HCI - Earnings call transcript Q4 2021

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Operator

Good morning and welcome to HCI Group's Fourth Quarter 2021 earnings call. My name is Paul and I will be your conference operator this morning. 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 9th, 2022, starting later today. The call is also being broadcast live via webcast and available via webcast replay until March 8th, 2023 on the Investor Information section of HCI Group's website at www. hcigroup.com. to Relations. call like Glover, to now Investor Gateway would turn over the Matt I proceed. please Matt,

Matt Glover

Thank you, is morning. Financial Executive Earnings Chief and Officer. good Officer, Officer; Call. Quarter Group's Operating Chairman On XXXX and Fourth Paresh today's and Harmsworth, call Mark Karin Patel, HCI's Welcome Coleman, Chief to Chief HCI

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

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

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

results obligations HCI to Some statements. Karin. of Securities conditions, disclaims all and call Group uncertainties over the of the effects the uncertainties Should material risks turn any financial business, these could filings Commission. with develop that, have are company's Chief the Coleman, to Officer. Operating and forward-looking any or company's like update operations. And the I'd to Karin developments these adverse identified actual Exchange with events, in on risks into and

Karin Coleman

the year this progress HCI meaningful you, company. XXXX Thank Group everyone. welcome, decisive across you key joining Matt. And for initiatives on morning. for Thank was a all us with

stable around premiums year million, annualized producing increases retention gross XX%. of from in from fourth $XXX of up of million At Choice, $XX while reported in an we written of another insurance ago. just gross subsidiaries last million premiums consolidated QX of ratio benefiting written up growth Homeowners XX% rate Our quarter, premiums ending fourth the the ratio strong a remains posted and loss year, year gross year. quarter attritional insurance XX%. the our TypTap, while grew, below $XX our million we last in strong loss Both gross million from with $XX $XXX of divisions At up from quarter, reported

for the the gross for doubled And XXXX annualized to of XXXX. under at we at than end from While million, year, expansion just $XXX XX year, in up in more premiums was states. and plans end have XXXX. one the of started the TypTap state $XXX million additional

with more Our combined carriers remain $XXX of capitalized a than surplus million. well insurance

two over accomplishment. back is Looking years, its enhancements, annualized the below effectiveness HCI results I'd this XX%. speak remarkable margins gross our to potential business at the and gross premiums scale proprietary ratio flat we attractive holding These ongoing to say doubled share. of as our has market while technology, loss a expand

Central had million Greenleaf, in estate assets, subsidiary, Commercial growing only Florida. the real end, value excited estate real very At for onto the profit of year. a our an which about We're with Moving strong year in million properties quarter real our a with estate our appraised Marquee nearly associated earning include full year $XX $XXX we portfolio debt. rapidly closed

XXXX expect estate real as on continues our Greenleaf sustain momentum portfolio. its to in embedded capitalize in We value the to team

detail reducing senior in nearly capital subsidiaries, reducing is our taken XXXX external ability while In that we XXth early and in level the $XX tangible its HCI it with revenue, dividend converted convertible grow shareholders. infusion expanded its combined now and paying targeted actions to was debt-to-capital with we've balance Mark. XX%. need lowest strengthened XXXX recent sheet, to per million closing, by balance our to million strengthen over fourth preferred debt than moving capital. line the financial from Mark of results $X.XX Centerbridge XX%, The and Now, the balance $XXX we've our down sheet, at growing on I'll to our beginning share an Group footprint Partners million without years. sheet, the while bottom and equity provide notes, the more my we the quarter, capital results. by In increased the We of turn our increased and on for share. strengthened $XXX Together to footing from year for $XXX year, book at which to outstanding value our to balance last million quarterly year. and reducing per our $XX more produced the our the additional sound consecutive our group million level, our

Mark Harmsworth

late profitable Thanks, in despite storm significant and year quarter a being by growth, off by XX% the premiums profitable Karin, written full XX% impacted the Growth by the another earned year. was fourth by XX% was of the year. quarter quarter quarter adversely grew grew for in XX% and fourth and the strong the capping for growth Northeast quarter and in in quarter, by premiums grew balance October. full sheet The Gross another for strengthening. profitability, grew

