10-Q 1 hci-20240331.htm 10-Q 10-Q
--12-31Q1false0001400810two yearstwo yearsthree yearstwo yearsfour yearstwo yearstwo yearshttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://hcigroup.com/20240331#LongTermDebtAndFinanceLeaseObligationsExcludingLineOfCredithttp://hcigroup.com/20240331#LongTermDebtAndFinanceLeaseObligationsExcludingLineOfCredit50,00050,00050,00050,0000001400810hci:ClaimsHandlingServicesMember2023-01-012023-03-310001400810us-gaap:RestrictedStockMember2022-12-310001400810hci:MatureRealEstatePrivateEquityFundsAndPortfolioGloballyMember2024-01-012024-03-3100014008102022-01-012022-12-310001400810us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001400810hci:ExchangeTradedDebtMemberus-gaap:FixedMaturitiesMember2024-03-310001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FixedMaturitiesMember2024-03-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberhci:FivePointFiveZeroPercentagePromissoryNotesMember2024-03-310001400810us-gaap:NoncontrollingInterestMember2023-01-012023-03-310001400810us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810hci:TypTapInsuranceGroupIncMemberus-gaap:CommonStockMember2024-01-012024-03-310001400810hci:SegmentConcentrationRiskMemberhci:HCPCIInsuranceOperationsMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001400810srt:MaximumMemberus-gaap:OfficeEquipmentMember2024-03-310001400810us-gaap:FixedMaturitiesMember2023-01-012023-03-310001400810us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001400810srt:MaximumMemberus-gaap:RestrictedStockMemberus-gaap:SubsequentEventMember2024-04-172024-04-170001400810hci:ExchangeTradedDebtMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001400810us-gaap:OperatingSegmentsMemberhci:ReciprocalExchangeOperationMember2024-03-310001400810us-gaap:CommonStockMember2024-03-310001400810us-gaap:RevolvingCreditFacilityMember2024-01-012024-03-310001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001400810us-gaap:RealEstateInvestmentMember2023-01-012023-03-310001400810hci:ParticipatingReinsurersMember2023-12-310001400810us-gaap:AdditionalPaidInCapitalMember2023-12-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2024-03-310001400810hci:PolicyRenewalRightsMember2024-03-310001400810hci:CitizensMembersrt:MinimumMember2024-01-012024-03-310001400810us-gaap:ParentMember2022-12-310001400810hci:PowerUtilityAndEnergyIndustriesAndInfrastructureMember2023-01-012023-12-310001400810srt:MinimumMemberhci:BoatDocksWetSlipsMember2024-03-310001400810us-gaap:FixedMaturitiesMember2023-01-012023-03-310001400810us-gaap:RetainedEarningsMember2023-03-310001400810hci:OfficeSpaceMember2024-01-012024-03-310001400810hci:CitizensMember2024-01-012024-03-310001400810hci:SeniorAndJuniorDebtOfPrivateEquityBackedCompaniesMember2023-12-310001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2024-03-310001400810hci:ReinsuranceMember2024-01-012024-03-310001400810us-gaap:NoncontrollingInterestMember2022-12-310001400810us-gaap:SoutheastRegionMemberhci:UnitedInsuranceHoldingsCorporationMember2024-03-310001400810us-gaap:SoutheastRegionMemberhci:UnitedInsuranceHoldingsCorporationMember2023-12-310001400810us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2024-03-310001400810us-gaap:CarryingReportedAmountFairValueDisclosureMemberhci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2024-03-310001400810hci:WarrantIncrementTwoMember2024-01-220001400810us-gaap:LimitedPartnerMember2024-03-310001400810us-gaap:EmployeeStockOptionMember2024-03-310001400810hci:PowerUtilityAndEnergyIndustriesAndInfrastructureMember2024-01-012024-03-310001400810us-gaap:OperatingSegmentsMemberhci:HCPCIInsuranceOperationsMember2023-01-012023-03-310001400810hci:HomeownersChoicePropertyAndCasualtyInsuranceCompanyIncorporationMember2023-01-012023-03-310001400810us-gaap:SubsequentEventMember2024-04-172024-04-170001400810hci:TypTapInsuranceGroupIncMemberus-gaap:CommonStockMember2023-01-012023-03-310001400810hci:PrivateUSLowerMiddleMarketCompaniesMember2023-01-012023-12-310001400810hci:HomeownersChoicePropertyAndCasualtyInsuranceCompanyIncorporationMember2024-01-012024-03-310001400810us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810hci:AmendedWarrantsMemberhci:WarrantIncrementTwoMember2024-01-220001400810hci:ExchangeTradedDebtMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberhci:FourPointFiveFivePercentagePromissoryNotesMember2024-03-310001400810us-gaap:RestrictedStockMember2023-03-310001400810hci:RealEstateOperationsMemberus-gaap:OperatingSegmentsMember2023-12-310001400810us-gaap:ParentMember2023-01-012023-03-310001400810us-gaap:NoncompeteAgreementsMemberhci:UnitedInsuranceHoldingsCorporationMember2024-03-310001400810hci:TypTapMember2024-02-142024-02-1400014008102022-12-310001400810us-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810us-gaap:OtherInvestmentsMember2023-01-012023-03-310001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FixedMaturitiesMember2023-12-310001400810hci:CreditAndEquityInvestmentsPrimarilyInPrivateEquityOwnedCompaniesMember2023-12-310001400810hci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2024-03-152024-03-150001400810us-gaap:EquitySecuritiesMember2023-01-012023-03-310001400810us-gaap:EquitySecuritiesMember2023-01-012023-03-310001400810hci:CondoOwnersReciprocalExchangeCoreMember2023-12-3100014008102024-01-220001400810hci:FinanceLeaseLiabilitiesMember2024-01-012024-03-310001400810hci:BankLoansPublicAndPrivateCorporateBondsAssetBackedSecuritiesEquityAndDebtRestructuringMember2023-12-310001