UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form10-Q

☒
☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2024


☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number~~001-34126~~

001-34126

HCI Group, Inc.

(Exact name of ~~Registrant~~registrant as specified in its charter)

Florida

20-5961396

(State of

Incorporation)

(IRS Employer

Identification No.)

~~5300 West Cypress Street, Suite 100~~

3802 Coconut Palm Drive
Tampa, FL ~~33607~~

33619
(Address, including zip code, of principal executive offices)

~~(813)849-9500~~

(813) 849-9500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Shares, no par value	HCI	New York Stock Exchange

Indicate by check mark whether the ~~Registrant~~registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the ~~Registrant~~registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ ☑ No ☐

Indicate by check mark whether the ~~Registrant~~registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the ~~Registrant~~registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the ~~Registrant~~registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒☑

The aggregate number of shares of the ~~Registrant’s Common Stock,~~registrant’s common stock, no par value, outstanding on ~~October 26, 2017~~May 1, 2024 was ~~9,781,952.~~10,476,413.

HCI GROUP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


					Page
			~~Page~~
					PART I – FINANCIAL INFORMATION
~~Item 1~~	~~Financial Statements~~
Item 1	Financial Statements
	Consolidated Balance Sheets: ~~September 30, 2017~~
	March 31, 2024 (unaudited) and December 31, ~~2016~~2023			1-2
	Consolidated Statements of Income:
	Three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 (unaudited)			3
	Consolidated Statements of Comprehensive Income:
	Three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 (unaudited)			4
	Consolidated Statements of Equity:
	Three months ended March 31, 2024 and 2023 (unaudited)		5-6
	Consolidated Statements of Cash Flows: ~~Nine~~
	Three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 (unaudited)			~~5-6~~	7-9
	~~Consolidated Statements of Stockholders’ Equity:~~ ~~Nine months ended September 30, 2017 and 2016 (unaudited)~~			~~7-8~~
	Notes to Consolidated Financial Statements (unaudited)			~~9-44~~
		10-38

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations			~~45-60~~
		39-49

Item 3	Quantitative and Qualitative Disclosures ~~about~~About Market Risk			~~61-62~~
		50-51

Item 4	Controls and Procedures			63	52


PART II – OTHER INFORMATION

~~Item 1~~	~~Legal Proceedings~~			63

Item 1A1	~~Risk Factors~~Legal Proceedings			63
		53

Item 1A	Risk Factors		53

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds			~~64-65~~
		53-54
~~Item 3~~	~~Defaults upon Senior Securities~~			65

Item 3	Defaults Upon Senior Securities		54

Item 4	Mine Safety Disclosures			65
		54
~~Item 5~~	~~Other Information~~			65

Item 65	~~Exhibits~~Other Information			66
		54
~~Signatures~~
~~Certifications~~Item 6	Exhibits		55-61

Signatures			62

Certifications

PART I – FINANCIAL INFORMATION

Item 1 –Financial Statements

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollar amounts in thousands)

   September 30,
2017 December 31,
2016
   (Unaudited)
Assets

Fixed-maturity securities, available for sale, at fair value (amortized cost: $253,162 and $167,231, respectively)
   $ 256,102 $ 166,248
Equity securities, available for sale, at fair value (cost: $58,242 and $47,750, respectively)
   63,023 53,035
Equity securities, trading, at fair value (cost: $929 and $0, respectively)
   1,003 —
Limited partnership investments, at equity
   20,998 29,263
Investment in unconsolidated joint venture, at equity
   1,664 2,102
Real estate investments (Note 4 – Consolidated Variable Interest Entity)
   48,961 48,086


Total investments
   391,751 298,734
Cash and cash equivalents (Note 4 – Consolidated Variable Interest Entity)
   292,438 280,531
Accrued interest and dividends receivable
   2,241 1,654
Income taxes receivable
   24,081 2,811
Premiums receivable
   27,179 17,276
Prepaid reinsurance premiums
   28,352 24,554
Reinsurance recoverable:

Paid losses and loss adjustment expenses
   17 —
Unpaid losses and loss adjustment expenses
   213,729 —
Deferred policy acquisition costs
   21,150 16,639
Property and equipment, net
   12,356 11,374
Intangible assets, net
   4,498 4,899
Deferred income taxes, net
   —   250
Other assets (Note 4 – Consolidated Variable Interest Entity)
   11,461 11,342


Total assets
   $ 1,029,253 $ 670,064


   (continued)


	March 31,		December 31,
	2024		2023
	(Unaudited)
Assets
Fixed-maturity securities, available for sale, at fair value (amortized cost: $475,170 and $387,687, respectively and allowance for credit losses: $0 and $0, respectively)	$	470,805	$	383,238
Equity securities, at fair value (cost: $47,852 and $44,011, respectively)		52,013		45,537
Limited partnership investments		24,015		23,583
Real estate investments		69,096		67,893
Total investments		615,929		520,251
Cash and cash equivalents (a)		655,384		536,478
Restricted cash (a)		3,303		3,287
Receivable from maturities of fixed-maturity securities		—		91,085
Accrued interest and dividends receivable		4,052		3,507
Income taxes receivable (a)		651		—
Deferred income taxes, net		—		512
Premiums receivable, net (allowance: $3,443 and $3,152, respectively)		43,291		38,037
Assumed premiums receivable		—		19,954
Prepaid reinsurance premiums		34,125		86,232
Reinsurance recoverable, net of allowance for credit losses:
Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively)		25,452		19,690
Unpaid losses and loss adjustment expenses (allowance: $69 and $118, respectively)		305,218		330,604
Deferred policy acquisition costs		45,152		42,910
Property and equipment, net		29,314		29,251
Right-of-use assets - operating leases		1,352		1,407
Intangible assets, net		7,046		7,659
Funds withheld for assumed business		14,181		30,087
Other assets (a)		57,184		50,365
Total assets	$	1,841,634	$	1,811,316

(a)

See Note 13 for details of balances associated with consolidated variable interest entity.

(continued)

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets ~~- continued~~– (Continued)

(Dollar amounts in thousands)


	March 31,			December 31,
	2024			2023
	(Unaudited)
Liabilities and Equity
Losses and loss adjustment expenses (a)	$	578,712		$	585,073
Unearned premiums (a)		499,499			501,157
Advance premiums		26,518			15,895
Reinsurance payable on paid losses and loss adjustment expenses		—			3,145
Ceded reinsurance premiums payable (a)		10,693			8,921
Assumed premiums payable (a)		2,681			850
Accrued expenses		24,699			19,722
Income tax payable		23,184			7,702
Deferred income taxes, net (a)		5,113			—
Revolving credit facility		50,000			—
Long-term debt		184,744			208,495
Lease liabilities – operating leases		1,357			1,408
Other liabilities (a)		36,564			35,623
Total liabilities		1,443,764			1,387,991
Commitments and contingencies (Note 21)
Redeemable noncontrolling interest (Note 18)		—			96,160
Equity:
Common stock (no par value, 40,000,000 shares authorized, 10,276,463 and 9,738,183 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively)		—			—
Additional paid-in capital		116,728			89,568
Retained income		282,056			238,438
Accumulated other comprehensive loss, net of taxes		(3,102	)		(3,163	)
Total stockholders’ equity		395,682			324,843
Noncontrolling interests		2,188			2,322
Total equity		397,870			327,165
Total liabilities, redeemable noncontrolling interest and equity	$	1,841,634		$	1,811,316

(a)

See Note 13 for details of balances associated with consolidated variable interest entity.

   September 30,
2017    December 31,
2016
   (Unaudited)
Liabilities and Stockholders’ Equity

Losses and loss adjustment expenses
   $ 344,672    $ 70,492
Unearned premiums
   206,174    175,803
Advance premiums
   10,248    4,651
Assumed reinsurance balances payable
   243    3,294
Accrued expenses (Note 4 – Consolidated Variable Interest Entity)
   11,803    6,513
Reinsurance recovered in advance on unpaid losses
   9,882    —
Deferred income taxes, net
   3,092    —
Long-term debt
   236,311    138,863
Other liabilities (Note 4 – Consolidated Variable Interest Entity)
   13,772    26,702




Total liabilities
   836,197    426,318




Commitments and contingencies (Note 16)

Stockholders’ equity:

7% Series A cumulative convertible preferred stock (no par value, 1,500,000 shares authorized, no shares issued and 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, 9,035,609 and 9,662,761 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively)
   —      —
Additionalpaid-in capital
   —      8,139
Retained income
   188,313    232,964
Accumulated other comprehensive income, net of taxes
   4,743    2,643




Total stockholders’ equity
   193,056    243,746




Total liabilities and stockholders’ equity
   $ 1,029,253    $ 670,064

See accompanying Notes to Consolidated Financial ~~Statements.~~Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(Dollar amounts in thousands, except per share amounts)

   Three Months Ended
September 30, Nine Months Ended
September 30,
   2017 2016 2017 2016
Revenue

Gross premiums earned
   $ 88,669 $ 92,542 $ 270,376 $ 286,273
Premiums ceded
   (44,705 ) (29,242 ) (101,529 ) (105,998 )


Net premiums earned
   43,964 63,300 168,847 180,275
Net investment income
   2,878 2,785 8,522 6,000
Net realized and unrealized investment (losses) gains
   (152 ) 583 2,350 899
Net other-than-temporary impairment losses recognized in income:

Total other-than-temporary impairment losses
   (474 ) (575 ) (864 ) (1,211 )
Portion of loss recognized in other comprehensive income, before taxes
   —   351 —   (230 )


Net other-than-temporary impairment losses
   (474 ) (224 ) (864 ) (1,441 )
Policy fee income
   905 972 2,721 2,967
Gain on repurchases of convertible senior notes
   —   —   —   153
Gain on bargain purchase
   —   2,071 —   2,071
Other
   369 321 1,207 1,151


Total revenue
   47,490 69,808 182,783 192,075


Expenses

Losses and loss adjustment expenses
   89,231 25,909 142,425 79,261
Policy acquisition and other underwriting expenses
   9,926 10,536 29,645 32,525
Salaries and wages
   4,605 5,945 15,051 17,009
Interest expense
   4,408 2,672 12,328 8,112
Loss on repurchases of senior notes
   —   —   743 —
Other operating expenses
   5,338 4,717 15,162 14,213


Total operating expenses
   113,508 49,779 215,354 151,120


(Loss) income before income taxes
   (66,018 ) 20,029 (32,571 ) 40,955
Income tax (benefit) expense
   (25,472 ) 8,696 (13,587 ) 16,542


Net (loss) income
   $ (40,546 ) $ 11,333 $ (18,984 ) $ 24,413


Basic (loss) earnings per share
   $ (4.44 ) $ 1.17 $ (2.05 ) $ 2.48


Diluted (loss) earnings per share
   $ (4.44 ) $ 1.10 $ (2.05 ) $ 2.41


Dividends per share
   $ 0.35 $ 0.30 $ 1.05 $ 0.90


	Three Months Ended
	March 31,
	2024			2023
Revenue
Gross premiums earned	$	256,644		$	180,068
Premiums ceded		(68,106	)		(70,509	)
Net premiums earned		188,538			109,559
Net investment income		14,067			17,715
Net realized investment losses		—			(1,149	)
Net unrealized investment gains		2,635			529
Policy fee income		1,019			1,090
Other		355			1,285
Total revenue		206,614			129,029
Expenses
Losses and loss adjustment expenses		79,922			60,565
Policy acquisition and other underwriting expenses		22,139			22,720
General and administrative personnel expenses		16,274			13,502
Interest expense		3,149			2,801
Other operating expenses		7,700			6,305
Total expenses		129,184			105,893
Income before income taxes		77,430			23,136
Income tax expense		20,474			5,343
Net income		56,956			17,793
Net income attributable to redeemable noncontrolling interest (Note 18)		(10,149	)		(2,324	)
Net loss (income) attributable to noncontrolling interests		804			(131	)
Net income after noncontrolling interests	$	47,611		$	15,338
Basic earnings per share	$	4.76		$	1.78
Diluted earnings per share	$	3.81		$	1.54

See accompanying Notes to Consolidated Financial ~~Statements.~~Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

(~~Amounts~~Dollar amounts in thousands)

   Three Months Ended
September 30, Nine Months Ended
September 30,
   2017 2016 2017 2016
Net (loss) income
   $ (40,546 ) $ 11,333 $ (18,984 ) $ 24,413


Other comprehensive income:

Change in unrealized gain on investments:

Net unrealized gain arising during the period
   2,155 2,234 4,822 10,290
Other-than-temporary impairment loss charged to income
   474 224 864 1,441
Call and repayment losses charged to investment income
   —   3 9 14
Reclassification adjustment for net realized losses (gains)
   226 (583 ) (2,276 ) (899 )


Net change in unrealized gain
   2,855 1,878 3,419 10,846
Deferred income taxes on above change
   (1,101 ) (724 ) (1,319 ) (4,184 )


Total other comprehensive income, net of income taxes
   1,754 1,154 2,100 6,662


Comprehensive (loss) income
   $ (38,792 ) $ 12,487 $ (16,884 ) $ 31,075


	Three Months Ended
	March 31,
	2024			2023
Net income	$	56,956		$	17,793
Other comprehensive income:
Change in unrealized gain on investments:
Net unrealized gains arising during the period		52			2,415
Reclassification adjustment for net realized losses		32			738
Net change in unrealized gains		84			3,153
Deferred income taxes on above change		(21	)		1,810
Total other comprehensive income, net of income taxes		63			4,963
Comprehensive income		57,019			22,756
Comprehensive loss (income) attributable to noncontrolling interests		802			(306	)
Comprehensive income after noncontrolling interests	$	57,821		$	22,450

See accompanying Notes to Consolidated Financial ~~Statements.~~Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of ~~Cash Flows~~Equity

~~(Unaudited)~~For the Three Months Ended March 31, 2024

(Unaudited)

(~~Amounts~~Dollar amounts in ~~thousands)~~thousands, except per share amount)

   Nine Months Ended
September 30,
   2017 2016
Cash flows from operating activities:

Net (loss) income
   $ (18,984 ) $ 24,413
Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Stock-based compensation
   3,362 3,072
Net amortization of premiums on investments in fixed-maturity securities
   884 475
Depreciation and amortization
   6,945 3,968
Deferred income tax benefits
   (3,822 ) (4,967 )
Net realized and unrealized investment gains
   (2,350 ) (899 )
Other-than-temporary impairment losses
   864 1,441
Income from unconsolidated joint venture
   (126 ) (153 )
Distribution received from unconsolidated joint venture
   147 —
Gain on repurchases of convertible senior notes
   —   (153 )
Gain on bargain purchase
   —   (2,071 )
Loss on repurchases of senior notes
   743 —
Net income from limited partnership interests
   (1,724 ) (54 )
Distributions received from limited partnership interests
   854 428
Foreign currency remeasurement (gain) loss
   (31 ) 9
Other
   172 5
Changes in operating assets and liabilities:

Accrued interest and dividends receivable
   (587 ) (305 )
Income taxes
   (21,270 ) 2,510
Premiums receivable
   (9,903 ) (6,495 )
Prepaid reinsurance premiums
   (3,798 ) 11,048
Reinsurance recoverable
   (213,746 ) —
Deferred policy acquisition costs
   (4,511 ) (2,619 )
Other assets
   2,441 32,073
Losses and loss adjustment expenses
   274,180 5,505
Unearned premiums
   30,371 22,032
Advance premiums
   5,597 4,894
Assumed reinsurance balances payable
   (3,051 ) (1,084 )
Reinsurance recovered in advance on unpaid losses
   9,882 —
Accrued expenses and other liabilities
   (1,146 ) (1,180 )


Net cash provided by operating activities
   51,393 91,893


Cash flows from investing activities:

Investments in limited partnership interests
   (2,623 ) (4,670 )
Acquisition of real estate business, net of cash acquired
   —   (12,056 )
Distributions received from limited partnership interests
   11,758 —
Proceeds from investment in real estate under acquisition, development and construction arrangement
   —   10,200
Distribution from unconsolidated joint venture
   417 —
Purchase of property and equipment
   (1,872 ) (543 )
Purchase of real estate investments
   (2,095 ) (1,522 )
Purchase of fixed-maturity securities - available for sale
   (105,258 ) (79,232 )
Purchase of equity securities - available for sale
   (34,512 ) (13,259 )
Purchase of equity securities - trading
   (1,507 ) —
Proceeds from sales of fixed-maturity securities - available for sale
   9,638 37,415
Proceeds from calls, repayments and maturities of fixed-maturity securities - available for sale
   8,786 2,637
Proceeds from sales of equity securities - available for sale
   25,729 14,155
Proceeds from sales of equity securities - trading
   580 —


Net cash used in investing activities
   (90,959 ) (46,875 )


   (continued)


	Common Stock					Additional Paid-In			Retained			Accumulated Other Comprehensive Loss,			Total Stockholders’			Noncontrolling			Total
	Shares			Amount		Capital			Income			Net of Tax			Equity			Interests			Equity
Balance at December 31, 2023		9,738,183		$	—	$	89,568		$	238,438		$	(3,163	)		324,843		$	2,322		$	327,165
Net income (loss)		—			—		—			57,085			—			57,085			(129	)		56,956
Net income attributable to redeemable noncontrolling interest		—			—		—			(9,474	)		—			(9,474	)		(675	)		(10,149	)
Total other comprehensive income, net of income taxes		—			—		—			—			61			61			2			63
Cashless exercise of common stock warrants		155,049			—		—			—			—			—			—			—
Forfeiture of restricted stock		(200	)		—		—			—			—			—			—			—
Repurchase and retirement of common stock		(5,656	)		—		(556	)		—			—			(556	)		—			(556	)
Conversion of senior notes to common stock		389,087			—		23,449			—			—			23,449			—			23,449
Dilution from subsidiary stock-based compensation		—			—		—			—			—			—			668			668
Common stock dividends ($0.40 per share)		—			—		—			(3,993	)		—			(3,993	)		—			(3,993	)
Stock-based compensation		—			—		881			—			—			881			—			881
Deemed dividend on warrant modification		—			—		3,386			—			—			3,386			—			3,386
Balance at March 31, 2024		10,276,463		$	—	$	116,728		$	282,056		$	(3,102	)	$	395,682		$	2,188		$	397,870

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Consolidated Statements of Cash Flows - continued~~

~~(Unaudited)~~

~~(Amounts in thousands)~~

   Nine Months Ended
September 30,
   2017 2016
Cash flows from financing activities:

Cash dividends paid
   (10,512 ) (9,368 )
Cash dividends received under share repurchase forward contract
   788 561
Proceeds from exercise of common stock options
   75 —
Proceeds from issuance of long-term debt
   143,859 18,200
Repurchases of convertible senior notes
   —   (11,347 )
Repurchases of senior notes
   (40,250 ) —
Repayment of debt
   (718 ) (264 )
Repurchases of common stock
   (30,636 ) (464 )
Repurchases of common stock under share repurchase plan
   (6,189 ) (18,023 )
Debt issuance costs
   (4,975 ) (339 )
Tax benefits on stock-based compensation
   —   176


Net cash provided by (used in) financing activities
   51,442 (20,868 )


Effect of exchange rate changes on cash
   31 (8 )


Net increase in cash and cash equivalents
   11,907 24,142
Cash and cash equivalents at beginning of period
   280,531 267,738


Cash and cash equivalents at end of period
   $ 292,438 $ 291,880


Supplemental disclosure of cash flow information:

Cash paid for income taxes
   $ 11,506 $ 18,824


Cash paid for interest
   $ 8,647 $ 6,417


Non-cash investing and financing activities:

Unrealized gain on investments inavailable-for-sale securities, net of tax
   $ 2,100 $ 6,662


Details of business acquisition:

Fair value of assets acquired
   $ —   $ 14,677
Less: purchase price
   —   (12,250 )
gain on bargain purchase
   —   (2,071 )


Liabilities assumed
   $ —   $ 356


Conversion of revolving credit facility to long-term debt
   $ 9,441 $ —


Receivable from sales ofavailable-for-sale securities
   $ 3,034 $ 270


Payable on purchases ofavailable-for-sale securities
   $ 3,014 $ 388

See accompanying Notes to Consolidated Financial ~~Statements.~~Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated ~~Statement~~Statements of ~~Stockholders’~~ Equity – (Continued)

~~Nine~~For the Three Months Ended ~~September 30, 2017~~March 31, 2023

(Unaudited)

(Dollar amounts in ~~thousands)~~thousands, except per share amount)

   Common Stock    Additional
Paid-In Retained Accumulated
Other
Comprehensive
Income,    Total
Stockholders’
   Shares Amount    Capital Income Net of Tax    Equity
Balance at December 31, 2016
   9,662,761 $ —      $ 8,139 $ 232,964 $ 2,643    $ 243,746
Net loss
   —   —      —   (18,984 ) —      (18,984 )
Total other comprehensive income, net of income taxes
   —   —      —   —   2,100    2,100
Exercise of common stock options
   30,000 —      75 —   —      75
Issuance of restricted stock
   154,936 —      —   —   —      —
Forfeiture of restricted stock
   (23,218 ) —      —   —   —      —
Repurchase and retirement of common stock
   (434,505 ) —      (21,236 ) —   —      (21,236 )
Repurchase and retirement of common stock under share repurchase plan
   (163,265 ) —      (6,189 ) —   —      (6,189 )
Repurchase of common stock under prepaid forward contract
   (191,100 ) —      (9,400 ) —   —      (9,400 )
Equity component on 4.25% convertible senior notes (net of offering costs of $543)
   —   —      15,151 —   —      15,151
Deferred taxes on debt discount
   —   —      (5,845 ) —   —      (5,845 )
Common stock dividends
   —   —      —   (9,724 ) —      (9,724 )
Stock-based compensation
   —   —      3,362 —   —      3,362
Additionalpaid-in capital shortfall allocated to retained income
   —   —      15,943 (15,943 ) —      —






Balance at September 30, 2017
   9,035,609 $ —      $ —   $ 188,313 $ 4,743    $ 193,056


	Common Stock					Additional Paid-In			Retained			Accumulated Other Comprehensive Loss,			Total Stockholders’			Noncontrolling			Total
	Shares			Amount		Capital			Income			Net of Tax			Equity			Interests			Equity
Balance at December 31, 2022		8,598,682		$	—	$	—		$	172,482		$	(9,886	)	$	162,596		$	(1,342	)	$	161,254
Net income		—			—		—			17,488			—			17,488			305			17,793
Net income attributable to redeemable noncontrolling interest		—			—		—			(2,150	)		—			(2,150	)		(174	)		(2,324	)
Total other comprehensive income, net of income taxes		—			—		—			—			4,788			4,788			175			4,963
Issuance of restricted stock		6,000			—		—			—			—			—			—			—
Forfeiture of restricted stock		(2,125	)		—		—			—			—			—			—			—
Repurchase and retirement of common stock		(5,884	)		—		(305	)		—			—			(305	)		—			(305	)
Dilution from subsidiary stock-based compensation		—			—		—			—			—			—			631			631
Common stock dividends ($0.40 per share)		—			—		—			(3,432	)		—			(3,432	)		—			(3,432	)
Stock-based compensation		—			—		1,277			—			—			1,277			—			1,277
Additional paid-in capital shortfall adjustment allocated to retained income		—			—		(640	)		640			—			—			—			—
Balance at March 31, 2023		8,596,673		$	—	$	332		$	185,028		$	(5,098	)	$	180,262		$	(405	)	$	179,857

See accompanying Notes to Consolidated Financial ~~Statements.~~Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated ~~Statement~~Statements of ~~Stockholders’ Equity - continued~~Cash Flows

~~Nine Months Ended September 30, 2016~~(Unaudited)

~~(Unaudited)~~

(Dollar amounts in thousands)

   Common Stock    Additional
Paid-In Retained Accumulated
Other
Comprehensive
(Loss) Income, Total
Stockholders’
   Shares Amount    Capital Income Net of Tax Equity
Balance at December 31, 2015
   10,292,256 $ —      $ 23,879 $ 215,634 $ (1,791 ) $ 237,722
Net income
   —   —      —   24,413 —   24,413
Total other comprehensive income, net of income taxes
   —   —      —   —   6,662 6,662
Issuance of restricted stock
   102,440 —      —   —   —   —
Forfeiture of restricted stock
   (11,787 ) —      —   —   —   —
Cancellation of restricted stock
   (160,000 ) —      —   —   —   —
Repurchase and retirement of common stock
   (14,934 ) —      (464 ) —   —   (464 )
Repurchase and retirement of common stock under share repurchase plan
   (574,851 ) —      (18,023 ) —   —   (18,023 )
Common stock dividends
   —   —      —   (8,807 ) —   (8,807 )
Tax benefits on stock-based compensation
   —   —      176 —   —   176
Tax shortfalls on stock-based compensation
   —   —      (239 ) —   —   (239 )
Stock-based compensation
   —   —      3,072 —   —   3,072




Balance at September 30, 2016
   9,633,124 $ —      $ 8,401 $ 231,240 $ 4,871 $ 244,512


	Three Months Ended
	March 31,
	2024			2023
Cash flows from operating activities:
Net income after noncontrolling interests	$	47,611		$	15,338
Net income attributable to noncontrolling interests		9,345			2,455
Net income		56,956			17,793
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense		1,582			2,106
Net accretion of discount on investments in fixed-maturity securities		(2,148	)		(1,845	)
Depreciation and amortization		1,003			2,230
Deferred income tax expense		5,604			3,266
Net realized investment losses		—			1,149
Net unrealized investment gains		(2,635	)		(529	)
Credit loss expense - reinsurance recoverable		(49	)		(1	)
Net income from limited partnership interests		(195	)		(553	)
Distributions received from limited partnership interests		—			303
Loss on extinguishment of debt		—			177
Gain on sales of real estate investments		—			(8,936	)
Foreign currency remeasurement (gain) loss		(1	)		1
Other non-cash items		(19	)		71
Changes in operating assets and liabilities:
Accrued interest and dividends receivable		(545	)		(573	)
Income taxes		14,831			2,100
Premiums receivable, net		(5,254	)		(9,968	)
Assumed premiums receivable		19,954			—
Prepaid reinsurance premiums		52,107			39,564
Reinsurance recoverable		19,673			91,660
Deferred policy acquisition costs		(2,242	)		(1,110	)
Funds withheld for assumed business		15,906			3,498
Other assets		(6,657	)		(5,590	)
Losses and loss adjustment expenses		(6,361	)		(57,457	)
Unearned premiums		(1,658	)		19,786
Advance premiums		10,623			7,247
Assumed reinsurance balances payable		1,831			—
Reinsurance payable on paid losses and loss adjustment expenses		(3,145	)		(1,563	)
Reinsurance recovered in advance on unpaid losses		—			(19,863	)
Ceded reinsurance premiums payable		1,772			(3,523	)
Accrued expenses and other liabilities		11,056			19,669
Net cash provided by operating activities		181,989			99,109

(continued)

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Continued)

(Unaudited)

(Dollar amounts in thousands)


	Three Months Ended
	March 31,
	2024			2023
Cash flows from investing activities:
Investments in limited partnership interests		(399	)		(170	)
Distributions received from limited partnership interests		162			1,602
Distribution received from unconsolidated joint venture		—			18
Purchase of property and equipment		(946	)		(1,469	)
Purchase of real estate investments		(5,244	)		(175	)
Purchase of fixed-maturity securities		(172,336	)		(160,152	)
Purchase of equity securities		(7,679	)		(6,472	)
Purchase of short-term and other investments		—			(10	)
Proceeds from sales of real estate investments		—			21,746
Proceeds from sales of fixed-maturity securities		6,030			11,060
Proceeds from calls, repayments and maturities of fixed-maturity securities		172,024			112,497
Proceeds from sales of equity securities		3,516			3,754
Proceeds from sales, redemptions and maturities of short-term and other investments		—			14
Net cash used in investing activities		(4,872	)		(17,757	)
Cash flows from financing activities:
Cash dividends paid		(3,993	)		(3,432	)
Net borrowing under revolving credit facility		50,000			—
Cash dividends paid to redeemable noncontrolling interests		(2,923	)		(3,012	)
Repayment of long-term debt		(128	)		(258	)
Redemption of long-term debt		(466	)		(6,895	)
Repurchases of common stock		(557	)		(305	)
Redemption of redeemable noncontrolling interest		(100,000	)		—
Purchase of noncontrolling interests		(33	)		(198	)
Debt issuance costs		(99	)		—
Net cash used in financing activities		(58,199	)		(14,100	)
Effect of exchange rate changes on cash		4			(3	)
Net increase in cash, cash equivalents, and restricted cash		118,922			67,249
Cash, cash equivalents, and restricted cash at beginning of period		539,765			237,763
Cash, cash equivalents, and restricted cash at end of period	$	658,687		$	305,012

(continued)

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Continued)

(Unaudited)

(Dollar amounts in thousands)


	Three Months Ended
	March 31,
	2024		2023
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	38	$	35
Cash paid for interest	$	1,052	$	739
Non-cash investing and financing activities:
Unrealized gain on investments in available-for-sale securities, net of tax	$	63	$	4,963
Conversion of 4.25% Convertible Senior Notes	$	23,450	$	—
Sale of real estate investments:
Contingent consideration receivable	$	—	$	125
Long-term debt obligations assumed by the buyer	$	—	$	8,995
Payable on purchases of equity securities	$	25	$	—

See accompanying Notes to Consolidated Financial ~~Statements.~~Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

Note~~1--~~ 1 -- Nature of Operations

HCI Group, Inc., together with its ~~majority-owned and controlled~~ subsidiaries ~~(collectively,~~(“HCI” or the “Company”), is primarily engaged in the property and casualty insurance business through two Florida domiciled insurance companies, Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”)~~, its principal operating subsidiary.~~ and TypTap Insurance Company (“TypTap”). Both HCPCI isand TypTap are authorized to underwrite various homeowners’ property and casualty insurance products and allied lines business in the state of ~~Florida. HCPCI also offers flood-endorsed~~Florida and ~~wind-only policies to new andpre-existing~~ ~~Florida customers. HCPCI’s~~in other states. The operations of each insurance subsidiary are supported by HCI Group, Inc. and certain HCI subsidiaries. ~~During 2017, HCPCI received regulatory approval~~The operations of TypTap are also supported by TypTap Insurance Group, Inc. (“TTIG”), the Company’s majority-owned subsidiary, and certain TTIG subsidiaries. The Company emphasizes the use of internally developed technologies to ~~write residential property~~collect and ~~casualty insurance~~analyze claims and other supplemental data to assist in the ~~states~~underwriting process and generate savings as well as efficiency for the operations of ~~Arkansas, Maryland, North Carolina, New Jersey, Pennsylvania, South Carolina~~the insurance subsidiaries and ~~Texas.~~other insurance-related businesses. The Company also provides an attorney-in-fact (“AIF”) service. The Company's subsidiary, Core Risk Managers, LLC (“CRM”), serves as the AIF for Condo Owners Reciprocal Exchange (“CORE”), a reciprocal insurance exchange owned by its policyholders. Although the Company does not have any equity interest in CORE, the Company is required to consolidate CORE as its primary beneficiary. See Note 13 -- “Variable Interest Entity” for additional information. In addition, Greenleaf Capital, LLC, the Company’s real estate subsidiary, is primarily engaged in the business of owning and leasing real estate and operating marina facilities.

Assumed Business

Citizens Assumption

During the first quarter of 2024, the Company continued to participate in a take-out program through which the Company assumed insurance policies held by Citizens Property Insurance Corporation (“Citizens”), a Florida state-supported insurer. Approximately 9,800 policies were assumed by TypTap and CORE, representing approximately $87,800 in annualized premiums written.

Note 2 —-- Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements ~~for~~of HCI Group, Inc. and its majority-owned and controlled subsidiaries (collectively, the ~~Company~~“Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s financial position as of ~~September 30, 2017~~March 31, 2024 and the results of operations and cash flows for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ending December 31, ~~2017.~~2024. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, ~~2016~~2023 included in the Company’s Form10-K, which was filed with the SEC on ~~February 22, 2017.~~March 8, 2024.

In preparing the interim unaudited consolidated financial statements, management was required to make certain judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the financial reporting date and throughout the periods being reported upon.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

Certain of the estimates result from judgments that can be subjective and complex, and consequently actual results may differ from these estimates.

