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): May 2, 2013
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 33607
(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 2 Financial Information
Item 2.02 Results of Operations and Financial Condition
On May 2, 2013, we released our earnings for the three months ended March 31, 2013. We plan to host an earnings conference call that same day at 4:30 p.m. Eastern time during which our chief executive officer and chief financial officer will discuss the results.
The call will be available by dialing
Toll-Free: 877-407-9210
International: 201-689-8049
Investors or analysts that wish to participate in the call should contact Jay Madhu, vice president of investor relations at jmadhu@hcigroup.com or (813) 405-3660.
The conference call will be broadcast simultaneously and available for replay via the investor section of the companys website at www.hcigroup.com.
Please call the conference telephone number 5-10 minutes prior to 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 May 9, 2013.
Toll-Free Replay Number: 877-660-6853
International Replay Number: 201-612-7415
Conference ID#: 413667
Our earnings release appears as Exhibit 99.1 to this form 8-K
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: May 2, 2013.
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
Homeowners Choice Reports First Quarter 2013 Results
Tampa, Fla. May 2, 2013 Homeowners Choice, Inc., doing business as HCI Group, Inc. (NYSE:HCI), reported its financial results for the quarter ended March 31, 2013.
First Quarter 2013 - Financial Results
Income available to common stockholders in the first quarter of 2013 totaled $20.4 million or $1.81 diluted earnings per common share. These results compare with $6.8 million or $0.88 diluted earnings per common share in the first quarter of 2012.
Gross premiums earned in the first quarter of 2013 increased 50.9% to $82.5 million from $54.7 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 (defined as gross premiums earned less premiums ceded to reinsurance companies) in the first quarter of 2013 increased 49.8% to $60.6 million from $40.4 million in the same prior year period. Premiums ceded in the first quarter of 2013 were 26.6% of the companys gross premiums earned, compared with 26.1% during the same prior year period.
Net investment income in the first quarter of 2013 was $139,000 compared with $522,000 in the same prior year period. The decrease was primarily due to operating losses incurred by certain business activities associated with the companys real estate investments.
Losses and loss adjustment expenses in the first quarter of 2013 were $15.9 million compared with $19.2 million in the same prior year period.
Policy acquisition and other underwriting expenses in the first quarter of 2013 were $6.0 million compared with $6.8 million in the first quarter of 2012. The decrease was primarily due to a one-time charge in 2012 resulting from the adoption of new accounting guidance for deferred acquisition costs. Interest expense totaled $686,000 in the first quarter of 2013 and relates to our senior notes issued in January 2013. Other operating expenses, which include a variety of general and administrative costs, totaled $6.1 million in the first quarter of 2013 compared with $4.3 million in the first quarter of 2012.
First Quarter 2013 - Financial Ratios
The companys loss ratio for the first quarter of 2013 (defined as losses and loss adjustment expenses incurred related to net premiums earned) was 26.2% compared with 47.4% in the first quarter of 2012.
The expense ratio in the first quarter of 2013 (defined as policy acquisition and other underwriting expenses related to net premiums earned plus interest and other administrative expenses) was 21.1% compared with 27.5% in the first quarter of 2012.
Expressed as the total of all expenses related to net premiums earned, the combined loss and expense ratio to net premiums earned was 47.3% in the first quarter of 2013 compared with 74.9% in the first quarter of 2012.
Management Commentary
Our book of business continues to perform well, said Paresh Patel, Homeowners Choice chairman and chief executive officer. We believe our strong balance sheet will permit us to take advantage of accretive growth opportunities.
Conference Call
Homeowners Choice will hold a conference call later today (May 2, 2013) to discuss these financial results. The companys 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 managements presentation.
The call will be available by dialing
Toll-Free: 877-407-9210
International: 201-689-8049
Investors or analysts that wish to participate in the call should contact Jay Madhu, vice president of investor relations at jmadhu@hcigroup.com or (813) 405-3660.
The conference call will be broadcast simultaneously and will be available for replay via the investor section of the companys website at www.hcigroup.com.
Please call the conference telephone number 5-10 minutes prior to 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 May 9, 2013.
Toll-Free Replay Number: 877-660-6853
International Replay Number: 201-612-7415
About Homeowners Choice, Inc.
Homeowners Choice, Inc., doing business as HCI Group, Inc., is a holding company owning subsidiaries engaged in diverse business activities, including property and casualty insurance, information technology, real estate and reinsurance. The companys largest subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., is a leading provider of property and casualty insurance in the state of Florida.
