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): August 4, 2015
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) |
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)) |
Item 2.02 Results of Operations and Financial Condition
On August 4, 2015, we released our earnings for the three months and six months ended June 30, 2015. 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.
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 companys website at www.hcigroup.com.
Date: Tuesday, August 4, 2015
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Listen-only toll-free number: (877) 407-8033
Listen-only international number: (201) 689-8033
Conference ID: 13614027
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 Liolios Group 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 through September 4, 2015 and via the Investor Information section of the HCI Group website at www.hcigroup.com until October 4, 2015.
Toll-free replay number: (877) 660-6853
International replay number: (201) 612-7415
Conference ID: 13614027
Our earnings release appears as Exhibit 99.1 to this form 8-K
Item 9.01 Exhibits.
Exhibit 99.1 Earnings Release
2
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: August 4, 2015.
HCI GROUP, 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 HCI Group, Inc. and will be retained by HCI Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
3
Exhibit 99.1
FOR IMMEDIATE RELEASE
HCI Group Reports Second Quarter and Six-Month 2015 Results
Tampa, Fla. August 4, 2015 HCI Group, Inc. (NYSE:HCI) reported results today for the three and six months ended June 30, 2015.
Second Quarter 2015 - Financial Results
Income available to common stockholders in the second quarter of 2015 totaled $22.0 million, or $1.93 diluted earnings per common share, compared with $16.4 million, or $1.39 diluted earnings per common share in the second quarter of 2014.
Gross premiums earned in the second quarter of 2015 increased 18.1% to $107.8 million from $91.2 million in the same period in 2014. The increase was primarily due to the assumption of approximately 6,000 homeowners multi-peril policies and approximately 30,000 wind-only policies from state sponsored Citizens Property Insurance Corporation in December 2014 and 4,000 primarily homeowners multi-peril policies from Citizens in February 2015.
Premiums ceded in the second quarter of 2015 were $31.4 million, or 29.1% of gross premiums earned, compared with $28.6 million, or 31.3% of gross premiums earned, during the same period in 2014.
Net premiums earned (defined as gross premiums earned less premiums ceded to reinsurance companies) in the second quarter of 2015 increased 21.9% to $76.4 million from $62.6 million in the same period in 2014.
Investment related income in the second quarter of 2015, which totaled $1.7 million, was offset by a $293,000 noncash charge due to declines deemed other than temporary in the fair value of securities owned by the company. This compares with $2.6 million in investment related income in the second quarter of 2014, which included $1.2 million of net realized gains from investment sales. The total investment portfolio has grown from $179.2 million at June 30, 2014 to $275.7 million at June 30, 2015.
Losses and loss adjustment expenses during the second quarter of 2015 were $20.6 million compared with $18.4 million in the same period in 2014.
Policy acquisition and other underwriting expenses in the second quarter of 2015 were $10.4 million compared with $9.6 million in the comparable period in 2014. The increase was primarily attributable to commissions and premium taxes related to the policies assumed in December 2014 from Citizens that have renewed and are included in 2015 premiums.
Salaries and wages during the second quarter of 2015 were $5.2 million compared with $4.1 million in the same period in 2014. The increase is primarily attributable to an increase in headcount at the Tampa headquarters.
Interest expense from the companys senior notes issued in 2013 totaled $2.7 million in the second quarter of 2015 compared with $2.6 million in the second quarter of 2014.
Other operating expenses, which include a variety of general and administrative expenses, totaled $4.6 million in the second quarter of 2015 compared with $5.3 million in the second quarter of 2014. The decrease was primarily attributable to an $863,000 decrease in stock-based compensation offset by an increase in other administrative expenses.
Second Quarter 2015 - Financial Ratios
The loss ratio applicable to the three months ended June 30, 2015 (defined as losses and loss adjustment expenses related to net premiums earned) was 26.9% compared with 29.3% in the three months ended June 30, 2014. The wind-only policies assumed from Citizens in December 2014 and February 2015 contributed to the year over year improvement.
The expense ratio applicable to the three months ended June 30, 2015 (defined as underwriting expenses, interest and other operating expenses related to net premiums earned) was 30.0% compared with 34.4% for the three months ended June 30, 2014.
Expressed as a total of all expenses in relation to net premiums earned, the combined loss and expense ratio to net premiums earned was 56.9% in the second quarter of 2015 compared with 63.7% for the three months ended June 30, 2014.
Six Months Ended June 30, 2015 - Financial Results
Income available to common stockholders for the six months ended June 30, 2015 totaled $47.4 million, or $4.14 diluted earnings per common share, compared with $34.1 million, or $2.84 diluted earnings per common share, for the six months ended June 30, 2014.
