HCI - Earnings call transcript Q4 2024

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Operator

Good afternoon, and welcome to HCI Group's Fourth Quarter 2020 Earnings Call. My name is Ali, and I will be your conference operator. [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 March 27, 2025, starting later today.

The call is also being broadcast live via webcast and available via webcast replay until February 27, 2026 on the Investor Information section of HCI Group's website at www.hcigroup.com.

to Relations. call Matt, like Glover, to now Investor Gateway please would turn over the Matt I proceed.

Matt Glover

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

webcast, Paresh Following please website To quarter of fourth performance for Karin's the update. information Investor operational update, the at strategic and visit Mark will then section will access corporate a review today's our financial our provide XXXX, of www.hcigroup.com.

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

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

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

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

Karin Coleman

of Hurricane everyone our and the and this Thank made quarter, out were from At X in beginning go to fourth a event you, Matt, hearts category Florida Losses hurricane. welcome, the everyone. landfall Milton impacted. as significant,

With demonstrate said, them policyholders of our business the our model. rebuild to results work their to and continue to We help pay our resiliency continue with that lives. claims

XX,XXX Hurricanes we this, some expect $X.X walk you we over things several coming Ultimately, XXXX. result from in Milton. notable of Despite with highlight HCI HCI steady highlight and paying it's events but to to to held will plan to Debbie, will so We in accomplished and we do in think during rates handled over these Helen through half rebuild. X claims XXXX. billion our the Florida them in that continue over Mark help important year, I numbers, the Florida,

a customers that our at the partner and appreciate Our XX%. we existing are rate steady remains of retention approximately strong customers

insurance success Reciprocal $XX million policyholders, During and We market citizens insurance nearly approximately in-force of XX%. we XXX,XXX in-force Exchange, all different HCI. reducing premium. over owners over from policyholders $X.X XXX,XXX our grew up to new different to XX,XXX a we than moved XX% blended our condo the option growth by combined grew which year, underlying net rate offered percentage companies XX XX,XXX company, our This implies our private to initiatives, across was a ratio started increased force in points. premium while to more Across billion. This our we a accomplished policies and

consecutive and value we this all quarterly team by line management were HCI quarter, to our dividend of technology. best-in-class forward we consistently to path. grow backed and because have has been continuing HCI its a with to proven bottom solid successes this on able by top line, XXth look per share paying deliver continued its $X.XX a fourth dividend. to return achieve the to commitment In shareholders of our on to We able

Now financial details on I'll to results. provide our it more over Mark turn to

Mark Harmsworth

to expected last underlying Milton impact and earnings detailed our earnings call, mitigate said we the it. Hurricane the on On Karen. of much fourth Thanks, quarter expected we of

earnings expense was under As were the $XX pretax the per in including and net quarter agreement. and that $X.XX. reversal expected, Milton of reinsurance Hurricane million net benefits multiyear for impact, impact diluted of $XX fourth was the of And including income million, share a loss million $X.X $XXX million

For $X.XX able $XXX were we've of was of per the million the with underlying past earnings diluted underlying share strength and full to of even grow the earnings income reasons a impact illustrating been few pretax couple over the hurricanes, earnings. years. X year, There are

been First, and revenue policies a of overall adding and our driven really lot by expense adding operational we've growing without efficiency. technology operating

Over the only years, premiums handful in-force added past of we've by a X grown XX% and people.

and ratio loss were changes loss we ratio When the Second, would legislative to our In declining. drop it expected XX% dropped XXXX, in even has XX% Florida, been that introduced happened. from further. steadily

X a combined year For a The strong our full loss non-cat less improvement and of noteworthy operating have our these things, leverage XXXX, in in ratio loss combined impact lower gross than XX%. the ratio. ratio was resulted

ratio Our XX%. combined is now about normalized

was combined fourth once first reinsurance than and quarter the underlying commissions be assumptions. the again and XXXX, the XX% we in to should ratio the expect in ratio While better Citizens of half that be combined recent for the for about kick

storm enhancing higher point been term rates ratio. have profitable capitalize positive and more factors XXXX. where what's capital combined we kept as we a over trend investment rates were in have these of when able like happening increased. improved through earnings has Because of and income all year doubled rates. investments one years an the with underlying to Investment of to has last generate our can low, of The higher couple active we impact balances the the earnings beyond is underlying combination There be short

the of of the share X things per a hurricanes share sheet. $XX.XX paying value balance the at started almost Debt and at ratio the ended year We with couple increased year Even $X.XX on per dividends, with book by $X year of XX% and also year. of in at just start the Now the the from has during a to improved cap materially debt-to-cap to XX%. the year. $XX.XX end

by debt $XX end over year. surplus liquidity holding by and the consolidated reduced we still grew million, XXXX, company the million is During underwriter at $XXX of XX%

future. company the are year Revenue and the despite growing, for increasing strengthen. strong season, sheet balance is an are a underlying earnings the was active positioned XXXX and continues to we for storm summary, In well

with to it And hand I'll that, over Paresh.

