HCI (HCI) 7 Nov 242024 Q3 Earnings call transcript

Good afternoon, and welcome to HCI Group's Third Quarter 2024 Earnings Call. My name is Paul, 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 December 7, 2024, starting later today.

The call is also being broadcast live via webcast and available via webcast replay until November 7, 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 Matt Glover, Gateway Investor Relations. proceed. please Matt,

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

Following then performance provide Paresh the Karin's a will quarter third strategic financial update, our Mark will of operational update. review for XXXX, and

www.hcigroup.com. our webcast, today's visit information corporate please website of at To access section the or

I'd take forward-looking to Private to to pursuant XXXX. listeners begin, opportunity we responses Before the and that like of questions remind the Securities Reform to today's statements Act presentation Litigation contain may made

forward-looking plan such project are words other statements. anticipate, similar signify expressions expect, Words as intend, and and to estimate, intended

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

identified these adverse financial or any the results in company's uncertainties filings developed Should of conditions developments uncertainties have and to these So the Commission. company's risks operations. business, and on events, the could risks Exchange are and Securities with effects actual material

the to disclaims all obligations Group update statements. any HCI forward-looking

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

our everyone. storms impacted have welcome, third affected our Debby These and employees, last Matt, South as have Milton and our neighbors, made as Carolina been families Florida, and North quarter, Georgia, you, Carolina. Thank Helene occurred we the and in by quarter. fourth call, Hurricanes hurricanes. families the X Since and in landfall in well early customers

prayers impacted. hearts go and everyone to Our out

reporting of third category we income earnings category millions of of their million and diluted per X XX,XXX our lives. and earnings share making hundreds the Despite $XX pretax had quarter, have of pay landfall hurricanes policyholders $X.XX. X produced help events Group positive These than to rebuild claims, and HCI more dollars X in to expect

paying shareholders return a per share, commitment HCI dividend. is our to This dividend its quarterly to XXth a deliver $X.XX continued value on consecutive by to tremendous result. of

Subsequent to the third quarter, we Citizens. successfully policies from added

process, add a plan were for and fourth the schedule target chose to policies expectation response to quarter. original join reach our from competitive October was the to assumption, the of able with our XX,XXX policyholders Given from pleased assumption at approximately XX,XXX ahead we're Citizens in We the HCI. roughly policyholders

year's In and to to in rates on this important time. Florida closing, rates talk I We want hurricane the [indiscernible] the overly not our for season this of therefore, about at increase stability to impact for active it address policyholders, believe looking we're future is have

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

Thanks, Karin.

As Debby Hurricanes has release quarter We the very Karin this and the press in season. a detailing what consistent release. are we said results actual active with the expected mentioned, in that October and Helene issued storm impact in a been third of

due reason Despite earnings a with just income Helene $X.XX. pretax profitability the underlying the in were in of hurricane business. Debby The the share diluted net and per is money was strength of expense $XX those quarter to $XX and million million over we quarter Hurricanes losses a third made from and

in of and The was low clearly underlying the than be a more maybe reinsurance more a was ratio impact results show that. XX%. offset XX%. underlying quarter loss storm can the third underlying in a importantly, or With ratio a and quarter program little combined the this under the place, combined of And a quarter ratio well-structured X

the multiyear totaled $XXX Hurricane under million in October, Milton made Milton talk of QX. landfall reinsurance storm for net as benefits expense Category In early a reversal Florida we a expect about X including and Now let's the agreement. to

underlying should growth the as assumption is than mitigate the quarter, should announced profitability again, premium higher profitability result quarter, be third the third a we than fourth the that. underlying partially in That quarter the loss but from the of Citizens in of losses storm higher a This lot recently.

to We additional assumption, to in-force be premiums $XXX expense. $XX around October expect associated added happened course, premium fourth costs than, this which earned premium There million incremental million, with total be in adding an late gross from quarter. in of this the minimal loss other should the

the couple Just a continues on to strengthen. which of things balance sheet,

doubled. are Book During $XXX the XX, September has more the XX%. investments XX company has equity share by to we've cash half and almost cut been Shareholder doubled, cap has up grown debt almost value months and ended per in and million. than

per despite take to January value a hurricanes. In of by was of step end or the per February, in quarter QX, the share book end the expect be third to but a bit of expected X value September. we to the back share it at where Book increased we back

well Total and liquidity? level quarter company are holding holding financial investments grew over cash million. about $XXX third What and at during the the company

