TAMPA, Fla., May 1, 2014 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE: HCI ) reported results today for the quarter ended March 31, 2014.
First Quarter 2014 - Financial Results
Income available to common stockholders in the first quarter of 2014 totaled $17.6 million or $1.44 diluted earnings per common share compared with $15.5 million or $1.31 diluted earnings per common share in the fourth quarter of 2013, and $20.4 million or $1.81 diluted earnings per common share in the first quarter of 2013.
Gross premiums earned in the first quarter of 2014 totaled $93.9 million compared with $91.4 million in the fourth quarter of 2013 and $82.5 million in the first quarter of 2013. The increase in 2014 compared with the first quarter of 2013 was primarily due to policies assumed from Citizens Property Insurance Corporation in November 2013.
Premiums ceded in the first quarter of 2014 were 29.3% of the company's gross premiums earned, compared with 30.6% and 26.6%, respectively, during the fourth quarter and first quarter of 2013.
Net premiums earned (defined as gross premiums earned less premiums ceded to reinsurance companies) in the first quarter of 2014 totaled $66.4 million compared with $63.4 million in the fourth quarter of 2013 and $60.6 million in the first quarter of 2013.
Net investment income in the first quarter of 2014 was $1.1 million compared with $0.7 million and $0.1 million, respectively, in the fourth quarter and first quarter of 2013.
Losses and loss adjustment expenses during the first quarter of 2014 were $18.6 million compared with $17.3 million and $15.9 million, respectively, in the fourth quarter and first quarter of 2013.
Policy acquisition and other underwriting expenses in the first quarter of 2014 were $9.1 million compared with $9.5 million and $6.0 million, respectively, in the fourth quarter and first quarter of 2013. The increase in 2014 as compared to first quarter 2013 was primarily attributable to the policies assumed from Citizens in 2012 and 2013 that renewed in the first quarter 2014. The associated premiums were subject to commissions and premium taxes.
Other operating expenses, which include a variety of general and administrative expenses, totaled $9.5 million in the first quarter of 2014 compared with $12.0 million and $6.1 million, respectively, in the fourth quarter and first quarter of 2013. The increase in 2014 as compared with the first quarter of 2013 is primarily attributable to an increase of $3.3 million in compensation and related expenses of which $1.7 million relates to stock-based compensation. The decrease in 2014 as compared with the fourth quarter of 2013 is primarily attributable to approximately $1.3 million of additional compensation and related costs and $1.0 million of charitable contributions in the fourth quarter of 2013.
Interest expense from the company's senior notes issued in 2013 totaled $2.6 million in the first quarter of 2014 compared with $1.2 million and $0.7 million, respectively, in the fourth quarter and first quarter of 2013. The company's 3.875% convertible notes were issued in December 2013.
At March 31, 2014, the company had $172.4 million of total investments compared with $146.0 million at December 31, 2013.
First Quarter 2014 - Financial Ratios
The loss ratio applicable to the three months ended March 31, 2014 (losses and loss adjustment expenses incurred related to net premiums earned) was 28.0% compared with 27.4% for the three months ended December 31, 2013 and 26.2% for the three months ended March 31, 2013.
The expense ratio applicable to the three months ended March 31, 2014 (defined as underwriting expenses, interest and other operating expenses related to net premiums earned) was 32.0% compared with 35.7% for the three months ended December 31, 2013 and 21.1% for the three months ended March 31, 2013.
Expressed as a total of all expenses in relation to net premiums earned, the combined loss and expense ratio to net premiums earned was 60.0% in the first quarter of 2014 compared with 63.1% for the three months ended December 31, 2013 and 47.3% for the three months ended March 31, 2013.
Share Repurchase Plan
During the three months ended March 31, 2014, the company repurchased and retired a total of 210,836 shares at a total cost, inclusive of fees and commissions, of approximately $7.8 million, or $37.02 per share.
Management Commentary
"The first quarter of 2014 was another successful quarter for HCI Group," said Paresh Patel, the company's chairman and chief executive officer. "Our core insurance operations continue to perform at industry leading levels and our information technology division has begun rolling out software that we believe will enhance growth and profitability prospects."
Conference Call
HCI Group will hold a conference call later today (May 1, 2014) 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 management's presentation.
| Dial-in number: (877) 407-8033 |
| International number: (201) 689-8033 |
Investors or analysts that wish to participate in the Q&A portion of the call should contact Kevin Mitchell at kmitchell@hcigroup.com or (813) 405-3603.
The conference call will be simulcast and available for replay via the investor section of the company's website at www.hcigroup.com .
Please call the conference telephone number 5 to 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 after 8:00 p.m. Eastern time on the same day through June 1, 2014.
| Toll-free replay number: (877) 660-6853 |
| International replay number: (201) 612-7415 |
| Conference ID: 13580109 |
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 services. The company's largest subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., is a leading provider of property and casualty insurance in the state of Florida.
