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NYSE: HCI | May 2020
Investor Presentation
Important Cautions Regarding Forward-Looking Statements
2
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,” or words of similar meaning are generally
intended to identify forward‐looking statements. All statements
other than statements of historical fact included in this
presentation are forward‐looking statements. These
forward‐looking statements are subject to risks, uncertainties,
assumptions and other factors, many of which are beyond the
control of the Company. Important factors that could cause actual
results to differ materially from those expressed or implied by the
forward‐looking statements are described in the Company’s filings
it makes from time to time with the Securities and Exchange
Commission, including within the “Risk Factors” section of the
Annual Report on Form 10‐K for the year ended December 31,
2019 filed March 6, 2020.
Insurancecan no longer ignore technology
Insurance technology has changed a lot over time
P R E - 2 0 t h
C E N T U R Y
E A R LY 1 9 0 0 s
1 9 6 0 s 1 9 8 0 s T O D A Y
1. It’s confusing
2. Lacks transparency
3. Application & underwriting process is cumbersome
Traditional insurance has always faced many challenges:
5
Entering a New Era of Insurance:
InsurTech
E A S Y T O S I G N U P
C O N V E N I E N T C O S TE F F E C T I V E
F R I C T I O N L E S ST R A N S P A R E N T R E S P O N S I V E
Property & Casualty Insurance
Reinsurance
HCI at a GlanceStock Price (5/4/20) $41.56
Current Price to Book (5/4/20) 1.79x
Common Shares Out. (GAAP) 3 7.74M
Fully Diluted Share Ct.4 9.82M
Est. Market Capitalization (5/4/20) $321.5M
Gross Revenue (TTM) ¹ $362.3M
Fully Diluted EPS (TTM) 4 $2.52
P/E5 16.5x
Dividend Yield 3.8%
Book Value/Share2 (3/31/20) $23.17
Institutional Ownership 62.4%
Insider Ownership 24.3%
Founded/IPO 2006/2008Real Estate
(1) Gross revenue = total revenue before premiums ceded as of quarter end 3/31/20. (2) $179.3M/7.74M. (3) 7.74M + 191,100 (shares subject to prepaid forward contract) = 7.93M common shares outstanding per AST as of 3/31/20. (4) As of 3/31/20. (5) $41.56 / $2.52 = 16.5x.
Technology
Key Milestones: Growth Through Innovation
2020
2019
2018
2017
2016
2015
2013
2012
2011
2010
2009
2008
2007
2006
Executed $144M Convertible Notes Offering
Launched Information Technology Division (Exzeo)Executed $103M Convertible Notes Offering
Completed Wind-Only Citizens Assumption
Launched TypTap for Private Flood Insurance
Executed Follow-on Offering
Launched Real Estate Division (Greenleaf)Acquired HomeWise Insurance Book of Business
Declared First Cash Dividend
Announced First Share Buyback
Formed Captive Insurance Division (Claddaugh)Completed Initial Public Offering
Executed on First Citizens Assumption
Incorporated in Florida 8
Launched TypTap Homeowners Product
Secured $65M Revolving Line of Credit
Repaid in Full (at Maturity) $89.9M of 3.875% Convertible Debt
Acquired Anchor Property & Casualty Insurance Book of Business
Specialization Breeds SuccessHCI remains focused on high reward opportunities:
While the company will stay focused on Florida, it’s taking smart bets in other markets
Benefit of having this specialization, which differentiates us from our peers, is that we can maximize profits for shareholders by avoiding unnecessary risk
F L O R I D A H O M E O W N E R S ’ I N S U R A N C E M A R K E T
~ $10.0B
U . S . F L O O D I N S U R A N C E M A R K E T
~ $4.7B
9
• Over 10 years of success, but are taking a fresh look at insurance
• Additional operations in technology, real estate and reinsurance
• Our disciplined execution has resulted in consistent profitability and best-in-class margins
• Strong track record of shareholder value creation:
F O U N D E D
2006
P R O F I T A B L E
48/50Q U A R T E R S
38C O N S E C U T I V E Q U A R T E R S O F
D I V I D E N D S
Track Record of Profitable Growth
$182 MILLION in buybacks
since inception
$101 MILLION in dividends paid since inception
10-YEARaverage return
on equity of 19%(1)
10(1) January 1, 2010 through December 31, 2019
How We’re Revolutionizing the Industry
Industry leading profitability
Multi-tiered growth strategy:
Expansion in product mix
Geographic expansion –9 additional states
Technology integration & implementation
The Growth of TypTapGross Premiums Written by Quarter (Homeowners) Premiums in Force (Homeowners)
