HCI Group has reported that its first-quarter 2020 net income declined to $0.5 million as the company experienced $4.8 million of net unrealised losses on equity securities, $2.2 million of net realised losses on investment sales, and $3 million of reductions in the estimated value of limited partnership investments.
The company states that these losses relate to declines in financial markets driven by economic uncertainty being caused by the ongoing COVID-19 pandemic.
Net income of $0.5 million in Q1 2020 declined from the $6.7 million recorded in the same period in 2019. As well as the dip in net income, HCI has also reported an investment loss of $0.2 million in the quarter, which includes the impact of the above-mentioned reduction in the estimated value of limited partnership interests.
Loss and loss adjustment expenses increased slightly year-on-year to $28.1 million, driven primarily by an increase in loss reserves related to the growth of TypTap premiums, offset by lower loss reserves related to a severe storm event in March of last year, explains HCI.
Overall, consolidated gross written premiums totalled $76.5 million in Q1 2020 against $67.6 million in Q1 2019, which reflects the continued growth of TypTap. In total, TypTap, which is the firm’s technology-driven insurance subsidiary, recorded gross written premiums of $18.4 million in Q1 2020, compared with $6.1 million in Q1 2019.
Consolidated gross earned premiums jumped to $92.4 million in the first-quarter of the year, which is growth of 11.8% on the $82.6 million recorded a year earlier.
As at the end of the first-quarter of the year, HCI’s combined ratio totalled 88.8%, which is an improvement on the 100.3% recorded in the same period in the previous year.
The company’s Chairman and Chief Executive Officer (CEO), Paresh Patel, commented: “With the exception of unrealized investment losses, we had a very good quarter. Our cash flow is healthy and our balance sheet remains strong.”