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. 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 information technology will enhance growth and profitability prospects. 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.
| HCI GROUP, INC. AND SUBSIDIARIES | ||
| Consolidated Balance Sheets | ||
| (Amounts in thousands, except share amounts) | ||
| At March 31, 2014 | At December 31, 2013 | |
| (Unaudited) | ||
| Assets | ||
| Fixed-maturity securities, available for sale, at fair value (amortized cost: $129,680 and $110,738, respectively) | $ 133,113 | 112,151 |
| Equity securities, available for sale, at fair value (cost: $22,174 and $17,248, respectively) | 22,872 | 17,649 |
| Other investments | 16,450 | 16,228 |
| Total investments | 172,435 | 146,028 |
| Cash and cash equivalents | 296,576 | 293,398 |
| Accrued interest and dividends receivable | 1,338 | 1,133 |
| Premiums receivable | 18,033 | 14,674 |
| Prepaid reinsurance premiums | 15,217 | 28,066 |
| Deferred policy acquisition costs | 14,184 | 14,071 |
| Property and equipment, net | 12,931 | 13,132 |
| Other assets | 19,101 | 15,814 |
| Total assets | $ 549,815 | 526,316 |
| Liabilities and Stockholders' Equity | ||
| Losses and loss adjustment expenses | $ 43,597 | 43,686 |
| Unearned premiums | 156,959 | 171,907 |
| Advance premiums | 17,567 | 4,504 |
| Assumed reinsurance balances payable | 994 | 4,660 |
| Accrued expenses | 8,567 | 4,032 |
| Dividends payable | 3,190 | 19 |
| Income taxes payable | 8,592 | 543 |
| Deferred income taxes, net | 2,586 | 2,740 |
| Long-term debt | 127,559 | 126,932 |
| Other liabilities | 11,492 | 6,772 |
| Total liabilities | 381,103 | 365,795 |
| Stockholders' equity: | ||
| 7% Series A cumulative convertible preferred stock (liquidation preference $10.00 per share), no par value, 1,500,000 shares authorized, 10,206 and 110,684 shares issued and outstanding in 2014 and 2013, respectively | — | — |
| Series B junior participating preferred stock (no par value, 400,000 shares authorized, no shares issued or outstanding) | — | — |
| Preferred stock (no par value 18,100,000 shares authorized, no shares issued or outstanding) | — | — |
| Common stock, (no par value, 40,000,000 shares authorized, 10,970,108 and 10,939,268 shares issued and outstanding in 2014 and 2013, respectively) | — | — |
| Additional paid-in capital | 44,148 | 48,966 |
| Retained income | 122,026 | 110,441 |
| Accumulated other comprehensive income, net of taxes | 2,538 | 1,114 |
| Total stockholders' equity | 168,712 | 160,521 |
| Total liabilities and stockholders' equity | $ 549,815 | 526,316 |
| HCI GROUP, INC. AND SUBSIDIARIES | |||
| Consolidated Statements of Income | |||
| (Amounts in thousands, except per share amounts) | |||
| Three Months Ended | |||
| March 31, | December 31, | March 31, | |
| 2014 | 2013 | 2013 | |
| (Unaudited) | |||
| Revenue | |||
| Gross premiums earned | $ 93,888 | 91,370 | 82,547 |
| Premiums ceded | (27,508) | (27,942) | (21,996) |
| Net premiums earned | 66,380 | 63,428 | 60,551 |
| Net investment income | 1,059 | 655 | 139 |
| Policy fee income | 257 | 85 | 772 |
| Net realized investment gains | 4 | 37 | 20 |
| Other | 417 | 1,047 | 329 |
| Total revenue | 68,117 | 65,252 | 61,811 |
| Expenses | |||
| Losses and loss adjustment expenses | 18,565 | 17,348 | 15,872 |
| Policy acquisition and other underwriting expenses | 9,129 | 9,456 | 5,968 |
| Interest expense | 2,574 | 1,228 | 686 |
| Other operating expenses | 9,539 | 11,988 | 6,115 |
| Total expenses | 39,807 | 40,020 | 28,641 |
| Income before income taxes | 28,310 | 25,232 | 33,170 |
| Income tax expense | 10,690 | 9,670 | 12,783 |
| Net income | $ 17,620 | 15,562 | 20,387 |
| Preferred stock dividends | 3 | (16) | (34) |
| Income available to common stockholders | $ 17,623 | 15,546 | 20,353 |
| Basic earnings per common share | $ 1.60 | 1.36 | 1.87 |
| Diluted earnings per common share | $ 1.44 | 1.31 | 1.81 |
| Dividends per common share | $ 0.28 | 0.27 | 0.23 |
Company Contact: Kevin Mitchell, Vice President of Investor Relations HCI Group, Inc. Tel (813) 405-3603 Investor Relations Contact: Matt Glover or Michael Koehler Liolios Group, Inc. Tel (949) 574-3860