Gross premiums earned for the six months ended June 30, 2015 increased 17.4% to $217.3 million from $185.1 million in the same year-ago period.
Premiums ceded for the six months ended June 30, 2015 were $59.2 million, or 27.3% of gross premiums earned, compared with $56.1 million, or 30.3% of the gross premiums earned, during the same period in 2014.
Net premiums earned for the six months ended June 30, 2015 increased 22.5% to $158.1 million from $129.0 million in the same period in 2014.
Investment related income in the six months ended June 30, 2015 which was $2.9 million, was offset by a $2.0 million noncash charge due to declines deemed other than temporary in the fair value of securities owned by the company. This compares with $3.7 million in investment related income in the six months ended June 30, 2014.
Losses and loss adjustment expenses for the six months ended June 30, 2015 and 2014 were $39.6 million and $36.9 million respectively.
Policy acquisition and other underwriting expenses for the six months ended June 30, 2015 were $20.2 million compared with $18.7 million for the six months ended June 30, 2014.
Salaries and wages during the six months ended June 30, 2015 were $10.1 million compared with $8.3 million in the same period in 2014.
Interest expense from the companys senior notes issued in 2013 totaled $5.3 million in the six months ended June 30, 2015 compared with $5.2 million in the six months ended June 30, 2014.
Other operating expenses totaled $9.3 million for the six months ended June 30, 2015 compared with $10.6 million for the six months ended June 30, 2014.
Six Months Ended June 30, 2015 - Financial Ratios
The loss ratio applicable to the six months ended June 30, 2015 was 25.0% compared with 28.7% in the six months ended June 30, 2014.
The expense ratio applicable to the six months ended June 30, 2015 was 28.5% compared with 33.1% in the same period in 2014.
Expressed as a total of all expenses related to net premiums earned, the combined loss and expense ratio to net premiums earned was 53.5% in the six months ended June 30, 2015 compared with 61.8% in the same period in 2014.
Management Commentary
During the second quarter, we saw our homeowners insurance business produce significant profits and a very low combined ratio resulting from our strict underwriting guidelines, said Paresh Patel, the companys chairman and chief executive officer. Looking forward, we are well positioned to capitalize on the ever-evolving insurance marketplace while we patiently seek strategic growth opportunities.
Conference Call
HCI Group will hold a conference call later today (August 4, 2015) to discuss these financial results. 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.
Interested parties can listen to the live presentation, which can be accessed by dialing the listen-only number below or by clicking the webcast link available on the Investor Information section of the companys website at www.hcigroup.com.
Listen-only toll-free number: (877) 407-8033
Listen-only international number: (201) 689-8033
Conference ID: 13614027
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 Liolios Group 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 through September 4, 2015 and via the Investor Information section of the HCI Group website at www.hcigroup.com until October 4, 2015.
Toll-free replay number: (877) 660-6853
International replay number: (201) 612-7415
Conference ID: 13614027
About HCI Group, Inc.
HCI Group, Inc. owns subsidiaries engaged in diverse, yet complementary business activities, including homeowners insurance, reinsurance, real estate and information technology. 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 and S&P SmallCap 600 Index. Its 8% Senior Notes trade on the New York Stock Exchange under the ticker symbol HCJ. For more information about HCI Group, visit www.hcigroup.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, 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. There can be no assurance, for example, that the company will maintain its current profitability levels. 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. HCI Group, Inc. disclaims all obligations to update any forward-looking statements.
Company Contact:
Kevin Mitchell, Vice President of Investor Relations
HCI Group, Inc.
(813) 405-3603
kmitchell@hcigroup.com
Investor Relations Contact:
Michael Koehler
Liolios Group, Inc.
