TAMPA, Fla., April 30, 2015 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE: HCI ) reported results today for the quarter ended March 31, 2015.
First Quarter 2015 - Financial Results
Income available to common stockholders in the first quarter of 2015 totaled $25.4 million or $2.21 diluted earnings per common share compared with $17.6 million or $1.44 diluted earnings per common share in the first quarter of 2014.
Gross premiums earned in the first quarter of 2015 totaled $109.6 million compared with $93.9 million in the first quarter of 2014. The increase was primarily due to policies assumed from Citizens Property Insurance Corporation in December 2014.
Net premiums earned (defined as gross premiums earned less premiums ceded to reinsurance companies) in the first quarter of 2015 totaled $81.7 million compared with $66.4 million in the first quarter of 2014. Premiums ceded in the first quarter of 2015 were 25.4% of the company's gross premiums earned, compared with 29.3% during the first quarter of 2014.
Investment related income in the first quarter of 2015 was $1.2 million, but was offset by a $1.7 million noncash charge due to declines deemed other than temporary in the fair value of securities owned by the company. This compares with $1.1 million in investment related income in the first quarter of 2014.
Losses and loss adjustment expenses during the first quarter of 2015 were $19.0 million compared with $18.6 million in the first quarter of 2014.
Policy acquisition and other underwriting expenses increased to $9.8 million in the first quarter of 2015 compared with $9.1 million in the same quarter of 2014. The increase is attributable to an increase in direct written premiums.
Salaries and wages during the first quarter of 2015 were $4.9 million compared with $4.2 million in the same period in 2014. The increase is primarily attributable to an increase in headcount at the company's Tampa headquarters.
Interest expense from the company's senior notes issued in 2013 totaled $2.7 million in the first quarter of 2015 compared with $2.6 million in the first quarter of 2014.
Other operating expenses, which include a variety of general and administrative expenses, totaled $4.8 million in the first quarter of 2015 compared with $5.4 million in the first quarter of 2014. The decrease is primarily attributable to a decrease in stock-based compensation.
First Quarter 2015 - Financial Ratios
The company's loss ratio applicable to the three months ended March 31, 2015 (losses and loss adjustment expenses incurred related to net premiums earned) was 23.3% compared with 28.0% for the three months ended March 31, 2014. The company's wind-only policies assumed from Citizens in December 2014, contributed to the year over year improvement.
The expense ratio applicable to the three months ended March 31, 2015 (defined as underwriting expenses, interest and other operating expenses related to net premiums earned) was 27.1% compared with 32.0% for the three months ended March 31, 2014.
Expressed as a total of all expenses related to net premiums earned, the combined loss and expense ratio to net premiums earned was 50.4% in the first quarter of 2015 compared with 60.0% in the first quarter of 2014.
Share Repurchase Plan
During the three months ended March 31, 2015, the company repurchased and retired 37,869 shares at a cost, inclusive of fees and commissions, of approximately $1.6 million, or $42.51 per share. This repurchase plan expired March 31, 2015. The total cost of 1,028,570 shares repurchased, inclusive of fees and commissions, during this just over one-year repurchase plan was approximately $40.0 million or $38.85 per share.
Management Commentary
"Our core insurance operations continue to perform at industry leading levels driven by our strict underwriting standards and expense management," said Paresh Patel, the company's chairman and chief executive officer. "In fact, our net premiums earned and net income during the quarter were the highest in our company's history. As we have done throughout HCI's history, we will patiently evaluate the marketplace for attractive growth opportunities."
Conference Call
HCI management will host a conference call later today (April 30, 2015) to discuss these financial results followed by a question and answer session. 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.
