Executive Summary

HCI delivered a strong Q1 2025: revenue of $216.43M, diluted EPS of $5.35, pre-tax income of $100.3M; EPS and revenue were both ahead of S&P Global consensus, with EPS beating by ~$0.80 and revenue by ~$1.54M, aided by a sharp drop in the gross loss ratio to 19.7% . Consensus EPS was $4.56* and revenue $214.89M* (S&P Global).
Management announced plans to pursue a tax-free spin-off of Exzeo by year-end, positioning the technology platform to grow with third-party carriers; Exzeo posted $52M revenue and $24M pretax (stand-alone view) in Q1, reinforcing spin viability .
Sequentially vs Q4 2024, revenue rose meaningfully (to $216.43M from $161.88M) and diluted EPS rebounded from $0.23 to $5.35 as catastrophe losses abated; YOY EPS rose from $3.81 and gross loss ratio improved from 31.1% to 19.7% on lower claims and litigation frequency .
Balance sheet strengthening is a focus: management expects by end of Q2 2025 shareholder equity near ~$0.75B, BVPS near ~$60, and debt-to-cap well below 10%, aided by full conversion of the 4.75% converts in June (reducing debt by ~ $172M) .
Near-term catalysts: Exzeo spin-off path and clarity, continued low loss ratios, and stable reinsurance placement (management characterized June 1 renewals as “boring,” with ample capacity) .

What Went Well and What Went Wrong

What Went Well
- Material underwriting improvement: gross loss ratio fell to 19.7% (vs. 31.1% YOY), driving a net combined ratio of ~56%; management attributes improvement to legislative reforms, favorable weather, and post-hurricane lull in claims .
- EPS and revenue beats vs consensus: $5.35 diluted EPS vs $4.56* and $216.43M revenue vs $214.89M*, with sequential rebound from Q4 cat-impacted results .
- Strategic unlock: Board pursuing a tax-free Exzeo spin-off by year-end; Exzeo delivered $52M revenue and $24M pretax in Q1 (stand-alone), evidencing profitability and scalability with third parties .
What Went Wrong
- Reinsurance cost pressure: premiums ceded rose to $99.64M (vs. $68.11M YOY) as policy count and total insured value (TIV) increased; growth drove higher reinsurance spend .
- Expense growth with scale: policy acquisition/underwriting expenses up to $27.29M (from $22.14M YOY) and G&A personnel to $20.48M (from $16.27M), reflecting higher bonuses, stock comp, and benefits .
- Competitive intensity in commercial-residential (condo) noted; management emphasized pricing discipline and cautioned written premium comparisons can be distorted by Citizens assumption timing .

Financial Results

Sequential and estimate comparison (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Total Revenue ($USD Millions)	$175.32	$161.88	$216.43
Diluted EPS ($)	$0.52	$0.23	$5.35
Consensus EPS (S&P Global)*	—	—	4.56*
Revenue Consensus (S&P Global, $M)*	—	—	214.89*
Net Premiums Earned ($M)	$155.82	$146.35	$200.75
Premiums Ceded ($M)	$109.69	$151.15	$99.64
Pre-Tax Income ($M)	$14.08	$5.89	$100.34
Net Income After NCI ($M)	$5.68	$2.58	$69.68
Gross Loss Ratio (%)	39.8%	37.2%	19.7%

Year-over-year (Q1 2025 vs Q1 2024)

Metric	Q1 2024	Q1 2025
Total Revenue ($USD Millions)	$206.61	$216.43
Diluted EPS ($)	$3.81	$5.35
Net Premiums Earned ($M)	$188.54	$200.75
Premiums Ceded ($M)	$68.11	$99.64
Losses & LAE ($M)	$79.92	$59.29
Gross Loss Ratio (%)	31.1%	19.7%

Insurance operations – Gross Premiums Earned and mix

Metric ($USD Millions)	Q1 2024	Q1 2025
Homeowners Choice	$149.27	$156.49
TypTap Insurance Company	$103.75	$124.45
Condo Owners Reciprocal Exchange (CORE)	$3.63	$15.33
Tailrow Reciprocal Exchange	—	$4.12
Total Gross Premiums Earned	$256.64	$300.38
Gross Loss Ratio (%)	31.1%	19.7%

Key Performance Indicators

KPI	Q3 2024	Q4 2024	Q1 2025
Book Value per Share (end of period)	$43.45	$42.10	$48.55
Net Combined Ratio	n/a	n/a	~56%
Shares Outstanding (end of period)	10,479,076	10,767,184	10,765,336
Exzeo (stand-alone view): Revenue / Pretax	n/a	n/a	$52M / $24M

Notes: Consensus values marked with an asterisk (*) are from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Ongoing	$0.40 quarterly	$0.40 quarterly (declared Apr 24, 2025; paid Jun 20)	Maintained
Exzeo separation	2025	None	Board pursuing tax-free spin-off to HCI holders by year-end, subject to conditions	New
4.75% Convertible Notes	Q2 2025	Outstanding	Expect full conversion in June; reduces debt by ~ $172M; settling in shares	Action/De-lever
Balance sheet trajectory	End Q2 2025	None	Equity near ~$0.75B, BVPS near ~$60, debt-to-cap well below 10%	New
Reinsurance renewal (June 1)	2025	None	“Plenty of capacity,” normal/balanced negotiations; “boring year” characterization	Stable
Pricing/rates (Florida homeowners)	2025	“Keep rates flat for foreseeable future” (Q4)	No imminent rate changes; filings will be mechanical; potential minor adjustments	Maintained tone

