HCI Shareholder/Stockholder Letter Transcript:
2023
2023
Annual Report
TM
About HCI Group, Inc.
HCI Group, Inc. owns subsidiaries engaged in diverse, yet complementary business activities, including
homeowners insurance, information technology services, insurance management, real estate, and
reinsurance. HCI s leading insurance operation, TypTap Insurance Company, is a technology-driven
homeowners insurance company. 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.
Annual Dividends Per Share
(in Dollars/Share)
Gross Premium Earned
(in millions)
$725
$766
$1.40
$577
$337 $365
13
14
$423
15
$379 $358
$343 $342
16
17
18
19
$0.95
$416
20
21
22
23
13
$1.10
14
$1.48
$1.60 $1.60 $1.60 $1.60 $1.60
$1.20 $1.20
15
16
17
18
19
20
21
22
In 2023, we reached several important milestones, with each of our business divisions contributing to the positive result.
We made great progress during the year, and we will continue to execute on our proven track record of creating
long-term value for our shareholders.
Paresh Patel,
Chairman & Chief Executive Officer
23
Dear Fellow Shareholders,
In 2023, we made significant progress on key initiatives which resulted in HCI reaching several important milestones during the year.
We brought more choice to consumers in Florida and delivered strong returns to our shareholders. Collectively, our actions across
business divisions resulted in a dramatic improvement in pre-tax income to over $117 million in 2023.
At Homeowners Choice, pre-tax income totaled over $106 million and in-force premiums reached approximately $620 million at the
end of 2023, which is the largest it s ever been. The company continues to be profitable and has sustained strong retention ratios.
The promise of insurtech was always to use technology to get a better underwriting result. What we have seen unfold over the past
few years is that most insurtechs have struggled to reach profitability. TypTap, on the other hand, continues to demonstrate that the
promise of insurtech is possible. TypTap showed steady improvement throughout the year and reported GAAP profitability in all four
quarters of 2023.
At Greenleaf, our real estate subsidiary, we sold two real estate properties during the year for a $8.9 million gain. We see significant
upside in Greenleaf, which owns attractive commercial real estate assets in Florida. We will continue to execute on our strategy of
identifying undervalued assets and harvesting gains when appropriate.
HCI reported another year of strong net investment income at over $45 million driven by a favorable interest rate environment. HCI
ended the year with over $1 billion in total invested assets, with the majority in fixed income investments and cash and cash
equivalents. We maintained a conservative investment strategy and we kept a shorter duration portfolio to maximize the yield on our
investments.
Our results this year were possible because of the investments we ve made at Exzeo, our technology subsidiary. We ve built a
technology ecosystem that both of our insurance divisions, Homeowners Choice and TypTap, continue to utilize to curate highly
profitable underwriting portfolios. And what we ve learned is that the power of our technology ecosystem is scalable. For example,
during the year we leveraged our technology ecosystem to successfully launch Condo Owners Reciprocal Exchange or CORE. We
were able to take CORE from a concept to a fully licensed and operating insurance carrier in a matter of months. And today, in a
difficult commercial residential insurance market, CORE is actively insuring a portfolio of policies in Florida.
We are also proud to be able to leverage our technology and provide policyholders with a private market insurance solution in a
difficult Florida homeowners market. In 2023, we assumed approximately 60,000 policies from Citizens Property Insurance
Corporation, Florida s state-backed insurance company. HCI was able to add these policies at premium levels that were largely
commensurate with and in some cases below Citizens rates. In total, we assumed over $226 million of in-force premium from
Citizens, which resulted in HCI exceeding $1 billion of in-force premium for the first time in our history.
In closing, we are proud of our execution and financial achievements in 2023. We made great progress, but we aren t done yet. We
enter 2024 ready to build on this momentum and execute on the significant opportunity in front of us to create long-term value for our
shareholders.
Sincerely,
Paresh Patel
Chairman & CEO
4/29/2024 Letter Continued (Full PDF)