10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q


☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number

001-34126

HCI Group, Inc.

(Exact name of registrant as specified in its charter)


Florida		20-5961396
(State of Incorporation)		(IRS Employer Identification No.)

3802 Coconut Palm Drive
Tampa, FL 33619
(Address, including zip code, of principal executive offices)

(813) 849-9500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Shares, no par value	HCI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☑	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The aggregate number of shares of the registrant’s common stock, no par value, outstanding on May 1, 2025 was 11,547,697.

HCI GROUP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


		Page

PART I – FINANCIAL INFORMATION

Item 1	Financial Statements
	Consolidated Balance Sheets:
	March 31, 2025 (unaudited) and December 31, 2024	1-2
	Consolidated Statements of Income:
	Three months ended March 31, 2025 and 2024 (unaudited)	3
	Consolidated Statements of Comprehensive Income:
	Three months ended March 31, 2025 and 2024 (unaudited)	4
	Consolidated Statements of Equity:
	Three months ended March 31, 2025 and 2024 (unaudited)	5-6
	Consolidated Statements of Cash Flows:
	Three months ended March 31, 2025 and 2024 (unaudited)	7-9
	Notes to Consolidated Financial Statements (unaudited)	10-41

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42-53

Item 3	Quantitative and Qualitative Disclosures About Market Risk	54-55

Item 4	Controls and Procedures	56


PART II – OTHER INFORMATION

Item 1	Legal Proceedings	57

Item 1A	Risk Factors	57

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	57-58

Item 3	Defaults Upon Senior Securities	58

Item 4	Mine Safety Disclosures	58

Item 5	Other Information	58

Item 6	Exhibits	59-65

Signatures		66

Certifications

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollar amounts in thousands)


	March 31,		December 31,
	2025		2024
	(Unaudited)
Assets
Fixed-maturity securities, available for sale, at fair value (amortized cost: $651,071 and $719,536, respectively and allowance for credit losses: $0 and $0, respectively)	$	652,861	$	718,537
Equity securities, at fair value (cost: $52,962 and $52,030, respectively)		55,226		56,200
Limited partnership investments		20,176		20,802
Real estate investments		80,151		79,120
Total investments		808,414		874,659
Cash and cash equivalents (a)		754,481		532,471
Restricted cash (a)		3,722		3,714
Accrued interest and dividends receivable		7,650		6,008
Income taxes receivable (a)		—		463
Deferred income taxes, net (a)		1,502		72
Premiums receivable, net (allowance: $4,684 and $5,891, respectively) (a)		54,704		50,582
Prepaid reinsurance premiums (a)		38,009		92,060
Reinsurance recoverable, net of allowance for credit losses (a):
Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively)		46,335		36,062
Unpaid losses and loss adjustment expenses (allowance: $151 and $186, respectively)		481,434		522,379
Deferred policy acquisition costs (a)		56,398		54,303
Property and equipment, net		30,237		29,544
Right-of-use assets – operating leases		1,124		1,182
Intangible assets, net		4,565		5,206
Funds withheld for assumed business		8,451		11,690
Other assets (a)		9,642		9,818
Total assets	$	2,306,668	$	2,230,213

(a)

See Note 14 for details of balances associated with consolidated variable interest entities.

(continued)

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets – (Continued)

(Dollar amounts in thousands)


	March 31,		December 31,
	2025		2024
	(Unaudited)
Liabilities and Equity
Losses and loss adjustment expenses (a)	$	798,146	$	845,900
Unearned premiums (a)		573,565		584,703
Advance premiums (a)		37,807		18,867
Reinsurance payable on paid losses and loss adjustment expenses		—		2,496
Ceded reinsurance premiums payable		19,779		18,313
Assumed premiums payable (a)		3,582		2,176
Accrued expenses (a)		29,110		17,677
Income tax payable (a)		33,378		5,451
Deferred income taxes, net (a)		3,661		2,830
Revolving credit facility		42,000		44,000
Long-term debt		185,332		185,254
Lease liabilities – operating leases		1,131		1,185
Other liabilities (a)		34,708		32,320
Total liabilities		1,762,199		1,761,172
Commitments and contingencies (Note 22)
Redeemable noncontrolling interests (Note 19)		1,637		1,691
Equity:
Common stock (no par value, 40,000,000 shares authorized, 10,765,336 and 10,767,184 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively)		—		—
Additional paid-in capital		124,170		122,289
Retained income		397,171		331,793
Accumulated other comprehensive income (loss), net of taxes		1,342		(749	)
Total stockholders’ equity		522,683		453,333
Noncontrolling interests		20,149		14,017
Total equity		542,832		467,350
Total liabilities, redeemable noncontrolling interests and equity	$	2,306,668	$	2,230,213

(a)

See Note 14 for details of balances associated with consolidated variable interest entities.

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(Dollar amounts in thousands, except per share amounts)


	Three Months Ended
	March 31,
	2025			2024
Revenue
Gross premiums earned	$	300,383		$	256,644
Premiums ceded		(99,635	)		(68,106	)
Net premiums earned		200,748			188,538
Net investment income		13,751			14,067
Net realized investment gains		1,167			—
Net unrealized investment (losses) gains		(1,906	)		2,635
Policy fee income		2,229			1,019
Other		444			355
Total revenue		216,433			206,614
Expenses
Losses and loss adjustment expenses		59,291			79,922
Policy acquisition and other underwriting expenses		27,287			22,139
General and administrative personnel expenses		20,483			16,274
Interest expense		3,384			3,149
Other operating expenses		5,649			7,700
Total expenses		116,094			129,184
Income before income taxes		100,339			77,430
Income tax expense		26,109			20,474
Net income		74,230			56,956
Net income attributable to redeemable noncontrolling interests (Note 19)		—			(10,149	)
Net (income) loss attributable to noncontrolling interests		(4,546	)		804
Net income after noncontrolling interests	$	69,684		$	47,611
Basic earnings per share	$	6.47		$	4.76
Diluted earnings per share	$	5.35		$	3.81

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

(Dollar amounts in thousands)


	Three Months Ended
	March 31,
	2025			2024
Net income	$	74,230		$	56,956
Other comprehensive income:
Change in net unrealized gain on investments:
Net unrealized gains arising during the period		2,809			52
Reclassification adjustment for net realized (gains) losses		(20	)		32
Net change in unrealized gains		2,789			84
Deferred income taxes on above change		(698	)		(21	)
Total other comprehensive income, net of income taxes		2,091			63
Comprehensive income		76,321			57,019
Comprehensive (income) loss attributable to noncontrolling interests		(4,546	)		802
Comprehensive income after noncontrolling interests	$	71,775		$	57,821

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity

For the Three Months Ended March 31, 2025

(Unaudited)

(Dollar amounts in thousands, except per share amount)


	Common Stock					Additional Paid-In			Retained			Accumulated Other Comprehensive Income,			Total Stockholders’			Noncontrolling		Total
	Shares			Amount		Capital			Income			Net of Tax			Equity			Interests		Equity
Balance at December 31, 2024		10,767,184		$	—	$	122,289		$	331,793		$	(749	)		453,333		$	14,017	$	467,350
Net income		—			—		—			69,684			—			69,684			4,546		74,230
Total other comprehensive income, net of income taxes		—			—		—			—			2,091			2,091			—		2,091
Issuance of restricted stock		1,000			—		—			—			—			—			—		—
Forfeiture of restricted stock		(750	)		—		—			—			—			—			—		—
Repurchase and retirement of common stock		(5,267	)		—		(639	)		—			—			(639	)		—		(639	)
Conversion of senior notes to common stock		3,169			—		250			—			—			250			—		250
Dilution from subsidiary stock-based compensation		—			—		—			—			—			—			702		702
Common stock dividends ($0.40 per share)		—			—		—			(4,306	)		—			(4,306	)		—		(4,306	)
Stock-based compensation		—			—		2,270			—			—			2,270			—		2,270
Subscriber surplus contribution		—			—		—			—			—			—			884		884
Balance at March 31, 2025		10,765,336		$	—	$	124,170		$	397,171		$	1,342		$	522,683		$	20,149	$	542,832

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity – (Continued)

For the Three Months Ended March 31, 2024

(Unaudited)

(Dollar amounts in thousands, except per share amount)


	Common Stock					Additional Paid-In			Retained			Accumulated Other Comprehensive Loss,			Total Stockholders’			Noncontrolling			Total
	Shares			Amount		Capital			Income			Net of Tax			Equity			Interests			Equity
Balance at December 31, 2023		9,738,183		$	—	$	89,568		$	238,438		$	(3,163	)		324,843		$	2,322		$	327,165
Net income (loss)		—			—		—			57,085			—			57,085			(129	)		56,956
Net income attributable to redeemable noncontrolling interests		—			—		—			(9,474	)		—			(9,474	)		(675	)		(10,149	)
Total other comprehensive income, net of income taxes		—			—		—			—			61			61			2			63
Cashless exercise of common stock warrants		155,049			—		—			—			—			—			—			—
Forfeiture of restricted stock		(200	)		—		—			—			—			—			—			—
Repurchase and retirement of common stock		(5,656	)		—		(556	)		—			—			(556	)		—			(556	)
Conversion of senior notes to common stock		389,087			—		23,449			—			—			23,449			—			23,449
Dilution from subsidiary stock-based compensation		—			—		—			—			—			—			668			668
Common stock dividends ($0.40 per share)		—			—		—			(3,993	)		—			(3,993	)		—			(3,993	)
Stock-based compensation		—			—		881			—			—			881			—			881
Deemed dividend on warrant modification		—			—		3,386			—			—			3,386			—			3,386
Balance at March 31, 2024		10,276,463		$	—	$	116,728		$	282,056		$	(3,102	)	$	395,682		$	2,188		$	397,870

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(Dollar amounts in thousands)


	Three Months Ended
	March 31,
	2025			2024
Cash flows from operating activities:
Net income after noncontrolling interests	$	69,684		$	47,611
Net income attributable to noncontrolling interests		4,546			9,345
Net income		74,230			56,956
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense		2,972			1,582
Net accretion of discount on investments in fixed-maturity securities		(336	)		(2,148	)
Depreciation and amortization		2,019			1,003
Amortization of debt issuance costs		472			—
Deferred income tax (benefit) expense		(1,297	)		5,604
Net realized investment gains		(1,167	)		—
Net unrealized investment losses (gains)		1,906			(2,635	)
Credit loss expense - reinsurance recoverable		(35	)		(49	)
Net loss (income) from limited partnership interests		626			(195	)
Gain on sales of real estate investments		(370	)		—
Foreign currency remeasurement gain		(3	)		(1	)
Other non-cash items		11			(19	)
Changes in operating assets and liabilities:
Accrued interest and dividends receivable		(1,642	)		(545	)
Income taxes		28,390			14,831
Premiums receivable, net		(4,122	)		(5,254	)
Assumed premiums receivable		—			19,954
Prepaid reinsurance premiums		54,051			52,107
Reinsurance recoverable		30,707			19,673
Deferred policy acquisition costs		(2,095	)		(2,242	)
Funds withheld for assumed business		3,239			15,906
Other assets		208			(6,657	)
Losses and loss adjustment expenses		(47,754	)		(6,361	)
Unearned premiums		(11,138	)		(1,658	)
Advance premiums		18,940			10,623
Reinsurance payable on paid losses and loss adjustment expenses		(2,496	)		(3,145	)
Ceded reinsurance premiums payable		1,466			1,772
Assumed reinsurance balances payable		1,406			1,831
Accrued expenses and other liabilities		13,818			11,056
Net cash provided by operating activities		162,006			181,989

(continued)

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Continued)

(Unaudited)

(Dollar amounts in thousands)


	Three Months Ended
	March 31,
	2025			2024
Cash flows from investing activities:
Investments in limited partnership interests		(95	)		(399	)
Distributions received from limited partnership interests		95			162
Purchase of property and equipment		(1,732	)		(946	)
Purchase of real estate investments		(1,857	)		(5,244	)
Purchase of fixed-maturity securities		(15,000	)		(172,336	)
Purchase of equity securities		(9,327	)		(7,679	)
Proceeds from sales of real estate investments		824			—
Proceeds from sales of fixed-maturity securities		2,610			6,030
Proceeds from calls, repayments and maturities of fixed-maturity securities		81,211			172,024
Proceeds from sales of equity securities		9,542			3,516
Net cash provided by (used in) investing activities		66,271			(4,872	)
Cash flows from financing activities:
Cash dividends paid		(4,306	)		(3,993	)
Net (repayment) borrowing under revolving credit facility		(2,000	)		50,000
Cash dividends paid to redeemable noncontrolling interests		—			(2,923	)
Net surplus contribution from subscribers		830			—
Repayment of long-term debt		(133	)		(128	)
Redemption of long-term debt		—			(466	)
Repurchases of common stock		(639	)		(557	)
Redemption of redeemable noncontrolling interests		—			(100,000	)
Purchase of noncontrolling interests		—			(33	)
Debt issuance costs		—			(99	)
Net cash used in financing activities		(6,248	)		(58,199	)
Effect of exchange rate changes on cash		(11	)		4
Net increase in cash, cash equivalents, and restricted cash		222,018			118,922
Cash, cash equivalents, and restricted cash at beginning of period		536,185			539,765
Cash, cash equivalents, and restricted cash at end of period	$	758,203		$	658,687

(continued)

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Continued)

(Unaudited)

(Dollar amounts in thousands)


	Three Months Ended
	March 31,
	2025		2024
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	65	$	38
Cash paid for interest	$	214	$	1,052
Non-cash investing and financing activities:
Unrealized gain on investments in available-for-sale securities, net of tax	$	2,091	$	63
Conversion of 4.25% Convertible Senior Notes	$	—	$	23,450
Conversion of 4.75% Convertible Senior Notes	$	250	$	—
Payable on purchases of equity securities	$	—	$	25

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 1 -- Nature of Operations

HCI Group, Inc., together with its subsidiaries (“HCI” or the “Company”), is primarily engaged in the property and casualty insurance business through two Florida domiciled insurance companies, Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”) and TypTap Insurance Company (“TTIC”). Both HCPCI and TTIC are authorized to underwrite various homeowners’ property and casualty insurance products and allied lines business in the state of Florida and in other states. A third insurance subsidiary, perRisk Insurance Company (“perRisk”), is domiciled in Arizona and has not yet commenced its surplus lines insurance business. The operations of insurance subsidiaries are supported by HCI Group, Inc. and certain entities within the consolidated group. Exzeo Group, Inc. (formerly known as TypTap Insurance Group, Inc.), its majority-owned subsidiary, provides turn-key insurance technology and operations solutions based on a proprietary platform of purpose-built software and data analytics applications that are specifically designed for the property and casualty insurance ecosystem. Exzeo’s advanced data analytics algorithms and software tools maximize efficiency and optimize underwriting outcomes.