Material estimates that are particularly susceptible to significant change in the near term are related to the Company’s losses and loss adjustment expenses, which include amounts estimated for claims incurred but not yet reported. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make these estimates. In addition, accounting policies ~~for~~specific to reinsurance ~~contracts~~ with retrospective provisions, reinsurance recoverable, deferred income taxes, limited partnership investments, allowance for credit losses, and stock-based compensation expense involve significant judgments and estimates material to the Company’s consolidated financial statements.

In the case of assumed business, the Company relies entirely on the ceding insurance company to provide information about premiums, losses, and loss adjustment expenses. When the information is not available at the reporting date, the Company will make estimates based on all recent available data. Accordingly, the actual results could differ significantly from those estimates.

All significant intercompany balances and transactions have been eliminated.

Revenue from Claims Processing Services

Revenue related to claims processing services is included in other revenue in the consolidated statements of income. For the three months ended March 31, 2024 and 2023, revenues from claims processing services were $0 and $527, respectively.

Noncontrolling Interests

A noncontrolling interest arises when the Company has less than 100% of the voting rights and economic interests in a subsidiary or a consolidated variable interest entity (“VIE”). The Company has noncontrolling interests attributable to TTIG and CORE, a VIE consolidated by the Company under the VIE model. The noncontrolling interest related to TTIG is periodically adjusted for the expensing of TTIG’s stock-based awards granted to its employees, the interest’s share of TTIG’s net income or loss to common stockholders and change in other comprehensive income or loss. The noncontrolling interest related to CORE is periodically adjusted for CORE’s net surplus contribution and net income or loss since the Company has no equity interest in CORE.

Note 3 -- Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.


	March 31,		December 31,
	2024		2023
Cash and cash equivalents	$	655,384	$	536,478
Restricted cash		3,303		3,287
Total	$	658,687	$	539,765

Restricted cash represents funds in the Company’s sole ownership primarily held by certain states to meet regulatory requirements in which the Company’s insurance subsidiaries conduct business and are not available for immediate business use. Funds withheld in an account for which the Company is a co-owner but not the named

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

~~Adoption of New Accounting Standards~~

~~Effective January 1, 2017, the Company adopted Accounting Standards UpdateNo. 2016-09,~~ Compensation—Stock Compensation (Topic 718), which amends the accounting for share-based payment transactions including the related income taxes, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Amendments related to the timing of when excess tax benefitsbeneficiary are recognized, minimum statutory withholding requirements, and forfeitures, which is applied using a modified retrospective transition method, have no impact on the Company’s comparative consolidated financial statements. In addition, the retrospective application of the amendments related to the presentation of employee taxes paid does not ~~have an impact on the Company’s comparative consolidated statement of~~considered restricted cash flows. Upon adoption of this standard, the Company elected to account for forfeitures of share-based awards when they occur and apply the amendments related to the presentation of excess tax benefits on the statement of cash flows prospectively. Under the new standard, the Company is required to recognize any excess tax benefits and tax deficiencies in the Company’s consolidated statement of income.

~~Investments in Trading Securities~~

The Company holds certain equity securities with the intention of selling them in a short period of time to generate profits. As such, these equity securities are classified as trading and carried at fair value. Realized investment gains and losses from sales are recorded on the trade date and are ~~determined using thefirst-infirst-out~~ ~~(FIFO) method. Unrealized holding gains and losses from the changes in the fair value are reported in the consolidated statement of income as net unrealized investment gains or losses.~~

~~Long-Term Debt~~

Long-term debt is generally classified as a liability and carried at amortized cost, net of any discount and issuance costs. At issuance, a debt instrument with embedded features such as conversion and redemption options is evaluated to determine whether bifurcation and derivative accounting is applicable. If such instrument is not subject to derivative accounting, it is further evaluated to determine if the Company is required to separately account for the liability and equity components.

To determine the carrying values of the liability and equity components at issuance, the Company measures the fair value of a similar liability, including any embedded features other than the conversion option, and assigns such value to the liability component. The liability component’s fair value is then subtracted from the initial proceeds to determine the carrying value of the debt instrument’s equity component, which is included in ~~additionalpaid-in~~ ~~capital.~~

Any embedded feature other than the conversion option is evaluated at issuance to determine if it is probable that such embedded feature will be exercised. If the Company concludes that the exercisability of that embedded feature is not probable, the embedded feature is considered to be~~non-substantive~~ ~~and would not impact the initial measurement and expected life of the debt instrument’s liability component.~~

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

Transaction costs related to issuing a debt instrument that embodies both liability and equity components are allocated to the liability and equity components in proportion to the allocation of the proceeds and accountedfunds withheld for as debt issuance costs and equity issuance costs, respectively. Debt issuance costs are capitalized and presented as a deduction from the carrying value of the debt. Both debt discount and deferred debt issuance costs are amortized to interest expense over the expected life of the debt instrument using the effective interest method. Equity issuance costs are a reduction to the proceeds allocated to the equity component.

~~Common Share Repurchases~~

The Company primarily repurchases its common stock in the open market through share repurchase programs and from institutional investors in private transactions such as prepaid share repurchase forward contracts and share repurchase agreements.

A prepaid share repurchase forward contract is generally a contract that allows a party to buy from the counterparty a specified number of common shares at a specific time at a given forward price. The Company entered into such a contract and evaluated the characteristics of the forward contract to determine whether it met the definition of a derivative financial instrument pursuant to U.S. GAAP. The Company determined the forward contract is an equity contractassumed business on the Company’s common shares requiring physical settlement in common shares of the Company. As such, the transaction is recognized as a component of stockholders’ equity and there will be no recognition in earnings for changes in fair value in subsequent periods.

~~In general, the Company first allocates the purchase price or the prepayment amount to additionalpaid-in~~ ~~capital to the extent available and the remaining balance is allocated to retained income. Due to past and recent share repurchases, the Company’s additionalpaid-in~~ ~~capital has been exhausted and shall remain so until the Company fully recoups the total amount allocated to retained income.~~

~~Reclassifications.~~ ~~Certain reclassifications of prior year amounts have been made to conform to the current year presentation.~~

~~Note 3 — Recent Accounting Pronouncements~~

~~Accounting Standards Update No.~~ ~~2017-13.~~ ~~In September 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards UpdateNo. 2017-13~~ ~~(“ASU2017-13”),~~ ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842). ASU2017-13~~ ~~adds SEC paragraphs pursuant to the SEC Staff Announcement at the July 20, 2017 Emerging Issues Task Force meeting concerning the transition related to Accounting Standards UpdatesNo. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606) andNo. 2016-02,~~ ~~Leases (Topic 842). ASU2017-13~~ also supersedes SEC paragraphs pursuant to the rescission of SEC Staff Announcement, “Accounting for Management Fees Based on a Formula,” effective upon the initial adoption of Topic 606 and SEC Staff Announcement, “Lessor Consideration of Third-Party Value Guarantees,” effective upon the initial adoption of Topic 842. ASU~~2017-13~~ also rescinds three SEC Observer Comments effective upon the initial adoption of Topic 842. One SEC Staff Observer comment is being moved to Topic 842. The Company does not anticipate significant impact from this guidance.

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

~~Accounting Standards Update No.~~ ~~2017-09.~~ ~~In May 2017, the FASB issued Accounting Standards UpdateNo. 2017-09~~ ~~(“ASU2017-09”),~~ Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an application of modification accounting. ASU~~2017-09~~ ~~is effective for the Company beginning with the first quarter of 2018. Early adoption is permitted. This guidance will impact the future modification of the Company’s existing share-based awards.~~

~~Accounting Standards Update No.~~ ~~2017-08.~~ ~~In March 2017, the FASB issued Accounting Standards UpdateNo. 2017-08~~ ~~(“ASU2017-08”),~~ ~~Receivables – Nonrefundable Fees and Other Costs (Subtopic310-20):~~ Premium Amortization on Purchased Callable Debt Securities, which amends guidance on the amortization period of premiums on certain purchased callable debt securities. Specifically, this update shortens the amortization period of certain purchased callable debt securities to the earliest call date. ASU~~2017-08~~ is effective for the Company beginning with the first quarter of 2019. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements.

~~Accounting Standards Update No.~~ ~~2017-05.~~ ~~In February 2017, the FASB issued Accounting Standards UpdateNo. 2017-05~~ ~~(“ASU2017-05”),~~ ~~Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic610-20),~~ ~~which clarifies the scope of asset derecognition guidance and accounting for partial sales of nonfinancial assets. In addition, ASU2017-15~~ eliminates the exception in the financial asset guidance for transfers of investments including equity method investments in real estate entities and supersedes the guidance in the Exchanges of a Nonfinancial Asset for a Noncontrolling Ownership Interest subsection (Topic 845). ASU~~2017-05~~ ~~is effective for the Company beginning with the first quarter of 2018. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements.~~

~~Accounting Standards Update No.~~ ~~2017-03.~~ ~~In January 2017, the FASB issued Accounting Standards UpdateNo. 2017-03~~ ~~(“ASU2017-03”),~~ Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic 323), which adds and amends SEC paragraphs pursuant to the SEC Staff Announcements at the September 22, 2016 and November 17, 2016 Emerging Issues Task Force meetings. The announcement made at the September 22, 2016 meeting provides the SEC staff view on the disclosure of the impact that recently issued accounting standards will have on a public entity’s financial statements when the standards are adopted in a future period. This announcement applies to ASU~~2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606); ASU2016-02,~~ ~~Leases (Topic 842); ASU2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326) and any subsequent amendments to guidance in the ASUs that are issued prior to the adoption of the aforementioned ASUs.~~

~~Accounting Standards Update No.~~ ~~2017-01.~~ ~~In January 2017, the FASB issued Accounting Standards UpdateNo. 2017-01~~ ~~(“ASU2017-01”),~~ Business Combinations (Topic 805), which clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. If the screen is not met, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output to be considered a business. ASU~~2017-01~~ is effective for the Company beginning with the first quarter of 2018. Early adoption is permitted under certain circumstances. When adopted, this guidance will impact how the Company determines whether a transaction should be accounted for as a business acquisition or disposal in a future period. The Company elected to adopt this standard in the fourth quarter of 2017.

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

~~Accounting Standards to be Adopted in Fiscal Year 2018~~

~~In January 2016, the FASB issued Accounting Standards UpdateNo. 2016-01~~ ~~(“ASU2016-01”),~~ ~~Financial Instruments – Overall (Subtopic825-10),~~ primarily requiring all equity investments other than those accounted for under the equity method of accounting or those that result in consolidation of the investee to be measured at fair value with changes in the fair value recognized through net income. The application of ASU~~2016-01~~ ~~could cause the Company to experience significant volatility in earnings. Under current accounting policy, the Company recognizes unrealized holding gains and losses onavailable-for-sale~~ ~~equity securities in stockholders’ equity as a component of accumulated other comprehensive income. In the year of adoption,available-for-sale~~ equity securities’ unrealized holding gains and losses reported in accumulated other comprehensive income at December 31, 2017 will be reclassified to beginning retained income. Any subsequent changes in fair value will be recognized in the consolidated statement of income. In addition, the classification of the Company’s equity securities with readily determinable fair values as~~“available-for-sale”~~ in the consolidated balance ~~sheet and related disclosures will be eliminated.~~sheets.

In ~~May 2014,~~connection with the ~~FASB issued Accounting Standards UpdateNo. 2014-09~~ ~~(“ASU2014-09”),~~ ~~Revenue from Contracts with Customers (Topic 606). The core principle~~sale of the ~~guidance is that an entity should recognize revenue~~retail shopping center investment property in Melbourne, Florida to ~~depict the transfer~~a non-affiliate, $87 of ~~promised goods or services to customers~~restricted cash was deposited in ~~an amount that reflects the consideration to which the entity expects to be entitled~~escrow in ~~exchange for those goods or services. ASU2014-09~~ ~~supersedes the revenue recognition requirements~~March 2023 and released in ~~Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. ASU2014-09~~ also amends the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer to be consistent with the guidance in this ASU. ASU~~2014-09~~ permits two methods of adoption: a full retrospective method or a modified retrospective method. This standard could impact the timing and amounts of revenue recognized. The Company has identified and reviewed impacted revenue generating activities in accordance with the five-step revenue recognition model specified by this standard. The Company elects to use a modified retrospective method for transition to the new revenue recognition standard. Based on the Company’s assessment, the impact will be limited to the related disclosures of certain revenue generating activitiesFebruary 2024 as ~~its primary source of revenue from insurance premiums is not within the scope of this new standard.~~post-sale conditions were met.

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

Note 4 —-- Investments

a)Available-for-Sale Fixed-Maturity Securities

The Company holds investments in fixed-maturity securities ~~and equity securities~~ that are classified asavailable-for-sale. At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, the cost or amortized cost, allowance for credit loss, gross unrealized gains and losses, and estimated fair value of the Company’savailable-for-sale securities by security type were as follows:

   Cost or
Amortized
Cost    Gross
Unrealized
Gain    Gross
Unrealized
Loss    Estimated
Fair Value
As of September 30, 2017

Fixed-maturity securities

U.S. Treasury and U.S. government agencies
   $ 47,348    $ 5    $ (112 )    $ 47,241
Corporate bonds
   121,459    1,862    (811 )    122,510
State, municipalities, and political subdivisions
   74,924    2,099    (83 )    76,940
Exchange-traded debt
   9,293    194    (211 )    9,276
Redeemable preferred stock
   138    2    (5 )    135








Total
   253,162    4,162    (1,222 )    256,102
Equity securities
   58,242    5,361    (580 )    63,023








Totalavailable-for-sale securities
   $ 311,404    $ 9,523    $ (1,802 )    $ 319,125








As of December 31, 2016

Fixed-maturity securities

U.S. Treasury and U.S. government agencies
   $ 1,975    $ —      $ (36 )    $ 1,939
Corporate bonds
   75,538    607    (1,641 )    74,504
State, municipalities, and political subdivisions
   78,018    776    (488 )    78,306
Exchange-traded debt
   11,463    36    (237 )    11,262
Redeemable preferred stock
   237    3    (3 )    237








Total
   167,231    1,422    (2,405 )    166,248
Equity securities
   47,750    5,769    (484 )    53,035








Totalavailable-for-sale securities
   $ 214,981    $ 7,191    $ (2,889 )    $ 219,283


	Cost or Amortized		Allowance for Credit		Gross Unrealized		Gross Unrealized			Estimated Fair
	Cost		Loss		Gain		Loss			Value
As of March 31, 2024
U.S. Treasury and U.S. government agencies	$	444,189	$	—	$	23	$	(3,498	)	$	440,714
Corporate bonds		30,487		—		65		(943	)		29,609
Exchange-traded debt		494		—		—		(12	)		482
Total	$	475,170	$	—	$	88	$	(4,453	)	$	470,805
As of December 31, 2023
U.S. Treasury and U.S. government agencies	$	359,630	$	—	$	224	$	(3,800	)	$	356,054
Corporate bonds		27,563		—		116		(975	)		26,704
Exchange-traded debt		494		—		—		(14	)		480
Total	$	387,687	$	—	$	340	$	(4,789	)	$	383,238

~~At September 30, 2017, fixed-maturity securities included $252 of U.S. Treasury securities related to a statutory deposit held in trust for the South Carolina Director of Insurance.~~

Expected maturities ~~will~~may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. The scheduled contractual maturities of fixed-maturity securities as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~2023 are as follows:


	Amortized Cost		Estimated Fair Value		March 31, 2024				December 31, 2023
*As of September 30, 2017*
					Cost or		Estimated		Cost or		Estimated
					Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale
Due in one year or less	$	30,082	$	30,115	$	281,977	$	280,304	$	234,992	$	234,025
Due after one year through five years		127,627		127,444		189,861		187,529		148,935		145,758
Due after five years through ten years		66,146		67,853		2,838		2,490		3,266		2,974
Due after ten years		29,307		30,690		494		482		494		481
					$	475,170	$	470,805	$	387,687	$	383,238
	$	253,162	$	256,102

1412

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

   Amortized
Cost    Estimated
Fair Value
As of December 31, 2016

Available-for-sale

Due in one year or less
   $ 2,656    $ 2,662
Due after one year through five years
   49,915    50,023
Due after five years through ten years
   90,360    89,332
Due after ten years
   24,300    24,231




   $ 167,231    $ 166,248

Securities on Deposit

The fair value of fixed-maturity securities on deposit with various regulatory authorities at March 31, 2024 and December 31, 2023 was $1,668 and $1,660, respectively.

Sales ofAvailable-for-Sale Fixed-Maturity Securities

Proceeds received, and the gross realized gains and losses from sales ofavailable-for-sale fixed-maturity securities, for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 were as follows:

   Proceeds    Gross
Realized
Gains    Gross
Realized
Losses
Three months ended September 30, 2017

Fixed-maturity securities
   $ 2,765    $ 97    $ (23 )






Equity securities
   $ 4,827    $ 223    $ (525 )






Three months ended September 30, 2016

Fixed-maturity securities
   $ 3,891    $ 196    $ —






Equity securities
   $ 5,000    $ 491    $ (104 )






Nine months ended September 30, 2017

Fixed-maturity securities
   $ 9,638    $ 126    $ (45 )






Equity securities
   $ 25,729    $ 3,058    $ (865 )






Nine months ended September 30, 2016

Fixed-maturity securities
   $ 37,415    $ 579    $ —






Equity securities
   $ 14,155    $ 850    $ (530 )


			Gross Realized		Gross Realized
	Proceeds		Gains		Losses
Three months ended March 31, 2024	$	6,030	$	12	$	(44	)
Three months ended March 31, 2023	$	11,060	$	—	$	(738	)

~~Other-than-temporary Impairment~~

Gross Unrealized Losses for Available-for-Sale Fixed-Maturity Securities

Securities with gross unrealized loss positions at March 31, 2024 and December 31, 2023, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:


	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross			Estimated		Gross			Estimated		Gross			Estimated
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
As of March 31, 2024	Loss			Value		Loss			Value		Loss			Value
U.S. Treasury and U.S. government agencies	$	(209	)	$	304,595	$	(3,289	)	$	131,299	$	(3,498	)	$	435,894
Corporate bonds		(42	)		4,736		(901	)		18,735		(943	)		23,471
Exchange-traded debt		(12	)		482		—			—		(12	)		482
Total available-for-sale securities	$	(263	)	$	309,813	$	(4,190	)	$	150,034	$	(4,453	)	$	459,847


	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross			Estimated		Gross			Estimated		Gross			Estimated
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
As of December 31, 2023	Loss			Value		Loss			Value		Loss			Value
U.S. Treasury and U.S. government agencies	$	(22	)	$	3,464	$	(3,778	)	$	181,463	$	(3,800	)	$	184,927
Corporate bonds		(8	)		1,941		(967	)		19,418		(975	)		21,359
Exchange-traded debt		(14	)		481		—			—		(14	)		481
Total available-for-sale securities	$	(44	)	$	5,886	$	(4,745	)	$	200,881	$	(4,789	)	$	206,767

At March 31, 2024 and December 31, 2023, there were 83 and 65 securities, respectively, in an unrealized loss position.

Allowance for Credit Losses of Available-for-Sale Fixed-Maturity Securities

The Company regularly reviews its individual investment securities for ~~other-than-temporary~~credit impairment. The Company considers various factors in determining whether a credit loss exists for each individual security, ~~is other-than-temporarily impaired,~~ including-

•

the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;

~~the length of time~~

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

•

the extent to which the market value of the security has been below its cost or amortized cost;

•

general market conditions and industry or sector specific factors and other qualitative factors;

•

nonpayment by the issuer of its contractually obligated interest and principal payments; and

•

the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

~~Fixed-maturity Securities~~

There was no ~~impairment loss recognized~~ balance or activity in the allowance for credit losses of available-for-sale fixed-maturity securities during the three months ended ~~September 30, 2017. For the nine months ended September 30, 2017, the Company recognized $100 of impairment losses related to the sale of twointent-to-sell~~ ~~fixed-maturity securities. At September 30, 2017, two fixed-maturity securities were considered other-than-temporarily impaired due to their credit risk.~~ March 31, 2024 and 2023.

b) Equity Securities

The Company ~~intends to hold these two fixed-maturity securities until maturity, but does not expect a full recovery of their carrying value.~~

In June 2016, the Company sold one impaired fixed-maturity security that was previously intended to hold until maturity due to uncertainties surrounding the issuer’s announced restructuring plan. Prior to the sale of this security, the remaining $202 of unrealized impairment loss was reclassified from comprehensive income and recognizedholds investments in total other-than-temporary impairment losses in the Company’s consolidated statement of income. For the three months ended September 30, 2016, the Company recorded $531 of impairment loss, of which $180 was considered other-than-temporarily impaired due to a credit related loss and recorded in the consolidated statement of income, with the remaining amount of $351 related to~~non-credit~~ factors and recorded in other comprehensive income. For the nine months ended September 30, 2016, the Company recognized $675 of impairment loss in the consolidated statement of income, representing $206 of additional losses recorded during the period and the reclassification of $469 previously recorded in other comprehensive income. At September 30, 2016, one fixed-maturity security the Company intended to hold to maturity had a credit related loss.

~~The following table presents a rollforward of the cumulative credit losses in other-than-temporary impairments recognized in income from available for sale fixed-maturity securities.~~

   2017    2016
Balance at January 1
   $ 475    $ 111
Additional credit impairments on previously impaired securities
   —      293




Balance at March 31
   475    404
Credit impaired security fully disposed of for which there was no prior intent or requirement to sell
   —      (385 )
Reduction due to increase in expected cash flows recognized over the remaining life of the previously impaired security
   —      (19 )




Balance at June 30
   475    —
Credit impairment on impaired securities
   —      180




Balance at September 30
   $ 475    $ 180

~~Equity Securities~~

~~In determining whether~~ equity securities measured at fair values which are other than temporarily impaired, the Company considers its intent and ability to hold a security for a period of time sufficient to allow for the recovery of cost, the length of time each security has been in an unrealized loss position, the extent of the decline and the near-term prospect for recovery. The Company recognized impairment losses of $474 and $44 in the consolidated statement of income for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, the Company recognized impairment losses of $764 and $766, respectively. readily determinable. At ~~September 30, 2017 and 2016, the Company had four and 16 equity securities, respectively, that were other-than-temporarily impaired.~~

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

~~Securities with gross unrealized loss positions at September 30, 2017~~March 31, 2024 and December 31, ~~2016, aggregated by investment category and length of time~~2023, the ~~individual securities have been in a continuous loss position, are as follows:~~

   Less Than Twelve
Months    Twelve Months or Longer    Total
As of September 30, 2017    Gross
Unrealized
Loss Estimated
Fair Value    Gross
Unrealized
Loss Estimated
Fair
Value    Gross
Unrealized
Loss Estimated
Fair Value
Fixed-maturity securities

U.S. Treasury and U.S. government agencies
   $ (112 ) $ 45,344    $ —   $ —      $ (112 ) $ 45,344
Corporate bonds
   (530 ) 49,789    (281 ) 15,346    (811 ) 65,135
State, municipalities, and political subdivisions
   (29 ) 4,332    (54 ) 3,889    (83 ) 8,221
Exchange-traded debt
   (209 ) 3,189    (2 ) 80    (211 ) 3,269
Redeemable preferred stock
   (5 ) 45    —   —      (5 ) 45






Total fixed-maturity securities
   (885 ) 102,699    (337 ) 19,315    (1,222 ) 122,014
Equity securities
   (545 ) 11,154    (35 ) 1,260    (580 ) 12,414






Totalavailable-for-sale securities
   $ (1,430 ) $ 113,853    $ (372 ) $ 20,575    $ (1,802 ) $ 134,428

~~At September 30, 2017, there were 127 securities in an unrealized loss position. Of these securities, 17 securities had been in an unrealized loss position for 12 months or longer. The~~cost, gross unrealized ~~loss of corporate bonds in an unrealized loss position for less than twelve months included $133 of other-than-temporary impairment~~gains and losses, ~~related tonon-credit~~ ~~factors.~~

   Less Than Twelve
Months    Twelve Months or Longer    Total
As of December 31, 2016    Gross
Unrealized
Loss Estimated
Fair
Value    Gross
Unrealized
Loss Estimated
Fair
Value    Gross
Unrealized
Loss Estimated
Fair
Value
Fixed-maturity securities

U.S. Treasury and U.S. government agencies
   $ (36 ) $ 1,939    $ —   $ —      $ (36 ) $ 1,939
Corporate bonds
   (1,546 ) 43,859    (95 ) 2,814    (1,641 ) 46,673
State, municipalities, and political subdivisions
   (441 ) 26,029    (47 ) 3,036    (488 ) 29,065
Exchange-traded debt
   (191 ) 4,980    (46 ) 1,954    (237 ) 6,934
Redeemable preferred stock
   (3 ) 47    —   —      (3 ) 47






Total fixed-maturity securities
   (2,217 ) 76,854    (188 ) 7,804    (2,405 ) 84,658
Equity securities
   (293 ) 10,042    (191 ) 3,209    (484 ) 13,251






Totalavailable-for-sale securities
   $ (2,510 ) $ 86,896    $ (379 ) $ 11,013    $ (2,889 ) $ 97,909

At December 31, 2016, there were 134 securities in an unrealized loss position. Of these securities, 20 securities had been in an unrealized loss position for 12 months or longer. The gross unrealized loss of corporate bonds in an unrealized loss position for twelve months or longer included $76 of other-than-temporary impairment losses related to~~non-credit~~ ~~factors.~~

~~b) Trading Securities~~

~~At September 30, 2017, the cost, net unrealized gains,~~ and estimated fair value of the Company’s ~~trading~~ equity securities were ~~$929, $74,~~as follows:


			Gross Unrealized		Gross Unrealized			Estimated Fair
	Cost		Gain		Loss			Value
March 31, 2024	$	47,852	$	6,123	$	(1,962	)	$	52,013
December 31, 2023	$	44,011	$	3,945	$	(2,419	)	$	45,537

The table below presents the portion of unrealized gains and ~~$1,003, respectively. There were no investments~~losses in ~~trading~~the Company’s consolidated statements of income related to equity securities ~~at December 31, 2016.~~still held.


	Three Months Ended
	March 31,
	2024		2023
Net gains recognized	$	2,667	$	114
Exclude: Net realized gains (losses) recognized for securities sold		32		(415	)
Net unrealized gains recognized	$	2,635	$	529

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

Sales of ~~Trading~~Equity Securities

Proceeds received, and the gross realized gains and losses from sales of ~~trading~~ equity securities, for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and 2023 were as follows:

   Proceeds    Gross
Realized
Gains    Gross
Realized
Losses
Three months ended September 30, 2017

Equity securities
   $ 580    $ 12    $ (10 )






Nine months ended September 30, 2017

Equity securities
   $ 580    $ 12    $ (10 )


			Gross Realized		Gross Realized
	Proceeds		Gains		Losses
Three months ended March 31, 2024	$	3,516	$	173	$	(141	)
Three months ended March 31, 2023	$	3,754	$	17	$	(432	)

~~The Company did not hold any trading equity security during 2016.~~

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

c) Limited Partnership Investments

The Company has interests in limited partnerships that are not registered or readily tradeable on a securities exchange. These partnerships are private equity funds managed by general partners who make ~~all~~ decisions with regard to financial policies and operations. As such, the Company is not the primary beneficiary and does not consolidate these partnerships. ~~In August 2017, the Company entered into a subscription agreement with another limited partnership.~~ The following table provides information related to the Company’s investments in limited ~~partnerships.~~partnerships:


	March 31, 2024						December 31, 2023
	Carrying		Unfunded				Carrying		Unfunded
Investment Strategy	Value		Balance		(%) (a)		Value		Balance		(%) (a)
Primarily in senior secured loans and, to a limited extent, in other debt and equity securities of private U.S. lower- middle-market companies. (b)(c)(e)	$	3,415	$	—		15.37	$	3,295	$	—		15.37
Value creation through active distressed debt investing primarily in bank loans, public and private corporate bonds, asset-backed securities, and equity securities received in connection with debt restructuring. (b)(d)(e)		2,176		—		1.24		2,271		—		1.25
High returns and long-term capital appreciation through investments in the power, utility and energy industries, and in the infrastructure sector. (b)(f)(g)		3,128		—		0.18		3,400		—		0.18
Value-oriented investments in less liquid and mispriced senior and junior debts of private equity-backed companies. (b)(h)(i)		3,368		—		0.55		3,306		—		0.55
Value-oriented investments in mature real estate private equity funds and portfolios globally. (b)(j)		7,690		2,543		1.32		7,590		2,543		1.32
Risk-adjusted returns on credit and equity investments, primarily in private equity-owned companies. (b)(k)		4,238		1,263		0.55		3,721		1,662		0.55
Total	$	24,015	$	3,806			$	23,583	$	4,205

(a)

Represents the Company’s percentage investment in the fund at each balance sheet date.

(b)

Except under certain circumstances, withdrawals from the funds or any assignments are not permitted. Distributions, except income from late admission of a new limited partner, will be received when underlying investments of the funds are liquidated.

(c)

The term is expected to be two years following the maturity of the fund’s outstanding leverage. Although the capital commitment period has expired, follow-on investments and pending commitments may require additional fundings.

(d)

Effective July 1, 2023, this investment is in the process of winding down. Although the capital commitment period has ended, the general partner could still request an additional funding under certain circumstances.

(e)

At the fund manager’s discretion, the term of the fund may be extended for up to two additional one-year periods.

(f)

Expected to have a ten-year term. The capital commitment period has expired but the general partner may request additional funding for follow-on investment.

(g)

With the consent of a supermajority of partners, the term of the fund may be extended for up to three additional one-year periods.

(h)

Expected to have an eight-year term from the commencement date, which can be extended for up to two additional one-year periods with the consent of either the advisory committee or a majority of limited partners.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

   September 30, 2017    December 31, 2016
Investment Strategy    Carrying
Value    Unfunded
Balance    (%)(a)    Carrying
Value    Unfunded
Balance    (%)(a)
Primarily in senior secured loans and, to a limited extent, in other debt and equity securities of private U.S. lower-middle-market companies. (b)(c)(e)
   $ 7,134    $ 5,505    15.37    $ 6,246    $ 6,428    16.50
Value creation through active distressed debt investing primarily in bank loans, public and private corporate bonds, asset-backed securities, and equity securities received in connection with debt restructuring. (b)(d)(e)
   7,630    1,746    1.76    7,358    1,360    1.76
Maximum long-term capital appreciation through long and short positions in equity and/or debt securities of publicly traded U.S. andnon-U.S. issuers, derivative instruments and certain other financial instruments. (f)
   —      —      —      11,333    —      66.58
High returns and long-term capital appreciation through investments in the power, utility and energy industries, and in the infrastructure sector. (b)(g)(h)
   6,148    3,766    0.18    4,326    5,766    0.18
Value-oriented investments in less liquid and mispriced senior and junior debts of private equity-backed companies. (b)(i)(j)
   86    4,914    0.62    —      —      —









Total
   $ 20,998    $ 15,931       $ 29,263    $ 13,554

(i)

The capital commitment period has ended but an additional funding may be requested.

(j)

The term is expected to end November 27, 2027. The term may be extended for up to four additional one-year periods at the general partner’s discretion, and up to two additional one-year periods with the consent of the advisory committee.

(k)

Expected to have an eight-year term after the final admission date. The term may be extended for an additional one-year period at the general partner’s discretion, and up to two additional one-year periods with the consent of either the advisory committee or a majority of limited partners.

