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HCI Group (HCI) Q2 Earnings and Revenues Beat Estimates

HCI Group HCI reported second-quarter 2023 earnings of $1.22 per share, beating the Zacks Consensus Estimate by 103.3%. Quarterly earnings rebounded from the year-ago loss of 71 cents per share.

The results reflect better performance at Homeowner Choice, an increase in net investment income and lower expenses.

HCI Group, Inc. Price, Consensus and EPS Surprise

HCI Group, Inc. price-consensus-eps-surprise-chart | HCI Group, Inc. Quote

Behind the Headlines

Gross premiums earned of $182 million increased 0.5% year over year, reflecting a higher average premium per policy, offset by attrition in the number of policies in force.

Net premiums earned decreased 7.5% year over year to $115.6 million.

Operating revenues increased 1.1% year over year to about $127.3 million on account of the rise in net investment income and policy fee income. The top line beat the Zacks Consensus Estimate by 3.4%.

Net investment income was $8.8 million, up more than three-fold, driven by higher yields on fixed maturity securities, cash and cash equivalents.

Total expenses decreased 22.1% year over year to $107.1 million due to decreased losses and loss adjustment expenses, acquisition cost, general and administrative personnel expenses and other operating expenses

Losses and loss adjustment expenses were $61.9 million, down 28.6% year over year, driven by lower claim frequency, lower litigation frequency in Florida and higher average premium per policy.

Losses and loss adjustment expenses as a percent of gross premiums earned declined to 34% from 47.9% in the year-ago quarter.

Financial Update

HCI Group exited the second quarter with cash and cash equivalents of $297 million, which increased 25% from the 2022-end level. Total investments decreased 10.7% from 2022 end to $549.7 million at quarter end.  

Long-term debt of $208.2 million decreased 1.7% from the 2022-end figure.

As of Jun 30, 2023, total shareholders’ equity was $188.4 million, which increased 15.9% from the level at 2022 end.

Book value per share increased 15.9% from year-end 2022 to $21.92 at second-quarter 2023 end.

Zacks Rank

HCI Group currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Property and Casualty Insurers

The Travelers Companies TRV reported second-quarter 2023 core income of 6 cents per share, which missed the Zacks Consensus Estimate of $2.27. The bottom line decreased 97.7% year over year, primarily attributable to higher-than-expected catastrophe loss.

Travelers’ total revenues increased 9.8% from the year-ago quarter to $10.1 billion, primarily driven by higher premiums. The top-line figure was almost in line with the Zacks Consensus Estimate.

Net written premiums increased 14% year over year to a record $10.3 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.1 billion.

Travelers witnessed an underwriting gain of $781 million, up 38% year over year, driven by record net earned premiums of $9.2 billion and a consolidated underlying combined ratio, which improved 170 basis points.  The combined ratio deteriorated 820 basis points year over year to 106.5 due to higher catastrophe losses and lower net favorable prior-year reserve development, partially offset by a lower underlying combined ratio.

The Progressive Corporation’s PGR second-quarter 2023 earnings per share of 50 cents missed the Zacks Consensus Estimate of 88 cents. The bottom line declined 47.4% year over year.

Net premiums earned grew 19% to $14.5 billion and beat our estimate of $12.9 billion as well as the Zacks Consensus Estimate of $14.3 billion. The combined ratio deteriorated 480 bps from the prior-year quarter’s level to 104.

Policies in force were solid in the Personal Auto segment, increasing 17% from the year-ago month’s figure to 19.7 million. Special Lines improved 7% to 5.8 million.

W.R. Berkley Corporation’s WRB second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year.

Operating revenues came in at $2.9 billion, down 57.4% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line missed the consensus estimate by 1.2%.

W.R. Berkley’s net premiums written were a record $2.8 billion, up 8.7% year over year, as market conditions remained favorable for most lines of business. Our estimate for the same was $2.7 billion.

Catastrophe losses totaled $53.5 million in the quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 100 basis points to 89.6, in line with the Zacks Consensus Estimate. Our estimate for combined ratio was 91.3.

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