HCI Group, Inc. (NYSE:HCI), a holding company with
operations in homeowners insurance, information technology
services, real estate, and reinsurance, reported a net loss of $8.5
million, or $1.04 per share, in the second quarter of 2022 compared
with net income of $3.8 million, or $0.24 diluted earnings per
share, in the second quarter of 2021. Adjusted net loss (a non-GAAP
measure which excludes net unrealized gains or losses on equity
securities) was $5.4 million, or $0.71 per share, in the second
quarter of 2022 compared with adjusted net income of $2.7 million,
or $0.11 diluted earnings per share, in the second quarter of 2021.
This press release includes an explanation of adjusted net income
as well as a reconciliation to net income and earnings per share
calculated in accordance with generally accepted accounting
principles (known as “GAAP”).
Management Commentary
“Inflation accelerated in the quarter which led
to an increase in our gross loss ratio. We responded swiftly,
increasing rates 10% at Homeowners Choice and 12% at TypTap
effective August 2022,” said HCI Group Chairman and Chief Executive
Officer Paresh Patel. “These actions will offset higher severity
and improve our underwriting margins in the future. Inflation
aside, we continue to see benefits from operating leverage as our
business expands.
“We remain optimistic about the future. In May,
we raised over $170 million of capital through our convertible note
offering, which gives added flexibility to our strategy. The
strategy remains unchanged: to maximize returns for our
shareholders.”
Second Quarter 2022 Commentary
Consolidated gross written premiums of $186.2
million increased from $185.0 million in the second quarter of
2021. Homeowners Choice gross written premiums declined to $113.1
million from $124.2 million as the quota share with United Property
and Casualty (UPC) transitioned to TypTap. TypTap Insurance Company
gross written premiums grew to $73.0 million from $60.7
million.
Consolidated gross premiums earned of $181.1
million increased 29.9% from $139.4 million in the second quarter
of 2021. Homeowners Choice gross premiums earned grew to $113.7
million from $100.4 million, and TypTap gross premiums earned grew
to $67.4 million from $39.0 million.
Premiums ceded for reinsurance of $56.2 million
increased from $46.4 million in the second quarter of 2021
primarily due to the growth of both Homeowners Choice and TypTap
and declined as a percentage of gross premiums earned to 31.0% from
33.3% in the second quarter of 2021.
Net investment income of $3.7 million increased
from $2.6 million in the second quarter of 2021. The increase was
attributable to higher income from fixed maturity securities offset
by reductions in income from limited partnership investments.
Net realized and unrealized investment losses
were $4.2 million compared to net realized and unrealized gains of
$4.1 million in the second quarter of 2021. Combined, changes
in realized and unrealized gains/losses accounted for $8.3 million
of the $16.6 million change in pre-tax net income from the second
quarter of 2021.
Losses and loss adjustment expenses of $86.8
million increased from $55.9 million in the same period of 2021.
The increase was primarily attributable to the company’s growing
premium base as well as inflation and prior year loss
development.
Policy acquisition and other underwriting
expenses of $26.9 million increased from $23.2 million in the same
quarter of 2021 but declined from 16.6% of gross premiums earned to
14.8% reflecting lower commission rates at TypTap.
General and administrative expenses of $15.3
million increased from $10.5 million for the second quarter of 2021
due to an increase in personnel and related expenses in connection
with the growth of the business.
Year-to-Date 2022 Results
For the six months ended June 30, 2022, the
company reported a net loss of $5.8 million, or $0.92 per share,
compared with net income of $10.7 million, or $0.98 diluted
earnings per share, for the six months ended June 30, 2021.
Adjusted net income (a non-GAAP measure which excludes net
unrealized gains or losses on equity securities) for the six-month
period was $0.08 million, which, after adjustments for the purpose
of calculating earnings per share, equates to a loss of $0.33 per
share compared with adjusted net income of $9.8 million, or $0.87
diluted earnings per share, in the same period of 2021. An
explanation of this non-GAAP financial measure and reconciliations
to the applicable GAAP numbers accompany this press release.
Consolidated gross written premiums of $363.4
million increased 16.9% from $310.8 million in the six months ended
June 30, 2021. Homeowners Choice gross written premiums were $204.3
million compared with $205.2 million. TypTap Insurance Company
gross written premiums grew to $159.2 million from $105.6 million.
The increase was primarily due to the UPC quota share arrangement
and organic growth.