The companys 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 Homeowners Choice, Inc., visit www.hcigroup.com.
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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 that accretive growth opportunities will arise or that the company will take advantage of them. 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.
Company Contact:
Jay Madhu, Vice President of Investor Relations
Homeowners Choice, Inc.
Tel (813) 405-3660
jmadhu@hcigroup.com
Investor Relations Contact:
Matt Glover or Michael Koehler
Liolios Group, Inc.
Tel (949) 574-3860
hci@liolios.com
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HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except share amounts)
At March 31, 2013 | At December 31, 2012 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Fixed-maturity securities, available-for-sale, at fair value |
$ | 35,117 | 35,953 | |||||
Equity securities, available-for-sale, at fair value |
9,944 | 8,876 | ||||||
Other investments |
16,059 | 16,087 | ||||||
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Total investments |
61,120 | 60,916 | ||||||
Cash and cash equivalents |
279,327 | 230,214 | ||||||
Accrued interest and dividends receivable |
272 | 375 | ||||||
Premiums and reinsurance receivable |
17,125 | 10,642 | ||||||
Prepaid reinsurance premiums |
16,035 | 9,112 | ||||||
Deferred policy acquisition costs |
11,822 | 10,032 | ||||||
Property and equipment, net |
12,981 | 10,853 | ||||||
Deferred income taxes |
4,921 | 3,848 | ||||||
Other assets |
3,957 | 2,296 | ||||||
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Total assets |
$ | 407,560 | 338,288 | |||||
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Liabilities and Stockholders Equity | ||||||||
Losses and loss adjustment expenses |
$ | 41,751 | 41,168 | |||||
Unearned premiums |
140,951 | 154,249 | ||||||
Advance premiums |
15,905 | 4,029 | ||||||
Assumed reinsurance balances payable |
991 | 1,377 | ||||||
Accrued expenses |
6,727 | 3,041 | ||||||
Dividends payable |
37 | 42 | ||||||
Income taxes payable |
13,802 | 8,813 | ||||||
Long-term debt |
40,250 | | ||||||
Other liabilities |
7,418 | 4,316 | ||||||
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Total liabilities |
267,832 | 217,035 | ||||||
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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, 210,555 and 241,182 shares issued and outstanding in 2013 and 2012 |
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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, 10,907,244 and 10,877,537 shares issued and outstanding in 2013 and 2012) |
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Additional paid-in capital |
64,286 | 63,875 | ||||||
Retained income |
73,657 | 55,758 | ||||||
Accumulated other comprehensive income |
1,785 | 1,620 | ||||||
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Total stockholders equity |
139,728 | 121,253 | ||||||
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Total liabilities and stockholders equity |
$ | 407,560 | 338,288 | |||||
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HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
Three Months Ended | ||||||||
March 31, | ||||||||
2013 | 2012 | |||||||
(Unaudited) | ||||||||
Revenue |
||||||||
Gross premiums earned |
$ | 82,547 | 54,698 | |||||
Premiums ceded |
(21,996 | ) | (14,267 | ) | ||||
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Net premiums earned |
60,551 | 40,431 | ||||||
Net investment income |
139 | 522 | ||||||
Policy fee income |
772 | 515 | ||||||
Realized investment gains |
20 | 21 | ||||||
Other |
329 | 163 | ||||||
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Total revenue |
61,811 | 41,652 | ||||||
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Expenses |
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Losses and loss adjustment expenses |
15,872 | 19,168 | ||||||
Policy acquisition and other underwriting expenses |
5,968 | 6,836 | ||||||
Interest expense |
686 | | ||||||
Other operating expenses |
6,115 | 4,267 | ||||||
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Total expenses |
28,641 | 30,271 | ||||||
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Income before income taxes |
33,170 | 11,381 | ||||||
Income taxes |
12,783 | 4,413 | ||||||
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Net income |
$ | 20,387 | 6,968 | |||||
Preferred stock dividends |
(34 | ) | (181 | ) | ||||
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Income available to common stockholders |
$ | 20,353 | 6,787 | |||||
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Basic earnings per common share |
$ | 1.87 | 1.07 | |||||
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Diluted earnings per common share |
$ | 1.81 | 0.88 | |||||
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Dividends per common share |
$ | 0.23 | 0.15 | |||||
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