HCI (HCI) 8 Aug 242024 Q2 Earnings call transcript

Good afternoon, and welcome to HCI Group's Second Quarter 2024 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 September 7, 2024, starting later today. This call is also being broadcast live via webcast and available via webcast replay until August 8, 2025 on the Investor Information section of HCI Group's website at www.hcigroup.com. I would now like to turn the call over to Mr. Investor Gateway of Glover Relations. Matt Matt, please proceed.

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

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

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

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

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

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

everyone. welcome, Matt, and Thank you,

base on few into a Debby. comments on quickly the Hurricane getting touch wanted Before I quarter, to

out go sympathies impacted Debby. Our those by to

Our during difficult team this time. actively is policyholders assisting our

be our retention. is to losses and not expect be within expected a early statutory to event, Our we is that reinsurance its Debby view well

commitment quarter of pre-tax premiums weather divisions. Including share had per underwriting earnings This to per accomplishments gross a insurance to paying in quarter, notable from of of million share, quarter. almost the of second losses reported XX.X%. HCI quarter, to outcome. Gross shareholders, our improvement another dividend. We Now its for results. the and $X $XXX update. consecutive in loss million, quarter quarter to contributions billion. We HCI be dividend ratio $XX our on quarterly each several in increased with in premiums a tremendous above of Group continued our In-force XXth was XX% $X.XX. continue was reported the earned the the income In our deliver $X.XX

First, Condo Owners run as total assumed approximately Citizens, rate $XX its CORE, Reciprocal million. premium is Exchange, policies additional known and from

unchanged. secure, the Second, both we expect partners. quarter. $XX be claims retention Citizens. similar CORE's includes consolidation our in of reinsurance policies per recognize annual our completed of to of statements our believe the towers and enhancements. I'd to reinsurers assumption technology organization. With the were and We we we now million outcome spend total reaffirm like reinsurance minor approximately to a last related from all quarter our the appreciate spend reinsurance of structure the largely I made value and across insurance with quarter, program last reinsurance transfer of and reinsurance which few at This a risk our year, the pleased our was We reinsurance included carriers support to continued

retaining more expected. that mentioned policies were I we First, we than

expectations. As The more case. continues retention the of renewal and up our paper, exceed is to this transition policies come to for our policies still

Second, I mentioned that coming the than loss ratio in better was expected.

policies better is the than is we still loss this assumed this case. book expected. seasoned, The continuing from more becomes on As Citizens ratio

November to to assumption both been Additionally, approved Choice our And from has assume in success policies participate attractive been from Citizens, technology of to assume Citizens. Homeowners the to policies have Given proven a XX,XXX been policies policies from has up XX,XXX assume October. companies approved Citizens in policies CORE to October. also applied approved well October. as in have assume to applied in select we TypTap additional to has

on We closer everyone to on line bottom profitability, plans solid quarter and we will progress another we continue top of make solid the update date. Overall, assumption our to posted our and line.

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

Karin. Thanks,

being sorry, same $XXX As of premiums year. Investment in some last driving said than year, We last loss solid the was higher a earnings income Consolidated are and quarter is -- by company. this is the expense quarter a earned higher These force growth ago, loss $XX but by lower down rates quarter in year that was another the where at for are than just and policies to the The year income invested being we in double million the XX% of outstanding Florida, up were from gross were over number lower million driven the quarter higher the share lower is ratio $XX Pre-tax year. investment was consolidated time XX% ratio come quarter, same ratios. Gross driven last a second balances. loss show, per the investment higher continued income from it loss cash million results XX.X% ratio almost primarily ago. of there. by of the over expense the XX% quarter, XX% numbers would quarter same diluted growth, premium higher investments $X.XX. this and down driven was also and higher. The income, end up by what XX%, ago

this year, X of For the first consolidated the was loss ratio months XX.X%.

loss a reinsurance is assumptions lower operational by just that, XX%. which under as rate well expenses policy This taken of our we combined from as ratio as driven of would While all reduction the weather the last year. The last for the the was in had actions closer was considerable expected combined half propensity. The combined improvements and improving of the XX% is little trends, litigation of ratio as the normalize frequency much the Citizens ratio types in less quarter lower claims first combined acquisition we a had leverage. year limited lower little loss the we If for being year, because the decrease quarter of this have than by second part this ratio in ratio been quarter a well driven during to was XX%. quarter. This numbers the for

indication are and this gross a an expenses As down first the of of the X.X%, year that operating X last percentage months earned premiums as year. from of leverage, labor period in XX% same during

