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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-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.
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.
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.
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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W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
American Financial Group, Inc. (AFG) : Free Stock Analysis Report
HCI Group, Inc. (HCI) : Free Stock Analysis Report
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