400810us-gaap:SubsequentEventMember2024-04-242024-04-240001400810us-gaap:LimitedPartnerMember2024-01-012024-03-310001400810us-gaap:EmployeeStockOptionMember2023-12-310001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001400810hci:ReinsuranceMember2023-01-012023-03-310001400810hci:CreditAndEquityInvestmentsPrimarilyInPrivateEquityOwnedCompaniesMember2024-01-012024-03-310001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001400810us-gaap:NoncontrollingInterestMember2024-01-012024-03-310001400810us-gaap:RevolvingCreditFacilityMember2024-03-310001400810us-gaap:ParentMember2024-03-310001400810us-gaap:RevolvingCreditFacilityMember2023-01-012023-03-310001400810hci:TyptapGroupMemberhci:SegmentConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001400810hci:TypTapInsuranceGroupIncMember2023-01-012023-03-310001400810us-gaap:ConvertibleDebtMember2023-01-012023-03-310001400810us-gaap:OperatingSegmentsMemberhci:HCPCIInsuranceOperationsMember2024-01-012024-03-310001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001400810hci:InvestmentExpenseMember2024-01-012024-03-310001400810us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001400810hci:CreditAndEquityInvestmentsPrimarilyInPrivateEquityOwnedCompaniesMember2023-01-012023-12-310001400810us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001400810us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberhci:FivePointFiveZeroPercentagePromissoryNotesMember2024-03-310001400810us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberhci:FourPointFiveFivePercentagePromissoryNotesMember2024-03-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberhci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2023-12-310001400810hci:WarrantIncrementThreeMember2024-01-220001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001400810us-gaap:OperatingSegmentsMemberhci:TyptapGroupMember2024-03-310001400810hci:FivePointFiveZeroPercentagePromissoryNotesMember2024-01-012024-03-310001400810hci:AmendedWarrantsMemberhci:WarrantIncrementoneMember2024-01-220001400810hci:FivePointFiveZeroPercentagePromissoryNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2024-01-012024-03-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberhci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2023-12-310001400810us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001400810us-gaap:NoncontrollingInterestMember2023-03-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-12-310001400810hci:SeniorAndJuniorDebtOfPrivateEquityBackedCompaniesMember2024-03-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001400810us-gaap:SoutheastRegionMemberhci:UnitedInsuranceHoldingsCorporationMember2023-01-012023-03-310001400810hci:CondoOwnersReciprocalExchangeMemberus-gaap:SubsequentEventMember2024-04-232024-04-230001400810hci:MatureRealEstatePrivateEquityFundsAndPortfolioGloballyMember2023-01-012023-12-310001400810srt:RetailSiteMembersrt:MinimumMember2024-03-310001400810hci:FivePointFiveZeroPercentagePromissoryNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001400810us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2023-01-012023-03-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberhci:FivePointFiveZeroPercentagePromissoryNotesMember2023-12-310001400810hci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2023-12-310001400810us-gaap:OperatingSegmentsMemberhci:ReciprocalExchangeOperationMember2023-12-310001400810us-gaap:CommonStockMember2023-01-012023-03-310001400810us-gaap:ParentMember2023-12-310001400810us-gaap:SeriesAPreferredStockMemberhci:PreferredStockParValueMember2024-01-220001400810us-gaap:SubsequentEventMember2024-04-012024-04-010001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel3Memberhci:FivePointFiveZeroPercentagePromissoryNotesMember2023-12-310001400810us-gaap:RetainedEarningsMember2022-12-310001400810us-gaap:EquitySecuritiesMember2024-01-012024-03-310001400810us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberhci:FourPointFiveFivePercentagePromissoryNotesMember2023-12-310001400810hci:CitizensMember2023-01-012023-03-310001400810hci:PinedaLandingsMelbourneMember2024-03-310001400810us-gaap:AdditionalPaidInCapitalMember2023-03-310001400810us-gaap:RealEstateInvestmentMemberhci:PinedaLandingsMelbourneMember2023-03-310001400810hci:TyptapGroupMemberhci:SegmentConcentrationRiskMemberus-gaap:AssetsTotalMember2024-01-012024-03-310001400810hci:RealEstateOperationsMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001400810hci:PowerUtilityAndEnergyIndustriesAndInfrastructureMember2024-03-310001400810hci:FourPointFiveFivePercentagePromissoryNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310001400810hci:BankLoansPublicAndPrivateCorporateBondsAssetBackedSecuritiesEquityAndDebtRestructuringMember2024-03-310001400810us-gaap:RestrictedStockMember2024-03-310001400810us-gaap:EquitySecuritiesMember2023-01-012023-03-310001400810us-gaap:CommonStockMember2023-12-310001400810us-gaap:RetainedEarningsMember2023-01-012023-03-310001400810us-gaap:NoncontrollingInterestMember2023-12-310001400810hci:ParticipatingReinsurersMember2024-03-3100014008102023-01-012023-03-310001400810us-gaap:RestrictedStockMember2023-12-310001400810us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001400810hci:BankLoansPublicAndPrivateCorporateBondsAssetBackedSecuritiesEquityAndDebtRestructuringMember2024-01-012024-03-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberhci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2024-03-310001400810