additional is us adding drive to allowing technology Our to grow of a lot without is profitability. and helping this costs,

on few sheet, a to comments Now which the continues improve. balance

$XXX $XX. cash quickly XX%. despite debt management, These operational has has have been consolidated cash months, dropped from XX share resulted efficiency, from about $XX capital grown per The the the profitability debt-to-cap million. from has last $XXX maintain Shareholder by should also book balance to the dropped value million. $XX investments increased by increased improvements to Debt have and equity million. ratio able has in holding growing $XXX to We've liquidity And XX% capital. by significant flow. I talk sheet company million reduction. at careful over and debt well management, Over

it revenue to is investments to Paresh. surplus solid position, In are to premium investment is summary, up capital improve. addition, continues continues grow. And down, and ratio up, debt a in underwriter it the financial we're increase. In hand down, cash over is up, at level and to that, income is I'll The with and continues combined

Mark. you, Thank

Hurricane I a I speedy impacted Before my Debby, offer wish and going recovery. my comments, want sympathies to into also everyone by to those

want comments, a ratio combined in measure because in across of underwriting back the our see in success: we've even ratio. combined to thoughts technology. Mark's industry way, is down the been as my moving on move difficult. But improvement very, HCI. you quarters, The broader insurance that? universal it of of that a the And requires has a results. is if incremental the show combined able huge effort. to lot industry, in Now ratio very And we few was Why a in highlighted material It's improvement a

ourselves, better-than-average but has and have works Our combined led the shown in can combined we that good not know in ratios technology only technology times. tough the has We improve the times, And accomplish. With it that a significantly the else it better ratios to turn I history, This for a that what it a we accomplishment. can can drive it huge our provide that, please Operator, ratio. we combined given questions. ask instructions. is over will

from first Phillips question Our coming Michael Instructions] [Operator with Oppenheimer. is

What had around question have loss of kind a would that in of fielding certainly concerns, we're the past if don't guess again, you all be $XX if, and big look or maybe had I could, like? in know if think CAT just that this, the lot what maybe all. Maybe potential. million today's comes know if I past can do Citizens, What like came there's that would $XX if if month. these and another from at in quantify to weeks billion that There's guys book? been given guess, through? I I growth I what first something you Ian of under And way $X couple net. you a don't through the gross like would what look million

talk there to a So what a is about path look would that like today? of Ian similar as way of kind

it's Yes, Michael, Mark.

because, the comes about underwriter there program. where then about depends TypTap after kind would is be, So first to on bit got TypTap. reinsurance year's statutory Homeowners thing, is through, And in that, losses a is, in million, there Choice we've be Choice this million. would the about think utilized storm as -- way there's a and you or used know, Claddaugh which is We've it of significant if like the of it insurance the little $X Ian -- obviously, $XX a retentions storm Homeowners loss. the in

because $XX which was do based and in you program, that multiyear should again, gets a is for the -- idea. loss. And on that some But So if little underwriter then TypTap those of to sort have and there on TypTap we beyond that benefits. which that an is is the as million reinsurance have $XX you complicated, that, anything the could Claddaugh but of know, depending in of beyond loss impacted sort benefits, a some depending affected. utilized on size unwinding But fully reinsurance if depends is potential size, that give a layer of involved was million loss underwriter bit on you TypTap

sorry. And I guess ahead, -- sorry, go Paresh. I'm

painful, net what Ian because Why It both point, look loss, CAT all question. right? a is the concerned. forecast, of from we that insurers about terms at we sit But which Ian, at through was. in perspective answering estimates We right? XX% everybody no there. tower is a understand, given was went where It's don't we Michael, different and a had Ian? of where was Ian this right, Ian in just X,

think, about I comfortable have event, reinsurance yes. So amount a going numbers, with that, key it that's after But a that bought losses. claims, what to towers. we sort certain feel there retained by of on we cetera, us gives weather reinsurance should And we the whole net be item, comfort, our is covered that's will than have of of to it. pay the And purpose adequate and more historical is that the based et be

Yes.

of guess, one and up Okay, bit between is say was sure. a the XXXX. to That's I big quite differences I is helpful. going pricing now since then

the guess guess, this Should XX,XXX. rate to October, -- for next news last XX%. that's any Do might So as you think than that question year? Or pointing reason I I be the towards that be is it what there there? the on different the Karin just numbers was assuming think what acceptance may were it be higher time XX,XXX, any good be would -- well. I under and you're thoughts on gave the around, year? you this your think

personal are that think been policies there and takeout, to speaking or is general This Just XX, least comments that these over have X, October carriers, side. them, requested on who I the is have like by obviously. XXX,XXX something been XX carriers at approved the line

slightly it's different. side, commercial the On

twice takeout. had So this out one November policies what did over Choice perspective, to just in Homeowners were in last -- size. that is put This the year, the there take approved in OIR XXX,XXX over

