HCI Group, Inc.

HCI Group, Inc. is primarily engaged in the property and casualty insurance business, providing various homeowners' property and casualty insurance products for properties located in the State of Florida, which is its primary market, as well as in other states in the northeast and southeast regions of the United States. The property and casualty insurance industry is large, fragmented, highly regulated, and complex, and carriers compete primarily on product differentiation, pricing, customer service and experience, marketing and advertising, and affiliate programs and channel strategies. HCI faces competition from national, regional and residual market insurance companies, and may also face competition from new entrants in its markets that could create pricing pressure leading to overall premium reductions.

The company's competitive strategies focus on exceptional service, claims settlement practices, disciplined underwriting, new product offerings, effective and efficient use of technology, geographical expansion, and distribution channel improvement. HCPCI and TTIC have each obtained a Demotech rating of 'A Exceptional,' which is accepted by major mortgage companies operating in the state of Florida and many other states, though none of its insurance subsidiaries currently have an acceptable A.M. Best rating, which could limit its ability to compete with large, national insurance companies and certain regional insurance companies.

HCI generates revenue primarily through gross premiums earned from its property and casualty insurance policies, with net premiums earned representing gross premiums less premiums ceded. The company also generates net investment income, net realized and unrealized investment gains, policy fee income, and other income. Its insurance operations are supported by Exzeo, a majority-owned subsidiary that provides turn-key insurance technology and operations solutions based on a proprietary platform of purpose-built software and data analytics applications specifically designed for the property and casualty insurance ecosystem, which HCI utilizes to identify profitable underwriting opportunities, drive efficiency in claim processing and settlements, and streamline operations.

HCI's Insurance Operations segment includes two operating property and casualty insurance subsidiaries: Homeowners Choice Property & Casualty Insurance Company, Inc. (HCPCI) and TypTap Insurance Company (TTIC), which provide various homeowners' property and casualty insurance products for properties located in the State of Florida, its primary market, as well as in other states in the northeast and southeast regions of the U.S. A third insurance subsidiary, perRisk Insurance Company, has not yet commenced its surplus lines insurance business. The company also has a wholly-owned Bermuda domiciled captive reinsurance subsidiary which allows it to selectively retain risk and reduce the cost of third party reinsurance, and it does not provide reinsurance to non-affiliates. During 2025, gross premiums earned were $1,145.8 million ¹ from Insurance Operations and $95.6 million ² from Reciprocal Exchange Operations, while during 2024, gross premiums earned were $1,036.1 million ³ from Insurance Operations and $51.2 million ⁴ from Reciprocal Exchange Operations.

The Exzeo segment provides turnkey insurance technology and operations solutions to property and casualty insurance carriers and their agents through a proprietary platform of purpose-built software and data analytics applications, including SAMS, Harmony, ClaimColony, and AtlasViewer. Exzeo currently holds insurance agency or MGA licenses in the states necessary to support their customer base and provides expert reinsurance placement services. The Reciprocal Exchange Operations segment relates to the insurance operations of consolidated reciprocal insurance exchanges that are owned by their policyholders, where members, known as subscribers, gain ownership by purchasing an insurance policy and collectively assume one another's risks by exchanging insurance contracts. The Real Estate segment is primarily engaged in the business of developing and operating commercial properties for investment purposes or for HCI's own use, with a portfolio of investment properties including two marinas, three retail shopping centers, two corporate office parks, and undeveloped land. The Corporate and Other segment is comprised of the holding company, HCI Group, Inc., plus other operations that do not meet the quantitative and qualitative thresholds for a reportable segment, and currently provides attorney-in-fact (AIF) services to reciprocal insurance exchange operations.

During 2025, approximately 33,000 ⁵ policies with annualized premiums of $115.9 million ⁶ assumed relate to Tailrow, which commenced operations during 2025. On November 6, 2025, Exzeo closed its initial public offering, issuing 8,000,000 ⁷ shares of common stock at a price of $21.00 ⁸ per share for gross proceeds of $168.0 million ⁹, with underwriting and offering costs totaling $13.2 million ¹⁰ and net proceeds allocated as $129.2 million ¹¹ to additional paid-in capital and $25.5 million ¹² to noncontrolling interest. As of December 31, 2025, HCI owned approximately 82.5% ¹³ of Exzeo's outstanding shares of common stock, inclusive of unvested restricted stock. On January 22, 2024, Exzeo entered into a Stock Redemption Agreement with Centerbridge which allowed Exzeo to redeem all of the Exzeo Series A Preferred Stock held by Centerbridge for a total of $100.0 million ¹⁴ plus accrued and unpaid dividends of approximately $2.9 million ¹⁵. During 2025, HCI's insurance subsidiaries paid dividends of $14.0 million ¹⁶ to HCI.

For the year ended December 31, 2025, total revenue was $900,946 thousand ¹⁷, compared to $750,051 thousand ¹⁸ in 2024 and $550,670 thousand ¹⁹ in 2023. Net income after noncontrolling interests was $299,005 thousand ²⁰ in 2025, compared to $109,953 thousand ²¹ in 2024 and $79,034 thousand ²² in 2023. Diluted earnings per share were $22.72 ²³ in 2025, compared to $8.89 ²⁴ in 2024 and $7.62 ²⁵ in 2023. The net combined ratio (excluding interest expense) was 56.3% ²⁶ in 2025, compared to 83.1% ²⁷ in 2024 and 85.0% ²⁸ in 2023.