Tel (949) 574-3860
hci@liolios.com
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollar amounts in thousands)
At June 30, 2015 | At December 31, 2014 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Fixed-maturity securities, available for sale, at fair value (amortized cost: $165,995 and $96,163, respectively) |
$ | 165,435 | 97,084 | |||||
Equity securities, available for sale, at fair value (cost: $59,557 and $45,387, respectively) |
60,331 | 45,550 | ||||||
Limited partnership investments, at equity |
22,716 | 2,550 | ||||||
Investment in joint venture, at equity |
4,746 | 4,477 | ||||||
Real estate investments |
22,447 | 19,138 | ||||||
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Total investments |
275,675 | 168,799 | ||||||
Cash and cash equivalents |
274,729 | 314,716 | ||||||
Accrued interest and dividends receivable |
1,574 | 1,059 | ||||||
Income taxes receivable |
| 2,624 | ||||||
Premiums receivable |
30,161 | 15,824 | ||||||
Prepaid reinsurance premiums |
33,418 | 34,096 | ||||||
Deferred policy acquisition costs |
21,993 | 15,014 | ||||||
Property and equipment, net |
12,007 | 12,292 | ||||||
Deferred income taxes, net |
4,022 | 2,499 | ||||||
Other assets |
48,151 | 35,287 | ||||||
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Total assets |
$ | 701,730 | 602,210 | |||||
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Liabilities and Stockholders Equity | ||||||||
Losses and loss adjustment expenses |
$ | 54,329 | 48,908 | |||||
Unearned premiums |
233,503 | 214,071 | ||||||
Advance premiums |
15,405 | 4,380 | ||||||
Assumed reinsurance balances payable |
855 | 218 | ||||||
Accrued expenses |
12,080 | 4,826 | ||||||
Income taxes payable |
5,947 | | ||||||
Long-term debt |
130,929 | 129,539 | ||||||
Other liabilities |
22,935 | 17,683 | ||||||
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Total liabilities |
475,983 | 419,625 | ||||||
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Stockholders equity: |
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7% Series A cumulative convertible preferred stock (no par value, 1,500,000 shares authorized, no shares issued and outstanding) |
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Series B junior participating preferred stock (no par value, 400,000 shares authorized, no shares issued or outstanding) |
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Preferred stock (no par value, 18,100,000 shares authorized, no shares issued or outstanding) |
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Common stock, (no par value, 40,000,000 shares authorized, 10,263,149 and 10,189,128 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively) |
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Additional paid-in capital |
22,763 | 20,465 | ||||||
Retained income |
202,853 | 161,454 | ||||||
Accumulated other comprehensive income, net of taxes |
131 | 666 | ||||||
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Total stockholders equity |
225,747 | 182,585 | ||||||
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Total liabilities and stockholders equity |
$ | 701,730 | 602,210 | |||||
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HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
(Dollar amounts in thousands, except per share amounts)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenue |
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Gross premiums earned |
$ | 107,765 | 91,221 | $ | 217,332 | 185,109 | ||||||||||
Premiums ceded |
(31,378 | ) | (28,572 | ) | (59,217 | ) | (56,080 | ) | ||||||||
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Net premiums earned |
76,387 | 62,649 | 158,115 | 129,029 | ||||||||||||
Net investment income |
1,795 | 1,481 | 3,204 | 2,540 | ||||||||||||
Policy fee income |
942 | 638 | 1,483 | 895 | ||||||||||||
Net realized investment (losses) gains |
(74 | ) | 1,167 | (267 | ) | 1,171 | ||||||||||
Other-than-temporary impairment losses |
(293 | ) | | (1,983 | ) | | ||||||||||
Other |
311 | 349 | 726 | 766 | ||||||||||||
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Total revenue |
79,068 | 66,284 | 161,278 | 134,401 | ||||||||||||
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Expenses |
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Losses and loss adjustment expenses |
20,565 | 18,383 | 39,604 | 36,948 | ||||||||||||
Policy acquisition and other underwriting expenses |
10,443 | 9,559 | 20,242 | 18,688 | ||||||||||||
Salaries and wages |
5,236 | 4,072 | 10,134 | 8,257 | ||||||||||||
Interest expense |
2,679 | 2,609 | 5,340 | 5,183 | ||||||||||||
Other operating expenses |
4,562 | 5,278 | 9,329 | 10,632 | ||||||||||||
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Total expenses |
43,485 | 39,901 | 84,649 | 79,708 | ||||||||||||
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Income before income taxes |
35,583 | 26,383 | 76,629 | 54,693 | ||||||||||||
Income tax expense |
13,561 | 9,953 | 29,229 | 20,643 | ||||||||||||
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Net income |
$ | 22,022 | 16,430 | $ | 47,400 | 34,050 | ||||||||||
Preferred stock dividends |
| 1 | | 4 | ||||||||||||
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Income available to common stockholders |
$ | 22,022 | 16,431 | $ | 47,400 | 34,054 | ||||||||||
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Basic earnings per common share |
$ | 2.17 | 1.53 | $ | 4.67 | 3.14 | ||||||||||
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Diluted earnings per common share |
$ | 1.93 | 1.39 | $ | 4.14 | 2.84 | ||||||||||
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Dividends per common share |
$ | 0.30 | 0.27 | $ | 0.60 | 0.55 | ||||||||||
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