~~(a)~~

~~Represents the Company’s percentage investment in the fund at each balance sheet date.~~

~~(b)~~

~~(c)~~

~~Expected to have a10-year~~ ~~term and the capital commitment is expected to expire on September 3, 2019.~~

~~(d)~~

~~Expected to have a three-year term from the end of the capital commitment period, which is March 31, 2018.~~

~~(e)~~

~~At the fund manager’s discretion, the term of the fund may be extended for up to two additionalone-year~~ ~~periods.~~

~~(f)~~

~~The withdrawal was effective on February 15, 2017. As a result, the Company’s investment in this limited partnership was terminated.~~

~~(g)~~

~~Expected to have a10-year~~ ~~term and the capital commitment is expected to expire on June 30, 2020.~~

~~(h)~~

~~With the consent of a super majority of partners, the term of the fund may be extended for up to three additionalone-year~~ ~~periods.~~

~~(i)~~

~~Expected to have asix-year~~ ~~term from the commencement date, which can be extended for up to two additionalone-year~~ ~~periods with the consent of either the advisory committee or a majority of limited partners.~~

~~(j)~~

~~Unless extended or terminated for reasons specified in the agreement, the capital commitment is expected to expire on December 1, 2018.~~

The following is the summary of aggregated ~~summarized~~ unaudited financial information of limited partnerships included in the investment strategy table above, which in certain cases is presented on a three-month lag due to the unavailability of information at the Company’s respective balance sheet dates. ~~In applying the equity method of accounting, the Company uses the most recently available financial information provided by the general partner of each of these partnerships.~~ The financial statements of these limited partnerships are audited annually.


	Three Months Ended
	March 31,
	2024			2023
Operating results:
Total income*	$	3,066		$	182,360
Total expenses		(25,601	)		(2,257	)
Net (loss) income	$	(22,535	)	$	180,103

*Includes net change in unrealized gains or losses on investments.


	March 31,		December 31,
	2024		2023
Balance sheet:
Total assets	$	4,155,784	$	4,072,501
Total liabilities	$	209,841	$	220,525

19For the three months ended March 31, 2024 and 2023, the Company recognized net investment income from limited partnerships of $195 and $553, respectively. Included in net investment income for the three months ended March 31, 2024 was an estimated favorable change in net asset value of $100. During the three months ended March 31, 2024 and 2023, the Company received total cash distributions of $162 and $1,905, respectively, including returns on investment of $0 and $303, respectively.

At March 31, 2024 and December 31, 2023, the Company’s net cumulative contributed capital to the partnerships at each respective balance sheet date totaled $23,583 and $23,346, respectively, and the Company’s maximum exposure to loss aggregated $24,015 and $23,583, respectively.

d) Real Estate Investments

Real estate investments consist of the following as of March 31, 2024 and December 31, 2023:


	March 31,			December 31,
	2024			2023
Land	$	42,272		$	42,272
Land improvements		4,843			4,387
Buildings and building improvements		18,593			18,594
Tenant and leasehold improvements		1,978			1,869
Other		8,076			7,168
Total, at cost		75,762			74,290
Less: accumulated depreciation and amortization		(6,666	)		(6,397	)
Real estate investments	$	69,096		$	67,893

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

   Three Months Ended
September 30,    Nine Months Ended
September 30,
   2017    2016    2017    2016
Operating results:

Total income
   $ 71,854    $ 166,374    $ 301,604    $ 143,305
Total expenses
   (24,663 )    (54,577 )    (78,482 )    (184,598 )








Net income (loss)
   $ 47,191    $ 111,797    $ 223,122    $ (41,293 )

For the three and nine months ended September 30, 2017, the Company recognized net investment income of $392 and $1,724, respectively, for these investments. During the third quarter of 2017, the Company received in cash a return on investment totaling $428. During the nine-month period ended September 30, 2017, the Company received total cash distributions of $12,612, representing $11,758 of returned capital and $854 of return on investment. Included in the return of capital was $11,626 from one limited partnership the Company withdrew from in February 2017.

For the three and nine months ended September 30, 2016, the Company recognized net investment income of $1,119 and $54, respectively. During the three and nine months ended September 30, 2016, the Company received cash distributions of $384 and $428, respectively, of return on investment. At September 30, 2017 and December 31, 2016, the Company’s cumulative contributed capital to the partnerships existing at each respective balance sheet date totaled $19,569 and $31,946, respectively, and the Company’s maximum exposure to loss aggregated $20,998 and $29,263, respectively.

~~d) Investment in Unconsolidated Joint Venture~~

The Company has an equity investment in FMKT Mel JV, which is a limited liability company treated as a joint venture under U.S. GAAP. In March 2017, FMKT Mel JV sold a portion of its outparcel land for gross proceeds of $825 and recognized a $331 gain on sale of which $199 was allocated to the Company in accordance with the profit allocation specified in the operating agreement.

At September 30, 2017 and December 31, 2016, the Company’s maximum exposure to loss relating to this variable interest entity was $1,664 and $2,102, respectively, representing the carrying value of the investment. At September 30, 2017, there was $0 of undistributed income from this equity method investment as compared with an undistributed loss, after an equity distribution, of $25 at December 31, 2016, the amounts of which were included in the Company’s consolidated retained income.

The limited liability company members received no cash distributions during the three months ended September 30, 2017 and 2016. During the nine months ended September 30, 2017, the Company received a cash distribution of $564, representing a combined distribution of $147 in earnings and $417 in capital as compared with no cash distribution during the nine months ended September 30, 2016. The following tables provide FMKT Mel JV’s summarized unaudited financial results and the unaudited financial positions:

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

   Three Months Ended
September 30,    Nine Months Ended
September 30,
   2017    2016    2017    2016
Operating results:

Total revenues and gain
   $ —      $ 235    $ 331    $ 949
Total expenses
   (18 )    (318 )    (83 )    (801 )








Net (loss) income
   $ (18 )    $ (83 )    $ 248    $ 148








The Company’s share of net (loss) income*
   $ (16 )    $ (75 )    $ 126    $ 153

*	~~Included in net investment income in the Company’s consolidated statements of income.~~

   September 30,
2017    December 31,
2016
Balance Sheet:

Construction in progress - real estate
   $ 375    $ 334
Property and equipment, net
   1,213    1,654
Cash
   110    179
Other
   180    180




Total assets
   $ 1,878    $ 2,347




Accounts payable
   $ 15    $ 11
Other liabilities
   14    —
Members’ capital
   1,849    2,336




Total liabilities and members’ capital
   $ 1,878    $ 2,347




Investment in unconsolidated joint venture, at equity*
   $ 1,664    $ 2,102

*	~~Included the 90% share of FMKT Mel JV’s operating results.~~

~~e) Real Estate Investments~~

Real estate investments include office and retail space that is leased to tenants, wet and dry boat storage, one restaurant, and two marinas. Real estate investments consist of the following as of September 30, 2017 and December 31, 2016.

   September 30,
2017    December 31,
2016
Land
   $ 20,422    $ 17,592
Land improvements
   9,904    9,336
Buildings
   17,742    16,154
Tenant and leasehold improvements
   996    872
Construction in progress*
   —      3,404
Other
   2,911    2,683




Total, at cost
   51,975    50,041
Less: accumulated depreciation and amortization
   (3,014 )    (1,955 )




Real estate investments
   $ 48,961    $ 48,086

*	~~This project, which was developed by the Company’s consolidated variable interest entity, was completed in July 2017. The costs were reclassified to land, land improvement, and building.~~

Depreciation and amortization expense related to real estate investments was ~~$374~~$269 and ~~$126~~$453 for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016, respectively, and $1,062 and $314 for the nine months ended September 30, 2017 and 2016,~~2023, respectively.

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

~~f) Consolidated Variable Interest Entity~~

The Company has a commercial property in Riverview, Florida. The development project of this property was completed in July 2017 through a limited liability company treated under U.S. GAAP as a joint venture in which the Company’s subsidiary has a controlling financial interest and, as a result, it is the primary beneficiary. The following table summarizes the assets and liabilities related to this variable interest entity which are included in the accompanying consolidated balance sheets.

   September 30,
2017    December 31,
2016
Cash and cash equivalents
   $ 90    $ 65
Construction in progress included in real estate investments
   $ —      $ 3,404
Real estate investments
   $ 4,472    $ —
Other assets
   $ 139    $ —
Accrued expenses
   $ 59    $ 68
Other liabilities
   $ 42    $ 11

g)e) Net Investment Income

Net investment income (loss), by source, is summarized as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended
	2017			2016			2017			2016			March 31,
Available-for-sale securities:
Fixed-maturity securities	$	1,532		$	1,164		$	4,172		$	3,394
													2024			2023
Available-for-sale fixed-maturity securities													$	4,827		$	4,035
Equity securities		790			817			2,461			2,552			442			296
Investment expense		(176	)		(165	)		(526	)		(488	)		(79	)		(129	)
Limited partnership investments		392			1,119			1,724			54			195			553
Real estate investments		(292	)		(372	)		(856	)		(455	)		1,493			9,293
(Loss) income from unconsolidated joint venture		(16	)		(75	)		126			153
Cash and cash equivalents		648			285			1,415			755			7,189			3,667
Other		—			12			6			35

Net investment income	$	2,878		$	2,785		$	8,522		$	6,000		$	14,067		$	17,715

22For the three months ended March 31, 2023, income from real estate investments included a net realized gain of $6,476 resulting from the sale of the retail shopping center investment property in Melbourne, Florida in March 2023 for a price of $18,500, and also included a net realized gain of $2,460 resulting from the sale of the retail shopping center investment property in Sorrento, Florida in March 2023 for a price of $13,418.

~~HCI GROUP, INC. AND SUBSIDIARIES~~f) Other Investments

~~Notes~~From time to ~~Consolidated Financial Statements (unaudited)~~

~~(Amounts~~time, the Company may invest in ~~thousands, except share~~financial assets other than stocks, mutual funds, and ~~per share amounts, unless otherwise stated)~~bonds. For the three months ended March 31, 2024 and 2023, net realized gains related to other investments were $0 and $4, respectively.

Note 5 —-- Comprehensive Income (Loss)

Comprehensive income (loss) includes net income ~~(loss)~~ and other comprehensive income or loss, which for the Company includes changes in unrealized gains or losses of ~~investments~~available-for-sale fixed-maturity securities carried at fair value and changes ~~in the unrealized other-than-temporary impairment~~to any credit losses related to these investments. Reclassification adjustments for realized (gains) losses are reflected in net realized investment gains (losses) on the consolidated statements of income. The components of other comprehensive income or loss and the related tax effects allocated to each component were as follows:


	Three Months Ended						Three Months Ended
	March 31, 2024						March 31, 2023
	Before		Income		Net of		Before		Income			Net of
	Tax		Tax Effect		Tax		Tax		Tax Effect			Tax
Net unrealized gains	$	52	$	13	$	39	$	2,415	$	(1,997	)	$	4,412
Reclassification adjustment for net realized losses		32		8	$	24		738		187			551
Total other comprehensive income	$	84	$	21	$	63	$	3,153	$	(1,810	)	$	4,963

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

   Three Months Ended
September 30, 2017    Three Months Ended
September 30, 2016
   Before
Tax    Income Tax
Expense
(Benefit)    Net of
Tax    Before
Tax Income Tax
Expense
(Benefit) Net of
Tax
Unrealized gain arising during the period
   $ 2,155    $ 831    $ 1,324    $ 2,234 $ 862 $ 1,372
Other-than-temporary impairment loss
   474    183    291    224 86 138
Call and repayment losses charged to investment income
   —      —      —      3 1 2
Reclassification adjustment for realized losses (gains)
   226    87    139    (583 ) (225 ) (358 )








Total other comprehensive income
   $ 2,855    $ 1,101    $ 1,754    $ 1,878 $ 724 $ 1,154

(Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

   Nine Months Ended
September 30, 2017 Nine Months Ended
September 30, 2016
   Before
Tax Income Tax
Expense
(Benefit) Net of
Tax Before
Tax Income Tax
Expense
(Benefit) Net of
Tax
Unrealized gain arising during the period
   $ 4,822 $ 1,860 $ 2,962 $ 10,290 $ 3,970 $ 6,320
Other-than-temporary impairment loss
   864 333 531 1,441 556 885
Call and repayment losses charged to investment income
   9 4 5 14 5 9
Reclassification adjustment for realized gains
   (2,276 ) (878 ) (1,398 ) (899 ) (347 ) (552 )


Total other comprehensive income
   $ 3,419 $ 1,319 $ 2,100 $ 10,846 $ 4,184 $ 6,662

Note 6 —-- Fair Value Measurements

The Company records and discloses certain financial assets at their estimated fair ~~value.~~values. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:

Valuation Methodology

Cash and ~~cash equivalents~~Cash Equivalents

Cash and cash equivalents primarily consist of money-market funds and certificates of ~~deposit.~~deposit maturing within 90 days. Their carrying value approximates fair value due to the short maturity and high liquidity of these funds.

~~Available-for-sale~~Restricted Cash

Restricted cash represents cash held by state authorities and ~~trading securities~~the carrying value approximates fair value.

Fixed-Maturity and Equity Securities

Estimated fair values of the Company’s~~available-for-sale~~ fixed-maturity and ~~trading~~equity securities are determined in accordance with U.S. GAAP, using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical securities or other inputs that are observable either

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

directly or indirectly, such as quoted prices for similar securities. In those instances where observable inputs are not available, fair values are measured using unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the security and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.

The estimated fair values for securities that do not trade on a daily basis are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 2 inputs. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to broker-provided data. The Company gains assurance of the overall reasonableness and consistent application of the assumptions and methodologies, and compliance with accounting standards for fair value determination through ongoing monitoring of the reported fair values.

~~Limited Partnership Investments~~Revolving Credit Facility

~~As described in Note 4 — “Investments” under~~ ~~Limited Partnership Investments~~,From time to time, the Company has interests in limited partnerships which are private equity funds. Pursuant to U.S. GAAP, these funds are required to use fair value accounting; therefore, the estimated fair value approximates the carrying value of these funds.

~~Revolving Credit Facility~~

an amount outstanding under a revolving credit facility. The interest rate ~~on the Company’s revolving credit facility was~~is variable and is periodically adjusted based on the ~~London Interbank Offered~~Secured Overnight Financing Rate (“SOFR”) plus a spread. As a result, its carrying value at December 31, 2016 approximated fair value. In February 2017, this credit facility was converted into a 3.95% three-year promissory note. See Note 8 — “Long-Term Debt” under~~3.95% Promissory Note.~~ten

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

basis points adjustment plus a margin based on the debt-to-capital ratio. As a result, carrying value, when outstanding, approximates fair value.

~~Long-term debt~~Long-Term Debt

The following table summarizes components of the Company’s long-term debt and methods used in estimating their fair values:


	Maturity Date	~~Maturity~~ ~~Date~~		Valuation Methodology
8%4.75% Convertible Senior Notes	2042	*		~~Closing~~ Quoted price ~~listed on the New York Stock Exchange~~
~~3.875%~~4.25% Convertible Senior Notes	*	~~2019~~		Quoted price ~~at September 30, 2017;~~
4.55% Promissory Note	2036		Discounted cash flow method/Level 3 inputs ~~at December 31, 2016~~
~~4.25% Convertible Senior Notes~~5.50% Promissory Note		~~2037~~		~~Quoted price~~
~~3.95% Promissory Note~~2033		~~2020~~		Discounted cash flow method/Level 3 inputs
~~4% Promissory Note~~		~~2031~~		~~Discounted cash flow method/Level 3 inputs~~
~~3.75% Promissory Note~~		~~2036~~		~~Discounted cash flow method/Level 3 inputs~~

*	~~Redeemed on April 3, 2017.~~

*Debt derecognized in March 2024. See Note 10 -- “Long-Term Debt” for additional information.

Assets Measured at Estimated Fair Value on a Recurring Basis

The following ~~table presents~~tables present information about the Company’s financial assets measured at estimated fair value on a recurring basis. The ~~table indicates~~tables indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016:~~2023:


	Fair Value Measurements Using									Fair Value Measurements Using
	(Level 1)		(Level 2)		(Level 3)		��	Total		(Level 1)		(Level 2)		(Level 3)		Total
*As of September 30, 2017*
As of March 31, 2024
Financial Assets:
Cash and cash equivalents	$	292,438	$	—	$	—		$	292,438	$	655,384	$	—	$	—	$	655,384
Restricted cash										$	3,303	$	—	$	—	$	3,303
Fixed-maturity securities:
U.S. Treasury and U.S. government agencies		45,739		1,502		—			47,241	$	432,781	$	7,933	$	—	$	440,714
Corporate bonds		121,516		994		—			122,510		23,188		6,421		—		29,609
State, municipalities, and political subdivisions		—		76,940		—			76,940
Exchange-traded debt		9,276		—		—			9,276		482		—		—		482
Redeemable preferred stock		135		—		—			135

Total fixed-maturity securities		176,666		79,436		—			256,102
Total available-for-sale securities										$	456,451	$	14,354	$	—	$	470,805
Equity securities		63,023		—		—			63,023	$	52,013	$	—	$	—	$	52,013

Totalavailable-for-sale securities		239,689		79,436		—			319,125

Trading equity securities		1,003		—		—			1,003

Total	$	533,130	$	79,436	$	—		$	612,566


	Fair Value Measurements Using
	(Level 1)		(Level 2)		(Level 3)		Total
As of December 31, 2023
Financial Assets:
Cash and cash equivalents	$	536,478	$	—	$	—	$	536,478
Restricted cash	$	3,287	$	—	$	—	$	3,287
Fixed-maturity securities:
U.S. Treasury and U.S. government agencies	$	348,145	$	7,909	$	—	$	356,054
Corporate bonds		20,267		6,437		—		26,704
Exchange-traded debt		480		—		—		480
Total available-for-sale securities	$	368,892	$	14,346	$	—	$	383,238
Equity securities	$	45,537	$	—	$	—	$	45,537

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

   Fair Value Measurements Using
   (Level 1)    (Level 2)    (Level 3)    Total
As of December 31, 2016

Financial Assets:

Cash and cash equivalents
   $ 280,531    $ —      $ —      $ 280,531








Fixed-maturity securities:

U.S. Treasury and U.S. government agencies
   1,939    —      —      1,939
Corporate bonds
   73,519    985    —      74,504
State, municipalities, and political subdivisions
   —      78,306    —      78,306
Exchange-traded debt
   11,262    —      —      11,262
Redeemable preferred stock
   237    —      —      237








Total fixed-maturity securities
   86,957    79,291    —      166,248
Equity securities
   53,035    —      —      53,035








Totalavailable-for-sale securities
   139,992    79,291    —      219,283








Total
   $ 420,523    $ 79,291    $ —      $ 499,814

~~Assets and~~ Liabilities Carried at Other Than Fair Value

The following tables present fair value information for ~~assets and~~ liabilities that are carried on the consolidated balance ~~sheet~~sheets at amounts other than fair value as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016.~~2023:

   Carrying    Fair Value Measurements Using    Estimated
   Value    (Level 1)    (Level 2)    (Level 3)    Fair Value
As of September 30, 2017

Financial Assets:

Limited partnership investments
   $ 20,998    $ —      $ —      $ 20,998    $ 20,998
Financial Liabilities:

Long-term debt:

3.875% Convertible senior notes
   $ 84,547    $ —      $ 88,874    $ —      $ 88,874
4.25% Convertible senior notes
   125,581    —      128,656    —      128,656
3.95% Promissory note
   9,317    —      —      9,361    9,361
4% Promissory note
   8,321    —      —      8,108    8,108
3.75% Promissory note
   8,545    —      —      7,984    7,984










Total long-term debt
   $ 236,311    $ —      $ 217,530    $ 25,453    $ 242,983


	Carrying		Fair Value Measurements Using						Estimated
	Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
As of March 31, 2024
Financial Liabilities:
Revolving credit facility	$	50,000	$	—	$	50,000	$	—	$	50,000
Long-term debt:
4.75% Convertible Senior Notes	$	168,516	$	—	$	268,717	$	—	$	268,717
5.50% Promissory Note		11,654		—		—		11,327		11,327
4.55% Promissory Note		4,573		—		—		4,249		4,249
Total long-term debt	$	184,743	$	—	$	268,717	$	15,576	$	284,293

   Carrying    Fair Value Measurements Using    Estimated
   Value    (Level 1)    (Level 2)    (Level 3)    Fair Value
As of December 31, 2016

Financial Assets:

Limited partnership investments
   $ 29,263    $ —      $ —      $ 29,263    $ 29,263
Financial Liabilities:

Revolving credit facility
   $ 9,463    $ —      $ —      $ 9,463    $ 9,463
Long-term debt:

8% Senior notes
   $ 39,448    $ —      $ 41,618    $ —      $ 41,618
3.875% Convertible senior notes
   81,988    —      —      84,696    84,696
4% Promissory note
   8,660    —      —      8,664    8,664
3.75% Promissory note
   8,767    —      —      8,506    8,506










Total long-term debt
   $ 138,863    $ —      $ 41,618    $ 101,866    $ 143,484


	Carrying		Fair Value Measurements Using						Estimated
	Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
As of December 31, 2023
Financial Liabilities:
Long-term debt:
4.75% Convertible Senior Notes	$	168,230	$	—	$	215,114	$	—	$	215,114
4.25% Convertible Senior Notes		23,916		—		34,545		—		34,545
5.50% Promissory Note		11,707		—		—		11,512		11,512
4.55% Promissory Note		4,640		—		—		4,349		4,349
Total long-term debt	$	208,493	$	—	$	249,659	$	15,861	$	265,520

Note 7 -- Intangible Assets, Net

The Company’s intangible assets, net consist of the following:


	March 31,			December 31,
	2024			2023
In-place leases (a)		2,221			2,221
Policy renewal rights - United		10,100			10,100
Non-compete agreements - United (b)		314			314
Total, at cost		12,635			12,635
Less: accumulated amortization		(5,589	)		(4,976	)
Intangible assets, net	$	7,046		$	7,659

(a)

Amortization related to the Haines City property is expected to start in June 2024.

(b)

Fully amortized

The remaining weighted-average amortization periods for the intangible assets as of March 31, 2024 are summarized in the table below:


In-place leases		18.4 years
Policy renewal rights - United		2.1 years

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

At March 31, 2024 and December 31, 2023, contingent liabilities related to renewal rights intangible assets were $371, and are included in other liabilities on the consolidated balance sheets.

Note ~~7 —~~8 -- Other Assets

The following table summarizes the Company’s other assets:


	September 30, 2017		December 31, 2016		March 31,		December 31,
Benefits receivable related to retrospective reinsurance contracts	$	1,969	$	5,810
					2024		2023
Benefits receivable related to retrospective reinsurance contract					$	51,282	$	44,289
Reimbursement and fees receivable under TPA service						—		629
Prepaid expenses		2,233		1,581		2,551		2,882
Deposits						418		409
Lease acquisition costs, net		580		615		814		833
Restricted cash		709		600
Other		5,970		2,736		2,119		1,323

Total other assets	$	11,461	$	11,342	$	57,184	$	50,365

Note ~~8 —~~9 -- Revolving Credit Facility

As of March 31, 2024, the Company had $50,000 outstanding under the credit facility, which was used to partially fund the redemption of the TTIG Series A Preferred Stock held by Centerbridge Partners, L.P. (“Centerbridge”) on January 22, 2024. See Note 19 -- “Redeemable Noncontrolling Interest” for additional information. For the three months ended March 31, 2024 and 2023, interest expense was $738 and $25, respectively, including $15 and $25 of amortization of issuance costs, respectively. At March 31, 2024, the Company was in compliance with all required covenants and had available borrowing capacity of $25,000.

Note 10 -- Long-Term Debt

The following table summarizes the Company’s long-term ~~debt.~~debt:

   September 30,
2017    December 31,
2016
8% Senior Notes, redeemed in April 2017
   $ —      $ 40,250
3.875% Convertible Senior Notes, due March 15, 2019
   89,990    89,990
4.25% Convertible Senior Notes, due March 1, 2037
   143,750    —
3.95% Promissory note, due through February 17, 2020
   9,417    —
4% Promissory note, due through February 1, 2031
   8,468    8,821
3.75% Promissory note, due through September 1, 2036
   8,692    8,924




Total principal amount
   260,317    147,985
Less: unamortized discount and issuance costs
   (24,006 )    (9,122 )




Total long-term debt
   $ 236,311    $ 138,863


	March 31,			December 31,
	2024			2023
4.75% Convertible Senior Notes, due June 1, 2042	$	172,500		$	172,500
4.25% Convertible Senior Notes, due March 1, 2037 (a)		—			23,916
4.55% Promissory Note, due through August 1, 2036		4,631			4,700
5.50% Promissory Note, due through July 1, 2033		11,848			11,906
Finance lease liabilities, due through October 15, 2024		1			2
Total principal amount		188,980			213,024
Less: unamortized issuance costs		(4,236	)		(4,529	)
Total long-term debt	$	184,744		$	208,495

(a)

Notes converted or redeemed during the first quarter of 2024

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

The following table summarizes future maturities of long-term debt as of ~~September 30, 2017,~~March 31, 2024, which takes into consideration the assumption that the ~~4.25%~~4.75% Convertible Senior Notes are repurchased at ~~the~~their next earliest call ~~date.~~date:

Due in 12 months following September 30,

2017
   $ 1,039
2018
   91,070
2019
   9,815
2020
   906
2021
   144,693
Thereafter
   12,794


Total
   $ 260,317


Due in 12 months following March 31,
2024	$	524
2025		549
2026		577
2027		173,107
2028		638
Thereafter		13,585
Total	$	188,980

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

Information with respect to interest expense related to long-term debt is as follows:


										Three Months Ended
	Three Months Ended September 30,				Nine Months Ended September 30,					March 31,
	2017		2016		2017			2016		2024		2023
Interest Expense:
Contractual interest	$	2,662	$	1,810	$	7,766		$	5,466	$	2,118	$	2,497
Non-cash expense ~~(a)~~(b)		1,746		862		4,623			2,646		293		279
Capitalized interest (b)		—		—		(61	)		—

Total	$	4,408	$	2,672	$	12,328		$	8,112	$	2,411	$	2,776

~~(a)~~

(b)

Represents amortization ~~of debt discount and issuance costs.~~

~~(b)~~

~~Interest was capitalized for a construction project in Riverview, Florida which is intended for lease.~~

~~Convertible Senior Notes~~

~~The Company’s Convertible Senior Notes consist~~ of ~~3.875% Convertible Senior Notes due 2019 (“3.875% Convertible Notes”) and~~ debt issuance costs.

4.25% Convertible Senior Notes ~~due 2037 (“4.25% Convertible Notes”). The 3.875% Convertible Notes were issued in late 2013 in a private offering for an aggregate principal amount of $103,000.~~

During the first quarter of ~~2016,~~2024, the Company ~~repurchased an aggregate~~notified the holders of ~~$13,010 in principal, thereby decreasing~~its outstanding 4.25% Convertible Senior Notes due 2037 that the ~~aggregate~~Company had elected to redeem the remaining $23,916 principal balance of ~~its 3.875% Convertible Notes to $89,990. On March 3, 2017,~~ the Company issued 4.25% Convertible Notes in a private offering for an aggregate principal amount of $143,750. The net proceeds of the 4.25% Convertible Notes were $138,775 after $4,975 in related issuance and transaction costs. The following table summarizes the principal and interest payment terms of these4.25% Convertible Senior ~~Notes:~~


~~Convertible Senior Notes~~		~~Interest Payment Terms~~
~~3.875% Convertible Notes, due March 15, 2019~~		~~Semiannually in arrears: March 15 and September 15~~
~~4.25% Convertible Notes, due March 1, 2037~~		~~Semiannually in arrears: March 1 and September 1~~

~~The~~Notes. As a result of this notice, the 4.25% Convertible Senior Notes rank equally in right of payment to the Company’s existing and future unsecured and unsubordinated obligations. These Convertible Senior Notes do not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. The Convertible Senior Notes provide no protection to the note holders in the event of a fundamental change or other corporate transaction involving the Company except those described in each respective indenture. These Convertible Senior Notes do not require a sinking fund to be established for the purpose of redemption. In conjunction with the issuances of the Convertible Senior Notes, the Company enteredbecame immediately convertible into ~~prepaid share repurchase forward contracts and share repurchase agreements providing for the repurchase of shares of~~ the Company’s common ~~stock. See Note 14 — “Stockholders’ Equity” under~~~~Share Repurchase Agreements~~ ~~and~~~~Prepaid Share Repurchase Forward Contracts~~ ~~for additional information.~~

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

~~The following table summarizes information regarding the equity and liability components~~shares, with a redemption date of ~~the Convertible Senior Notes:~~

   September 30,
2017    December 31
2016
Principal amount
   $ 233,740    $ 89,990
Unamortized discount
   (18,790 )    (6,795 )




Liability component – net carrying value before issuance costs
   $ 214,950    $ 83,195




Equity component – conversion, net of offering costs
   $ 31,051    $ 15,900

~~Embedded Conversion Feature~~

March 15, 2024. The conversion feature of these Convertible Senior Notes is subject to conversion rate adjustments upon the occurrence of specified events (including payment of dividends above a specified amount) but will not be adjusted for any accrued and unpaid interest.

~~3.875% Convertible Notes~~. Since January 2015, the Company’s cash dividends on common stock have exceeded $0.275 per share, resulting in adjustments to the conversion rate of the 3.875% Convertible Notes. Accordingly, as of September 30, 2017, the conversion rate of the Company’s ~~3.875%~~4.25% Convertible Senior Notes was ~~16.1801~~16.5892 shares of common stock for each $1$1 in principal amount, which was the equivalent of approximately ~~$61.80~~$60.25 per share. The Company converted $23,450 in aggregate principal of 4.25% Convertible Senior Notes for aggregate consideration of 389,087 shares of HCI’s common stock plus $1 cash consideration in lieu of fractional shares. The remaining 4.25% Convertible Senior Notes were redeemed for $466 on March 15, 2024.

~~4.25%~~4.75% Convertible Senior Notes.

The conversion rate of the ~~4.25%~~4.75% Convertible Senior Notes is currently ~~16.2635~~12.4166 shares of common stock for each $1 in principal amount, which is the equivalent of approximately ~~$61.49~~$80.54 per share.

The ~~holders of~~effective interest rate for the4.75% Convertible Senior Notes, ~~may convert all or~~taking into account both cash and non-cash components, approximates 5.6%. Had a ~~portion~~20-year term been used for the amortization of ~~their~~the issuance costs of the 4.75% Convertible Senior Notes, ~~during specified periods as follows: (1) during any calendar quarter commencing after~~ the calendar quarter ending on the dates specified in each respective indenture, if the last reported sale price of the Company’s common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (2) during the five~~business-day~~ ~~period after any ten consecutivetrading-day~~ ~~period in which the trading price per $1 principal amount of the Convertible Senior Notes is less than 98% of the product of the last reported sale price and the conversion~~annual effective interest rate ~~on each such trading day; (3) if specified corporate events, including a change in control, occur; or (4) at any time on or after the dates specified in each respective indenture.~~

~~The note holders who elect~~charged to ~~convert their Convertible Senior Notes in connection with a fundamental change as described in the indentures will be entitled~~earnings would have decreased to a “make-whole” adjustment in the form of an increase in the conversion rate. Upon conversion, the Company has options to satisfy its conversion obligation by paying or delivering cash, shares of its common stock or a combination of cash and shares of its common stock.approximately 5.0%. As of ~~September 30, 2017, none of~~March 31, 2024, the ~~conditions allowing the holders of either class of the Convertible Senior Notes to convert had been met.~~

The Company determined that the Convertible Senior Notes’ embedded conversion feature is not a derivative financial instrument but rather is required to be separately accounted for in equity because the Company may elect to settle the conversion option entirely or partially in cash. At issuance, the Company accounted for the equity component of the embedded conversion feature as a reduction in the carrying amountremaining amortization period of the debt ~~and an increase in additionalpaid-in~~ ~~capital.~~issuance costs was expected to be 3.17 years for the 4.75% Convertible Senior Notes.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 11 -- Reinsurance

~~Embedded Redemption Feature – Fundamental Change~~Reinsurance obtained from other insurance companies

The note holders have the right to require the Company to repurchase for cash all or any portion of the Convertible Senior Notes at par prior to the maturity date should any of the fundamental change events described in the indentures occur. The Company concluded that this embedded redemption feature is not a derivative financial instrument and that it is not probable at issuance that any of the specified fundamental change events will occur. Therefore, this embedded redemption feature is not substantive and will not affect the expected life of the liability component.

~~Embedded Redemption Feature – Put Option of the Note Holder~~

At the option of the holders of the 4.25% Convertible Notes, the Company is required to repurchase for cash all or any portion of the 4.25% Convertible Notes at par on March 1, 2022, March 1, 2027 or March 1, 2032. The Company concluded that this embedded feature is not a derivative financial instrument. In addition, based on economic factors at the time when the 4.25% Convertible Notes were issued, the Company determined it is probable that the note holders will exercise this option. Thus, the Company amortizes the liability component and related issuance costs associated with the 4.25% Convertible Notes over the period from March 3, 2017 to March 1, 2022.