Consolidated gross premiums earned of $360.0
million increased 33.2% from $270.4 million in the six months ended
June 30, 2021. Homeowners Choice gross premiums earned grew
to $232.0 million from $202.6 million, and TypTap gross premiums
earned grew to $128.1 million from $67.8 million.
Premiums ceded for reinsurance of $109.4 million
increased from $89.5 million in the first six months of 2021
primarily due to the growth of both Homeowners Choice and TypTap
and declined as a percentage of gross premiums earned from 33.1% to
30.4% in the first half of 2021.
Net realized and unrealized investment losses
were $8.1 million compared with net realized and unrealized
investment gains of $4.9 million in the six months ended June 30,
2021. Combined, changes in realized and unrealized gains/losses
accounted for $13.1 million of the $22.8 million change in pre-tax
net income from the first six months of 2021.
Losses and loss adjustment expenses of $159.5
million increased from $101.7 million in the six months ended June
30, 2021. The increase was primarily attributable to the company’s
growing premium base as well as inflation and prior year loss
development.
Policy acquisition and other underwriting
expenses of $56.3 million increased from $46.2 million in the six
months ended June 30, 2021 but declined from 17.1% of gross
premiums earned to 15.6% reflecting lower commission rates at
TypTap.
General and administrative expenses of $29.3
million increased from $20.2 million in the six months ended June
30, 2021 due to an increase in personnel and related expenses in
connection with the growth of the business including higher stock
based compensation.
Conference CallHCI Group will hold a conference
call tomorrow, August 9, 2022, to discuss these financial results.
Chairman and Chief Executive Officer Paresh Patel, Chief Operating
Officer Karin Coleman and Chief Financial Officer Mark Harmsworth
will host the call starting at 8:30 a.m. Eastern time.
Interested parties can listen to the live
presentation by dialing the listen-only number below or by clicking
the webcast link available on the Investor Information section of
the company's website at www.hcigroup.com.
Listen-only toll-free number: (888) 506-0062Listen-only
international number: (973) 528-0011 Entry Code: 781380
Please call the conference telephone number 10
minutes before the start time. An operator will register your name
and organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at (949)
574-3860.
A replay of the call will be available by
telephone after 8:00 p.m. Eastern time on the same day as the call
and via the Investor Information section of the HCI Group website
at www.hcigroup.com through September 8, 2022.
Toll-free replay number: (877)
481-4010International replay number: (919) 882-2331 Replay ID:
46129
About HCI Group, Inc.HCI Group,
Inc. owns subsidiaries engaged in diverse, yet complementary
business activities, including homeowners insurance, reinsurance,
real estate and information technology services. HCI’s leading
insurance operation, TypTap Insurance Company, is a rapidly
growing, technology-driven insurance company that is expanding
nationwide to provide homeowners and flood insurance. TypTap’s
operations are powered in large part by insurance-related
information technology developed by HCI’s software subsidiary,
Exzeo USA, Inc. HCI’s largest subsidiary, Homeowners Choice
Property & Casualty Insurance Company, Inc., provides
homeowners insurance primarily in Florida. HCI’s real estate
subsidiary, Greenleaf Capital, LLC, owns and operates multiple
properties in Florida, including office buildings, retail centers
and marinas.
The company's common shares trade on the New
York Stock Exchange under the ticker symbol "HCI" and are included
in the Russell 2000 and S&P SmallCap 600 Index. HCI Group, Inc.
regularly publishes financial and other information in the Investor
Information section of the company’s website. For more information
about HCI Group and its subsidiaries, visit www.hcigroup.com.
Forward-Looking StatementsThis
news release may contain forward-looking statements made pursuant
to the Private Securities Litigation Reform Act of 1995. Words such
as "anticipate," "estimate," "expect," "intend," "plan,"
"confident," "prospects" and "project" and other similar words and
expressions are intended to signify forward-looking statements.
Forward-looking statements are not guarantees of future results and
conditions, but rather are subject to various risks and
uncertainties. For example, the estimation of reserves for losses
and loss adjustment expenses is an inherently imprecise process
involving many assumptions and considerable management judgment.
Some of these risks and uncertainties are identified in the
company's filings with the Securities and Exchange Commission.
Should any risks or uncertainties develop into actual events, these
developments could have material adverse effects on the company's
business, financial condition and results of operations. HCI Group,
Inc. disclaims all obligations to update any forward-looking
statements.
