HCI Group, Inc. Q1 FY2026 earnings call

Growth and Financials - Pre-tax income grew 15% to $115M, diluted EPS $5.45. Best first quarter ever. Gross premiums earned up over 8%, total revenue up over 12%. - Balance sheet strengthening: Stockholder equity doubled, cash in fixed-term securities just under $2B, book value per share almost $85, debt-to-cap ratio 6%. Total surplus grew 22% over last year. - Share repurchase: Authorized $80M buyback, used $37.5M by end of April, bought back 239,000 shares. - Reinsurance: Licensed new reinsurance company Vortex Reinsurance in Cayman Islands. HDI in final phase of June 1 reinsurance placements. - Carrier performance: All four carriers profitable, tailrow with over $120M in-force premiums. - Future opportunities: Looking at two or three Exio-like opportunities, insurance related and other aspects of insurance value chain.

Pre-tax income grew by 15% from the same quarter last year to $115 million, diluted earnings per share were $5.45. Gross premiums earned grew by just over 8%. Total revenue grew by just over 12%. Loss ratio this quarter was 20%, same as first quarter last year. Combined ratio was 57% this quarter, targeting combined ratio plus or minus 5%. Stockholder equity has doubled over last year to over a billion dollars. Cash in fixed-term securities is just under $2 billion. Book value per share is almost $85. Debt-to-cap ratio is 6%. Total surplus has grown by 22% over last year to well over a half a billion dollars. Growth leverage ratio is less than 2.5. Exio and Griston generating revenue on non-HCI business. Tailrow has over $120 million of in-force premiums. All four carriers are profitable.

Forward-looking - Target combined ratio plus or minus 5%. - Expect stability in premiums going forward. - Anticipate inflection point in industry, will be ready with strong balance sheet to execute. - Share repurchase continuing at current rate, buying back about 2% of company every quarter.

Risks - Forward-looking statements subject to various risks and uncertainties. Developments of identified risks could materially adverse affect business, financial condition, results of operations. - Market conditions and weather can impact combined ratio and other financial metrics. - Outcomes of exploring new Exio-like opportunities not certain.

Q: Update on primary environment in Florida for HCI and all its carriers.

A: Stability in premiums expected to remain.

Q: Reason for starting new reinsurer vs leveraging CLADAW more.

A: Optionality gives advantage through different market conditions, provides additional flexibility.

Q: Color on two or three Exeo-like opportunities.

A: Insurance related, other lines of insurance and other aspects of insurance value chain, broad net cast.

Q: Combined ratio target, timeframe.

A: Target 60% plus or minus 5%, 57% in Q1, same as 2025 full year, not expecting significant change.

Q: Posture on reinsurance renewals.

A: Reinsurance market softening, will see nuances when finalized, press release likely in a few weeks once June 1 program finalized.

Q: Impact of Exio growth on P&L.

A: Other income line will be most affected as their revenue flows through, tripled quarter over quarter.

Q: ENS company, surplus finance company.

A: Continues making progress, used for things like California, doing homework and diligence before stepping in, not one of the two or three Exio-like opportunities