Paresh Patel

Mark. Thank you,

on HCI and Overall, we the while ended combination to this comments, a premiums Mark the by profitability. note. year Karin highlighted the Florida earned over of also Group year best-in-class our full ongoing impact positive in technology increasing As contributed the has grew gross reforms The very for XX% and outcome. strong of in

be future, the do intend in to term, would our just impressive. hopefully and to And that. short without hurricanes, Looking we Continuing current trajectory on the the very

And the premium across the is even just U.S. in to of Karin use highlighted the underwriting there's and by frequency total of and opportunity X% technology better to driver see proven $X.X additional supports billion the drive record, premium was track the our market. be of other believe and company, technology opportunity. HCI Mark's of ] Our controlled expect [indiscernible] it has became Group. The the a currently result an and company of than we technology insurance severity bigger that we What operational catastrophe homeowners a our HCI comments increasing less game changer. few an But But represents [ we given to XX% over an ago, Taro days Group it's losses, a a growth. for

of structure a have set operating goal, up consist to that we will that new distinct X units. So

The reinsurer. captive first companies unit includes our our X top-performing and insurance

our dedicated real from This estate. risk unit who claims to management experience underwriting group generating in own opportunistic while real strong will will portfolio. and delivering a focus and our managing include this income team our policyholders its results, positive Additionally, has and operations creating claims continue on for diligently estate

management This Our efficiencies. includes underwriting insurers our second platform to unit optimize outcomes operations. and helps and empower insurance operating unit market-leading deliver our better technology operational

viable at to up it the Group Axio from rename does unit we more include XXXX, flows, time demonstrated to the Group in income, the But its while only is being Insurance catastrophe-prone which this importantly, that and of carriers no We earned the not approximately therefore, need capital we Axio umbrella. under strong million [indiscernible] this has this insurance navigate cash to However, to Group hurricane Inc. ] and entity with needs volatility. ability Axio the no X companies, tipped significantly significantly profitability for insurance in an expect growing. immediate customers, a its of $XX technology Group are XXXX. any pretax number HCI is profitability solid and technology Group enhancing In grow unit [ world currently felt independently appropriate

this strategic for other advantage outside market we to and so the TAM. range management bigger much advisers this team, with a are but a take we alternatives want fully And evaluating opportunity. companies opportunity, therefore, stand-alone restrictions to same of same of assistance So geographies. in that of thing the fewer to vision, a same embrace We can other Axio it entity insurance Group do make market

or consider additional a not for structures It's potential During will be that will platform intend we we this solutions the valuable. review, shareholders, just sale to unlock point. at of this value too but actions, entertaining our

will I that, for over turn With questions. it

Operator

Citizens coming [Operator Carletti Matt with Our JMP. question Instructions] first is from

Matthew Carletti

of following about groups. kind maybe on Paresh, the up there commentary your separating

for country got with things the in you view of of that time well fires some January as talking we reminder in Florida of ahead been You've about terms and of being in how like catastrophic rest climate and dealing changing the weather the a of kind kind of that. with California.

of point Florida see should outside challenging more knowledge at Or on if HCI an already Can about to access use E&S the to basis you with as think even you Axio opportunity as help or California these kind carriers we any and would you how the areas. about that? if on we risk of like use As expect might any means in kind to an some look you take Group opportunities us your that? So go of or an of example, there otherwise?

Paresh Patel

is withstand California do be that Great California the those and as in go and to in desperate of is And hearts question, or well. would occur it actually clearly coming that years and probably What all of wildfires comfortably. additional speaking people financially events our in the a Matt. is solution can that viable need unfortunate out look, will

it's that of we largest in We question have the as the idea. hurricanes market, for But done in X multifaceted how a terms just go the would approaching Florida. to

is us which the sure clearly for technology that proven. have you thing First do can this, make we have to

of at it are little thing will was right? group -- we of HCI both, across already to we just this what Part as Does there which is flexibility in California, is to going or go. a Axio to do looking that it? this moment. deal technology the whole partner having we Group The to whether whatever. And about is this the be talking we or Second with bit separation who's of the the question is And way now is with right debate be remove that to going to that other help? that's company come with to exclusive from somebody market we're at. or one the of best a part an with it's in or going do of ready I'm

