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): November 2, 2011
Homeowners Choice, 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) |
5300 West Cypress Street, Suite 100
Tampa Florida 33706
(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)) |
Section 1 Business and operations
Item 1.01. Entry into a Material Definitive Agreement
On November 2, 2011, we entered into an assumption agreement with HomeWise Insurance Company, whereby we agreed to assume certain rights and obligations with respect to that companys Florida homeowners insurance policies. Under the agreement, HomeWise agreed to transfer to us up 70,000 of the policies and approximately $45 million in cash, which represents an estimate of the unearned premiums and premium receivables. Exact figures are undeterminable until ongoing policy cancellations and premium refunds are accounted for.
Section 2 Financial Information
Item 2.02. Results of Operations and Financial Condition
On November 8, 2011, we released our earnings for the three and months ended September 30, 2011. We plan to host an earnings conference call that same day at 4:30 p.m. ET during which our chief executive officer and our chief financial officer will discuss the results.
Interested parties are invited to listen to the call live over the Internet at http://www.ir-site.com/hcpci/events.asp. The call is also available by dialing (877) 407-9210 (toll-free). International participants should instead call (201) 689-8049. Participants should dial into the conference call approximately 10 minutes before the scheduled start time. Replays of the webcast will be available until December 9, 2011.
Investors wishing to participate in the call should contact Jay Madhu, Vice-PresidentInvestor Relations at: jmadhu@hcpci.com or (727) 213-3660.
Our earnings release appears as Exhibit 99.1.
Section 3 Securities and Trading Markets
Item 3.02 Unregistered Sales of Equity Securities
On November 2, 2011, we agreed to issue to Glencoe Acquisition, Inc., 1,000,000 warrants for the purchase of up to 500,000 of our common shares in exchange for an option to acquire all the equity interest in its subsidiary First Home Acquisition Corporation, LLC. The option expires February 28, 2013. Two warrants are exercisable to purchase one common share at a price $9.10 per share before July 31, 2013. The warrants were issued pursuant to the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended.
Section 9 Financial Statements and Exhibits
Item 9.01 | Exhibits. |
Exhibit 99.1 Earnings Release
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: November 8, 2011.
HOMEOWNERS CHOICE, INC. | ||
BY: | /s/ Richard R. Allen | |
Name: | Richard R. Allen | |
Title: | Chief Financial Officer |
A signed original of this Form 8-K has been provided to Homeowners Choice, Inc. and will be retained by Homeowners Choice, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 99.1
FOR IMMEDIATE RELEASE
Media Contact: | Investor Relations Contact: | |||
Suzie Boland | Jay Madhu | |||
RFB Communications Group | Homeowners Choice, Inc. | |||
813.259.0345 | 813.405.3660 | |||
sboland@rfbcommunications.com | jmadhu@hcpci.com |
Homeowners Choice Reports Strong Third Quarter
CLEARWATER, Fla. (Nov. 8, 2011) 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, 2011.
Another successful and profitable quarter is the result of the hard work and dedicated efforts of the entire team here at Homeowners Choice, said Homeowners Choice Chief Executive Officer Paresh Patel. In a difficult market, were pleased to provide not only excellent returns for our shareholders, but also an exceptional level of service for our policyholders.
Income available to common stockholders for the third quarter of 2011 was $1,856,000, or $0.27 diluted earnings per common share, compared with $1,657,000, or $0.25 diluted earnings per common share, for the third quarter of 2010. Income available to common stockholders for the nine months ended Sept. 30, 2011 was $4,572,000, or $0.70 diluted earnings per common share, compared with $3,638,000, or $0.54 diluted earnings per common share, for the nine months ended Sept. 30, 2010.
