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Edited Transcript of HCI earnings conference call or presentation 5-Nov-19 9:45pm GMT

Q3 2019 Hci Group Inc Earnings Call

CLEARWATER Nov 17, 2019 (Thomson StreetEvents) -- Edited Transcript of HCI Group Inc earnings conference call or presentation Tuesday, November 5, 2019 at 9:45:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* James Mark Harmsworth

HCI Group, Inc. - CFO

* Kevin A. Mitchell

HCI Group, Inc. - SVP of IR

* Pareshbhai Suryakant Patel

HCI Group, Inc. - Co-Founder, Chairman, President & CEO

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Conference Call Participants

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* Christopher Campbell

Keefe, Bruyette, & Woods, Inc., Research Division - Analyst

* Mark Douglas Hughes

SunTrust Robinson Humphrey, Inc., Research Division - MD

* Matthew John Carletti

JMP Securities LLC, Research Division - MD and Senior Analyst

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Presentation

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Operator [1]

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Good afternoon, and welcome to HCI Group's third quarter 2019 earnings call. My name is Edna, and I will be your conference operator this afternoon. (Operator Instructions)

Before we begin today's call, I would like to remind everyone that this conference call is being recorded and will be available for replay through December 5, 2019 starting later this evening. The call is also being broadcast live via webcast and available via webcast replay until December, 5, 2019 on the Investor Information section of the HCI Group's website at www.hcigroup.com.

I would now like to turn the call over to Kevin Mitchell, HCI's Senior Vice President of Investor Relations. Sir, please proceed.

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Kevin A. Mitchell, HCI Group, Inc. - SVP of IR [2]

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Thank you, and good afternoon. Welcome to HCI Group's third quarter 2019 earnings call. With me today are Paresh Patel, our Chairman and Chief Executive Officer; and Mark Harmsworth, our Chief Financial Officer. Following Paresh's opening remarks, Mark will review our financial performance for the quarter and first 9 months of 2019, and then turn the call back to Paresh for an operational update and business outlook.

Finally, we will take your questions. To access today's webcast, please visit the investor information section of our corporate website at hcigroup.com.

Before we begin, I would like to take the opportunity to remind our listeners that today's presentation and responses to questions may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as anticipate, estimate, expect, intend, plan and project and other similar words and expressions are intended to signify forward-looking statements.

Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the company's filings with the Securities and Exchange Commission. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on the company's business, financial conditions and results of operations. HCI Group disclaims all the obligations to update any forward-looking statements.

Now with that, I would like to turn the call over to Paresh Patel, our Chairman and CEO. Paresh?

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [3]

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Thank you, Kevin, and welcome, everyone. Before Mark provides details around our financial performance for the quarter and the first 9 months of 2019, I would like to touch on some events and highlights from the quarter. Obviously, we generated diluted earnings of $0.73 per share. HCI has been profitable now in 46 of the last 48 quarters, with the 2 exceptions being the quarters in which Hurricane Irma and Hurricane Michael hit.

Also in July, we paid a dividend of $0.40 per common share, our 36th consecutive quarterly dividend. The current yield is nearly 4%. And as most of you know, hurricane activity generally peaks in the third quarter of every year. This year, we had a quiet third quarter. Although Hurricane Dorian devastated the Bahamas in September, it's good on the East Coast of Florida without making a land fall.

Our estimated losses from Dorian were slight. However, as we always do, when a hurricane threatens Florida -- that threatens Florida, we suspend new business until the Dorian threat had passed. That suspension impacted our new business production for about 3 weeks out of the quarter. But despite the suspension, consolidated growth within premiums were up 8% over the third quarter of 2018, reflecting the rapid growth of TypTap Insurance Company, our technology-driven insurance subsidiary.

With that, I'll now turn it over to our CFO Mark Harmsworth, who will give us -- who will walk us through the financial performance for the third quarter. Mark?