The Company also provides attorney-in-fact (“AIF”) services for reciprocal insurance exchanges owned by their policyholders. The Company's subsidiaries, Core Risk Managers, LLC (“CRM”) and Tailrow Risk Managers, LLC (“TRM”), serve as the AIF for Condo Owners Reciprocal Exchange (“CORE”) and Tailrow Insurance Exchange (“Tailrow”), respectively. Although the Company does not have any equity interest in the reciprocal insurance exchanges, the Company is required to consolidate them as their primary beneficiary. See Note 14 -- “Variable Interest Entities” for additional information. In addition, Greenleaf Capital, LLC, the Company’s real estate subsidiary, is primarily engaged in the business of owning, developing, and leasing real estate and operating marina facilities.

On February 27, 2025, TypTap Insurance Group, Inc. filed articles of amendment to its Restated Articles of Incorporation changing its name to Exzeo Group, Inc (“Exzeo”). Exzeo and its consolidated subsidiaries are hereinafter referred to as “Exzeo Group.”

Citizens Assumption

From time to time, the Company and its consolidated variable interest entities (“VIEs”) may participate in a “take-out program” through which the Company and its VIEs assume insurance policies held by Citizens Property Insurance Corporation (“Citizens”), a Florida state-supported insurer.

During the three months ended March 31, 2025, approximately 13,900 policies were assumed, representing approximately $35,800 in annualized gross written premiums, whereas for the three months ended March 31, 2024, approximately 9,800 policies were assumed, representing approximately $87,800 in annualized gross premiums.

Note 2 -- Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of HCI Group, Inc. and its majority-owned and controlled subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s financial position as of March 31, 2025 and the results of operations and cash flows for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ending December 31, 2025. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2024 included in the Company’s Form 10-K, which was filed with the SEC on February 28, 2025.

In preparing the interim unaudited consolidated financial statements, management was required to make certain judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the financial reporting date and throughout the periods being reported upon. Certain of the estimates result from judgments that can be subjective and complex, and consequently actual results may differ from these estimates.

Material estimates that are particularly susceptible to significant change in the near term are related to the Company’s losses and loss adjustment expenses, which include amounts estimated for claims incurred but not yet reported. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make these estimates. In addition, accounting policies specific to reinsurance with retrospective provisions, reinsurance recoverable, deferred income taxes, limited partnership investments, allowance for credit losses, and stock-based compensation expense involve significant judgments and estimates material to the Company’s consolidated financial statements.

In the case of assumed business, the Company relies entirely on the ceding insurance company to provide information about premiums, losses, and loss adjustment expenses. When the information is not available at the reporting date, the Company will make estimates based on all recent available data. Accordingly, the actual results could differ significantly from those estimates.

All significant intercompany balances and transactions have been eliminated.

Reclassification

The Company's previously reported segment information has been recast to conform with the current presentation. See Note 15 -- “Segment Information.”

Note 3 -- Recent Accounting Pronouncements

Adopted

Accounting Standards Update No. 2023-09. In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-09 (“ASU 2023-09”) Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update enhances income tax disclosures by requiring public entities to report income tax expense disaggregated by federal, state, and foreign taxes, with further detail on specific jurisdictions over a quantitative threshold. In addition, public entities must also separately disclose reconciling items equal to or greater than five percent of pretax income from operations by the applicable federal statutory rate. This update has been adopted on a prospective basis for the fiscal year beginning on January 1,

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

2025 and will result in enhanced income tax disclosures beginning with our consolidated financial statements for the year ending December 31, 2025.

Accounting Standards Update No. 2024-04. In November 2024, the FASB issued Accounting Standards Update No. 2024-04 (“ASU 2024-04”) Debt–Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. This update clarifies whether entities should apply extinguishment accounting or induced conversion accounting when recording the settlement of convertible debt instruments due to an induced conversion. ASU 2024-04 is effective for all entities for fiscal years beginning after December 15, 2025. Early adoption is permitted as of the beginning of a reporting period if the entity has also adopted ASU 2020-06 as of that period. The Company has elected to early adopt this update effective January 1, 2025. The adoption of this update had no impact on the Company’s financial position or results of operation upon adoption as the new guidance applies prospectively from January 1, 2025.

Pending Adoption

Accounting Standards Update No. 2025-01 and 2024-03. In January 2025, the FASB issued Accounting Standards Update No. 2025-01 (“ASU 2025-01”) Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update clarifies the effective date of Accounting Standards Update No. 2024-03 (“ASU 2024-03”) Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which was issued by the FASB in November 2024. For public business entities, ASU 2024-03 enhances disclosures by requiring the disaggregation of certain expense captions presented within the income statement, such as employee compensation and intangible asset amortization. In addition, the total relevant expense caption on the income statement must be reconciled to the aggregate of the separately disclosed expense categories with the difference represented by an "other items" amount which is qualitatively described. ASU 2024-03 is effective for all public business entities for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating its impact on certain disclosures but expects the adoption to result in additional disclosures of certain expenses.

Note 4 -- Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.


	March 31,		December 31,
	2025		2024
Cash and cash equivalents	$	754,481	$	532,471
Restricted cash		3,722		3,714
Total	$	758,203	$	536,185

Restricted cash represents funds in the Company’s sole ownership primarily held by certain states to meet regulatory requirements in which the Company’s insurance subsidiaries conduct business and not available for immediate business use. Funds withheld in an account for which the Company is a co-owner but not the named beneficiary are not considered restricted cash and are included in funds withheld for assumed business on the consolidated balance sheets.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 5 -- Investments

a) Available-for-Sale Fixed-Maturity Securities

The Company holds investments in fixed-maturity securities that are classified as available-for-sale. At March 31, 2025 and December 31, 2024, the cost or amortized cost, allowance for credit loss, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale securities by security type were as follows:


	Cost or Amortized		Allowance for Credit		Gross Unrealized		Gross Unrealized			Estimated Fair
	Cost		Loss		Gain		Loss			Value
As of March 31, 2025
U.S. Treasury and U.S. government agencies	$	624,650	$	—	$	2,229	$	(306	)	$	626,573
Corporate bonds		25,927		—		139		(242	)		25,824
Exchange-traded debt		494		—		—		(30	)		464
Total	$	651,071	$	—	$	2,368	$	(578	)	$	652,861
As of December 31, 2024
U.S. Treasury and U.S. government agencies	$	688,123	$	—	$	2,019	$	(2,726	)	$	687,416
Corporate bonds		30,919		—		77		(371	)		30,625
Exchange-traded debt		494		—		2		—			496
Total	$	719,536	$	—	$	2,098	$	(3,097	)	$	718,537

Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. The scheduled contractual maturities of fixed-maturity securities as of March 31, 2025 and December 31, 2024 are as follows:


	March 31, 2025				December 31, 2024
	Cost or		Estimated		Cost or		Estimated
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale
Due in one year or less	$	510,506	$	511,771	$	520,005	$	521,301
Due after one year through five years		39,207		39,261		98,831		98,808
Due after five years through ten years		100,864		101,365		100,206		97,932
Due after ten years		494		464		494		496
	$	651,071	$	652,861	$	719,536	$	718,537

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Securities on Deposit

The fair value of fixed-maturity securities on deposit with various regulatory authorities at March 31, 2025 and December 31, 2024 was $1,801 and $1,794, respectively.

Sales of Available-for-Sale Fixed-Maturity Securities

Proceeds received, and the gross realized gains and losses from sales of available-for-sale fixed-maturity securities, for the three months ended March 31, 2025 and 2024 were as follows:


			Gross Realized		Gross Realized
	Proceeds		Gains		Losses
Three months ended March 31, 2025	$	2,610	$	24	$	(4	)
Three months ended March 31, 2024	$	6,030	$	12	$	(44	)

Gross Unrealized Losses for Available-for-Sale Fixed-Maturity Securities

Securities with gross unrealized loss positions at March 31, 2025 and December 31, 2024, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:


	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross			Estimated		Gross			Estimated		Gross			Estimated
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
As of March 31, 2025	Loss			Value		Loss			Value		Loss			Value
U.S. Treasury and U.S. government agencies	$	(1	)	$	498	$	(305	)	$	83,792	$	(306	)	$	84,290
Corporate bonds		(19	)		5,814		(223	)		7,851		(242	)		13,665
Exchange-traded debt		(30	)		464		—			—		(30	)		464
Total available-for-sale securities	$	(50	)	$	6,776	$	(528	)	$	91,643	$	(578	)	$	98,419


	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross			Estimated		Gross			Estimated		Gross			Estimated
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
As of December 31, 2024	Loss			Value		Loss			Value		Loss			Value
U.S. Treasury and U.S. government agencies	$	(2,063	)	$	97,771	$	(663	)	$	104,872	$	(2,726	)	$	202,643
Corporate bonds		(53	)		6,296		(318	)		15,255		(371	)		21,551
Total available-for-sale securities	$	(2,116	)	$	104,067	$	(981	)	$	120,127	$	(3,097	)	$	224,194

At March 31, 2025 and December 31, 2024, there were 34 and 56 securities, respectively, in an unrealized loss position.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Allowance for Credit Losses of Available-for-Sale Fixed-Maturity Securities

The Company regularly reviews its individual investment securities for credit impairment. The Company considers various factors in determining whether a credit loss exists for each individual security, including-

•

the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;

•

the extent to which the market value of the security has been below its cost or amortized cost;

•

general market conditions and industry or sector specific factors and other qualitative factors;

•

nonpayment by the issuer of its contractually obligated interest and principal payments; and

•

the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.

There was no balance or activity in the allowance for credit losses of available-for-sale fixed-maturity securities during the three months ended March 31, 2025 and 2024.

b) Equity Securities

The Company holds investments in equity securities measured at fair values which are readily determinable. At March 31, 2025 and December 31, 2024, the cost, gross unrealized gains and losses, and estimated fair value of the Company’s equity securities were as follows:


			Gross Unrealized		Gross Unrealized			Estimated Fair
	Cost		Gain		Loss			Value
March 31, 2025	$	52,962	$	4,573	$	(2,309	)	$	55,226
December 31, 2024	$	52,030	$	6,427	$	(2,257	)	$	56,200

The table below presents the portion of unrealized gains and losses in the Company’s consolidated statements of income related to equity securities still held.


	Three Months Ended
	March 31,
	2025			2024
Net (losses) gains recognized	$	(759	)	$	2,667
Exclude: Net realized gains recognized for securities sold		1,147			32
Net unrealized (losses) gains recognized	$	(1,906	)	$	2,635

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Sales of Equity Securities

Proceeds received, and the gross realized gains and losses from sales of equity securities, for the three months ended March 31, 2025 and 2024 were as follows:


			Gross Realized		Gross Realized
	Proceeds		Gains		Losses
Three months ended March 31, 2025	$	9,542	$	1,331	$	(184	)
Three months ended March 31, 2024	$	3,516	$	173	$	(141	)

c) Limited Partnership Investments

The Company has interests in limited partnerships that are not registered or readily tradeable on a securities exchange. These partnerships are private equity funds managed by general partners who make decisions with regard to financial policies and operations. As such, the Company is not the primary beneficiary and does not consolidate these partnerships. The following table provides information related to the Company’s investments in limited partnerships:


	March 31, 2025						December 31, 2024
	Carrying		Unfunded				Carrying		Unfunded
Investment Strategy	Value		Balance		(%) (a)		Value		Balance		(%) (a)
Primarily in senior secured loans and, to a limited extent, in other debt and equity securities of private U.S. lower- middle-market companies. (b)(c)(e)	$	2,307	$	—		15.37	$	2,400	$	—		15.37
Value creation through active distressed debt investing primarily in bank loans, public and private corporate bonds, asset-backed securities, and equity securities received in connection with debt restructuring. (b)(d)(e)		717		—		1.04		1,082		—		1.13
High returns and long-term capital appreciation through investments in the power, utility and energy industries, and in the infrastructure sector. (b)(f)(g)		3,242		—		0.17		3,407		—		0.18
Value-oriented investments in less liquid and mispriced senior and junior debts of private equity-backed companies. (b)(h)(i)		2,061		—		0.51		2,053		—		0.52
Value-oriented investments in mature real estate private equity funds and portfolios globally. (b)(j)		6,605		2,350		1.31		6,781		2,445		1.31
Risk-adjusted returns on credit and equity investments, primarily in private equity-owned companies. (b)(k)		5,244		810		0.54		5,079		810		0.55
Total	$	20,176	$	3,160			$	20,802	$	3,255

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

(a)

Represents the Company’s percentage investment in the fund at each balance sheet date.

(b)

Except under certain circumstances, withdrawals from the funds or any assignments are not permitted. Distributions, except income from late admission of a new limited partner, will be received when underlying investments of the funds are liquidated.

(c)

The term is expected to be two years following the maturity of the fund’s outstanding leverage. Although the capital commitment period has expired, follow-on investments and pending commitments may require additional fundings.

(d)

Effective July 1, 2023, this investment is in the process of winding down. Although the capital commitment period has ended, the general partner could still request an additional funding under certain circumstances.

(e)

At the fund manager’s discretion, the term of the fund may be extended for up to two additional one-year periods.

(f)

Expected to have a ten-year term. The capital commitment period has expired but the general partner may request additional funding for follow-on investment.

(g)

With the consent of a supermajority of partners, the term of the fund may be extended for up to three additional one-year periods.

(h)

Expected to have an eight-year term from the commencement date, which can be extended for up to two additional one-year periods with the consent of either the advisory committee or a majority of limited partners.

(i)

The capital commitment period has ended but an additional funding may be requested.

