HCI - Earnings call transcript Q4 2019

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Operator

Good afternoon and welcome to HCI Group's Fourth Quarter and Full Year 2019 Earnings Call. My name is Cynthia, and I will be your conference operator this afternoon. At this time all participants will be in a listen-only mode.

Before we begin today’s call, I would like to remind everyone that this conference call is being recorded and will be available for replay through April 5, 2020, starting later this evening. The call is also being broadcast live via webcast and available via webcast replay until June 5, 2020 on the Investor Information section of HCI Group's website at www.hcigroup.com.

to for call HCI. like Swansiger, to now Relations Investor would turn over the Rachel I Rachel, proceed. please

Rachel Swansiger

Thank you and fourth quarter good afternoon. Welcome full XXXX to year earnings call. and HCI Group's

and are Patel, Harmsworth, today Chief Officer. Financial Officer, me With our our Chairman and Chief Paresh Mark Executive

quarter turn operational opening will the to for an the call and Paresh's year business of financial performance review back Following full our XXXX update outlook. remarks, for Mark and and then Paresh

today's will webcast, website visit www.hcigroup.com. take Information your of we access section To Finally, Investor please questions. the our at corporate

we take words today's remind anticipate, estimate, Before signify XXXX. and begin, questions made opportunity similar I plan responses Securities intend, to forward-looking and statements. expect, the to would may that of project the Litigation listeners to such forward-looking and Act other statements like expressions pursuant Words our as to and intended contain to are presentation Private Reform

various are uncertainties. not and to results are guarantees subject future statements Forward-looking of but risks conditions rather and

of or Company's Some and results any effects have the uncertainties Should adverse the conditions in financial Group actual Commission. Exchange the to identified risks filings material are with any of obligations forward-looking develop these Company's operations. update developments Securities to on events, all could risks and HCI disclaims business, uncertainties these and the statements.

Patel, Now, with that, Chairman and our call Paresh Paresh? I turn CEO. to to would like over the

Paresh Patel

start are overview with real Thank you, in and brief to development principal everyone. Rachel. software estate. a like welcome, our I'd insurance, Company. And of Today, HCI's operations

primarily Company, homeowners Insurance Company two Choice insurance & Homeowners and here both Casualty Florida. which have TypTap of Insurance provide in and We companies, flood insurance Property

services, related which Capital, of which called develops in insurance technology real portfolio several our And use estate owns lastly, have Exzeo in Greenleaf also products an information manages and growing have operations. day-to-day subsidiary our Florida. of we We we that and

we insurtech began company. insurance an Recently, as describing HCI

insurance related and technologies. focus primary While is business, our on our insurance using developing is

have and our of of technology to results. help We up and suite servicing products. developed insurance tools operating speed cost also the underwriting our lower These full a producing, improve

coding For and in example, when they combined our experience can deliver minutes. the operating will speak profit consumers virtually analytics, policy about I and an are by with as instantaneous. platform TypTap these that platforms industry has The deliver in and superior agents, for our on insurance it evidenced what data tech a production a margins. results, binding Underwriting to moment. online simplify and platforms us decisions more means leading both policy

marked the hit. hurricanes quarter. some for highlights fourth in XX profitable, the the been for the fourth quarters of exceptions The quarters Irma and Now, which being HCI quarter XXth that out has Michael

year, share. this at consecutive we paid quarterly also per of December dividend our In common $X.XX XXth

X.X%. current share treasury at about year of note, As that's our that a a today. note to of price, Compare the yield yield XX a

finally, acquisitions year-end the organic, force year assumptions, for quarter, at and/or TypTap's last the was size citizens a of TypTap. in premiums year. without growth And end quadrupled the This any from fantastic of in

over it turn Mark? our our who for walk through quarter I'll though, will to fourth us outlook, year. business performance full Mark our about the talk and CFO, I Before Harmsworth, financial