Company Contact:Simon RosenbergInvestor
RelationsHCI Group, Inc.Tel (813)
405-5261srosenberg@hcigroup.com
Investor Relations Contact:Matt GloverGateway
Group, Inc.Tel (949) 574-3860HCI@gatewayir.com
Media Contact:Catherine AdcockGateway Group,
Inc.Tel (949) 574-6860catherine@gatewayir.com
- Tables to
follow -
HCI GROUP, INC. AND
SUBSIDIARIESSelected Financial
Metrics(Dollar amounts in thousands, except per
share amounts)
|
|
Q2 2022 |
|
|
Q1 2022 |
|
|
FY 2021 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
Insurance
Operations |
|
|
|
|
|
|
|
|
|
Gross Written Premiums: |
|
|
|
|
|
|
|
|
|
Homeowners Choice |
|
$ |
113,139 |
|
|
$ |
91,141 |
|
|
$ |
426,910 |
|
TypTap Insurance Company |
|
|
73,013 |
|
|
|
86,153 |
|
|
|
247,479 |
|
Total Gross Written Premiums |
|
|
186,152 |
|
|
|
177,294 |
|
|
|
674,389 |
|
|
|
|
|
|
|
|
|
|
|
Gross Premiums Earned: |
|
|
|
|
|
|
|
|
|
Homeowners Choice |
|
|
113,681 |
|
|
|
118,303 |
|
|
|
401,137 |
|
TypTap Insurance Company |
|
|
67,443 |
|
|
|
60,622 |
|
|
|
175,907 |
|
Total Gross Premiums Earned |
|
|
181,124 |
|
|
|
178,925 |
|
|
|
577,044 |
|
|
|
|
|
|
|
|
|
|
|
Gross Premiums Earned Loss
Ratio |
|
|
47.9 |
% |
|
|
40.6 |
% |
|
|
39.4 |
% |
|
|
|
|
|
|
|
|
|
|
Per Share
Metrics |
|
|
|
|
|
|
|
|
|
GAAP Diluted EPS |
|
$ |
(1.04 |
) |
|
$ |
0.09 |
|
|
$ |
0.21 |
|
Non-GAAP Adjusted Diluted
EPS |
|
$ |
(0.71 |
) |
|
$ |
0.34 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
|
Dividends per share |
|
$ |
0.40 |
|
|
$ |
0.40 |
|
|
$ |
1.60 |
|
|
|
|
|
|
|
|
|
|
|
Book value per share at the end
of period |
|
$ |
26.39 |
|
|
$ |
31.66 |
|
|
$ |
31.92 |
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding at the end
of period |
|
|
9,047,972 |
|
|
|
10,125,927 |
|
|
|
10,131,399 |
|
|
HCI
GROUP, INC. AND SUBSIDIARIESConsolidated Balance
Sheets
(Dollar amounts in thousands)
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
|
|
(Unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
Fixed-maturity securities, available for sale, at fair value
(amortized cost: $403,844 and $41,953, respectively and allowance
for credit losses: $0 and $0, respectively) |
|
$ |
398,571 |
|
|
$ |
42,583 |
|
Equity securities, at fair value
(cost: $38,065 and $46,276, respectively) |
|
|
35,719 |
|
|
|
51,740 |
|
Limited partnership
investments |
|
|
26,695 |
|
|
|
28,133 |
|
Investment in unconsolidated
joint venture, at equity |
|
|
858 |
|
|
|
363 |
|
Real estate investments |
|
|
72,723 |
|
|
|
73,896 |
|
Total investments |
|
|
534,566 |
|
|
|
196,715 |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
360,488 |
|
|
|
628,943 |
|
Restricted cash |
|
|
2,600 |
|
|
|
2,400 |
|
Accrued interest and dividends
receivable |
|
|
1,421 |
|
|
|
353 |
|
Income taxes receivable |
|
|
1,789 |
|
|
|
4,084 |
|
Premiums receivable, net
(allowance: $3,935 and $1,750, respectively) |
|
|
52,302 |
|
|
|
68,157 |
|
Prepaid reinsurance premiums |
|
|
81,023 |
|
|
|
26,355 |
|
Reinsurance recoverable, net of allowance for credit
losses: |
|
|
|
|
|
|
Paid losses and loss adjustment expenses (allowance: $0 and $0,
respectively) |
|
|
11,134 |
|
|
|
11,985 |
|
Unpaid losses and loss adjustment expenses (allowance: $62 and $90,
respectively) |
|
|
42,348 |
|
|
|
64,665 |
|
Deferred policy acquisition
costs |
|
|
48,305 |
|
|
|
57,695 |
|
Property and equipment, net |
|
|
17,244 |
|
|
|
14,232 |
|
Right-of-use-assets - operating
leases |
|
|
1,861 |
|
|
|
2,204 |
|
Intangible assets, net |
|
|
14,358 |
|
|
|
10,636 |
|
Funds withheld for assumed
business |
|
|
82,468 |
|
|
|
73,716 |
|
Other assets |
|
|
28,796 |
|
|
|