(j)

The term is expected to end November 27, 2027. The term may be extended for up to four additional one-year periods at the general partner’s discretion, and up to two additional one-year periods with the consent of the advisory committee.

(k)

Expected to have an eight-year term after the final admission date. The term may be extended for an additional one-year period at the general partner’s discretion, and up to two additional one-year periods with the consent of either the advisory committee or a majority of limited partners.

The following is the summary of aggregated unaudited financial information of limited partnerships included in the investment strategy table above, which in certain cases is presented on a three-month lag due to the unavailability of information at the Company’s respective balance sheet dates. The financial statements of these limited partnerships are audited annually.


	Three Months Ended
	March 31,
	2025			2024
Operating results:
Total income*	$	(8,373	)	$	3,066
Total expenses		(16,215	)		(25,601	)
Net loss	$	(24,588	)	$	(22,535	)

*Includes net change in unrealized gains or losses on investments.


	March 31,		December 31,
	2025		2024
Balance sheet:
Total assets	$	3,979,579	$	4,118,765
Total liabilities	$	172,868	$	157,420

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

For the three months ended March 31, 2025 and 2024, the Company recognized net investment loss from limited partnerships of $626 and net investment income of $195, respectively. Included in net investment income for the three months ended March 31, 2025 and 2024 was an estimated unfavorable change in net asset value of $175 and an estimated favorable change in net asset value of $100, respectively. For the three months ended March 31, 2025 and 2024, the Company received total cash distributions of $95 and $162, respectively, representing returns of capital.

At March 31, 2025 and December 31, 2024, the Company’s net cumulative contributed capital to the partnerships at each respective balance sheet date totaled $23,346 and $20,987, respectively, and the Company’s maximum exposure to loss aggregated $20,176 and $20,802, respectively.

d) Real Estate Investments

Real estate investments consist of the following as of March 31, 2025 and December 31, 2024:


	March 31,			December 31,
	2025			2024
Land	$	41,818		$	42,272
Land improvements		10,578			4,843
Buildings and building improvements		30,680			18,772
Tenant and leasehold improvements		2,265			2,265
Construction in progress - Haines City		1,427			17,373
Other		1,233			1,106
Total, at cost		88,001			86,631
Less: accumulated depreciation and amortization		(7,850	)		(7,511	)
Real estate investments	$	80,151		$	79,120

Depreciation and amortization expense related to real estate investments was $339 and $269 for the three months ended March 31, 2025 and 2024, respectively.

In March 2025, the Company sold an outparcel of land in Sorrento, Florida for proceeds of $824.

e) Net Investment Income

Net investment income (loss), by source, is summarized as follows:


	Three Months Ended
	March 31,
	2025			2024
Available-for-sale fixed-maturity securities	$	7,514		$	4,827
Equity securities		487			442
Investment expense		(185	)		(79	)
Limited partnership investments		(626	)		195
Real estate investments		318			1,493
Cash and cash equivalents		6,243			7,189
Net investment income	$	13,751		$	14,067

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

For the three months ended March 31, 2025, income from real estate investments included a net gain of $370 in connection with the sale of one outparcel in Sorrento, Florida as described in d) Real Estate Investments.

Note 6 -- Comprehensive Income (Loss)

Comprehensive income (loss) includes net income and other comprehensive income or loss, which for the Company includes changes in unrealized gains or losses of available-for-sale fixed-maturity securities carried at fair value and changes to any credit losses related to these investments. Reclassification adjustments for realized (gains) losses are reflected in net realized investment gains (losses) on the consolidated statements of income. The components of other comprehensive income or loss and the related tax effects allocated to each component were as follows:


	Three Months Ended									Three Months Ended
	March 31, 2025									March 31, 2024
	Before			Income			Net of			Before		Income		Net of
	Tax			Tax Effect			Tax			Tax		Tax Effect		Tax
Net unrealized gains	$	2,809		$	703		$	2,106		$	52	$	13	$	39
Reclassification adjustment for net realized (gains) losses		(20	)		(5	)	$	(15	)		32		8	$	24
Total other comprehensive income	$	2,789		$	698		$	2,091		$	84	$	21	$	63

Note 7 -- Fair Value Measurements

The Company records and discloses certain financial assets at their estimated fair values. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:


Level 1	–	Unadjusted quoted prices in active markets for identical assets.
Level 2	–	Other inputs that are observable for the asset, either directly or indirectly such as quoted prices for identical assets that are not observable throughout the full term of the asset.
Level 3	–	Inputs that are unobservable.

Valuation Methodology

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of money-market funds and certificates of deposit maturing within 90 days. Their carrying value approximates fair value due to the short maturity and high liquidity of these funds.

Restricted Cash

Restricted cash represents cash held by state authorities and the carrying value approximates fair value.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Fixed-Maturity and Equity Securities

Estimated fair values of the Company’s fixed-maturity and equity securities are determined in accordance with U.S. GAAP, using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical securities or other inputs that are observable either directly or indirectly, such as quoted prices for similar securities. In those instances where observable inputs are not available, fair values are measured using unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the security and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.

The estimated fair values for securities that do not trade on a daily basis are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 2 inputs. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to broker-provided data. The Company gains assurance of the overall reasonableness and consistent application of the assumptions and methodologies, and compliance with accounting standards for fair value determination through ongoing monitoring of the reported fair values.

Revolving Credit Facility

From time to time, the Company has an amount outstanding under a revolving credit facility. The interest rate is variable and is periodically adjusted based on the Secured Overnight Financing Rate (“SOFR”) plus a ten basis points adjustment plus a margin based on the debt-to-capital ratio. As a result, carrying value, when outstanding, approximates fair value.

Long-Term Debt

The following table summarizes components of the Company’s long-term debt and methods used in estimating their fair values:


	Maturity Date	Valuation Methodology
4.75% Convertible Senior Notes	2042	Quoted price
4.55% Promissory Note	2036	Discounted cash flow method/Level 3 inputs
5.50% Promissory Note	2033	Discounted cash flow method/Level 3 inputs

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Assets Measured at Estimated Fair Value on a Recurring Basis

The following tables present information about the Company’s financial assets measured at estimated fair value on a recurring basis. The tables indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of March 31, 2025 and December 31, 2024:


	Fair Value Measurements Using
	(Level 1)		(Level 2)		(Level 3)		Total
As of March 31, 2025
Financial Assets:
Cash and cash equivalents	$	754,481	$	—	$	—	$	754,481
Restricted cash	$	3,722	$	—	$	—	$	3,722
Fixed-maturity securities:
U.S. Treasury and U.S. government agencies	$	626,082	$	491	$	—	$	626,573
Corporate bonds		18,656		7,168		—		25,824
Exchange-traded debt		464		—		—		464
Total available-for-sale securities	$	645,202	$	7,659	$	—	$	652,861
Equity securities	$	55,226	$	—	$	—	$	55,226


	Fair Value Measurements Using
	(Level 1)		(Level 2)		(Level 3)		Total
As of December 31, 2024
Financial Assets:
Cash and cash equivalents	$	532,471	$	—	$	—	$	532,471
Restricted cash	$	3,714	$	—	$	—	$	3,714
Fixed-maturity securities:
U.S. Treasury and U.S. government agencies	$	686,929	$	487	$	—	$	687,416
Corporate bonds		21,358		9,267		—		30,625
Exchange-traded debt		496		—		—		496
Total available-for-sale securities	$	708,783	$	9,754	$	—	$	718,537
Equity securities	$	56,200	$	—	$	—	$	56,200

Liabilities Carried at Other Than Fair Value

The following tables present fair value information for liabilities that are carried on the consolidated balance sheets at amounts other than fair value as of March 31, 2025 and December 31, 2024:


	Carrying		Fair Value Measurements Using						Estimated
	Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
As of March 31, 2025
Financial Liabilities:
Revolving credit facility	$	42,000	$	—	$	42,000	$	—	$	42,000
Long-term debt:
4.75% Convertible Senior Notes	$	169,602	$	—	$	323,746	$	—	$	323,746
4.55% Promissory Note		4,296		—		—		4,057		4,057
5.50% Promissory Note		11,434		—		—		11,676		11,676
Total long-term debt	$	185,332	$	—	$	323,746	$	15,733	$	339,479

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)


	Carrying		Fair Value Measurements Using						Estimated
	Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
As of December 31, 2024
Financial Liabilities:
Revolving credit facility	$	44,000	$	—	$	44,000	$	—	$	44,000
Long-term debt:
4.75% Convertible Senior Notes	$	169,397	$	—	$	266,989	$	—	$	266,989
5.50% Promissory Note		11,491		—		—		11,307		11,307
4.55% Promissory Note		4,366		—		—		4,043		4,043
Total long-term debt	$	185,254	$	—	$	266,989	$	15,350	$	282,339

Note 8 -- Intangible Assets, Net

The Company’s intangible assets, net consist of the following:


	March 31,			December 31,
	2025			2024
In-place leases		2,221		$	2,221
Policy renewal rights - United		10,100			10,100
Non-compete agreements - United (a)		314			314
Total, at cost		12,635			12,635
Less: accumulated amortization		(8,070	)		(7,429	)
Intangible assets, net	$	4,565		$	5,206

(a)

Fully amortized.

The remaining weighted-average amortization periods for the intangible assets as of March 31, 2025 are summarized in the table below:


In-place leases		17.9 years
Policy renewal rights - United		1.1 years

At March 31, 2025 and December 31, 2024, contingent liabilities related to renewal rights intangible assets were $371 and are included in other liabilities on the consolidated balance sheets.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 9 -- Other Assets

The following table summarizes the Company’s other assets:


	March 31,		December 31,
	2025		2024
Prepaid premium taxes		1,396		1,045
Prepaid brokerage fees		433		657
Other prepaid expenses		3,006		3,966
Deposits		439		583
Lease acquisition costs, net		805		822
Other		3,563		2,745
Total other assets	$	9,642	$	9,818

Note 10 -- Revolving Credit Facility

At March 31, 2025, the Company had $42,000 outstanding under the credit facility. For the three months ended March 31, 2025 and 2024, interest expense was $669 and $738, respectively, including $15 and $15 of amortization of issuance costs, respectively. At March 31, 2025, the Company was in compliance with all required covenants and had available borrowing capacity of $33,000.

Note 11 -- Long-Term Debt

The following table summarizes the Company’s long-term debt:


	March 31,			December 31,
	2025			2024
4.75% Convertible Senior Notes, due June 1, 2042	$	172,250		$	172,500
4.55% Promissory Note, due through August 1, 2036		4,347			4,419
5.50% Promissory Note, due through July 1, 2033		11,609			11,670
Total principal amount		188,206			188,589
Less: unamortized issuance costs		(2,874	)		(3,335	)
Total long-term debt	$	185,332		$	185,254

The following table summarizes future maturities of long-term debt as of March 31, 2025, which takes into consideration that the Company intends to redeem the 4.75% Convertible Senior Notes on June 5, 2025. See 4.75% Convertible Senior Notes within this note for additional information:


Due in 12 months following March 31,	Amount
2025	$	172,799
2026		577
2027		607
2028		638
2029		670
Thereafter		12,915
Total	$	188,206

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Information with respect to interest expense related to long-term debt is as follows:


	Three Months Ended
	March 31,
	2025		2024
Interest Expense:
Contractual interest	$	2,258	$	2,118
Non-cash expense (a)		457		293
Total	$	2,715	$	2,411

(a)

Includes amortization of debt issuance costs.

4.75% Convertible Senior Notes

On March 28, 2025, the Company notified all noteholders that it will redeem all of the outstanding 4.75% Convertible Notes on June 5, 2025 for a redemption price equal to the principal amount of the notes plus any accrued and unpaid interest. As a consequence of this notice, the noteholders are entitled to convert their notes into shares of common stock until the end of the day June 4, 2025. The conversion ratio is 12.6789 shares of common stock per $1 principal amount of notes.

During the first quarter of 2025, the Company converted $250 in aggregate principal of 4.75% Convertible Senior Notes for aggregate consideration of 3,169 shares of HCI’s common stock plus cash consideration in lieu of fractional shares.

With the redemption date of June 5, 2025, the effective interest rate, taking into account both cash and non-cash components, approximates 13.5%. As of March 31, 2025, the remaining amortization period of the debt issuance costs was expected to be two months.

Note 12 -- Reinsurance

Reinsurance obtained from other insurance companies

The Company cedes a portion of its homeowners’ insurance exposure to other entities under catastrophe excess of loss reinsurance contracts and a portion of its flood insurance exposure under one quota share reinsurance agreement. Ceded premiums under most catastrophe excess of loss reinsurance contracts are subject to revision resulting from subsequent adjustments in total insured value. Under the terms of the quota share reinsurance agreement, the Company is entitled to a 30% ceding commission on ceded premiums written and a profit commission equal to 10% of net profit.

The Company remains liable for claims payments in the event that any reinsurer is unable to meet its obligations under the reinsurance agreements. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. The Company contracts with a number of reinsurers to secure its annual reinsurance coverage, which generally becomes effective June 1st of each year. The Company purchases reinsurance each year taking into consideration probable maximum losses and reinsurance market conditions.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The impact of the reinsurance contracts on premiums written and earned is as follows:


	Three Months Ended
	March 31,
	2025			2024
Premiums Written:
Direct	$	268,456		$	211,895
Assumed		20,790			43,091
Gross written		289,246			254,986
Ceded		(99,635	)		(68,106	)
Net premiums written	$	189,611		$	186,880
Premiums Earned:
Direct	$	249,402		$	189,675
Assumed		50,981			66,969
Gross earned		300,383			256,644
Ceded		(99,635	)		(68,106	)
Net premiums earned	$	200,748		$	188,538

During the three months ended March 31, 2025, the Company derecognized $6 of ceded losses, thereby increasing losses and loss adjustment expenses. There were no ceded losses recognized during the three months ended March 31, 2024. At March 31, 2025 and December 31, 2024, there were 44 reinsurers, participating in the Company’s reinsurance program. Total net amounts recoverable and receivable from reinsurers at March 31, 2025 and December 31, 2024 were $527,769 and $558,441, respectively. Approximately 74.6% of the paid reinsurance recoverable balance at March 31, 2025 was receivable from four reinsurers, one of which was the Florida Hurricane Catastrophe Fund, a tax-exempt state trust fund. Based on all available information considered in the rating-based method, the Company recognized decreases in credit loss expense of $35 and $49 for the three months ended March 31, 2025 and 2024, respectively. Allowances for credit losses related to the reinsurance recoverable balance were $151 and $186 at March 31, 2025 and December 31, 2024, respectively.