I competitive, it's think that. lot we be to going but more a So anticipated

our like et we is and cetera. take-up that rates, of opportunities side other The

terms also all is this in of as question, So that events, to the depends also of other other first everybody side, summer aware yes. is weather happens the what caveat over on of your the

yes. unforeseen, it's X the X lot in months, a at So of to numbers know We'll moment. fuzzy

Okay. question Yes. ratio, your for I is loss gross And XX%. now, guess, last then

has talked still time? it of Is You said litigation of gotten that so And think what the or past, rate in in about again. around last that you you've It's XX Florida number. from a quarter quarter than about the last lower mentioned the or before, down percent. some down I kind even you maybe about the said or round better

claims XX% this Claims, like talked frequency, I XX% I down based think XX% so of frequency claims on to litigation is about has. litigation to it now. any is before, but Yes, and number XX%

So a better. it's, yes, actually getting bit little it's

the Congrats Good. quarter Okay. on end.

next from Matt with Our JMP. question coming Carletti is Citizens

you understand the coming of and Karin, policies for are little takeouts could how in QX some much renewal made much we fall might And kind QX your with up better. takeouts that for little have referenced dates? they of been up were retaining better kind about think a how population us expand come of we hoping concentrated retaining we opening be as or bit us that how the of QX on the them when to you about dates, a as -- kind renewals maybe, weighting of of comments, the forward might you the think that was of lot in done and I help renewal that renewal. of help as Just look with a maybe

rate Sure. first Well, tell closer it's can coming year we to policies you of that XX% about over, retention doing the holding the XX%. we were and forecasting, were when expecting a the I

much then is between pretty dates difference we about And quarters there renewal QX, the think as or of weighting kind the it is of XQ, those in similar?

a you they to I That's Matt, over, XX, to policies paper frame frame, that be will Karin is instead roll XX% time. think into Whenever XX% think, how I our the over we spread. about, February That's November, roll talking of the they XXXX. it's Citizens all just over policy. let's XX XX%. took from on from, get last net degree, time roughly even say, Yes. the is, because the an roll the until I what November the the onto paper works in of right, our they -- and tend assume But technical time

the step what renewal, got is you when you offer a So economics. happens The yes. big

that And or XX% us XX%, versus next to whether so week, the there we're XX fact an next renew isn't tells policies of week much going XXX yes. doing also renew attrition which be

Citizens. policies that up going to try a about the of XXX,XXX in it Does going have change it make going past a kind you maybe, understanding that past. my rate in bigger Citizens next as increases, That's my outcome. all? And those what for right. a viewed maybe some Paresh, great is be to Right, be a attachment for Citizens Then -- as than little of maybe you'll rate getting the higher question is it you pushing greenlight does is have they think for kind that takeout, because -- at they're price you of all kind of does look is just at into Does of that -- -- success it does fit kind takeouts? population I in how you how the takeouts kind kind change faster? you over you does of at the think, the little time, potential Or referenced,

you Yes. takeout, similar. that effectiveness rate especially Matt, this in I on level year's our increase. a think be tell I given number at I basis, year's That's like-for-like would very think the would last

you So October, to that tell competitive, the yes. against comments, being and should questions getting that, itself policies are of things more earlier for tagged that XXX,XXX and

numbers offsetting that you so and yes. be it And have what yes, reality be, will will

my just numbers you question, last one, net premiums Okay. written Perfect. have And if then my quarterly handy. Mark,

$XXX it's Yes, million.

the Congrats quarter. on

[Operator Truist. question coming Hughes next Instructions] with Mark is Our from

the for it right $XX of Debby, to Is retention way of within described think million for being about $X I TypTap. about HCI and Thinking less something that million it? think as the impact than you've the

rate. volumes late that X the tell I can retention carriers. That's the the coming between is in claim as of low you today relatively

We have less than XXX claims reported.

closer say, retention And think it? to that is way that than the one to numbers? X to about to Is

Well, ongoing it event. an is still

well. So that I as consider have think to we

yes. Yes,

not a it's mean, of XXX I claims. But claims, lot

to to to million, get plus claims $XX to get XXX more $XX million $X You've lot than got million. a

within still when So storm ongoing. is say statutory we the retention,

careful be say. XXX about have a lot claims. is what claims not we But a to bit of little We

