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HCI Group Inc (HCI) Q3 2019 Earnings Call Transcript

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HCI Group Inc (NYSE: HCI)
Q3 2019 Earnings Call
Nov 5, 2019, 4:45 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon and welcome to HCI Group's Third Quarter 2019 Earnings Call. My name is Dagmar, and I will be your conference operator this afternoon. [Operator Instructions] The call is also being broadcast live via webcast and available via webcast replay until December 5, 2019 on the Investor Information section of HCI Group's website at www.hcigroup.com. I would now like to turn the call over to Kevin Mitchell HCI's Senior Vice President of Investor Relations. Sir, please proceed.

Kevin Mitchell -- Senior Vice President of Investor Relations

Thank you, and good afternoon. Welcome to HCI Group's third quarter 2019 earnings call. With me today are Paresh Patel, our Chairman and Chief Executive Officer; and Mark Harmsworth, our Chief Financial Officer.

Following Paresh's opening remarks, Mark will review our financial performance for the quarter and first nine months of 2019, and then turn the call back to Paresh for an operational update and business outlook. Finally, we will take your questions. To access today's webcast, please visit the Investor Information section of our corporate website at hcigroup.com.

Before we begin, I would like to take the opportunity to remind our listeners that today's presentation and responses to questions may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as anticipate, estimate, expect, intend, plan and project and other similar words and expressions are intended to signify forward-looking statements.

Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the company's filings with the Securities and Exchange Commission. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on the company's business, financial conditions and results of operations. HCI Group disclaims all the obligations to update any forward-looking statements.

Now, with that, I would like to turn the call over to Paresh Patel, our Chairman and CEO. Paresh?

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Thank you, Kevin, and welcome everyone. Before Mark provides details around our financial performance for the quarter and the first nine months of 2019, I would like to touch on some events and highlights from the quarter. Obviously, we generate diluted earnings of $0.73 per share. HCI has been profitable now in 46 of the last 48 quarters, with the two exceptions being the quarters in which Hurricane Irma and Hurricane Michael hit. Also in July, we paid a dividend of $0.40 per common share. Our 36th consecutive quarterly dividend. The current yield is nearly 4%. And as most of you know, hurricane activity generally peaks in the third quarter of every year. This year we had a quiet third quarter. Although Hurricane Dorian devastated the Bahamas in September, it's good at the East Coast of Florida without making landfall. Our estimated losses from Dorian were slight. However, as we always do when a hurricane threatens Florida, [Indecipherable] Florida, we suspend new business, until the Dorian threat had passed. That suspension impacted our new business production for about three weeks out of the quarter.

But despite the suspension consolidated gross written premiums were up 8% over the third quarter of 2018, reflecting the rapid growth of TypTap Insurance Company, our technology driven insurance subsidiary.

With that, I'll now turn it over to our CFO, Mark Harmsworth, who will give us -- who will walk us through the financial performance for the third quarter. Mark?

Mark Harmsworth -- Chief Financial Officer

Thanks, Paresh. So, net income on a GAAP basis for the third quarter was $5.9 million and GAAP diluted earnings per share were $0.73. On an adjusted basis, net income for the quarter was $5.4 million and adjusted diluted earnings per share were $0.67. Year-to-date, net income on a GAAP basis was $20.1 million and $14.7 million on an adjusted basis. Year-to-date diluted earnings per share were $2.49 on a GAAP basis and $1.82 on an adjusted basis.

The third quarter was another chapter in our growth story. In the second quarter, written premiums grew from the previous year, and that trend continued in the third quarter. Gross written premiums of $97.3 million were 8% higher than the same quarter last year and about 2% higher year-to-date. This growth, as Paresh mentioned, has been driven by TypTap. TypTap wrote over $16 million in premium this quarter, and has written more than $36 million year-to-date. We are really excited about the growth here, and we expect it to continue. The growth in written premium will start to translate into higher earned premium and we expect that to happen in the fourth quarter. This would be the first time a quarter-over-quarter increase in gross premiums earned has happened in some time.