Matthew Carletti

sure. for does, It

just the tail seen about, might around two, having takeouts. takeout numbers Can are of you million structure. about how fit out HCI's that be green are kind the Does increase reciprocal get policies, the that always obviously it road there of fit that that policies And as balance structure amount that kind view kind of X that question but little reciprocal We've bit expand? Citizens. left? And there's you saw one, elevated a of number do million Next that you pool activity. that sheet we don't so take $X below in of I live might policies light kind does think, an of citizens of can talk been a a announcement going talk

Paresh Patel

Yes.

at So Citizens would green we notice populating. will starting still being That forward. impact Yes, there that consider policies under There are rate questions just think. lot X the has change the the as for policies would just have Citizens of but been in continue -- is at be that there. approved portfolio to and some because a point. you million we with moment of will in the there. great by not the as this some going flux worth

million overall, by the XX,XXX is there. in the policies let's quarter. opportunity taking grown the $XXX about just by fourth Citizens so into We've this And still So business on perspective. or put

the we XX,XXX, XXX,XXX policies, So Absolutely. XX,XXX, can them XX,XXX, XX,XXX, find

there. is that So

]. reciprocals and Taro almost as of other its with thing in TypTap other just of The its payroll complementary did everything for note, item else, like an assumption [ and most product. takeout to in It's

working and more many how items other It adapt one and come we're we are we note more how in as comments how the chose highlights these made to doing many we've are waste ask now about the else, will think right? offers we So join picks people of be Karin getting at is technology things, we us. made it. we And don't really with very of go got interested our cetera, because likely would likely join to or are well and will on yes, et not only efficient. who who folks We to somewhere people say,

these All all Mark about, leverage this efficiencies and operating of into able correctly. to is about built being what talking do

over So again over and we've XXXX. seen and in this go over

any there's XX last our about if doubt brings home. months the So it really technology, who

Matthew Carletti

in the what Milton without could. helpful. And XX% sure. in the of if for gross loss X accident ratio Was the much how Or there numbers obviously, impact kind it? loss in there's in question, the I be development gross very The impact if loss any would just Yes, That's numbers quarter? then ratio it? there. quick was so, And year favorable quarter,

Mark Harmsworth

Yes.

Matt, So it's Mark.

So million, about million to yes, and that's quarters $XX to relates prior to other million worth About there's of $XX that in the XXXX. number. of QX actually years. included $X favorable relates of prior million $XX.X the development

year ratio, XX.X%, loss in for normalized the I -- ratio was the the loss of year, terms normalized think. it QX, full you full In was if And it consolidated XX.X%. was will, --

Operator

Our coming Phillips with from next question Michael is Oppenheimer.

Michael Phillips

the question, off PYD. to just start Mark, follow-up with that I'll a on last

recognizing that that I or the Or is think Helen, could of would it quarters It's So been maybe, just I kept cushioned that, you else? that. it's X in some you from litigation cats things. somewhat -- happened that the favorable of about earlier of preserve that guess from XXXX. the that? talked some you've be of possibly and Is first yet be how and $XX X maybe part anything year, the million

Mark Harmsworth

of things, driven very little we fact is selections a thought. clearly that was a a I lawsuits less initial few tail we claims it right? There of than Severity significantly lot I than make was largely that No, bit initially mean development. it. we thought a the it's it Getting our watch to was and thought also little a things. little it then it's mean, we we than by developing thought was initially of less be the and than better part going lower would. And bit

frankly, So was to expected everything down bring that bring our selections if first didn't if the the the and in expense same direction range be. months we of moving above clear to be that very X our it it we going year. were we quite considerably -- the didn't better well And for we actuaries than

Michael Phillips

Okay.

right? from it's what less That's the it sound said makes prior it's former severity, any more it's that much I of better of better cats the So in latter, like what said. state, XQ, litigation, of so not more but you

TAM, specific maybe happy TAM the take if tech maybe a X think the Like for start guess do mentioned to that to about of as you of talk bit when platform. but second Can but I that the how bigger not you the TAM business? On the that? you much want, your just obviously, do segment for see what you the you structures. qualify little numbers,

Paresh Patel

Okay.

what's that I be so, there basis. we or is an or by HCI out about in insurance that's think off $XXX X, on billion spent billion billion homeowners $XXX $X.X that might annualized spent year to back So controls. about a Nationally, premium I

and like around are said, more we're I So struggling. carriers But more X%.