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

Thank you, Mark.

by a to comments, is very preferred indicated season, plan also for we catastrophic been such very Mark's As same. has events each hope year. outcome possibilities We and every Karin the interesting At But it hurricanes, the quiet conservative months. of hurricane of few and a always our reinsurance year. start the we cover like program a buy possibility for

recoveries bigger under back reinsurance But the that to step of all of at have will with look want picture. happens those we those when I X just contracts. said, to years and This

trends are underlying unfolding. hurricanes our well. the as that want performing sheet Despite I balance the and landfall -- Florida, making strong, we we seeing highlight look unfolding we're forward, X remains And business that is in to several

committed homeowners operating Florida in and future. to attractive the state the are think an is we in market, we First,

highlighted is endured Building Second, a in commitment, and plans the rates grow way have as months, we the confidence coming policyholders done. her lot demonstrate we have in to believe Citizens. chose our another have have move our exactly that in from which our year. customers HCI what best the added to few to increase is who to XX,XXX and business comments, past over we policyholders Karin on to no we And Florida the

further an we start operational be are we ] fourth also by early to Taro, in which fully And XXXX. think plan our to business Therefore, [ the opportunity grow will have to admitted working currently carrier, future. finally, this the we

have we active withstood summary, hurricane season. In an

business Our is healthy.

a We that for have that, no carrier plans at added Florida months. this increase I'll be to new recently we've rates a turn operational are XX,XXX and it starting and time, questions. With added in we new -- in over few would customers,

from from [Operator Instructions] And coming is Citizen today first Carletti the Matt JMP. question

just some if about it? think was mean, we prior But Milton observations you like Paresh, should so be I right specifically of might hoping how it to I able kind we the just I with have compare always know the Ian's I comparison. maybe you're think storms, reforms claims for feel don't had, to offer whereas on you model seen event the the that think of you've of are on a Florida, firsthand, the big maybe estimates. kind others lot of I coming it it ground, an in of the how kind impact is seeing to

Just would helpful. be any you there insights have

the X/X couple we benchmark, weeks about claims track between by Ian, the this have in. in as right, a -- usually, X/X . would at are of we we -- the ultimate we come of into of Matt, Milton time, get, right? yes, size would storm, how within claims received roughly Sure. of things, have number And [indiscernible seeing to So X/X to going we're come using a just X that

counts. of I is the in And of sense explain kind actual this to want claim it further

business has the though Ian landfall. grown even So made considerably since

we counts occurring, So Ian.. actual even seeing lower. I have much that a Milton though lot we claim And policies, because was are no more is think, the is

Okay.

Okay. Great. That's good. helpful. That's very [indiscernible]

of kind XX,XXX... you takeout, your the On hit

up Matt [indiscernible] you broke

me can okay? you hear sorry, I'm

you please? Yes? the repeat Can question, Yes.

Sure. last just maybe have Yes. insights and on very of than the which historical. year, than we stronger kind It's even about was you was the what saw might strong, stronger conversion takeouts

Just think dynamics just that and be there? of why of kind the you some might

Okay.

everybody think for sought policies about to very as the number takeout in on October depopulated approved XXX,XXX a of the by -- were carriers. month, else call, So background just okay? for I And that was listening heavily after be a

that pick. we takeout -- or participating amongst carriers And in are the lowest

head XX,XXX of selected, as at to mentioned, right? best, we'd November policies. as get And So we our right? we XX want a them of whole want to to had we we was That said might the X Karin we policies to -- in attempts get get policies, low due expected requisite we than because if need we that multiple XXs, So might idea. XX,XXX get well kind to rate the in less because

I think people homeowners of the What that rate. other -- that And just happened is things to is choice speaks those going take-up things, has and they're HCI have a had very though, tipped -- anything practice prefer think brand of some up I built on up that because things. if we Milton would and doing in just the it high

that selected our come -- making and So only people us. who wanted with we technology, to sure

you So rate. high very coming gives together that take-up that all of

But of people we sitting much in I've think so of for [indiscernible] it's that there's the October think And contribute yes, the -- factors better. take. XX% I here. numbers I around seen did the rest lot a think I collectively,

in going in did thing November also October, other to we've X month, yes. X well Matt, we our not so capacity -- because are so then it we that in Sorry, participate reached just because we therefore