~~The effective interest rates for the 3.875% Convertible Notes and the 4.25% Convertible Notes, taking into account both cash andnon-cash~~ ~~components, approximate 8.3% and 7.6%, respectively. Had a20-year~~ term been used for the amortization of the liability component and issuance costs of the 4.25% Convertible Notes, the annual effective interest rate charged to earnings would have been decreased to approximately 5.4%. As of September 30, 2017, the remaining amortization periods of the debt discounts were expected to be 1.5 years for the 3.875% Convertible Notes and 4.4 years for the 4.25% Convertible Notes.

~~8% Senior Notes~~

On April 3, 2017, the Company redeemed its 8% publicly traded, unsecured senior notes which had unamortized debt issuance costs of $743 at par for $40,805, including accrued and unpaid interest of $555. For the nine months ended September 30, 2017, the Company recognized a loss of $743 associated with the early extinguishment of this debt. The redemption was funded by the net proceeds from the issuance of the 4.25% Convertible Senior Notes.

~~3.95% Promissory Note~~

On February 27, 2017, the Company converted its outstanding revolving credit facility of $9,441 into a three-year mortgage loan primarily collateralized by a retail shopping center in Melbourne, Florida. Shortly after the loan conversion, the Company withdrew an additional amount of $109, thereby increasing the loan amount to $9,550. The loan bears a fixed annual interest rate of 3.95%. Approximately $50 of principal and interest is payable in 35 monthly installments beginning March 17, 2017 plus a final balloon payment of $8,891 including principal and unpaid interest payable on February 17, 2020. The promissory note may be repaid in part or in full at any time without penalty.

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

~~Note 9 — Reinsurance~~

The Company cedes a portion of its homeowners’ insurance exposure to other entities under catastrophe excess of loss reinsurance ~~treaties~~contracts and a portion of its flood insurance exposure under one quota share reinsurance agreement. Ceded premiums under most catastrophe excess of loss reinsurance contracts are subject to revision resulting from subsequent adjustments in total insured value. Under the terms of the quota share reinsurance agreement, ~~effective January 1, 2017,~~ the Company ~~was~~is entitled to a ~~30%~~30% ceding commission on ceded premiums ~~written. During the third quarter~~written and a profit commission equal to 10% of 2017, the Company entered into a three-year flood catastrophe excess of loss reinsurance contract effective July 1, 2017. The reinsurance premiums under this three-year contract are generally determined on a quarterly basis based on the premiums associated with the applicable flood total insured value in force on the last day of the preceding quarter. Effective September 1, 2017, the quota share reinsurance agreement was terminated and replaced with a new quota share agreement with revised terms and conditions. Under the new agreement, the Company is also entitled to a 30% ceding commission on ceded premiums written.net profit.

The Company remains liable for claims payments in the event that any reinsurer is unable to meet its obligations under the reinsurance agreements. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. The Company contracts with a number of reinsurers to secure its annual reinsurance coverage, which generally becomes effective June ~~1st~~1st of each year. The Company purchases reinsurance each year taking into consideration probable maximum losses and reinsurance market conditions.

The impact of the reinsurance ~~treaties~~contracts on premiums written and earned is as follows:


													Three Months Ended
	Three Months Ended September 30,						Nine Months Ended September 30,						March 31,
	2017			2016			2017			2016			2024			2023
Premiums Written:
Direct	$	94,935		$	93,282		$	301,930		$	308,682		$	211,895		$	207,423
Assumed		(63	)		(18	)		(1,184	)		(377	)		43,091			(7,569	)

Gross written		94,872			93,264			300,746			308,305			254,986			199,854
Ceded		(44,704	)		(29,242	)		(101,528	)		(105,998	)		(68,106	)		(70,509	)

Net premiums written	$	50,168		$	64,022		$	199,218		$	202,307		$	186,880		$	129,345

Premiums Earned:
Direct	$	87,118		$	92,112		$	259,698		$	283,011		$	189,675		$	172,905
Assumed		1,551			430			10,678			3,262			66,969			7,163

Gross earned		88,669			92,542			270,376			286,273			256,644			180,068
Ceded		(44,705	)		(29,242	)		(101,529	)		(105,998	)		(68,106	)		(70,509	)

Net premiums earned	$	43,964		$	63,300		$	168,847		$	180,275		$	188,538		$	109,559

During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2024 and 2023, the Company recognized ceded losses of $0 and $2,751, respectively, as reductions in losses and loss adjustment expenses. At March 31, 2024 and December 31, 2023, there were 58 and 33 reinsurers, respectively, participating in the Company’s reinsurance ~~recoveries~~program. Total net amounts recoverable and receivable from reinsurers at March 31, 2024 and December 31, 2023 were $330,670 and $350,294, respectively. Approximately 64.7% of ~~$213,746~~the reinsurance recoverable balance at March 31, 2024 was receivable from four reinsurers. Based on all available information considered in the rating-based method, the Company recognized decreases in credit loss expense of $49 and ~~$213,751, respectively, were deducted from losses incurred. During~~$1 for the three ~~and nine~~ months ended ~~September 30, 2016, there~~March 31, 2024 and 2023, respectively. Allowances for credit losses related to the reinsurance recoverable balance were ~~no recoveries pertaining to~~$69 and $118 at March 31, 2024 and December 31, 2023, respectively.

One of the existing reinsurance contracts includes retrospective provisions that ~~were deducted from~~adjust premiums in the event losses ~~incurred. The recoveries in 2017 were related to Hurricane Irma which~~are minimal or zero. For the three months ended March 31, 2024 and 2023, the Company recognized

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

~~made landfall~~reductions in premiums ceded of $6,993 in each of the Florida Peninsula and caused significant property damages across the region. At September 30, 2017 and December 31, 2016, there were 37 and 35 reinsurers, respectively, participating in the Company’s reinsurance program. Amounts receivable with respect to reinsurers at September 30, 2017 and December 31, 2016 were $213,746 and $0, respectively. Included in the amounts receivable at September 30, 2017 was $7,400respective periods, related to the Company’s contract with Oxbridge Reinsurance Limited, a related party. Approximately 31.3% of the reinsurance recoverable balance at September 30, 2017 was concentrated in two reinsurers. Based on the insurance ratings, the payment history and the financial strength of the reinsurers, management believes there was no significant credit risk associated with its reinsurers’ obligations to perform on any prepaid reinsurance contract and to fund any reinsurance recoverable balance as of September 30, 2017.

Certain of the reinsurance contracts include retrospective provisions that adjust premiums, increase the amount of future coverage, or result in a profit commission in the event losses are minimal or zero. The Company’s preliminary losses related to Hurricane Irma before reinsurance recoveries are estimated to be in the range of $250,000 to $300,000. As a result, the balances of previously accrued benefits and deferred reinsurance premiums were adjusted with the changes recognizedthese adjustments in the consolidated ~~statement~~statements of ~~income as~~income. See Note 21 -- “Commitments and Contingencies” for additional ~~ceded premiums. For the three and nine months ended September 30, 2017, the Company recognized net ceded premiums of $12,464 and $5,508, respectively, related~~information.

Amounts receivable pursuant to these adjustments. Included in these amounts attributable to the Company’s contract with Oxbridge for the three and nine months ended September 30, 2017 were $2,415 and $903, respectively. In contrast, these adjustments were reflected as a net reduction in ceded premiums of $3,428 for the three months ended September 30, 2016, of which $594 related to the Company’s contract with Oxbridge. For the nine months ended September 30, 2016, these adjustments were $9,250, of which $1,334 related to the Company’s contract with Oxbridge. In June 2016, the Company received a total of $37,800 in cash benefits related to two retrospective reinsurance contracts that terminated May 31, 2016 of which $7,560 was received from Oxbridge. In September 2016, the Company received the final cash payment of $5,716 under the terms of the remaining retrospective reinsurance contract which terminated May 31, 2016.

~~In addition, these adjustments~~provisions are reflected in other ~~assets and prepaid reinsurance premiums.~~assets. At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, other assets included ~~$1,969~~$51,282 and ~~$5,810,~~$44,289, respectively, of ~~which $393 and $1,043 related~~amounts receivable pursuant to ~~the contract with Oxbridge and prepaid reinsurance premiums included $484 and $2,152, respectively, of which $85 and $338 related to the contract with Oxbridge.~~retrospective provisions. Management believes the credit risk associated with the collectability of these accrued benefits is minimal as the amount receivable is concentrated with one reinsurer with a good credit rating and the Company monitors the creditworthiness of this reinsurer based on available information about the reinsurer’s financial ~~position.~~condition.

Reinsurance provided to other insurance companies

32United

From 2021 to 2022, the Company, through HCPCI and TypTap, provided quota share reinsurance on all in-force, new and renewal policies issued by United Property & Casualty Insurance Company, an insurance subsidiary of United Insurance Holdings Corporation (“United”), in the states of Connecticut, New Jersey, Massachusetts, and Rhode Island (collectively “Northeast Region”). From 2022 to 2023, the Company’s insurance subsidiaries also provided quota share reinsurance on all of United’s personal lines insurance business in the states of Georgia, North Carolina, and South Carolina (collectively “Southeast Region”). In conjunction with these reinsurance agreements, the Company entered into renewal rights agreements with United which provided the Company with the right to renew and/or replace United’s insurance policies at the end of their respective policy periods. In February 2023, United’s Florida-domiciled residential insurance subsidiary was placed into receivership by the State of Florida due to its financial insolvency and, as a result, the Company ceased providing quota share reinsurance on United policies. The majority of the policies under these reinsurance agreements have been renewed and/or replaced by the Company.

On February 14, 2024, upon approval from the receiver of United, TypTap received $15,000 from the trust account that holds funds withheld for the assumed business on the Southeast Region quota share reinsurance agreement. In addition, $4,462 was withdrawn in February 2024 by the receiver from the trust accounts to settle for paid losses and LAE related to the Northeast Region and the Southeast Region quota share reinsurance agreements.

At March 31, 2024 and December 31, 2023, the Company had a net balance of $582 due to United related to the Northeast Region, representing ceding commission payable.

For the three months ended March 31, 2023, $7,569 of assumed premiums written related to the Southeast Region’s insurance policies were derecognized, which primarily resulted from the return of the unearned portion of assumed written premiums subsequent to the Company’s renewal and/or replacement of insurance policies in the Southeast Region. At March 31, 2024, the Company had a net balance of $1,438 due to United related to the Southeast Region, consisting of premiums payable of $1,712 offset by ceding commission receivable of $274. At December 31, 2023, the Company had a net balance of $4,203 due to United related to the Southeast Region, consisting of premiums payable of $1,712 and payable on paid losses and loss adjustment expenses of $2,765, offset by ceding commission receivable of $274.

At March 31, 2024, the Company had a net amount due to United of $2,020 and funds withheld for assumed business in trust accounts totaling $14,181 for the benefit of policies assumed from United. The Company ceased providing TPA services to United in March 2023. The Company cannot predict the actions a

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

receiver might take, which may include restrictions on, or use of, funds held in trust. Any such actions could have a material adverse effect on the Company’s financial position and results of operations.

At March 31, 2024 and December 31, 2023, the balance of funds withheld for assumed business related to the Company’s quota share reinsurance agreements with United was $14,181 and $30,087, respectively.

Citizens Assumption

Assumed premiums written related to Citizens policies were $43,091 for the three months ended March 31, 2024 as opposed to $0 for the three months ended March 31, 2023.

Note ~~10 —~~12 -- Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses (“LAE”) is determined on an individual case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future ~~claim~~claims development and losses incurred but not reported.

The Company primarily writes insurance in ~~the state of Florida,~~states which could be exposed to hurricanes or other natural catastrophes. The occurrence of a major catastrophe could have a significant effect on the Company’s quarterly results and cause a temporary disruption of the normal operations of the Company. However, the Company is unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.

Activity in the liability for ~~unpaid~~ losses and ~~loss adjustment expenses~~LAE is summarized as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended
	2017			2016			2017			2016			March 31,
Gross balance, beginning of period	$	73,089		$	54,727		$	70,492		$	51,690
Less: reinsurance recoverable		5			—			—			—
													2024			2023
Net balance, beginning of period		73,084			54,727			70,492			51,690
Net balance, beginning of period*													$	254,351		$	246,546
Incurred, net of reinsurance, related to:
Current period		78,337			21,283			123,710			68,703			79,922			56,698
Prior period		10,894			4,626			18,715			10,558

Prior periods														—			3,867
Total incurred, net of reinsurance		89,231			25,909			142,425			79,261			79,922			60,565

Paid, net of reinsurance, related to:
Current period		(20,888	)		(16,078	)		(40,392	)		(38,674	)		(17,789	)		(11,110	)
Prior period		(10,484	)		(7,363	)		(41,582	)		(35,082	)

Prior periods														(43,059	)		(49,950	)
Total paid, net of reinsurance		(31,372	)		(23,441	)		(81,974	)		(73,756	)		(60,848	)		(61,060	)

Net balance, end of period		130,943			57,195			130,943			57,195			273,425			246,051
Add: reinsurance recoverable		213,729			—			213,729			—

Add: reinsurance recoverable before allowance for credit losses														305,287			560,257
Gross balance, end of period	$	344,672		$	57,195		$	344,672		$	57,195		$	578,712		$	806,308

* Net balance represents beginning-of-period liability for unpaid losses and LAE less beginning-of-period reinsurance recoverable for unpaid losses and LAE.

The establishment of loss and LAE reserves is an inherently uncertain process and changes in loss and LAE reserve estimates are expected as these estimates are subject to the outcome of future events. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such estimates are adjusted. ~~During~~Losses and LAE for the three ~~and nine~~ months ended ~~September 30, 2017, the Company incurred $267,000~~March 31, 2024 included net estimated losses of ~~estimated gross losses or $54,000 of estimated net losses~~approximately $21,678 related to ~~Hurricane Irma~~Citizens policies assumed. Excluding Citizens-related losses, lower losses and ~~experienced unfavorable development of $10,894~~LAE for the three months ended March 31, 2024 resulted from a decrease in claims and ~~$18,715, respectively, of which $9,442 and $17,438, respectively, pertain~~litigation related to ~~claims in the 2015 and 2016 loss years.~~Florida policies.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 13 -- Variable Interest Entity

CORE, a Florida-domiciled reciprocal insurance exchange, is owned by its policyholders, referred to as subscribers, and was organized to offer commercial residential multiple peril and wind insurance products. Each subscriber owns part of CORE by buying an insurance policy and making a surplus contribution. CORE is managed by CRM, an AIF company which is a wholly-owned subsidiary of HCI. At the formation date of CORE, management determined that CORE is a variable interest entity (“VIE”).

Since HCI has the power to direct the activities of CORE that most significantly affect CORE’s economic performance and the obligation to absorb losses or the right to receive benefits from CORE via the subordinated surplus note and the management and service agreements, HCI is considered the primary beneficiary of CORE and is required to consolidate CORE. As HCI has no equity at risk, CORE’s equity and results of operations are included in noncontrolling interests.

CORE’s assets are legally restricted for the purpose of fulfilling obligations specific to CORE. The creditors of CORE have no legal right to pursue additional sources of payment from the Company. The following table summarizes the assets and liabilities related to CORE, a consolidated VIE, which are included in the accompanying consolidated balance sheets:


	March 31,		December 31,
	2024		2023
Assets:
Cash and cash equivalents	$	44,411	$	24,635
Restricted cash		302		300
Income taxes receivable		651		—
Other assets		270		65
Total assets	$	45,634	$	25,000
Liabilities:
Losses and loss adjustment expenses	$	1,178	$	—
Unearned premiums		15,862		—
Ceded reinsurance premiums payable		1,986		—
Assumed premiums payable		236		—
Deferred income taxes, net		342		—
Other liabilities		183		—
Total liabilities	$	19,787	$	—

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

Note ~~11 —~~14 -- Segment Information

The ~~Company’s businesses consist of four~~Company identifies its operating ~~divisions:~~divisions based on managerial emphasis, organizational structure and revenue source. The Company has five reportable segments: HCPCI insurance operations, TypTap Group, reciprocal exchange operations, real estate operations, and corporate and other. Due to their economic characteristics, the Company’s property and casualty insurance division and reinsurance ~~investment~~operations, excluding the insurance operations under TypTap Group and reciprocal exchange operations, are grouped together into one reportable segment under HCPCI insurance operations. The TypTap Group segment includes its property and casualty insurance operations, information technology operations and its management company’s activities. The reciprocal exchange segment represents the insurance operations of CORE, a consolidated VIE. The real estate operations segment includes companies engaged in operating commercial properties the Company owns for investment purposes or for use in its own operations. The corporate and ~~information technology.~~other segment represents the activities of the holding companies and any other companies that do not meet the quantitative and qualitative thresholds for a reportable segment. The determination of segments may change over time due to changes in operational emphasis, revenues, and results of operations. The Company’s chief executive officer, who serves as the Company’s chief operating decision maker, evaluates each division’s financial and operating ~~performances~~performance based on revenue and operating income. ~~The Company aggregates its operating divisions into segments based on organizational structure and revenue source.~~

~~Due to their economic characteristics, the Company’s property and casualty insurance division and reinsurance division are grouped together into one reportable segment under insurance operations.~~ For the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, revenues from the ~~Company’s~~HCPCI insurance operations segment before intracompany elimination represented ~~96.1%~~63.7% and ~~94.8%~~61.2%, respectively, and revenues from the TypTap Group segment represented 33.8% and 36.5%, respectively, of total revenues of all operating segments. For the nine months ended September 30, 2017 and 2016, revenues from the Company’s insurance operations before intracompany elimination represented 96.4% of total revenues of all operating segments in each of the periods. At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, HCPCI insurance operations’ total assets represented ~~90.7%~~53.1% and ~~87.9%~~55.3%, respectively, and TypTap Group’s total assets represented 34.9% and 33.6%, respectively, of the combined assets of all operating segments. There was no other operating division representing ten percent or more of the Company’s total revenues or combined assets. In addition, there was no other operating division representing ten percent or more of the greater,

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in ~~absolute amount, of the combined profits of all operating divisions reporting a profit or the combined losses of all operating divisions reporting a loss.~~ thousands, except share and per share amounts, unless otherwise stated)

The following tables present segment information reconciled to the Company’s consolidated statements of income. ~~Othernon-reportable~~ ~~divisions are combined and disclosed in Corporate and Other.~~ Intersegment transactions are not eliminated from segment results. However, intracompany transactions are eliminated in segment results below.


For Three Months Ended March 31, 2024	HCPCI Insurance Operations			TypTap Group			Reciprocal Exchange Operations			Real Estate (a)		Corporate/ Other (b)			Reclassification/ Elimination			Consolidated
Revenue:
Gross premiums earned (c)	$	155,382		$	103,748		$	3,625		$	—	$	—		$	(6,111	)	$	256,644
Premiums ceded		(43,326	)		(28,673	)		(2,218	)		—		—			6,111			(68,106	)
Net premiums earned		112,056			75,075			1,407			—		—			—			188,538
Net income from investment portfolio		8,228			4,543			56			—		4,694			(819	)		16,702
Policy fee income		504			515			—			—		—			—			1,019
Other		3,538			1,495			—			3,447		1,030			(9,155	)		355
Total revenue		124,326			81,628			1,463			3,447		5,724			(9,974	)		206,614
Expenses:
Losses and loss adjustment expenses		39,014			40,553			1,268			—		—			(913	)		79,922
Amortization of deferred policy acquisition costs		10,136			10,795			—			—		—			—			20,931
Other policy acquisition expenses		579			519			546			—		—			(436	)		1,208
Stock-based compensation expense		369			701			—			—		512			—			1,582
Interest expense		—			1,500			812			223		2,926			(2,312	)		3,149
Depreciation and amortization		138			1,088			—			380		160			(276	)		1,490
Personnel and other operating expenses		11,748			9,970			54			1,434		3,733			(6,037	)		20,902
Total expenses		61,984			65,126			2,680			2,037		7,331			(9,974	)		129,184
Income (loss) before income taxes	$	62,342		$	16,502		$	(1,217	)	$	1,410	$	(1,607	)	$	—		$	77,430
Total revenue from non-affiliates (d)	$	114,956		$	88,083		$	1,916		$	2,606	$	4,085
Gross premiums written	$	91,875		$	143,624		$	19,487

(a)

Other revenue under real estate primarily consisted of rental income from investment properties.

(b)

Other revenue under corporate and other primarily consisted of revenue from marina business and management fees for attorney-in-fact services.

(c)

Gross premiums earned under HCPCI Insurance Operations consist of $149,271 from HCPCI and $6,111 from a reinsurance company.

(d)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

Three Months Ended September 30, 2017    Insurance
Operations    Corporate/
Other(a)    Reclassification/
Elimination    Consolidated
Revenue:

Net premiums earned
   $ 43,964    $ —      $ —      $ 43,964
Net investment income
   2,563    623    (308 )    2,878
Net realized and unrealized investment (losses) gains
   (226 )    74    —      (152 )
Net other-than-temporary impairment losses
   (464 )    (10 )    —      (474 )
Policy fee income
   905    —      —      905
Other
   85    2,706    (2,422 )    369








Total revenue
   46,827    3,393    (2,730 )    47,490








Expenses:

Losses and loss adjustment expenses
   89,231    —      —      89,231
Amortization of deferred policy acquisition costs
   9,031    —      —      9,031
Interest expense
   —      4,408    —      4,408
Depreciation and amortization
   33    785    (494 )    324
Other
   7,155    5,595    (2,236 )    10,514








Total expenses
   105,450    10,788    (2,730 )    113,508








Loss before income taxes
   $ (58,623 )    $ (7,395 )    $ —      $ (66,018 )


	HCPCI
	Insurance			TypTap			Real		Corporate/			Reclassification/
For Three Months Ended March 31, 2023	Operations			Group			Estate (a)		Other (b)			Elimination			Consolidated
Revenue:
Gross premiums earned (c)	$	96,991		$	87,612		$	—	$	—		$	(4,535	)	$	180,068
Premiums ceded		(40,195	)		(34,823	)		—		—			4,509			(70,509	)
Net premiums earned		56,796			52,789			—		—			(26	)		109,559
Net income from investment portfolio		2,954			3,379			—		1,900			8,862			17,095
Gain from sales of real estate investments		—			—			8,936		—			(8,936	)		—
Policy fee income		563			527			—		—			—			1,090
Other		4,653			1,643			2,923		595			(8,529	)		1,285
Total revenue		64,966			58,338			11,859		2,495			(8,629	)		129,029
Expenses:
Losses and loss adjustment expenses		28,782			33,056			—		—			(1,273	)		60,565
Amortization of deferred policy acquisition costs		9,621			11,863			—		—			—			21,484
Other policy acquisition expenses		655			611			—		—			(30	)		1,236
Stock-based compensation expense		496			829			—		781			—			2,106
Interest expense		—			431			203		2,598			(431	)		2,801
Depreciation and amortization		139			956			627		202			(537	)		1,387
Loss on extinguishment of debt		—			—			177		—			(177	)		—
Personnel and other operating expenses		9,919			9,433			1,554		1,589			(6,181	)		16,314
Total expenses		49,612			57,179			2,561		5,170			(8,629	)		105,893
Income (loss) before income taxes	$	15,354		$	1,159		$	9,298	$	(2,675	)	$	—		$	23,136
Total revenue from non-affiliates (d)	$	56,929		$	61,286		$	11,051	$	1,926
Gross premiums written	$	85,153		$	114,701

Three Months Ended September 30, 2016    Insurance
Operations    Corporate/
Other(a)    Reclassification/
Elimination    Consolidated
Revenue:

Net premiums earned
   $ 63,300    $ —      $ —      $ 63,300
Net investment income
   2,316    989    (520 )    2,785
Net realized investment gains
   532    51    —      583
Net other-than-temporary impairment losses
   (225 )    1    —      (224 )
Policy fee income
   972    —      —      972
Gain on bargain purchase
   —      2,071    —      2,071
Other
   106    2,001    (1,786 )    321








Total revenue
   67,001    5,113    (2,306 )    69,808








Expenses:

Losses and loss adjustment expenses
   25,909    —      —      25,909
Amortization of deferred policy acquisition costs
   9,335    —      —      9,335
Interest expense
   —      2,672    —      2,672
Depreciation and amortization
   31    419    (147 )    303
Other
   8,426    5,293    (2,159 )    11,560








Total expenses
   43,701    8,384    (2,306 )    49,779








Income before income taxes
   $ 23,300    $ (3,271 )    $ —      $ 20,029

(a)

Other revenue under real estate primarily consisted of rental income from investment properties.

(b)

Other revenue under corporate and other primarily consisted of revenue from marina business.

(c)

Gross premiums earned under HCPCI Insurance Operations consist of $92,456 from HCPCI and $4,535 from a reinsurance company.

(d)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

~~(a)~~

~~Other revenue under corporate and other primarily consisted of rental income from investment properties and revenue from restaurant and marina businesses.~~

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

Nine Months Ended September 30, 2017    Insurance
Operations    Corporate/
Other(a)    Reclassification/
Elimination    Consolidated
Revenue:

Net premiums earned
   $ 168,847    $ —      $ —      $ 168,847
Net investment income
   7,153    2,099    (730 )    8,522
Net realized and unrealized investment gains
   2,193    157    —      2,350
Net other-than-temporary impairment losses
   (854 )    (10 )    —      (864 )
Policy fee income
   2,721    —      —      2,721
Other
   428    8,063    (7,284 )    1,207








Total revenue
   180,488    10,309    (8,014 )    182,783








Expenses:

Losses and loss adjustment expenses
   142,425    —      —      142,425
Amortization of deferred policy acquisition costs
   26,668    —      —      26,668
Interest expense
   —      12,328    —      12,328
Loss on repurchases of senior notes
   —      743    —      743
Depreciation and amortization
   94    2,227    (1,425 )    896
Other
   22,601    16,282    (6,589 )    32,294








Total expenses
   191,788    31,580    (8,014 )    215,354








Loss before income taxes
   $ (11,300 )    $ (21,271 )    $ —      $ (32,571 )

Nine Months Ended September 30, 2016    Insurance
Operations    Corporate/
Other(a)    Reclassification/
Elimination    Consolidated
Revenue:

Net premiums earned
   $ 180,275    $ —      $ —      $ 180,275
Net investment income
   5,802    876    (678 )    6,000
Net realized investment gains
   856    43    —      899
Net other-than-temporary impairment losses
   (1,426 )    (15 )    —      (1,441 )
Policy fee income
   2,967    —      —      2,967
Gain on repurchases of convertible senior notes
   —      153    —      153
Gain on bargain purchase
   —      2,071    —      2,071
Other
   543    5,808    (5,200 )    1,151








Total revenue
   189,017    8,936    (5,878 )    192,075








Expenses:

Losses and loss adjustment expenses
   79,261    —      —      79,261
Amortization of deferred policy acquisition costs
   28,674    —      —      28,674
Interest expense
   —      8,112    —      8,112
Depreciation and amortization
   131    1,191    (335 )    987
Other
   25,159    14,470    (5,543 )    34,086








Total expenses
   133,225    23,773    (5,878 )    151,120








Income before income taxes
   $ 55,792    $ (14,837 )    $ —      $ 40,955

~~(a)~~

~~Other revenue under corporate and other primarily consisted of rental income from investment properties and revenue from restaurant and marina businesses.~~

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

The following table presents segment assets reconciled to the Company’s total assets inon the consolidated balance ~~sheets.~~sheets:


	September 30, 2017			December 31, 2016			March 31,			December 31,
Segment:
Insurance Operations	$	871,601		$	651,927
							2024			2023
Segments:
HCPCI Insurance Operations							$	921,327		$	933,116
TypTap Group								669,986			623,366
Reciprocal Exchange Operations								47,776			25,000
Real Estate Operations								131,893			132,257
Corporate and Other		213,299			116,849			334,304			233,952
Consolidation and Elimination		(55,647	)		(98,712	)		(263,652	)		(136,375	)

Total assets	$	1,029,253		$	670,064		$	1,841,634		$	1,811,316

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

Note ~~12 —~~15 -- Leases

The table below summarizes the Company’s right-of-use (“ROU”) assets and corresponding liabilities for operating and finance leases:


	March 31,		December 31,
	2024		2023
Operating leases:
ROU assets	$	1,352	$	1,407
Liabilities	$	1,357	$	1,408
Finance leases:
ROU assets	$	1	$	1
Liabilities	$	1	$	2

The following table summarizes the Company’s operating and finance leases in which the Company is a lessee:


		Renewal	Other Terms and
Class of Assets	Initial Term	Option	Conditions
Operating lease:
Office equipment	36 to 63 months	Yes	(a)
Office space	5 to 9 years	Yes	(a), (b)
Finance lease:
Office equipment	3.25 years	Not applicable	(c)

(a)

There are no variable lease payments.

(b)

Rent escalation provisions exist.

(c)

There is a bargain purchase option.

As of March 31, 2024, maturities of lease liabilities were as follows:


	Leases
	Operating		Finance
Due in 12 months following March 31,
2024	$	287	$	1
2025		296		—
2026		306		—
2027		316		—
2028		160		—
Thereafter		219		—
Total lease payments		1,584		1
Less: interest		227		—
Total lease obligations	$	1,357	$	1

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

The following table provides quantitative information with regards to the Company’s operating and finance leases:


	Three Months Ended
	March 31,
	2024			2023
Lease costs:
Finance lease costs:
Amortization – ROU assets*	$	—		$	4
Operating lease costs*		68			52
Short-term lease costs*		92			93
Total lease costs	$	160		$	149
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows – operating leases	$	70		$	44
Financing cash flows – finance leases	$	1		$	4

	March 31,
	2024
Weighted-average remaining lease term:
Finance leases (in years)		0.5
Operating leases (in years)		5.4
Weighted-average discount rate:
Finance leases (%)		2.4	%
Operating leases (%)		6.0	%

* Included in other operating expenses on the consolidated statements of income.

The following table summarizes the Company’s operating leases in which the Company is a lessor:


		Renewal	Other Terms and
Class of Assets	Initial Term	Option	Conditions
Operating lease:
Office space	1 to 3 years	Yes	(d)
Retail space	3 to 20 years	Yes	(d)
Boat docks/wet slips	1 to 12 months	Yes	(d)

(d)

There are no purchase options.

Note 16 -- Income Taxes

A valuation allowance must be established for deferred tax assets when it is more likely than not that the deferred tax assets will not be realized based on available evidence both positive and negative, including recent operating results, available tax planning strategies, and projected future taxable income. As of December 31, 2023, management concluded, based on the evaluation of the positive and negative evidence, that is more likely than not that the deferred tax assets will be realized and therefore no valuation allowance on the Company’s deferred tax assets is required. The Company evaluates the realizability of its deferred tax assets each quarter, and as of March 31, 2024, based on all of the available evidence, management concluded that it is more likely than not that the deferred tax assets will be realized.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

During the three months ended ~~September 30, 2017,~~March 31, 2024 and 2023, the Company recorded approximately ~~$25,472~~$20,474 and $5,343, respectively, of income tax ~~benefits,~~expense, which resulted in aneffective tax rates of 26.4% and 23.1%, respectively. The increase in the effective tax rate ~~of 38.6%. During~~as compared with the ~~three months ended September 30, 2016,~~corresponding period in the ~~Company recorded approximately $8,696 of income taxes, which resulted in an~~prior year was primarily attributable to a lower prior year effective tax rate resulting from the release of ~~43.4%. During~~ the nine months ended September 30, 2017, the Company recorded approximately $13,587 of income tax benefits, resulting in an effective tax rate of 41.7%. During the nine months ended September 30, 2016, the Company recorded approximately $16,542 of income taxes, which resulted in an effective tax rate of 40.4%.valuation allowance during 2023. The Company’s estimated annual effective tax rate differs from the statutory federal tax rate due to state and foreign income taxes as well as certain nondeductible andtax-exempt items.

In July 2017, the Company received notice from the Internal Revenue Service stating the Company’s 2015 federal income tax return would be examined. The examination is currently in the process of gathering information.