A couple of other things on the income statement. In June, we announced our new reinsurance program, an estimated reinsurance premiums of $31 million per quarter. This assumes some significant growth in TypTap, but we did say that premiums could increase if the TypTap growth outpaced our expectations, which it has. In Q3, premiums ceded for reinsurance are about $500,000 higher than the $31 million just mentioned. This reflects a higher TIV adjustment than anticipated because of the extraordinary growth of TypTap. Ceded reinsurance in Q4 should be about the same as it was in this quarter.

Net investment income is about $1.4 million, less than the same quarter last year. This was driven largely by the fact that limited partnership income was unusually high in the third quarter last year. Loss expense in Q3 was about $1.5 million higher than last year. This was largely driven by TypTap. While we expect the long-term core loss ratio to be similar to that of Homeowners Choice, in order to build reserves and be conservative, we have been and will continue to reserve at a higher loss ratio. While this may drive slightly higher loss expenses in the near term as it did this quarter, we think this is the right thing to do. In addition, we booked a loss reserve in the quarter for Hurricane Dorian of about $1 million. Loss expense year-to-date is about $11 million higher than the first nine months of last year. About one-third of this is explained by TypTap as mentioned above. And most of the balance by the hail event that we had in the first quarter.

If you're looking really closely, you might that our effective tax rate this quarter is a little low at 24.2%. This was due to the lowering of the Florida corporate income tax rate, the drop was retroactive to January 1 and so the full year to date benefit was booked in Q3. With this new Florida rate, we expect the go-forward consolidated income tax rate to be about 26.8%.

Now to the balance sheet, press release shows a comparison to December 31, 2018, so I'll make a few comments on those movements. First, you will see some changes within investments. The biggest of which is a $66 million reduction in short-term investments, which of course were sold to fund the $90 million debt pay down in March. Fixed term securities are up. While some securities matured and were used to pay down the debt, we also purchased some new corporate bonds back in January to capitalize on the increase in rates that was happening earlier in the year. Reinsurance recoverable and loss reserves are both up. We increased the ultimate for Hurricane Michael to $32.5 million and the ultimate for Hurricane Irma $508 million. These changes increased reinsurance recoverable and loss reserves in the balance sheet, but have no impact on the income statement.

As of September 30, we have paid about $368 million in Irma claims and we have an additional $140 million in reserves. In terms of overall loss reserves in the balance sheet, the increase is largely driven by the CAT adjustments mentioned above, however, reserves for daily claims are also up despite open claims and open litigation being down as we continue to take a cautious reserve stance.

Just a few comments on capital management. As you know, we are now paying a dividend of $0.40 per share. While this is about 7% higher than it was last year, the actual cash dividends paid in the quarter were the same as last year because the share count continues to drop. Speaking of which, we have continued the execution of our $20 million buyback plan approved for 2019, to the end of September, we had bought back about 368,000 shares at an average price of just over $41.25 a share. There is just under $5 million left of the $20 million authorized and we will continue with the program until the end of the year. The number of common shares outstanding at the end of September was approximately 7,883,000. This is down 7% from a year ago and 13% from two years ago as our buyback program continues to reduce the shares outstanding. The fully diluted share count at the end of the quarter was 9,860,000.

Book value per share at the end of September was $23.37, which is up 8% from the start of the year. One final note in terms of holding company liquidity, we have about $50 million of cash and investments at the holding company level as well as access to the $55 million available on the revolving credit facility.

And with that, I will turn it back to Paresh.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Thanks, Mark. As you can see from our financial results, Q3 was on a [Phonetics] successful quarter for HCI. We are growing organically and profitably driven primarily by TypTap, our technology based insurance subsidiary. And despite this, our suspension of new business production during the pendency of Hurricane Dorian, Gross written premiums at TypTap increased four-fold compared to a year ago. Earlier in the year, we have projected that TypTap would have more than $50 million of premiums in force by the end of the year. Updating that forecast at this point, we expect TypTap will surpass that number by Thanksgiving. So, despite the tendency of Dorian, we will be there a month ahead of schedule.

This underlines the value of our investments in technology and analytics is now clear. We can now grow rapidly while maintaining strict underwriting standards.