us-gaap:RestrictedStockMember2023-01-012023-03-310001400810us-gaap:LeasesAcquiredInPlaceMember2024-03-310001400810hci:FourPointFiveFivePercentagePromissoryNotesMember2024-01-012024-03-310001400810hci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2024-03-310001400810us-gaap:EmployeeStockOptionMember2024-01-012024-03-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310001400810hci:SorrentoHillsVillageSorrentoMemberus-gaap:RealEstateInvestmentMember2023-01-012023-03-310001400810hci:LimitedPartnershipInvestmentMember2024-01-012024-03-310001400810us-gaap:CommonStockMember2024-01-012024-03-310001400810us-gaap:OperatingSegmentsMemberhci:ReciprocalExchangeOperationMember2024-01-012024-03-310001400810hci:MatureRealEstatePrivateEquityFundsAndPortfolioGloballyMember2023-12-310001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FixedMaturitiesMember2023-12-310001400810srt:MaximumMembersrt:RetailSiteMember2024-03-310001400810us-gaap:CarryingReportedAmountFairValueDisclosureMemberhci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2023-12-310001400810us-gaap:LeasesAcquiredInPlaceMember2023-12-310001400810us-gaap:SeriesAPreferredStockMemberhci:UnpaidDividendsMember2024-01-220001400810hci:InvestmentExpenseMember2023-01-012023-03-310001400810us-gaap:OperatingSegmentsMemberhci:TyptapGroupMember2024-01-012024-03-310001400810hci:CitizensMember2024-01-012024-03-310001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FixedMaturitiesMember2024-03-310001400810hci:RealEstateOperationsMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001400810hci:WarrantIncrementThreeMemberhci:AmendedWarrantsMember2024-01-220001400810hci:ClaimsHandlingServicesMember2024-01-012024-03-310001400810hci:FivePointFiveZeroPercentagePromissoryNotesMember2023-12-310001400810us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:RestrictedStockMemberus-gaap:SubsequentEventMember2025-03-150001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FixedMaturitiesMember2024-03-310001400810hci:TyptapGroupMemberhci:SegmentConcentrationRiskMemberus-gaap:AssetsTotalMember2023-01-012023-12-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberhci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2023-12-310001400810us-gaap:EmployeeStockOptionMember2023-01-012023-03-310001400810us-gaap:OperatingSegmentsMemberhci:TyptapGroupMember2023-01-012023-03-310001400810hci:SegmentConcentrationRiskMemberhci:HCPCIInsuranceOperationsMemberus-gaap:AssetsTotalMember2023-01-012023-12-310001400810us-gaap:RevolvingCreditFacilityMemberus-gaap:SubsequentEventMember2024-04-010001400810hci:TyptapGroupMemberhci:SegmentConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310001400810us-gaap:EquitySecuritiesMember2024-01-012024-03-310001400810us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2023-12-310001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FixedMaturitiesMember2023-12-310001400810us-gaap:FixedMaturitiesMember2024-01-012024-03-3100014008102022-01-012022-03-310001400810us-gaap:NortheastRegionMemberhci:UnitedInsuranceHoldingsCorporationMember2024-03-310001400810us-gaap:FairValueInputsLevel1Memberhci:ExchangeTradedDebtMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810hci:PolicyRenewalRightsMemberhci:UnitedInsuranceHoldingsCorporationMember2023-12-310001400810hci:ExchangeTradedDebtMemberus-gaap:FixedMaturitiesMember2023-12-310001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810srt:MaximumMemberhci:OfficeSpaceMember2024-03-310001400810us-gaap:RetainedEarningsMember2023-12-310001400810hci:BankLoansPublicAndPrivateCorporateBondsAssetBackedSecuritiesEquityAndDebtRestructuringMember2023-01-012023-12-310001400810srt:MaximumMember2024-01-012024-03-310001400810us-gaap:RealEstateInvestmentMemberhci:PinedaLandingsMelbourneMember2023-01-012023-03-310001400810us-gaap:OtherInvestmentsMember2024-01-012024-03-310001400810us-gaap:CommonStockMember2023-03-310001400810hci:CreditAndEquityInvestmentsPrimarilyInPrivateEquityOwnedCompaniesMember2024-03-310001400810us-gaap:IntersegmentEliminationMember2024-01-012024-03-3100014008102024-01-012024-03-310001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2023-12-310001400810us-gaap:CashAndCashEquivalentsMember2023-01-012023-03-310001400810hci:PrivateUSLowerMiddleMarketCompaniesMember2023-12-310001400810us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001400810hci:PowerUtilityAndEnergyIndustriesAndInfrastructureMember2023-12-310001400810hci:TypTapInsuranceGroupIncMember2023-12-310001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810hci:FivePointFiveZeroPercentagePromissoryNotesMember2024-03-310001400810hci:PolicyRenewalRightsMemberhci:UnitedInsuranceHoldingsCorporationMember2024-03-3100014008102024-01-222024-01-2200014008102024-05-010001400810hci:OfficeSpaceMembersrt:MinimumMember2024-03-310001400810srt:ConsolidationEliminationsMember2023-12-310001400810srt:ConsolidationEliminationsMember2024-03-310001400810hci:SegmentConcentrationRiskMemberhci:HCPCIInsuranceOperationsMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310001400810hci:ExchangeTradedDebtMemberus-gaap:FixedMaturitiesMember2024-03-310001400810hci:SeniorAndJuniorDebtOfPrivateEquityBackedCompaniesMember2023-01-012023-12-310001400810us-gaap:AdditionalPaidInCapitalMember2024-03-310001400810hci:TypTapMember2024-02-012024-02-290001400810srt:MaximumMember2024-01-222024-01-220001400810us-gaap:OtherLiabilitiesMember2024-03-310001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FixedMaturitiesMember2023