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James Mark Harmsworth, HCI Group, Inc. - CFO [4]

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Thanks, Paresh. So net income on a GAAP basis for the third quarter were $5.9 million and GAAP diluted earnings per share were $0.73. On an adjusted basis, net income for the quarter was $5.4 million and adjusted diluted earnings per share were $0.67. Year-to-date, net income on a GAAP basis was $20.1 million and $14.7 million on an adjusted basis. Year-to-date, diluted earnings per share were $2.49 on a GAAP basis and $1.82 on an adjusted basis.

The third quarter was another chapter on our growth story. In the second quarter, written premiums grew from the previous year and that trend continued in the third quarter. Gross written premiums of $97.3 million were 8% higher than the same quarter last year and about 2% higher year-to-date. This growth, as Paresh mentioned, has been driven by TypTap. TypTap grew over $16 million in premium this quarter and has written more than $36 million year-to-date. We're really excited about the growth here and we expect it to continue. The growth in written premium will start to translate into higher earned premium and we expect that to happen in the fourth quarter. This would be the first time a quarter-over-quarter increase in gross premiums earned has happened in some time.

A couple of other things on the income statement. In June, we announced our new reinsurance program and estimated reinsurance premiums of $31 million per quarter. This assumes some significant growth in TypTap, but we did say that premiums could increase if the TypTap growth outpaced our expectations, which it has.

In Q3, premiums ceded for reinsurance are about $500,000 higher than the $31 million just mentioned. This reflects a higher TIV adjustment than anticipated because of the extraordinary growth of TypTap.

Ceder reinsurance in Q4 should be about the same as it was in this quarter. Net investment income is about $1.4 million less than the same quarter last year. This was driven largely by the fact that limited partnership income was unusually high in the third quarter last year. Loss expense in Q3 was about $1.5 million higher than last year. This is largely driven by TypTap. While we expect the long-term core loss ratio to be similar to that of Homeowners Choice, in order to build reserves and be conservative, we have been and will continue to reserve at a higher loss ratio. While this may drive slightly higher loss expenses in the near term as it did this quarter, we think this is the right thing to do. In addition, we booked a loss reserve in the quarter for Hurricane Dorian of about $1 million.

Loss expense year-to-date is about $11 million higher than the first 9 months of last year, about 1/3 of this is explained by TypTap, as mentioned above and most of the balance by the hail event that we had in the first quarter. If you're looking really closely, you might notice our effective tax rate this quarter was a little low at 24.2%. This was due to the lowering of the Florida Corporate Income Tax rate. The drop was retroactive to January 1 and so the full year-to-date benefit was booked in Q3. With this new Florida rate, we expect the go forward consolidated income tax rate to be about 26.8%.

Now to the balance sheet. Press release shows a comparison to December 31, 2018, so I'll make a few comments on those movements. First, you will see some changes within investments, the biggest of which is a $66 million reduction in short-term investments, which of course, were sold to fund the $90 million debt paydown in March. Fixed term securities are up, while some securities matured and were used to pay down the debt, we also purchased some new corporate bonds back in January to capitalize on the increase in rates that was happening earlier in the year.

Reinsurance recoverable and loss reserves are both up. We increased the ultimate for Hurricane Michael to $32.5 million and the ultimate for Hurricane Irma to $508 million. These changes increased reinsurance recoverable and loss reserves in the balance sheet but have no impact on the income statement. As of September 30, we have paid about $368 million in Irma claims and we have an additional $140 million in reserves.

In terms of overall loss reserves in the balance sheet, the increase is largely driven by the CAT adjustments mentioned above. However, reserves for daily claims are also up despite open claims and open litigation being down as we continue to take a cautious reserve stance.

Just a few comments on capital management. As you know, we are now paying a dividend of $0.40 per share. While this is about 7% higher than it was last year, the actual cash dividends paid in the quarter were the same as last year because the share count continues to drop. Speaking of which, we have continued the execution of our $20 million buyback plan approved for 2019. To the end of September, we had bought back about 368,000 shares at an average price of just over $41.25 a share. There is just under $5 million less of the $20 million authorized and we will continue with the program until the end of the year.

The number of common shares outstanding at the end of September was approximately 7,883,000, this is down 7% from a year ago and 13% from 2 years ago as our buyback program continues to reduce the shares outstanding. The fully diluted share count at the end of the quarter was 9,860,000. Book value per share at the end of September was $23.37, which is up 8% from the start of the year.

