HCI Group, Inc. (HCI)·Q3 2025 Earnings Summary

Executive Summary

• HCI delivered Q3 2025 diluted EPS of $4.90, a material beat vs S&P Global consensus of $2.81*, driven by a 22.0% gross loss ratio and a 64% net combined ratio; total revenue of $216.4M slightly missed $220.0M consensus* as investment gains normalized .*
• Book value per share rose to $63.41 and shareholders’ equity to $822M; management expects Exzeo’s IPO to lift YE 2025 book value above $1B and BVPS to “close to $80,” framing a near-term re-rating catalyst .
• Operating leverage remained evident: net premiums earned rose to $195.0M while opex grew modestly; cash & equivalents climbed to $988M with long-term debt at $32M after convertible note conversion .
• Citizens depopulation added 47k policies ($175M in-force premium) in October; management will skip December takeouts, indicating focus beyond Citizens and disciplined growth into 2026 .

What Went Well and What Went Wrong

• What Went Well
  • “Industry-leading net combined ratios” and strong profitability: combined ratio 64% (below the ~70% level discussed prior) with gross loss ratio 22.0% amid lower non-cat frequency; YoY net income up to $67.9M from $9.4M .
  • Balance sheet strengthening: cash & equivalents $987.9M, debt/cap ~8%, long-term debt $32.1M; renegotiated and doubled credit facility to $150M while releasing real estate collateral .
  • Exzeo IPO completed; HCI retained all 75M shares; management expects YE 2025 BVPS uplift of ~$10 from IPO proceeds and highlights substantial unrealized value not reflected in book .
• What Went Wrong
  • Revenue slight miss vs consensus (actual $216.35M vs $220.03M*) despite EPS beat, reflecting lower realized/unrealized gains vs prior-year compare .*
  • Underwriting expense lines rose with scale: policy acquisition & other underwriting expenses increased to $31.7M (from $26.1M), and G&A personnel to $20.8M (from $19.2M) YoY .
  • Segment mix: Condo Owners Reciprocal Exchange gross premiums earned contracted YoY ($10.5M vs $17.4M), partly offset by Tailrow ramp; highlights portfolio shift dynamics .

Financial Results

Income statement snapshot (USD)

Year-over-year comparison (Q3 2025 vs Q3 2024)

Segment breakdown – Gross Premiums Earned (USD)

Key performance indicators

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “Another strong quarter, marked by solid profitability, industry-leading net combined ratios, and meaningful growth in book value per share… we progressed our initiative to unlock shareholder value and establish Exzeo as an independent, publicly traded entity” .
• COO: “Net combined ratio of 64%… book value per share increasing more than 50% YTD to $63… weather in Florida remains favorable… Exio added a fifth carrier… we assumed over 47,000 policies from Citizens… new credit facility with Fifth Third… Exio successfully completed its IPO” .
• CFO: “Cash and investments are up by around $334M so far this year… long-term debt is now only $32M… debt to cap has dropped to 8%… after-tax ROE continues to be over 30%… facility doubled to $150M and released collateral” . On Exzeo IPO: “BV up about $125M; BVPS up about $10… YE BV >$1B and BVPS close to $80… HCI owns 75M Exzeo shares but on the books at < $3/sh” .

Q&A Highlights

• Citizens October allocation and pacing: ~19.5k HCI/Homeowners Choice, ~19k Terra, ~8k TypTap; management skipping December takeouts as Citizens shrinks and focus shifts beyond depop .
• Holding company liquidity ~ $285M at September-end; supports growth into 2026 without aggressive equity actions .
• Expense ratio: no unusual items; continued operational leverage with revenue up ~13% and flattish opex due to technology scale .
• Exzeo IPO EPS effect: if fully in Q3, < $0.15 dilution to diluted EPS; rule of thumb to roughly double the minority interest line item shown in the release for modeling .
• October takeout earning pattern: ~$175M in-force premium; 60% unearned ($150M cash) recognized over policy terms; model $175M for earned run-rate .

Estimates Context

• Q3 2025 vs S&P Global consensus: EPS $4.90 vs $2.81* (beat ~74%); Revenue $216.35M vs $220.03M* (miss ~1.7%); EPS based on 5 estimates*, Revenue based on 3 estimates* .*

Values retrieved from S&P Global.*

Implications: Street will likely raise FY25–26 EPS to reflect structurally lower loss ratio and operating leverage, while revenue estimates may modestly adjust for lower realized/unrealized gains normalization .

Key Takeaways for Investors

• Quality beat: Massive EPS outperformance on disciplined underwriting and low frequency; combined ratio at 64% underscores sustainable profitability through the tail of hurricane season .
• Capital unlock: Exzeo IPO adds ~$125M to BV in Q4 and positions YE BVPS near ~$80; HCI retains 75M Exzeo shares carried well below market, implying latent value not in book .
• Balance sheet strength: ~$988M cash, $32M LT debt, debt/cap ~8%; expanded $150M facility gives dry powder for opportunistic growth and potential real estate monetization .
• Near-term revenue cadence: October Citizens addition of ~$175M IFR premium supports Q4 and 2026 earned premium trajectory, even as HCI opts out of December assumptions .
• Expense discipline: Tech-driven operating leverage continues; management emphasizes growth “without adding people,” supporting mid-60s combined ratios vs prior ~70% commentary .
• Watch modeling nuances: Minor EPS dilution from higher minority interest post-Exzeo IPO; management pegs full-quarter effect at < $0.15 .
• Catalysts: Q4 book value step-up from Exzeo proceeds; ongoing Florida market normalization; potential financing of fully leased Tampa campus to surface real estate value .

Appendix: Additional Data Points

• Q3 2025 selected line items: losses & LAE $66.2M; policy acquisition/underwriting $31.7M; G&A personnel $20.8M; interest expense $1.0M .
• Segment trends: Tailrow ramped from zero to $9.1M GPE YoY; TypTap GPE grew to $124.6M; CORE GPE declined to $10.5M .
• Dividend: $0.40/share declared for payment Dec 19, 2025 (record Nov 21, 2025) .