Q4 Earnings and Revs Miss Ests at HCI Group

Zacks

HCI Group, Inc. (HCI) posted earnings of $1.31 per share in the fourth quarter of 2013, missing the Zacks Consensus Estimate by 20 cents. However, earnings improved 10% year over year largely on the strength of an improved top line.

Subsequently, shares of HCI Group fell 8.22% in the aftermarket trading session likely due to the earnings miss at the company.

Full year net income of HCI Group came in at 95 cents per share on revenues of $241.1 million. While the top line improved 48%, the bottom line rose nearly 8% year over year.

Quarterly Operational Update

HCI Group’s total revenue of $62.5 million was 21.9% higher year over year. A 28% increase in net premiums earned coupled with a five-fold increase in net investment income drove the upside. However, results missed the Zacks Consensus Estimate of $68 million.

Gross premiums earned improved 26.9%, fueled by policies assumed from Citizens Property Insurance Corporation in Nov 2013 combined with renewal premiums from policies assumed from Citizens in Nov 2012.

Total expense scaled up 33% year over year to $40 million attributable to increase in losses and loss adjustment expenses, policy acquisition and other underwriting expenses, interest expense and other operating expenses.

Loss ratio in the reported quarter was 27.4%, lower than 32.1% in the year-ago quarter. The improvement was attributable to higher premiums earned.

Financial Update

HCI Group exited 2013 with cash and cash equivalents of $293.4 million, up 27.5% from the end of 2012.

At the end of the quarter, total debt was $126.9 million.

Total stockholders' equity was $160.5 million at 2013 end, up 32.3% year over year.

Zacks Rank

HCI Group currently carries a Zacks Rank #3 (Hold).

Performance of Other Property and Casualty Insurers

The Travelers Companies Inc. (TRV) reported operating net earnings of $2.68 per share in the fourth quarter of 2013, surpassing the Zacks Consensus Estimate by 23.5%. Moreover, earnings improved nearly fourfold on a year-over-year basis.

RLI Corp. (RLI) reported fourth-quarter operating earnings of 72 cents per share, outpacing the Zacks Consensus Estimate by 28.6% and the year-ago quarter’s earnings by 64%.

ACE Ltd. (ACE) reported operating net earnings of $2.39 per share in the fourth quarter of 2013, exceeding the Zacks Consensus Estimate by 19.5%. Moreover, earnings surged nearly 67% on a year-over-year basis.

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