One final note in terms of holding company liquidity. We have about $50 million of cash in investments at the holding company level as well as access to the $55 million available on the revolving credit facility. And with that, I will turn it back to Paresh.

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [5]

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Thanks, Mark. As you can see from our financial results, Q3 was another successful quarter for HCI. We are growing organically and profitably, driven primarily by TypTap, our technology-based insurance subsidiary. And despite the -- our suspension of new business production during the pendency of Hurricane Dorian, gross written premiums at TypTap increased fourfold compared to a year ago.

Earlier in the year, we had projected that TypTap would have more than $50 million of premiums enforced by the end of the year. Updating that forecast at this point, we expect TypTap will surpass that number by Thanksgiving. So despite the pendency of Dorian, we will be there a month ahead of schedule.

This underlines that the value of our investments in technology and analytics is now clear. We can now grow rapidly while maintaining strict underwriting standards. And with that, we are ready to open the call for questions. Operator, please provide the proper instructions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And now our first question comes from Matt Carletti with JMP Securities.

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Matthew John Carletti, JMP Securities LLC, Research Division - MD and Senior Analyst [2]

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I just have a few questions. Paresh, I was hoping you might be able to give a little more color on the success of TypTap, in particular. How did that growth kind of build over the quarters? Maybe a month by month picture or however you want to frame it? And then also, two, how should we think about kind of where you've been getting the best traction? Are there certain geographies within Florida that you're finding that works better or certain types of production sources?

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [3]

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Okay. So in terms of growth of TypTap, we were growing quite rapidly, winding more business every week compared to the week before. Obviously, we went on to nearly zero when Dorian was approaching. And from an outstanding start, business has come roaring back. And our best performing week was last week. I say that with some hesitancy in mind because usually the cyclicality to the business and new business production tends to fall off in the fourth quarter. But so far, we haven't seen it in TypTap. But business cycles are business cycles, and we will have some kind of slowdown in near future.

We've said we are going to probably be $50 million premium force by the end of November. And we have stated a goal for next year of trying get to about $100 million if the trends continue, which right now, is looking very good. In terms of where we are getting business from, we are getting it from all the places we would like to get it from. So the portfolio is coming up in a very similar footprint as the one that we have for Homeowners Choice, with the exception that we're not writing a lot of business we can't handle.

So everything is going according to plan or actually slightly ahead of plan. And to put this into perspective, I think in April, we had said we would get to $50 million by the end of year, so it was about 39 weeks away. We are going to be about 4 weeks ahead of schedule on that despite having a 3-week set back because of Dorian. So that gives you an idea as to how much the business has performed ahead of our expectations.

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Matthew John Carletti, JMP Securities LLC, Research Division - MD and Senior Analyst [4]

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Yes. That's very helpful. Another kind of big picture question. Just curious your thoughts on -- as we sit here and looking at insurtech, there sure are a lot of companies out there and I think some doing a very good job in differentiating themselves and some not. One thing that's very common is growth and TypTap clearly is participating in that. One thing that's less common is profit and that is something that it seems you guys have figured out with TypTap. So I'm curious just with kind of some of the headlines, your valuation metrics and things like that you see out there that are getting reported from the bunch. How do you think of that when you think about what TypTap is worth within HCI?

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [5]

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Okay. So great question. Yes. We are aware of the valuation metrics applied to a lot of other companies that are basically entirely focused on growth. But eventually, income is what is necessary, otherwise it's just you're buying the business. We've always taken that different viewpoint that insurance -- insurtech still has the word insurance in it so it has to make insurance sense. So we focused more on getting the formula correct and then starting to scale up.

So we have approached the reverse of what a lot of other folks have done which is start with tech first and we'll worry about making money later on. We said make money first and then scale up. And that is starting to now come to fruition as we're seeing this thing grow. As far as the valuation of this -- of TypTap, clearly, I don't think any value is particularly being (inaudible) to TypTap within the HCI Group, let alone Exzeo, which is providing the underlying technology. But eventually, I think the 2 things will have to meet, either some of our -- some of the insurtech companies will have to come down to valuation to where we are or the world will have to acknowledge that our valuation should rise to approach that of some of these companies because we are actually achieving in TypTap the promise that some of these companies hold for the future that they hope to someday tame.