TypTap doubled Choice were underwriters is mentioned, by more the grew Homeowners course our under XX% record year. and is of XXX%, Consolidated grown two premiums for just years both for While leading has for company, another ago. to gross what annualized the are it year; premiums which growth, and Karin million, premium the gross than was by grew growing. around TypTap, the $XXX earned about as this quarter of

about for loss minute talk expense. a Let's

ratio XXXX. in because driven The is X%, are dollars expense The than attritional for is actually ratios both up underlying Homeowners little, by very mainly were mix. in actually in trends less the loss growth. loss and mostly was terms, improving. that loss up this The and was loss Choice change consolidated business While of TypTap lower

a of is couple which XX%, points lower about year. last was it Choice, Homeowners than For

couple Florida about the of expected. XX%, TypTap's also in year. The For it lower last than around business we'd XX.X%, ratio loss non-cap had UPC what a homeowner points business, Northeast which a was of is

we we when into gotten core see with are deeper this data, involved business, dig as we loss we the in more ratio. the decline have seeing a that However,

which relates, this encouraging should was in this is is and progress, showing what is it be expense course, in year. last interest the While work what model discuss it very be decrease long-term third I'll in was minute. drop effective. in statement, And of a income debt, going that a it XXXX. expense forward, of of a This thing about of the can expansion that in more interest very about half One noticed

Let's to the sheet. balance turn

debt-to-cap five drop of have our is debt-to-cap. $XX and secured started like cash materially and year discussed, came equity to end the I'd of XX%, the flow to half a ratio of balance the of the convertible we have few debt about That's a we convertible debt $XX now this about decline in by have of of ended with and of second the XXXX, million debt million balance debt, a liquidity. another and ratio real is As debt-to-cap a XX%. the this years. year. million we make de-leveraging million just $XX million in estate from and about debt extended converting been in sheet. in for we of of a year comments with Most effectively At and a debt in the $XXX We $XXX huge on

things flow continuing depreciation, few a between cash things million for to delta from XXXX. expenses, compensation. operations net flow from $XX Our the We from that consolidated over non-cash million Cash operations are operations just about million $XX operations. drive flows. and was in $XX are stock-based cash cash income year, produce There up $XX and the million strong had flow for from TypTap of with like

to claims claims significantly grows, unearned business premiums expense we actual are than reserves. and collecting the continue as As paid we're build less

million for mentioned investments two million line we've company we strongly we million. $XX $XX our about $XXX credit of holding holding many company As of $XX surplus and companies level, a funded cash have with of of insurance total times, to At $XXX access the and combined million. liquidity have

company XX,XXX,XXX, including is was a to book remaining share of the is and the million Loss the continues Shareholder option shares diluted of Just up. the up share is $XX.XX, the Common the is purposes end. might that at equity increased and effect increasing. share, end of equity dilutive are other at count value year the about value Book at year. warrants down, beginning grow. ratios declining. helpful. Debt to summary, per convertible and In dividends million per few be for numbers the $XX.XX fully of flow Cash $XXX outstanding from last $XXX XX,XXX,XXX from are notes.

more financial I'll it themselves. at positions company we liquidity company opportunities aggressive, if and We present profitable holding hand the to have strong with And that, have with capital insurance and the Paresh. levels. capability over And

Paresh Patel

Thanks on like that Last Karin companies, path plan. In do growth for expectation maturing for and Mark. you a a enthusiasm these units the companies investors. today, few well. and needed conditions profitability. a all rapid with Along spend Matt, there Mark have and changed, this, of everyone the companies I'd and strong capital before, HCI considerably. with solid was management deliver was show to the and [Indiscernible], performing on to are year demand especially must all growth to market of has of minutes also as underwriting expectation subsided operational to year TypTap Building an types a for aware, be solid Market these is need and insurtechs. there that is the

on on items, want update this the If high fulfill scale. last markets I to you progress the you four year. the can to had TypTap opportunity show take all you'll expectation then And

talk First, let's about growth.

with UPC Florida, now our are doubling year. to new across nationwide have we really two expansion. accelerated year-over-year a consecutive complete, of Outside second We add states, continue we the for and Florida, in premium growing transactions

talk in funded, very let's HCI. TypTap's are plans fully and about a strong capital. parent has corporate for TypTap see outside Second, need we Furthermore, no capital. growth

but are the from as proving book Florida we've towards early positive. with very targets. technology should similar Results expect over path In and taken Northeast of well long-term improvement, results we discuss more The effectiveness, the is underwriting. points Third, down to and the business success underwriting the seen UPC in transaction. we this of transaction our UPC our provide we is and several coming percentage we importantly, time have Exzeo are technology its in Southeast margin claims, expected,

importantly, most discuss and Finally, let's profitability.