Understood. ratio that's your anything I sand? quarter, around That of kind as makes in unique? lowest so the sense. line one, in the a forward, was is there believe yet And of seen that we've sustainable XX% loss fairly kind if we it look Mark, onetime showing or in could. mentioned last that, number I number is X keeps Is in improvement. in underlying you which the the nature view, Or

booked No. that a number We prior number. been than small that. normalized. would on pretty I periods. $XX even wasn't have it credit It mean number. less reduce But a out taken the expense and actually we've million, has a the that's big stable been at That looking to

number. a is XX% So good

I think forward. that that's going a good number

of quarter as number and next claims storm, a couple in you a the bit the a QX sometimes the for In But fourth get QX less. think little of weather year. next claims is until pretty quarter, had the daily sometimes significant a we be you've quarters good into XX% where in can I know,

next Your with from coming Hughes Mark Truist. is question

Mark, the third quarter. the takeout from XX $XX in to you base way the a of and off read be incremental $XXX you quarter, the And it fourth the I X was [ more working what, for million of -- XX% million, of we're the in in at Is X it would it? a when that the full would kind be that XX%. then have like think premium XX, quarter the suggested ]

a -- yes, QX bit Yes, little prorated sorry. it's for QX,

Yes. dollars about a And of what premium ceded either kind -- we or of should run What of rate percentage. on kind then kind absolute think for basis,

Yes.

question. good So

number, $XXX you number you will is mentioned through premium that going the adjustment million, normalized the number, number number talked in of about QX, $XXX for adjustment the the But take except about course, that's adjustment you have May. million think million of that be now the sort end for we then going but make ceded had the and That forward, for that I where sort the we've million. Milton. new the of baseline $XX The Milton. right the should is to $XXX of until So there. for million QX, forward, quarterly

adjustment QX Yes. Milton. the And refresh me on for

So in that's the multiyear the benefits my That's line under for $XXX mentioned the premium agreement about Milton. adjustment is in reversal that million included prepared And I million the of Berkshire. the $XX to with remarks. ceded

Yes.

and premium what losses. in million then ceded in million $XX $XX So

exactly. Yes,

How at holdco? Okay. much cash the

Over $XXX million.

the what might intent, Paresh, the your comments today, new area targeting. carrier, me but and comment some then -- Refresh the of on we're And have missed about new carrier. your I size

in Homeowners Mark, at had -- it us point. we had size carrier premium [indiscernible] in then and TypTap, north sense normal have already that we're Florida, -- reciprocal growth going the back which for to started surplus, grew certain carrier We as grow Typtap last second it's our reciprocal our It and this starting year. in to the X We're commercial next to $XXX million on based resident will homeowners our It's a [indiscernible] both third be a started just no. of yes. [indiscernible] choice. carrier. well capitalize a Choice day, We going it we carrier in core legacy. in it. give a for of it and is XXXX We

decent Or is million, distortion a $XX Is [indiscernible] about ? a reasonable run rate? think there about going to quarter, I some the G&A is that that this When still is Yes. the rate? run that takeouts around --

sometimes be -- odd rate. good a for good than mean that's number. lower number. thing little tends QX Yes, pretty bit there's a generally but pretty I run The that nothing same a That's operating that's go-forward QX, to expenses. in

in Okay. Any what's carriers with capital new in or But me environment was competitive is competitive there the characterize Florida, new the among on you enthusiasm you Obviously, business? these the comments maybe would appetite the how the takeouts. storms, -- tell about market some the environment? for

policyholders we're Mark, carrier don't been taking taking weeks at all -- think guess, and to busily they after there, out I -- and those claims weeks I for X of weeks, X little X things. of a And it's after bit I but are kinds of over care X -- this I Milton speak think or all every care -- want point.

next dust or to comes is that settle. just begin what So

but to -- and healthy, it business So as seems be to be everybody seems usual.

think up don't down necessary. I appetite went or So

your As about of way. as well, [indiscernible] lead far technically part a to [indiscernible] the wanted the new we is capital question

other I'm enter we it's to sure Wait some there carriers kind the of to as point, forming. other don't have that to I may are. But be state expect But thing. here that see. visibility are going be whatever this will capital So who's there water, will at capital that yes. and normal fund or

with coming Compass from next Your question Alexander is Casey Point.

