Reinsurance News

HCI Group sees 30% increase in gross premiums earned, despite Q2 $8.5mn net loss

9th August 2022 - Author: Jack Willard

Florida-based insurtech HCI Group has reported a net loss of $8.5 million in the second quarter of 2022, compared to a net income of $3.8 million in the same period last year.

HCIAdjusted net loss was $5.4 million for the quarter, compared to an adjusted net income of $2.7 million in the prior year quarter.

For H122, HCI Group reported a net loss of $5.8 million, compared to a net income of $10.7 million in H121, while adjusted net income for H122 was $0.08 million, compared to an adjusted net income of $9.8 million in H121.

At the same time, consolidated gross premiums were $181.1 million for the quarter, a 30% increase from $139.4 million from the second quarter of 2021.

Consolidated gross written premiums (GWP) for the quarter also increased to $186.2 million from $185 million in the prior year quarter.

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Homeowners choice GWP however, declined to $113.1 million from $124.2 million from the prior year period, as the quota share with United Property and Casualty (UPC) transitioned to TypTap. TypTap Insurance Company gross written premiums grew to $73 million from $60.7 million.

In addition, premiums ceded for reinsurance for Q2 22 were $56.2 million, an increase from Q2 21’s $46.4 million.

Additionally, consolidated gross premiums were $360 million for H122, a 33.2% increase from $270.4 million in H121.

Meanwhile, consolidated GWP premiums for H122 were $363.4 million, a 17% increase from $310.8 million in H121.

Net investment income for the quarter was $3.7 million, an increase from $2.6 million in the prior year quarter. The increase was noted to be attributable to higher income from fixed maturity securities offset by reductions in income from limited partnership investments.

Furthermore, net realized and unrealized investment losses were $4.2 million compared to net realized and unrealized gains of $4.1 million in the second quarter of 2021.

HCI Group Chairman and Chief Executive Officer, Paresh Patel, commented: “Inflation accelerated in the quarter which led to an increase in our gross loss ratio. We responded swiftly, increasing rates 10% at Homeowners Choice and 12% at TypTap effective August 2022.

“These actions will offset higher severity and improve our underwriting margins in the future. Inflation aside, we continue to see benefits from operating leverage as our business expands.

“We remain optimistic about the future. In May, we raised over $170 million of capital through our convertible note offering, which gives added flexibility to our strategy. The strategy remains unchanged: to maximize returns for our shareholders.”

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