Note ~~13 —~~17 -- Earnings Per Share

U.S. GAAP requires the Company to use thetwo-class method in computing basic earnings (loss) per share since holders of the Company’s restricted stock have the right to share in dividends, if declared, equally with common stockholders. These participating securities affect the computation of both basic and diluted earnings (loss) per share during periods of net ~~income.~~

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share~~income or loss. For a majority-owned subsidiary, its basic and diluted earnings (loss) per share ~~amounts, unless otherwise stated)~~are first computed separately. Then, the Company’s proportionate share in that majority-owned subsidiary’s earnings is added to the computation of both basic and diluted earnings (loss) per share at a consolidated level.

A summary of the numerator and denominator of the basic and diluted ~~(loss)~~ earnings per common share is presented ~~below.~~below:

   Three Months Ended
September 30, 2017 Three Months Ended
September 30, 2016
   Loss
(Numerator) Shares
(Denominator)    Per Share
Amount Income
(Numerator) Shares
(Denominator)    Per Share
Amount
Net (loss) income
   $ (40,546 )    $ 11,333
Less: Loss (income) attributable to participating securities
   2,737    (557 )





Basic (Loss) Earnings Per Share:

(Loss) income allocated to common stockholders
   (37,809 ) 8,519    $ (4.44 ) 10,776 9,209    $ 1.17




Effect of Dilutive Securities:

Stock options*
   —   —      —   62
Convertible senior notes*
   —   —      1,028 1,447





Diluted (Loss) Earnings Per Share:

(Loss) income available to common stockholders and assumed conversions
   $ (37,809 ) 8,519    $ (4.44 ) $ 11,804 10,718    $ 1.10


	Three Months Ended							Three Months Ended
	March 31, 2024							March 31, 2023
	Income			Shares (a)		Per Share		Income			Shares (a)		Per Share
	(Numerator)			(Denominator)		Amount		(Numerator)			(Denominator)		Amount
Net income	$	56,956						$	17,793
Less: Net income attributable to redeemable noncontrolling interest		(10,149	)						(2,324	)
Less: Net loss (income) attributable to noncontrolling interests		804							(131	)
Net income attributable to HCI		47,611							15,338
Less: Income attributable to participating securities		(1,218	)						(564	)
Basic Earnings Per Share:
Income allocated to common stockholders		46,393			9,751	$	4.76		14,774			8,278	$	1.78
Effect of Dilutive Securities: *
Stock options		—			280				—			45
Convertible senior notes		1,640			2,282				1,921			2,537
Warrants		—			305				—			—
Diluted Earnings Per Share:
Income available to common stockholders and assumed conversions	$	48,033			12,618	$	3.81	$	16,695			10,860	$	1.54

   Nine Months Ended
September 30, 2017 Nine Months Ended
September 30, 2016
   Loss
(Numerator) Shares
(Denominator)    Per Share
Amount Income
(Numerator) Shares
(Denominator)    Per Share
Amount
Net (loss) income
   $ (18,984 )    $ 24,413
Less: Loss (income) attributable to participating securities
   1,236    (1,158 )





Basic (Loss) Earnings Per Share:

(Loss) income allocated to common stockholders
   (17,748 ) 8,648    $ (2.05 ) 23,255 9,395    $ 2.48




Effect of Dilutive Securities:

Stock options*
   —   —      —   62
Convertible senior notes*
   —   —      3,206 1,507





Diluted (Loss) Earnings Per Share:

(Loss) income available to common stockholders and assumed conversions
   $ (17,748 ) 8,648    $ (2.05 ) $ 26,461 10,964    $ 2.41

(a)

Shares in thousands.

* For the three months ended March 31, 2023, warrants were excluded due to anti-dilutive effect.

*	~~Excluded in 2017 due to anti-dilutive effect.~~

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 18 -- Redeemable Noncontrolling Interest

~~Note 14 — Stockholders’ Equity~~

~~Common~~On January 22, 2024, TTIG entered into a Stock

~~In December 2016, the Company’s Board of Directors authorized aone-year~~ ~~plan~~ Redemption Agreement with Centerbridge which allowed TTIG to ~~repurchase up to $20,000~~redeem all of the ~~Company’s~~TTIG Series A Preferred Stock held by Centerbridge. The redemption totaled $100,000 plus accrued and unpaid dividends of approximately $2,923. At redemption, the difference between the consideration transferred of $102,923 and the redemption date carrying value of $96,695 is recorded as a deemed dividend and is included in net income attributable to redeemable noncontrolling interest which is subtracted from net income when calculating income available to common ~~shares before commissions and fees. During~~stockholders.

The following table summarizes the ~~three months ended September 30, 2017, the Company repurchased and retired a total~~activity of ~~124,849 shares at a weighted average price per share of $36.79 under this repurchase plan. The total cost of shares repurchased, inclusive of fees and commissions,~~redeemable noncontrolling interest during the three months ended ~~September 30, 2017 was $4,599, or $36.83 per share. During the nine months ended September 30, 2017, the Company repurchased~~March 31, 2024 and retired a total of 163,265 shares at a weighted average price per share of $37.86 under this authorized repurchase plan. The total cost of shares repurchased, inclusive of fees and commissions, during the nine months ended September 30, 2017 was $6,189, or $37.91 per share.2023:

~~In December 2015, the Company’s Board of Directors authorized aone-year~~ ~~plan to repurchase up to $20,000 of the Company’s common shares before commissions and fees. During~~


	2024			2023
Balance at January 1	$	96,160		$	93,553
Increase (decrease):
Accrued cash dividends		424			1,637
Accretion - increasing dividend rates		111			687
Adjustment to maximum redemption value		6,228			—
Dividends paid		(2,923	)		(3,012	)
Redemption		(100,000	)		—
Balance at March 31	$	—		$	92,865

For the three months ended ~~September 30, 2016,~~March 31, 2024, net income attributable to redeemable noncontrolling interest was $10,149, consisting of accrued cash dividends of $424, accretion related to increasing dividend rates of $111, an adjustment to maximum redemption value of $6,228, and a deemed dividend resulting from warrant modifications of $3,386. See Note 19 -- “Equity” for additional information regarding the Company repurchased and retired a total of 198,055 shares at a weighted average price per share of $30.29 under this repurchase plan. The total cost of shares repurchased, inclusive of fees and commissions, duringmodifications to the warrants held by Centerbridge. For the three months ended March 31, 2023, net income attributable to redeemable noncontrolling interest was $2,324, consisting of accrued cash dividends of $1,637 and accretion related to increasing dividend rates of $687.

Note 19 -- Equity

Stockholders’ Equity

Common Stock

On January 22, 2024, a new shelf registration statement on Form S-3 (the “Shelf Registration”) was filed, replacing the Company’s old universal shelf registration statement filed in September ~~30, 2016 was $6,008, or $30.33 per share. During the nine months ended September 30, 2016,~~2023. The new Shelf Registration permits the Company ~~repurchased~~to offer and ~~retired~~sell its common stock, preferred stock, debt securities, warrants, and stock purchase contracts and units, from time to time, subject to market conditions and its capital needs. The Shelf Registration will also enable Centerbridge to sell all or a ~~total~~portion of ~~574,851~~the amended and restated warrant or the shares atissuable pursuant to the warrant. As a ~~weighted average price per share~~part of ~~$31.31. The total cost~~the Shelf Registration, the Company also announced the implementation of an “at-the-market” facility (the “ATM facility”) under which the Company would have the ability to raise up to $75,000 through the issuance of new shares ~~repurchased, inclusive~~ of ~~fees and commissions, during~~common stock into the ~~nine months ended September 30, 2016 was $18,023, or $31.35 per share.~~market if it were to so choose.

On ~~October 19, 2017,~~January 24, 2024, the Company’s Board of Directors declared a quarterly dividend of ~~$0.35~~$0.40 per common share. The dividends ~~are payable~~were paid on ~~December~~March 15, ~~2017~~2024 to ~~shareholders~~stockholders of record on ~~November 17, 2017.~~February 16, 2024.

~~Share Repurchase Agreements~~34

~~In conjunction with the issuance of the 4.25% Convertible Notes as described in Note 8 — “Long-Term Debt” under~~~~Convertible Senior Notes~~~~, the Company used $20,345 of the net proceeds to repurchase and retire an aggregate of 413,600 shares of its common stock at a price of $49.19 per share from institutional investors.~~

~~Prepaid Share Repurchase Forward Contracts~~

The Company has two outstanding prepaid share repurchase forward contracts, one of which was entered into with Deutsche Bank AG, London Branch in conjunction with the issuance of the 3.875% Convertible Notes. The other was entered into with Societe Generale in conjunction with the issuance of the 4.25% Convertible Notes as described in Note 8 — “Long-Term Debt” under~~Convertible Senior Notes~~. Both Deutsche Bank AG, London Branch and Societe Generale are considered forward counterparties. Under these forward contracts, the Company made initial upfront payments in exchange for the future deliveries of the Company’s common stock from the forward counterparties. Pursuant to the forward contract entered into in December 2013 with Deutsche Bank AG, London Branch, the Company prepaid $29,923 to repurchase 622,751 shares of the Company’s

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

Warrants

In connection with the redemption of the TTIG Series A Preferred Stock held by Centerbridge in January 2024, HCI, for the benefit of TTIG, extended the expiration dates of 450,000 of the underlying warrant shares, which will now expire in 150,000 share increments on December 31, 2026, December 31, 2027, and December 31, 2028. The remaining 300,000 share warrants retained their original expiration date of February 26, 2025 and were exercised on March 11, 2024 through a cashless transaction. The warrant modifications resulted in a $3,386 increase in the fair value of the warrants, which is recorded as a deemed dividend by decreasing retained income and increasing additional paid-in capital. The amount of deemed dividend is included in net income attributable to redeemable noncontrolling interest which is subtracted from net income when calculating net income available to common stockholders.

At March 31, 2024, there were warrants outstanding and exercisable, held by Centerbridge, to purchase 450,000 shares of HCI common stock at an exercise price of $54.40.

Noncontrolling Interests

TTIG

During the three months ended March 31, 2024 and 2023, TTIG repurchased and retired a total of 22,787 and 34,108 shares, respectively, of its common stock surrendered by its employees to satisfy payroll tax liabilities associated with the vesting of restricted shares. The total cost of purchasing noncontrolling interests during the three months ended March 31, 2024 and 2023 was $33 and $198, respectively.

At March 31, 2024, there were 80,329,238 shares of TTIG’s common stock outstanding, of which 5,329,238shares ~~will be delivered over a settlement period~~were not owned by HCI.

CORE

As described in ~~2019. Pursuant to the forward contract entered into in March 2017 with Societe Generale,~~Note 13 -- “Variable Interest Entity,” the Company ~~prepaid $9,400 of the net proceeds of the offering~~has no equity interest at risk in CORE and CORE receives surplus contributions from its subscribers in addition to ~~repurchase 191,100 shares of the Company’s common stock, which shares will be delivered over a settlement period in 2022.~~

~~Each forward contract~~policy premiums. The surplus contribution is ~~subject~~payable to ~~early settlement, in whole~~CORE on or ~~in part, at any time~~ prior to the ~~final settlement~~initial effective date atof coverage and on or prior to the ~~option~~effective date of ~~each forward counterparty, as well as early settlement or settlement with alternative consideration~~all endorsements generating an additional premium. The surplus contribution made during a policy term may be returned on a pro-rata basis to a subscriber in the event of ~~certain corporate transactions. In~~policy cancellation. CORE, organized in November 2023, did not write any policies during the event the Company pays any cash dividends on its common shares, each forward counterparty will pay an equivalent amount to the Company. The shares to be purchased under the forward contracts will be treated as retired for financial statement purposes asfirst quarter of ~~the effective date of each forward contract, but will remain outstanding for corporate law purposes, including for purposes of any future stockholders votes.~~2024.

The Company determined that each forward contract does not meet the characteristics of a derivative instrument and, as such, the transaction resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for both basic and diluted earnings per share.

Note ~~15 —~~20 -- Stock-Based Compensation

2012 Omnibus Incentive ~~Plans~~Plan

The Company currently has outstanding stock-based awards granted under the ~~2007 Stock Option and Incentive~~ Plan ~~and the 2012 Omnibus Incentive Plan. Only the 2012 Plan~~which is currently active and available for future grants. OnAt March 17, 2017, the Company’s board of directors amended the 2012 Omnibus Incentive Plan and reduced the number of shares reserved under the plan from 5,000,000 shares to 3,000,000 shares. At September 30, 2017,31, 2024, there were ~~1,995,107~~962,406 shares available for grant.

Stock Options

Stock options granted and outstanding under the incentive ~~plans~~plan generally vest over ~~periods ranging from immediately vested to five~~a period of four years, except for those with market conditions, and are exercisable over the contractual term of ten ~~years.~~years.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

A summary of the stock option activity for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 is as follows (option amounts not in thousands):

   Number of
Options    Weighted
Average
Exercise
Price    Weighted
Average
Remaining
Contractual
Term    Aggregate
Intrinsic
Value
Outstanding at January 1, 2017
   50,000    $ 4.02    2.3 years    $ 1,773
Granted
�� 110,000    $ 40.00



Outstanding at March 31, 2017
   160,000    $ 28.76    7.4 years    $ 2,591
Exercised
   (30,000 )    $ 2.50



Outstanding at June 30, 2017
   130,000    $ 34.82    8.7 years    $ 1,675



Outstanding at September 30, 2017
   130,000    $ 34.82    8.5 years    $ 639



Exercisable at September 30, 2017
   20,000    $ 6.30    3.9 years    $ 639



Outstanding at January 1, 2016
   110,000    $ 3.19    2.3 years    $ 3,482
Outstanding at March 31, 2016
   110,000    $ 3.19    2.1 years    $ 3,312



Outstanding at June 30, 2016
   110,000    $ 3.19    1.8 years    $ 2,650



Outstanding at September 30, 2016
   110,000    $ 3.19    1.6 years    $ 2,989



Exercisable at September 30, 2016
   110,000    $ 3.19    1.6 years    $ 2,989


					Weighted
			Weighted		Average
			Average		Remaining	Aggregate
	Number of		Exercise		Contractual	Intrinsic
	Options		Price		Term	Value
Outstanding at January 1, 2024		590,000	$	51.54	5.9 years	$	21,156
Outstanding at March 31, 2024		590,000	$	51.54	5.6 years	$	38,077
Exercisable at March 31, 2024		590,000	$	51.54	5.6 years	$	38,077

Outstanding at January 1, 2023		440,000	$	45.25	5.6 years	$	—
Outstanding at March 31, 2023		440,000	$	45.25	5.3 years	$	3,146
Exercisable at March 31, 2023		412,500	$	45.07	5.2 years	$	3,031

~~The aggregate intrinsic value and realized tax benefits of the options exercised during the nine months ended September 30, 2017 were $1,319 and $509.~~

There were no options exercised during the three ~~and nine~~ months ended ~~September 30, 2016.~~March 31, 2024 and 2023. For the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, the Company recognized ~~$79~~$14 and ~~$0, respectively, of compensation expense. For the nine months ended September 30, 2017 and 2016, the Company recognized $228 and $0,~~$90, respectively, of compensation expense related to stock options which ~~was~~is included in ~~other operating~~general and administrative personnel expenses. ~~Deferred~~There were no deferred tax benefits related to stock options ~~were $30 and $0~~recognized for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016, respectively, and $88 and $0 for the nine months ended September 30, 2017 and 2016, respectively.~~2023. At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, there was ~~$1,020~~$0 and ~~$0,~~$14, respectively, of unrecognized compensation expense related to nonvested stock options. ~~The Company expects to recognize the remaining compensation expense over a weighted-average period of 3.3 years.~~

~~The following table provides assumptions used in the Black-Scholes option-pricing model to estimate the fair value of the stock options granted during the nine months ended September 30, 2017:~~


~~Expected dividend yield~~	~~3.53~~	%
~~Expected volatility~~	~~42.86~~	%
~~Risk-free interest rate~~	~~1.92~~	%
~~Expected life (in years)~~	5

Restricted Stock Awards

From time to time, the Company has granted and may grant restricted stock awards to ~~its~~certain executive officers, other employees, and ~~nonemployee~~non-employee directors in connection with their service to the Company. The terms of the Company’s outstanding restricted stock grants may include service,

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

performance, and market-based conditions. The determination of fair value with respect to the awards containing only service-based conditions is based on the market value of the Company’s common stock on the grant date. For awards with market-based conditions, the fair value is determined using a Monte Carlo simulation method, which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome. ~~The determination of fair value with respect to the awards concerning only performance or service-based conditions is based on the market value of the Company’s common stock on the grant date.~~

Information with respect to the activity of unvested restricted stock awards during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 is as follows:


	Number of Restricted Stock Awards			Weighted Average Grant Date Fair Value		Number of			Weighted
Nonvested at January 1, 2017		542,503		$	30.81
						Restricted			Average
						Stock			Grant Date
						Awards			Fair Value
Nonvested at January 1, 2024							271,417		$	37.12
Vested							(29,690	)	$	56.05
Forfeited							(200	)	$	51.87
Nonvested at March 31, 2024							241,527		$	34.78

Nonvested at January 1, 2023							342,459		$	39.86
Granted		45,000		$	40.15		6,000		$	51.76
Vested		(20,109	)	$	48.42		(40,352	)	$	54.83
Forfeited		(926	)	$	35.52		(2,125	)	$	40.33

Nonvested at March 31, 2017		566,468		$	30.92

Granted		109,936		$	44.05
Vested		(45,874	)	$	34.51
Forfeited		(9,948	)	$	40.90

Nonvested at June 30, 2017		620,582		$	32.82

Forfeited		(12,344	)	$	32.34

Nonvested at September 30, 2017		608,238		$	32.83

Nonvested at January 1, 2016		620,513		$	30.33
Vested		(20,917	)	$	48.42
Cancelled		(160,000	)	$	26.27
Forfeited		(750	)	$	45.25

Nonvested at March 31, 2016		438,846		$	30.93

Granted		102,440		$	32.21
Vested		(24,235	)	$	37.34
Forfeited		(5,147	)	$	42.20

Nonvested at June 30, 2016		511,904		$	30.77

Vested		(2,000	)	$	37.68
Forfeited		(5,890	)	$	36.67

Nonvested at September 30, 2016		504,014		$	30.67

Nonvested at March 31, 2023							305,982		$	38.11

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

The Company recognized compensation expense related to restricted stock, which is included in ~~other operating~~general and administrative personnel expenses, of ~~$1,144~~$867 and ~~$1,124~~$1,187 for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016, respectively, and $3,134 and $3,072 for the nine months ended September 30, 2017 and 2016,~~2023, respectively. At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, there was approximately ~~$10,208~~$3,165 and ~~$7,531,~~$4,043, respectively, of total unrecognized compensation expense related to nonvested restricted stock arrangements. The Company expects to recognize the remaining compensation expense over a weighted-average period of ~~35 months.~~ 1.4 years. The following table summarizes information about deferred tax benefits recognized and tax benefits realized related to restricted stock awards and paid dividends, and the fair value of vested restricted stock for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016.~~2023.


	Three Months Ended
	March 31,
	2024		2023
Deferred tax benefits recognized	$	99	$	263
Tax benefits realized for restricted stock and paid dividends	$	511	$	299
Fair value of vested restricted stock	$	1,664	$	2,213

Subsidiary Equity Plan

42For the three months ended March 31, 2024 and 2023, TypTap Group recognized compensation expense related to its stock-based awards of $701 and $829, respectively. At March 31, 2024 and December 31, 2023, there was $3,696 and $4,438, respectively, of unrecognized compensation expense related to nonvested restricted stock and stock options.

Note 21 -- Commitments and Contingencies

Obligations under One Multi-Year Reinsurance Contract

As of March 31, 2024, the Company has a contractual obligation related to one multi-year reinsurance contract entered into effective June 1, 2022. The contract may be cancelled only with the other party’s consent or when its experience account is positive at the end of each contract year. The future minimum aggregate premium amount payable to the reinsurer is $91,350 due in June 2024.

Capital Commitments

As described in Note 4 -- “Investments” under Limited Partnership Investments, the Company is contractually committed to capital contributions for limited partnership interests. At March 31, 2024, there was an aggregate unfunded balance of $3,806.

FIGA Assessments

The Company’s insurance subsidiaries, as member insurers, are required to collect and remit the pass-through assessments to FIGA on a quarterly basis. As of March 31, 2024, the FIGA assessments payable by the Company were $1,651.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(~~Amounts~~Dollar amounts in thousands, except share and per share amounts, unless otherwise stated)

   Three Months Ended
September 30,    Nine Months Ended
September 30,
   2017    2016    2017    2016
Deferred tax benefits recognized
   $ 403    $ 434    $ 1,097    $ 1,185
Tax benefits realized for restricted stock and paid dividends
   $ 49    $ 45    $ 1,232    $ 176
Fair value of vested restricted stock
   $ —      $ 75    $ 2,557    $ 1,993

Note ~~16 — Commitments and Contingencies~~22 -- Subsequent Events

~~Obligations under Multi-Year Reinsurance Contracts~~

~~As of September 30, 2017,~~On April 1, 2024, the Company ~~has contractual obligations related~~repaid $2,000 to ~~three multi-year reinsurance contracts. Two~~the line of ~~these contracts have effective~~credit, reducing the outstanding balance under the revolving credit facility to $48,000.

On April 17, 2024, the Company awarded Paresh Patel, its Chief Executive Officer, 200,000 restricted shares of common stock. The shares will vest equally over a period of four years, with vesting dates of ~~June 1, 2016~~March 15, 2025, 2026, 2027, and 2028, under the ~~other has an effective date~~condition that the price per share reaches $200 for a period of ~~July 1, 2017. These contracts may be cancelled only with the other party’s consent. The table below presents the future minimum aggregate~~30 consecutive trading days.

On April 23, 2024, CORE assumed 148 policies from Citizens, representing approximately $15,700 in annualized premiums ~~amount payable to the reinsurers.~~written.

Due in 12 months following September 30,

2017*
   $ 21,971
2018*
   2,571
2019*
   1,929


Total
   $ 26,471

*	~~Premiums payable after December 31, 2017 under one contract are estimated. See Note 9 — “Reinsurance” for additional information.~~

~~Capital Commitment~~

~~As described in Note 4 — “Investments” under~~~~Limited Partnership Investments~~~~, the Company is contractually committed to capital contributions for four limited partnership interests. At September 30, 2017, there was an aggregate unfunded balance of $15,931.~~

~~Note 17 — Related Party Transactions~~

~~Claddaugh Casualty Insurance Company, Ltd.~~On April 24, 2024, the Company’s ~~Bermuda domiciled reinsurance subsidiary, has~~Board of Directors declared a ~~reinsurance agreement with Oxbridge Reinsurance Limited whereby a portion~~quarterly dividend of ~~the business assumed from the Company’s insurance subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., is ceded by Claddaugh~~$0.40 per common share. The dividends are payable on June 21, 2024 to ~~Oxbridge. With respect to the period from June 1, 2016 through~~ stockholders of record on May 31, 2017, Oxbridge assumed $6,000 of the total covered exposure for approximately $3,400 in premiums. With respect to the period from June 1, 2017 through May 31, 2018, Oxbridge assumed $7,400 of the total covered exposure for approximately $3,400 in premiums. See Note 9 — Reinsurance – which includes the amounts due from and paid by Oxbridge during the nine months ended September 30, 2017 and 2016 with respect to benefits accrued in connection with the Oxbridge agreements. The premiums charged by Oxbridge are at rates which management believes to be competitive with market rates available to Claddaugh. Oxbridge has deposited funds into a trust account to satisfy certain collateral requirements under its reinsurance contract with Claddaugh. Trust assets may be withdrawn by Claddaugh, the trust beneficiary, in the

~~HCI GROUP, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(Amounts in thousands, except share and per share amounts, unless otherwise stated)~~

event amounts are due under the Oxbridge reinsurance agreements. Among the Oxbridge shareholders are Paresh Patel, the Company’s chief executive officer, who is also chairman of the board of directors for Oxbridge, and members of his immediate family and three of the Company’s~~non-employee~~ ~~directors including Sanjay Madhu who serves as Oxbridge’s president and chief executive officer.~~

~~Note 18 — Subsequent Event~~

~~On October~~ 17, ~~2017, the Company, through a wholly owned subsidiary, acquired commercial real estate in Tampa, Florida for a purchase price of $9,100. The acquired assets primarily consisted of land, building andin-place~~ ~~lease agreements. The Company incurred approximately $115 of acquisition-related costs and accounted for this transaction as an asset acquisition in accordance with ASU2017-01~~ ~~which the Company early adopted in the fourth quarter of 2017. As a result, all transaction-related costs were allocated among the assets acquired.~~2024.

ITEM 2 –MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion under this Item 2 in conjunction with our consolidated financial statements and related notes and information included elsewhere in this quarterly report on Form10-Q and in our Form10-K filed with the Securities and Exchange Commission (“SEC”) on ~~February 22, 2017.~~March 8, 2024. Unless the context requires otherwise, as used in this Form10-Q, the terms “HCI,” “we,” “us,” “our,” “the Company,” “our company,” and similar references refer to HCI Group, Inc., a Florida corporation incorporated in 2006, and its subsidiaries. All dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are in whole dollars unless specified otherwise.

Forward-Looking Statements

In addition to historical information, this quarterly report contains forward-looking statements as defined under federal securities laws. Such statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. Typically, forward-looking statements can be identified by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions. The important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include but are not limited to the effects of governmental regulation; changes in insurance regulations; the frequency and extent of claims; uncertainties inherent in reserve estimates; catastrophic events; changes in the demand for, pricing of, availability of or collectability of reinsurance; restrictions on our ability to change premium rates; increased rate pressure on premiums; the severity and impact of a pandemic; and other risks and uncertainties detailed herein and from time to time in our SEC reports.

OVERVIEW –General

HCI Group, Inc. is a Florida-based insurance company ~~that, through its subsidiaries, is engaged~~with operations in ~~a variety of business activities, including~~ property and casualty insurance, ~~reinsurance,~~information technology services, insurance management, real estate and ~~information technology. Based~~reinsurance. We utilize innovative technology to promote efficiency, refine risk assessment and enhance experiences for clients throughout the insurance process. We manage our operations in the following organizational segments, based on ~~our organizational structure, revenue sources,~~managerial emphasis and evaluation of financial and operating ~~performances by management, we manage four operating divisions, which includes the following operations:~~performances:

HCPCI Insurance Operations

▪

Property and casualty insurance

▪

Reinsurance and other auxiliary operations

TypTap Group

▪

Property and casualty insurance

▪

Information technology

Reciprocal Exchange Operations

Real Estate Operations

Other Operations

▪

Holding company operations

~~Insurance Operations~~

•

~~Property and casualty insurance~~

•

~~Reinsurance~~

~~Other Operations~~

•

~~Real estate~~

•

~~Information technology~~

For the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, revenues from HCPCI insurance operations before intracompany elimination represented ~~96.1%~~63.7% and ~~94.8%~~61.2%, respectively, and revenues from TypTap Group represented 33.8% and 36.5%, respectively, of total revenues of all operating segments. ~~For the nine months ended September 30, 2017 and 2016, revenues from insurance operations before intracompany elimination represented 96.4% of total~~

~~revenues of all operating segments in each of the periods.~~ At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, HCPCI insurance operations’ total assets represented ~~90.7%~~53.1% and ~~89.8%~~55.3%, respectively, and TypTap Group’s total assets represented 34.9% and 33.6%, respectively, of the combined assets of all operating segments. ~~There was no other operating division representing ten percent or more of our total revenues or combined assets.~~ See Note ~~11 —~~14 -- “Segment Information” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form10-Q for additional information.

HCPCI Insurance Operations

Property and Casualty Insurance

~~Homeowners Choice Property & Casualty Insurance Company, Inc.~~

~~Our principal operating subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”), is a leading provider~~HCPCI provides various forms of ~~property and casualty~~residential insurance ~~in the state of Florida. HCPCI along with certain of our other subsidiaries currently provides property and casualty~~products such as homeowners insurance, ~~to homeowners, condominium owners, and tenants in the state of Florida. HCPCI offers flood-endorsed~~fire insurance, and wind-only ~~policies to eligible new andpre-existing~~ ~~Florida customers. In addition,~~insurance. HCPCI was approved by the Florida Office of Insurance Regulation to write standalone flood insurance policies for Florida homeowners. HCPCI strives to offer insurance products at competitive rates, while pursuing profitability using selective underwriting criteria.

~~HCPCI began operations in 2007 by participating in a“take-out~~ ~~program,” which~~ is a legislatively mandated program designed to encourage private insurance companies to assume policies from Citizens Property Insurance Corporation, a Florida state-supported insurer. Our growth since inception has resulted primarily from a series of policy assumptions. This growth track has been beneficial to us although there are fewer policies available for assumption today as a result of increased competition in the Florida market. Thus, we plan to seek other opportunities to expand by providing new or additional product offerings in and outside the state of Florida. During 2017, HCPCI received regulatory approvalauthorized to write residential property and casualty insurance in the states of Arkansas, California, Connecticut, Florida, Maryland, Massachusetts, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina and Texas. ~~HCPCI expects to begin writing flood policies in those states during 2018.~~Currently, Florida is HCPCI’s primary market.

~~TypTap Insurance Company~~Reinsurance and other auxiliary operations

TypTap Insurance Company was organized by HCI Group, Inc. and approved by the Florida Office of Insurance Regulation in January 2016 to transact insurance business in the state of Florida. TypTap began writing standalone flood coverage to Florida homeowners in March 2016.

~~We expect the flood insurance products offered by TypTap and HCPCI to become significant contributors to future financial results.~~

~~Reinsurance~~

We have a Bermuda domiciled wholly-owned reinsurance subsidiary, Claddaugh Casualty Insurance Company ~~Ltd.~~Ltd (“Claddaugh”). We selectively retain risk in Claddaugh, ~~displacing~~reducing the ~~need for HCPCI to pay premiums to third party reinsurers.~~cost of third-party reinsurance. Claddaugh fully collateralizes its exposure to ~~HCPCI~~affiliates by depositing funds into a trust account. Claddaugh ~~also from time to time mitigates~~may mitigate a portion of its risk through retrocession ~~contracts.~~

contracts, however Claddaugh did not enter into any retrocession contracts for the 2023-2024 treaty year. Currently, Claddaugh does not provide reinsurance to non-affiliates. Other auxiliary operations also include claim adjusting and processing services.

TypTap Group

46TypTap Insurance Group, Inc. (“TTIG”), our majority-owned subsidiary, currently has four subsidiaries: TypTap Insurance Company (“TypTap”), TypTap Management Company, Exzeo USA, Inc., and Cypress Tech Development Company which also owns Exzeo Software Private Limited, a subsidiary domiciled in India. TTIG is primarily engaged in the property and casualty insurance business and uses internally developed software technologies to drive efficiency in claim processing and claims settlements, identify profitable underwriting opportunities, generate savings and streamline operations across its insurance operations. In addition, software is also used to analyze potential and current properties based on statistical models for catastrophic events, allowing us to pursue the optimal candidates for insurance coverage.

~~Other Operations~~Property and Casualty Insurance

~~Real Estate~~

~~Our real estate operations consist of multiple properties we own and operate. Properties used in operations consist~~TypTap, TTIG’s insurance subsidiary, has been the primary source of our ~~Tampa headquarters building~~organic growth in gross written premium. TypTap’s policies in force have increased from 6,721 in January 2018 to 99,608 at March 31, 2024. TypTap has been successful in using internally developed proprietary technology to underwrite, select and write policies efficiently. Since TypTap began applying for approval to offer homeowners coverage in states outside of Florida in October 2020, TypTap has received approvals from 31 states.

Information Technology

Our information technology operations include a ~~secondary insurance~~team of experienced software developers with extensive knowledge in designing and creating web-based applications. The operations, ~~site in Ocala, Florida. Properties held as investments include two retail shopping centers and a combined 24 acres of waterfront property where two marinas and one restaurant~~which are ~~located.~~

In July 2017, we completed one real estate development and construction project described as a joint venture arrangement under U.S. GAAP, which we consolidate with our operations. In October 2017, we added commercial real estatelocated in Tampa, Florida and Noida, India, are focused on developing cloud-based, innovative products and services that support in-house

operations as well as our third-party relationships with our agency partners and claim vendors. These products include SAMSTM, HarmonyTM, AtlasViewer® and ClaimColonyTM.