segment Our show track at profits Choice. Homeowners a strong clearly results of record

be a to Exzeo, it also, and Our TypTap all cost Homeowners it where Choice. will is to which please give having in of operating of profitability the get separate of not 's just very investment to solid it include from. to actual XXXX. build This that a achieved talking recent TypTap base will about profitability. is company. I'm path in we a point that the full to results similar continued from Despite this, objective think periods success us our profits, And as note costs

appreciate As TypTap, and not is the delivering the am months going to insurtech. the that realize that current think so promise full see we time, TypTap of clearly of will valuation. I is forward, market value doing confident over this which market is go the the actual intrinsic on

the change, our So we job operationally continue. to get puts the market sure been that shareholders. execute and nationwide our plan closing, in has potential. into existing to are conditions From and we And maximum In bottom continue our committed on to top status we innings for plan re-evaluate, the of deliver results sit adapt we'll early and TypTap's context. understanding TypTap's track where line TypTap plans. the make When we we expansion and IPO value full because maximizing are of are beginning,

Our questions. results open record the technology will excited of in with differentiator, Operator. a continues now demonstrating for this we our a to by that, as top Florida. demonstrated our works And outside be are technology of national I being Florida we because our up are performer on track that proves And by basis.

Operator

Matt first is question questions. and Ladies the live. coming you. Instructions] from for gentlemen, line Carletti the your is is from open [Operator JMP. Matt, floor Thank now And

Matt Carletti

morning. Thanks. Good

Paresh Patel

Good morning, Matt.

Matt Carletti

you on help there's you and I more TypTap an wanted Can there. those whether that quarter magnitude, the reported ratio commission. before increased TypTap seeing make year business having question, know the run that the might to just ratio, once expect you with expense from pressure rough can writes into more we're scaled? a of consolidated ramps it some And the understand to numbers, investments ratio. or on the us first help what unpack couple the whether ask need for order are of us year, expense what the little where states in items the the to you you expand to of premium also, expense impact TypTap is I it

Mark Harmsworth

couple in trending loss in expense I I Hey, terms are overall -- loss down, it's right Yeah, of that the little the a in on the Mark. been professional bit higher. Matt, expenses thing expense TypTap, been the along which side and bit little by forward think scaling go is on numbers expenses, talked we expenses expense about pretty XXXX, up and driven fees, the think operating But ratio driving come loss of a little and there's consolidated lot earlier. a up that of that's that's the a the What's in going in Loss expense, in down those of I the trending that's is bit high with thirties, the that XXXX trending of expense that. XXXX. companies separating type basis, a direction is helpful sort ratio. labor things expect largely flat to

a longer run. to we come get of closer to XX expense the down expect So XX longer-term ratio to the in target to and

Matt Carletti

Great. Very helpful.

just to and on it. one add then numbers on one, lower quick Just one last one the

at of was more that How at sitting mentioned XXX TypTap? surplus. year-end You million than much

Mark Harmsworth

So we've million, TypTap, XXX total. $XX.X and balance. is Homeowners is then, Choice And the the million got $XX.X -- for

Matt Carletti

advantage you Florida for guys that Paresh, Homeowners us an viewing Great. over difficult opportunities has And opportunities Homeowners Choices of has you're question, for years. many Can going different which on the last we take update market, might Homeowners market created legacy historically Choice Florida as then think has that. just to shown a and been just ways you give how forward? the Choice. what portend broadly about

Paresh Patel

to again, fall. things. the seems Yet Florida Matt, One in is be Sure. two homeowners free market.

which same of weeks. you Choice, on I last think live the and else stat how shows the going for can should that other technology, of business income we keep a last currently through we And there. two out have has -- does. in stabilize of issues It the with adverse slight the low we same Homeowners two actually go various we state everybody it once year. I companies all despite the power portfolio, stuff, pressures just out have. note, There's a the the conditions, very made that base,

So that's advertising the the me of current the portfolio, value Homeowners Choice.

always about talk for opportunity the easy do let's see this liquidations state advantage that's the maximized we involved, are successfully and and will two it's exit term planning the the for And be difficult to when that because how recent Yes, to very as and much that, Hopefully opportunities. more we growing Florida that timing that right? large and Now we're people we the it's future know opportunity because item needed of sitting on show. to I in said a Yes? we've here this, to get that handled how And we basis, to long Having timing. you correct, right, aware take of other both it. items, question. answers so is of waiting get those have

Matt Carletti

helpful. the luck of Very the answers for Thank going and best you forward.