Yes, yes.

much any favorable more quantify little maybe But And last you how way said usual think of a a got quarter? or less Okay. you that? I benefit how help much then to was year. this from than weather

that not much, X was Mark. It's or of that's point a really not our QX it. it's I I really story. mean weather expectation maybe X higher, mean

the I back think of claims I -- at go 'XX, look to you quarter if frequency down you If earlier, is XX%. second said

XX% like a down nonweather, down that be is something If won't nonweather and this but you divide weather XX% is and analysis, between perfect weather and that. or

So the lower a slight in improvement be. down. story. than are It's frequency, ratio, a expected was It we little said in When I was it's loss it's improvement the it weather claims very the to not down, all a difference.

quarter, we So think heavy loss a higher be that quarter, light is could in originally Yes. it said little that And a a I bit ratio XX% the not really bit than weather there. than weather a is had about in when is. I XX.X% it mean, little not driving down we talked lower it what's what was story. weather Weather but -- is

that Choice. do growth this we I subs, to if growth? interested the have? around I don't other voluntary you just you but at your of Yes. you policy would appetite Homeowners CORE How when will much about much you more want, in how into much be But how voluntary think storm Thanks or fourth get the are point? point, guess, TypTap include the for posture the in season, quarter, clarification. but perhaps, a

Paresh. it's Mark,

of get us premium got keep the is policies X growth incremental saying doing, isn't is, going is from it and mean in same of material going time, mitigating that One given size both at, did how that one things we're item. there, time, you think becomes the not Doesn't on but and writing it's by interested of the carriers it yes. That's at also to writing a thing yes. now almost -- voluntary right? it to in you If but mind at all scale gets much everything on it's operate XX,XXX that factors. XX,XXX the dwarfed voluntarily not sort but focus our growth are as is such, be other compared We policies, to the to why the else,

I suggesting there's and there to that your do capital more you done. curious discuss to And Paresh, think, with can technology you that terms if the sort I'm ended would that in was commentary, care you be share can of what of And you now? anything

to everybody Look, I'm benchmark. of right? what listening Yes. requires it's their of industry and uses you're couple every ratios. We going sense to And the trying generates -- a is a great one and combined points, improve if a a And by here's it articulate, of efforts to as trying team everything lot management industry all that's of it's else, point. part effort combined And ratio and a improve are insurance to achievement. the of --

that and more have ratio. other importantly, grow always it selling faster everybody your is you this combined there of that's that, improve And if and technology Let and and/or improve, improve you management The benefits insurance team right? this the also technology. results, will is, your technology point every

all touted, get a We a And actual wasn't companies thing a right? So the technology there moved the year is this ratio our our much is because there This bombarded has same year. last this insurance how technology of year. at hurricane isn't see with done was in this hurricane want look numbers. And stuff. The long we we of interesting that. space combined been what has long thing, and

work been and from that's just technology these line of there? to combined the ourselves somewhere? your all your in it actually you It's what does of a of a find versus that difference growth and doing it's we the something improve some change the if between business that in, And ratio that climate And and benign seems the ratio. line to, could Citizens apply risks selecting have proven combined to field. efficiently especially to and insurance, Florida, more we yes. in tough things business that promises we difference is it That's That's where the What make that aspirations homeowners technology has technology that. but in that, asking the this worth -- if come I'm this in exploring, question, happens environment, in improve and

Yes.

one talked you've you've reasonable million could that about and I but $XXX later you quarters. think good If kind $X earned rate couple pretty of $XXX last Is that policies way takes, the so? voluntary, premium, ask takeout or The And at applied to billion that this in run puts year, the in in been gross Okay. about more. force. in maybe million more of juncture, some for about a it, the is a

Yes. not any pretty I do, aside we or is at million it now, the a takeouts $XXX is look you good might if might rate. business mean, setting run where that

[Operator Okay. Instructions]

at As to questions who has our time. I now to back no And concludes over further would closing question-and-answer turn This we remarks. a like have session. call few Patel, Paresh the this

thank with you, most earlier importantly, their next are help the agents, I affected behalf would thoughts said shareholders, ready entire quarter. and policyholders those of And continued I and can. we like our for to had team, our way by you On to in Hurricane and in our support. to my employees, management Debby, prayers talk that every stand Thank and comments, we as

and conclude gentlemen. today's conference call. This does ladies you, Thank

your we your this for time, participation. you thank You and may disconnect lines at