our should How what we're we these trying and to selection, perspective to in badly. from the what's deploy all the of we California like in capital should events stories profitable of the how risk when and will those come those out that which solvent, stay so things premium financially not do be? continue hurt should going coming of light on will carriers insurance that we occur, events to think are I mind,

built And for XX environment, can given this years, facing been that well. and really technology we've do that that we've

to thinking before. it Florida catastrophe Nobody had. So knowledge was of about we had disasters these and outside didn't because everybody that occurring kinds have -- wanted

platform, Now throughout or growing. under getting with seen $X.X our -- billion just the very, management a they do, on there, it $X.X right? the huge the get we $X And Imagine billion. if million be you've opportunity. very time we're X% went share from premium small, by the market to U.S., leverage $X is billion already by about we'll

TAM that So gives Does as here. kind that looking you at to of the idea the an help? we're

Michael Phillips

it your tech part homeowners sounds and Yes. referring like of the that's of think to does. market. overall market. first can the your answer, the I It In how you're kind help

when part you're to So referring size is TAM, your a your small homeowners industry, that. ACI of the the of

second guess Okay. that don't first to know call I closer Mark? When second of same Make the I sure X than numbers, about looking the comparing we adjusted can, little XX%, Mark. of at in bit more first was the maybe the that in ratio, maybe for -- Good. if combined you're the if half I'm heard what XXXX better year. a I the -- in you talk little around numbers And correctly, I the a half first the that the that am of half you Is kind XX%. then -- half XX% and off. about, talking of right

Mark Harmsworth

there, that beyond Think a question thing. -- as that on commissions after referred the to got on Citizens the and And that ratio. as type normalized in your those QX assumptions, -- about year I Yes. full XX% next of of to Yes. XXXX, reinsurance combined renewals, you've

comes more will of that's likely of is first of the where in mid-XXs where the fully because, loaded assumptions the The XX% in reason got the coming in, reinsurance, you've premium year like temporary sort no obviously, QX expense, you but be from. impact no the pack. the it number of that Citizens loss again, number, as So half have

And lower. so is going combined just ratio your

get how XX%, for about of XXXX the out. -- that's year, So XX% help? ratio does so was by in the the full half XX%, year the combined that way, you that first the normalized normalizes XX.X%, once XX% And

Michael Phillips

perfect. Yes, you appreciate Yes, it. that's thank I

Operator

Mark Our coming Hughes Securities. from is question with next Truist

Mark Hughes

to that for to is good that here in seems really companies like It going idea on direction. look be a a Paris least the use would or some a this the the assume are that at you're if would GEO, term? early flagship sort highlight help And visibility insurance to for result the customer technology happen What's start I in is I for to chance? other of it way to or odds? that to opportunity. to and it? at have medium near the right the What What's stepping

Paresh Patel

Mark, solidly is a are think where help. rapid -- right, The needs no Yes. earnings clip. growing no profitable, these we companies volatility is you're we've I would immediate go where of my interesting at to hurricane of developed and comments, it thing capital, through

All of these things are controlled X customers. Group carriers true with only having HCI the as

to very existing future Axio that customers just new any positive a So they're get going -- their for going very them give X for right? leverage things the and a even carriers the them, doing create is if to is doesn't by

comes make technology And out, Group, Now beauty mind doing brighter, catastrophe future you leader in to Louisiana expand HCI set you right? the adding operate up those can But states, the these X to correctly, even at be hand, decisions. if that different to California, places. this you're the now Louisiana active to start whether other being in wants geos on right? of on separating moment. another so it the decisions could you being Texas X as thing California states, If those what we're other obviously one. or Axio's may separating or is it

help operate use may could Texas there business are Texas, could right who Group, for the want the help who example, HCI now not in plenty use underwrite carriers or in to while of the to California better. So in

making are beneficial So that's HCI to limited the helping why so that you're is not capital only that separation Group. to we

Mark Hughes

But as fronting could involve this well?