14,717 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,280,703 |
|
|
$ |
1,176,857 |
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
Losses and loss adjustment
expenses |
|
$ |
238,824 |
|
|
$ |
237,165 |
|
Unearned premiums |
|
|
370,140 |
|
|
|
366,744 |
|
Advance premiums |
|
|
25,428 |
|
|
|
13,771 |
|
Reinsurance payable on paid
losses and loss adjustment expenses |
|
|
4,302 |
|
|
|
4,017 |
|
Ceded reinsurance premiums
payable |
|
|
24,641 |
|
|
|
19,318 |
|
Accrued expenses |
|
|
17,093 |
|
|
|
15,453 |
|
Deferred income taxes, net |
|
|
6,168 |
|
|
|
11,739 |
|
Revolving credit facility |
|
|
— |
|
|
|
15,000 |
|
Long-term debt |
|
|
211,648 |
|
|
|
45,504 |
|
Lease liabilities - operating
leases |
|
|
1,824 |
|
|
|
2,203 |
|
Other liabilities |
|
|
48,737 |
|
|
|
31,485 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
948,805 |
|
|
|
762,399 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
Redeemable noncontrolling
interest |
|
|
91,963 |
|
|
|
89,955 |
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
Common stock, (no par value, 40,000,000 shares authorized,
9,047,972 and 10,131,399 shares issued and outstanding at June 30,
2022 and December 31, 2021, respectively) |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
12,887 |
|
|
|
76,077 |
|
Retained income |
|
|
229,621 |
|
|
|
246,790 |
|
Accumulated other comprehensive (loss) income, net of taxes |
|
|
(3,760 |
) |
|
|
498 |
|
Total stockholders' equity |
|
|
238,748 |
|
|
|
323,365 |
|
Noncontrolling interests |
|
|
1,187 |
|
|
|
1,138 |
|
Total equity |
|
|
239,935 |
|
|
|
324,503 |
|
|
|
|
|
|
|
|
Total liabilities, redeemable noncontrolling interest, and
equity |
|
$ |
1,280,703 |
|
|
$ |
1,176,857 |
|
|
HCI GROUP, INC. AND
SUBSIDIARIESConsolidated Statements of
Income(Unaudited)(Dollar amounts
in thousands, except per share amounts)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums earned |
|
$ |
181,124 |
|
|
$ |
139,440 |
|
|
$ |
360,049 |
|
|
|
$ |
270,382 |
|
Premiums ceded |
|
|
(56,205 |
) |
|
|
(46,436 |
) |
|
|
(109,367 |
) |
|
|
|
(89,535 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
|
124,919 |
|
|
|
93,004 |
|
|
|
250,682 |
|
|
|
|
180,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
3,684 |
|
|
|
2,635 |
|
|
|
6,552 |
|
|
|
|
7,229 |
|
Net realized investment (losses)
gains |
|
|
(6 |
) |
|
|
2,607 |
|
|
|
(320 |
) |
|
|
|
3,720 |
|
Net unrealized investment
(losses) gains |
|
|
(4,234 |
) |
|
|
1,489 |
|
|
|
(7,810 |
) |
|
|
|
1,220 |
|
Policy fee income |
|
|
1,052 |
|
|
|
992 |
|
|
|
2,109 |
|
|
|
|
1,962 |
|
Other |
|
|
511 |
|
|
|
777 |
|
|
|
1,753 |
|
|
|
|
1,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
125,926 |
|
|
|
101,504 |
|
|
|
252,966 |
|
|
|
|
196,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses |
|
|
86,830 |
|
|
|
55,917 |
|
|
|
159,534 |
|
|
|
|
101,668 |
|
Policy acquisition and other
underwriting expenses |
|
|
26,863 |
|
|
|
23,169 |
|
|
|
56,271 |
|
|
|
|
46,234 |
|
General and administrative
personnel expenses |
|
|
15,301 |
|
|
|
10,546 |
|
|
|
29,335 |
|
|
|
|
20,196 |
|
Interest expense |
|
|
1,515 |
|
|
|
2,000 |
|
|
|
2,116 |
|
|
|
|
4,079 |
|
Other operating expenses |
|
|
6,977 |
|
|
|
4,775 |
|
|
|
13,269 |
|
|
|
|
9,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
137,486 |
|
|
|
96,407 |
|
|
|
260,525 |
|
|
|
|
181,179 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income
taxes |
|
|
(11,560 |
) |
|
|
5,097 |
|
|
|
(7,559 |
) |
|
|
|
15,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense |
|
|
(3,018 |
) |
|
|
1,267 |
|
|
|
(1,808 |
) |
|
|
|
4,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(8,542 |
) |
|