-12-310001400810hci:LimitedPartnershipInvestmentMember2023-01-012023-03-310001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001400810us-gaap:NoncompeteAgreementsMemberhci:UnitedInsuranceHoldingsCorporationMember2023-12-310001400810hci:FourPointFiveFivePercentagePromissoryNoteMember2024-03-310001400810us-gaap:FairValueMeasurementsRecurringMember2023-12-310001400810us-gaap:CommonStockMember2022-12-310001400810us-gaap:RetainedEarningsMember2024-01-012024-03-310001400810us-gaap:IntersegmentEliminationMember2023-01-012023-03-310001400810hci:BoatDocksWetSlipsMember2024-01-012024-03-310001400810us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001400810hci:FourPointFiveFivePercentagePromissoryNotesMember2024-03-310001400810srt:MaximumMemberhci:BoatDocksWetSlipsMember2024-03-3100014008102024-01-242024-01-240001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FixedMaturitiesMember2024-03-310001400810hci:TypTapInsuranceGroupIncMember2024-01-012024-03-310001400810hci:SorrentoHillsVillageSorrentoMemberus-gaap:RealEstateInvestmentMember2023-03-310001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001400810hci:OriginalWarrantsMember2024-01-220001400810us-gaap:ShareBasedCompensationAwardTrancheThreeMemberus-gaap:RestrictedStockMemberus-gaap:SubsequentEventMember2027-03-150001400810us-gaap:NoncontrollingInterestMember2024-03-310001400810us-gaap:NortheastRegionMemberhci:UnitedInsuranceHoldingsCorporationMember2023-12-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberhci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2023-12-310001400810us-gaap:CarryingReportedAmountFairValueDisclosureMemberhci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2023-12-310001400810hci:TypTapInsuranceGroupIncMember2024-03-3100014008102023-03-310001400810us-gaap:OperatingSegmentsMemberhci:HCPCIInsuranceOperationsMember2024-03-310001400810hci:PrivateUSLowerMiddleMarketCompaniesMember2024-01-012024-03-310001400810us-gaap:OtherLiabilitiesMember2023-12-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberhci:FourPointFiveFivePercentagePromissoryNotesMember2023-12-310001400810us-gaap:ParentMember2024-01-012024-03-310001400810us-gaap:NoncontrollingInterestMemberhci:TypTapInsuranceGroupIncMember2024-03-310001400810us-gaap:ReinsuranceRecoverableForPaidAndUnpaidClaimsAndClaimsAdjustmentsMemberhci:ReinsuranceMemberus-gaap:ReinsurerConcentrationRiskMember2024-01-012024-03-310001400810us-gaap:RestrictedStockMemberus-gaap:SubsequentEventMember2024-04-172024-04-170001400810us-gaap:OfficeEquipmentMember2024-01-012024-03-310001400810hci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2024-01-012024-03-310001400810hci:RealEstateOperationsMemberus-gaap:OperatingSegmentsMember2024-03-310001400810us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001400810hci:FourPointFiveFivePercentagePromissoryNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001400810hci:FourPointFiveFivePercentagePromissoryNoteMember2023-12-310001400810us-gaap:FixedMaturitiesMember2024-01-012024-03-310001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810us-gaap:ConvertibleDebtMember2024-01-012024-03-310001400810hci:ShareBasedPaymentArrangementTrancheFourMemberus-gaap:RestrictedStockMemberus-gaap:SubsequentEventMember2028-03-150001400810hci:SeniorAndJuniorDebtOfPrivateEquityBackedCompaniesMember2024-01-012024-03-310001400810us-gaap:FairValueInputsLevel1Memberhci:ExchangeTradedDebtMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-3100014008102024-03-310001400810hci:PrivateUSLowerMiddleMarketCompaniesMember2024-03-3100014008102023-01-012023-12-310001400810us-gaap:ParentMember2023-03-310001400810us-gaap:WarrantMember2024-01-012024-03-310001400810hci:WarrantIncrementoneMember2024-01-220001400810us-gaap:OperatingSegmentsMemberhci:HCPCIInsuranceOperationsMember2023-12-310001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001400810hci:UnitedInsuranceHoldingsCorporationMember2024-03-310001400810us-gaap:RetainedEarningsMember2024-03-310001400810us-gaap:OperatingSegmentsMemberhci:TyptapGroupMember2023-12-310001400810us-gaap:SubsequentEventMember2024-04-170001400810hci:HCPCIInsuranceOperationsMemberhci:SegmentConcentrationRiskMemberus-gaap:AssetsTotalMember2024-01-012024-03-310001400810hci:ExchangeTradedDebtMemberus-gaap:FixedMaturitiesMember2023-12-310001400810hci:RetailSpaceMember2024-01-012024-03-310001400810us-gaap:OfficeEquipmentMembersrt:MinimumMember2024-03-310001400810hci:MatureRealEstatePrivateEquityFundsAndPortfolioGloballyMember2024-03-310001400810hci:CondoOwnersReciprocalExchangeCoreMember2024-03-310001400810us-gaap:RestrictedStockMember2024-01-012024-03-310001400810us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberhci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2024-03-310001400810us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2024-01-012024-03-3100014008102023-12-310001400810us-gaap:CashAndCashEquivalentsMember2024-01-012024-03-310001400810us-gaap:LimitedPartnerMember2023-12-310001400810us-gaap:EquitySecuritiesMember2024-01-012024-03-310001400810hci:FourPointFiveFivePercentagePromissoryNoteMember2024-01-012024-03-310001400810us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:RestrictedStockMemberus-gaap:SubsequentEventMember2026-03-150001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001400810us-gaap:LimitedPartnerMember2023-01-012023-03-31xbrli:purehci:Segmenthci:Securityxbrli:shareshci:Reinsuranceiso4217:USDiso4217:USDxbrli:shareshci:InsurancePolicyhci:TradingDay