Reciprocal Exchange Operations

This segment encompasses the reciprocal exchange operations under our management. Condo Owners Reciprocal Exchange (“CORE”), organized in November 2023 to ~~our portfolio~~offer commercial residential multiple peril and wind insurance products, is owned by its policyholders, referred to as subscribers, who gain ownership by buying an insurance policy. The subscribers then assume one another’s risks by exchanging insurance contracts, so they are both the insurers and the insureds. The daily operations of ~~real estate investments.~~CORE are directly or indirectly conducted by Core Risk Managers, LLC (“CRM”), an AIF company. Such daily operations include general administration, marketing, underwriting, accounting, policy administration, claim adjusting, and information technology. CRM is permitted to outsource any of these services to other HCI subsidiaries. See Note ~~4 — “Investments” and Note 18 — “Subsequent Event”~~13 -- “Variable Interest Entity” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form10-Q for additional information.

~~Information Technology~~Real Estate Operations

Our ~~information technology~~real estate operations consist of multiple properties we own and operate for investment purposes and also properties we own and use for our own operations. Properties used in operations consist of two Tampa office buildings and an insurance operations site in Ocala, Florida. Our investment properties include ~~a team of experienced software developers with extensive knowledge in developingweb-based~~ ~~products~~retail shopping centers, two marinas, and ~~applications for mobile devices. The operations, which are~~undeveloped land in Tampa ~~Florida~~ and ~~Noida, India, are focused on developing cloud-based, innovative products or services~~Haines City.

Other Operations

Holding company operations

Activities of our holding company, HCI Group, Inc., plus other companies that ~~supportin-house~~do not meet the quantitative and qualitative thresholds for a reportable segment comprise the operations ~~as well as our third party relationships with our agency partners and claim vendors. These products include~~~~Proplet~~^TM~~, TypTap~~^TM,~~SAMS~~^TM,~~Exzeo~~^®,~~Atlas Viewer~~^TM~~, and~~ ~~CasaClue~~^TM.of this segment.

Recent Events

On ~~October~~April 1, 2024, we repaid $2,000,000 to the line of credit, reducing the amount outstanding under the revolving credit facility to $48,000,000.

On April 17, ~~2017,~~2024, we ~~acquired commercial real estate~~awarded Paresh Patel, our Chief Executive Officer, 200,000 restricted shares of common stock. The shares will vest equally over a period of four years, with vesting dates of March 15, 2025, 2026, 2027, and 2028, under the condition that the price per share reaches $200 for a period of 30 consecutive trading days.

On April 23, 2024, CORE assumed 148 policies from Citizens, representing approximately $15,700,000 in ~~Tampa, Florida for $9,215,000, including acquisition-related costs. The acquired assets primarily consisted of land, building andin-place~~ ~~lease agreements.~~annualized premiums written.

On ~~October 19, 2017,~~April 24, 2024, our Board of Directors declared a quarterly dividend of ~~$0.35~~$0.40 per common share. The dividends are payable on ~~December 15, 2017~~June 21, 2024 to stockholders of record on ~~November~~May 17, ~~2017.~~

2024.

4741

RESULTS OF OPERATIONS

The following table summarizes our results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 (dollar amounts in thousands, except per share amounts):


													Three Months Ended
	Three Months Ended September 30,						Nine Months Ended September 30,						March 31,
	2017			2016			2017			2016			2024			2023
Revenue
Gross premiums earned	$	88,669		$	92,542		$	270,376		$	286,273		$	256,644		$	180,068
Premiums ceded		(44,705	)		(29,242	)		(101,529	)		(105,998	)		(68,106	)		(70,509	)

Net premiums earned		43,964			63,300			168,847			180,275			188,538			109,559
Net investment income		2,878			2,785			8,522			6,000			14,067			17,715
Net realized and unrealized investment (losses) gains		(152	)		583			2,350			899
Net other-than-temporary impairment losses recognized in income:
Total other-than-temporary impairment losses		(474	)		(575	)		(864	)		(1,211	)
Portion of loss recognized in other comprehensive income, before taxes		—			351			—			(230	)

Net other-than-temporary impairment losses		(474	)		(224	)		(864	)		(1,441	)
Net realized investment losses														—			(1,149	)
Net unrealized investment gains														2,635			529
Policy fee income		905			972			2,721			2,967			1,019			1,090
Gain on repurchases of convertible senior notes		—			—			—			153
Gain on bargain purchase		—			2,071			—			2,071
Other income		369			321			1,207			1,151			355			1,285

Total revenue		47,490			69,808			182,783			192,075			206,614			129,029

Expenses
Losses and loss adjustment expenses		89,231			25,909			142,425			79,261			79,922			60,565
Policy acquisition and other underwriting expenses		9,926			10,536			29,645			32,525			22,139			22,720
Salaries and wages		4,605			5,945			15,051			17,009
General and administrative personnel expenses														16,274			13,502
Interest expense		4,408			2,672			12,328			8,112			3,149			2,801
Loss on repurchases of senior notes		—			—			743			—
Other operating expenses		5,338			4,717			15,162			14,213			7,700			6,305

Total operating expenses		113,508			49,779			215,354			151,120

(Loss) income before income taxes		(66,018	)		20,029			(32,571	)		40,955
Income tax (benefit) expense		(25,472	)		8,696			(13,587	)		16,542

Net (loss) income	$	(40,546	)	$	11,333		$	(18,984	)	$	24,413

Total expenses														129,184			105,893
Income before income taxes														77,430			23,136
Income tax expense														20,474			5,343
Net income														56,956			17,793
Net income attributable to noncontrolling interests														(9,345	)		(2,455	)
Net income after noncontrolling interests													$	47,611		$	15,338
Ratios to Net Premiums Earned:
Loss Ratio		202.96	%		40.93	%		84.35	%		43.97	%		42.39	%		55.28	%
Expense Ratio		55.22	%		37.71	%		43.19	%		39.86	%

Combined Ratio		258.18	%		78.64	%		127.54	%		83.83	%

Expense Ratio (excluding interest expense)														24.46	%		38.82	%
Combined Ratio (excluding interest expense)														66.85	%		94.10	%
Ratios to Gross Premiums Earned:
Loss Ratio		100.63	%		28.00	%		52.68	%		27.69	%		31.14	%		33.63	%
Expense Ratio		27.38	%		25.79	%		26.97	%		25.10	%

Combined Ratio		128.01	%		53.79	%		79.65	%		52.79	%

(Loss) Earnings Per Share Data:
Expense Ratio (excluding interest expense)														17.97	%		23.62	%
Combined Ratio (excluding interest expense)														49.11	%		57.25	%
Earnings Per Share Data:
Basic	$	(4.44	)	$	1.17		$	(2.05	)	$	2.48		$	4.76		$	1.78

Diluted	$	(4.44	)	$	1.10		$	(2.05	)	$	2.41		$	3.81		$	1.54

Comparison of the Three Months ~~ended September 30, 2017 with~~Ended March 31, 2024 to the Three Months ~~ended September 30, 2016~~Ended March 31, 2023

Our results of operations for the three months ended ~~September 30, 2017 reflected~~March 31, 2024 reflect net ~~losses allocable to common stockholders~~income of approximately ~~$40,546,000,~~$56,956,000 or ~~$4.44 loss~~$3.81 diluted earnings per share, compared with ~~net income of~~ approximately ~~$11,333,000,~~$17,793,000 or ~~$1.10~~$1.54 diluted earnings per ~~diluted~~ share, for the three months ended ~~September 30, 2016.~~March 31, 2023. The quarter-over-quarter ~~decrease~~increase was primarily due to an $78,979,000 increase in net premiums earned, offset by a ~~$63,322,000~~$19,357,000 increase in losses and loss adjustment expenses, ~~which included $54,000,000 of estimated net losses from Hurricane Irma,~~a $15,131,000 increase in income tax expense, and a ~~$15,463,000~~$2,772,000 increase in ~~ceded premiums, which included $12,464,000 of adjustments to ceded premiums related to retrospective provisions. The losses in the quarter were offset by $25,472,000 of income tax benefits.~~general and administrative personnel expenses.

Revenue

Gross Premiums Earned on a consolidated basis for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 were approximately ~~$88,669,000~~$256,644,000 and ~~$92,542,000,~~$180,068,000, respectively. The ~~decrease in 2017~~$76,576,000 increase was primarily

attributable to ~~policy attrition as well as a~~the policies assumed from Citizens and the effect of premium rate ~~decrease effective on new and renewal~~increases. Gross premiums earned from the policies ~~beginning in January 2016.~~

~~Premiums Ceded~~assumed were $66,969,000 for the three months ended ~~September 30, 2017~~March 31, 2024 compared with $7,163,000 for the three months ended March 31, 2023. HCPCI gross premiums earned were $149,271,000 for the three months ended March 31, 2024 compared with $92,456,000 for the three months ended March 31, 2023. TypTap gross premiums earned for the three months ended March 31, 2024 were $103,748,000 compared with $87,612,000 for the three months ended March 31, 2023. CORE gross premiums earned were $3,625,000 for the three months ended March 31, 2024.

Premiums Ceded for the three months ended March 31, 2024 and ~~2016~~2023 were approximately ~~$44,705,000~~$68,106,000 and ~~$29,242,000,~~$70,509,000, respectively, representing ~~50.4%~~26.5% and ~~31.6%~~39.2%, respectively, of gross premiums earned. The ~~$15,463,000 increase~~$2,403,000 decrease was primarily attributable to the ~~adjustment~~expiration and discontinuation of flood reinsurance in the ~~previously accrued benefits and deferred reinsurance premiums related to retrospective provisions under certain reinsurance contracts due to increased losses caused by Hurricane Irma.~~second quarter of 2023.

Our premiums ceded represent ~~amounts paid to reinsurers~~costs of reinsurance to cover losses from catastrophes that exceed the retention levels defined by our catastrophe excess of loss reinsurance ~~treaties~~contracts or to assume a proportional share of losses as defined byin a quota share arrangement. For the three months ended September 30, 2017, premiums ceded included a net increase of approximately $12,465,000 related to the adjustment under the provisions of certain reinsurance contracts. For the three months ended September 30, 2016, premiums ceded reflected a net reduction of approximately $3,428,000 attributable to these reinsurance contract provisions. See “Economic Impact of Reinsurance Contracts with Retrospective Provisions” under “Critical Accounting Policies and Estimates.”agreement. The rates we pay for reinsurance are based primarily on policy exposures reflected in gross premiums earned.

~~Net Premiums Written~~ ~~during~~ Reinsurance costs can be decreased by a reduction in premiums ceded attributable to retrospective provisions under multi-year reinsurance contracts. For the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023, premiums ceded included a decrease of $6,993,000 related to retrospective provisions in each of the respective periods. See “Economic Impact of Reinsurance Contract with Retrospective Provisions” under “Critical Accounting Policies and Estimates.”

Net Premiums Written for the three months ended March 31, 2024 and 2023 totaled approximately ~~$50,168,000~~$186,880,000 and ~~$64,022,000,~~$129,345,000, respectively. Net premiums written represent the premiums charged on policies issued during a fiscal period less any applicable reinsurance costs. The ~~$13,854,000 decrease~~increase in ~~2017~~2024 primarily resulted from the ~~increase~~policies assumed from Citizens and the decrease in premiums ceded ~~during the period~~to reinsurers as described above. We had approximately ~~141,000~~250,500 policies in force at ~~September 30, 2017~~March 31, 2024 (direct and assumed) as compared with approximately ~~145,000~~216,300 policies in force at ~~September 30, 2016.~~March 31, 2023.

Net Premiums Earned for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 were approximately ~~$43,964,000~~$188,538,000 and ~~$63,300,000,~~$109,559,000, respectively, and reflect the gross premiums earned less reinsurance costs as described above.

The following is a reconciliation of our total Net Premiums Written to Net Premiums Earned for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016 (amounts~~2023 (dollar amounts in thousands):


	Three Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2024		2023
Net Premiums Written	$	50,168		$	64,022		$	186,880	$	129,345
Increase in Unearned Premiums		(6,204	)		(722	)

Decrease (Increase) in Unearned Premiums								1,658		(19,786	)
Net Premiums Earned	$	43,964		$	63,300		$	188,538	$	109,559

Net ~~Other-Than-Temporary Impairment Losses~~Investment Income for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016 were~~2023 was approximately ~~$474,000~~$14,067,000 and ~~$224,000,~~$17,715,000, respectively. During the third quarter of 2017, we recognized impairment losses specific to four equity securities. These equity securities were impaired because each security had been in an unrealized loss position for a length of time with no near-term prospect of recovery. During the quarter ended September 30, 2016, we recognized impairment losses specific to one fixed-maturity security and four equity securities.

~~Expenses~~

~~Our~~~~Losses and Loss Adjustment Expenses~~~~amounted to approximately $89,231,000 and $25,909,000~~Net investment income for the three months ended ~~September 30, 2017~~March 31, 2023 included a net realized gain of $8,936,000 from the sale of two real estate investment properties. Excluding the real estate gain in the prior year quarter, net investment income increased to $14,067,000 from $8,779,000. The increase was primarily attributable to higher balances of fixed-maturity securities and ~~2016,~~cash combined with higher yields. See Net Investment Income under Note 4 -- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Net Realized Investment Losses for the three months ended March 31, 2024 were $0 compared with approximately $1,149,000 of net realized losses for the three months ended March 31, 2023, which included net realized losses of approximately $1,153,000 from sales of fixed-maturity and equity securities.

Net Unrealized Investment Gains for the three months ended March 31, 2024 and 2023 were $2,635,000 and $529,000, respectively. ~~During~~The increase was primarily attributable to an overall improvement in the ~~third quarter of 2017, our~~equity market.

Expenses

Our consolidated Losses and Loss Adjustment Expenses amounted to approximately $79,922,000 and $60,565,000 for the three months ended March 31, 2024 and 2023, respectively. The losses and loss adjustment expenses ~~included $54,000,000~~ of ~~net estimated losses related~~HCPCI Insurance Operations were $39,014,000 and $28,782,000 for the three months ended March 31, 2024 and 2023, respectively. The increase was primarily attributable to ~~Hurricane Irma and approximately $2,500,000~~Citizens policies assumed in the fourth quarter of additional losses related to Hurricane Matthew. In addition, we continued to strengthen our loss reserves in response to trends involving assignment of insurance benefits and related litigation. Our 2016 losses2023. Losses and loss adjustment expenses ~~reflected initially estimated losses~~for TypTap were $40,553,000 compared with $33,056,000 for the same comparative period. The increase was primarily attributable to the policies assumed from ~~Hurricane Hermine of approximately $2,500,000.~~Citizens in December 2023 and January 2024. Losses and loss adjustment expenses for CORE were $1,268,000 for the three months ended March 31, 2024, resulting from the policies assumed from Citizens in February 2024. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

Policy Acquisition and Other Underwriting Expenses for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016 of~~2023 were approximately ~~$9,926,000~~$22,139,000 and ~~$10,536,000,~~$22,720,000 on a consolidated basis, respectively, and primarily reflect the amortization of deferred acquisition costs such as commissions payable to agents for production and renewal of policies and premium ~~taxes related to the policies that have renewed. The $610,000 decrease from the corresponding period in 2016 was primarily attributable to a decrease in commissions and premium taxes resulting from~~taxes. Amortized policy ~~attrition and the effect of the rate decrease.~~

~~Salaries and Wages~~acquisition expenses for HCPCI Insurance Operations were $10,136,000 for the three months ended ~~September 30, 2017~~March 31, 2024 compared with $9,621,000 for the three months ended March 31, 2023. The increase was primarily due to the effect of premium rate increases. TypTap's amortized policy acquisition expenses were $10,795,000 compared with $11,863,000 for the same comparative period. The decrease was driven by lower policy acquisition costs in Florida related to lower commission rates.

General and ~~2016~~Administrative Personnel Expenses for the three months ended March 31, 2024 and 2023 were approximately ~~$4,605,000~~$16,274,000 and ~~$5,945,000,~~$13,502,000, respectively. ~~The decrease from~~Our general and administrative personnel expenses include salaries, wages, payroll taxes, stock-based compensation expenses, and employee benefit costs. Factors such as merit increases, changes in headcount, and periodic restricted stock grants, among others, cause fluctuations in this expense. In addition, our personnel expenses are decreased by the ~~corresponding period in 2016 was primarily attributable to the~~ capitalization ~~of approximately $418,000~~ of payroll costs related to aprojects to develop software ~~development project~~ for internal use and ~~lower bonuses~~the payroll costs associated with the processing and settlement of certain catastrophe claims which are recoverable from reinsurers under reinsurance contracts. The period-over-period increase of $2,772,000 was primarily attributable to an increase in employee incentive bonus and merit increases for ~~senior management. As of September 30, 2017, we had approximately 250~~ employees ~~located at our offices~~effective in ~~Florida compared with 243 employees as of September 30, 2016. We also had 81 employees located~~late February 2024, offset by a decrease in ~~Noida, India at September 30, 2017 versus 80 at September 30, 2016.~~stock-based compensation expense.

Interest Expense for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 was approximately ~~$4,408,000~~$3,149,000 and ~~$2,672,000,~~$2,801,000, respectively. The increase ~~was~~ primarily ~~attributable~~resulted from interest expense related to ~~the net increase in long-term debt resulting from the issuance~~line of credit borrowing, offset by a lower interest expense for our 4.25% Convertible Senior ~~Notes in March 2017 and the redemption of 8% Senior Notes in April 2017.~~Notes.

Income Tax ~~Benefit~~Expense for the three months ended ~~September 30, 2017~~March 31, 2024 and 2023 was approximately ~~$25,472,000~~$20,474,000 and $5,343,000, respectively, for state, federal, and foreign income taxes resulting in aneffective tax rates of 26.4% and 23.1%, respectively. The increase in the effective tax rate ~~of 38.6%. This compared with approximately $8,696,000 of income tax expense for the three months ended September 30, 2016, resulting in an~~was primarily attributable to a lower prior year effective tax rate resulting from the release of ~~43.4%.~~

valuation allowance during 2023.

Ratios:

~~Ratios:~~

The loss ratio applicable to the three months ended ~~September 30, 2017~~March 31, 2024 (losses and loss adjustment expenses incurred related to net premiums earned) was ~~203.0%~~42.4% compared with ~~40.9%~~55.3% for the three months ended ~~September 30, 2016.~~March 31, 2023. The decrease was primarily attributable to the increase in ~~2017 was attributable to losses related to Hurricane Irma and decreased~~ net premiums ~~earned.~~earned, offset in part by the increase in losses and loss adjustment expenses as compared to the first quarter of 2023.

The expense ratio applicable to the three months ended ~~September 30, 2017~~March 31, 2024 (defined as ~~underwriting~~total expenses ~~salaries~~excluding losses and ~~wages,~~loss adjustment expenses and interest ~~and other operating expenses~~expense related to net premiums earned) was ~~55.2%~~24.5% compared with ~~37.7%~~38.8% for the three months ended ~~September 30, 2016.~~March 31, 2023. The decrease in our expense ratio was primarily attributable to the increase in net premiums earned, offset by the increase in general and administrative personnel expenses and the increase in other operating expenses.

The combined ratio (total of all expenses excluding interest expense in relation to net premiums earned) is the measure of overall underwriting profitability before other income. Our combined ratio for the three months ended ~~September 30, 2017~~March 31, 2024 was ~~258.2%~~66.9% compared with ~~78.6%~~94.1% for the three months ended ~~September 30, 2016.~~

Due to the impact our reinsurance costs have on net premiums earned from period to period, our management believes the combined ratio measured to gross premiums earned is more relevant in assessing overall performance. The combined ratio to gross premiums earned for the three months ended September 30, 2017 was 128.0% compared with 53.8% for the three months ended September 30, 2016. The increase was primarily attributable to the combined impact of decreased gross premiums earned, increased operating expenses and losses from Hurricane Irma.

~~Comparison of the Nine Months ended September 30, 2017 with the Nine Months ended September 30, 2016~~

Our results of operations for the nine months ended September 30, 2017 reflect net losses allocable to common stockholders of approximately $18,984,000, or $2.05 loss per share, compared with net income of approximately $24,413,000, or $2.41 earnings per diluted share, for the nine months ended September 30, 2016. The period-over-period decrease was primarily due to net estimated losses of approximately $54,000,000 resulting from Hurricane Irma.

~~Revenue~~

~~Gross Premiums Earned~~ ~~for the nine months ended September 30, 2017 and 2016 were approximately $270,376,000 and $286,273,000, respectively.~~March 31, 2023. The decrease in ~~2017 was attributable to policy attrition as well as a rate decrease effective on new and renewal policies beginning in January 2016.~~

~~Premiums Ceded~~ for the nine months ended September 30, 2017 and 2016 were approximately $101,529,000 and $105,998,000, respectively, representing 37.6% and 37.0%, respectively, of gross premiums earned. The percentage increase from the corresponding period in 2016 was primarily attributable to the adjustments related to the retrospective provisions under certain reinsurance contracts offset in part by lower reinsurance costs as described earlier. For the nine months ended September 30, 2017, premiums ceded included a net increase of approximately $5,509,000 related to these provisions. For the nine months ended September 30, 2016, premiums ceded reflected a net reduction of approximately $9,250,000. See “Economic Impact of Reinsurance Contracts with Retrospective Provisions” under “Critical Accounting Policies and Estimates.”

~~Net Premiums Written~~ for the nine months ended September 30, 2017 and 2016 totaled approximately $199,218,000 and $202,307,000, respectively. The decrease in 2017 resulted from a decrease of approximately $7,600,000 in gross premiums written combined with a decrease of approximately $4,500,000 in premiums ceded during the year.

~~Net Premiums Earned~~ ~~for the nine months ended September 30, 2017 and 2016 were approximately $168,847,000 and $180,275,000, respectively, and reflected gross premiums earned less reinsurance costs as described above.~~

~~The following is a reconciliation of our total Net Premiums Written to Net Premiums Earned for the nine months ended September 30, 2017 and 2016 (amounts in thousands):~~

   Nine Months Ended
   September 30,
   2017    2016
Net Premiums Written
   $ 199,218    $ 202,307
Increase in Unearned Premiums
   (30,371 )    (22,032 )




Net Premiums Earned
   $ 168,847    $ 180,275

~~Net Investment Income~~ for the nine months ended September 30, 2017 and 2016 was approximately $8,522,000 and $6,000,000, respectively. The increase in 2017 was primarily due to $1,724,000 of income from limited partnership investments compared with $54,000 of income during the corresponding period in 2016. See Note 4 — “Investments” under~~Net Investment Income~~ ~~to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form10-Q.~~

~~Net Other-Than-Temporary Impairment Losses~~ for the nine months ended September 30, 2017 and 2016 were approximately $864,000 and $1,441,000, respectively. During the nine months ended September 30, 2017, we recognized impairment losses specific to two fixed-maturity securities and five equity securities. The fixed-maturity securities were subject to impairment resulting from our intention to sell these securities before their recovery. Five equity securities were impaired as a result of the length of time each security had been in an unrealized loss position with no near-term prospect of recovery. During the nine months ended September 30, 2016, we recognized impairment losses specific to two fixed-maturity securities and 16 equity securities.

~~Gain on Repurchases of Convertible Senior Notes~~ ~~for the nine months ended September 30, 2016 was approximately $153,000. The gain~~2024 was attributable to the ~~repurchase of $13,010,000 in principal of our 3.875% Convertible Senior Notes during the first quarter of 2016.~~

~~Gain on bargain purchase~~~~for the nine months ended September 30, 2016 was approximately $2,071,000, resulting from the August 2016 acquisition of one real estate business.~~

~~Expenses~~

~~Our~~~~Losses and Loss Adjustment Expenses~~amounted to approximately $142,425,000 and $79,261,000, respectively, for the nine months ended September 30, 2017 and 2016. Our 2017 losses and loss adjustment expenses included a net initial estimate of $54,000,000 of losses related to Hurricane Irma and additional losses of approximately $2,500,000 related to Hurricane Matthew. In addition, our losses and loss adjustment expenses reflected the continuation of reserve strengthening

in response to trends involving assignment of insurance benefits and related litigation. Compared with the corresponding period in 2016, our losses and loss adjustment expenses were impacted by weather-related events including Hurricane Hermine. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

~~Policy Acquisition and Other Underwriting Expenses~~ for the nine months ended September 30, 2017 and 2016 were approximately $29,645,000 and $32,525,000, respectively. The $2,880,000 decrease from the corresponding period in 2016 was primarily attributable to decreased commissions and premium taxes resulting from policy attrition and the effect of the rate decrease.

~~Salaries and Wages~~ for the nine months ended September 30, 2017 and 2016 were approximately $15,051,000 and $17,009,000, respectively. The $1,958,000 decrease from the corresponding period in 2016 was primarily attributable to the capitalization of approximately $1,360,000 of payroll costs related to a software development project for internal use and lower bonuses for senior management.

~~Loss on repurchases of Senior Notes~~ for the nine months ended September 30, 2017 was approximately $743,000, resulting from the early extinguishment of our 8% Senior Notes. See Note 8 — “Long-Term Debt” under 8% Senior Notes to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form~~10-Q.~~

~~Income Tax Benefit~~for the nine months ended September 30, 2017 was $13,587,000 for state, federal, and foreign income taxes compared with income tax expense of $16,542,000 for the nine months ended September 30, 2016, resulting in an effective tax rate of 41.7% for 2017 and 40.4% for 2016.

~~Ratios:~~

The loss ratio applicable to the nine months ended September 30, 2017 was 84.3% compared with 44.0% for the nine months ended June 30, 2016. The increase was primarily due to the increase in losses and loss adjustment expenses described above combined with the decrease in net premiums earned which was driven in large part by the increase in ceded premiums due to the aforementioned adjustments.

The expense ratio applicable to the nine months ended September 30, 2017 was 43.2% compared with 39.8% for the nine months ended September 30, 2016. The increase in our expense ratio is primarily attributable to the decrease in net premiums earned asfactors described above.

The combined ratio is the measure of overall underwriting profitability before other income. Our combined ratio for the nine months ended September 30, 2017 was 127.5% compared with 83.8% for the nine months ended September 30, 2016.

Due to the impact our reinsurance costs have on net premiums earned from period to period, our management believes the combined ratio measured to gross premiums earned is more relevant in assessing overall performance. The combined ratio to gross premiums earned for the nine months ended September 30, 2017 was 79.7% compared with 52.8% for the nine months ended September 30, 2016.

Seasonality of Our Business

Our insurance business is seasonal as hurricanes and tropical storms affecting Florida, our primary market, and other southeastern states typically occur during the period from June 1st through November 30th of each year. Winter storms in the northeast usually occur during the period between December 1st and March 31st of each year. Also, with our reinsurance treaty year typically effective on June 1st of each year, any variation in the cost of our reinsurance, whether due to changes in reinsurance rates, coverage levels or changes in the total insured value of our policy base, will occur and be reflected in our financial results beginning on June 1st of each year.

LIQUIDITY AND CAPITAL RESOURCES

Throughout our history, our liquidity requirements have been met through issuances of our common and preferred stock, debt offerings and funds from operations. We expect our future liquidity requirements will be met by funds from operations, primarily the cash received by our insurance subsidiaries from premiums written and investment income. We may consider raising additional capital through debt ~~and~~and/or equity offerings to support our growth and future investment opportunities.

Our insurance ~~subsidiary requires~~subsidiaries require liquidity and adequate capital to meet ongoing obligations to policyholders and claimants and to fund operating expenses. In addition, we attempt to maintain adequate levels of liquidity and surplus to manage any differences between the duration of our liabilities and invested assets. In the insurance industry, cash collected for premiums from policies written is invested, interest and dividends are earned thereon, and losses and loss adjustment expenses are paid out over a period of years. This period of time varies by the circumstances surrounding each claim. ~~Substantially~~With the exception of litigated claims, substantially all of our losses and loss adjustment expenses are fully settled and paid within approximately 100 days of the claim receipt date. Additional cash outflow occurs through payments of underwriting costs such as commissions, taxes, payroll, and general overhead expenses.

We believe that we maintain sufficient liquidity to pay claims and expenses, as well as to satisfy commitments in the event of unforeseen events such as reinsurer insolvencies, inadequate premium rates, or reserve deficiencies. We maintain a comprehensive reinsurance program at levels management considers adequate to diversify risk and safeguard our financial position.

In the future, we anticipate our primary use of funds will be to pay claims, reinsurance premiums, interest, and dividends and to fund operating ~~expenses. In addition, we intend to continue investing in~~expenses and real estate ~~to maximize returns and diversify our sources of income, pursue acquisition opportunities, or consider other strategic opportunities.~~acquisitions.

Revolving Credit Facility, Convertible Senior Notes, Promissory Notes, and ~~Promissory Note~~Finance Leases

The following table summarizes ~~our long-term debt’s~~the principal and interest payment obligations of our indebtedness at ~~September 30, 2017:~~March 31, 2024:


		Maturity Date		~~Interest~~ Payment Due Date
~~3.875%~~ 4.75% Convertible Senior ~~Notes~~Notes*	June 2042	~~March 2019~~		~~March 15~~ June 1 and ~~September 15~~December 1
~~4.25% Convertible Senior Notes~~		~~March 2037~~		~~March 1 and September 1~~
4% 4.55% Promissory Note	Through August 2036	~~Through February 2031~~		1st day of each month
~~3.75% Callable~~ 5.50% Promissory Note	Through July 2033	~~Through September 2036~~		1st day of each month
~~3.95% Promissory Note~~ Finance leases	Through October 2024		Various
Revolving credit facility	Through ~~February 2020~~November 2028		17^th ~~of each month~~ January 1, April 1, July 1, October 1


*	At the option of the noteholders, we may be required to repurchase for cash all or any portion of the notes on June 1, 2027, June 1, 2032 or June 1, 2037.

See Note ~~8 —~~10 -- “Long-Term Debt” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form~~10-Q~~ ~~for additional information.~~

10-Q.

Limited Partnership Investments

Our limited partnership investments consist of ~~four~~six private equity funds managed by their general partners. ~~These~~Two of these funds have unexpired capital commitments which are callable at the discretion of the fund’s general partner for funding new investments or expenses of the fund. Although capital commitments for the four remaining funds have expired, the general partners may request additional funds under certain circumstances. At ~~September 30, 2017,~~March 31, 2024, there was an aggregate unfunded capital balance of ~~$15,931,000.~~$3,806,000. SeeLimited Partnership Investments under Note 4 —-- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form~~10-Q~~ ~~for additional information.~~ 10-Q.

Real Estate Investment

~~Share Repurchase Plan~~

~~In December 2016,~~Real estate has long been a significant component of our ~~Board~~overall investment portfolio. It diversifies our portfolio and helps offset the volatility of ~~Directors approved aone-year~~ ~~plan to repurchase up to $20,000,000 of common shares under which~~other higher-risk assets. Thus, we may purchase shares of common stock in open market purchases, block transactions and privately negotiated transactions in accordance with applicable federal securities laws. At September 30, 2017, there was approximately $13,818,000 available under the plan. See Note 14 — “Stockholders’ Equity” toconsider expanding our ~~unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form10-Q.~~

~~Real Estate Development and Acquisition~~

We may contemplate the acquisition of land for future development through one of our existing joint ventures. Although we have no outstanding commitment to fund any future project and we expect to finance future development projects with cash from real estate ~~operations and through property financings, we may be required to make additional capital contributions when warranted.~~investment portfolio should an opportunity arise.

In October 2017, we used approximately $9,215,000, including acquisition-related costs, to purchase commercial real estate in Tampa, Florida. In addition, we completed our development project in Riverview, Florida in July 2017. We have the option to acquire the joint venture partner’s interest in this project.