$ |
3,830 |
|
|
$ |
(5,751 |
) |
|
|
$ |
10,675 |
|
Net (loss) income attributable to redeemable noncontrolling
interest |
|
|
(2,268 |
) |
|
|
(2,179 |
) |
|
|
(4,516 |
) |
|
|
|
(2,973 |
) |
Net loss attributable to noncontrolling interests |
|
|
829 |
|
|
|
266 |
|
|
|
1,189 |
|
|
|
|
363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income after noncontrolling interests |
|
$ |
(9,981 |
) |
|
$ |
1,917 |
|
|
$ |
(9,078 |
) |
|
|
$ |
8,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share |
|
$ |
(1.04 |
) |
|
$ |
0.25 |
|
|
$ |
(0.92 |
) |
|
|
$ |
1.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share |
|
$ |
(1.04 |
) |
|
$ |
0.24 |
|
|
$ |
(0.92 |
) |
|
|
$ |
0.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share |
|
$ |
0.40 |
|
|
$ |
0.40 |
|
|
$ |
0.80 |
|
|
|
$ |
0.80 |
|
|
HCI GROUP, INC. AND
SUBSIDIARIES(Amounts in thousands, except per share
amounts)
A summary of the numerator and denominator of
basic and diluted earnings (loss) per common share calculated in
accordance with GAAP is presented below.
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
GAAP |
|
June 30, 2022 |
|
|
June 30, 2022 |
|
|
|
Loss |
|
|
Shares (a) |
|
Per Share |
|
|
Loss |
|
|
Shares (a) |
|
Per Share |
|
|
|
(Numerator) |
|
|
(Denominator) |
|
Amount |
|
|
(Numerator) |
|
|
(Denominator) |
|
Amount |
|
Net loss |
|
$ |
(8,542 |
) |
|
|
|
|
|
|
$ |
(5,751 |
) |
|
|
|
|
|
Less: Net income attributable to
redeemable noncontrolling interest |
|
|
(2,268 |
) |
|
|
|
|
|
|
|
(4,516 |
) |
|
|
|
|
|
Less: TypTap Group's net loss
attributable to non-HCI common stockholders and TypTap Group's
participating securities |
|
|
829 |
|
|
|
|
|
|
|
|
1,189 |
|
|
|
|
|
|
Net loss attributable to HCI |
|
|
(9,981 |
) |
|
|
|
|
|
|
|
(9,078 |
) |
|
|
|
|
|
Less: Loss attributable to
participating securities |
|
|
635 |
|
|
|
|
|
|
|
|
590 |
|
|
|
|
|
|
Basic Loss Per
Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss allocated to common stockholders |
|
|
(9,346 |
) |
|
|
9,022 |
|
$ |
(1.04 |
) |
|
|
(8,488 |
) |
|
|
9,249 |
|
$ |
(0.92 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Dilutive
Securities:* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
Convertible senior notes |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
Warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Loss Per
Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss available to common
stockholders and assumed conversions |
|
$ |
(9,346 |
) |
|
|
9,022 |
|
$ |
(1.04 |
) |
|
$ |
(8,488 |
) |
|
|
9,249 |
|
$ |
(0.92 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Shares in
thousands. |
|
* For the three and
six months ended June 30, 2022, convertible senior notes, stock
options, and warrants were excluded due to anti-dilutive
effect. |
|
Non-GAAP Financial Measures
Adjusted net income (loss) is a Non-GAAP
financial measure that removes from net income (loss) HCI's portion
of the effect of unrealized gains or losses on equity securities
required to be included in results of operations in accordance with
Accounting Standards Codification 321. HCI Group believes net
income without the effect of volatility in equity prices more
accurately depicts operating results. This financial measurement is
not recognized in accordance with accounting principles generally
accepted in the United States of America ("GAAP") and should not be
viewed as an alternative to GAAP measures of performance. A
reconciliation of GAAP Net income (loss) to Non-GAAP Adjusted net
income (loss) and GAAP diluted earnings (loss) per share to
Non-GAAP Adjusted diluted earnings (loss) per share is provided
below.
