HCI Group Q1 Earnings Call Highlights

Key Points

• HCI Group said it posted its best first quarter ever, with pre-tax income up 15% to $115 million, diluted EPS of $5.45, and total revenue rising more than 12% on stronger investment and other income.
• Profitability remained strong, with a 20% loss ratio and a 57% combined ratio, while management highlighted continued low claims, steady premiums, and a target combined ratio of 60% plus or minus 5 points.
• The company emphasized a much stronger balance sheet and ongoing capital returns, including more than $1 billion of stockholders’ equity, nearly $2 billion in cash and fixed-term securities, and $37.5 million in share buybacks under an $80 million authorization.

HCI Group NYSE: HCI reported what executives described as its best first quarter ever, with higher revenue, expanded capital levels and continued share repurchases, according to management comments on the company’s first-quarter 2026 earnings call.

Chief Financial Officer Mark Harmsworth said pre-tax income increased 15% from the prior-year quarter to $115 million, while diluted earnings per share were $5.45. He said gross premiums earned rose just over 8%, reflecting the full effect of insurance assumptions completed in 2025. Total revenue increased slightly more than 12%, helped by higher investment income and other income.

Harmsworth said the increase in other income reflected revenue generated by Exzeo and Griston from non-HCI business. He later told analysts that as Exzeo grows, its revenue will primarily appear in HCI’s consolidated “other income” line, which he said tripled quarter over quarter.

Margins Remain Strong as Loss Ratio Holds Steady

HCI’s loss ratio for the quarter was 20%, roughly in line with the first quarter of 2025. Harmsworth attributed the result to continued low claims and litigation frequency.

The company’s combined ratio was 57% in the quarter, matching the full-year 2025 level. Harmsworth said HCI is targeting a combined ratio of 60%, plus or minus 5 percentage points, based on its current business profile.

In response to a question from Michael Phillips of Oppenheimer, Harmsworth clarified that the combined ratio target refers to an accident-year, ex-catastrophe basis. He said the target is appropriate “certainly for this year,” while noting that weather could move the figure. He added that the company’s average premium per policy at the end of the first quarter was largely flat compared with a year earlier.

Balance Sheet Strengthens, Buyback Continues

Harmsworth said stockholders’ equity has doubled over the past year to more than $1 billion. HCI had just under $2 billion in cash and fixed-term securities, book value per share of nearly $85 and a debt-to-capital ratio of 6%, according to his remarks.

He also said total surplus across the company’s underwriters grew 22% over the past year to well over $500 million, while the gross leverage ratio is now below 2.5. Harmsworth said that leaves room for growth without the need for new capital and provides additional protection in the event of a storm.

HCI announced an $80 million share repurchase authorization in March. Harmsworth said the company had used $17.5 million of that authorization by the end of March to buy back about 110,000 shares. By the end of April, cumulative repurchases had reached 239,000 shares, using about $37.5 million of the authorization.

Chairman and Chief Executive Officer Paresh Patel said the company is using only a portion of earnings to repurchase stock while continuing to strengthen the balance sheet. “Simply put, we are investing in ourselves,” Patel said. He said that at the current pace, HCI is buying back about 2% of the company each quarter.

Management Highlights Carrier Profitability and Reinsurance Flexibility

Karin, speaking after Harmsworth during the prepared remarks, said HCI entered the second quarter with $1.3 billion in premiums in force across four carriers. She said more than half of the company’s Citizens takeouts in 2025 were completed by Tailrow, HCI’s second reciprocal exchange, which now has more than $120 million of in-force premiums.

She said all four carriers are profitable inception to date, with the two most recent carriers reaching that milestone within 12 to 15 months of launch. She said that reflected HCI’s emphasis on execution and disciplined carrier formation.

Karin also said HCI licensed a new reinsurance company, Fortex Reinsurance, domiciled in the Cayman Islands as a Class B insurer. Fortex is HCI’s second reinsurance company, joining Claddagh, which is domiciled in Bermuda. She said the added structure gives HCI more flexibility to selectively retain risk and reduce the cost of third-party reinsurance.

The company is in the final phase of its June 1 reinsurance placements. Karin said HCI would not announce details until the placements are finalized because market conditions were continuing to improve. During the question-and-answer session, management said the reinsurance market continues to soften and that the company expects to issue a press release after the program is finalized.

Exzeo and Future Growth Initiatives Remain in Focus

Harmsworth said HCI has just under $200 million of holding company liquidity, excluding the 75 million shares it owns of Exzeo, which now trades publicly. He said HCI’s book value per share of nearly $85 does not include unrealized gains on Exzeo ownership. If the fair value of Exzeo and HCI’s real estate portfolio were added, pro forma book value per share would be almost $145, according to Harmsworth.

Patel said HCI grew Exzeo “from just an idea” to a current valuation of $1.5 billion. He said management is now evaluating “two or three” opportunities that could become the next Exzeo-like asset. In response to Matthew Carletti of JMP Securities, Patel said those opportunities are insurance-related, but not necessarily Florida homeowners insurance. He said they may involve other lines of insurance or other parts of the insurance value chain.

Patel also addressed possible acquisitions, saying opportunities may emerge at an “inflection point” in the industry. Asked by Mark Hughes of Truist about book rolls or M&A, Patel said timing matters, particularly ahead of hurricane season. “We would like to do M&A the day after the storm as opposed to do an M&A the day before the storm,” he said.

Florida Market Described as Stable

During the analyst Q&A, management said the primary insurance environment in Florida remains stable for HCI’s full enterprise, including its carriers. Karin said the company sees stability in premiums and anticipates that continuing going forward.

Phillips also asked about HCI’s excess and surplus lines initiative. Patel said it continues to make progress and noted that the company is doing diligence on potential uses, including California. He said California remains a market where developments, including wildfire-related litigation, require careful evaluation before entering.

Patel closed the call by thanking shareholders, employees, agents and policyholders as the company moves into what he called the next phase of growth.

About HCI Group NYSE: HCI

HCI Group, Inc NYSE: HCI is a holding company whose principal business is the underwriting and issuance of property and casualty insurance through its insurance subsidiaries. Headquartered in Jacksonville, Florida, the company focuses primarily on personal-line insurance products, writing homeowners, condominium, renters and mobile home policies. HCI Group also offers wind-only and flood coverage in coastal regions across the state, providing tailored solutions to both coastal and non-coastal communities.

The company distributes its insurance products through a network of independent agents and brokers, leveraging local market expertise to assess risk and deliver personalized service.

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