One of the existing reinsurance contracts includes retrospective provisions that adjust premiums in the event losses are minimal or zero. Due to the losses from Hurricane Helene and Hurricane Milton during the third and fourth quarters of 2024, these retrospective provisions were fully exhausted and as such, no benefits were accrued during the three months ended March 31, 2025. In contrast, for the three months ended March 31, 2024, the Company recognized reductions in premiums ceded of $6,993 related to these adjustments in the consolidated statement of income.

There were no benefits accrued under the multi-year reinsurance contract with retrospective provisions at March 31, 2025 and December 31, 2024.

Reinsurance provided to other insurance companies

United

The Company formerly provided quota share reinsurance to United Property & Casualty Insurance Company (“United”) on its policies in the northeast and southeast regions of the United States. United was placed into receivership by the State of Florida due to its financial insolvency and, as a result, the Company ceased

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

providing quota share reinsurance on United policies. At March 31, 2025 and December 31, 2024, the Company had a net balance of $831 due to United related to the northeast region, representing ceding commission payable.

At March 31, 2025 and December 31, 2024, the Company had a net balance of $1,438 due to United related to the southeast region, consisting of premiums payable of $1,712, offset by ceding commission receivable of $274.

At March 31, 2025, the Company had a net amount due to United of $2,269 and funds withheld for assumed business in trust accounts totaling $8,451 for the benefit of policies assumed from United. The Company cannot predict the actions a receiver might take, which may include restrictions on, or use of, funds held in trust. Any such actions could have a material adverse effect on the Company’s financial position and results of operations.

At March 31, 2025 and December 31, 2024, the balance of funds withheld for assumed business related to the Company’s quota share reinsurance agreements with United was $8,451 and $11,690, respectively.

Citizens Assumption

Assumed premiums written related to Citizens policies were approximately $20,790 and $43,091 for the three months ended March 31, 2025 and 2024, respectively.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 13 -- Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses (“LAE”) is determined on an individual case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future claims development and losses incurred but not reported.

The Company primarily writes insurance in states which could be exposed to hurricanes or other natural catastrophes. The occurrence of a major catastrophe could have a significant effect on the Company’s quarterly results and cause a temporary disruption of the normal operations of the Company. However, the Company is unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.

Activity in the liability for losses and LAE is summarized as follows:


	Three Months Ended
	March 31,
	2025			2024
Net balance, beginning of period*	$	323,335		$	254,351
Incurred, net of reinsurance, related to:
Current period		59,291			79,922
Prior periods		—			—
Total incurred, net of reinsurance		59,291			79,922
Paid, net of reinsurance, related to:
Current period		(13,095	)		(17,789	)
Prior periods		(52,970	)		(43,059	)
Total paid, net of reinsurance		(66,065	)		(60,848	)
Net balance, end of period		316,561			273,425
Add: reinsurance recoverable before allowance for credit losses		481,585			305,287
Gross balance, end of period	$	798,146		$	578,712

* Net balance represents beginning-of-period liability for unpaid losses and LAE less beginning-of-period reinsurance recoverable for unpaid losses and LAE.

The establishment of loss and LAE reserves is an inherently uncertain process and changes in loss and LAE reserve estimates are expected as these estimates are subject to the outcome of future events. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such estimates are adjusted. Losses and LAE for the three months ended March 31, 2025 included net estimated losses of approximately $10,775 related to Citizens policies assumed. Excluding Citizens-related losses, lower losses and LAE for the three months ended March 31, 2025 resulted from a decrease in reported claims and litigation frequency.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 14 -- Variable Interest Entities

The Company holds variable interests in two reciprocal insurance exchanges, CORE and Tailrow. The reciprocal insurance exchanges are owned by their policyholders, referred to as subscribers, who gain ownership by buying an insurance policy and making a surplus contribution. The Company is required to assess whether it has a controlling financial interest in its variable interest entities. A controlling financial interest exists if an entity has both: 1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and 2) the obligation to absorb losses from or the right to receive benefits of the VIE that could potentially be significant to the VIE. Under U.S. GAAP, an entity meeting these requirements is considered to be the primary beneficiary of a VIE and is required to consolidate the VIE.

CORE was organized to offer commercial residential multiple peril and wind insurance products and Tailrow was organized to provide commercial residential multiple peril insurance. Based on management’s current evaluation, CORE and Tailrow are considered variable interest entities (VIEs), and the Company has determined that it is the primary beneficiary of both entities.

Tailrow’s and CORE’s assets are legally restricted for the purpose of fulfilling their obligations. The creditors of the VIEs have no legal right to pursue additional sources of payment from the Company.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The following table summarizes the assets and liabilities related to the Company’s variable interests in consolidated VIEs which are included in the accompanying consolidated balance sheets:


	March 31,		December 31,
	2025		2024
Assets:
Cash and cash equivalents	$	100,286	$	74,886
Restricted cash		616		611
Income taxes receivable		—		463
Deferred income taxes, net		1,502		72
Premiums receivable, net (allowance: $205 and $1,085, respectively)		4,143		4,230
Prepaid reinsurance premium		6,582		13,886
Reinsurance recoverable, net of allowance for credit losses:
Unpaid losses and loss adjustment expenses (allowance: $2 and $4, respectively)		3,598		3,596
Deferred policy acquisition costs		2,538		2,709
Other assets		626		891
Total assets	$	119,891	$	101,344
Liabilities:
Losses and loss adjustment expenses	$	19,042	$	17,415
Unearned premiums		40,474		30,204
Advance premiums		327		—
Assumed premiums payable		1,362		656
Accrued expenses		889		915
Income taxes payable		2,535		19
Deferred income taxes, net		—		261
Other liabilities		1,398		1,131
Total liabilities	$	66,027	$	50,601

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 15 -- Segment Information

The Company identifies its operating divisions based on managerial emphasis, organizational structure and revenue source. The Company has five reportable segments: insurance operations, Exzeo Group, reciprocal exchange operations, real estate operations, and corporate and other. Due to their economic characteristics, the Company’s property and casualty insurance division and reinsurance operations, excluding the insurance operations under reciprocal exchange operations, are grouped together into one reportable segment under insurance operations. The Exzeo Group segment includes insurance solutions, information technology operations, and its management company’s activities. The reciprocal exchange segment represents the insurance operations of CORE and Tailrow, consolidated VIEs. The real estate operations segment includes companies engaged in operating commercial properties the Company owns for investment purposes or for use in its own operations. The corporate and other segment represents the activities of the holding companies and any other companies, such as CRM and TRM, that do not meet the quantitative and qualitative thresholds for a reportable segment. The determination of segments may change over time due to changes in operational emphasis, revenues, and results of operations. The Company’s chief executive officer, who serves as the Company’s chief operating decision maker, evaluates each division’s financial and operating performance based on revenue and operating income.

For the three months ended March 31, 2025 and 2024, revenues from the insurance operations segment before intracompany elimination represented 77.0% and 85.1%, respectively, and revenues from the Exzeo Group segment represented 16.7% and 12.7%, respectively, of total revenues of all operating segments. At March 31, 2025 and December 31, 2024, insurance operations’ total assets represented 81.1% and 83.6%, respectively, and Exzeo Group’s total assets represented 5.5% and 3.7%, respectively, of the combined assets of all operating segments.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The following tables present segment information reconciled to the Company’s consolidated statements of income. Intersegment transactions are not eliminated from segment results. However, intracompany transactions are eliminated in segment results below.


For Three Months Ended March 31, 2025	Insurance Operations			Exzeo Group		Reciprocal Exchange Operations			Real Estate (a)		Corporate/ Other (b)			Reclassification/ Elimination			Consolidated
Revenue:
Gross premiums earned (c)	$	282,135		$	—	$	19,447		$	—	$	—		$	(1,199	)	$	300,383
Premiums ceded		(93,427	)		—		(7,407	)		—		—			1,199			(99,635	)
Net premiums earned		188,708			—		12,040			—		—			—			200,748
Net income from investment portfolio		10,859			398		780			—		1,765			(790	)		13,012
Policy fee income		2,229			—		—			—		—			—			2,229
Other		2,746			52,407		(9	)		2,840		3,655			(61,195	)		444
Total revenue		204,542			52,805		12,811			2,840		5,420			(61,985	)		216,433
Expenses:
Losses and loss adjustment expenses		70,815			—		2,772			—		—			(14,296	)		59,291
Amortization of deferred policy acquisition costs		25,244			—		1,067			—		—			—			26,311
Other policy acquisition expenses		18,333			12,667		2,521			—		2,128			(34,673	)		976
Stock-based compensation expense		473			723		—			—		1,776			—			2,972
Interest expense		—			—		1,108			216		3,168			(1,108	)		3,384
Depreciation and amortization		611			708		—			510		191			(374	)		1,646
Personnel and other operating expenses		11,244			14,512		255			1,733		4,155			(10,385	)		21,514
Total expenses		126,720			28,610		7,723			2,459		11,418			(60,836	)		116,094
Income (loss) before income taxes (d)	$	77,822		$	24,195	$	5,088		$	381	$	(5,998	)	$	(1,149	)	$	100,339
Total revenue from non-affiliates (e)	$	201,050		$	398	$	14,010		$	1,975	$	838
Gross premiums written	$	259,529		$	—	$	29,717

(a)

Other revenue under real estate primarily consisted of rental income from investment properties.

(b)

Other revenue under corporate and other primarily consisted of revenue from marina operations and management fees for attorney-in-fact services.

(c)

Gross premiums earned under insurance operations includes $1,199 earned from reciprocal exchange operations.

(d)

The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The insurance operations and the reciprocal exchange operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo Group and the AIF operations recognize service fee revenues according to revenue recognition standards. Although both service fee expenses and revenues are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.

(e)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)


For Three Months Ended March 31, 2024	Insurance Operations			Exzeo Group		Reciprocal Exchange Operations			Real Estate (a)		Corporate/ Other (b)			Reclassification/ Elimination			Consolidated
Revenue:
Gross premiums earned (c)	$	253,472		$	—	$	3,625		$	—	$	—		$	(453	)	$	256,644
Premiums ceded		(66,341	)		—		(2,218	)		—		—			453			(68,106	)
Net premiums earned		187,131			—		1,407			—		—			—			188,538
Net income from investment portfolio		12,758			13		56			—		4,694			(819	)		16,702
Policy fee income		1,019			—		—			—		—			—			1,019
Other		3,092			32,929		—			3,447		1,030			(40,143	)		355
Total revenue		204,000			32,942		1,463			3,447		5,724			(40,962	)		206,614
Expenses:
Losses and loss adjustment expenses		84,024			—		1,268			—		—			(5,370	)		79,922
Amortization of deferred policy acquisition costs		20,931			—		—			—		—			—			20,931
Other policy acquisition expenses		15,415			11,158		546			—		—			(25,911	)		1,208
Stock-based compensation expense		369			701		—			—		512			—			1,582
Interest expense		—			1,500		812			223		2,926			(2,312	)		3,149
Depreciation and amortization		612			614		—			380		160			(276	)		1,490
Personnel and other operating expenses		13,433			11,869		54			1,434		3,733			(9,621	)		20,902
Total expenses		134,784			25,842		2,680			2,037		7,331			(43,490	)		129,184
Income (loss) before income taxes (d)	$	69,216		$	7,100	$	(1,217	)	$	1,410	$	(1,607	)	$	2,528		$	77,430
Total revenue from non-affiliates (e)	$	200,803		$	13	$	1,916		$	2,606	$	2,784
Gross premiums written	$	235,499		$	—	$	19,487

(a)

Other revenue under real estate primarily consisted of rental income from investment properties.

(b)

Other revenue under corporate and other primarily consisted of revenue from marina operations and management fees for attorney-in-fact services.

(c)

Gross premiums earned under insurance operations include $453 earned from the reciprocal exchange operations.

(d)

(e)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The following table presents gross premium earned by geographic location:


	Three Months Ended March 31,
	2025		2024
Florida	$	270,805	$	227,249
Non-Florida		29,578		29,395
Total gross premiums earned	$	300,383	$	256,644

The following table presents segment assets reconciled to the Company’s total assets on the consolidated balance sheets:


	March 31,			December 31,
	2025			2024
Segments:
Insurance Operations	$	1,906,645		$	1,905,878
Exzeo Group		135,824			89,441
Reciprocal Exchange Operations		125,383			105,556
Real Estate Operations		98,731			96,795
Corporate and Other		215,068			175,282
Consolidation and Elimination		(174,983	)		(142,739	)
Total assets	$	2,306,668		$	2,230,213

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 16 -- Leases

The table below summarizes the Company’s right-of-use (“ROU”) assets and corresponding liabilities for operating and finance leases:


	March 31,		December 31,
	2025		2024
Operating leases:
ROU assets	$	1,124	$	1,182
Liabilities	$	1,131	$	1,185

The following table summarizes the Company’s operating and finance leases in which the Company is a lessee:


		Renewal	Other Terms and
Class of Assets	Initial Term	Option	Conditions
Operating lease:
Office equipment	36 to 63 months	Yes	(a)
Office space	5 to 9 years	Yes	(a), (b)

(a)

There are no variable lease payments.

(b)

Rent escalation provisions exist.

As of March 31, 2025, maturities of operating lease liabilities were as follows:


Due in 12 months following March 31,
2025	$	294
2026		303
2027		313
2028		157
2029		115
Thereafter		99
Total lease payments		1,281
Less: interest		150
Total lease obligations	$	1,131

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The following table provides quantitative information with regard to the Company’s operating and finance leases:


	Three Months Ended
	March 31,
	2025			2024
Lease costs:
Operating lease costs*	$	76		$	68
Short-term lease costs*		80			92
Total lease costs	$	156		$	160
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows – operating leases	$	72		$	70
Financing cash flows – finance leases	$	—		$	1

	March 31,
	2025
Weighted-average remaining lease term:
Operating leases (in years)		4.4
Weighted-average discount rate:
Operating leases (%)		6.0	%

* Included in other operating expenses on the consolidated statements of income.

