On November 7, 2023, HCI Group Inc (HCI, Financial), a diversified holding company, announced its financial results for the third quarter of 2023. The company reported a pre-tax income of $20.1 million and net income of $15.7 million, or $1.34 diluted earnings per share, for the quarter. This performance marks a significant improvement from the net loss of $51.5 million, or a loss per share of $5.66, in the third quarter of 2022.
Financial Highlights and Management Commentary
Adjusted net income for the third quarter, which is a non-GAAP measure that excludes net unrealized gains or losses on equity securities, was $16.5 million, or $1.41 diluted earnings per share. This compares favorably to an adjusted net loss of $51.2 million, or a loss per share of $5.62, in the third quarter of 2022.
"HCI delivered another quarter of strong earnings as the company benefited from an improved operating environment in Florida, and rising interest rates on our interest-bearing investments," said HCI Group Chairman and Chief Executive Officer Paresh Patel. "We believe we are seeing the impact of insurance reforms recently enacted by the Florida Legislature."
Consolidated gross premiums earned in the third quarter increased to $188.3 million from $181.7 million in the third quarter of 2022. The increase was primarily due to higher average premiums per policy, partially offset by a reduction in the number of policies in force.
Income Statement and Balance Sheet Review
Net investment income for the third quarter was $9.4 million, which, excluding a prior year's real estate gain, represents an increase from $5.1 million in the third quarter of 2022. This rise was primarily due to higher yields on fixed maturity securities, cash, and cash equivalents.
Losses and loss adjustment expenses decreased significantly to $66.7 million from $139.8 million in the third quarter of 2022. The gross loss ratio also improved, declining to 32% in the third quarter of 2023 from 41% in the same period last year, reflecting better claims experience in Florida.
Policy acquisition and other underwriting expenses decreased to $22.8 million from $24.7 million in the third quarter of 2022, and general and administrative personnel expenses also saw a reduction to $13.9 million from $15.8 million.
For the nine months ended September 30, 2023, HCI Group reported net income of $48.3 million, or $4.16 diluted earnings per share, compared with a net loss of $57.3 million, or a loss per share of $6.26, for the same period in 2022.
Balance Sheet and Cash Flow Position
The balance sheet of HCI Group Inc (HCI, Financial) as of September 30, 2023, showed total assets of $1.72 billion, with investments totaling $527 million and cash and cash equivalents of $324 million. Total liabilities stood at $1.43 billion, with losses and loss adjustment expenses accounting for the largest share at $709 million. Equity attributable to stockholders was $199.94 million.
The company's strong performance in the third quarter, coupled with the positive outlook provided by management, suggests that HCI Group Inc (HCI, Financial) is on a path to sustainable profitability and growth. The detailed financial tables and management's commentary provide further insights into the company's operations and strategic direction.
For more detailed information and to access the full earnings report, please visit the Investor Information section of HCI Group's website at www.hcigroup.com.
Explore the complete 8-K earnings release (here) from HCI Group Inc for further details.