exactly his what be questions were a were first questions because analyst must to great going my X be. Mark

So hop the in I'm okay. back I'll queue.

from [Operator have Instructions] question with coming a Phillips Oppenheimer. Michael You

in least I a your Florida the bit all getting raise you're the excluding not comments that guess, coming a little ask on at the to rates signify depop to guess desire and I about year wanted ex business rates. to Florida about grow I the depop strategy Does in stuff? your part, for

it's Michael, Paresh.

right? think et that's cetera. as sort the the we see that would policyholders, comments I going differently et commentary and my next a god, anxiety -- "oh with insureds news rates we than We latest did. my characterize like is, articles on we year," and -- made be insurance it The we of afflicts of been everything anxiety what issues, slightly what's that cetera. else. will our And lot why causes

we a we I'm let for in our wanted frankly, know for policyholders actions than don't will right? but the raise be rates XXXX. to speaking I other are to so. do just to taking, of the or that anybody not We kind see not think, in need looking industry ourselves, Florida because we

Now it's up beliefs are. least but our us, solely to at what that's

I margins that for your It next slight have implications I obviously, wonder year. if margins your sounds maybe are any mean good. will pressure on strong.

talk long-term and this some sure about but it a and relationship, any I'm let's of some have all have margins, in on might this. stuff, of doing in our not quarter. look, we're for given We effect this policyholders margins terms have our of

events by, door policyholder whatever. when with to next caught house XXXX. car Helene down. us a they and burned outside unfortunately, a house fire been the the And have And all whole parked since went the and pretty that next who's had We much their

by think that is ] traumatized seen [ -- is notes the fairly just stuff, with haven't I I've this person right? of I him all spoken whatever. claim

it this on themselves We're help be effort try the of part claims. Floridians X going look to doing that's see is should about normality. just not, and we is build this too. raise all thinking -- say to and our next to we makes restore year people this answer rates And stuff, the or they really when we at more need we we're to phones, Do that whether because we're why

go to can we the with had So policyholders, relationships back we've our yes.

and been be, Yes, that that present year it more put past a the your this next in goes, you X is always a point comes at years. the of course, for I'm going story of I what's future would strategy, guess part sure maybe a if aside, has at of makes next obviously, little and but be And more, depop HCI? big Kind that's strategy? year your sense. been longer, for large has of some what's higher level least But business. the to part

I'll think maybe answer, answer of is. the else from Florida. and tell It's would that. around me But aside? if it's case, about it's not, right question, put I the that's help but this, that it and And out to different of kind me let's what HCI for to depop when you talk what deeper. If try outside tell me if And growing

Okay.

that there. flavor you We've the of kind what company had So and in But we or season, for a isn't several no were build We've whatever. I'm that there healthy it or hurricane actions month thing, depop of X the effect, another is they're another about and item longer-term because Well, just the to hurricanes season what? do currently. the we're that years question have. hurricane it right? run hurricane when kind X we had only and saying asked the the we beginning landfalling there's of depop,So happens Ian just guess remembering of if our not are

occur, up of Our it's And will to the in in climate look also very the we where how we've a kind at done you this the do to most underwriting is it. nicely words. opportunities and to deeds right? can lets could it, rest basically selection will places be climate-adaptive. do maybe that's have louder country intense to by figured a X of say you risk the if that us happens our what we've it Maybe level and where do we this that's of even catastrophes, change than just done, And more to world place also being It et away sets speak afflicted cetera. and be

we've And capital are, are tend and is do that they the our numbers up to I'm highest the to allocate it make other putting also we are, where to sure what that side we ROE, of we they that done can right? So get what we here is correctly. do best we sure

speak for results themselves. Our

you. thank Yes,

testament results think a guys of you with in, coming strength lot certainly well. to shared quite it's tough a I your

to question-and-answer a back has time, Paresh concludes session. turn the who closing now like our this this over remarks. Patel, I At to would call few

to On agent behalf importantly, continued management entire of [indiscernible] I employees, team, and for and our most XXXX. our policyholders the thank more would shareholders, dramatic of all their peaceful less for you. Thank support. to like them

At thank you, call. -- conference today's this conclude time, this This everyone. concludes does