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Matthew John Carletti, JMP Securities LLC, Research Division - MD and Senior Analyst [6]

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Okay. Thank you for the color. And one quick numbers question for Mark, kind of my quarterly question. Net written premiums, do you have that handy?

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James Mark Harmsworth, HCI Group, Inc. - CFO [7]

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Yes. $65.76 million.

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Operator [8]

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Our next question comes from Mark Hughes with SunTrust.

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Mark Douglas Hughes, SunTrust Robinson Humphrey, Inc., Research Division - MD [9]

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On TypTap, you described how you're being conservative on setting losses as you're ramping up there. When do you think you'll know or have a good idea or how much time before you're confident that you can perhaps set those losses at a more normal long-term level?

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James Mark Harmsworth, HCI Group, Inc. - CFO [10]

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It's -- as we've said, we're pretty excited about the growth. But in terms of its size, it's still fairly small relative to Homeowners Choice, obviously, and there is just not enough data to get your arms around that. As I said in my script, we expect that rate to be about what Homeowners Choice is, potentially a little bit less, we're -- we've got a lot of experience. We're applying the same general underwriting standards.

So we have no reason to think that it won't be that. But we just feel like the right thing to do through this growth phase is to try and build up the reserves and just to do so by growing with a higher loss ratio. But I think it'll take some time. But I think the most important thing is there is no reason to think that it will be different from that of Homeowners Choice.

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Mark Douglas Hughes, SunTrust Robinson Humphrey, Inc., Research Division - MD [11]

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Can you quantify how much more you're putting in terms of the cushion?

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [12]

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Let me take that one, Mark. It becomes difficult to say how much we put in there in cushion because TypTap is small enough that one large fire would make that cushion disappear in the short term. The key thing that we are trying to point out is that we're being conservative, one. Two, that when we approach 100 million in premium, that's when these businesses stabilize out. So we're on that track, but we're not quite there yet. And three, that we are doing this conservative booking ahead of things. We're not running this -- that someday we hope as we scale up the loss ratio will improve. We're actually already there, and we are taking a more conservative sense, just in case we miss something and the loss ratio does deteriorate a little bit from the numbers it's been posting currently.

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Mark Douglas Hughes, SunTrust Robinson Humphrey, Inc., Research Division - MD [13]

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Understood. You had mentioned that, I think, your reserves are up, your open litigation is down. Could you just give us a few thoughts at any measures you might be able to share around open litigation and then your observations about new lawsuits? Have the plaintiff's attorneys started to target, I guess, non-storm claims, it's understandable that they had a lot to do with Irma, and with Michael. Are they going back to day-to-day claims? And the recent regulatory changes, are they having much of an impact?

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James Mark Harmsworth, HCI Group, Inc. - CFO [14]

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A lot of questions. I think, as we've said before, I think that it's -- I think it's a little early to tell whether those legislative changes are going to have a material impact on litigation flow and on loss reserves. In terms of numbers, open claims from the end of the year to the end of the third quarter are down about 15%. Open litigation is down more than that. I know they're pretty significant drops and encouraged by the fact that the open litigation is down even more than the claims are down because, of course, that drives a lot of the reserve requirement.

But yes, as I sort of said in the script, in order to sort of keep a cautious stance, daily reserves are still up from the end of the year to the end of the third quarter.

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [15]

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And Mark, adding something to Mark's comments and some other different color. What we are seeing across our book is our Tri-County -- and this is speaking just from daily claims, not the CAT stuff, right? We are seeing an improvement in terms of lawsuits in the Tri-County area, but it is slightly being offset by the increase in lawsuits in the non-Tri-County area. So the lawsuit fever is spreading beyond Tri-County. But because of some of the underwriting decisions we took several years ago, we are seeing the payoff by the reduction in the number of lawsuits we are getting in Tri-County, and we are monitoring the non-Tri-County area as something to watch going forward.