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number

 

001-34126

HCI Group, Inc.

(Exact name of registrant as specified in its charter)

 

Florida

20-5961396

(State of Incorporation)

(IRS Employer
Identification No.)

3802 Coconut Palm Drive
Tampa, FL 33619
(Address, including zip code, of principal executive offices)

 

(813) 849-9500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading Symbol

 

Name of Each Exchange on Which Registered

Common Shares, no par value

 

HCI

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐

Accelerated filer ☑

Non-accelerated filer ☐

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☑

The aggregate number of shares of the registrant’s common stock, no par value, outstanding on May 1, 2024 was 10,476,413.

 


 

HCI GROUP, INC. AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

Item 1

 

Financial Statements

 

 

 

 

Consolidated Balance Sheets:

 

 

 

 

March 31, 2024 (unaudited) and December 31, 2023

 

1-2

 

 

Consolidated Statements of Income:

 

 

 

 

Three months ended March 31, 2024 and 2023 (unaudited)

 

3

 

 

Consolidated Statements of Comprehensive Income:

 

 

 

 

Three months ended March 31, 2024 and 2023 (unaudited)

 

4

 

 

Consolidated Statements of Equity:

 

 

 

 

Three months ended March 31, 2024 and 2023 (unaudited)

 

5-6

 

 

Consolidated Statements of Cash Flows:

 

 

 

 

Three months ended March 31, 2024 and 2023 (unaudited)

 

7-9

 

 

Notes to Consolidated Financial Statements (unaudited)

 

10-38

 

 

 

 

 

Item 2

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

39-49

 

 

 

 

 

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

 

50-51

 

 

 

 

 

Item 4

 

Controls and Procedures

 

52

 

 

 

 

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

Item 1

 

Legal Proceedings

 

53

 

 

 

 

 

Item 1A

 

Risk Factors

 

53

 

 

 

 

 

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

53-54

 

 

 

 

 

Item 3

 

Defaults Upon Senior Securities

 

54

 

 

 

 

 

Item 4

 

Mine Safety Disclosures

 

54

 

 

 

 

 

Item 5

 

Other Information

 

54

 

 

 

 

 

Item 6

 

Exhibits

 

55-61

 

 

 

 

 

Signatures

 

62

 

 

 

Certifications

 

 

 

 


 

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollar amounts in thousands)

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Fixed-maturity securities, available for sale, at fair value (amortized cost: $475,170
    and $
387,687, respectively and allowance for credit losses: $0 and $0, respectively)

 

$

470,805

 

 

$

383,238

 

Equity securities, at fair value (cost: $47,852 and $44,011, respectively)

 

 

52,013

 

 

 

45,537

 

Limited partnership investments

 

 

24,015

 

 

 

23,583

 

Real estate investments

 

 

69,096

 

 

 

67,893

 

Total investments

 

 

615,929

 

 

 

520,251

 

Cash and cash equivalents (a)

 

 

655,384

 

 

 

536,478

 

Restricted cash (a)

 

 

3,303

 

 

 

3,287

 

Receivable from maturities of fixed-maturity securities

 

 

 

 

 

91,085

 

Accrued interest and dividends receivable

 

 

4,052

 

 

 

3,507

 

Income taxes receivable (a)

 

 

651

 

 

 

 

Deferred income taxes, net

 

 

 

 

 

512

 

Premiums receivable, net (allowance: $3,443 and $3,152, respectively)

 

 

43,291

 

 

 

38,037

 

Assumed premiums receivable

 

 

 

 

 

19,954

 

Prepaid reinsurance premiums

 

 

34,125

 

 

 

86,232

 

Reinsurance recoverable, net of allowance for credit losses:

 

 

 

 

 

 

Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively)

 

 

25,452

 

 

 

19,690

 

Unpaid losses and loss adjustment expenses (allowance: $69 and $118, respectively)

 

 

305,218

 

 

 

330,604

 

Deferred policy acquisition costs

 

 

45,152

 

 

 

42,910

 

Property and equipment, net

 

 

29,314

 

 

 

29,251

 

Right-of-use assets - operating leases

 

 

1,352

 

 

 

1,407

 

Intangible assets, net

 

 

7,046

 

 

 

7,659

 

Funds withheld for assumed business

 

 

14,181

 

 

 

30,087

 

Other assets (a)

 

 

57,184

 

 

 

50,365

 

Total assets

 

$

1,841,634

 

 

$

1,811,316

 

 

(a)
See Note 13 for details of balances associated with consolidated variable interest entity.