The following table summarizes the Company’s operating leases in which the Company is a lessor:


		Renewal	Other Terms and
Class of Assets	Initial Term	Option	Conditions
Operating lease:
Office space	1 to 3 years	Yes	(c)
Retail space	3 to 20 years	Yes	(c)
Boat docks/wet slips	1 to 12 months	Yes	(c)

(c)

There are no purchase options.

In March 2025, the Company entered into an operating lease agreement with tenant Government Employees Insurance Company (“GEICO”) for its 189,147-square-foot commercial real estate investment property located in Tampa, Florida. The lease term is 128 months, includes two options to renew for additional 60-month terms, and is expected to commence in the third quarter of 2025. GEICO also has the option to terminate, either partially or wholly, the lease agreement at the end of the seventh year after commencement of the lease. Under the office lease, the Company will waive rent for all three buildings during the first eight months of the lease term, rent for the first building during months 9 - 12, and fifty percent of rent for the first building during months 13 - 18. The Company will own all building improvements performed by the tenant. The total consideration in the lease agreement is allocated between the lease and non-lease components based on their relative standalone prices, with the lease component representing the right to use office space and the non-lease component comprising various property maintenance and administrative services provided by the Company. The lease agreement does not include any residual value guarantees.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 17 -- Income Taxes

A valuation allowance must be established for deferred tax assets when it is more likely than not that the deferred tax assets will not be realized based on available evidence both positive and negative, including recent operating results, available tax planning strategies, and projected future taxable income. The Company evaluates the realizability of its deferred tax assets each quarter, and as of March 31, 2025, based on all of the available evidence, management concluded that it is more likely than not that the deferred tax assets will be realized other than a valuation allowance on the sale of TTIC by Exzeo to HCI in the amount of $544 related to the deferred intercompany taxable loss that arose during the third quarter of 2024. The Company did not have a valuation allowance established as of March 31, 2024.

During the three months ended March 31, 2025 and 2024, the Company recorded approximately $26,109 and $20,474 of income tax expense, respectively, resulting in effective tax rates of 26.0% and 26.4%, respectively. The decrease in the effective tax rate as compared with the corresponding period in the prior year was primarily attributable to a higher prior year effect tax rate resulting from certain non-deductible compensation expense for the first quarter of 2024. The Company’s estimated annual effective tax rate differs from the statutory federal tax rate due to state and foreign income taxes as well as certain nondeductible and tax-exempt items.

Note 18 -- Earnings Per Share

U.S. GAAP requires the Company to use the two-class method in computing basic earnings (loss) per share since holders of the Company’s restricted stock have the right to share in dividends, if declared, equally with common stockholders. These participating securities affect the computation of both basic and diluted earnings (loss) per share during periods of net income or loss. For a majority-owned subsidiary, its basic and diluted earnings (loss) per share are first computed separately. Then, the Company’s proportionate share in that majority-owned subsidiary’s earnings is added to the computation of both basic and diluted earnings (loss) per share at a consolidated level.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

A summary of the numerator and denominator of the basic and diluted earnings per common share is presented below:


	Three Months Ended							Three Months Ended
	March 31, 2025							March 31, 2024
	Income			Shares (a)		Per Share		Income			Shares (a)		Per Share
	(Numerator)			(Denominator)		Amount		(Numerator)			(Denominator)		Amount
Net income	$	74,230						$	56,956
Less: Net income attributable to redeemable noncontrolling interests		—							(10,149	)
Less: Net (income) loss attributable to noncontrolling interests		(4,546	)						804
Net income attributable to HCI		69,684							47,611
Less: Income attributable to participating securities		(3,103	)						(1,218	)
Basic Earnings Per Share:
Income allocated to common stockholders		66,581			10,286	$	6.47		46,393			9,751	$	4.76
Effect of Dilutive Securities:
Stock options		—			350				—			280
Convertible senior notes		1,873			2,142				1,640			2,282
Warrants		—			7				—			305
Diluted Earnings Per Share:
Income available to common stockholders and assumed conversions	$	68,454			12,785	$	5.35	$	48,033			12,618	$	3.81

(a)

Shares in thousands.

Note 19 -- Redeemable Noncontrolling Interests

Exzeo - Series A Preferred Stock

Exzeo previously issued shares of its Series A Preferred Stock to a private investment management fund. These shares were presented as redeemable noncontrolling interest on the consolidated balance sheet until the redemption was completed during the first quarter of 2024. For the three months ended March 31, 2024, net income attributable to redeemable noncontrolling interest was $10,149, consisting of accrued cash dividends of $424, accretion related to increasing dividend rates of $111, an adjustment to maximum redemption value of $6,228, and a deemed dividend resulting from warrant modifications of $3,386.

VIE - Subscriber Surplus Contribution

Subscriber surplus contributions in redeemable noncontrolling interests represent a refundable portion of the surplus contributions received from policyholders of the VIEs.

The following table summarizes the activity of the subscriber surplus contribution during the three months ended March 31, 2025 and 2024:

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)


	2025			2024
Balance at January 1	$	1,691		$	—
Cash contribution		833			—
Return of contribution		(3	)		—
Noncash reclassification		(884	)		—
Balance at March 31	$	1,637		$	—

Note 20 -- Equity

Stockholders’ Equity

Common Stock

On January 14, 2025, the Company’s Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends were paid on March 21, 2025 to stockholders of record on February 21, 2025.

Noncontrolling Interests

Exzeo

During the three months ended March 31, 2025, Exzeo did not repurchase and retire any shares of common stock from current or former employees. For the three months ended March 31, 2024, Exzeo repurchased and retired a total of 22,787 shares of its common stock surrendered by its employees to satisfy payroll tax liabilities associated with the vesting of restricted shares. The total cost of purchasing noncontrolling interests during the three months ended March 31, 2024 was $33.

At March 31, 2025, there were 82,709,589 shares of Exzeo’s common stock outstanding, of which 7,709,589 shares were not owned by HCI.

Consolidated Variable Interest Entities

As described in Note 14 -- “Variable Interest Entities,” the Company has no equity interest at risk in consolidated VIEs. An insurance exchange receives surplus contributions from its subscribers in addition to policy premiums. The surplus contribution is payable to an insurance exchange on or prior to the initial effective date of coverage, in installments for certain payment plans, and on or prior to the effective date of all endorsements generating an additional premium.

Note 21 -- Stock-Based Compensation

2012 Omnibus Incentive Plan

The Company currently has outstanding stock-based awards granted under the Plan which is currently active and available for future grants. At March 31, 2025, there were 691,596 shares available for grant.

Stock Options

Stock options granted and outstanding under the incentive plan vest over a period of four years and are exercisable over the contractual term of ten years.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

A summary of the stock option activity for the three months ended March 31, 2025 and 2024 is as follows (option amounts not in thousands):


					Weighted
			Weighted		Average
			Average		Remaining	Aggregate
	Number of		Exercise		Contractual	Intrinsic
	Options		Price		Term	Value
Outstanding at January 1, 2025		590,000	$	51.54	4.9 years	$	37,523
Outstanding at March 31, 2025		590,000	$	51.54	4.6 years	$	58,367
Exercisable at March 31, 2025		590,000	$	51.54	4.6 years	$	58,367

Outstanding at January 1, 2024		590,000	$	51.54	5.9 years	$	21,156
Outstanding at March 31, 2024		590,000	$	51.54	5.6 years	$	38,077
Exercisable at March 31, 2024		590,000	$	51.54	5.6 years	$	38,077

There were no options exercised during the three months ended March 31, 2025 and 2024. For the three months ended March 31, 2025 and 2024, the Company recognized $0 and $14, respectively, of compensation expense related to stock options which is included in general and administrative personnel expenses. There were no deferred tax benefits related to stock options recognized for the three months ended March 31, 2025 and 2024. At March 31, 2025 and December 31, 2024, there was no unrecognized compensation expense related to nonvested stock options.

Restricted Stock Awards

From time to time, the Company has granted and may grant restricted stock awards to certain executive officers, other employees, and non-employee directors in connection with their service to the Company. The terms of the Company’s outstanding restricted stock grants may include service, performance, and market-based conditions. The determination of fair value with respect to the awards containing only service-based conditions is based on the market value of the Company’s common stock on the grant date. For awards with market-based conditions, the fair value is determined using a Monte Carlo simulation method, which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Information with respect to the activity of unvested restricted stock awards during the three months ended March 31, 2025 and 2024 is as follows:


	Number of			Weighted
	Restricted			Average
	Stock			Grant Date
	Awards			Fair Value
Nonvested at January 1, 2025		486,115		$	63.00
Granted		1,000		$	138.94
Vested		(18,405	)	$	61.38
Forfeited		(750	)	$	109.72
Nonvested at March 31, 2025		467,960		$	63.15

Nonvested at January 1, 2024		271,417		$	37.12
Vested		(29,690	)	$	56.05
Forfeited		(200	)	$	51.87
Nonvested at March 31, 2024		241,527		$	34.78

The Company recognized compensation expense related to restricted stock, which is included in general and administrative personnel expenses, of $2,249 and $867 for the three months ended March 31, 2025 and 2024, respectively. At March 31, 2025 and December 31, 2024, there was approximately $18,083 and $20,296, respectively, of total unrecognized compensation expense related to nonvested restricted stock arrangements. The Company expects to recognize the remaining compensation expense over a weighted-average period of 2.7 years. The following table summarizes information about deferred tax benefits recognized and tax benefits realized related to restricted stock awards and paid dividends, and the fair value of vested restricted stock for the three months ended March 31, 2025 and 2024.


	Three Months Ended
	March 31,
	2025		2024
Deferred tax benefits recognized	$	201	$	99
Tax benefits realized for restricted stock and paid dividends	$	608	$	511
Fair value of vested restricted stock	$	1,130	$	1,664

Subsidiary Equity Plan

For the three months ended March 31, 2025 and 2024, Exzeo Group recognized compensation expense related to its stock-based awards of $703 and $701, respectively. At March 31, 2025 and December 31, 2024, there was $8,491 and $9,495, respectively, of unrecognized compensation expense related to nonvested subsidiary restricted stock and stock options.

Note 22 -- Commitments and Contingencies

Capital Commitments

As described in Note 5 -- “Investments” under Limited Partnership Investments, the Company is contractually committed to capital contributions for limited partnership interests. At March 31, 2025, there was an aggregate unfunded balance of $3,160.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

FIGA Assessments

The Company’s insurance subsidiaries, as member insurers, are required to collect and remit the pass-through assessments to FIGA on a quarterly basis. As of March 31, 2025, the FIGA assessments payable by the Company were $2,164 and are included in other liabilities on the consolidated balance sheet.

Note 23 -- Related Party Transaction

HCPCI and TTIC have reinstatement premium protection reinsurance contracts (“RPP”) with various reinsurers. For one of the RPP contracts, Oxbridge Reinsurance Limited (“Oxbridge”) participates as a subscribing reinsurer. One of the Company’s non-employee directors, Jay Madhu, serves as Oxbridge’s chairman of its board of directors and chief executive officer and is an investor in that company. Under the contracts, Oxbridge agrees to indemnify HCPCI and TTIC for a portion of reinstatement premium which HCPCI or TTIC pays or becomes liable to pay to reinstate reinsurance protection. The $1,099 premium is paid over four installments, each of which is to be deposited into a trust account in order to fully collateralize Oxbridge’s obligations. Trust assets may be withdrawn by HCPCI and TTIC or the trust beneficiaries in the event amounts are due under the 2024-2025 RPP contracts.

Note 24 -- Subsequent Events

On April 11, 2025, the Company entered into an agreement with a holder of its 4.75% Convertible Senior Notes, whereby the noteholder converted $61,761 in aggregate principal amount in exchange for 783,061 shares of HCI’s common stock and $1,125 in cash. The transaction was accounted for as an induced conversion. As such, the Company recognized induced conversion expense of $1,125, representing the excess of the fair value of the total consideration transferred over the fair value of the common stock issued.

On April 23, 2025, the Company’s Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends are payable on June 20, 2025 to stockholders of record on May 16, 2025.

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion under this Item 2 in conjunction with our consolidated financial statements and related notes and information included elsewhere in this quarterly report on Form 10-Q and in our Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 28, 2025. Unless the context requires otherwise, as used in this Form 10-Q, the terms “HCI,” “we,” “us,” “our,” “the Company,” “our company,” and similar references refer to HCI Group, Inc., a Florida corporation incorporated in 2006, and its subsidiaries. All dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are in whole dollars unless specified otherwise.

Forward-Looking Statements

In addition to historical information, this quarterly report contains forward-looking statements as defined under federal securities laws. Such statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. Typically, forward-looking statements can be identified by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions. The important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include but are not limited to the effects of governmental regulation; changes in insurance regulations; the frequency and extent of claims; uncertainties inherent in reserve estimates; catastrophic events; changes in the demand for, pricing of, availability of or collectability of reinsurance; restrictions on our ability to change premium rates; increased rate pressure on premiums; the severity and impact of a pandemic; and other risks and uncertainties detailed herein and from time to time in our SEC reports.

OVERVIEW – General

HCI Group, Inc. is a Florida-based company with operations in property and casualty insurance, information technology services, insurance management, real estate and reinsurance. We utilize innovative technology to promote efficiency, refine risk assessment and enhance experiences for clients throughout the insurance process. We manage our operations in the following organizational segments, based on managerial emphasis and evaluation of financial and operating performances:

Insurance Operations

▪

Property and casualty insurance

▪

Reinsurance and other auxiliary operations

Exzeo Group

▪

Insurance solutions

▪

Information technology

▪

Reinsurance brokerage services

Reciprocal Exchange Operations

Real Estate Operations

Other Operations

▪

Attorney-in-fact services

▪

Holding company operations

For the three months ended March 31, 2025 and 2024, revenues from insurance operations before intracompany elimination represented 77.0% and 85.1%, respectively, and revenues from Exzeo Group represented 16.7% and 12.7%, respectively, of total revenues of all operating segments. At March 31, 2025 and December 31, 2024, insurance operations’ total assets represented 81.1% and 83.6%, respectively, and Exzeo Group’s total assets represented 5.5% and 3.7%, respectively, of the combined assets of all operating segments. See Note 15 -- “Segment Information” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for additional information.