Operator

coming Truist. instructions]. from question you. Mark, your is line live. the And [Operator Thank from is Mark Hughes next

Mark Hughes

morning. Good you. Thank

Mark Harmsworth

Mark. morning, Good

Paresh Patel

Mark. Hi,

Mark Hughes

talk of communicated about Paresh, sooner talked you I you TypTap Could this what that's perhaps about that? had than for previously? think year. profitability the periods driving what you is

Paresh Patel

are and to -- starting of as the Matt sorry, we are elsewhere, mounting it. these Mark. going, Florida benefits see things in The opportunities Yeah, way are

a business rate the obviously, faster and remarks, expenses you had was by large continue and and in greater your the a than originally both things at thing had way, it is we quickly sometimes as was the different even anticipated, over growing business improving better That's stated Putting amortizing quicker improved, gets alluded we now anticipated. we a made see is opening that anticipated. as we as that of even we to my in one effective lot shocks our accelerate On than I had note, technology of So Florida so this myself, a what's gets revenue you're Northeast that. the items, how also Mark to it's base benefits different acquired, how much margins. a even it than us

Mark Hughes

just And that there. profitable policies you identifying the Okay. on a the more flesh Northeast, Is -- helpful Is it that less little are that difference? would actions non-renewing? and the you're the in seeing Just bit? be are could improvement pricing claims making you a or the little the out

Paresh Patel

side that And the item above. correct to It it's Mark, side, numbers that or and that the of all is book, suddenly answer isn't better Yes. us whether those the combined there way, management, of one a the better adding the the It's to together is in expense or improve. book ratio pricing pruning admin is together, giving reinsurance better -- what's the on of the coming coming it's all simple better of things makes side, the ratio. loss

So that working. to my insurtech is other comments that said, I

Mark Hughes

Understood.

expectations. when at generous terms growth You about to us past strokes a been have broad in enough in I goals, XXXX, if you give think XXXX, might the especially there's you of TypTap. wonder your about topline talk

Paresh Patel

to Absolutely. tell everything and going the are I be world choppier, obviously, place. a Mark, the that what out there, is, getting on will with else noisier you events all geopolitical is

XXXX. in point, in path clearly talked we billion I growth a I dollars that -- our this we of think lumpy -- are what premium can about will to is be we see So case but at

in to you there, ramp, what We a -- will see at. as you if get to if opposed it I'm going getting get just be steps is

Mark Hughes

TypTap? or is be billion billion is to the consolidated just And do. the clear, I

Paresh Patel

Well, I'm billion a be might possible. in thinking TypTap

Mark Hughes

Okay. the on is I sheet? real And million, What's value on think. estate, the the the value XXX then appraised a balance carrying

Mark Harmsworth

less a in million XX to XX about carrying number Karin is mentioned keep spots give mind the appraised carrying for though. than just value value XX. about is exact in you values I'll that. But One the XXX, about is that, value sheet. different It's in about thing of a second. couple a both balance in total

But value, about value one those So are of mentioned typically is look value, The to appraised that at because keep of estate appraised appraisals, just or -- we've the sorry. very those two to very And I've were full conservative. million. conservative those about appraised talked real of talked a fairly is Karin I between bank about thing estimate, So think value, conservative market XX mind, the in considerably delta you that the those very, value appraised if the higher than assets, the market value estimate of it's was assets value that. right?

because to can the something in keep about it's sort We thing value Just but of appraised talked still pretty it's only verify, mind. conservative. you

Paresh Patel

over is When clearly and one thing is the real value. all estate value on they is. more Mark, and alluded done inflationary portfolio in with Karin And A about opportunity. at patient be years we're in -- rates in prices, everybody setting to as And environment building that than done. her the looking an the Appraisals think other very comments. said are, is XXX we're said Mark comps we're we million I see the kinds in what has us previous the all that especially here get going appraised Florida, considerably known just In increasing things. the of the whatever the Mark But maximizing or those just said. Central real that worth estate to on