Mark Harmsworth

basis. $X.XX quarter share diluted the GAAP per Net fourth on for on $X.XX earnings was an adjusted Paresh. million, and Thanks, $X.X income were basis and a

diluted up was on full an share of and year For million per GAAP basis year, were $X.XX the from income adjusted earnings on and $XX.X net last $X.XX basis. a $XX.X million

again continued fourth discussing quarter has were been few last in grow and third in year-over-year. quarter. the In the second earnings company the begun we've the now again. up to premiums trend quarter, gross calls, On written That the

$X million of million by of in TypTap. compared In fourth to last TypTap the up the by this driven QX, were $XX XX%, quarter gross written wrote growth quarter year. premiums premium

full to compared $XX.X the in million wrote over XXXX. year, premium For of million $XX TypTap

it of since premiums earned While through up some premium, quarter. takes written started way time, been increases this course, and for to have that to gross in QX, work those their increases

X% earned almost In earned up and the end the same and of quarter gross for net premiums at than from premiums QX, were year. quarter year, higher they in XXXX, X% end last the up the XX% were force last for At year. were the premiums were of XX%

XX% in the to at due looking than year, minute. Now quarter for loss a were lower same the fourth expenses expenses largely lower Total quarter last expenses.

offset net the income as than by than were for X% was a full were in and year, less revenue, increase the up up X% more total and For expenses result, a year.

to turn sheet. balance let's the Now

at brought debt ratio our reduced this the out in As in we of to end you cap cash million the down that XX% we last XX% the year. came in bonds of in from considerably paid due This convertible our to year end when level XXXX know, debt at March. $XX

debt, and maintain we very the investment strong down paying position. cash still Despite a

We have million million we on well $XX company in as additional liquidity credit in cash from investments facility. and $XXX financial have consolidated the and and cash basis, in holding level, $XX at our million as revolving a investments

of in end companies from target. are ratios insurance up a The year, individual also financial the RBC insurance surplus position. companies very are strong last both above and in well The is

under is surplus to companies $XX $XXX over Choice future support Homeowners surplus million the in of just just plenty We insurance and TypTap. growth. have in in million in There

the we dividends consolidated We had In $XX end $XX XXX,XXX purchased Through remains authorized. in We December, of and about buy authorized strong. this cash the million the operations Board $XX.X balance using XXXX, flow million year. shares Cash used buyback flow sheet. program. million stock, a to $XX from those of funds the strengthen over generated million back increase

the average now of the we and to the This fully the the under in price additional months, purchased purchased plan this number program authorized. December, at two extension total of $XX is authorized shares In an brings utilizes XXXX an million XXXX, XX,XXX into $XX.XX, Board of first an have XXX,XXX and shares. the purchase

In have almost or by years, about reduced we XX%. last the the X.X three shares float million

Company shareholder more XX% even they each more the bought of any owns result, haven't a As stock. if

As Total is total before, I share. that count year benefits of higher despite dividends per increasing year, pay the X% cash outflow. this half same dividends of cash additional we can the the of reducing in one without as mentioned of last an increase share were second per share the

dividends year great maybe up. down per last more earnings year XX%, Revenue despite a and performance. But are over is are book share well return Irma is the best equity return was XXXX share just of measure on share and this count is three up, down, us. shareholder important, years debt was and up, XX.X% value per This hurricanes for grew, may Michael. total the over be is

take future, surplus Looking we you to and and liquidity we the have business, more the to opportunity have know, recently as of arise. the on should book taken significant on a

I'll with And turn that, it back Paresh. to

Paresh Patel

Thanks, Mark.

Mark year successful in experienced year a indicated, weather of As us. good another with Dorian and blow basically September. exceptions for was XXXX by hailstorm the a a March Hurricane Florida glancing in

all policyholders that, Property annualized will its Anchor this business by $XXX policies the based that own million XX from approved a of premium. & book which on premium regulators, Anchor us by of announced to transition approximately on to Florida policies representing million and Florida of year, plan we Insurance of Following X. February Casualty April under annualized compares XX,XXX close XXX,XXX over approximately has our to in of Company $XX

the the participate to Under were in under policyholders transition. Anchor deal, no obligation

are that business the expect to to be and we time most and some optimize transaction retain accretive we it to this of However, for will earnings. optimistic very that us will the book, soon take

