HCI - Earnings call transcript Q2 2021

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Operator

Good afternoon, and welcome to HCI Group's Second Quarter 2021 Earnings Call. My name is Matthew, and I'll be your conference operator this afternoon. [Operator Instructions].

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 September five, 2021, starting later this evening. The call is also being broadcast live via webcast and available via webcast replay until August five, 2022, 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, With Executive and Operating and [first call quarter] Paresh good Karin Officer; afternoon. Welcome second is Chairman Chief XXXX to Mark quarter Patel, Harmsworth, earnings Financial our our Officer. call. Coleman, me our today's (sic) on Chief HCI Officer; Group's Chief and

an Mark the then webcast, remarks, Information opening To will outlook, provide second Paresh website corporate of Karin's financial questions. for of www.hcigroup.com. review section we Following performance please then and quarter XXXX, will your Investor will operational and our our at visit take the today's access

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

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

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

Karin? Karin with our Now, like would Officer. turn over that, I Coleman, call to Chief Operating the to

Karin Coleman

company continue It goals our to for and productive as Thank and for we quarter success. strategic everyone. welcome, another on been long-term Rachel, you, position the has execute HCI

the the per paid our reflect premiums our is reinsurance notable June, by we by reinsurance restructured share dividend. to insurance four of consecutive program approaching division, insurance quarter events. quarterly gross second companies a was two marked costs from Casualty with million. operational towers July $XXX In successfully annualized separation the covered At Details several We purchasing our dividend, as consolidated The entered United XXrd reinsurance in companies, We In X-K. ongoing separate connection benefited support Insurance within a capacities. strong quota our new into share well our new expectations. and reinsurance of with long-standing our with total transaction reinsurance from as in Property were HCI by participation June. XX agreement Form $X.XX partners

million track reached business, law, Senate passed increase effective of recently XX% As an from of policies agreement, reinsurance our Under states. part at the in its and well UPC transition and Bill the of We're stated we take share approvals HCI, and ahead quarter. see a we of Northeast insurance $XXX regulatory to of this transition the up to all to by And four did legislature with filings. intent schedule of Florida of its of of on of because July to litigation the UPC's million force to Well, also close have of uses. curb renewal date of call, includes claims UPC lead policies the litigation UPC approvals in the to four peers, goal each us. to provide last quota On new business. transact TypTap XXX% year-end. of all by those was our we of share subsidiaries business finalizing XX one our second to inhibition which similar reach that growth for agreed $XXX TypTap in new states, to surpassing the end the its Also, quota the on policies has goal of

Florida. be sparsely litigation Capital, continue estate with expect on Alpha July Overall, West to landfall end seven, see Tropical in we Greenleaf an we trends. a Central don't July as real post we made the a At significant At pleased Storm event. region quarter's performance. However, improvement division, our one, in third Alpha of populated

value All real these investments. of tremendous our estate operating properties are shareholder success profit. We've generating through a had creating

sold even last of properties Mark discuss of turn million for of gain we the over of for and results a with sale, financial I'll As our real quarter XXXX. in $XX $XX still to Mark? that the million. with first second one unrealized portfolio. six our months over gains a estate reminder, that, year, it have we And to And

Mark Harmsworth

This business profitability, liquidity strong maintaining cash build and quarter continue the another positions. for to was surplus us as flow, the invest Karin. while Thanks and future, we in

press As again the in premiums last on year in which impact premiums shares Gross a share of issued minute. grew record quarter preferred Earned the includes earnings XX% were quarter Centerbridge, per diluted I'll up this touch a year-to-date release, the high. XX%. same showed we are earned about $X.XX. from were the This by to and

growth are two We on driving fronts.

and strong the to realize like policies our surplus our on with transitioning strategic opportunities, we business UPC, the one Northeast from using positions First, capital into are book.

TypTap, Second, technology-enabled tremendous growth through which we platform, drive voluntary growth experienced in continuing are conception. has our to

growth previous $XXX June from As driven and the for TypTap million be new is recently premiums of one, XX% a contract are showing is release of about XXXX. both XX for which June up beginning program. expected of premiums from press the XXXX. months The XX, $XXX our our the reinsurance issued in million, by Homeowners is our We year underwriters, consolidated annual about end run increase rate Choice. Net ceded to

in results two month old reflect one under new. and months QX the Our reinsurance the program under

second expect we last half to be year. which points three the of second around half For to the lower four year, of XX%, is than premium ceded the

everything from increase you'll of the this The that loss expenses loss with expected. mix. of as year. quarter, than traditional than second from last that, business. function year up product second ratio ratios the are higher is Homeowners at notice XX% from the XX% is performing and as Looking slightly the growth higher coming Choice consolidated is a little the results of of This loss quarter quarter Having last said growth a products is

