Non-GAAP financial measure Adjusted net income is presented below.

	Three Months Ended							Year Ended
Non-GAAP	December 31, 2023							December 31, 2023
	Income			Shares (a)		Per Share		Income			Shares (a)		Per Share
	(Numerator)			(Denominator)		Amount		(Numerator)			(Denominator)		Amount
Adjusted net income (non-GAAP)	$	38,792						$	86,847
Less: Net income attributable to redeemable noncontrolling interest		(2,360	)					$	(9,370	)
Less: TypTap Group's net income attributable to non-HCI common stockholders and TypTap Group's participating securities		(433	)						(841	)
Net income attributable to HCI		35,999							76,636
Less: Income attributable to participating securities		(1,101	)						(2,545	)
Basic Earnings Per Share before unrealized gains/losses on equity securities:
Income allocated to common stockholders		34,898			8,567	$	4.07		74,091			8,367	$	8.86
Effect of Dilutive Securities:
Stock options		—			155				—			83
Convertible senior notes		1,938			2,538				7,732			2,538
Warrants		—			192				—			56
Diluted Earnings Per Share before unrealized gains/losses on equity securities:
Income available to common stockholders and assumed conversions	$	36,836		$	11,452	$	3.22	$	81,823		$	11,044	$	7.41
(a) Shares in thousands.

Reconciliation of GAAP Diluted EPS to Non-GAAP Adjusted Diluted EPS

	Three Months Ended						Year Ended
	December 31, 2023						December 31, 2023
GAAP diluted Earnings Per Share				$	3.40					$	7.62
Net unrealized investment gains	$	(0.25	)				$	(0.29	)
Less: Tax effect at 25.041%	$	0.07					$	0.08
Net adjustment to GAAP diluted EPS				$	(0.18	)				$	(0.21	)
Non-GAAP Adjusted diluted EPS				$	3.22					$	7.41

8

XML

Cover	Mar. 07, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 07, 2024
Entity Registrant Name	HCI Group, Inc.
Entity Central Index Key	0001400810
Entity Emerging Growth Company	false
Entity File Number	001-34126
Entity Incorporation State Country Code	FL
Entity Tax Identification Number	20-5961396
Entity Address, Address Line One	3802 Coconut Palm Drive
Entity Address, City or Town	Tampa
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33619
City Area Code	813
Local Phone Number	405-3600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of each class	Common Stock
Trading Symbol(s)	HCI
Name of each exchange on which registered	NYSE