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Mark Douglas Hughes, SunTrust Robinson Humphrey, Inc., Research Division - MD [16]

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You wouldn't characterize, similar to Matt's question, the -- why your growth at TypTap is getting better. Do you find that it's increasing distributions? Do you find that the ease of use or convenience, perhaps, for the agents is leading to a kind of a learning curve where you see progressively more business out of the agents once they're on the system and working with you? Any way you could parse that out a little?

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [17]

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Yes. I think it's a number of things, but really the core underlying thing is the technology that we deployed. What the technology lets the agents do is that they can very quickly get an underwriting decision yes, no, maybe. Four or 5 questions at most, which is a lot quicker than anything else. And to the extent that we are open for business and we know what our risk appetite is, it's become a very easy go-to location for agents.

To put this into perspective, we're only binding something like 6%, 7% of the quotes we do in a given week. But what we've achieved in technology is that we can do thousands of quotes and do them very efficiently. And that has a huge kind of [inflation] not only for efficiency for us as an organization, but also if you value the agents' time that they can do lots of quotes and get an answer almost instantaneously.

So as we stay agent-focused and they see the value of this, we sort of become their -- we're not quite there yet, but we're starting to become their -- their go-to insurer when somebody walks in through the door, okay? So we're becoming favorites. And they're becoming big fans of the technology, yes.

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Operator [18]

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(Operator Instructions) Our next question comes from Christopher Campbell with KBW.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [19]

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I guess my first question is just kind of a numbers one. What are the CATs and then the reserve development for the quarter?

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [20]

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I think Mark gave the CATs in his prepared remarks.

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James Mark Harmsworth, HCI Group, Inc. - CFO [21]

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Yes. I give the number for -- we updated the ultimate for Michael to $32.5 million. And we updated the ultimate for Irma, and then I gave the numbers -- the paid number for Irma and the reserve number for Irma.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [22]

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Oh, no, no. I was thinking about like the net CATs, like the net CATs that are hitting your -- that would hit your numbers.

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James Mark Harmsworth, HCI Group, Inc. - CFO [23]

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That would hit the income statement?

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [24]

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Yes. Not the loss trade numbers, yes. The actual like net CAT losses that you guys have this quarter.

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James Mark Harmsworth, HCI Group, Inc. - CFO [25]

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Oh, there is -- oh, I see. Okay. So there's really -- yes. So the only thing we had, Chris -- sorry about that. So -- we're thinking about Michael and Irma there. So the only thing we really had was Dorian. We put up $1 million for Dorian.

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [26]

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(inaudible) need for caution.

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James Mark Harmsworth, HCI Group, Inc. - CFO [27]

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Yes. And that's it, so in terms of CAT losses in the loss reserves, there's just $1 million and that relates to Dorian. Sorry about that.

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [28]

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And actually I think we're having trouble answering the question. I'm thinking about it in our heads because for us, Q3 was a CAT or a kitty CAT free quarter as well. So we just, looking at Dorian, the number of claims that have come in, just another day at the office.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [29]

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Okay. Got it. And then reserve development, was there anything this quarter?

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James Mark Harmsworth, HCI Group, Inc. - CFO [30]

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Yes. I mean we've been doing the same thing, I think I've mentioned it. Each quarter we've been booking a couple of million dollars in reserve development. Each quarter we'll look at that at the end of the year. Year-to-date, I think we're at about $6.5 million, something like that. So we did the same thing in the third quarter that we did in the first two quarters. So no real change there.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [31]

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Okay. And then how much was that in this quarter?

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James Mark Harmsworth, HCI Group, Inc. - CFO [32]

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This quarter was $2 million.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [33]

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Okay. $2 million. Okay. Got it. Great. And then I think you guys have mentioned that the open litigation is down more than the -- or I think the litigation claims are down more than the claims are then like the closed claims. So I guess, why -- so if frequency is down, is severity up? Is that why the daily reserves are actually rising? Is that you're seeing kind of -- you're seeing lower frequency, but then kind of more loss -- more inflation in those losses?

