Hci Group, Inc. · NYSE:HCI
Hci — Investor Presentation (December 2022)
35 slides from Hci's investor presentation, December 2022
Slide 1: Investor Presentation
Investor Presentation NYSE: HCI | DECEMBER 2022
Slide 2: Forward-Looking Statement
This presentation includes certain forward‐looking statements and information, including statements regarding plans, strategies and expectations of HCI Group, Inc. (“HCI” or the “Company”). When used in this presentation, words such as “believes,” “anticipates,” “expects,” “estimates,” Forward-Looki
Slide 3: HCI at a Glance
Stock Price $39.59 Est. Market Capitalization $340M Property & Casualty Insurance Insurance Technology Book Value/Share $18.91 Dividend Yield 4.0% HCI at a Glance In-Force Premium $737M Debt to Capital 65.4% Founded/IPO 2006/2008 Management Tenure 13 years Reinsurance Real Estate Insider Ownership 2
Slide 4: Investment Thesis
Investment Thesis An insurance holding company with interests in Homeowners Insurance, Insurtech, Reinsurance, and Real Estate. 2006 founded Combining technology and industry knowledge to drive profitable growth Allocating capital with purpose and discipline while managing risk 56/61 profitable quar
Slide 5: Growing Through Investment & Innovation
Growing Through HCI transitions polices HCI Group premium in 4 Northeast states in force exceeds Investment & Innovation from UIHC $700 million HCI transitions all TypTap approved policies from Anchor in 20 states Insurance TypTap insurance group raises Executed Launched Launched $100M in capital fi
Slide 6: Overview of HCI Business Divisions
Overview of HCI Business Divisions PROPERTY & CASUALTY INSURANCE TECHNOLOGY REINSURANCE REAL ESTATE Homeowners and Technology-driven Reinsurance captive Real estate company condominium insurance homeowners and flood that participates in the with significant primarily in Florida insurance placement o
Slide 7: Property & Casualty Insurance
Property & Casualty Insurance 6
Slide 8: Florida Focused Insurance Business with Strong Operating Performance
Florida Focused Insurance Business with Strong Operating Performance Homeowners Choice Homeowners Choice In-Force Premiums (in $M) Gross Loss Ratio (%) (1) Gross Loss Ratio Non-Cat Gross Loss Ratio 42% 40% $482 38% 38% 36% 36% 36% 37% $422 34% 35% 33% $377 31% $344 $323 $309 2017 2018 2019 2020 2021
Slide 9: Customer Centric Model Delivers High Customer Retention
Customer Centric Model Delivers High Customer Retention High Retention of In-Force Premium Strict underwriting, exposure 74% management, and industry-leading claims technology support risk selection, % OF IN-FORCE PREMIUM customer retention and loss control >70% of in-force premium retained more Inc
Slide 10: Value-Added Portfolio Acquisitions
Value-Added Portfolio Acquisitions DECEMBER 2021 AUGUST 2021 Has acquired Has selected policies of ~$300M of in-force premiums acquired for $12M, resulting in earnings accretion Georgia, North Carolina & South Carolina Florida insurance policies personal insurance lines $87 million of $3.1 million c
Slide 11: Insurance Technology
Insurance Technology
Slide 12: U.S. Homeowners Insurance is a Massive Opportunity
U.S. Homeowners Insurance is a Massive Opportunity… …with Attractive Features Homeowners market is large and growing Fragmented with one company > 10% share High average premium and strong retention Incumbents under-investing in technology Opportunity to capture market share $120B Total U.S. market
Slide 13: Technology-driven Insurance Company
Technology-driven Insurance Company Proprietary National Superior Positive Experienced Technology Expansion Underwriting Cash Flow Management 12
Slide 14: We Use Technology to Underwrite at the Individual Property Level
We Use Technology to Underwrite at the 73%1 Individual Property Level industry average loss ratio TypTap’s Differentiated Strategy Up to 1000 Data Points per Property Individual property level risk evaluation Individual Property Level Risk Selection Only write insurance for homes that are expected t
Slide 15: Individual Level Risk Evaluation Results
Individual Level Risk Evaluation Results in TypTap’s Lower Loss Ratio RED PROPERTIES (not approved): Risks that we expect Property level to be unprofitable and (TypTap) vs. zip code will not bind level (industry) GREEN PROPERTIES TypTap’s algorithms (approved): Those that meet our return can determi
Slide 16: HCI Developed its Own Technology
HCI Developed its Own Technology Exzeo Was Launched in 2012 to Build and Develop TypTap’s Entire Technology Stack Wholly-owned technology subsidiary Started writing flood Launched policies after Launched A team of over 150 Exzeo Launched Casaclue and 4 years of Launched homeowners National experienc
Slide 17: Exzeo's Full-stack Tech Platforms Power TypTap
Exzeo’s Full-stack Tech Platforms Power TypTap Simplified Customer Experience… … Powered by a Full Suite Solution Intuitive user interface Enter an address to start a quote, and then answer 4-8 simple questions HARMONY Quoting & policy administration Intelligent data repository Casaclue, our intelli
Slide 18: Our Data Repository is Curated for Precise Risk Evaluation