Reconciliation of GAAP Net Loss to Non-GAAP Adjusted Net
(Loss) Income
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2022 |
|
June 30, 2022 |
GAAP Net loss |
|
|
|
|
$ |
(8,542 |
) |
|
|
|
|
|
|
$ |
(5,751 |
) |
|
|
Net unrealized investment
losses |
|
$ |
4,234 |
|
|
|
|
|
|
|
$ |
7,810 |
|
|
|
|
|
|
Less: Tax effect at 25.345% |
|
$ |
(1,073 |
) |
|
|
|
|
|
|
$ |
(1,979 |
) |
|
|
|
|
|
Net adjustment to Net loss |
|
|
|
|
$ |
3,161 |
|
|
|
|
|
|
|
$ |
5,831 |
|
|
|
Non-GAAP Adjusted Net (loss)
income |
|
|
|
|
$ |
(5,381 |
) |
|
|
|
|
|
|
$ |
80 |
|
|
|
|
HCI GROUP, INC. AND
SUBSIDIARIES(Amounts in thousands, except per share
amounts)
A summary of the numerator and denominator of
the basic and diluted earnings (loss) per common share calculated
with the Non-GAAP financial measure Adjusted net income (loss) is
presented below.
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
Non-GAAP |
|
June 30, 2022 |
|
|
June 30, 2022 |
|
|
|
Loss |
|
|
Shares (a) |
|
Per Share |
|
|
Loss |
|
|
Shares (a) |
|
Per Share |
|
|
|
(Numerator) |
|
|
(Denominator) |
|
Amount |
|
|
(Numerator) |
|
|
(Denominator) |
|
Amount |
|
Adjusted net (loss) income
(non-GAAP) |
|
$ |
(5,381 |
) |
|
|
|
|
|
|
$ |
80 |
|
|
|
|
|
|
Less: Net income attributable to
redeemable noncontrolling interest |
|
|
(2,268 |
) |
|
|
|
|
|
|
|
(4,516 |
) |
|
|
|
|
|
Less: TypTap Group's net loss
attributable to non-HCI common stockholders and TypTap Group's
participating securities |
|
|
810 |
|
|
|
|
|
|
|
|
1,153 |
|
|
|
|
|
|
Net loss attributable to HCI |
|
|
(6,839 |
) |
|
|
|
|
|
|
|
(3,283 |
) |
|
|
|
|
|
Less: Loss attributable to
participating securities |
|
|
437 |
|
|
|
|
|
|
|
|
220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Loss Per Share
before unrealized gains/losses on equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss allocated to common stockholders |
|
|
(6,402 |
) |
|
|
9,022 |
|
$ |
(0.71 |
) |
|
|
(3,063 |
) |
|
|
9,249 |
|
$ |
(0.33 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Dilutive
Securities:* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
Convertible senior notes |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
Warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Loss Per Share
before unrealized gains/losses on equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss available to common
stockholders and assumed conversions |
|
$ |
(6,402 |
) |
|
$ |
9,022 |
|
$ |
(0.71 |
) |
|
$ |
(3,063 |
) |
|
$ |
9,249 |
|
$ |
(0.33 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Shares in
thousands. |
|
* For the three and
six months ended June 30, 2022, convertible senior notes, stock
options, and warrants were excluded due to anti-dilutive
effect. |
|
Reconciliation of GAAP Diluted EPS to Non-GAAP Adjusted
Diluted EPS
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2022 |
|
June 30, 2022 |
GAAP diluted (Loss) Earnings Per Share |
|
|
|
|
$ |
(1.04 |
) |
|
|
|
|
|
$ |
(0.92 |
) |
|
|
Net unrealized investment
losses |
|
$ |
0.46 |
|
|
|
|
|
|
$ |
0.84 |
|
|
|
|
|
|
Less: Tax effect at
25.345% |
|
$ |
(0.13 |
) |
|
|
|
|
|
$ |
(0.25 |
) |
|
|
|
|
|
Net adjustment to GAAP diluted
EPS |
|
|
|
|
$ |
0.33 |
|
|
|
|
|
|
$ |
0.59 |
|
|
|
Non-GAAP Adjusted diluted
EPS |
|
|
|
|
$ |
(0.71 |
) |
|
|
|
|
|
$ |
(0.33 |
) |
|
|
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