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [34]

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I don't know if I would characterize it that way. I think Mark said some of the development was because of TypTap now growing and us seeing conservative positions on that. The other part of it is, in terms of the number of open claims coming down, it's because the frequency of new claims coming in has dropped off significantly. So if you imagine that we were, hypothetically, say, closing 20 suits a week, but if we are only getting 15, the numbers eventually are going to come down. The number of open suits is going to eventually come down. It's that kind of effect you are seeing, is that the frequency of new suits coming in has been tailing off for several months now and it's starting to have an effect.

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James Mark Harmsworth, HCI Group, Inc. - CFO [35]

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Yes. So if you looked on a reported basis, the number of claims as Paresh mentioned, the number of claims is coming down, the number of losses is coming down more than the number of claims is coming down. The number of open claims, total lit -- non-lit, as I mentioned, is down about 15%. Lit is down more than that, part of that is just because we're getting fewer litigation claims and also because we're probably closing a little faster.

If your question is related to why are you still getting some adverse development? Some of that is just caution and some of that is chewing up litigation reserves for prior years a little bit. But the overall trends are very strong. Claims are dropping, lawsuits are dropping, opens are dropping and a lot of the reserve increases is just sort of being cautious.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [36]

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Yes. And I'm trying to think about it right. I'm thinking about the loss ratio was up to like 50.2% this quarter versus 47.6% a year ago, and then if I'm just thinking about the puts and takes, right? So the benefits would be, right, the lower frequency of lawsuits doesn't sound like severity is getting any worse. And then the only like delta would be then the growth in TypTap, right? So if the loss costs are coming down and then CATs aren't a big deal, I would expect that those, like, frequency numbers would be, like, -- I did -- the loss cost should be coming down versus up. So I'm trying to, I guess, in a way back where we should expect the core loss ratio to be going forward?

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [37]

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Chris, I think, Mark in his prepared remarks, talked about the $11 million, the bulk of which has to do with TypTap and then $6.5 million was to do with the hail event in the first quarter.

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James Mark Harmsworth, HCI Group, Inc. - CFO [38]

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Yes. So Chris, if you look at loss expense and you can look at it on the quarter or you can look at it year-to-date, either way, right? So I think what you're getting at is sort of, hey, how come the core loss ratio isn't dropping, right?

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [39]

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Right. Yes. What I'm thinking about as the bigger part of you book is seeing these better lawsuit trends.

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James Mark Harmsworth, HCI Group, Inc. - CFO [40]

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Yes. So -- okay. So first a little bit of a detail and then a little bigger picture. So when you go through, there's a lot of things that are in the numbers and we mentioned them in the prepared remarks. So if you're looking year-to-date, we've got about -- there's about $11 million that relates to TypTap. There's $1 million for Dorian. We've got some money in there for the hail event in the first quarter.

So you've got a significant amount of money in there that really sort of relates to other things. If you back some of those numbers out and look year-to-date, the core loss expense for the current year is lower than the core loss expense for last year, which is sort of what we would expect to see, and that's happening.

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Christopher Campbell, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [41]

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Okay. Great. That's helpful. Yes, I'll look at the year-to-date numbers. I think that'll be easier to see. And then just kind of one last one, like as you're growing TypTap, I mean, does that change your share repurchase appetite over time?

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Pareshbhai Suryakant Patel, HCI Group, Inc. - Co-Founder, Chairman, President & CEO [42]

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I don't think the 2 things are interrelated because we have not had to downstream any capital into TypTap since we capitalized it 3 years ago with a $25 million despite having weathered 4 hurricanes. It's making money. Key item. It's making money. And we have plenty of capital with which to keep our insurance operations running and do all the other things that we do as well.

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Operator [43]

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At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Kevin Mitchell, who has a few closing remarks.

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Kevin A. Mitchell, HCI Group, Inc. - SVP of IR [44]

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As always, on behalf of the entire management team, I'd like to thank our shareholders, employees, agents, most importantly, our policyholders, for their continued support. We look forward to updating you on our progress in the near future.

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Operator [45]

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Thank you for joining us today for our presentation. This concludes today's call. You may now disconnect.