adequate do we have policies. in and most we and servicing place the could We transaction? to data enable integrate this Why could transaction Anchor's technology and we important, begin because the that this us pursue policyholder swiftly capital, have systems

we For all over additional days and mailed regulatory without policyholders, and need we this a example, X, of within transitioned will approval, those servicing to Anchor policies, personnel. receiving beginning notices begin April for XX,XXX produced

significant it case, The power is TypTap business new is employees. additional of that we size of of scale the a about to performance. this dozens our In expect costs. that operationally without such allows add to without us That's technology hiring

ready we're instructions. Operator, provide appropriate questions. to your the the that, please open with And call to

Operator

from [Operator our sir. question And you, JMP. first Instructions] of Carletti Please come Matt will Thank question. your state

Matt Carletti

Thanks. Good afternoon.

Paresh Patel

afternoon. Good

Matt Carletti

towards pressures that see HCI? place taking maybe of this little and we what might of the year as what and Florida, some your comments on Paresh, comments follow plenty and of Anchor the hoping landscape just future could having you talk broader liquidity actions for in about mid-year opportunities arise I you unfolds should peers of capital kind bit and about potential about and Mark's was surplus and agency a headlines as opportunities create move rating

Paresh Patel

Okay.

coming So, have out after think speaking and issues, of year Florida what most the product multiple at carriers gross various general think is, hurricanes end year-end their been board and bolster lot this a of And I week. premium add of to upper capital surplus see challenged. other you had are numbers surplus are about them years marketplace, across the just I the ratios XXXX. to Their financially allowable limits, ends at to

mean things challenges profitability and challenges of both sheet their you existing all course balance that So of portfolios. that companies have with core these have

do an becomes a in policy very to take kind it are that because over of how environment, difficult somebody fund you it? you if if do So, needs do to or acquisition,

that as the add without and to the could capital. In way, business what needing context, to is ask add reality. leverage. to And, Homeowners We this of and it take over us any more balance would Choice book do Anchor HCI's this did our the sheet regulators by to

RBC before met required under about last done our ratios are - we if is adding comfortably ratio even had all goes the to of Anchor, well And even premium X:X. deal basically year, to end we surplus would the that and, Anchor have the

Matt Carletti

Can are put shift If little stable, bit. in to really helpful. terms mean, it's quarter. you weekly and of up annualized growth kind just quarter, about rate? of the really progressed really how That's some bit Great. week nice I whether fairly now a the I was maybe TypTap gears production that little could production talk in across grow it or week after continued it where we a

Paresh Patel

Yes.

it stopped of production growth and really when up of went was - we of numbers TypTap well as the things mid-September. all talked obviously, the had that ended sort in the that's that, October, Matt, with way have started in November because and accelerated was because very why up picking through of did. then we sort previous That call, Dorian, And So, from approaching. we the December,

manage some point, growing. At do where we how growing, have we we are to are

Anchor the bit, growth that prudence, hurricane of But approaching TypTap's we abundance tempering are a and an controlled of also out with we've is but we done the both very especially and position a little are design companies. acquisition. this So given by we fundamentally, in are season

Matt Carletti

Great. I And then ask just that want one quarter. guess numbers I Mark for question every to

QX You have handy? net premiums for written

Mark Harmsworth

million. $XX.X Yes,

Matt Carletti

Wonderful. color Thanks nice of very forward. all congrats luck for the and on year. All much Best right. going a

Paresh Patel

Thanks, Matt.

Mark Harmsworth

you. Thank

Operator

[Operator Instructions] SunTrust. And our Mark Hughes next from Please will with come question proceed.