And with that, we are ready to open the call for questions. Operator, please provide the appropriate Instructions.

Questions and Answers:

Operator

Thank you, sir. [Operator Instructions] Our first question comes from Matt Carletti with JMP Securities. Please state your question.

Matt Carletti -- JMP Securities -- Analyst

Hey, thanks, good afternoon. Just have a few questions. Paresh, I was hoping you might be able to give a little more color on the success of TypTap, in particular. How did that growth kind of build over the quarters, maybe a month-by-month picture or however you want to frame it? And then also two, how should we think about kind of where you've been getting the best traction, are there certain geographies within Florida that you're finding it works better or certain types of production sources?

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Okay. So, in terms of growth of TypTap, we were growing quite rapidly binding more business every week compared to the week before, obviously, [Indecipherable] to nearly zero, when Dorian was approaching. And from that standing start, business has come roaring back and our best performing week was last week. I see that with some hesitancy in mind because usually there's a cyclicality to the business and new business production tends to fall off in the fourth quarter, but so far we haven't seen it in TypTap, but business cycles -- our business cycles and we will have some kind of slowdown in near future.

We've said we are going to probably be $50 million premium in force by the end of November, and we had stated a goal for next year of trying to get to about $100 million if the trends continue, which right now is looking very good. In terms of where we are getting business from, we are getting it from all the places we would like to get it from. So, the portfolio is coming up in a very similar footprint as the one that we have for Homeowners Choice, with the exception that we're not writing a lot of business in the panhandle.

So, everything is going according to plan, or actually slightly ahead of plan and to put this into perspective, I think in April, we had said we would get to $50 million by the end of the year. So, it was about 39 weeks away. We are going to be about four weeks ahead of schedule on that, despite having a three-week setback because of Dorian sort of gives you an idea as to how much the business is performing ahead of our expectations.

Matt Carletti -- JMP Securities -- Analyst

Yeah, and it's very helpful. And then another kind of big picture question, just curious, your thoughts on, as we sit here and looking insure tech, there are sure a lot of companies out there and I think some doing a very good job of differentiating themselves and some not. One thing that's very common is growth and TypTap clearly is participating in that. One thing that's less common is profit, and that is something that it seems you guys have figured out in [Phonetics] TypTap. So I'm curious just with kind of some of the headline valuation metrics and things like that you see out there that are getting reported from the bunch, how do you think of that, when you think about what TypTap is worth within HCI?

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Okay. So, great question. Yes, we are aware of the valuation metrics applied to a lot of other companies that are basically entirely focused on growth, but eventually income is what is necessary. Otherwise, it's just you're buying the business. We have always taken that different viewpoint that insurance -- insure tech still has the word insurance in it. So, it has to make insurance sense. So, we focus more on getting the formula correct and then starting to scale up. So, we have approached the reverse of what a lot of other folks have done which is start with tech first and we'll worry about making money later on. We said make money first and then scale up, and that is starting to now come to fruition as we're seeing this thing grow.

As far as the valuation of this -- of TypTap, clearly, I don't think any value is particularly being ascribed to TypTap within the HCI Group, let loan [Phonetics] Exzeo which is providing the underlying technology.

But, eventually, I think the two things will have to meet either some of our -- some of the insure tech companies would have to [Phonetics] come down valuation to where we are, or the world [Phonetics] will have to acknowledge that our valuation should rise to approach that of some of these companies, because we are actually achieving in TypTap. The promise of some of these companies hold for the future that they hope to some day attain.

Matt Carletti -- JMP Securities -- Analyst

Okay. Thank you for the color. And one quick numbers question for Mark, kind of my quarterly question, net written premiums, do you have that handy?

Mark Harmsworth -- Chief Financial Officer

Yeah, $65.76 million.

Matt Carletti -- JMP Securities -- Analyst

Thank you very much. Congrats on a nice quarter guys. Best of luck going forward.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Yeah. Thanks, Matt.

Operator

Okay. Our next question comes from Mark Hughes with SunTrust Bank. Please state your question.