Insurance Operations

Property and Casualty Insurance

We currently have three insurance subsidiaries: Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”) and TypTap Insurance Company (“TTIC”). A third insurance subsidiary, perRisk Insurance Company, has yet to conduct its surplus lines insurance business. We provide various forms of residential insurance products such as homeowners insurance, fire insurance, and wind-only insurance to homeowners, condominium owners and tenants for properties primarily located in Florida and in various states outside of Florida. Although we conduct insurance business in many states, Florida remains our primary market. We utilize internally developed software technologies to drive efficiency in claim processing and claims settlements, identify profitable underwriting opportunities, generate savings and streamline operations across its insurance operations.

Reinsurance and other auxiliary operations

We have a Bermuda domiciled wholly-owned reinsurance subsidiary, Claddaugh Casualty Insurance Company Ltd (“Claddaugh”). We selectively retain risk in Claddaugh, reducing the cost of third-party reinsurance. Claddaugh fully collateralizes its exposure to HCPCI, TypTap, and CORE by depositing funds into a trust account. Claddaugh may mitigate a portion of its risk through retrocession contracts, however Claddaugh did not enter into any retrocession contracts for the 2024-2025 treaty year. Currently, Claddaugh does not provide reinsurance to non-affiliates. Other auxiliary operations also include claim adjusting and processing services.

Exzeo Group

Exzeo Group, Inc. (“Exzeo”), our majority-owned subsidiary, currently has four subsidiaries: Exzeo Insurance Services, Inc (“EIS”) which was formerly known as TypTap Management Company, Exzeo USA, Inc. (“Exzeo USA”), Dark Horse Re, LLC (“Dark Horse”), and Cypress Tech Development Company which also owns Exzeo Software Private Limited (“Exzeo India”), a subsidiary domiciled in India. Exzeo provides a turn-key insurance technology and operations solutions to third-party insurance carriers based on a proprietary platform of purpose-built software and data-analytics applications that are specifically designed for the property and casualty insurance ecosystem. Exzeo's platform of products and services is highly scalable and poised to continue to optimize the performance of insurance markets, to the benefit of policyholders, capital providers, as well as the overall insurance value chain. The advanced data analytics algorithms and software tools enable insurance carriers to maximize efficiency of their systems, optimize underwriting outcomes and ultimately serve their customers more effectively.

Insurance Solutions

Exzeo provides operational services through EIS, which performs end-to-end services including underwriting support, insurance application processing, policyholder service, premium collection activities and claims administration. Additionally, EIS leverages data analytics to monitor claims and market trends to improve pricing models, advising on insurance policy design, and ensuring compliance with regulatory requirements.

Information Technology

Exzeo’s information technology operations are anchored by its software development and data analytics capabilities, primarily supported by Exzeo USA and Exzeo India, which design and maintain components of Exzeo’s technology infrastructure along with research and development. Exzeo's proprietary platform includes configurable applications designed to support the full insurance value chain from quoting and underwriting, policy management, claims management, geolocation visualization tools, as well as financial reporting. Key products currently in use or under development include AtlasViewer®, an online data visualization and geographic tool, SAMSTM, a policy administration platform, HarmonyTM, a next generation policy administration platform under development, and ClaimColonyTM, an application that provides intelligent automation of insurance claims and other business processes.

Reinsurance Brokerage Services

Through our subsidiary Dark Horse, we provide expert reinsurance brokerage services to help insurance companies manage risk by acting as an intermediary between the insurer client and reinsurers. We design tailored reinsurance solutions by assessing our insurer client’s risk portfolio.

Reciprocal Exchange Operations

Reciprocal Exchange Operations refer to the activities of consolidated variable interest entities, Condo Owners Reciprocal Exchange (“CORE”) and Tailrow Insurance Exchange (“Tailrow”). CORE provides commercial residential multiple peril insurance, while Tailrow specializes in fire and homeowners multiple peril insurance.

A reciprocal insurance exchange is a policyholder-owned entity where members, known as subscribers, gain ownership by purchasing an insurance policy. These subscribers collectively assume one another’s risks by exchanging insurance contracts, effectively acting as both insurers and insureds. The exchange’s operations are managed by an attorney-in-fact (“AIF”) company, which oversees general administration, marketing, underwriting, accounting, policy administration, claims adjusting, and information technology.

Real Estate Operations

Our real estate operations consist of multiple properties we own and operate for investment purposes and also properties we own and use for our own operations. Properties used in operations consist of two Tampa office buildings and an insurance operations site in Ocala, Florida. Our investment properties include retail shopping centers, two marinas, undeveloped land in Tampa and land under development in Haines City, Florida.

Other Operations

Holding company operations

Activities of our holding company, HCI Group, Inc., plus other companies that do not meet the quantitative and qualitative thresholds for a reportable segment comprise the operations of this segment.

Recent Events

On April 11, 2025, we entered into an agreement with a holder of our 4.75% Convertible Senior Notes, whereby the noteholder converted $61,761,000 in aggregate principal amount in exchange for 783,061 shares of HCI’s common stock and approximately $1,125,000 in cash. The transaction was accounted for as an induced conversion. As such, we recognized induced conversion expense of $1,125,000, representing the excess of the fair value of the total consideration transferred over the fair value of the common stock issued.

On April 23, 2025, our Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends are payable on June 20, 2025 to stockholders of record on May 16, 2025.

RESULTS OF OPERATIONS

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024 (dollar amounts in thousands, except per share amounts):


	Three Months Ended
	March 31,
	2025			2024
Revenue
Gross premiums earned	$	300,383		$	256,644
Premiums ceded		(99,635	)		(68,106	)
Net premiums earned		200,748			188,538
Net investment income		13,751			14,067
Net realized investment gains		1,167			—
Net unrealized investment (losses) gains		(1,906	)		2,635
Policy fee income		2,229			1,019
Other income		444			355
Total revenue		216,433			206,614
Expenses
Losses and loss adjustment expenses		59,291			79,922
Policy acquisition and other underwriting expenses		27,287			22,139
General and administrative personnel expenses		20,483			16,274
Interest expense		3,384			3,149
Other operating expenses		5,649			7,700
Total expenses		116,094			129,184
Income before income taxes		100,339			77,430
Income tax expense		26,109			20,474
Net income		74,230			56,956
Net income attributable to noncontrolling interests		(4,546	)		(9,345	)
Net income after noncontrolling interests	$	69,684		$	47,611
Ratios to Net Premiums Earned:
Loss Ratio		29.54	%		42.39	%
Expense Ratio (excluding interest expense)		26.61	%		24.46	%
Combined Ratio (excluding interest expense)		56.15	%		66.85	%
Ratios to Gross Premiums Earned:
Loss Ratio		19.74	%		31.14	%
Expense Ratio (excluding interest expense)		17.78	%		17.97	%
Combined Ratio (excluding interest expense)		37.52	%		49.11	%
Earnings Per Share Data:
Basic	$	6.47		$	4.76
Diluted	$	5.35		$	3.81

Comparison of the Three Months Ended March 31, 2025 to the Three Months Ended March 31, 2024

Our results of operations for the three months ended March 31, 2025 reflect net income of approximately $74,230,000 or $5.35 diluted earnings per share, compared with net income of approximately $56,956,000 or $3.81 diluted earnings per share, for the three months ended March 31, 2024. The quarter-over-quarter increase was primarily due to a $20,631,000 decrease in losses and loss adjustment expenses and a $12,210,000 increase in net premiums earned, offset by a $4,209,000 increase in general and administrative personnel expenses, a $3,690,000 net decrease in income from our investment portfolio (consisting of net investment income and net realized and unrealized gains or losses), and a $3,097,000 increase in policy acquisition, underwriting, and other operating expenses .

Revenue

Gross Premiums Earned on a consolidated basis for the three months ended March 31, 2025 and 2024 were approximately $300,383,000 and $256,644,000, respectively. The $43,739,000 increase was primarily attributable to the policies assumed from Citizens. Gross premiums earned from insurance operations were $282,135,000 for the three months ended March 31, 2025 compared with $253,472,000 for the three months ended March 31, 2024. Gross premiums earned from reciprocal exchange operations were $19,447,000 for the three months ended March 31, 2025 compared to $3,625,000 for the three months ended March 31, 2024.

Premiums Ceded for the three months ended March 31, 2025 and 2024 were approximately $99,635,000 and $68,106,000, respectively, representing 33.2% and 26.5%, respectively, of gross premiums earned. The $31,529,000 increase was primarily attributable to higher reinsurance rates for the 2024-2025 contract year, increased coverage due to growth in the number of policies in force and total insured value.

Our premiums ceded represent costs of reinsurance to cover losses from catastrophes that exceed the retention levels defined by our catastrophe excess of loss reinsurance contracts or to assume a proportional share of losses as defined in a quota share agreement. The rates we pay for reinsurance are based primarily on policy exposures reflected in gross premiums earned. Reinsurance costs can be decreased by a reduction in premiums ceded attributable to retrospective provisions under reinsurance contracts. For the three months ended March 31, 2025, there was no adjustment in premiums ceded related to retrospective provisions as opposed to a decrease of $6,993,000 for the three months ended March 31, 2024.

Net Premiums Written for the three months ended March 31, 2025 and 2024 totaled approximately $189,611,000 and $186,880,000, respectively. Net premiums written represent the premiums charged on policies issued during a fiscal period less any applicable reinsurance costs. The increase in 2025 primarily resulted from an increase in gross premiums written from the assumption of Citizens insurance policies, offset by an increase in premiums ceded. We had approximately 278,400 policies in force at March 31, 2025 as compared with approximately 250,500 policies in force at March 31, 2024.

Net Premiums Earned for the three months ended March 31, 2025 and 2024 were approximately $200,748,000 and $188,538,000, respectively, and reflect the gross premiums earned less reinsurance costs as described above.

The following is a reconciliation of our total Net Premiums Written to Net Premiums Earned for the three months ended March 31, 2025 and 2024 (amounts in thousands):


	Three Months Ended
	March 31,
	2025		2024
Net Premiums Written	$	189,611	$	186,880
Decrease in Unearned Premiums		11,137		1,658
Net Premiums Earned	$	200,748	$	188,538

Net Investment Income for the three months ended March 31, 2025 and 2024 was approximately $13,751,000 and $14,067,000, respectively. The $316,000 decrease was primarily attributable to a $1,175,000 decrease in income from real estate investments, a $946,000 decrease in interest income from cash and cash equivalents, and a $821,000 decrease in income from limited partnership investments, offset by an increase of $2,687,000 in interest income from available-for-sale fixed-maturity securities. See Net Investment Income under Note 5 -- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Net Realized Investment Gains for the three months ended March 31, 2025 were approximately $1,167,000 as opposed to $0 for the three months ended March 31, 2024. The increase was primarily attributable to net realized gains of approximately $1,115,000 from sales of equity securities during the three months ended March 31, 2025 as opposed to $0 from sales of these securities during the corresponding period in 2024.

Net Unrealized Investment Losses for the three months ended March 31, 2025 was approximately $1,906,000 as opposed to net unrealized investment gains of approximately $2,635,000 for the three months ended March 31, 2024. The decrease was primarily attributable to an unfavorable change in the equity market compared with the three months ended March 31, 2024.

Expenses

Our consolidated Losses and Loss Adjustment Expenses amounted to approximately $59,291,000 and $79,922,000 for the three months ended March 31, 2025 and 2024, respectively. The decrease is primarily driven by a decline in claims and litigation frequency. The decrease was offset in part by losses on policies assumed from Citizens by the reciprocal exchange operations during 2025. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

Policy Acquisition and Other Underwriting Expenses for the three months ended March 31, 2025 and 2024 were approximately $27,287,000 and $22,139,000 on a consolidated basis, respectively, and primarily reflect the amortization of deferred acquisition costs such as commissions payable to agents for production and renewal of policies and premium taxes. The increase in amortized costs was primarily due to an increase in premiums in force associated with policy renewals in the insurance and reciprocal exchange operations.

General and Administrative Personnel Expenses for the three months ended March 31, 2025 and 2024 were approximately $20,483,000 and $16,274,000, respectively. Our general and administrative personnel expenses include salaries, wages, payroll taxes, stock-based compensation expenses, and employee benefit costs. Factors such as merit increases, changes in headcount, and periodic restricted stock grants, among others, cause fluctuations in this expense. In addition, our personnel expenses are decreased by the capitalization of payroll costs related to projects to develop software for internal use and the payroll costs associated with the processing and settlement of certain catastrophe claims which are recoverable from reinsurers under reinsurance contracts. The quarter-over-quarter increase of $4,209,000 was primarily attributable to an increase in employee incentive bonus, an increase in stock-based compensation expense, an increase in employee health benefits, and merit increases for non-executive employees effective in March 2025, offset by higher payroll costs recoverable from reinsurers

Interest Expense for the three months ended March 31, 2025 and 2024 was approximately $3,384,000 and $3,149,000, respectively. The increase was primarily attributable to the accelerated amortization of debt issuance costs in connection with the planned redemption of our 4.75% Convertible Senior Notes on June 5, 2025.

Income Tax Expense for the three months ended March 31, 2025 and 2024 was approximately $26,109,000 and $20,474,000, respectively, for state, federal, and foreign income taxes, resulting in effective tax rates of 26.0% and 26.4%, respectively.

Ratios:

The loss ratio applicable to the three months ended March 31, 2025 (losses and loss adjustment expenses incurred related to net premiums earned) was 29.5% compared with 42.4% for the three months ended March 31, 2024. The decrease was primarily attributable to the decrease in losses and loss adjustment expenses and the increase in net premiums earned.

The expense ratio applicable to the three months ended March 31, 2025 (defined as total expenses excluding losses and loss adjustment expenses and interest expense related to net premiums earned) was 26.6% compared with 24.5% for the three months ended March 31, 2024. The increase in our expense ratio was primarily attributable to the increase in policy acquisition and other underwriting expense and the increase in general and administrative personnel expenses.

The combined ratio (total of all expenses excluding interest expense in relation to net premiums earned) is the measure of overall underwriting profitability before other income. Our combined ratio for the three months ended March 31, 2025 was 56.1% compared with 66.9% for the three months ended March 31, 2024. The decrease in 2025 was attributable to the factors described above.