Mark Hughes

- kind to ratio about impact and the what on you need book, Anchor that the you time, Can the take profitability, perhaps, move average across to the it loss be can moved? talk of over assuming steps

Paresh Patel

what A do Yes, we that challenges. things. we a have are things. can do will over Anchor But a time, we over couple is, of because book we otherwise Mark. challenges Anchor had of taking wouldn't number from Clearly, had know

more it over will to comfortable forms We we're much rates with. transition and which our

the of So that some alleviate will problem.

secondly, have we the a we pick as operating had immediately about And we'll improvement as that talked don't separate Anchor overhead because some up company. earlier,

So that our incremental we improve increase that profitability will so get some on to degree. side, won't

that were I know ratios necessarily loss of As and themselves their far bad. ratios go, their as in don't loss particularly

go take-outs. to deal, think a the you outrun think outrun XXXX, they they doing April eventually, started I like. when issues we sins those we've And were back the past, of risk way and previous and only after going the constructed And I trying of XXXX were to company X. if couldn't their the lot

We of portfolio, past I the job coming current the which have the just we to current have the management the management operate -- - us. good to any don't over commend of of have up. cleaning So have done to sins a

Mark Hughes

unearned it X will ones… be April that book will will see written premium be entirely Or that through So comes the - the written? just that

Paresh Patel

Okay.

answer technical are doing or we to is, rewrite. stub cancellation the what policy a So period is that

that that year, policy April expire a this had somebody Anchor if example, for So, as issued going in to was has that was cancellation a X. being notice of policy canceled October of saying

on policyholder covering policy April a that rates Anchor's to stub October issued X has Choice to and Homeowners same forms.

So there to policyholder. the disruption is no

cetera. X how some the unearned course, agreed April rolls will to XX, So of us give holdbacks, premium that et that's over. October And, less Anchor

When policy policies. that HCPCI rates sequence just that October all comes, this happens. And will in That's at that all other paper then make our we and onto which will renew HCPCI of look of forms. like the policy

Mark Hughes

situation capital the then at TypTap. And

I then under your, think with just where being X:X. at stand And HCI, I you Is TypTap? limit described is kind that of, case? that you the X:X. do assume

Paresh Patel

Okay.

just because let's - said of So the couple we've a numbers.

when add just book Let's there. the in premium million the just a end bit. you in it, was in roughly them between Homeowners stuff surplus. conservative. Anchor total about Choice, Anchor me number go under you million add my X:X the $XXX -- speaking, And at that $XXX has And, of it's if through XXXX, to two being

sort X.X:X, room plenty that growth. less So, of about even and leaves it's for you than can you see of

to X:X million We're you million. idea premium. you went basically number,$XXX have. how growth of $XXX surplus, write of room million that you for we It If an of gives $XXX can much

at premium in slightly about, has it as point. It of $XX is surplus, of $XX million a say of I'd force. TypTap ended about and million different at today, now

it it going that at against point, hits $XX still has every before But million tide, So, is about day talking were X:X you by grow earning number to about. money. TypTap that this

But we'll to starts case, you rapidly, some So accounting unless have add that a first-world very surplus growing that, have start which have, of more to that's to capital. around going if do how is stat to problem yes. maybe moving works, because in TypTap

Mark Hughes

or update? yes. ask ratio by loss of couple the sort of XX%, just go Yes, any And it's around curious, hovered you context your May just I XX%. of year, [indiscernible] this about AOB in years opportunity say last when that, the the - to of updates fraud without sort let's think

Is run from that You're at the kind the you environment that a changing in anything that end of lower of it good fourth Do in the the or moves see quarter. book rate? level? that

Mark Harmsworth

of we’re think to the a - of so, XX, to I don't loss in XX-ish I think as range. I tend that that Mark. percentage changing mean, gross ratio don't core tend of XX, Mark. I premiums it and think always I significantly. more see it's really earned

tell of But Generally in the it's slowed AOB changes little bit before, a a any has said early we've As to that see environment. major bit. don't litigation. impact I it little

Mark Hughes

you. Thank

Operator

a back At this question-and-answer this concludes to would like Rachel time, our session. who I now to turn closing remarks. over has the Swansiger few call

Rachel Swansiger

management the in shareholders, updating We our the forward most you to of behalf for On policyholders, our future. I would continued progress entire like importantly, to team, look support. agents employees, and thank their near our on

Operator

our presentation. today’s for call. you Thank us joining for This today concludes

disconnect. now may You

HCI (HCI) 5 Mar 202019 Q4 Earnings call transcript