Mark Hughes -- SunTrust Robinson Humphrey -- Analyst

Thank you. Good afternoon.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Good afternoon, Mark.

Hey, Mark.

Mark Hughes -- SunTrust Robinson Humphrey -- Analyst

On TypTap, you described how you're being conservative on setting losses as you're ramping up there. When do you think you'll know or have a good idea or how much time before you're confident that you can perhaps set those losses at a more normal long-term level?

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

It's -- as we've said, we're pretty excited about the growth, but in terms of its size, it's still fairly small relative to Homeowners Choice obviously. And it's just not enough data to get your arms around that. As I said in my script, we expect that rate to be about what Homeowners Choice is, potentially a little bit less where we've got a lot of experience, we're applying the same general underwriting standards. So, we have no reason to think that it won't be that, but we just feel like the right thing to do through this growth phase is to try and build up the reserves and just to do so by going with the higher loss ratio. But -- I think it will take some time, but I think the most important thing is, there is no reason to think that it will be different from that of Homeowners Choice.

Mark Hughes -- SunTrust Robinson Humphrey -- Analyst

Can you quantify how much more you're putting in terms of the cushion?

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

In it...

Mark Harmsworth -- Chief Financial Officer

Let me take that one.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Yeah.

Mark Harmsworth -- Chief Financial Officer

Mark, it becomes difficult to say how much put in there in cushion, because TypTap is small enough that one large fire, would make that cushion disappear in the short term. The key thing that we are trying to point out is that we're being conservative, one. Two, that when we approach $100 million in premium that's when these businesses stabilize out. So, we're on that track, but we're not quite there yet. And three, that we are doing this conservative booking ahead of things. We're not running this that some day we hope as we scale up the loss ratio will improve. We're actually already there and we are taking a more conservative stance, just in case we miss something and the loss ratio does deteriorate a little bit from the numbers it's been posting currently.

Mark Hughes -- SunTrust Robinson Humphrey -- Analyst

Understood. You had mentioned that, I think, your reserves are up, your opening litigation is down. Could you just give us...

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Yeah.

Mark Hughes -- SunTrust Robinson Humphrey -- Analyst

...a few thoughts, any measures might be able to share around the open litigation and then your observations about new lawsuits, have the plaintiff attorneys started to target, I guess, non-storm claims as I understand that they had a lot to do with Irma and with Michael. Are they going back to day-to-day claims, and the recent regulatory changes are they having much of an impact?

Mark Harmsworth -- Chief Financial Officer

So, I mean, there's a lot of questions, I think it's -- as we've said before, I think that it's -- I think it's a little early to tell whether those legislative changes are going to have a material impact on litigation flow and on loss reserves. In terms of numbers, open claims from the end of the year to the end of the third quarter are down about 15%, litigation -- open litigation is down more than that. And those are pretty significant drops, and encouraged by the fact that the open litigation is down even more than the claims are down because of course that drives a lot of the -- a lot of the reserve requirement. But yeah, as I sort of said in the script in order to sort of keep a cautious stance, daily reserves are still up from the end of the year to the end of the third quarter.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Okay. And Mark, adding some -- something to Mark's comments and some of the different color. What we are seeing in our -- across our book is our Tri-County, and this is speaking just on the daily claims, not the CAT stuff, right. We are seeing an improvement in terms of lawsuits in Tri-County area. But it is slightly being offset by a increase in lawsuits in the non-Tri-County area. So, the lawsuit fever is spreading beyond Tri-County, but because of some of the underwriting decisions we took several years ago, we are seeing the pay-off by the reduction in the number of lawsuits we are getting in Tri-County, and we are monitoring the non-Tri-County area as something to watch going forward.

Mark Hughes -- SunTrust Robinson Humphrey -- Analyst

I mean, would you characterize similar to Matt's question why your growth at TypTap is getting better, do you find that it's increasing distribution. Do you find that the ease of use or convenience perhaps for the agents is leading to kind of a learning curve where you see progressively more business out of the agents once they're on the system and working with you, any way you could flesh that out a little.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Yeah, I think, it's a number of things, but really the core underlying thing is the technology that we had -- that we deployed. What the technology lets the agents do is that they can very quickly get an underwriting decision. Yes. No. Maybe. Four or five questions at most, which is a lot quicker than anything else. And to the extent that we are open for business, and we know what our risk appetite is, it's become a very easy go to location for agents. To put this into perspective, we are only binding something like 6%, 7% of the quotes we do in a given week.

