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HCI Group Q4 Earnings Hit by High Expenses, Revenues Fall

HCI Group Inc . HCI reported operating earnings per share of $1.05 for the fourth quarter of 2015. The bottom line missed the Zacks Consensus Estimate of $1.19 by nearly 12% and declined 19% year over year.

A decline in revenues and higher expenses resulted in the underperformance.

Behind the Headlines

Total revenues decreased 2.1% year over year to $63.4 million due to 0.2% lower net premiums earned, and a 52% drop in other income. The downside was, however, limited by higher net investment income and policy fee income.

Gross premiums earned improved 11.5% year over year on the back of premiums assumed from Citizens Property Insurance Corporation in Dec 2014 and subsequent renewals.

Total expenses of HCI Group rose nearly 11% year over year to $45.8 million. The increase stemmed from higher loss and loss adjustment expenses, policy acquisition, interest expenses, salaries and wages, and other operating expenses.

Loss ratio during the quarter deteriorated 160 basis points year over year to 34.8%.

Full-Year Highlights

HCI Group's operating earnings came in at $5.90 per share, up 10% over 2014.

Total revenues grossed $285.9 million, up 7.5% over 2014.

Financial Update

At the end of 2015, HCI Group had cash and cash equivalents of $267.7 million, down from $314.7 million at the end of 2014. Total assets increased to $637 million from $598 million at year-end 2014, whereas shareholder equity rose to $237.7 million from $182.6 million at the end of 2014. Long-term debt totaled $129.4 million compared with $125.9 million at 2014 end.

Zacks Rank

HCI Group holds a Zacks Rank #4 (Sell).

Performance of Other Property and Casualty Insurers

The bottom line at The Travelers Companies, Inc. TRV and Aflac Incorporated AFL outperformed their respective Zacks Consensus Estimate in the fourth quarter. The same at RLI Corp. RLI missed our expectation.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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