Paresh Patel

I is that positive and and I'm this so resulted we've like something, very, are been other again, is how When see focused things XXX% technology lots don't of right? more outcome for Axio funding bar to of our than distribution evolves. these very there get than that necessarily put in is, we through shall sure done. technology this is yes, the lots has you fronting this things how the you where results. underlying But it on time clear clients talking sense done of else entirely much at et gave have you produce because so never produced actually engineering of like always not to know that the capital, of who every numbers I far, Group our capital have would mindful we've profitability, we'll to technology friendly we've I'm financial kinds anybody before way as at So are right? into has their We've companies fronting, actually higher we had Mark the done time. because this been the different a looking people right? group, never of cetera, going has a have risk these in, risk that a far, results put capital HCI have just our -- And

Mark Hughes

loss quarter, ratio? some you. tend that. gross fourth weather, any to The some all attritional do How think of very hear get storms a losses, other you I you in Yes, perspective, much think ratio the good factors helped loss down I variability those Yes. that knock

Mark Harmsworth

might out in a it's than -- lower which driver, just frequency little phenomenon. XXXX you a 'XX might take was is frequency lot. coming at It XX.X% is big up, helped of XX% ratio, it the the XXXX. in weather, bit just going severities not direction, a right it's It you down, think is It coming moving not and was I And -- weather look claims claim but you different, it a it's weather a mean I frequency, even bit. bit is and help have if if lower in Mark, litigation But loss is than Mark. I coming all mean -- it's obviously, claims a 'XX. down, out if propensity factor but down.

Paresh Patel

if aspects little sure the technology also Mark, is of business. There's we big other with depopulations late had things doing policyholders understood the We add about were could book the of concerned did are And us I we 'XX, loss going. about when making we our us. We talked clearly takeout commentary efficiency would and how in technology come in to to only that a depopulating the -- with stay about the can bit that perform. Citizens, showing how terms who want to existing we ratios they

bit sure in And about little for more reserving we in our conservative were past, Mark quarters -- those a so I'm takeout it we talked I think books.

the else and right? already sort said takeouts -- results think years is of started never almost good would doing new book phenomenon we that are place. what quarter that I that as a we fourth a right? the as happen, those everything in is we have few we're didn't existing This ago, could has showing have

Mark Harmsworth

not that seeing. assume and that assumed -- you're on the loss The start, indistinguishable, legacy at part if we Yes. did of ratio what between is -- difference the business, you that's that the business which and that's will, Yes.

Paresh Patel

that technology. it's that the is to fact Yes. than is doing nothing attributable And other

Karin's this by about not ratio, start dropping right So the as look at the of in will future. It's is this to how the why, showing you year. which there stuff and work in XX% theory, course in is working, is all combined someday it effectively the point in

fact to I in think by doing seem tell should all would laps or the of in if to And thrilled, can you around you the year, by a points opposed the effortlessly a matter be X be is XX%. X table. it insurance right? just tone you doing the improve guys are as boardroom that We

Mark Hughes

lower you takeouts as to mine Did however well that Is needs little can that a fair? doing want strata, possibility if additional open the you for up presumably future for and on or higher it kind takeouts. of at look you're strata

Paresh Patel

right? And has environment, that Yes, up reforms to kept it things is we very we itself happen only doing when in a stable we very a here. right? environment then state made the to right? the Good that industry the of regulatory done to be in are be And private look, indices it legislature responds also does, market steady one insurance Citizens like. what of where positive is and when step a fourth the hurricanes, of contracts because state matter. what shrank it's And California, right, I and usually talk market. private quarter, you right? a in tell about happen further, will looks X compare the stable has to may alternatives after suddenly actually them, that you, stepped have this the insurance whole it in healthy up as go hurricanes, is and the can is an your -- even and going That to of and offer even after the you achievement, people Florida the is there very, private for which question, -- And manner to we're it And to Citizens shrink incredible the regulations a

Mark Hughes

think Paresh, might If California slip I of you about wake the in outlook what do market wildfires? reinsurance one and the the more.

Paresh Patel

in because answer a in mid-January. Bermuda we tongue-in-cheek were you give I'll

happen and what's about worry to to California. wants everybody going think discuss I in

are -- estimated would did. Mark the the boring The Florida, we do, guys numbers where what numbers losses that had are right, we contained, insurance We were through. from coming we we are to said going we said other

to customers, we else. I at the problem. have we know everything looked do our exactly everybody to know I We behave. rates We said, U.S. are you So California exactly going as like how solve it, said, like what

right? I think good the boring and it talking the when I it does. be seem those happened all, guys. We that, the the a always XX way, Florida is -- that First And in of it's point years, time it's now love sentiment thing industry. to says right? California by

Operator

Thank you.

have end session. our reached question-and-answer We the of

So I'll Mr. for now turn any to closing the call comments. over Patel back

Paresh Patel

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

Operator

conference, Ladies may you lines and at and gentlemen, does your and participation. you. this time, we conclude this for today's your Thank disconnect thank you

HCI (HCI) 27 Feb 252024 Q4 Earnings call transcript