Seasonality of Our Business

Our insurance business is seasonal as hurricanes and tropical storms affecting Florida, our primary market, and other southeastern states typically occur during the period from June 1st through November 30th of each year. Winter storms in the northeast usually occur during the period between December 1st and March 31st of each year. Also, with our reinsurance treaty year typically effective on June 1st of each year, any variation in the cost of our reinsurance, whether due to changes in reinsurance rates, coverage levels or changes in the total insured value of our policy base, will occur and be reflected in our financial results beginning on June 1st of each year.

LIQUIDITY AND CAPITAL RESOURCES

Throughout our history, our liquidity requirements have been met through issuances of our common and preferred stock, debt offerings and funds from operations. We expect our future liquidity requirements will be met by funds from operations, primarily the cash received by our insurance subsidiaries from premiums written and investment income. We may consider raising additional capital through debt and/or equity offerings to support our growth and future investment opportunities.

Our insurance subsidiaries require liquidity and adequate capital to meet ongoing obligations to policyholders and claimants and to fund operating expenses. In addition, we attempt to maintain adequate levels of liquidity and surplus to manage any differences between the duration of our liabilities and invested assets. In the insurance industry, cash collected for premiums from policies written is invested, interest and dividends are earned thereon, and losses and loss adjustment expenses are paid out over a period of years. This period of time varies by the circumstances surrounding each claim. With the exception of litigated claims, substantially all of our losses and loss adjustment expenses are fully settled and paid within approximately 90 days of the claim receipt date. Additional cash outflow occurs through payments of underwriting costs such as commissions, taxes, payroll, and general overhead expenses.

We believe that we maintain sufficient liquidity to pay claims and expenses, as well as to satisfy commitments in the event of unforeseen events such as reinsurer insolvencies, inadequate premium rates, or reserve deficiencies. We maintain a comprehensive reinsurance program at levels management considers adequate to diversify risk and safeguard our financial position.

In the future, we anticipate our primary use of funds will be to pay claims, reinsurance premiums, interest, and dividends and to fund operating expenses and real estate acquisitions.

Revolving Credit Facility, Convertible Senior Notes, Promissory Notes, and Finance Leases

The following table summarizes the principal and interest payment obligations of our indebtedness at March 31, 2025:


	Maturity Date	Payment Due Date
4.75% Convertible Senior Notes*	June 2042	June 1 and December 1
4.55% Promissory Note	Through August 2036	1st day of each month
5.50% Promissory Note	Through July 2033	1st day of each month
Revolving credit facility	Through November 2028	January 1, April 1, July 1, October 1


*	All of the outstanding Notes are scheduled to be redeemed on June 5, 2025. Noteholders are entitled to convert their notes into common stock until the end of the day on June 4, 2025.

See Note 11 -- “Long-Term Debt” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Limited Partnership Investments

Our limited partnership investments consist of six private equity funds managed by their general partners. Two of these funds have unexpired capital commitments which are callable at the discretion of the fund’s general partner for funding new investments or expenses of the fund. Although capital commitments for the four remaining funds have expired, the general partners may request additional funds under certain circumstances. At March 31, 2025, there was an aggregate unfunded capital balance of $3,160,000. See Limited Partnership Investments under Note 5 -- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Real Estate Investment

Real estate has long been a significant component of our overall investment portfolio. It diversifies our portfolio and helps offset the volatility of other higher-risk assets. Thus, we may consider expanding our real estate investment portfolio should an opportunity arise.

Sources and Uses of Cash

Cash Flows for the Three Months Ended March 31, 2025

Net cash provided by operating activities for the three months ended March 31, 2025 was approximately $162,006,000, which consisted primarily of cash received from net premiums written, and reinsurance recoveries of approximately $30,707,000 less cash disbursed for operating expenses, losses and loss adjustment expenses and interest payments. Net cash provided by investing activities of $66,271,000 was primarily due to the proceeds from calls, repayments and maturities of fixed-maturity securities of $81,211,000, the proceeds from sales of fixed-maturity and equity securities of $12,152,000, and the proceeds from the sale of real estate property of $824,000, offset by the purchases of fixed-maturity and equity securities of $24,327,000, the purchases of real estate investments of $1,857,000, and the purchases of property and equipment of $1,732,000. Net cash used in financing activities totaled $6,248,000, which was primarily due to $4,306,000 of cash dividend payments, net repayment of our revolving credit facility of $2,000,000, $639,000 of share repurchases, and repayments of long-term debt of $133,000, offset by net contribution from noncontrolling interests of $830,000.

Cash Flows for the Three Months Ended March 31, 2024

Net cash provided by operating activities for the three months ended March 31, 2024 was approximately $181,989,000, which consisted primarily of cash received from net premiums written, and reinsurance recoveries of approximately $19,151,000 less cash disbursed for operating expenses, losses and loss adjustment expenses and interest payments. Net cash used in investing activities of $4,872,000 was primarily due to the purchases of fixed-maturity and equity securities of $180,015,000 and purchases of real estate investments of $5,244,000, offset by the proceeds from calls, repayments and maturities of fixed-maturity securities of $172,024,000 and the proceeds from sales of fixed-maturity and equity securities of $9,546,000. Net cash used in financing activities totaled $58,199,000, which was primarily due to the redemption of redeemable noncontrolling interests of $100,000,000, $3,993,000 of cash dividend payments, and cash dividends paid to redeemable noncontrolling interest of $2,923,000, offset by $50,000,000 of net borrowing under the line of credit agreement.

Investments

The main objective of our investment policy is to maximize our after-tax investment income with a reasonable level of risk given the current financial market. Our excess cash is invested primarily in money market accounts, certificates of deposit, and fixed-maturity and equity securities.

At March 31, 2025, we had $708,087,000 of fixed-maturity and equity investments, which are carried at fair value. Changes in the general interest rate environment affect the returns available on new fixed-maturity investments. While a rising interest rate environment enhances the returns available on new investments, it reduces the market value of existing fixed-maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new fixed-maturity investments but increases the market value of existing fixed-maturity investments, creating the opportunity for realized investment gains on disposition.

In the future, we may alter our investment policy with regard to investments in federal, state and municipal obligations, preferred and common equity securities and real estate mortgages, as permitted by applicable law, including insurance regulations.

OFF-BALANCE SHEET ARRANGEMENTS

As of March 31, 2025, we had unexpired capital commitments for limited partnerships in which we hold interests. Such commitments are not recognized in the consolidated financial statements but are required to be disclosed in the notes to the consolidated financial statements. See Note 22 -- “Commitments and Contingencies” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for additional information.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make estimates and judgments to develop amounts reflected and disclosed in our consolidated financial statements. Material estimates that are particularly susceptible to significant change in the near term are related to our losses and loss adjustment expenses, which include amounts estimated for claims incurred but not yet reported. We base our estimates on various assumptions and actuarial data we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates.

We believe our accounting policies specific to losses and loss adjustment expenses, reinsurance recoverable, reinsurance with retrospective provisions, deferred income taxes, stock-based compensation expense, limited partnership investments, acquired intangible assets, warrants, and redeemable noncontrolling interest involve our most significant judgments and estimates material to our consolidated financial statements.

Reserves for Losses and Loss Adjustment Expenses

Our liability for losses and loss adjustment expense (“Reserves”) is specific to property insurance, which is our insurance subsidiaries’ only line of business. The Reserves include both case reserves on reported claims and our reserves for incurred but not reported (“IBNR”) losses. At each period end date, the balance of our Reserves is based on our best estimate of the ultimate cost of each claim for those known cases and the IBNR loss reserves are estimated based primarily on our historical experience. Changes in the estimated liability are charged or credited to operations as the losses and loss adjustment expenses are adjusted.

The IBNR represents our estimate of the ultimate cost of all claims that have occurred but have not been reported to us, and in some cases may not yet be known to the insured, and future development of reported claims. Estimating the IBNR component of our Reserves involves considerable judgment on the part of management. At March 31, 2025, $715,819,000 of the total $798,146,000 we have reserved for losses and loss adjustment expenses is attributable to our estimate of IBNR. The remaining $82,327,000 relates to known cases which have been reported but not yet fully settled in which case we have established a reserve based on currently available information and our best estimate of the cost to settle each claim. At March 31, 2025, $76,962,000 of the $82,327,000 in reserves for known cases relates to claims incurred during prior years.

Our Reserves decreased from $845,900,000 at December 31, 2024 to $798,146,000 at March 31, 2025. The $47,754,000 decrease is comprised of reductions in our catastrophe Reserves of $56,785,000 primarily specific to Hurricane Ian, Hurricane Helene as well as Hurricane Milton, and reductions in our non-catastrophe Reserves of $23,808,000 for 2024 and $13,357,000 for 2023 and prior loss years, offset by $46,196,000 in reserves established for 2025 loss year. The Reserves established for 2025 claims are primarily driven by an allowance for those claims that have been incurred but not reported to the company as of March 31, 2025. The decrease of $93,950,000 specific to our 2024 and prior loss-years reserves is due to settlement of claims related to those loss years.

Based on all information known to us, we consider our Reserves at March 31, 2025 to be adequate to cover our claims for losses that have occurred as of that date including losses yet to be reported to us. However, these estimates are continually reviewed by management as they are subject to significant variability and may be impacted by trends in claim severity and frequency or unusual exposures that have not yet been identified. As part of the process, we review historical data and consider various factors, including known and anticipated regulatory and legal developments, changes in social attitudes, inflation and economic conditions. As experience develops and other data becomes available, these estimates are revised, as required, resulting in increases or decreases to the existing unpaid losses and loss adjustment expenses. Adjustments are reflected in the results of operations in the period in which they are made, and the liabilities may deviate substantially from prior estimates.

The above and other accounting estimates and their related risks that we consider to be our critical accounting estimates are more fully described in our Annual Report on Form 10-K, which we filed with the SEC on February 28, 2025. For the three months ended March 31, 2025, there have been no other material changes with respect to any of our critical accounting policies.

RECENT ACCOUNTING PRONOUNCEMENTS

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our unaudited consolidated financial statements, see Note 3 -- “Recent Accounting Pronouncements” to our consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our investment portfolio at March 31, 2025 included fixed-maturity and equity securities, the purposes of which are not for speculation. Our main objective is to maximize after-tax investment income and maintain sufficient liquidity to meet our obligations while minimizing market risk, which is the potential economic loss from adverse fluctuations in securities prices. We consider many factors including credit ratings, investment concentrations, regulatory requirements, anticipated fluctuation of interest rates, durations and market conditions in developing investment strategies. Our investment securities are managed primarily by outside investment advisors and are overseen by the investment committee appointed by our Board of Directors. From time to time, our investment committee may decide to invest in low-risk assets such as U.S. government bonds.

Our investment portfolio is exposed to interest rate risk, credit risk and equity price risk. Fiscal and economic uncertainties caused by any government action or inaction may exacerbate these risks and potentially have adverse impacts on the value of our investment portfolio.

We classify our fixed-maturity securities as available-for-sale and report any unrealized gains or losses, net of deferred income taxes, as a component of other comprehensive income within our stockholders’ equity. As such, any material temporary changes in their fair value can adversely impact the carrying value of our stockholders’ equity. In addition, we recognize any unrealized gains or losses related to our equity securities in our statement of income. As a result, our results of operations can be materially affected by the volatility in the equity market.

Interest Rate Risk

Our fixed-maturity securities are sensitive to potential losses resulting from unfavorable changes in interest rates. We manage the risk by analyzing anticipated movement in interest rates and considering our future capital needs.

The following table illustrates the impact of hypothetical changes in interest rates to the fair value of our fixed-maturity securities at March 31, 2025 (dollar amounts in thousands):


Hypothetical Change in Interest Rates	Estimated Fair Value		Change in Estimated Fair Value			Percentage Increase (Decrease) in Estimated Fair Value
300 basis point increase	$	620,525	$	(32,336	)		-4.95	%
200 basis point increase		631,296		(21,565	)		-3.30	%
100 basis point increase		642,074		(10,787	)		-1.65	%
100 basis point decrease		663,655		10,794			1.65	%
200 basis point decrease		674,457		21,596			3.31	%
300 basis point decrease		685,266		32,405			4.96	%

Credit Risk

Credit risk can expose us to potential losses arising principally from adverse changes in the financial condition of the issuers of our fixed-maturity securities. We mitigate the risk by investing in fixed-maturity securities that are generally investment grade, by diversifying our investment portfolio to avoid concentrations in any single issuer or business sector, and by continually monitoring each individual security for declines in credit quality. While we emphasize credit quality in our investment selection process, significant downturns in the markets or general economy may impact the credit quality of our portfolio.

The following table presents the composition of our fixed-maturity securities, by rating, at March 31, 2025 (dollar amounts in thousands):


	Cost or		% of Total				% of Total
	Amortized		Amortized		Estimated		Estimated
Comparable Rating	Cost		Cost		Fair Value		Fair Value
AA+, AA, AA-		626,923		96		628,855		96
A+, A, A-		14,645		2		14,548		2
BBB+, BBB, BBB-		9,503		2		9,458		2
Total	$	651,071		100	$	652,861		100

Equity Price Risk

Our equity investment portfolio at March 31, 2025 included common stocks, perpetual preferred stocks, mutual funds and exchange-traded funds. We may incur potential losses due to adverse changes in equity security prices. We manage the risk primarily through industry and issuer diversification and asset mix.

The following table illustrates the composition of our equity securities at March 31, 2025 (dollar amounts in thousands):


			% of Total
	Estimated		Estimated
	Fair Value		Fair Value
Stocks by sector:
Financial	$	5,546		10
Consumer		6,429		12
Communications		2,922		5
Technology		2,884		5
Other (1)		2,070		4
		19,851		36
Mutual funds and exchange-traded funds by type:
Debt		28,816		52
Equity		6,513		12
Alternative		46		—
		35,375		64
Total	$	55,226		100

(1)

Represents an aggregate of less than 5% sectors.

Foreign Currency Exchange Risk

At March 31, 2025, we did not have any material exposure to foreign currency related risk.

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial and accounting officer), we have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, and, based on this evaluation, our chief executive officer and our chief financial officer have concluded that these disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, implementation of possible controls and procedures depends on management’s judgment in evaluating their benefits relative to costs.