Sources and Uses of Cash

Cash Flows for the ~~Nine months ended September 30, 2017~~Three Months Ended March 31, 2024

Net cash provided by operating activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 was approximately ~~$51,393,000,~~$181,989,000, which consisted primarily of cash received from net premiums written, and reinsurance recoveries of approximately $19,151,000 less cash disbursed for operating expenses, losses and loss adjustment expenses and interest payments. Net cash used in investing activities of ~~$90,959,000~~$4,872,000 was primarily due to the purchases of~~available-for-sale~~ fixed-maturity and ~~trading~~equity securities of ~~$141,277,000, the limited partnership investments~~$180,015,000 and purchases of ~~$2,623,000, and the~~ real estate investments of ~~$2,095,000,~~$5,244,000, offset by the proceeds from ~~sales ofavailable-for-sale~~ ~~securities of $35,367,000, the distributions of $11,758,000 from limited partnership investments~~calls, repayments and ~~the redemptions and repayments~~maturities of fixed-maturity securities of ~~$8,786,000.~~$172,024,000 and the proceeds from sales of fixed-maturity and equity securities of $9,546,000. Net cash ~~provided by~~used in financing activities totaled ~~$51,442,000,~~$58,199,000, which was primarily due to the ~~proceeds from issuance~~redemption of ~~4.25% Convertible Senior Notes~~redeemable noncontrolling interests of ~~$143,750,000,~~$100,000,000, $3,993,000 of cash dividend payments, and cash dividends paid to redeemable noncontrolling interest of $2,923,000, offset by ~~$40,250,000 used in the repurchases of our 8% senior notes, $4,975,000 of related underwriting and issuance costs, $36,825,000 used in our share repurchases and $9,724,000~~$50,000,000 of net ~~cash dividend payments.~~

borrowing under the line of credit agreement.

Cash Flows for the ~~Nine months ended September 30, 2016~~Three Months Ended March 31, 2023

Net cash provided by operating activities for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2023 was approximately ~~$91,893,000,~~$99,109,000, which consisted primarily of cash received from net premiums written, and reinsurance recoveries of approximately $94,412,000 less cash disbursed for operating expenses, losses and loss adjustment expenses and interest payments. Net cash used in investing activities of ~~$46,875,000~~$17,757,000 was primarily due to the purchases of~~available-for-sale~~ fixed-maturity and equity securities of ~~$92,491,000,~~$166,624,000 and ~~the limited partnership investments~~purchases of ~~$4,670,000,~~property and equipment of $1,469,000, offset by the proceeds from ~~sales~~calls, repayments and maturities of~~available-for-sale~~ fixed-maturity securities of ~~$51,570,000.~~$112,497,000, the proceeds from sales of real estate investments of $21,746,000, the proceeds from sales of fixed-maturity and equity securities of $14,814,000, and distributions received from limited partnership investments of $1,602,000. Net cash used in financing activities totaled ~~$20,868,000,~~$14,100,000, which was primarily due to ~~$11,347,000 used in~~ the ~~repurchases~~redemption of ~~our convertible senior notes, $18,023,000 used in our share repurchase plan and $8,807,000~~long-term debt of ~~net~~$6,895,000, $3,432,000 of cash dividend payments, ~~offset by $18,200,000 in aggregate proceeds from the issuance~~cash dividends paid to redeemable noncontrolling interest of ~~two promissory notes.~~$3,012,000, $305,000 of share repurchases, and repayments of long-term debt of $258,000.

Investments

The main objective of our investment policy is to maximize ourafter-tax investment income with a reasonable level of risk given the current financial market. Our excess cash is invested primarily in money market accounts, certificates of deposit, and ~~investments that are classified as available for sale or trading.~~fixed-maturity and equity securities.

At ~~September 30, 2017,~~March 31, 2024, we had ~~$320,128,000~~$522,818,000 of~~available-for-sale~~ fixed-maturity and ~~trading~~equity investments, which are carried at fair value. Changes in the general interest rate environment affect the returns available on new fixed-maturity investments. While a rising interest rate environment enhances the returns available on new investments, it reduces the market value of existing fixed-maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new fixed-maturity investments but increases the market value of existing fixed-maturity investments, creating the opportunity for realized investment gains on disposition.

With the exception of large national banks, it is our current policy not to maintain cash deposits of more than an aggregate of $10,000,000 in any one bank at any time. From time to time, we may have in excess of $10,000,000 of cash designated for investment and on deposit at a single national brokerage firm. 47

In the future, we may alter our investment policy aswith regard to investments in federal, state and municipal obligations, preferred and common equity securities and real estate mortgages, as permitted by applicable law, including insurance regulations.

OFF-BALANCE SHEET ARRANGEMENTS

As of ~~September 30, 2017,~~March 31, 2024, we had unexpired capital commitments for ~~four~~ limited partnerships in which we hold interests. Such commitments are not recognized in the consolidated financial statements but are required to be disclosed in the notes to the consolidated financial statements. See Note ~~16 —~~21 -- “Commitments and Contingencies” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form10-Q ~~and Contractual Obligations and Commitment below~~ for additional information.

~~CONTRACTUAL OBLIGATIONS AND COMMITMENTS~~

~~The following table summarizes our material contractual obligations and commitments as of September 30, 2017 (amounts in thousands):~~

   Payment Due by Period
   Total    Less than
1 Year    1-3 Years    3-5 Years    More than
5 Years
Operating lease (1)
   $ 614    147    279    188    —
Service agreement (1)
   107    23    50    34    —
Reinsurance contracts (2)
   26,471    21,971    2,571    1,929    —
Unfunded capital commitments (3)
   15,931    15,931    —      —      —
Long-term debt obligations (4)
   300,645    12,163    116,816    155,828    15,838










Total
   $ 343,768    50,235    119,716    157,979    15,838

~~(1)~~

Represents the lease for office space in Miami, Florida and the lease and maintenance service agreement for office space in Noida, India. Liabilities related to our India operations were converted from Indian rupees to U.S. dollars using the October 2, 2017 exchange rate.

~~(2)~~

Represents the minimum payment of reinsurance premiums under multi-year reinsurance contracts. Reinsurance premiums payable after December 31, 2017 under one contract are estimated and subject to subsequent revision as the premiums are determined on a quarterly basis based on the premiums associated with the applicable flood total insured value on the last day of the preceding quarter.

~~(3)~~

~~Represents the unfunded balance of capital commitments under the subscription agreements related to four limited partnerships in which we hold an interest.~~

~~(4)~~

Amounts represent principal and interest payments over the lives of various long-term debt obligations. See Note 8 — “Long-Term Debt” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form~~10-Q.~~

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have prepared our consolidated financial statements ~~and related disclosures~~ in accordance with accounting principles generally accepted in the United States of ~~America.~~America (“U.S. GAAP”). The preparation of these consolidated financial statements ~~and related disclosures~~ requires us to make ~~judgments, assumptions~~estimates and ~~estimates~~judgments to develop amounts reflected and disclosed in our consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances. Actual results may differ from these estimates and such differences may be material.

We believe our critical accounting policies and estimates are those related to losses and loss adjustment expenses, amounts receivable with respect to reinsurers, reinsurance with retrospective provisions, deferred income taxes, and stock-based compensation expense. These policies are critical to the portrayal of our financial condition and operating results. They require management to make judgments and estimates about inherently uncertain matters. Material estimates that are particularly susceptible to significant change in the near term are related to our losses and loss adjustment ~~expense reserves,~~expenses, which include amounts estimated for claims incurred but not yet ~~reported,~~reported. We base our estimates on various assumptions and actuarial data we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates.

We believe our accounting policies specific to losses and loss adjustment expenses, reinsurance recoverable, ~~balance and~~ reinsurance ~~contracts~~ with retrospective ~~provisions.~~provisions, deferred income taxes, stock-based compensation expense, limited partnership investments, acquired intangible assets, warrants, and redeemable noncontrolling interest involve our most significant judgments and estimates material to our consolidated financial statements.

Reserves for Losses and Loss Adjustment Expenses

Our ~~gross~~ liability for losses and loss adjustment expense (“Reserves”) is specific to property insurance, which is our insurance ~~division’s~~subsidiaries’ only line of business. The Reserves include both case reserves on reported claims and our reserves for incurred but not reported (“IBNR”) losses. At each

period end date, the balance of our Reserves is based on our best estimate of the ultimate cost of each claim for those known cases and the IBNR loss reserves are estimated based primarily on our historical experience. Changes in the estimated liability are charged or credited to operations as the losses and loss adjustment expenses are adjusted.

The IBNR represents our estimate of the ultimate cost of all claims that have occurred but have not been reported to us, and in some cases may not yet be known to the insured, and future development of reported claims. Estimating the IBNR component of our Reserves involves considerable judgment on the part of management. At ~~September 30, 2017, $213,825,000~~March 31, 2024, $514,553,000 of the total ~~$344,672,000~~$578,712,000 we have reserved for losses and loss adjustment expenses is attributable to our estimate of IBNR. The remaining ~~$130,847,000~~$64,159,000 relates to known cases which have been reported but not yet fully settled in which case we have established a reserve based on currently available information and our best estimate of the cost to settle each claim. At ~~September 30, 2017, $16,688,000~~March 31, 2024, $57,137,000 of the ~~$130,847,000~~$64,159,000 in reserves for known cases relates to claims incurred during prior years.

Our Reserves ~~increased~~decreased from ~~$70,492,000~~$585,073,000 at December 31, ~~2016~~2023 to ~~$344,672,000~~$578,712,000 at ~~September 30, 2017.~~March 31, 2024. The ~~$274,180,000 increase in our Reserves~~$6,361,000 decrease is comprised of ~~$297,047,000 in reserves related to claims occurring in the 2017 loss year offset by~~ reductions in our Reserves of ~~$13,765,000~~$26,404,000 primarily specific to Hurricane Ian and Hurricane Irma, and reductions in our non-catastrophe Reserves of $24,974,000 for ~~2016~~2023 and ~~$9,102,000~~$17,116,000 for ~~2015~~2022 and prior loss ~~years.~~years, offset by $62,133,000 in reserves established for the 2024 loss year. The ~~$297,047,000 in~~ Reserves established for ~~2017~~2024 claims isare primarily driven by ~~losses from Hurricane Irma, an allowance for subsequent development of claims reported for the accident year, and~~ an allowance for those claims that have been incurred but not reported to the company as of ~~September 30, 2017.~~March 31, 2024. The decrease of ~~$22,867,000~~$68,494,000 specific to our ~~2016~~2023 and prior ~~loss-year~~loss-years reserves is ~~primarily~~ due to settlement of claims related to those loss years.

Based on all information known to us, we consider our Reserves at ~~September 30, 2017~~March 31, 2024 to be adequate to cover our claims for losses that have occurred as of that date including losses yet to be reported to us. However, these estimates are continually reviewed by management as they are subject to significant variability and may be impacted by trends in claim severity and frequency or unusual exposures that have not yet been identified. As part of the process, we review historical data and consider various factors, including known and anticipated regulatory and legal developments, changes in social attitudes, inflation and economic conditions. As experience develops and other data becomes available, these estimates are revised, as required, resulting in increases or decreases to the existing unpaid losses and loss adjustment expenses. Adjustments are reflected in the results of operations in the period in which they are made, and the liabilities may deviate substantially from prior estimates.

~~Reinsurance Recoverable Balance~~

Our reinsurance recoverable balance represents an estimate of the amount of paid and unpaid losses and loss adjustment expenses that is recoverable from reinsurers. These estimates are determined in a manner consistent with the terms of the applicable reinsurance contracts and based on the ultimate losses and loss adjustment expenses we expect to incur. Given the uncertainty of the ultimate amounts of losses and loss adjustment expenses, the estimates may vary significantly from the eventual outcome.

Economic Impact of Reinsurance ~~Contracts~~Contract with Retrospective Provisions

~~Certain of~~From time to time, our reinsurance contracts may include retrospective provisions that adjust premiums ~~increase the amount of future coverage, or result in a profit commission~~ in the event losses are minimal or zero. In accordance with accounting principles generally accepted in the United States of America, we will recognize an asset in the period in which the absence of loss experience ~~gives rise to an increase in future coverage or~~ obligates the reinsurer to pay cash or other consideration under the contract. In the event that a loss arises, we will derecognize such asset in the period in which a loss arises. Such adjustments to the asset, which accrue throughout the contract term, will negatively impact our operating results when a catastrophic loss event occurs during the contract term.

~~As described in Note 9 — “Reinsurance” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form10-Q,~~ ~~we adjusted the balances of accrued benefits and deferred reinsurance premiums during the third quarter of 2017 due to the impact of Hurricane Irma.~~ For the three months ended September 30, 2017, we derecognized $9,300,000 of net accrued benefits. For the three months ended September 30, 2017, we recognized $3,163,000 in ceded premiums, including the reversal of the majority of reinsurance costs deferred in prior periods. In contrast, for the three months ended September 30, 2016,March 31, 2024 and 2023, we accrued benefits of ~~$2,490,000. For~~$6,993,000 in each of the ~~three months ended September 30, 2016, we deferred recognition~~respective periods. The accrual of ~~$937,000~~benefits was recognized as a reduction in ceded premiums. In combination, for the three months ended September 30, 2017, we recognized a net increase in ceded premiums of $12,464,000 as opposed to a net reduction in ceded premiums of $3,428,000 for the three months ended September 30, 2016.

For the nine months ended September 30, 2017, we derecognized $3,841,000 of net accrued benefits. For the nine months ended September 30, 2017, we recognized ceded premiums of $1,667,000, including the reversal of the majority of previously deferred reinsurance costs. By comparison, we accrued benefits of $11,120,000 for the nine months ended September 30, 2016. For the nine months ended September 30, 2016, we recognized net ceded premiums of $1,871,000, representing amortization of $3,085,000 of previously deferred reinsurance costs for increased coverage offset by $1,214,000 of ceded premiums deferred for the period. In combination, for the nine months ended September 30, 2017, we recognized a net increase in ceded premiums of $5,508,000 as opposed to a net reduction in ceded premiums of $9,250,000 for the nine months ended September 30, 2016. In June 2016, we received cash totaling $37,800,000 in connection with the benefits accrued for two retrospective reinsurance contracts that were terminated effective May 31, 2016. In September 2016, we received a cash payment of $5,716,000 under the terms of one retrospective reinsurance contract which terminated May 31, 2016.

As of ~~September 30, 2017,~~March 31, 2024, we had ~~$1,969,000~~$51,282,000 of accrued benefits, ~~and $484,000 of ceded premiums deferred, amounts~~the amount that would be charged to earnings in the event we experience a catastrophic loss that exceeds the coverage ~~limits~~limit provided under such agreements and in the period that the increased coverage is applicable. At December 31, 2016, we had $5,810,000 of accrued benefits and $2,152,000 of ceded premiums deferred related to these agreements.agreement.

We believe the credit risk associated with the collectability of these accrued benefits is minimal based on available information about the ~~individual~~ reinsurer’s financial position and ~~payment history.~~the reinsurer’s demonstrated ability to comply with contract terms.

The above and other accounting estimates and their related risks that we consider to be our critical accounting estimates are more fully described in our Annual Report on Form10-K, which we filed with the SEC on ~~February 22, 2017.~~March 8, 2024. For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2024, there have been no other material changes with respect to any of our critical accounting policies.

RECENT ACCOUNTING PRONOUNCEMENTS

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 3 to our Notes to Consolidated Financial Statements.None.

ITEM 3 –QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our investment portfolio at ~~September 30, 2017~~March 31, 2024 included fixed-maturity and equity securities, the ~~primary~~ purposes of which are not for ~~value preservation.~~speculation. Our main objective is to maximizeafter-tax investment income and maintain sufficient liquidity to meet our obligations while minimizing market risk, which is the potential economic loss from adverse fluctuations in securities prices. We consider many factors including credit ratings, investment concentrations, regulatory requirements, anticipated fluctuation of interest rates, durations and market conditions in developing investment strategies. Our investment securities are managed primarily by outside investment advisors and are overseen by the investment committee appointed by our ~~board~~Board of ~~directors.~~Directors. From time to time, our investment committee may decide to invest in low-risk assets such as U.S. government bonds.

Our investment ~~portfolios are~~portfolio is exposed to interest rate risk, credit risk and equity price risk. Fiscal and economic uncertainties caused by any government action or inaction may exacerbate these risks and potentially have adverse impacts on the value of our investment ~~portfolios.~~portfolio.

We classify our fixed-maturity securities ~~and the majority of equity securities~~ asavailable-for-sale and report any unrealized gains or losses, net of deferred income taxes, as a component of other comprehensive income within our stockholders’ equity. As such, any material temporary changes in their fair value can adversely impact the carrying value of our stockholders’ equity. In addition, we recognize any unrealized gains or losses related to our equity securities in our statement of income. As a result, our results of operations can be materially affected by the volatility in the equity market.

Interest Rate Risk

Our fixed-maturity securities are sensitive to potential losses resulting from unfavorable changes in interest rates. We manage the risk by analyzing anticipated movement in interest rates and considering our future capital needs.

The following table illustrates the impact of hypothetical changes in interest rates to the fair value of our fixed-maturity securities at ~~September 30, 2017 (amounts~~March 31, 2024 (dollar amounts in thousands):


Hypothetical Change in Interest Rates	Estimated Fair Value		Change in Estimated Fair Value			Percentage Increase (Decrease) in Estimated Fair Value			Estimated Fair Value		Change in Estimated Fair Value			Percentage Increase (Decrease) in Estimated Fair Value
300 basis point increase	$	232,088	$	(24,014	)		(9.38	)%	$	459,419	$	(11,386	)		-2.42	%
200 basis point increase		240,087		(16,015	)		(6.25	)%		463,214		(7,591	)		-1.61	%
100 basis point increase		248,092		(8,010	)		(3.13	)%		467,009		(3,796	)		-0.81	%
100 basis point decrease		264,115		8,013			3.13	%		474,601		3,796			0.81	%
200 basis point decrease		271,506		15,404			6.02	%		478,397		7,592			1.61	%
300 basis point decrease		275,881		19,779			7.72	%		482,193		11,388			2.42	%

Credit Risk

Credit risk can expose us to potential losses arising principally from adverse changes in the financial condition of the issuers of our fixed-maturity securities. We mitigate the risk by investing in fixed-maturity securities that are generally investment grade, by diversifying our investment portfolio to avoid concentrations in any single issuer or business sector, and by continually monitoring each individual security for declines in credit quality. While we emphasize credit quality in our investment selection process, significant downturns in the markets or general economy may impact the credit quality of our portfolio.

The following table presents the composition of our fixed-maturity securities, by rating, at ~~September 30, 2017 (amounts~~March 31, 2024 (dollar amounts in thousands):


									Cost or		% of Total				% of Total
									Amortized		Amortized		Estimated		Estimated
Comparable Rating	Amortized Cost		% of Total Amortized Cost		Estimated Fair Value		% of Total Estimated Fair Value		Cost		Cost		Fair Value		Fair Value
AAA	$	2,521		1	$	2,527		1	$	164,580		35	$	164,525		35
AA+, AA, AA-		70,830		28		71,256		28		281,466		59		278,025		59
A+, A, A-		93,220		37		93,630		37		14,901		3		14,576		3
BBB+, BBB, BBB-		57,523		23		59,024		23		12,226		3		12,024		3
BB+, BB, BB-		9,446		4		9,647		4
B+, B, B-		6,133		2		6,130		2
CCC+, CC and Not rated		13,489		5		13,888		5		1,997		—		1,655		—

Total	$	253,162		100	$	256,102		100	$	475,170		100	$	470,805		100

Equity Price Risk

Our equity investment portfolio at ~~September 30, 2017~~March 31, 2024 included common stocks, perpetual preferred stocks, mutual funds and ~~exchange traded~~exchange-traded funds. We may incur potential losses due to adverse changes in equity security prices. We manage the risk primarily through industry and issuer diversification and asset mix.

The following table illustrates the composition of our equity securities at ~~September 30, 2017 (amounts~~March 31, 2024 (dollar amounts in thousands):


							% of Total
					Estimated		Estimated
	Estimated Fair Value		% of Total Estimated Fair Value		Fair Value		Fair Value
Stocks by sector:
Financial	$	26,121		41	$	6,873		13
Industrial		5,378		8
Consumer		4,996		8		8,404		16
Energy		3,281		5
Technology						4,751		9
Other (1)		6,467		10		2,445		6
						22,473		44
		46,243		72

Mutual funds and Exchange traded funds by type:
Mutual funds and exchange-traded funds by type:
Debt		16,840		27		21,974		42
Equity		943		1		7,503		14

		17,783		28
Alternative						63		—
						29,540		56
Total	$	64,026		100	$	52,013		100

~~(1)~~

~~Represents an aggregate of less than 5% sectors.~~

(1)

Represents an aggregate of less than 5% sectors.

Foreign Currency Exchange Risk

At ~~September 30, 2017,~~March 31, 2024, we did not have any material exposure to foreign currency related risk.

ITEM 4 –CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial and accounting officer), we have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, and, based on this evaluation, our chief executive officer and our chief financial officer have concluded that these disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting during the quarter ended ~~September 30, 2017~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, implementation of possible controls and procedures depends on management’s judgment in evaluating their benefits relative to costs.

PART II – OTHER INFORMATION

ITEM 1 –LEGAL PROCEEDINGS

~~The Company is~~We are a party to claims and legal actions arising routinely in the ordinary course of our business. Although we cannot predict with certainty the ultimate resolution of the claims and lawsuits asserted against us, we do not believe that any currently pending legal proceedings to which we are a party will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

ITEM 1A –RISK FACTORS

There have been no material changes ~~from~~in the risk factors previously disclosed in the section entitled “Risk Factors” in our Form10-K, which was filed with the SEC on ~~February 22, 2017.~~

March 8, 2024.

ITEM 2 –UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)

Sales of Unregistered Securities and Use of Proceeds

None.

~~All information related to sales of unregistered securities had been reported in a current report on Form8-K.~~

(b)

Repurchases of Securities

The table below summarizes the number of common shares ~~repurchased during~~surrendered by employees to satisfy payroll tax liabilities associated with the ~~three months ended September 30, 2017 under a share repurchase plan~~vesting of restricted shares (dollar amounts in thousands, except share and per share amounts):

For the Month Ended
   Total Number
of Shares
Purchased    Average
Price Paid
Per Share    Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (a)    Maximum Dollar
Value of Shares That
May Yet Be
Purchased Under
The Plans or
Programs (b)
July 31, 2017
   895    $ 44.53    895    $ 18,371
August 31, 2017
   38,530    $ 40.31    38,530    $ 16,818
September 30, 2017
   85,424    $ 35.12    85,424    $ 13,818





   124,849    $ 36.79    124,849


	Total Number of Shares		Average Price Paid		Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Dollar Value of Shares That May Yet Be Purchased Under The Plans
For the Month Ended	Purchased		Per Share		or Programs		or Programs
January 31, 2024		—	$	—		—	$	—
February 29, 2024		5,656	$	98.21		—	$	—
March 31, 2024		—	$	—		—	$	—
		5,656	$	98.21		—

~~(a)~~

~~The share repurchase plan approved by our Board of Directors on December 15, 2016 commenced in January 2017.~~

~~(b)~~

~~Represents the balances before commissions and fees at the end of each month.~~

Working Capital Restrictions and Other Limitations on the Payment of Dividends

We are not subject to working capital restrictions or other limitations on the payment of dividends. Our insurance subsidiaries, however, are subject to restrictions on the dividends they may pay. Those restrictions could impact HCI’s ability to pay future dividends.

Under Florida law, a domestic insurer may not pay any dividend or distribute cash or other property to its ~~stockholder~~stockholders except out of that part of its available and accumulated capital and surplus funds which is derived from realized net operating profits on its business and net realized capital gains. Additionally, a Florida domestic insurer may not make dividend payments or distributions to its ~~stockholder~~stockholders without prior approval of the Florida Office of Insurance Regulation (“FLOIR”) if the dividend or distribution would exceed the larger of (1) the lesser of (a) 10.0% of its capital surplus or (b) net income, not including realized capital gains, plus a two year carry forward, (2) 10.0% of capital surplus with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains or (3) the lesser of (a) 10.0% of capital surplus or (b) net investment income plus a three year carry forward with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains.

Alternatively, a Florida domestic insurer may pay a dividend or distribution without the prior written approval of the ~~Florida Office of Insurance Regulation~~FLOIR if (1) if the dividend is equal to or less than the greater of (a) 10.0% of the insurer’s capital surplus as regards to policyholders derived from realized net operating profits on its business and net realized capital gains or (b) the insurer’s entire

net operating profits and realized net capital gains derived during the immediately preceding calendar year, (2) the insurer will have policy holder capital surplus equal to or exceeding 115.0% of the minimum required statutory capital surplus after the dividend or distribution, (3) the insurer files a notice of the dividend or distribution with the ~~Florida Office of Insurance Regulation~~FLOIR at least ten business days prior to the dividend payment or distribution and (4) the notice includes a certification by an officer of the insurer attesting that, after the payment of the dividend or distribution, the insurer will have at least 115% of required statutory capital surplus as to policyholders. Except as provided above, a Florida domiciled insurer may only pay a dividend or make a distribution (1) subject to prior approval by the ~~Florida Office of Insurance Regulation~~FLOIR or (2) 30 days after the ~~Florida Office of Insurance Regulation~~FLOIR has received notice of such dividend or distribution and has not disapproved it within such time.

During the ~~nine~~three months ended ~~September 30, 2017, HCPCI~~March 31, 2024, our insurance subsidiaries paid ~~a $18,000,000 dividend~~dividends of $11,000,000 to HCI.

~~ITEM 3~~

–~~DEFAULTS UPON SENIOR SECURITIES~~

~~None.~~ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

~~ITEM 4~~

–~~MINE SAFETY DISCLOSURES~~

None.

ITEM 4 – MINE SAFETY DISCLOSURES

None.

ITEM 5 –OTHER INFORMATION

None.

ITEM 6 – EXHIBITS

~~ITEM 6~~

–~~EXHIBITS~~

The following documents are filed as part of this report:


EXHIBIT
~~EXHIBIT~~ NUMBER		DESCRIPTION

3.1		Articles of Incorporation, with amendments. Incorporated by reference to the correspondingly numbered exhibit to our Form10-Q filed August 7, 2013.

3.1.1		Articles of Amendment to Articles of Incorporation designating the rights, preferences and limitations of Series B Junior Participating Preferred Stock. Incorporated by reference to Exhibit 3.1 to our Form8-K filed October 18, 2013.

~~3.2~~ 3.1.2		~~Bylaws.~~Articles of Amendment to Articles of Incorporation cancelling the rights, preferences and limitations of Series B Junior Participating Preferred Stock. Incorporated by reference to Exhibit 3.1 to our Form 8-K filed May 15, 2020.

3.2		Bylaws, with amendments. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-Q~~ 8-K filed ~~August 7, 2013.~~September 13, 2019.

4.1		Form of common stock certificate. Incorporated by reference to the correspondingly numbered exhibit to our Form10-Q filed November 7, 2013.

4.2		~~Supplement No.~~Common Stock Purchase Warrant, dated February 26, 2021, issued by HCI Group, Inc. to CB Snowbird Holdings, L.P. Incorporated by reference to Exhibit 4.1 of our Form 8-K filed March 1, ~~dated as of January 17, 2013, to the~~ 2021.

4.3		Indenture, dated ~~as of January 17, 2013,~~May 23, 2022, by and between HCI Group, Inc. ~~(formerly known as Homeowners Choice, Inc.) and The Bank of New York Mellon Trust Company, N.A., as Trustee. Incorporated by reference to the correspondingly numbered exhibit to our Form8-K~~ ~~filed January 17, 2013.~~

~~4.3~~		~~Form of 8.00% Senior Note due 2020 (included in Exhibit 4.2). Incorporated by reference to the correspondingly numbered exhibit to our Form8-K~~ ~~filed January 17, 2013.~~

~~4.4~~		~~Indenture, dated as of January 17, 2013, between HCI Group, Inc. (formerly known as Homeowners Choice, Inc.)~~ and The Bank of New York Mellon Trust Company, N.A. Incorporated by reference to ~~Exhibit 4.4 to Amendment No. 1~~the corresponding numbered exhibit to our ~~Registration Statement on~~ Form~~S-3~~ ~~(FileNo. 333-185228)~~ 10-Q filed ~~December 10, 2012.~~August 9, 2022.

4.6		~~Form~~Description of ~~Subordinated Indenture.~~Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended. Incorporated by reference to the ~~correspondingly~~corresponding numbered exhibit to ~~Amendment No. 1 to~~ our ~~Registration Statement on~~ Form~~S-3~~ ~~(File No. 333-185228)~~ 10-K filed ~~December 10, 2012.~~March 12, 2021.

~~4.7~~ 4.9		Rights Agreement, dated as of October 18, 2013, between HCI Group, Inc. and American Stock Transfer & Trust Company, LLC, which includes as Exhibit A thereto a summary of the terms of the Series B Junior Participating Preferred Stock, as Exhibit B thereto the Form of Right Certificate, and as Exhibit C thereto the Summary of Rights to Purchase Preferred Shares. Incorporated by reference to Exhibit 4.1 to our Form~~8-K~~ ~~filed October 18, 2013.~~



~~4.7.1~~		Amendment, dated as of April 18, 2017, to the Rights Agreement, by and between the Company and American Stock Transfer & Trust Company, LLC, dated as of October 18, 2013. Incorporated by reference to Exhibit 4.1 to our Form~~8-K~~ ~~filed April 24, 2017.~~

~~4.8~~		~~Indenture, dated December 11, 2013, between HCI Group, Inc. and The Bank of New York Mellon Trust Company, N.A. (including Global Note). Incorporated by reference to Exhibit 4.1 to our Form8-K~~ ~~filed December 12, 2013.~~

~~4.9~~		See Exhibits3.1,3.1.1, 3.1.2 and3.2 of this report for provisions of the Articles of Incorporation, as amended, and our Bylaws, as amended, defining certain rights of security holders.

4.10		Indenture, dated March 3, 2017, between HCI Group, Inc. and The Bank of New York Mellon Trust Company, N.A. Incorporated by reference to Exhibit 4.1 of our Form8-K filed March 3, 2017.

4.11		Form of Global 4.25% Convertible Senior Note due 2037 (included in Exhibit 4.1). Incorporated by reference to Exhibit 4.1 of our Form8-K filed March 3, 2017.

10.1		Excess of Loss Retrocession Contract (flood), effective June 1, 2014, issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-Q~~ ~~filed August 6, 2014.~~

10.2**		~~Executive~~Preferred Stock Purchase Agreement, dated ~~May 1, 2007 between~~February 26, 2021, among TypTap Insurance Group, Inc., HCI Group, Inc. ~~(formerly known as Homeowners Choice, Inc.)~~, and ~~Richard R. Allen. Incorporated by reference to the correspondingly numbered exhibit to our Registration Statement on FormS-1~~ ~~(File No. 333-150513), originally filed April 30, 2008, effective July 24, 2008, as amended.~~

~~10.3~~		Reimbursement Contract effective June 1, 2016 between Homeowners Choice Property & Casualty Insurance Company and the State Board of Administration which administers the Florida Hurricane Catastrophe Fund. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-Q~~ ~~filed August 3, 2016.~~

~~10.4~~		Reimbursement Contract effective June 1, 2017 between Homeowners Choice Property & Casualty Insurance Company and the State Board of Administration which administers the Florida Hurricane Catastrophe Fund.CB Snowbird Holdings, L.P. Incorporated by reference to the corresponding numbered exhibit to our Form~~10-Q~~ 8-K filed ~~August 3, 2017.~~March 1, 2021.

10.2		Amended and Restated Articles of Incorporation of TypTap Insurance Group, Inc. filed February 26, 2021. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.

10.3		Shareholders Agreement, dated February 26, 2021, among TypTap Insurance Group, Inc., CB Snowbird Holdings, L.P., HCI Group, Inc., and the other shareholders party thereto. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.


10.4		Parent Guaranty Agreement, dated February 26, 2021, between HCI Group, Inc. and CB Snowbird Holdings, L.P. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.

10.5**		~~Restated~~ HCI Group, Inc. 2012 Omnibus Incentive ~~Plan. Incorporated by reference to Exhibit 99.1 of our Form8-K~~ ~~filed March 23, 2017.~~



10.6**		~~HCI Group, Inc. (formerly known~~Plan as ~~Homeowners Choice, Inc.) 2007 Stock Option and Incentive Plan.~~revised April 26, 2022. Incorporated by reference to the ~~correspondingly~~corresponding numbered exhibit to our Form10-Q filed ~~August 29, 2008.~~May 6, 2022.