Our Data Repository is Curated for Precise Risk Evaluation Satellite imaging to determine proportion of ‘hip’ v. ‘gable’ roofs1 Data sourced through in-house Text mining of proprietary research and 3rd public litigation party resources history Satellite imaging to Curated and validated data identify
Slide 19: Algorithms Transforming Data Into Profit
Algorithms Transforming Data Into Profit TypTap uses Which data data to refine points are & update predictive The curated data is fed into our algorithms underwriting, cost rating engines TypTap has a multi-year track Algorithm-enabled engines determine record of red or green properties improving an
Slide 20: TypTap delivers value for agents and consumers
Increased Better conversion of underwriting selected risks results and through attractive profit pricing TypTap delivers value Ability to selectively Investment in underwrite best technology for agents and risks VALUE PROPOSITION consumers Increased Ease of use for “first looks” at agents TypTap pol
Slide 21: Why TypTap Partners with Agents
Why TypTap Partners with Agents We partner with agents because Direct Written Premium by Distribution Channel that’s where most policies are written 93% Overwhelming majority of homeowners insurance is bought through the independent agent channel Independent agent model allows us to scale and we do
Slide 22: TypTap's Advantages
Purpose-built technology suite 100% owned by TypTap Differentiated data and proprietary analytics TypTap’s creating superior underwriting results Advantages Aggregation of profitable properties is enhanced by high customer retention rate Ease of use for a frictionless policyholder and agent experien
Slide 23: TypTap's Expansion Update
TypTap’s Expansion Update Expanding footprint through nationwide licensing effort Current footprint1 (1) TypTap is approved to offer homeowners coverage in 20 states, including Florida. TypTap is currently operating in 12 states. 22
Slide 24: TypTap is Operating to Maximize Growth AND Profitability
TypTap is Operating to Maximize Growth AND Profitability TypTap Gross Written Premium TypTap and U.S. Homeowners Insurance Industry Gross Loss Ratios² $348M 82% 76% 78% TypTap CAGR: 121% 67% (vs. 6% for U.S. homeowners $247M insurance industry)1 54% 48% 44% 28% $105M $60M 7% $15M (3) 2018 2019 2020
Slide 25: Reinsurance
CLADDAUGH Reinsurance 24
Slide 26: Claddaugh Generating Profits for Our Shareholders
Claddaugh Generating Profits for Our Shareholders Cumulative Net Premium Earned Since 2008 $160 $140 Claddaugh is used to opportunistically manage $120 reinsurance cycles for HCI’s insurance divisions. $100 $80 $60 $40 Since its formation in 2008, $20 Claddaugh has contributed 1 $36M in pre-tax inco
Slide 27: Real Estate
GREENLEAF CAPITAL Real Estate
Slide 28: Creating Value in Real Estate
Acquire properties with unique value drivers Creating Value in Real Estate Optimize Reinvest or capital harvest Greenleaf Capital owns and structure operates HCI’s growing real estate portfolio. Its holdings include a set of premier commercial assets in rapidly growing Florida. Develop or reposition
Slide 29: Florida Real Estate Portfolio With Embedded Value
Florida Real Estate Portfolio With Embedded Value PROPERTY APPRAISED VALUE (1) BOOK VALUE(3) DEBT ON PROPERTY Office Portfolio $25M $16M $5M EXISTING Anchored Retail Center Portfolio 41M 28M 15M Waterfront Specialty Use Portfolio 40M 17M - DEVELOPMENT Retail Center 12M 13M - UNDER Waterfront Vacant
Slide 30: Cypress Commons
EXAMPLE Cypress Commons 2010 Acquired for $58 100% $7 million per sqft vacant 2020 Sold for $392 100% $44 million per sqft leased RETURN 5x 21% First sale MOIC IRR since inception 29
Slide 31: Homeowners Choice Investment Portfolio
Homeowners Choice Investment Portfolio A conservative allocation, positioned for higher rates and opportunistic investments 2% 7% Cash 17% Fixed Income Real Estate & Other Total invested assets1 $340 million Short Term Investments Equity Fixed Income Duration ~1 year Limited Partnerships 74% (1) As
Slide 32: TypTap Investment Portfolio
TypTap Investment Portfolio A conservative allocation, positioned for higher rates and opportunistic investments 9% 1% Cash Fixed Income Real Estate & Other Total invested assets1 $257 million Short Term Investments Equity Fixed Income Duration ~1 year Limited Partnerships 90% (1) As of 12/31/22 31
Slide 33: Experienced & Focused Leadership Team
Experienced & Focused Leadership Team PARESH PATEL MARK HARMSW ORTH Chairman & Chief Executive Officer Chief Financial Officer, HCI Group ▪ Founder; Chairman since 2007 & CEO since 2011 ▪ CFO since 2017; previously SVP of Finance ▪ Designed HCI’s policy administration systems, leveraging software ▪
Slide 34: Delivering Shareholder Value
Delivering Shareholder Value of market 121% cap returned to shareholders2 21% inside ownership >940% Total Shareholder Return since IPO 10-year 12% average ROE1 1) As of December 31, 2022 2) Based on market capitalization on 12/31/2022. Includes 269M buybacks and 145M dividends 33
Slide 35: Contact Us
Contact Us I N V E S T O R R E L AT I O N S HCI C O N TA C T G R O U P, I N C . Matt Glover 3802 Coconut Palm Drive Gateway Group, Inc. Tampa, FL 33619 Tel (949) 574-3860 Tel (813) 849-9500 hci@gatewayir.com www.hcigroup.com contactus@hcigroup.com 34