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Jun 30, 2022
Hci Group Q2 2022 Earnings Report
Reported a net loss due to accelerated inflation, which increased the gross loss ratio. Management responded by increasing rates at Homeowners Choice and TypTap to offset higher severity and improve underwriting margins.
Key Takeaways
HCI Group reported a net loss of $8.5 million, or $1.04 per share, in Q2 2022, compared to a net income of $3.8 million, or $0.24 diluted earnings per share, in Q2 2021. Adjusted net loss was $5.4 million, or $0.71 per share, compared to adjusted net income of $2.7 million, or $0.11 diluted earnings per share, in Q2 2021. Gross premiums earned grew by 30%.
Net loss of $8.5 million, or $1.04 per share, compared to net income of $3.8 million, or $0.24 diluted earnings per share in Q2 2021.
Adjusted net loss of $5.4 million, or $0.71 per share, compared to adjusted net income of $2.7 million, or $0.11 diluted earnings per share in Q2 2021.
Consolidated gross written premiums increased to $186.2 million from $185.0 million in Q2 2021.
Consolidated gross premiums earned of $181.1 million, up 29.9% from $139.4 million in Q2 2021.
Revenue by Segment
Forward Guidance
HCI Group increased rates 10% at Homeowners Choice and 12% at TypTap effective August 2022. These actions will offset higher severity and improve underwriting margins in the future. The strategy remains unchanged: to maximize returns for our shareholders.
Positive Outlook
- Rate increases at Homeowners Choice and TypTap are expected to offset higher severity.
- Rate increases are expected to improve underwriting margins.
- Operating leverage benefits are expected to continue as the business expands.
- Raised over $170 million of capital through a convertible note offering in May.
- Capital raise provides added flexibility to the company's strategy.
Challenges Ahead
- Inflation accelerated in the quarter, leading to an increase in the gross loss ratio.
- Net loss reported for the quarter compared to net income in the same period last year.
- Adjusted net loss reported for the quarter compared to adjusted net income in the same period last year.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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