But what we've achieved in the technology is that we can do thousands of quotes and do them very efficiently, and that has a huge translation, not only for efficiency for us as an organization, but also if you value the agents time that they can do lots of quotes and get an answer almost instantaneously. So, as we say agent focused and they see the value of this we sort of become their -- we're not quite there yet, but we are starting to become their insure -- the go-to insurer when somebody walked into the door, right. So, we're becoming favorites. And they are becoming big fans of the client [Phonetics].

Mark Harmsworth -- Chief Financial Officer

Yeah.

Mark Hughes -- SunTrust Robinson Humphrey -- Analyst

Yeah. Very good. Thank you.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Thank you.

Operator

[Operator Instructions] And while you wait, our next question comes from Christopher Campbell with KBW. Please state your questions.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

Yes, hi, good afternoon, gentlemen.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Good afternoon.

Mark Harmsworth -- Chief Financial Officer

Hi, Chris.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

Hey. I guess, my first question, just kind of a numbers one. What are the CATs and then the reserve development for the quarter?

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

I think, Mark gave the CATs in his prepared remarks.

Mark Harmsworth -- Chief Financial Officer

Yeah, I gave the number for -- we updated the ultimate for Michael to $32.5 million, we updated the ultimate for Irma and then I gave the numbers in the number -- the paid number for Irma and the reserve number for Irma.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

Okay. I was think about like the net CATs, like the net CATs that are hitting your -- that would hit your numbers?

Mark Harmsworth -- Chief Financial Officer

It would hit the income statement.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

Yeah, not the loss, straight [Phonetics] numbers, yeah, the actual like net CATs losses that you guys had this quarter.

Mark Harmsworth -- Chief Financial Officer

Oh, there is. Oh, I see, OK. So, there is a really, yeah, so the only thing we had, Chris. Sorry about that. So, we were thinking about Michael and Irma there. So, the only thing we really have is Dorian, we put up $1 million for Dorian.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

[Indecipherable] of caution.

Mark Harmsworth -- Chief Financial Officer

Yeah. And that's it. So, in terms of CATs losses on the -- in the loss of reserves, there's just $1 million and that related to Dorian. Sorry, sorry about that.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Yeah. And actually I think we're having trouble answering the question of thinking about it in our heads because for us Q3 was a CAT or a kitty CAT free quarter as well. So, we just looking at Dorian, the number of claims that have come in, it's just another day in the office.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

Okay. Got it. And then reserve development, was there anything this quarter?

Mark Harmsworth -- Chief Financial Officer

Yeah, I mean, we've been doing the same thing. I think I've mentioned it each quarter, we've been booking $2 million in reserve development each quarter, we'll look at that at the end of the year. Year-to-date, I think, we're at about $6.5 million, something like that. So, we did the same thing in the third quarter that we did in the first two quarters. So, no real change there.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

Okay. And then how much was that in this quarter?

Mark Harmsworth -- Chief Financial Officer

This quarter was $2 million.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

Okay. Okay, got it. Great. And then I think you guys had mentioned that the open litigation is down more than the -- or I think the litigation claims are down more than the claims are then like the closed claims.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Yeah.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

So, I guess, why so if frequency is down is severity up, is that why the daily reserves are actually rising, is that you're seeing kind of -- you're seeing lower frequency, but then kind of more loss -- more inflation on those losses?

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

I don't know if I would characterize it that way, I think Mark said, some of the development was because of TypTap now growing and us being conservative positions on that. The other part of it is, in terms of the number of open claims coming down is because the frequency of new claims coming in, has dropped off significantly.

So, if you imagine that we were hypothetically, say, closing 20 suits a week, but if we only getting 15, the numbers eventually going to come down. Number of open suits is going to eventually come down. Is that kind of effect you will see is that the frequency of new suits coming in has been tailing off for several months now and it's starting to have an effect.