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 company's website at www.hcigroup.com .
| Listen-only toll-free number: (877) 407-8033 |
| Listen-only international number: (201) 689-8033 |
| Conference ID: 13606510 |
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 May 30, 2015 and via the Investor Information section of the HCI Group website at www.hcigroup.com until July 30, 2015.
| Toll-free replay number: (877) 660-6853 |
| International replay number: (201) 612-7415 |
| Conference ID: 13606510 |
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 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 accretive growth opportunities will arise. 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, 2015 | At December 31, 2014 | |
| (Unaudited) | ||
| Assets | ||
| Fixed-maturity securities, available for sale, at fair value (amortized cost: $156,528 and $96,163, respectively) | $ 158,325 | 97,084 |
| Equity securities, available for sale, at fair value (cost: $57,836 and $45,387, respectively) | 59,779 | 45,550 |
| Limited partnership investment, at equity | 21,795 | 2,550 |
| Investment in joint venture, at equity | 4,747 | 4,477 |
| Real estate investments | 19,580 | 19,138 |
| Total investments | 264,226 | 168,799 |
| Cash and cash equivalents | 271,413 | 314,716 |
| Accrued interest and dividends receivable | 1,451 | 1,059 |
| Income taxes receivable | -- | 2,624 |
| Premiums receivable | 18,516 | 15,824 |
| Prepaid reinsurance premiums | 16,072 | 34,096 |
| Deferred policy acquisition costs | 15,063 | 15,014 |
| Property and equipment, net | 12,188 | 12,292 |
| Deferred income taxes, net | 2,220 | 2,499 |
| Other assets | 41,195 | 35,287 |
| Total assets | $ 642,344 | 602,210 |
| Liabilities and Stockholders' Equity | ||
| Losses and loss adjustment expenses | $ 51,177 | 48,908 |
| Unearned premiums | 185,958 | 214,071 |
| Advance premiums | 19,708 | 4,380 |
| Assumed reinsurance balances payable | 9,651 | 218 |
| Accrued expenses | 9,963 | 4,826 |
| Income taxes payable | 13,507 | -- |
| Long-term debt | 130,227 | 129,539 |
| Other liabilities | 16,137 | 17,683 |
| Total liabilities | 436,328 | 419,625 |
| Stockholders' equity: | ||
| 7% Series A cumulative convertible preferred stock (no par value, 1,500,000 shares authorized, no shares issued or outstanding) | — | — |
| 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, 10,137,006 and 10,189,128 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively) | — | — |
| Additional paid-in capital | 19,927 | 20,465 |
| Retained income | 183,792 | 161,454 |
| Accumulated other comprehensive income, net of taxes | 2,297 | 666 |
| Total stockholders' equity | 206,016 | 182,585 |
| Total liabilities and stockholders' equity | $ 642,344 | 602,210 |
| HCI GROUP, INC. AND SUBSIDIARIES | ||
| Consolidated Statements of Income | ||
| (Amounts in thousands, except per share amounts) | ||
| Three Months Ended | ||
| March 31, | March 31, | |
| 2015 | 2014 | |
| (Unaudited) | ||
| Revenue | ||
| Gross premiums earned | $ 109,567 | 93,888 |
| Premiums ceded | (27,839) | (27,508) |
| Net premiums earned | 81,728 | 66,380 |
| Net investment income | 1,409 | 1,059 |
| Policy fee income | 541 | 257 |
| Net realized investment (losses) gains | (193) | 4 |
| Other-than-temporary impairment loss | (1,690) | -- |
| Other | 415 | 417 |
| Total revenue | 82,210 | 68,117 |
| Expenses | ||
| Losses and loss adjustment expenses | 19,039 | 18,565 |
| Policy acquisition and other underwriting expenses | 9,799 | 9,129 |
| Salaries and wages | 4,898 | 4,185 |
| Interest expense | 2,661 | 2,574 |
| Other operating expenses | 4,767 | 5,354 |
| Total expenses | 41,164 | 39,807 |
| Income before income taxes | 41,046 | 28,310 |
| Income tax expense | 15,668 | 10,690 |
| Net income | $ 25,378 | 17,620 |
| Preferred stock dividends | -- | 3 |
| Income available to common stockholders | $ 25,378 | 17,623 |
| Basic earnings per common share | $ 2.50 | 1.60 |
| Diluted earnings per common share | $ 2.21 | 1.44 |
| Dividends per common share | $ 0.30 | 0.28 |
Company Contact: Kevin Mitchell, Vice President of Investor Relations HCI Group, Inc. (813) 405-3603 Investor Relations Contact: Michael Koehler Liolios Group, Inc. Tel (949) 574-3860
