HCI Group, Inc. has reported a slight increase in net income for the full-year 2020 to $27.6 million, despite a significant dip in income for the fourth-quarter to just $2.7 million.
Year-on-year, Q4 2020 net income fell by almost 58% from the $6.4 million reported in 2019, as adjusted net income fell from $5.9 million to $1.8 million for the quarter.
In the fourth-quarter, HCI recorded consolidated gross written premiums (GWP) of $139.3 million, which represents growth of 109.2% from the $66.6 million posted for the prior year period.
The InsurTech attributes the growth in GWP to expansion in Homeowners Choice GWP to $97.2 million, and also the growth of TypTap Insurance Company GWP to $42.1 million. The Homeowners Choice GWP, notes HCI, includes $44.6 million assumed from United Property & Casualty Insurance Company as part of a quota share agreement.
Consolidated gross premiums earned increased by 21% year-on-year to $109.1 million. And, HCI has reported that premiums ceded for reinsurance for Q4 totalled $44.2 million and represented 40.5% of gross earned premiums, compared with $31.5 million and 34.9% in Q4 2019.
Net investment income fell to $1.3 million for the quarter, while net unrealised investment gains jumped from $0.7 million in 2019 to $1.3 million in 2020.
During the final quarter of the year, HCI’s performance was impacted by elevated losses and loss adjustment expenses (LAE) of $40.4 million, driven by growth in gross premiums earned and also reserves for tropical storm Eta of $10 million.
“Despite the pandemic and the most active hurricane season on record, we were profitable in all four quarters and gross written premiums grew $139.2 million, driven primarily by organic policy growth at TypTap Insurance Company. We remain focused on generating profits and shareholder returns,” said the company’s Chairman and Chief Executive Officer (CEO), Paresh Patel.
For the full-year 2020, losses and LAE amounted to $160 million for HCI against $107.5 million in the previous year. The year-over-year increase was a result of higher gross premiums earned and also losses related to Hurricane Sally of $20.3 million, and losses related to Eta of $10 million.
Net income and adjusted net income for the year hit $27.6 million and $27.1 million, compared with $26.6 million and $20.6 million, respectively, in 2019.
For 2020, consolidated GWP jumped 38% year-on-year to $504.2 million, driven by the growth of Homeowners Choice GWP to $399.3 million for the year, and growth at TypTap to $104.9 million.
At $415.9 million, gross premiums earned increased in 2020 from the $342.1 million reported in 2019. Premiums ceded also increased for the year, reached $153.5 million or 36.9% of gross premiums earned in 2020, compared with $125.8 million or 36.8% of gross premiums earned in 2019.
Net investment income did decline year-on-year from $13.6 million to $4.6 million. HCI attributes the dip to a decrease in income from limited partnership investments and lower interest income from fixed-maturity securities and cash balances.