mix. $XXX and In paying and we TypTap year, Net product year, expenses is is up rate make cash this on $XX few $XX this from months support last investments The to was flow Fifth and also XX% business, capital million. same by cash liquid is million over are to from both higher operations related than credit million about $XX of and we of the premium flow about that to wanted million period this access million six on of the the more half but premium cash with with year. growth far continue are of acquisition first are liquidity. growth remained TypTap, expensing Consolidated over comments so to the the just operations over strong. far cash out. I up We the consolidated come company quarter is Policy from again, very as And to up also cash the is raise a in At commissions. available Third. the flow holding have from full so higher level, line the in which Northeast year. significantly year build than last coming second reserves the growth and reserves $XX

per from included about the they're accounted way outstanding, that to in by earnings for, The February, form press today's preferred As quarter. of $X.XX the capital while in Because we release. calculation you shares reduced they share of per details raised shares. are are know, of $X.XX Centerbridge preferred in

we capital preferred a structure, since permanent However, consider this of part to we shares our don't impact. consider be a temporary the

have we Just call one our I reporting. mentioned more on thing. that last reorganized the segmented earnings

can readers into well for grow. look way our Wrapping a the you better company segment. view each the the continues So, that operations real insurance we gives results as and the to our estate of This corporate see at operations business. of up, as

and cash are and insurance the I investing at And will company over are it strong the in to holding company We Paresh. that, capital positions future, with levels. hand both

Paresh Patel

we obviously, told that. would reach and year-end by Mark. Then TypTap the you TypTap would a $XX that exceeded exceeded XXXX. end premiums that. we year had in-force Thanks, company calls, earnings before be the million XXXX, previous that we And of million predicted $XXX the we of In

$XXX of TypTap mark XXXX. would said the end million we Finally, by the reach

annualized mentioned, ahead million, of we Also, Karin we would it thought has helpful already time where laid stand several months this we year, premium out be reached plan summarize and last to As schedule. $XXX strategic today. a

of First, the State TypTap five of XX that. of we out Florida has total riding states disclosed and to secured in Florida. Florida TypTap and plans licenses achieved expand outside outside is states have of we actively Currently, in

TypTap. our Second, to told corporate of a you ago, year team separate structure plans management our for reorganize and create a we

Group, Insurance structure. management Board has the company, and was And financial management which Bhandari achieved Financial joining Prior of the team, to CFO recently we joined the a also as will CFO. Chief separate an the Bolt year, have created Directors that. company workforce, TypTap We of Officer, team, and TypTap reorganize last as Ankur, of build-out example reporting a Solutions. the Ankur Late separate of separate separate now

our & we moved Bulku, over the quarter, TypTap be Furthermore, Senior Financial technology to added second invaluable Also Dowling will and has for And a Relations going securing to We months TypTap excited are to TypTap, insurance new forward. we strategic Partners. our for his team Officer. a have XX ago. who Ankur Bill HCI ago including been alternatives, Suela had with as has Broomall, joined a investors obviously, as think And who to that in background years, TypTap. explore year thirdly, will in we Investor ambitions we to support that growth several joined from for achieved Head said has disclosing plans we of outside

$XXX As in this Partners. we of in prior year, capital secured February of Centerbridge we for calls, equity our discussed million

that brings today. to recap of us All

call, the TypTap's relating TypTap statement initial Just Form we proposed registration announced public of confidentially draft offering Group stock. a with a prior that to S-X common to submitted Insurance this SEC

comments shareholders. have tried the you questions. in and show, now To long-term path. As be transparent forward a with going record always instructions? to With run we limited, of of have our but that, can that will our wrap filing. open please on track a we the forward on we're And can the our up, we communicated appropriate announcing many as be the continue are Operator, my to and continuing look company appreciate, on to earlier this we you have filing comments strategy for call provide ready mind on with plans and executing

Operator

first JMP proceed. And of question coming Instructions] Carletti our from [Operator Matt is Securities. Please

Matt Carletti

Hoping on getting in said that you've you back extent the questions. written the can helpful. you of provide any that the rate, little around great a a season, $XXX cautious Obviously, in would your for the to expectations accomplishment, And anything be were part know past, was TypTap, more the say helpful. congrats. numbers million I to a some gross wind can What run few would quarter? ask questions the the think year, you be I but update you about

Mark Harmsworth

it's Matt, So, Mark.

in gross TypTap premium $XX.X So, QX written million. for was

Matt Carletti

Anything lie? about forward or you add going kind that rather can let of

Paresh Patel

opening about has over already achieved, stated ends from we've of organic as the transaction. growth million of $XXX think, million up I hence, in about of Matt, million. business $XX the comments, There's TypTap $XXX with TypTap UPC that

think I million we we to out fourth as $XXX the business the direct expect the rest play you quarter. year, get increase as into that dramatically of division

to, at end expecting, be $XXX we're So, the point, million well of by to north TypTap of year. the obviously, this

Matt Carletti

just and issue, other give at centers actually can I us TypTap, What flows look call And like think of how in profitability of cash the what then, came whether that cash broadly. broadly flow up kind kind company's second InsurTech today you on -- did I share around obviously, of year-to-date, another picture a quarter, mean, stands?

