HCI Group (HCI) Q2 2024 earnings summary

Executive summary

• Pretax income for Q2 2024 was $76 million, with net income at $57.1 million and diluted EPS of $4.24, driven by premium growth, higher investment income, and improved underwriting results.

• Net income after noncontrolling interests was $54.1 million, up from $12.4 million in Q2 2023.

• Six-month net income reached $114.1 million ($8.04 EPS), compared to $32.7 million ($2.81 EPS) in the prior year period.

• Policy retention rates from Citizens takeouts held at 85%, significantly higher than the expected 65%.

• 55th consecutive quarterly dividend of $0.40 per share was paid and declared for September 2024.

Financial highlights

• Q2 2024 gross premiums earned were $263.6 million, up 45% year-over-year, with net premiums earned at $186.8 million (+62% YoY), primarily due to Florida growth and Citizens policy assumptions.

• Net investment income for Q2 2024 was $16.9 million, nearly double the prior year.

• Net premiums written for the quarter were $230 million.

• Book value per share increased to $42.72 at June 30, 2024, up from $21.92 a year ago.

• Consolidated cash and investments rose 45% year-over-year, up $390 million over 12 months.

Outlook and guidance

• Management expects continued growth from Citizens policy assumptions and premium rate actions, with gross premiums earned run rate expected to remain around $250 million per quarter barring additional takeouts.

• Reinsurance spend is expected to be approximately $92 million per quarter, with costs remaining elevated.

• Homeowners Choice and TypTap have been approved to assume up to 25,000 policies each from Citizens in October, with further applications planned.

• Focus remains on underwriting discipline, technology-driven efficiencies, and capital strength.