10.7**		Executive Employment Agreement dated November 23, 2016 between Mark Harmsworth and HCI Group, Inc. Incorporated by reference to the corresponding numbered exhibit to our Form10-Q filed August 3, 2017.

10.8		Working Layer Catastrophe Excess of Loss Reinsurance Contract, effective: June 1, 2016, issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers (National Fire). Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-Q~~ ~~filed August 3, 2016.~~

~~10.9~~		Multi-Year Working Layer Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2016, issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers (Claddaugh). Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-Q~~ ~~filed August 3, 2016.~~

~~10.10~~		Working Layer Catastrophe Excess of Loss Specific Retrocession Contract effective June 1, 2016 issued to Claddaugh Casualty Insurance Company Ltd. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-Q~~ ~~filed August 3, 2016.~~

~~10.11~~		~~Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2016,~~2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to ~~a request for confidential treatment.~~Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to ~~the correspondingly numbered exhibit~~Exhibit 10.131 to our Form10-Q filed August ~~3, 2016.~~9, 2022.

~~10.12~~ 10.9		Property Catastrophe First Excess of Loss Specific Retrocession Contract effective June 1, 2016 issued to Claddaugh Casualty Insurance Company Ltd. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-Q~~ ~~filed August 3, 2016.~~



~~10.13~~		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2016 by Homeowners Choice Property & Casualty Insurance Company, Inc. and subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-Q~~ ~~filed August 3, 2016.~~

~~10.14~~		Property Catastrophe Third Excess of Loss Reinsurance Contract effective June 1, 2016 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-Q~~ ~~filed August 3, 2016.~~

~~10.15~~		Property Catastrophe First Excess of Loss Reinsurance Contract effective June 1, 2016 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-Q~~ ~~filed August 3, 2016.~~

~~10.16~~		Working Layer Catastrophe Excess of Loss Specific Retrocession Contract effective June 1, 2017 issued to Claddaugh Casualty Insurance Company Ltd. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form~~10-Q~~ ~~filed August 3, 2017.~~

~~10.17~~		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, ~~2017~~2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to ~~a request for confidential treatment.~~Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to ~~the corresponding number exhibit~~Exhibit 10.132 to our Form10-Q filed August ~~3, 2017.~~9, 2022.

~~10.18~~ 10.10		~~Property Catastrophe Second Event Excess of Loss~~Reinstatement Premium Protection Reinsurance Contract effective June 1, ~~2017~~2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to ~~a request for confidential treatment.~~Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to ~~the corresponding numbered exhibit~~Exhibit 10.133 to our Form10-Q filed August ~~3, 2017.~~9, 2022.

~~10.19~~ 10.11		~~Reinstatement Premium Protection~~Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, ~~2017~~2022 issued to ~~Homeowners Choice Property & Casualty~~TypTap Insurance Company ~~Inc.~~ by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to ~~a request for confidential treatment.~~Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.134 to our Form 10-Q filed August 9, 2022.

10.12		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.135 to our Form 10-Q filed August 9, 2022.

10.13		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2022 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.136 to our Form 10-Q filed August 9, 2022.

10.14		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2022 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.137 to our Form 10-Q filed August 9, 2022.

10.15		Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.138 to our Form 10-Q filed August 9, 2022.


10.16		Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.139 to our Form 10-Q filed August 9, 2022.

10.17		Sixth Layer Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.140 to our Form 10-Q filed August 9, 2022.

10.18		Non-Florida Reinstatement Premium Protection Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.141 to our Form 10-Q filed August 9, 2022.

10.19		Non-Florida Reinstatement Premium Protection Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.142 to our Form 10-Q filed August 9, 2022.

10.20		Flood Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.143 to our Form 10-Q filed August 9, 2022.

10.21		Property Catastrophe Shared Multi-Region Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.144 to our Form 10-Q filed August 9, 2022.

10.22		Top Layer Flood/Wind Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to Exhibit 10.145 to our Form 10-Q filed August 9, 2022.

10.23		Reimbursement Contract effective June 1, 2022 between TypTap Insurance Company and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund. Incorporated by reference to Exhibit 10.146 to our Form 10-Q filed August 9, 2022.

10.24		Reimbursement Contract effective June 1, 2022 between Homeowners Choice Property & Casualty Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund. Incorporated by reference to Exhibit 10.147 to our Form 10-Q filed August 9, 2022.

10.25		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company by Subscribing Reinsurers. Portions


		of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form10-Q filed August ~~3, 2017.~~9, 2023.



~~10.23~~ 10.26		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.27		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.28		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.29		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.30		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.31		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2023 issued to TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.32		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2023 issued to TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.33		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.34		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company and TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.35		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company and TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.


10.36		Reimbursement Contract effective June 1, 2023 between Homeowners Choice Property & Casualty Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.37		Reimbursement Contract effective June 1, 2023 between TypTap Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.38		RAP Reimbursement Contract effective June 1, 2023 between Homeowners Choice Property & Casualty Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Reinsurance to Assist Policyholders Program (“RAP Program”). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.39		RAP Reimbursement Contract effective June 1, 2023 between TypTap Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Reinsurance to Assist Policyholders Program (“RAP Program”). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.40		Equity Distribution Agreement between HCI Group, Inc., Truist Securities, Inc. and Citizens JMP Securities, LLC. Incorporated by reference to Exhibit 1.2 of our Form S-3 filed January 22, 2024.

10.41		Amended and Restated Common Stock Purchase Warrant between HCI Group, Inc. and CB Snowbird Holdings, L.P. Incorporated by reference to Exhibit 4.17 of our Form S-3 filed January 22, 2024.

10.42		Registration Rights Agreement between HCI Group, Inc. and CB Snowbird Holdings, L.P. Incorporated by reference to Exhibit 4.18 of our Form S-3 filed January 22, 2024.

10.43		Stock Redemption Agreement between TypTap Insurance Group, Inc. and CB Snowbird Holdings, L.P. Incorporated by reference to Exhibit 4.19 of our Form S-3 filed January 22, 2024.

10.44		Assumption Agreement ~~effective October 15, 2014 by and~~ between Homeowners Choice Property & Casualty Insurance Company, Inc. and Citizens Property Insurance Corporation. Incorporated by reference to Exhibit ~~10.1~~99.1 of our Form8-K filed ~~January 28, 2015.~~October 2, 2023.

10.28** 10.45		~~Restricted Stock~~Assumption Agreement ~~dated May 8, 2012 whereby HCI Group, Inc. (formerly known as Homeowners Choice, Inc.) issued 30,000 shares of restricted common stock to Richard R. Allen.~~between TypTap Insurance Company and Citizens Property Insurance Corporation. Incorporated by reference to Exhibit ~~10.28~~99.1 of our Form8-K filed ~~May 10, 2012.~~November 6, 2023.

10.30* 10.48**		~~Restricted Stock Agreement dated May 8, 2012 whereby HCI~~TypTap Insurance Group, Inc. ~~(formerly known as Homeowners Choice, Inc.) issued 20,000 shares of restricted common stock to Andrew L. Graham.~~2021 Equity Incentive Plan. Incorporated by reference to Exhibit ~~10.30~~10.5 of our Form8-K filed ~~May 10, 2012.~~March 1, 2021.

10.34* 10.49**		Form of Restricted Stock Award Agreement ~~dated May 16, 2013 whereby HCI~~of TypTap Insurance Group, Inc. ~~(formerly known as Homeowners Choice, Inc.) issued 400,000 shares of restricted common stock to Paresh Patel.~~ Incorporated by reference to Exhibit ~~10.34~~10.6 of our Form8-K filed ~~May 21, 2013. See Exhibit 10.90~~March 1, 2021.

10.35* 10.51**		~~Restricted~~ Stock Option Agreement ~~dated May 16, 2013 whereby HCI~~between Paresh Patel and TypTap Insurance Group, Inc. ~~(formerly known as Homeowners Choice, Inc.) issued 24,000 shares of restricted common stock to Sanjay Madhu.~~dated October 1, 2021. Incorporated by reference to Exhibit ~~10.35 of~~99.1 to our Form8-K filed ~~May 21, 2013. See Exhibit 10.91~~October 7, 2021.

10.36* 10.52**		~~Restricted Stock Agreement dated May 16, 2013 whereby HCI~~TypTap Insurance Group, Inc. ~~(formerly known as Homeowners Choice, Inc.) issued 24,000 shares of restricted common stock to George Apostolou.~~2021 Omnibus Incentive Plan. Incorporated by reference to Exhibit ~~10.36~~99.2 of our Form8-K filed ~~May 21, 2013. See Exhibit 10.92~~October 7, 2021.

10.37** 10.53		~~Restricted Stock~~Purchase Agreement, dated May ~~16, 2013 whereby~~18, 2022, by and among HCI Group, Inc. ~~(formerly known~~, JMP Securities LLC and Truist Securities, Inc., as ~~Homeowners Choice, Inc.) issued 24,000 shares~~representatives of ~~restricted common stock to Harish Patel. Incorporated by reference to Exhibit 10.37 of our Form8-K~~ ~~filed May 21, 2013. See Exhibit 10.93~~

10.38**		Restricted Stock Agreement dated May 16, 2013 whereby HCI Group, Inc. (formerly known as Homeowners Choice, Inc.) issued 24,000 shares of restricted common stock to Gregory Politis. Incorporated by reference to Exhibit 10.38 of our Form~~8-K~~ ~~filed May 21, 2013. See Exhibit 10.94~~

10.39**		Restricted Stock Agreement dated May 16, 2013 whereby HCI Group, Inc. (formerly known as Homeowners Choice, Inc.) issued 24,000 shares of restricted common stock to Anthony Saravanos. Incorporated by reference to Exhibit 10.39 of our Form~~8-K~~ ~~filed May 21, 2013. See Exhibit 10.95~~



10.40**		Restricted Stock Agreement dated May 16, 2013 whereby HCI Group, Inc. (formerly known as Homeowners Choice, Inc.) issued 24,000 shares of restricted common stock to Martin Traber. Incorporated by reference to Exhibit 10.40 of our Form~~8-K~~ ~~filed May 21, 2013. See Exhibit 10.96~~

10.52**		~~Restricted Stock Agreement dated August 29, 2013 whereby HCI Group, Inc. issued 10,000 shares of restricted common stock to Anthony Saravanos. Incorporated by reference to Exhibit 10.52 of our Form8-K~~ ~~filed August 29, 2013.~~

10.53**		~~Restricted Stock Agreement dated November 12, 2013 whereby HCI Group, Inc. issued 24,000 shares of restricted common stock to Wayne Burks. Incorporated by reference to Exhibit 10.11 of our Form8-K~~ ~~filed November 13, 2013. See Exhibit 10.97~~

10.54**		Restricted Stock Agreement dated November 12, 2013 whereby HCI Group, Inc. issued 24,000 shares of restricted common stock to James J. Macchiarola. Incorporated by reference to Exhibit 10.12 of our Form~~8-K~~ ~~filed November 13, 2013. See Exhibit 10.98~~

~~10.56~~		~~Prepaid Forward Contract, dated December 5, 2013 and effective as of December 11, 2013, between HCI Group, Inc. and Deutsche Bank AG, London Branch.~~the several purchasers named therein. Incorporated by reference to Exhibit 10.1 of our Form8-K filed ~~December 12, 2013.~~May 23, 2022.


10.54		Stock Option Agreement between Paresh Patel and HCI Group, Inc. dated September 15, 2023.
~~10.57~~
10.57**		Form of executive restricted stock award contract. Incorporated by reference to ~~Exhibit 10.57 of~~the corresponding numbered exhibit to our Form10-Q ~~for the quarter ended March 31, 2014~~ filed May 1, 2014.

10.58		Purchase Agreement, dated February 28, 2017, by and between HCI Group, Inc. and JMP Securities LLC and SunTrust Robinson Humphrey, Inc., as representatives of the several initial purchasers named therein. Incorporated by reference to Exhibit 10.1 of our Form8-K filed February 28, 2017.

~~10.59~~ 10.62		~~Prepaid Forward Contract,~~Amended and Restated Credit Agreement, dated ~~February 28, 2017 and effective as of March 3, 2017,~~June 2, 2023, between HCI Group, Inc. and ~~Societe Generale.~~Fifth Third Bank. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.63		Security and Pledge Agreement and Revolving Credit Promissory Note, dated June 2, 2023, between HCI Group, Inc. and Fifth Third Bank. Incorporated by reference to Exhibits 99.2, and 99.3 to our Form 8-K filed June 8, 2023.

10.64		Second Amended and Restated Credit Agreement, Second Amended and Restated Security and Pledge Agreement, and Renewed, Amended and Restated Revolving Credit Promissory Note, dated November 3, 2023, between HCI Group, Inc. and Fifth Third Bank. Incorporated by reference to Exhibits 99.1, 99.2, and 99.3 to our Form 8-K filed November 9, 2023.

10.65		Underwriting Agreement, dated December 6, 2023, by and between HCI Group, Inc. and Citizens JMP Securities, LLC. Incorporated by reference to Exhibit ~~10.1 of~~1.1 to our Form8-K filed ~~March 3, 2017.~~December 7, 2023.

10.88* 10.66**		Executive Employment Agreement between Paresh Patel and HCI Group, Inc. dated April 17, 2024. Incorporated by reference to Exhibit 99.1 to our Form 8-K filed April 23, 2024.

10.67**		Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated April 17, 2024. Incorporated by reference to Exhibit 99.2 to our Form 8-K filed April 23, 2024.

10.105**		Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated January 16, 2020. Incorporated by reference to Exhibit 99.1 to our Form 8-K filed January 23, 2020.

10.106**		Nonqualified Stock Option Agreement between Paresh Patel and HCI Group, Inc. dated January ~~7, 2017.~~16, 2020. Incorporated by reference to ~~exhibit~~Exhibit 99.2 to our Form8-K filed January ~~11, 2017.~~23, 2020.

10.89** 10.124		~~Employment Agreement between Paresh Patel~~Property Quota Share Reinsurance Contract effective December 31, 2020 issued to United Property and ~~HCI Group, Inc. dated December 30, 2016. Incorporated~~Casualty Insurance Company by ~~reference to the exhibit numbered 99.1 to our Form8-K~~ ~~filed December 30, 2016.~~



10.90**		Amendment dated March 2, 2016 to Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated May 16, 2013. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-K~~ ~~filed March 4, 2016.~~

10.91**		Amendment dated March 2, 2016 to Restricted Stock Award Contract between Sanjay Madhu and HCI Group, Inc. dated May 16, 2013. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-K~~ ~~filed March 4, 2016.~~

10.92**		Amendment dated March 2, 2016 to Restricted Stock Award Contract between George Apostolou and HCI Group, Inc. dated May 16, 2013. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-K~~ ~~filed March 4, 2016.~~

10.93**		Amendment dated March 2, 2016 to Restricted Stock Award Contract between Harish Patel and HCI Group, Inc. dated May 16, 2013. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-K~~ ~~filed March 4, 2016.~~

10.94**		Amendment dated March 2, 2016 to Restricted Stock Award Contract between Gregory Politis and HCI Group, Inc. dated May 16, 2013. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-K~~ ~~filed March 4, 2016.~~

10.95**		Amendment dated March 2, 2016 to Restricted Stock Award Contract between Anthony Saravanos and HCI Group, Inc. dated May 16, 2013. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-K~~ ~~filed March 4, 2016.~~

10.96**		Amendment dated March 2, 2016 to Restricted Stock Award Contract between Martin Traber and HCI Group, Inc. dated May 16, 2013. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-K~~ ~~filed March 4, 2016.~~

10.97**		Amendment dated March 2, 2016 to Restricted Stock Award Contract between Wayne Burks and HCI Group, Inc. dated November 12, 2013. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-K~~ ~~filed March 4, 2016.~~

10.98**		Amendment dated March 2, 2016 to Restricted Stock Award Contract between Jim Macchiarola and HCI Group, Inc. dated November 12, 2013. Incorporated by reference to the correspondingly numbered exhibit to our Form~~10-K~~ ~~filed March 4, 2016.~~

10.99**		~~Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated January 7, 2017. Incorporated by reference to exhibit 99.1 to our Form8-K~~ ~~filed January 11, 2017.~~



10.100**		~~Restricted Stock Award Contract between Mark Harmsworth and HCI Group, Inc. dated December 5, 2016.~~Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.125		Renewal Rights Agreement effective January 18, 2021 by and among United Property and Casualty Insurance Company, United Insurance Holdings Corp., United Insurance Management, L.C. and Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.126		Property Quota Share Reinsurance Contract effective June 1, 2021 issued to United Property and Casualty Insurance Company by Homeowners Choice Property & Casualty Insurance Company and TypTap Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.


10.127		Renewal Rights Agreement effective December 30, 2021 by and among United Property and Casualty Insurance Company, United Insurance Holdings Corp., United Insurance Management, L.C. and Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.128		Property Quota Share Reinsurance Contract effective December 31, 2021 issued to United Property and Casualty Insurance Company by Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.129		Property Quota Share Reinsurance Contract effective June 1, 2022 issued to United Property and Casualty Insurance Company by TypTap Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August ~~3, 2017.~~9, 2022.

31.1		Certification of the Chief Executive Officer

31.2		Certification of the Chief Financial Officer

32.1		Written Statement of the Chief Executive Officer Pursuant to 18 U.S.C.ss.1350

32.2		Written Statement of the Chief Financial Officer Pursuant to 18 U.S.C.ss.1350

~~101.INS~~ 97**		HCI Group, Inc. Clawback Policy. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 8, 2024.

101.INS		Inline XBRL Instance ~~Document.~~Document

101.SCH		Inline XBRL Taxonomy Extension ~~Schema.~~Schema with Embedded Linkbase Documents

~~101.CAL~~ 104		Cover Page Interactive Data File (embedded within the Inline XBRL ~~Taxonomy Extension Calculation Linkbase.~~

~~101.DEF~~		~~XBRL Definition Linkbase.~~

~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase.~~

~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase.~~document)

**	~~Management contract or compensatory plan.~~

** Management contract or compensatory plan.

SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, who ~~has~~have signed this report on behalf of the Company.


	HCI GROUP, INC.

~~November 3, 2017~~	~~By:~~		~~/s/ Paresh Patel~~
			~~Paresh Patel~~
May 9, 2024	By:	/s/ Paresh Patel
		Paresh Patel
		Chief Executive Officer
			(Principal Executive Officer)

~~November 3, 2017~~	~~By:~~	May 9, 2024	~~/s/~~	By:	/s/ James Mark Harmsworth
			James Mark Harmsworth
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

A signed original of this document 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.


	Cost or Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
*As of September 30, 2017*
Fixed-maturity securities
U.S. Treasury and U.S. government agencies	$	47,348	$	5	$	(112	)	$	47,241
Corporate bonds		121,459		1,862		(811	)		122,510
State, municipalities, and political subdivisions		74,924		2,099		(83	)		76,940
Exchange-traded debt		9,293		194		(211	)		9,276
Redeemable preferred stock		138		2		(5	)		135

Total		253,162		4,162		(1,222	)		256,102
Equity securities		58,242		5,361		(580	)		63,023

Totalavailable-for-sale securities	$	311,404	$	9,523	$	(1,802	)	$	319,125

*As of December 31, 2016*
Fixed-maturity securities
U.S. Treasury and U.S. government agencies	$	1,975	$	—	$	(36	)	$	1,939
Corporate bonds		75,538		607		(1,641	)		74,504
State, municipalities, and political subdivisions		78,018		776		(488	)		78,306
Exchange-traded debt		11,463		36		(237	)		11,262
Redeemable preferred stock		237		3		(3	)		237

Total		167,231		1,422		(2,405	)		166,248
Equity securities		47,750		5,769		(484	)		53,035

Totalavailable-for-sale securities	$	214,981	$	7,191	$	(2,889	)	$	219,283


	Proceeds		Gross Realized Gains		Gross Realized Losses
Three months ended September 30, 2017
Fixed-maturity securities	$	2,765	$	97	$	(23	)

Equity securities	$	4,827	$	223	$	(525	)

Three months ended September 30, 2016
Fixed-maturity securities	$	3,891	$	196	$	—

Equity securities	$	5,000	$	491	$	(104	)

Nine months ended September 30, 2017
Fixed-maturity securities	$	9,638	$	126	$	(45	)

Equity securities	$	25,729	$	3,058	$	(865	)

Nine months ended September 30, 2016
Fixed-maturity securities	$	37,415	$	579	$	—

Equity securities	$	14,155	$	850	$	(530	)


	Less Than Twelve Months					Twelve Months or Longer					Total
As of September 30, 2017	Gross Unrealized Loss			Estimated Fair Value		Gross Unrealized Loss			Estimated Fair Value		Gross Unrealized Loss			Estimated Fair Value
Fixed-maturity securities
U.S. Treasury and U.S. government agencies	$	(112	)	$	45,344	$	—		$	—	$	(112	)	$	45,344
Corporate bonds		(530	)		49,789		(281	)		15,346		(811	)		65,135
State, municipalities, and political subdivisions		(29	)		4,332		(54	)		3,889		(83	)		8,221
Exchange-traded debt		(209	)		3,189		(2	)		80		(211	)		3,269
Redeemable preferred stock		(5	)		45		—			—		(5	)		45

Total fixed-maturity securities		(885	)		102,699		(337	)		19,315		(1,222	)		122,014
Equity securities		(545	)		11,154		(35	)		1,260		(580	)		12,414

Totalavailable-for-sale securities	$	(1,430	)	$	113,853	$	(372	)	$	20,575	$	(1,802	)	$	134,428


	Proceeds		Gross Realized Gains		Gross Realized Losses
Three months ended September 30, 2017
Equity securities	$	580	$	12	$	(10	)

Nine months ended September 30, 2017
Equity securities	$	580	$	12	$	(10	)


	September 30, 2017						December 31, 2016
Investment Strategy	Carrying Value		Unfunded Balance		(%)(a)		Carrying Value		Unfunded Balance		(%)(a)
Primarily in senior secured loans and, to a limited extent, in other debt and equity securities of private U.S. lower-middle-market companies. (b)(c)(e)	$	7,134	$	5,505		15.37	$	6,246	$	6,428		16.50
Value creation through active distressed debt investing primarily in bank loans, public and private corporate bonds, asset-backed securities, and equity securities received in connection with debt restructuring. (b)(d)(e)		7,630		1,746		1.76		7,358		1,360		1.76
Maximum long-term capital appreciation through long and short positions in equity and/or debt securities of publicly traded U.S. andnon-U.S. issuers, derivative instruments and certain other financial instruments. (f)		—		—		—		11,333		—		66.58
High returns and long-term capital appreciation through investments in the power, utility and energy industries, and in the infrastructure sector. (b)(g)(h)		6,148		3,766		0.18		4,326		5,766		0.18
Value-oriented investments in less liquid and mispriced senior and junior debts of private equity-backed companies. (b)(i)(j)		86		4,914		0.62		—		—		—

Total	$	20,998	$	15,931			$	29,263	$	13,554


	September 30, 2017		December 31, 2016
Balance Sheet:
Construction in progress - real estate	$	375	$	334
Property and equipment, net		1,213		1,654
Cash		110		179
Other		180		180

Total assets	$	1,878	$	2,347

Accounts payable	$	15	$	11
Other liabilities		14		—
Members’ capital		1,849		2,336

Total liabilities and members’ capital	$	1,878	$	2,347

Investment in unconsolidated joint venture, at equity*	$	1,664	$	2,102


	Three Months Ended September 30, 2017						Three Months Ended September 30, 2016
	Before Tax		Income Tax Expense (Benefit)		Net of Tax		Before Tax			Income Tax Expense (Benefit)			Net of Tax
Unrealized gain arising during the period	$	2,155	$	831	$	1,324	$	2,234		$	862		$	1,372
Other-than-temporary impairment loss		474		183		291		224			86			138
Call and repayment losses charged to investment income		—		—		—		3			1			2
Reclassification adjustment for realized losses (gains)		226		87		139		(583	)		(225	)		(358	)

Total other comprehensive income	$	2,855	$	1,101	$	1,754	$	1,878		$	724		$	1,154


	September 30, 2017			December 31, 2016
8% Senior Notes, redeemed in April 2017	$	—		$	40,250
3.875% Convertible Senior Notes, due March 15, 2019		89,990			89,990
4.25% Convertible Senior Notes, due March 1, 2037		143,750			—
3.95% Promissory note, due through February 17, 2020		9,417			—
4% Promissory note, due through February 1, 2031		8,468			8,821
3.75% Promissory note, due through September 1, 2036		8,692			8,924

Total principal amount		260,317			147,985
Less: unamortized discount and issuance costs		(24,006	)		(9,122	)

Total long-term debt	$	236,311		$	138,863


Due in 12 months following September 30,
2017	$	1,039
2018		91,070
2019		9,815
2020		906
2021		144,693
Thereafter		12,794

Total	$	260,317


	September 30, 2017			December 31 2016
Principal amount	$	233,740		$	89,990
Unamortized discount		(18,790	)		(6,795	)

Liability component – net carrying value before issuance costs	$	214,950		$	83,195

Equity component – conversion, net of offering costs	$	31,051		$	15,900


Three Months Ended September 30, 2017	Insurance Operations			Corporate/ Other(a)			Reclassification/ Elimination			Consolidated
Revenue:
Net premiums earned	$	43,964		$	—		$	—		$	43,964
Net investment income		2,563			623			(308	)		2,878
Net realized and unrealized investment (losses) gains		(226	)		74			—			(152	)
Net other-than-temporary impairment losses		(464	)		(10	)		—			(474	)
Policy fee income		905			—			—			905
Other		85			2,706			(2,422	)		369

Total revenue		46,827			3,393			(2,730	)		47,490

Expenses:
Losses and loss adjustment expenses		89,231			—			—			89,231
Amortization of deferred policy acquisition costs		9,031			—			—			9,031
Interest expense		—			4,408			—			4,408
Depreciation and amortization		33			785			(494	)		324
Other		7,155			5,595			(2,236	)		10,514

Total expenses		105,450			10,788			(2,730	)		113,508

Loss before income taxes	$	(58,623	)	$	(7,395	)	$	—		$	(66,018	)


Three Months Ended September 30, 2016	Insurance Operations			Corporate/ Other(a)			Reclassification/ Elimination			Consolidated
Revenue:
Net premiums earned	$	63,300		$	—		$	—		$	63,300
Net investment income		2,316			989			(520	)		2,785
Net realized investment gains		532			51			—			583
Net other-than-temporary impairment losses		(225	)		1			—			(224	)
Policy fee income		972			—			—			972
Gain on bargain purchase		—			2,071			—			2,071
Other		106			2,001			(1,786	)		321

Total revenue		67,001			5,113			(2,306	)		69,808

Expenses:
Losses and loss adjustment expenses		25,909			—			—			25,909
Amortization of deferred policy acquisition costs		9,335			—			—			9,335
Interest expense		—			2,672			—			2,672
Depreciation and amortization		31			419			(147	)		303
Other		8,426			5,293			(2,159	)		11,560

Total expenses		43,701			8,384			(2,306	)		49,779

Income before income taxes	$	23,300		$	(3,271	)	$	—		$	20,029


Nine Months Ended September 30, 2017	Insurance Operations			Corporate/ Other(a)			Reclassification/ Elimination			Consolidated
Revenue:
Net premiums earned	$	168,847		$	—		$	—		$	168,847
Net investment income		7,153			2,099			(730	)		8,522
Net realized and unrealized investment gains		2,193			157			—			2,350
Net other-than-temporary impairment losses		(854	)		(10	)		—			(864	)
Policy fee income		2,721			—			—			2,721
Other		428			8,063			(7,284	)		1,207

Total revenue		180,488			10,309			(8,014	)		182,783

Expenses:
Losses and loss adjustment expenses		142,425			—			—			142,425
Amortization of deferred policy acquisition costs		26,668			—			—			26,668
Interest expense		—			12,328			—			12,328
Loss on repurchases of senior notes		—			743			—			743
Depreciation and amortization		94			2,227			(1,425	)		896
Other		22,601			16,282			(6,589	)		32,294

Total expenses		191,788			31,580			(8,014	)		215,354

Loss before income taxes	$	(11,300	)	$	(21,271	)	$	—		$	(32,571	)


Nine Months Ended September 30, 2016	Insurance Operations			Corporate/ Other(a)			Reclassification/ Elimination			Consolidated
Revenue:
Net premiums earned	$	180,275		$	—		$	—		$	180,275
Net investment income		5,802			876			(678	)		6,000
Net realized investment gains		856			43			—			899
Net other-than-temporary impairment losses		(1,426	)		(15	)		—			(1,441	)
Policy fee income		2,967			—			—			2,967
Gain on repurchases of convertible senior notes		—			153			—			153
Gain on bargain purchase		—			2,071			—			2,071
Other		543			5,808			(5,200	)		1,151

Total revenue		189,017			8,936			(5,878	)		192,075

Expenses:
Losses and loss adjustment expenses		79,261			—			—			79,261
Amortization of deferred policy acquisition costs		28,674			—			—			28,674
Interest expense		—			8,112			—			8,112
Depreciation and amortization		131			1,191			(335	)		987
Other		25,159			14,470			(5,543	)		34,086

Total expenses		133,225			23,773			(5,878	)		151,120

Income before income taxes	$	55,792		$	(14,837	)	$	—		$	40,955


	Three Months Ended September 30, 2017								Three Months Ended September 30, 2016
	Loss (Numerator)			Shares (Denominator)		Per Share Amount			Income (Numerator)			Shares (Denominator)		Per Share Amount
Net (loss) income	$	(40,546	)						$	11,333
Less: Loss (income) attributable to participating securities		2,737								(557	)

Basic (Loss) Earnings Per Share:
(Loss) income allocated to common stockholders		(37,809	)		8,519	$	(4.44	)		10,776			9,209	$	1.17

Effect of Dilutive Securities:
Stock options*		—			—					—			62
Convertible senior notes*		—			—					1,028			1,447

Diluted (Loss) Earnings Per Share:
(Loss) income available to common stockholders and assumed conversions	$	(37,809	)		8,519	$	(4.44	)	$	11,804			10,718	$	1.10


		Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2017			50,000		$	4.02		2.3 years	$	1,773
Granted	��		110,000		$	40.00

Outstanding at March 31, 2017			160,000		$	28.76		7.4 years	$	2,591
Exercised			(30,000	)	$	2.50

Outstanding at June 30, 2017			130,000		$	34.82		8.7 years	$	1,675

Outstanding at September 30, 2017			130,000		$	34.82		8.5 years	$	639

Exercisable at September 30, 2017			20,000		$	6.30		3.9 years	$	639

Outstanding at January 1, 2016			110,000		$	3.19		2.3 years	$	3,482
Outstanding at March 31, 2016			110,000		$	3.19		2.1 years	$	3,312

Outstanding at June 30, 2016			110,000		$	3.19		1.8 years	$	2,650

Outstanding at September 30, 2016			110,000		$	3.19		1.6 years	$	2,989

Exercisable at September 30, 2016			110,000		$	3.19		1.6 years	$	2,989


Due in 12 months following September 30,
2017*	$	21,971
2018*		2,571
2019*		1,929

Total	$	26,471


	Nine Months Ended
	September 30,
	2017			2016
Net Premiums Written	$	199,218		$	202,307
Increase in Unearned Premiums		(30,371	)		(22,032	)

Net Premiums Earned	$	168,847		$	180,275


	Payment Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Operating lease (1)	$	614		147		279		188		—
Service agreement (1)		107		23		50		34		—
Reinsurance contracts (2)		26,471		21,971		2,571		1,929		—
Unfunded capital commitments (3)		15,931		15,931		—		—		—
Long-term debt obligations (4)		300,645		12,163		116,816		155,828		15,838

Total	$	343,768		50,235		119,716		157,979		15,838


For the Month Ended	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)		Maximum Dollar Value of Shares That May Yet Be Purchased Under The Plans or Programs (b)
July 31, 2017		895	$	44.53		895	$	18,371
August 31, 2017		38,530	$	40.31		38,530	$	16,818
September 30, 2017		85,424	$	35.12		85,424	$	13,818

		124,849	$	36.79		124,849

Large accelerated filer ☐

Accelerated filer ☑

Non-accelerated filer ☐

~~Non-accelerated~~ ~~filer~~

Smaller reporting company

Emerging growth company