HCI Group, Inc. Q3 FY2025 earnings call

• Financial highlights: Reported earnings of $4.90 per share, net combined ratio of 64%, total shareholders' equity of $821 million with book value per share increasing more than 50% year-to-date to $63 per share. - Real estate developments: Tampa campus owned by Greenleaf Capital fully leased, and Greenleaf acquired a new complex in Pinellas County. - Exzeo updates: Added fifth carrier, completed IPO. - Citizens assumption: Successfully assumed over 47,000 policies from Citizens in October, representing about $175 million of in-force premium, and not planning to participate in December assumption. - Credit facility: Entered new credit facility with Fifth Third Bank, doubling credit available.

The company has multiple segments. In the insurance/reinsurance segment, pretax income for the third quarter was just over $90 million. Year-to-date pretax income is $285 million, an increase of more than 70% compared to the first 9 months of last year. The loss ratio in the third quarter was 22%, and the net combined ratio was 64%. For the real estate segment, Greenleaf Capital's three-building campus in Tampa was fully leased and the division acquired a new complex in Pinellas County, Florida. Exzeo added a fifth carrier to its platform and completed an initial public offering, with HCI remaining a significant shareholder owning 75 million shares before and after the IPO.

• Remain committed to delivering strong earnings, compounding book value per share, and generating attractive returns for shareholders. - Expect HCI's book value to be over $1 billion and book value per share to be close to $80 by the end of the year.

• Forward-looking statements are subject to various risks and uncertainties, some of which are identified in the company's filings with the Securities and Exchange Commission. Should risks or uncertainties develop into actual events, they could have material adverse effects on the company's business, financial conditions, and results of operations.

Q: Can you give an update on the 75,000 policies applied for from Citizens?

A: We applied for 75,000, but ended up with the 47,000 mentioned, with Homeowners Choice getting about 19,500, Tailrow getting just over 19,000, and TypTap getting a little bit over 8,000.

Q: Would you share expected use of cash on balance sheet for Homeowners Choice or M&A?

A: Can't be too specific, but there's a strong capital position and surplus, and we grew by 15% this year with opportunities ahead.

Q: How much cash at the holding company?

A: Total holding company liquidity at the end of September was about $285 million.

Q: Why not do December takeout from Citizens?

A: Citizen is shrinking, and we're already thinking about other things beyond Citizens.

Q: About expense ratio being good, anything unusual?

A: No unusual in Q3, just operational leverage with technology allowing growth without adding much people.

Q: Modeling Exzeo impact on earnings per share?

A: Impact would be a little less than $0.15 if IPO happened at start of Q3, and book value will increase significantly from IPO net proceeds.

Q: Breakout of net income for Exzeo vs Homeowners Choice?

A: Will be in segmented report published tomorrow.

Q: Update on Exzeo pipeline?

A: Going forward, focus on HCI and ownership of Exzeo, and Exzeo will hold its own earnings calls.

Q: On October take-out, is $175 million in-force premium roughly annualized and unearned?

A: Yes, about 60% of $175 million is unearned