Gross premiums earned were $31.7 million for the three months ended Sept. 30, 2011 compared with $29.4 million for the three months ended Sept. 30, 2010. Gross premiums earned for the nine months ended Sept. 30, 2011 were $93.9 million compared with $89.7 million for the nine months ended Sept. 30, 2010. Net premiums earned (gross premiums earned reduced by premiums ceded to reinsurance companies that cover certain of the risks from hurricanes and other catastrophes) for the third quarter of 2011 increased approximately 18 percent to $17.8 million from $15.1 million in the prior year quarter. Net premiums earned for the nine months ended Sept. 30, 2011 increased approximately 10 percent to $51.6 million from $47.0 million for the nine months ended Sept. 30, 2010.
Losses and loss adjustment expenses (the expenses associated with investigating and settling claims) for the three months ended Sept. 30, 2011 were $10.4 million compared with $8.8 million for the three months ended Sept. 30, 2010 and $31.4 million for the nine months ended Sept. 30, 2011 compared with $29.5 million for the nine months ended Sept. 30, 2010. Policy acquisition and other underwriting expenses for the three months ended Sept. 30, 2011 were $3.5 million compared with $3.7 million for the three months ended Sept. 30, 2010 and $10.6 million for the nine months ended Sept. 30, 2011 compared with $10.7 million for the nine months ended Sept. 30, 2010.
In an announcement yesterday, Homeowners Choice reported that it acquired the Florida policies of HomeWise Insurance Company. The terms of the deal, approved by the Florida insurance regulators, include the transfer to Homeowners Choice of up to 70,000 homeowners policies and approximately $53 million of unearned premium. The transaction should nearly double the size of the companys existing policy base.
Financial information is included below.
Conference Call
The Company will host an earnings conference call on Nov. 8, 2011 at 4:30 ET to discuss its third quarter 2011 results. Interested parties are invited to listen to the call live over the Internet at http://www.ir-site.com/hcpci/events.asp. The call is also available by dialing (877) 407-9210 (toll-free). International participants should instead call (201) 689-8049. Participants should dial into the conference call approximately 10 minutes before the scheduled start time. Replays of the webcast will be available until Dec. 9, 2011.
About Homeowners Choice, Inc.
Homeowners Choice, Inc. is a Florida-based insurance holding company headquartered in Tampa. Through its subsidiary corporations, Homeowners Choice provides property and casualty homeowners insurance, condominium owners insurance and tenants insurance. Founded in 2006, Homeowners Choice prior to the assumption served approximately 57,000 policyholders throughout Florida representing approximately $128 million in annualized premiums. The companys common shares trade on the NASDAQ Global Select Market under the ticker symbol HCII and are included in the Russell Microcap Index. Its warrants trade on the same market under the ticker symbol HCIIW. Its Series A, Cumulative Redeemable Preferred shares trade on the NASDAQ Capital Market under the ticker symbol HCIIP. More information about Homeowners Choice, Inc. is available at www.hcpci.com.
The Homeowners Choice, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6712
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. For example, there can be no assurance the company will continue profitability. Some of these risks and uncertainties are identified in the companys 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 companys business, financial condition and results of operations. Homeowners Choice, Inc. disclaims all obligations to update any forward-looking statements.
HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share amounts)
At September 30, 2011 | At December 31, 2010 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Investment in fixed maturity securities, available-for-sale, at fair value (amortized cost $35,350 and $28,456) |
35,326 | 28,564 | ||||||
Equity securities, available-for-sale, at fair value |
4,757 | 884 | ||||||
Time deposits |
14,442 | 14,033 | ||||||
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Total investments |
54,525 | 43,481 | ||||||
Cash and cash equivalents |
61,956 | 54,849 | ||||||
Accrued interest and dividends receivable |
244 | 180 | ||||||
Premiums receivable |
10,050 | 5,822 | ||||||
Assumed reinsurance balances receivable |
63 | 26 | ||||||
Prepaid reinsurance premiums |
17,228 | 17,787 | ||||||
Deferred policy acquisition costs |
11,157 | 9,407 | ||||||
Income taxes receivable |
774 | | ||||||
Property and equipment, net |
16,788 | 7,755 | ||||||
Deferred income taxes |
| 584 | ||||||
Other assets |
1,378 | 1,057 | ||||||
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Total assets |
$ | 174,163 | 140,948 | |||||
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Liabilities and Stockholders Equity | ||||||||
Losses and loss adjustment expenses |
23,693 | 22,146 | ||||||
Unearned premiums |
78,289 | 65,034 | ||||||
Advance premiums |
4,584 | 1,114 | ||||||
Deferred income taxes |
285 | | ||||||
Accrued expenses |
3,247 | 2,385 | ||||||
Dividends payable |
218 | | ||||||
Income taxes payable |
| 310 | ||||||
Other liabilities |
4,668 | 3,330 | ||||||
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Total liabilities |
114,984 | 94,319 | ||||||
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Stockholders equity: |
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7% Series A cumulative convertible preferred stock (liquidation preference $10.00 per share), no par value, 1,500,000 shares authorized, 1,247,700 shares issued and outstanding in 2011 |
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Preferred stock (no par value 18,500,000 shares authorized, no shares issued or outstanding) |
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Common stock, (no par value, 40,000,000 shares authorized, 6,111,802 and 6,205,396 shares issued and outstanding in 2011 and 2010) |
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Additional paid-in capital |
28,572 | 18,606 | ||||||
Retained earnings |
30,803 | 28,065 | ||||||
Accumulated other comprehensive loss |
(196 | ) | (42 | ) | ||||
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Total stockholders equity |
59,179 | 46,629 | ||||||
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Total liabilities and stockholders equity |
$ | 174,163 | 140,948 | |||||
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HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue |
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Gross premiums earned |
$ | 31,741 | 29,398 | $ | 93,855 | 89,720 | ||||||||||
Premiums ceded |
(13,906 | ) | (14,314 | ) | (42,302 | ) | (42,750 | ) | ||||||||
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Net premiums earned |
17,835 | 15,084 | 51,553 | 46,970 | ||||||||||||
Net investment income |
529 | 473 | 1,602 | 1,572 | ||||||||||||
Policy fee income |
424 | 434 | 1,278 | 1,309 | ||||||||||||
Realized investment gains |
123 | 1,028 | 416 | 1,534 | ||||||||||||
Gain on bargain purchase |
| | 936 | | ||||||||||||
Other |
1,184 | 53 | 2,143 | 86 | ||||||||||||
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Total revenue |
20,095 | 17,072 | 57,928 | 51,471 | ||||||||||||
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Expenses |
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Losses and loss adjustment expenses |
10,431 | 8,783 | 31,357 | 29,459 | ||||||||||||
Policy acquisition and other underwriting expenses |
3,529 | 3,730 | 10,572 | 10,689 | ||||||||||||
Other operating expenses |
2,829 | 2,021 | 7,617 | 5,604 | ||||||||||||
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Total expenses |
16,789 | 14,534 | 49,546 | 45,752 | ||||||||||||
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Income before income taxes |
3,306 | 2,538 | 8,382 | 5,719 | ||||||||||||
Income taxes |
1,232 | 881 | 3,214 | 2,081 | ||||||||||||
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Net income |
$ | 2,074 | 1,657 | $ | 5,168 | 3,638 | ||||||||||
Preferred stock dividends |
(218 | ) | | (596 | ) | | ||||||||||
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Income available to common stockholders |
$ | 1,856 | 1,657 | $ | 4,572 | 3,638 | ||||||||||
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Basic earnings per common share |
$ | 0.30 | 0.27 | $ | 0.75 | 0.59 | ||||||||||
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Diluted earnings per common share |
$ | 0.27 | 0.25 | $ | 0.70 | 0.54 | ||||||||||
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Dividends per common share |
$ | 0.10 | | $ | 0.30 | | ||||||||||
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