Mark Hughes

a capital developments act see maximize Yeah. financial done? more the [Indiscernible] bit it to And maybe you you've that developments competitors, going Maybe what's the Could it opportunity. to take that mentioned with too? likely out little state? the What you're the developments in want Paresh, you among make to can regulatory you going to to then or timing

Paresh Patel

the action holders, it legal and Mark, for whether we and I in is are will a at improve because a to we would would never and beneficial that throughout ours while state, that's because or strategy. down rates, would welcome going else's insurance stake, tell it happen be everything they mainly else you that hope regulatory somebody conducted hope that ourselves action we have policy manner keep all whereby not conditions always

of noting when and the it it. risk. is is on sufficiently Looking see market that, in really the upon opportunities And the being based when that's patient fundamentally and when pricing we act timing we

Sometimes talked -- that a basically isn't healthy. is And for shareholder, but on favorable, we good its we for it it quarters. things sure fact in materials think that means our look value good a the be book about when haul. company, some we need tell for we policyholder be to business, XX what because companies having XX take not to good path is profitable. made of presentation very to out It more I you'll And profit to of the should also we you makes long really want a there's only its profitability. be somewhere it's that That around for it's importantly, of

see short as but called act just So And every will your for I we're watch question a to to occur, answer day is into when when that it sit mind when arrives. day don't upon have ready will that that We're calendar the and getting action. it. the here day we day when arrives, we in to

Mark Hughes

influences that -- going progress that on a to be to number in see Yes, to HCI, this over improve improvement that's that year? loss. make get got is that point right. that that's a should much that see If we XX% goal it Obviously, attritional be I the you of the might coming XXXX? onboard TypTap made presumably able think the that ask, of type you time, you you've lot growth should How I to level and

Mark Harmsworth

only. ratio ratio think a Yeah. the of for Choice wind in though, I we've Homeowners Hey, Keep and Mark, mind it's talked loss that loss about blended is Homeowners Mark. before this

that, you like to the XX if more ratio for the of Homeowners, XX. look piece at So it's loss

TypTap for So loss definitely XX. that. XXXX on where more target probably on on rather we're is XX realistic was the -- and that, direction. is a And year that progress in would it I headed XX.X. probably trending definitely year TypTap that's last this was I better sight. think HO than for in sorry, XX, definitely And ratio making the that's It's right -- take the target The attritional

Paresh Patel

Mark, give And improved just said, those rapidly, put a that points. Mark and right? also you what sight. to deteriorating perspective X.X adverse selection, which on building look some you tends just numbers, at growing In market the when actually remarkable by loss Pretty in ratio

Mark Hughes

very it Appreciate Thank you much.

Mark Harmsworth

Thanks, Mark.

Operator

HCI this Patel, closing Thank our like session back the would Chairman hand Paresh you. question-and-answer concludes at I to And remarks. today. and CEO now call to for

Paresh Patel

you. behalf entire call, lot thank share and the everything shareholders agents, On was importantly, to our management, team. the in there this just entire know most and going of about price shareholders, of continued are the policyholders is employees, everybody that stock I else. a for with support. and start thanking we and also Thank I anxious management the the price

I thought few be might comments just So helpful. a

just at look those HCI's of have just simply, and results operational us. best I we're future say, in Group. that merely the points HCI you simple And my that's the and and the it might and platitudes. all us, can putting us, behind was stock But is still not front talking seeing, ahead of opportunity about appreciate Given also price talking in fantastic run a prospects up last preview of day are the opinion, year we're that a of we

of a price will $XXX.XX, about believe myself, talk and last is not We're walking realized. that share. walk. me all yet been best Even our actions value when our HCI none the ahead high, single which ran commitments note putting I the up Let way insiders, especially all-time year share has myself of our included, to you the in the that true of the sold the lie days us

in next and stay for you, going actions So you on see those quarter. forward. the take Thank to tuned behalf us

Operator

Thank you, our gentlemen, today joining today's for for concludes ladies presentation. and us This call.

now may You disconnect.

HCI (HCI) 9 Mar 222021 Q4 Earnings call transcript