Florida-headquartered re/insurance focused holding company, HCI Group, Inc., saw its net income increase by $1.2 million in the second-quarter of 2019 to $7.6 million, while the firm’s combined ratio deteriorated from 89.3% in Q2 2018 to 92.9% in Q2 2019.
Despite the increase in Q2 net income year-on-year, HCI Group’s H1 2019 net income declined to $14.3 million from the $17.2 million recorded in the first-half of 2018, which the company attributes primarily to an increase in losses and loss adjustment expenses (LAE) of $9.8 million to $51.3 million, and lower net earned premiums.
For the second-quarter of 2019, losses and LAE totalled $24.3 million compared with $21.8 million in Q2 2018. The firm attributes the higher losses and LAE to loss reserve strengthening, and also notes that the H1 2019 result was impacted by approximately $5.3 million of losses related to a severe hail storm in March 2019.
The firm’s loss ratio for the second-quarter of 2019 increased from 41.2% in Q2 2018 to 46.7%, and increased from 38.9% in H 2018 to 49.7% in H1 2019.
In Q2 2019, HCI Group’s expense ratio improved to 46.2% compared with 48.1% in Q2 2018, while for the six-month period the firm’s expense ratio totalled 46.9%, compared with 45.8% in H1 2018 and which the firm says is a result of a reduction in net earned premiums.
HCI Group’s Q2 2019 and H1 2019 combined ratio totalled 92.9% and 96.6%, respectively, compared with 89.3% and 84.7% for the same periods in 2018, respectively.
Paresh Patel, HCI Group’s Chairman and Chief Executive Officer (CEO), said: “We remain encouraged by the accelerating growth of TypTap, our technology-driven insurance subsidiary. The growth at TypTap is organic and profitable. The second quarter reflects the continuing transition of our core insurance business to an InsurTech insurance operation.”
The growth in TypTap, which is the firm’s tech-driven insurance division, resulted in consolidated gross written premiums of $133.4 million in the second-quarter of 2019, which is up 0.8% on the same period in 2018. Consolidated gross premiums earned totalled $83.3 million in Q2 2018, which is a decline on 3% on the same period in 2018.
Premiums ceded in Q2 2019 fell slightly from $32.9 million in Q2 2018 to $31.3 million, while net earned premiums declined slightly in the second-quarter to $52 million.
For the first six months of the year, consolidated gross written premiums fell by 0.7% to $201.1 million. Gross premiums earned for the period declined to $165.9 million, compared with $171.1 million in the first-half of 2018. Premiums ceded hit $62.7 million in H1 2019, which is down slightly on the $65.2 million in H1 2018. Net earned premiums fell from $106.5 million in H1 2018 to $103.2 million in H1 2019.
