• Net Impact of Hurricane Milton: $128 million, including $78 million of net loss expense and $50 million for the reversal of benefits under a multiyear reinsurance agreement.
• Pretax Income (Q4 2024): $5.9 million.
• Diluted Earnings Per Share (Q4 2024): $0.23.
• Pretax Income (Full Year 2024): $173 million.
• Diluted Earnings Per Share (Full Year 2024): $8.89.
• In-Force Premium Growth: 22% to over $1.2 billion.
• Non-Cat Gross Loss Ratio (2024): Less than 25%.
• Normalized Combined Ratio: Approximately 75%.
• Investment Income Growth: Doubled over the last couple of years.
• Book Value Increase: From $33.36 to $42.10 per share.
• Debt-to-Cap Ratio: Improved from 50% to 34%.
• Consolidated Debt Reduction (2024): $80 million.
• Underwriter Surplus Growth: 50% increase.
• Holding Company Liquidity: Over $200 million at year-end.
• Gross Premiums Earned Growth (Full Year): Over 40%.
• Accio Group Pretax Income (2024): Approximately $35 million.

• Warning! GuruFocus has detected 3 Warning Sign with HCI.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• HCI Group Inc (NYSE:HCI) maintained a strong customer retention rate of approximately 90% despite significant hurricane impacts.
• The company successfully grew its in-force premium by 22% to over $1.2 billion and increased policies in force from 247,000 to more than 272,000.
• HCI Group Inc (NYSE:HCI) paid its 57th consecutive quarterly dividend, demonstrating a commitment to returning value to shareholders.
• The company's technology platform has been instrumental in achieving operational efficiency, allowing for revenue growth without significant increases in operating expenses.
• Investment income has doubled over the last couple of years due to higher investment balances and rates, contributing positively to underlying earnings.

Negative Points

• Hurricane Milton resulted in a net impact of $128 million, including $78 million of net loss expense.
• The company faced significant losses from three hurricanes, expecting to pay over $0.5 billion to help Florida rebuild.
• Despite a strong year, the company had to manage the reversal of $50 million in benefits under a multiyear reinsurance agreement.
• The normalized combined ratio is expected to be about 75% once reinsurance and commissions kick in for recent Citizens assumptions, indicating potential future cost pressures.
• The company is exposed to risks and uncertainties that could have material adverse effects on its business, as highlighted in its SEC filings.

Q & A Highlights

Q: Paresh, could you elaborate on the strategy for expanding HCI's operations outside Florida, particularly in catastrophe-prone areas like California? A: Paresh Patel, CEO: California needs a financially viable solution for wildfires, similar to what we've achieved with hurricanes in Florida. We have the technology to address this, and we're considering whether to enter the market independently, partner with existing companies, or both. The separation of Accio Group allows us flexibility in how we approach these opportunities.

Q: Can you discuss the potential for further takeouts from Citizens and how the new reciprocal structure might impact this? A: Paresh Patel, CEO: Citizens still has policies we consider viable for takeout. The recent rate changes will have some impact, but the opportunity remains. Our new reciprocal, Taro, complements our existing offerings and has shown success in takeouts, demonstrating the efficiency of our technology.

Q: What was the impact of favorable development on the loss numbers for the quarter? A: James Harmsworth, CFO: There was about $24.5 million in favorable development, with $5 million from prior years and the rest from earlier quarters in 2024. The full-year normalized loss ratio was 23.7%, and 19.5% for Q4.

Q: How do you view the total addressable market (TAM) for Accio Group's technology platform? A: Paresh Patel, CEO: The U.S. homeowners insurance market is about $140 billion annually, and HCI currently controls about 1% of that. Our technology can help other carriers improve underwriting and risk management, especially in catastrophe-prone areas, offering significant growth potential.

Q: What are your thoughts on the reinsurance market following the California wildfires? A: Paresh Patel, CEO: The industry is focused on California's challenges. In contrast, Florida's market, where we operate, is stable and predictable. Our performance in Florida is well-regarded, and we are seen as reliable partners by reinsurers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.