A key growth vector is the continued assumption of policies from Citizens Property Insurance Corporation, a Florida state supported insurer, through legislatively mandated take-out programs designed to reduce the state's risk exposure by transitioning policies to private insurers. During 2025, HCI assumed 60,820 ²⁹ policies with annualized gross premiums of $216,728 thousand ³⁰ from Citizens, and during 2024, it assumed 52,805 ³¹ policies with annualized gross premiums of $315,062 thousand ³². The company selectively pursues additional assumption opportunities with Citizens when they align with its risk appetite and growth strategy, and also assumes policies from other insurance companies in Florida and any other state in which it operates.

Another growth vector is geographical expansion, as HCI continues to pursue opportunities to further expand its business within the state of Florida and in other states to increase overall geographic diversification. The company has begun providing insurance services in other states in the northeast and southeast regions of the U.S., and its growth strategies also include policy assumption from third-party insurance companies with the intention of renewing and/or replacing them with its policies. Additionally, Exzeo's initial public offering completed in November 2025 was intended to position Exzeo for future growth and to provide technology-based services and solutions to unaffiliated insurance carriers, which represents a growth vector for the technology segment.The filing does not contain a specific operational outlook for supply chain, manufacturing capacity, or headcount strategy.

As of December 31, 2025, HCI had an outstanding balance of $36.0 million ³³ and an available borrowing capacity of $114.0 million ³⁴ under its Revolving Credit Facility, which provides borrowing capacity of up to $150.0 million ³⁵ and expires on November 5, 2030. The company also has an at-the-market facility (ATM Facility) implemented on January 22, 2024, which gives it the ability to raise up to $75.0 million ³⁶ through the issuance of new shares of common stock, and as of December 31, 2025, the remaining availability under the ATM Facility was $75.0 million ³⁷. On January 14, 2026, the Board declared a quarterly dividend of $0.40 ³⁸ per common share, payable on March 20, 2026 to stockholders of record on February 20, 2026.

A significant headwind is the concentration of HCI's insurance business in Florida, as any catastrophic event, destructive weather pattern, general economic trend, regulatory developments or other conditions specifically affecting the state of Florida could have a disproportionately adverse impact on its business, financial condition, and results of operations. The company's policyholders are currently concentrated in Florida and the northeast and southeast regions, which are subject to adverse weather conditions such as hurricanes, tropical storms and winter storms, and the incidence and severity of catastrophes are inherently unpredictable.

Another constraint is the cyclical nature of the property and casualty insurance industry, which historically has been characterized by periods of intense price competition due to excessive underwriting capacity as well as periods when shortages of capacity permitted an increase in pricing. As premium levels increase, there may be new entrants to the market, which could subsequently lead to a decrease in premium levels, and HCI cannot predict whether market conditions will improve, remain constant or deteriorate. Additionally, the company's ability to grow its premium base may depend upon the availability of future policy assumptions and acquisitions upon acceptable terms, and it cannot provide assurance that such opportunities will arise in the future.

A material risk is the concentration of HCI's insurance business in Florida, as any catastrophic event or other condition affecting losses in Florida could adversely affect financial condition and results of operations, and the company had approximately 313,400 ³⁹ policies in force as of December 31, 2025, primarily in Florida. The company faces significant exposure to hurricanes and other catastrophic events, and while it purchases reinsurance to mitigate risk, an especially severe catastrophe or series of catastrophes could exceed its reinsurance protection. Another key risk is that HCI's insurance subsidiaries do not have an acceptable A.M. Best rating, which could prevent expansion as mortgage companies may require property insurance from an insurer with such a rating, and a downgrade or loss of the Demotech 'A Exceptional' rating could result in substantial loss of business. Additionally, the company's historical revenue growth was derived primarily through policy assumptions from Citizens and other insurance companies, and it cannot guarantee that future policy assumptions and acquisitions will be available to the extent they have in the past. The insolvency and receivership of United Property & Casualty Insurance Company in 2023, for which HCI provided reinsurance, could adversely affect financial results, as the company cannot predict the actions a receiver might take with regards to funds held in trust.

Management's message emphasizes the company's general operating and growth strategies to continually optimize its existing book of insurance business, organically expand its insurance business, manage costs and expenses, diversify business operations, develop and deploy new technologies to streamline operational processes, and maintain a strong balance sheet to quickly pursue accretive opportunities when they arise. Key strategic priorities include participating in legislatively mandated take-out programs with Citizens Property Insurance Corporation, selectively pursuing additional assumption opportunities, and expanding geographically within Florida and other states. Management also highlights the completion of Exzeo's initial public offering in November 2025 as a key development to position Exzeo for future growth and to provide technology-based services and solutions to unaffiliated insurance carriers, while noting that HCI owned approximately 82.5% ⁴⁰ of Exzeo's outstanding shares of common stock as of December 31, 2025, inclusive of unvested restricted stock, and that Exzeo remains a consolidated, majority-owned subsidiary.