HCI Group Inc. HCI reported operating earnings per share of $1.93 for the second quarter of 2015. The results outpaced the Zacks Consensus Estimate of $1.70, thereby keeping the earning streak alive for four quarters in a row with an average beat of 10.7%. The bottom line also surged 38.8% year over year.
The increase in earnings came on the back of impressive top-line growth.
Behind the Headline
Total revenues increased 19.3% year over year to $79.1 million. The rise in revenues was attributable to 21.9% increment in net premiums earned, 21.2% higher net investment income and 47.6% surge in policy fee income. The upside, however, was limited by net realized investment losses and lower other revenues derived during the quarter.
Total expenses of HCI Group rose nearly 9% year over year to $43.5 million in the second quarter. The increase stemmed from higher loss and loss adjustment expenses (up 11.9%), policy acquisition and other underwriting expenses (9.2%) and salaries and wages (28.6%), partially offset by a 13.6% decline in other operating expenses.
Loss ratio during the quarter improved 240 basis points year over year to 26.9% owing to wind-only policies assumed from the citizens in Feb 2015 and Dec 2014.
Financial Update
At the end of Jun 2015, HCI Group had cash and cash equivalents of $274.7 million, down from $314.7 million at the end of 2014. Total assets surged to $701.7 million from $602.2 million at year-end 2014, whereas shareholder equity rose to $225.7 million from $182.6 million at the end of 2014. Long term debt stood at $130.9 million compared to $129.5 million recorded on 2014-end.
Zacks Rank
HCI Group holds a Zacks Rank #2 (Buy).
Performance of Other Property and Casualty Insurers
The bottom line at each of RLI Corporation RLI, The Travelers Companies Inc. TRV and Progressive Corp. PGR outperformed their respective Zacks Consensus Estimate in the second quarter.
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