 

(continued)

1


 

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets – (Continued)

(Dollar amounts in thousands)

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(Unaudited)

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

Losses and loss adjustment expenses (a)

 

$

578,712

 

 

$

585,073

 

Unearned premiums (a)

 

 

499,499

 

 

 

501,157

 

Advance premiums

 

 

26,518

 

 

 

15,895

 

Reinsurance payable on paid losses and loss adjustment expenses

 

 

 

 

 

3,145

 

Ceded reinsurance premiums payable (a)

 

 

10,693

 

 

 

8,921

 

Assumed premiums payable (a)

 

 

2,681

 

 

 

850

 

Accrued expenses

 

 

24,699

 

 

 

19,722

 

Income tax payable

 

 

23,184

 

 

 

7,702

 

Deferred income taxes, net (a)

 

 

5,113

 

 

 

 

Revolving credit facility

 

 

50,000

 

 

 

 

Long-term debt

 

 

184,744

 

 

 

208,495

 

Lease liabilities – operating leases

 

 

1,357

 

 

 

1,408

 

Other liabilities (a)

 

 

36,564

 

 

 

35,623

 

Total liabilities

 

 

1,443,764

 

 

 

1,387,991

 

Commitments and contingencies (Note 21)

 

 

 

 

 

 

Redeemable noncontrolling interest (Note 18)

 

 

 

 

 

96,160

 

Equity:

 

 

 

 

 

 

Common stock (no par value, 40,000,000 shares authorized, 10,276,463 and 9,738,183
    shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively)

 

 

 

 

 

 

Additional paid-in capital

 

 

116,728

 

 

 

89,568

 

Retained income

 

 

282,056

 

 

 

238,438

 

Accumulated other comprehensive loss, net of taxes

 

 

(3,102

)

 

 

(3,163

)

Total stockholders’ equity

 

 

395,682

 

 

 

324,843

 

Noncontrolling interests

 

 

2,188

 

 

 

2,322

 

Total equity

 

 

397,870

 

 

 

327,165

 

Total liabilities, redeemable noncontrolling interest and equity

 

$

1,841,634

 

 

$

1,811,316

 

 

(a)
See Note 13 for details of balances associated with consolidated variable interest entity.

 

See accompanying Notes to Consolidated Financial Statements (unaudited).

2


 

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(Dollar amounts in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Revenue

 

 

 

 

 

 

Gross premiums earned

 

$

256,644

 

 

$

180,068

 

Premiums ceded

 

 

(68,106

)

 

 

(70,509

)

Net premiums earned

 

 

188,538

 

 

 

109,559

 

Net investment income

 

 

14,067

 

 

 

17,715

 

Net realized investment losses

 

 

 

 

 

(1,149

)

Net unrealized investment gains

 

 

2,635

 

 

 

529

 

Policy fee income

 

 

1,019

 

 

 

1,090

 

Other

 

 

355

 

 

 

1,285

 

Total revenue

 

 

206,614

 

 

 

129,029

 

Expenses

 

 

 

 

 

 

Losses and loss adjustment expenses

 

 

79,922

 

 

 

60,565

 

Policy acquisition and other underwriting expenses

 

 

22,139

 

 

 

22,720

 

General and administrative personnel expenses

 

 

16,274

 

 

 

13,502

 

Interest expense

 

 

3,149

 

 

 

2,801

 

Other operating expenses

 

 

7,700

 

 

 

6,305

 

Total expenses

 

 

129,184

 

 

 

105,893

 

Income before income taxes

 

 

77,430

 

 

 

23,136

 

Income tax expense

 

 

20,474

 

 

 

5,343

 

Net income

 

 

56,956

 

 

 

17,793

 

Net income attributable to redeemable noncontrolling interest (Note 18)

 

 

(10,149

)

 

 

(2,324

)

Net loss (income) attributable to noncontrolling interests

 

 

804

 

 

 

(131

)

Net income after noncontrolling interests

 

$

47,611

 

 

$

15,338

 

Basic earnings per share

 

$

4.76

 

 

$

1.78

 

Diluted earnings per share

 

$

3.81

 

 

$

1.54

 

 

See accompanying Notes to Consolidated Financial Statements (unaudited).

3


 

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

(Dollar amounts in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Net income

 

$

56,956

 

 

$

17,793

 

Other comprehensive income:

 

 

 

 

 

 

Change in unrealized gain on investments:

 

 

 

 

 

 

Net unrealized gains arising during the period

 

 

52

 

 

 

2,415

 

Reclassification adjustment for net realized losses

 

 

32

 

 

 

738

 

Net change in unrealized gains

 

 

84

 

 

 

3,153

 

Deferred income taxes on above change

 

 

(21

)

 

 

1,810

 

Total other comprehensive income, net of income taxes

 

 

63

 

 

 

4,963

 

Comprehensive income

 

 

57,019

 

 

 

22,756

 

Comprehensive loss (income) attributable to noncontrolling interests

 

 

802

 

 

 

(306

)

Comprehensive income after noncontrolling interests

 

$

57,821

 

 

$

22,450

 

 

See accompanying Notes to Consolidated Financial Statements (unaudited).