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

We are a party to claims and legal actions arising routinely in the ordinary course of our business. Although we cannot predict with certainty the ultimate resolution of the claims and lawsuits asserted against us, we do not believe that any currently pending legal proceedings to which we are a party will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

ITEM 1A – RISK FACTORS

There have been no material changes in the risk factors previously disclosed in the section entitled “Risk Factors” in our Form 10-K, which was filed with the SEC on February 28, 2025.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)

Sales of Unregistered Securities and Use of Proceeds

None.

(b)

Repurchases of Securities

The table below summarizes the number of common shares surrendered by employees to satisfy payroll tax liabilities associated with the vesting of restricted shares (dollar amounts in thousands, except share and per share amounts):


	Total Number of Shares		Average Price Paid		Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Dollar Value of Shares That May Yet Be Purchased Under The Plans
For the Month Ended	Purchased		Per Share		or Programs		or Programs
January 31, 2025		—	$	—		—	$	—
February 28, 2025		5,267	$	121.33		—	$	—
March 31, 2025		—	$	—		—	$	—
		5,267	$	121.33		—

Working Capital Restrictions and Other Limitations on the Payment of Dividends

We are not subject to working capital restrictions or other limitations on the payment of dividends. Our insurance subsidiaries, however, are subject to restrictions on the dividends they may pay. Those restrictions could impact HCI’s ability to pay future dividends.

Under Florida law, a domestic insurer may not pay any dividend or distribute cash or other property to its stockholders except out of that part of its available and accumulated capital and surplus funds which is derived from realized net operating profits on its business and net realized capital gains. Additionally, a Florida domestic insurer may not make dividend payments or distributions to its stockholders without prior approval of the Florida Office of Insurance Regulation (“FLOIR”) if the dividend or distribution would exceed the larger of (1) the lesser of (a) 10.0% of its capital surplus or (b) net income, not including realized capital gains, plus a two year carry forward, (2) 10.0% of capital surplus with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains or (3) the lesser of (a) 10.0% of capital surplus or (b) net investment income plus a three year carry forward with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains.

Alternatively, a Florida domestic insurer may pay a dividend or distribution without the prior written approval of the FLOIR if (1) the dividend is equal to or less than the greater of (a) 10.0% of the insurer’s capital surplus as regards to policyholders derived from realized net operating profits on its business and net realized capital gains or (b) the insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year, (2) the insurer will have policy holder capital surplus equal to or exceeding 115.0% of the minimum required statutory capital surplus after the dividend or distribution, (3) the insurer files a notice of the dividend or distribution with the FLOIR at least ten business days prior to the dividend payment or distribution and (4) the notice includes a certification by an officer of the insurer attesting that, after the payment of the dividend or distribution, the insurer will have at least 115% of required statutory capital surplus as to policyholders. Except as provided above, a Florida domiciled insurer may only pay a dividend or make a distribution (1) subject to prior approval by the FLOIR or (2) 30 days after the FLOIR has received notice of such dividend or distribution and has not disapproved it within such time.

During the three months ended March 31, 2025, our insurance subsidiaries paid dividends of $14,000,000 to HCI.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 – MINE SAFETY DISCLOSURES

None.

ITEM 5 – OTHER INFORMATION

None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K) during the first quarter of 2025.

ITEM 6 – EXHIBITS

The following documents are filed as part of this report:


EXHIBIT
NUMBER		DESCRIPTION

3.1		Articles of Incorporation, with amendments. Incorporated by reference to the correspondingly numbered exhibit to our Form 10-Q filed August 7, 2013.

3.1.1		Articles of Amendment to Articles of Incorporation designating the rights, preferences and limitations of Series B Junior Participating Preferred Stock. Incorporated by reference to Exhibit 3.1 to our Form 8-K filed October 18, 2013.

3.1.2		Articles of Amendment to Articles of Incorporation cancelling the rights, preferences and limitations of Series B Junior Participating Preferred Stock. Incorporated by reference to Exhibit 3.1 to our Form 8-K filed May 15, 2020.

3.2		Bylaws, with amendments. Incorporated by reference to the correspondingly numbered exhibit to our Form 8-K filed September 13, 2019.

4.1		Form of common stock certificate. Incorporated by reference to the correspondingly numbered exhibit to our Form 10-Q filed November 7, 2013.

4.2		Common Stock Purchase Warrant, dated February 26, 2021, issued by HCI Group, Inc. to CB Snowbird Holdings, L.P. Incorporated by reference to Exhibit 4.1 of our Form 8-K filed March 1, 2021.

4.3		Indenture, dated May 23, 2022, by and between HCI Group, Inc. and The Bank of New York Mellon Trust Company, N.A. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2022.

4.6		Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 12, 2021.

4.9		See Exhibits 3.1, 3.1.1, 3.1.2 and 3.2 of this report for provisions of the Articles of Incorporation, as amended, and our Bylaws, as amended, defining certain rights of security holders.

4.10		Indenture, dated March 3, 2017, between HCI Group, Inc. and The Bank of New York Mellon Trust Company, N.A. Incorporated by reference to Exhibit 4.1 of our Form 8-K filed March 3, 2017.

4.11		Form of Global 4.25% Convertible Senior Note due 2037 (included in Exhibit 4.1). Incorporated by reference to Exhibit 4.1 of our Form 8-K filed March 3, 2017.

10.1		Preferred Stock Purchase Agreement, dated February 26, 2021, among TypTap Insurance Group, Inc., HCI Group, Inc., and CB Snowbird Holdings, L.P. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.

10.2		Amended and Restated Articles of Incorporation of TypTap Insurance Group, Inc. filed February 26, 2021. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.

10.3		Shareholders Agreement, dated February 26, 2021, among TypTap Insurance Group, Inc., CB Snowbird Holdings, L.P., HCI Group, Inc., and the other shareholders party thereto. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.


10.4		Parent Guaranty Agreement, dated February 26, 2021, between HCI Group, Inc. and CB Snowbird Holdings, L.P. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.

10.5**		HCI Group, Inc. 2012 Omnibus Incentive Plan as revised April 26, 2022. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed May 6, 2022.

10.7**		Executive Employment Agreement dated November 23, 2016 between Mark Harmsworth and HCI Group, Inc. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 3, 2017.

10.8		Reimbursement Contract effective June 1, 2024 between Homeowners Choice Property & Casualty Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.9		Reimbursement Contract effective June 1, 2024 between TypTap Insurance Company and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.10		Underlying Second Layer Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2024 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.11		Second Layer Reinstatement Premium Protection Reinsurance Contract effective June 1, 2024 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.12		Third Layer Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2024 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.13		Third Layer Reinstatement Premium Protection Reinsurance Contract effective June 1, 2024 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.14		County Weighted Industry Loss Reinsurance Contract effective July 9, 2024 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.


10.15		Panhandle Named Storm Property Catastrophe Excess of Loss Reinsurance Contract effective July 1, 2024 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.16		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2024 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.17		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2024 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.18		Layer 3B Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2024 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.19		Layer 3B Reinstatement Premium Protection Reinsurance Contract effective June 1, 2024 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.20		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2024 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.21		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2024 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.22		First and Second Layer Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2024 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.

10.23		Layer 3C Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2024 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2024.


10.25		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.26		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.27		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.28		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.29		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.30		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.31		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2023 issued to TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.32		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2023 issued to TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.33		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.34		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company and TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.35		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2023 issued to Homeowners Choice Property & Casualty Insurance Company and TypTap Insurance Company by Subscribing Reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item


		601(b)(10)(iv). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.36		Reimbursement Contract effective June 1, 2023 between Homeowners Choice Property & Casualty Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.37		Reimbursement Contract effective June 1, 2023 between TypTap Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.38		RAP Reimbursement Contract effective June 1, 2023 between Homeowners Choice Property & Casualty Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Reinsurance to Assist Policyholders Program (“RAP Program”). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.39		RAP Reimbursement Contract effective June 1, 2023 between TypTap Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Reinsurance to Assist Policyholders Program (“RAP Program”). Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.40		Equity Distribution Agreement between HCI Group, Inc., Truist Securities, Inc. and Citizens JMP Securities, LLC. Incorporated by reference to Exhibit 1.2 of our Form S-3 filed January 22, 2024.

10.41		Amended and Restated Common Stock Purchase Warrant between HCI Group, Inc. and CB Snowbird Holdings, L.P. Incorporated by reference to Exhibit 4.17 of our Form S-3 filed January 22, 2024.

10.42		Registration Rights Agreement between HCI Group, Inc. and CB Snowbird Holdings, L.P. Incorporated by reference to Exhibit 4.18 of our Form S-3 filed January 22, 2024.

10.43		Stock Redemption Agreement between TypTap Insurance Group, Inc. and CB Snowbird Holdings, L.P. Incorporated by reference to Exhibit 4.19 of our Form S-3 filed January 22, 2024.

10.44		Assumption Agreement between Homeowners Choice Property & Casualty Insurance Company, Inc. and Citizens Property Insurance Corporation. Incorporated by reference to Exhibit 99.1 of our Form 8-K filed October 2, 2023.

10.45		Assumption Agreement between TypTap Insurance Company and Citizens Property Insurance Corporation. Incorporated by reference to Exhibit 99.1 of our Form 8-K filed November 6, 2023.

10.48**		TypTap Insurance Group, Inc. 2021 Equity Incentive Plan. Incorporated by reference to Exhibit 10.5 of our Form 8-K filed March 1, 2021.

10.49**		Form of Restricted Stock Award Agreement of TypTap Insurance Group, Inc. Incorporated by reference to Exhibit 10.6 of our Form 8-K filed March 1, 2021.

10.51**		Stock Option Agreement between Paresh Patel and TypTap Insurance Group, Inc. dated October 1, 2021. Incorporated by reference to Exhibit 99.1 to our Form 8-K filed October 7, 2021.

10.52**		TypTap Insurance Group, Inc. 2021 Omnibus Incentive Plan. Incorporated by reference to Exhibit 99.2 of our Form 8-K filed October 7, 2021.


10.53		Purchase Agreement, dated May 18, 2022, by and among HCI Group, Inc., JMP Securities LLC and Truist Securities, Inc., as representatives of the several purchasers named therein. Incorporated by reference to Exhibit 10.1 of our Form 8-K filed May 23, 2022.

10.54**		Stock Option Agreement between Paresh Patel and HCI Group, Inc. dated September 15, 2023.

10.57**		Form of executive restricted stock award contract. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed May 1, 2014.

10.58		Purchase Agreement, dated February 28, 2017, by and between HCI Group, Inc. and JMP Securities LLC and SunTrust Robinson Humphrey, Inc., as representatives of the several initial purchasers named therein. Incorporated by reference to Exhibit 10.1 of our Form 8-K filed February 28, 2017.

10.62		Amended and Restated Credit Agreement, dated June 2, 2023, between HCI Group, Inc. and Fifth Third Bank. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2023.

10.63		Security and Pledge Agreement and Revolving Credit Promissory Note, dated June 2, 2023, between HCI Group, Inc. and Fifth Third Bank. Incorporated by reference to Exhibits 99.2, and 99.3 to our Form 8-K filed June 8, 2023.

10.64		Second Amended and Restated Credit Agreement, Second Amended and Restated Security and Pledge Agreement, and Renewed, Amended and Restated Revolving Credit Promissory Note, dated November 3, 2023, between HCI Group, Inc. and Fifth Third Bank. Incorporated by reference to Exhibits 99.1, 99.2, and 99.3 to our Form 8-K filed November 9, 2023.

10.65		Underwriting Agreement, dated December 6, 2023, by and between HCI Group, Inc. and Citizens JMP Securities, LLC. Incorporated by reference to Exhibit 1.1 to our Form 8-K filed December 7, 2023.

10.66**		Executive Employment Agreement between Paresh Patel and HCI Group, Inc. dated April 17, 2024. Incorporated by reference to Exhibit 99.1 to our Form 8-K filed April 23, 2024.

10.67**		Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated April 17, 2024. Incorporated by reference to Exhibit 99.2 to our Form 8-K filed April 23, 2024.

10.105**		Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated January 16, 2020. Incorporated by reference to Exhibit 99.1 to our Form 8-K filed January 23, 2020.

10.106**		Nonqualified Stock Option Agreement between Paresh Patel and HCI Group, Inc. dated January 16, 2020. Incorporated by reference to Exhibit 99.2 to our Form 8-K filed January 23, 2020.

10.124		Property Quota Share Reinsurance Contract effective December 31, 2020 issued to United Property and Casualty Insurance Company by Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.125		Renewal Rights Agreement effective January 18, 2021 by and among United Property and Casualty Insurance Company, United Insurance Holdings Corp., United Insurance Management, L.C. and Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.126		Property Quota Share Reinsurance Contract effective June 1, 2021 issued to United Property and Casualty Insurance Company by Homeowners Choice Property & Casualty Insurance Company and TypTap Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.


10.127		Renewal Rights Agreement effective December 30, 2021 by and among United Property and Casualty Insurance Company, United Insurance Holdings Corp., United Insurance Management, L.C. and Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.128		Property Quota Share Reinsurance Contract effective December 31, 2021 issued to United Property and Casualty Insurance Company by Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.129		Property Quota Share Reinsurance Contract effective June 1, 2022 issued to United Property and Casualty Insurance Company by TypTap Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 9, 2022.

31.1		Certification of the Chief Executive Officer

31.2		Certification of the Chief Financial Officer

32.1		Written Statement of the Chief Executive Officer Pursuant to 18 U.S.C.ss.1350

32.2		Written Statement of the Chief Financial Officer Pursuant to 18 U.S.C.ss.1350

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

** Management contract or compensatory plan.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, who have signed this report on behalf of the Company.


	HCI GROUP, INC.

May 9, 2025	By:	/s/ Paresh Patel
		Paresh Patel
		Chief Executive Officer
		(Principal Executive Officer)

May 9, 2025	By:	/s/ James Mark Harmsworth
		James Mark Harmsworth
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

A signed original of this document has been provided to HCI Group, Inc. and will be retained by HCI Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

ATTACHMENTS / EXHIBITS

ATTACHMENTS / EXHIBITS

XBRL TAXONOMY EXTENSION SCHEMA WITH EMBEDDED LINKBASES DOCUMENT