Mark Harmsworth

Mark. it's Matt,

flow So, was also TypTap from consolidated as in I which good well. year-to-date mentioned cash positive operations, and obviously

was our for cash operations about six $XX year. million For TTIG the first the I think months consolidated, from of flow

Matt Carletti

number you Ankur Excellent. to look on And on guys and really the look we mentioned expenses? then clear build the broadly forward and in other But of little could a or quarter LinkedIn talk growing you good. about investments the you that -- expect you it's should in terms you Bill actually The rapidly TypTap. What to places, business? scale are as look going

Mark Harmsworth

increases Yes. got quarter-over-quarter. in look labor compensation, I stock-based and can you got bit see and some increases operating We've you if increases in salaries. up those little they're expenses at mean, We've some a in expenses, there.

forward, I going second just labor saw that. terms of give guidance it's similar In to could operating think really and in we quarter. increases what don't expenses in But you the

Paresh Patel

in that also I in the fantastic all the But individuals the it to has, said, what always the a different short is, a TypTap just term, mentioned Mark expense. opportunity an of company, we're term, in Yes. Matt, asset pay investment yes. clearly off way and investing will the are think, saying long and as it above, not

Matt Carletti

questions, company, HCI? of I'll surplus then get out have numbers Do whole $XXX And for do TypTap of the you number Couple you at the net the written have and Mark, way. million? premiums then

Mark Harmsworth

written premiums the Matt? net So for quarter,

Matt Carletti

would be great. Yes. Quarter

Mark Harmsworth

consolidated of the million end and million about $XX.X at $XXX.X was It surplus TypTap June. is

Operator

Instructions] [Operator come from Truist Please question will Our Mark proceed. of next Hughes Securities.

Mark Hughes

Could you about the talk the in loss quarter. ratio

maybe Just was the even what growth. disaggregate UPC the roughly impact

What's then reserving you period you're be How think etcetera? how Would prices, get time What's curious And to loss trends? policies. raise have thoughts much the see I newer conservatively re-underwrite those been think playing that the book, as the that. you progression? more on I out? the on some might underlying

Mark Harmsworth

it's Mark, Mark.

picture, in last million quarter million. the the expense the look of up. of sort year second are up up starting So, expense loss from about movement premiums $XX year, big are the quarter to Gross of at the this if is about and $XX premiums loss earned second you

TypTap XX%, at ratio the loss but is bulk business, And XX% The talked growth about makes the UPC that. which you sense, about reserving if Homeowners we incremental that reserving came at before, it is coming we're the of XX%, that. about the of think which growth product, So, of from the rest Northeast XX%. about which we're about from

XX% a loss is XX% a and the a So from ratio. that product that it, has a product ratio coming call has, loss growth

loss basically that growth And that's mentioned said incremental I makes product just XX% of kind my it prepared in a sort So, ratio when of sense. what mix. in I was comments

really nothing going So, unusual on there.

at quarter XX%, think If was consolidated look the about ratio I for XX.X%. loss you it, maybe the

any that. the you forward rest absent If little expect consolidated less than you that of a look bit rate would ratio to be cat, loss year, the to

Second quarter second some the quarter, fourth April. higher and is in had than get quarters, weather always ratio third generally loss the in a because you little we bit weather some

picture. that loss you'd a break little is absent that product because than be in the bit big TypTap little the of to the further that's if Homeowners that that, ratio after. be loss anything around ratio. and the The more expect with I second of but few want line, then unusual. sort But lower consolidated around down thing of XX%, So, that's XX% the bit for Choice think can it expected year, And rest of loss higher detailed a you're points most but a UPC you go ratio important through by might your to the quarter weather, Homeowners in than that sort XX% range, I

So, that help? -- that does

Mark Hughes

lower? detail. super year, next When the UPC think that's Yes, we about be will

Paresh Patel

but would it we to think keep the to it me Let there's compelling take the go book until different. would about Mark. like that have through, is that obviously same evidence to transitions number but think make I many so would one, We be, we

Mark Hughes

on You your alluded And then in your changes? here have? latest those much latest impact on the fact recently. to how view that the they've what's might view legislative What's kicked

Karin Coleman

pull actual It's a the know little doesn't AOB intent down XX the XXXX. with to and in forward suit forward. the from tell. looking the demand We suit. Senate And mind us preset be to curve. deals appear of to the did they include early for from XX% able some July about the plus Obviously, be come to -- was what Keeping currently, numbers Bill bit July legislature's we're that to intent we of

in. that talking coming are just we're other streets about So, the

I tell. we're optimistic, early So, but too still to cautiously mean,

Operator

There Thank queue time. are questions [Operator this further the in you. Instructions] at no

Rachel Swansiger

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

Operator

us our for on call. joining presentation. conclude you today This Thank today's

now may disconnect. You

HCI (HCI) 8 Aug 212021 Q2 Earnings call transcript