4


 

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity

For the Three Months Ended March 31, 2024

(Unaudited)

(Dollar amounts in thousands, except per share amount)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Retained

 

 

Accumulated
Other
Comprehensive
Loss,

 

 

Total
Stockholders’

 

 

Noncontrolling

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Net of Tax

 

 

Equity

 

 

Interests

 

 

Equity

 

Balance at December 31, 2023

 

 

9,738,183

 

 

$

 

 

$

89,568

 

 

$

238,438

 

 

$

(3,163

)

 

 

324,843

 

 

$

2,322

 

 

$

327,165

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

57,085

 

 

 

 

 

 

57,085

 

 

 

(129

)

 

 

56,956

 

Net income attributable to
  redeemable noncontrolling
  interest

 

 

 

 

 

 

 

 

 

 

 

(9,474

)

 

 

 

 

 

(9,474

)

 

 

(675

)

 

 

(10,149

)

Total other comprehensive
  income, net of income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61

 

 

 

61

 

 

 

2

 

 

 

63

 

Cashless exercise of
  common stock warrants

 

 

155,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of restricted stock

 

 

(200

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase and retirement
  of common stock

 

 

(5,656

)

 

 

 

 

 

(556

)

 

 

 

 

 

 

 

 

(556

)

 

 

 

 

 

(556

)

Conversion of senior notes
  to common stock

 

 

389,087

 

 

 

 

 

 

23,449

 

 

 

 

 

 

 

 

 

23,449

 

 

 

 

 

 

23,449

 

Dilution from subsidiary
  stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

668

 

 

 

668

 

Common stock dividends
  ($
0.40 per share)

 

 

 

 

 

 

 

 

 

 

 

(3,993

)

 

 

 

 

 

(3,993

)

 

 

 

 

 

(3,993

)

Stock-based compensation

 

 

 

 

 

 

 

 

881

 

 

 

 

 

 

 

 

 

881

 

 

 

 

 

 

881

 

Deemed dividend on warrant
  modification

 

 

 

 

 

 

 

 

3,386

 

 

 

 

 

 

 

 

 

3,386

 

 

 

 

 

 

3,386

 

Balance at March 31, 2024

 

 

10,276,463

 

 

$

 

 

$

116,728

 

 

$

282,056

 

 

$

(3,102

)

 

$

395,682

 

 

$

2,188

 

 

$

397,870

 

 

See accompanying Notes to Consolidated Financial Statements (unaudited).

5


 

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity – (Continued)

For the Three Months Ended March 31, 2023

(Unaudited)

(Dollar amounts in thousands, except per share amount)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Retained

 

 

Accumulated
Other
Comprehensive
Loss,

 

 

Total
Stockholders’

 

 

Noncontrolling

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Net of Tax

 

 

Equity

 

 

Interests

 

 

Equity

 

Balance at December 31, 2022

 

 

8,598,682

 

 

$

 

 

$

 

 

$

172,482

 

 

$

(9,886

)

 

$

162,596

 

 

$

(1,342

)

 

$

161,254

 

Net income

 

 

 

 

 

 

 

 

 

 

 

17,488

 

 

 

 

 

 

17,488

 

 

 

305

 

 

 

17,793

 

Net income attributable to
  redeemable noncontrolling
  interest

 

 

 

 

 

 

 

 

 

 

 

(2,150

)

 

 

 

 

 

(2,150

)

 

 

(174

)

 

 

(2,324

)

Total other comprehensive
  income, net of income
  taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,788

 

 

 

4,788

 

 

 

175

 

 

 

4,963

 

Issuance of restricted
  stock

 

 

6,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of restricted stock

 

 

(2,125

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase and retirement
  of common stock

 

 

(5,884

)

 

 

 

 

 

(305

)

 

 

 

 

 

 

 

 

(305

)

 

 

 

 

 

(305

)

Dilution from subsidiary
  stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

631

 

 

 

631

 

Common stock dividends
  ($
0.40 per share)

 

 

 

 

 

 

 

 

 

 

 

(3,432

)

 

 

 

 

 

(3,432

)

 

 

 

 

 

(3,432

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,277

 

 

 

 

 

 

 

 

 

1,277

 

 

 

 

 

 

1,277

 

Additional paid-in capital
  shortfall adjustment
  allocated to retained income

 

 

 

 

 

 

 

 

(640

)

 

 

640

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2023

 

 

8,596,673

 

 

$

 

 

$

332

 

 

$

185,028

 

 

$

(5,098

)

 

$

180,262

 

 

$

(405

)

 

$

179,857

 

 

See accompanying Notes to Consolidated Financial Statements (unaudited).