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Exzeo strategy and separation	Tech platform highlighted; intent to make tech available beyond HCI (Q4)	Board pursuing tax-free spin; Exzeo stand-alone profitability ($52M rev, $24M pretax)	Acceleration toward separation
Underwriting/loss ratio	Q3 loss ratio 39.8% with cat impacts ; Q4 cat impacts from Milton; loss ratio 37.2%	Gross loss ratio 19.7%; combined ratio ~56%; normalized combined ~70% (weather-normalized)	Significant improvement
Reinsurance market	Noted higher ceded premiums with growth	June 1 outlook stable with ample capacity; “boring” year	Stable/benign
Rates/pricing	Plan to keep rates flat (Q4)	No imminent rate changes; filings may yield minor adjustments	Flat to slight adjustments
Citizens policy assumptions	Growth driver in Q3/Q4	Continued benefit; Tailrow launched, assumed ~14k policies	Continued growth lever
Balance sheet de-leveraging	End-2024 LT debt $185M	Convert to reduce debt by ~$172M; equity/BVPS targets for Q2	De-levering, equity build

Management Commentary

“HCI continues to demonstrate its ability to grow top line revenue while enhancing bottom line profitability... we improved the net combined ratio to 56%... pretax income just over $100 million and earnings of $5.35 per share.” – COO Karin Coleman .
“The gross loss ratio this quarter was less than 20%... claim frequency... down more than 40% from the first quarter of last year... Even if we normalize... adjusted combined ratio is still around 70%.” – CFO Mark Harmsworth .
“Exzeo is... a technology company focused on... reduce both their loss ratio and expense ratio... manages approximately $1.2 billion in premiums on its platform.” – Exzeo President Kevin Mitchell .
“We believe a spin-off of Exzeo into a separate public company is the best path forward... targeted for completion by the end of this year.” – CEO Paresh Patel .

Q&A Highlights

Exzeo market opportunity and spin rationale: Exzeo sees a “massive opportunity” beyond HCI; spin removes conflicts when selling to competing carriers; variable, per-policy transaction model facilitates scalability .
Loss ratio normalization: CFO suggested normalized loss ratio 24–25% (vs. <20% reported) implying ~70% combined ratio excluding temporary benefits and weather lulls .
Reinsurance: Management characterized June 1 renewals as routine with ample capacity; negotiations primarily around capacity, price, terms .
Rates: No imminent rate changes; filings reflect data through end-2024; any adjustments would be minor and mechanical .
Condo/commercial residential: More competitive landscape; HCI maintaining pricing discipline; caution on interpreting written premium due to assumption accounting .
Reserves: No favorable or adverse prior-period development; net reserves up slightly as usual .

Estimates Context

Q1 2025 actuals vs S&P Global consensus: EPS $5.35 vs $4.56* (beat by ~$0.80); revenue $216.43M vs $214.89M* (beat by ~$1.54M). EPS had 4 estimates; revenue had 4 estimates*.

Values marked with an asterisk (*) are retrieved from S&P Global.
Sequentially, Q2 2025 also exceeded consensus on both revenue and EPS (actual EPS $5.18 vs $4.50*; revenue $221.92M vs $218.98M*), reinforcing estimate revision momentum into mid-2025*.
Values marked with an asterisk (*) are retrieved from S&P Global.
Implications: Models likely need to reflect lower normalized loss ratio and a structurally lower combined ratio trajectory (management’s ~70% normalized benchmark), while acknowledging reinsurance and expense growth with scale .

Key Takeaways for Investors

Underwriting profitability inflecting: loss ratio down to 19.7% and combined ~56% in Q1; even normalized, management sees ~70% combined ratio, supporting above-consensus EPS power .
Exzeo spin-off could unlock value: stand-alone profitability ($52M rev, $24M pretax in Q1) plus removal of channel conflict may expand TAM and enhance valuation transparency .
Balance sheet de-risking: Convert settlement in shares expected to reduce debt by ~$172M; management targets ~sub-10% debt-to-cap and ~ $60 BVPS by end Q2 2025 .
Growth remains policy-led: Citizens depopulation and Tailrow’s launch are sustaining top-line growth, though reinsurance and acquisition costs scale with it .
Reinsurance backdrop supportive: ample capacity and “boring” mid-year placement reduce tail risk vs. recent cycles .
Watch condo/commercial competition and expense trend: maintaining pricing discipline and monitoring G&A growth (bonuses, stock comp, benefits) will be key to sustaining margin gains .
Near-term catalysts: clearer spin timeline/milestones (Form 10, IRS tax-free ruling), June 1 reinsurance outcome, and delivery on Q2 equity/BVPS/debt targets .

Footnote: Values marked with an asterisk (*) are retrieved from S&P Global.

HCI Group, Inc. (HCI)·Q1 2025 Earnings Summary