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HCI Group (HCI) Q2 Earnings Beat Estimates, Revenues Up Y/Y

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HCI Group, Inc. HCI reported second-quarter 2021 operating earnings per share of 11 cents, which surpassed the Zacks Consensus Estimate by 266.7%. However, the bottom line plunged 87.2% year over year.

The company’s results reflect improved revenues and sustained expansion across its insurance operation — TypTap Insurance Company. The upside was partly offset by escalating costs.

Shares of the company declined 14.2% in the last two days’ trading sessions.

HCI Group, Inc. Price, Consensus and EPS Surprise

HCI Group, Inc. Price, Consensus and EPS Surprise
HCI Group, Inc. Price, Consensus and EPS Surprise

HCI Group, Inc. price-consensus-eps-surprise-chart | HCI Group, Inc. Quote

Behind the Headlines

Gross premiums written of $185 million rose 7.6% year over year in the quarter under review attributable to a quota share arrangement with United coupled with TypTap’s consistent growth.

Operating revenues climbed 25.8% year over year to $102 million on account of rise in net premiums earned, net investment income and policy fee income. The top line outpaced the Zacks Consensus Estimate by 6%.

Net investment income of $2.6 million surged 62.5% year over year in the second quarter. The upside stemmed from limited partnership and real estate investments resulting in growing income, partly offset by a reduced interest income from fixed-maturity security investments.

Meanwhile, net premiums earned and policy fee income advanced 26.6% and 17.1%, respectively, on a year-over-year basis.

Total expenses escalated 39.9% year over year to $96.4 million due to increased losses and loss adjustment expenses, policy acquisition and other underwriting expenses, general and administrative personnel expenses and other operating expenses.

The 40.3% year-over-year rise in losses and loss adjustment expenses was a result of higher gross premiums earned from the quota share arrangement with United and expansion across TypTap. Policy acquisition and other underwriting expenses soared 78.3% year over year due to amortization of higher costs linked with the quota share arrangement with United.

Financial Update

HCI Group exited the second quarter with cash and cash equivalents of $626.3 million, which grew 45.2% from the 2020-end level. Total investments declined 14.9% from the figure at 2020 end to $192.1 million as of Jun 30, 2021.

The company’s long-term debt amounted to $160.6 million, up 2.6% from 2020-end figure.

As of Jun 30, 2021, total shareholders’ equity totaled $216.7 million, which increased 7.7% from the level at 2020 end.

Dividend Update

On Jul 12, 2021, the company’s board of directors approved a third-quarter cash dividend of 40 cents per share. The dividend will be payable on Sep 17, 2021 to shareholders of record as of Aug 20.

Zacks Rank

HCI Group currently has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Property and Casualty (P&C) Insurers

Of the P&C insurance industry players, which have reported second-quarter results so far, the bottom lines of American Financial Group, Inc. AFG, Cincinnati Financial Corporation CINF and W.R. Berkley Corporation WRB beat the respective Zacks Consensus Estimate.


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