6


 

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(Dollar amounts in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income after noncontrolling interests

 

$

47,611

 

 

$

15,338

 

Net income attributable to noncontrolling interests

 

 

9,345

 

 

 

2,455

 

Net income

 

 

56,956

 

 

 

17,793

 

Adjustments to reconcile net income to net cash provided by operating
   activities:

 

 

 

 

 

 

Stock-based compensation expense

 

 

1,582

 

 

 

2,106

 

Net accretion of discount on investments in fixed-maturity
   securities

 

 

(2,148

)

 

 

(1,845

)

Depreciation and amortization

 

 

1,003

 

 

 

2,230

 

Deferred income tax expense

 

 

5,604

 

 

 

3,266

 

Net realized investment losses

 

 

 

 

 

1,149

 

Net unrealized investment gains

 

 

(2,635

)

 

 

(529

)

Credit loss expense - reinsurance recoverable

 

 

(49

)

 

 

(1

)

Net income from limited partnership interests

 

 

(195

)

 

 

(553

)

Distributions received from limited partnership interests

 

 

 

 

 

303

 

Loss on extinguishment of debt

 

 

 

 

 

177

 

Gain on sales of real estate investments

 

 

 

 

 

(8,936

)

Foreign currency remeasurement (gain) loss

 

 

(1

)

 

 

1

 

Other non-cash items

 

 

(19

)

 

 

71

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accrued interest and dividends receivable

 

 

(545

)

 

 

(573

)

Income taxes

 

 

14,831

 

 

 

2,100

 

Premiums receivable, net

 

 

(5,254

)

 

 

(9,968

)

Assumed premiums receivable

 

 

19,954

 

 

 

 

Prepaid reinsurance premiums

 

 

52,107

 

 

 

39,564

 

Reinsurance recoverable

 

 

19,673

 

 

 

91,660

 

Deferred policy acquisition costs

 

 

(2,242

)

 

 

(1,110

)

Funds withheld for assumed business

 

 

15,906

 

 

 

3,498

 

Other assets

 

 

(6,657

)

 

 

(5,590

)

Losses and loss adjustment expenses

 

 

(6,361

)

 

 

(57,457

)

Unearned premiums

 

 

(1,658

)

 

 

19,786

 

Advance premiums

 

 

10,623

 

 

 

7,247

 

Assumed reinsurance balances payable

 

 

1,831

 

 

 

 

Reinsurance payable on paid losses and loss adjustment expenses

 

 

(3,145

)

 

 

(1,563

)

Reinsurance recovered in advance on unpaid losses

 

 

 

 

 

(19,863

)

Ceded reinsurance premiums payable

 

 

1,772

 

 

 

(3,523

)

Accrued expenses and other liabilities

 

 

11,056

 

 

 

19,669

 

Net cash provided by operating activities

 

 

181,989

 

 

 

99,109

 

 

(continued)

7


 

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Continued)

(Unaudited)

(Dollar amounts in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Cash flows from investing activities:

 

 

 

 

 

 

Investments in limited partnership interests

 

 

(399

)

 

 

(170

)

Distributions received from limited partnership interests

 

 

162

 

 

 

1,602

 

Distribution received from unconsolidated joint venture

 

 

 

 

 

18

 

Purchase of property and equipment

 

 

(946

)

 

 

(1,469

)

Purchase of real estate investments

 

 

(5,244

)

 

 

(175

)

Purchase of fixed-maturity securities

 

 

(172,336

)

 

 

(160,152

)

Purchase of equity securities

 

 

(7,679

)

 

 

(6,472

)

Purchase of short-term and other investments

 

 

 

 

 

(10

)

Proceeds from sales of real estate investments

 

 

 

 

 

21,746

 

Proceeds from sales of fixed-maturity securities

 

 

6,030

 

 

 

11,060

 

Proceeds from calls, repayments and maturities of fixed-maturity securities

 

 

172,024

 

 

 

112,497

 

Proceeds from sales of equity securities

 

 

3,516

 

 

 

3,754

 

Proceeds from sales, redemptions and maturities of short-term and other investments

 

 

 

 

 

14

 

Net cash used in investing activities

 

 

(4,872

)

 

 

(17,757

)

Cash flows from financing activities:

 

 

 

 

 

 

Cash dividends paid

 

 

(3,993

)

 

 

(3,432

)

Net borrowing under revolving credit facility

 

 

50,000

 

 

 

 

Cash dividends paid to redeemable noncontrolling interests

 

 

(2,923

)

 

 

(3,012

)

Repayment of long-term debt

 

 

(128

)

 

 

(258

)

Redemption of long-term debt

 

 

(466

)

 

 

(6,895

)

Repurchases of common stock

 

 

(557

)

 

 

(305

)

Redemption of redeemable noncontrolling interest

 

 

(100,000

)

 

 

 

Purchase of noncontrolling interests

 

 

(33

)

 

 

(198

)

Debt issuance costs

 

 

(99

)

 

 

 

Net cash used in financing activities

 

 

(58,199

)

 

 

(14,100

)

Effect of exchange rate changes on cash

 

 

4

 

 

 

(3

)

Net increase in cash, cash equivalents, and restricted cash

 

 

118,922

 

 

 

67,249

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

539,765

 

 

 

237,763

 

Cash, cash equivalents, and restricted cash at end of period

 

$

658,687

 

 

$

305,012

 

 

(continued)

 

8


 

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Continued)

(Unaudited)

(Dollar amounts in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for income taxes

 

$

38

 

 

$

35

 

Cash paid for interest

 

$

1,052

 

 

$

739

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Unrealized gain on investments in available-for-sale securities, net of tax

 

$

63