Mark Harmsworth -- Chief Financial Officer

Yeah. So, if you look on reported basis, number of claims -- as Paresh mentioned, number of claims is coming down, number of lawsuits is coming down more than the number of claims is coming down. The number of open claims total lit and non-lit, as I mentioned, is down about 15%, lit is down more than that. Part of that is just because we're getting fewer litigation claims and also because we're probably closing a little faster.

If your question is related to the -- to why are you still getting some adverse development, some of that is just caution and some of that is truing up litigation reserves for prior years a little bit, but the overall trends are very strong. Claims are dropping, lawsuits are dropping, opens are dropping, and a lot of the reserve increases just sort of being cautious.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

Okay. Yeah. I'm trying to think about it right, I'm thinking about the loss ratio was up to like 50.2% this quarter versus 47.6% a year ago. And then if I'm just thinking about the puts and takes, right. So the benefits would be, right, the lower frequency of lawsuits, it doesn't sound like...

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Yeah.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

...severity is getting any worse. And then the only thing -- the only like delta would be then the growth in TypTap, right. So, if the loss costs are coming down. And then CATs aren't a big deal, I would expect that those like frequency numbers would be like what -- I think the loss costs should be coming down versus up. So, I'm trying to guide, I guess, in a way back and where we should expect the core loss ratio to be going forward?

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Chris, I think, Mark in his prepared remarks talked about $11 million, the bulk of which was to do with TypTap and then $6.5 million was to do with the hail event in the first quarter.

Mark Harmsworth -- Chief Financial Officer

Yeah. So, Chris, if you look at loss expense and you can look at it on the quarter, or you can look at it year-to-date, either way, right. So, I think what you're getting at is, sort of, how come the core loss ratio isn't dropping, right?

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

Yeah, I'm thinking about the bigger part of your book is seeing these better lawsuit trends.

Mark Harmsworth -- Chief Financial Officer

Yes. So, OK, so first a little bit of a detail and then a little bit bigger picture. So, when you go through, there is a lot of things that are in the numbers and we mentioned them in the prepared remarks. So, if you're looking year-to-date, we've got about, there is -- there is a about $11 million that relates to TypTap, there's $1 million for Dorian. We've got some money in there for the hail event in the first quarter. So, you've got a significant amount of money in there that really sort of relates to other things. If you back some of those numbers out and look year-to-date, the core loss expense for the current year is lower than the core loss expense for last year, which is sort of what you would expect to see, and that's happening.

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

Okay, great. That's helpful. Yeah, I'll look at the year-to-date numbers, I think that will be easier to say it. And then just kind of one last one like as you're are growing TypTap, I mean, does that change your share repurchase appetite over time?

Mark Harmsworth -- Chief Financial Officer

I don't -- number of [Phonetics] two things are interrelated, because we have not had to downstream any capital into TypTap. Since we capitalize it three years ago with the $25 million despite having weathered four hurricanes. It's making money, key item is making money and we have plenty of capital with which to keep our insurance operations running and do all the other things that we do as well.

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Okay, perfect. Well, thanks for all the answers.

Mark Harmsworth -- Chief Financial Officer

Thank you.

Operator

At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Kevin Mitchell, who has a few closing remarks.

Kevin Mitchell -- Senior Vice President of Investor Relations

As always on behalf of the entire management team, I'd like to thank our shareholders, employees, agents, most importantly, our policyholders for their continued support. We look forward to updating you on our progress in the near future.

Operator

[Operator Closing Remarks]

Duration: 33 minutes

Call participants:

Kevin Mitchell -- Senior Vice President of Investor Relations

Paresh Patel -- Chairman of the Board of Directors and Chief Executive Officer

Mark Harmsworth -- Chief Financial Officer

Matt Carletti -- JMP Securities -- Analyst

Mark Hughes -- SunTrust Robinson Humphrey -- Analyst

Christopher Campbell -- Keefe, Bruyette, and Woods, Inc. -- Analyst

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