Total Premiums in Force
12
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 -
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20
HO Flood
Our Business is Built on Trust & Partnership
13
Reinsurance program transfers
catastrophic risk to 50+ HIGHLY-RATED
or fully collateralized partners
2019-2020 program provides
$901 MILLION OF CATASTROPHIC
COVERAGE (1st event)
Est. annual reinsurance premiums of
~$126 MILLION with first & second
event retention of only $16 MILLION
2019-2020 Property Cat Reinsurance Program
14
$16M(3)
$268M
$901M
Mandatory
FHCF (2)
45% of
Est Combined
707.1M xs 252M
1:50 YR
1:100 YR
1:282 YR
1:323 YR
$459M
$959M
$16M (3)
$608M
1:100 YR
FHCF 45% of
58.1M xs 252M
1:144 YR
1:50 YR$268M
$459M
First Event Cover (1)
Second Event Cover Following a $901m Loss
Notes: (1) RMS RiskLink v18.0 Long-Term Hurricane, with Loss Amplification, excluding Storm Surge, without Secondary Uncertainty(2) Florida Hurricane Catastrophe Fund(3) HCI 3rd party reinsurance retention set at $16M
3rd Party Reinsurance
100% of $593m xs $16m3rd Party Reinsurance
100% of $566m xs $16m
2.0x
2.2x 2.2x
1.9x
2016 2017 2018 2019
Our Success So Far
$64
$121 $161
$183
$238 $244
$194 $181 $186 $179
$8.28
$10.93
$14.68 $17.92
$23.10 $25.23
$22.14 $21.71 $23.90 $23.17
$5.0 0
$10 .00
$15 .00
$20 .00
$25 .00
$30 .00
$35 .00
$40 .00
2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 $-
$30
$60
$90
$12 0
$15 0
$18 0
$21 0
$24 0
$27 0 Stockholders' Equity
BV/Common Share
$0.53
$0.88 $0.95$1.10 $1.20 $1.20
$1.40 $1.50 $1.60 $1.60
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020(3)
38% 41% 40% 45%
37%43% 44% 45%
75%84% 84% 90%
2016 2017 2018 2019
Loss Ratio Expense Ratio
Total Stockholders’ Equity ($M) & Book Value/Common Share Combined Non-CAT Underwriting Ratios (4)
Annual Dividends Per Share (in Dollars/Share)
(1) Gross Written Premiums / STAT Surplus [Homeowners Choice Property and Casualty Insurance Co.]. (2) On April 16, 2018 HCI Board authorized an increase in the quarterly dividend to 37.5 cents per share. (3) On January 14, 2019, HCI Board authorized an increase in the quarterly dividend to 40 cents per share. (4) Combined ratio = total of all expenses in relation to net premiums earned. (5) Normalized for the impact of storms and accident year loss ratios updated to December 2019. (6) Drop of $50M reflects $44.9M of stock buybacks in 2017 [impact of buybacks = $2.25]
(5) (5) (5) (5)
(2) (3)
15
(6)
Underwriting Leverage (1)
Conservative Investment Portfolio
(1) As of 3/31/20(2) Excludes other than temporary impairment expense (OTTI) and change in unrealized gain (loss) on investments(3) Includes investments in limited partnerships, real estate, and joint ventures(4) Repaid in full (at maturity) $89.9M of 3.875% convertible debt(5) Excludes real estate and joint ventures(6) Includes realized gain (loss) on investments, change in unrealized gain (loss) on investments and other than temporary impairment expense (OTTI). Excludes real estate and joint ventures
• Significant portfolio cash balance available for future investment (49%) (1)
• Generated net investment income of $13.6 million in 2019 and $16.5 million in 2018 (2)
• 2018: Book Yield = 2.95%(5); Economic Yield = 1.66%(6)
• 2019: Book Yield = 2.87%(5); Economic Yield = 5.33%(6)
$230.2
$293.4
$314.7 $267.7
$280.5
$255.8 $239.5
$229.2
$317.1
$300.1
$450.2
$494.0 $510.5
$594.4
$649.7 $640.6
$583.3
$641.9
2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020
$ in
Mill
ion
s
Historical Investment Portfolio by Asset Type(1)
Equity Real Estate & Other (3) Fixed Income Short Term Investments Cash
16
Cash 49%
Fixed Income
29%
Equity 4%
Real Estate & Other
18%
ST Investments
<1%
(4)
• Founder; Chairman since 2007 & CEO since 2011• Designed HCI’s policy administration systems, leveraging
software development experience• Founded NorthStar Bank in 2004 and served as Director (2006-
2011)
PARESH PATELChairman & Chief Executive Officer
• CFO since 2017; previously SVP of Finance• Former senior advisor to Stewart Information Services (NYSE: STC)• CFO of First American Title Insurance Company (2006-2011)• Senior EVP of First Canadian Title Insurance Company (2002-2006)
MARK HARMSWORTHChief Financial Officer
• Previously, EVP (2017-2019) and VP of Corporate Services (2009-2017)
• Former VP Strategic Alliances, TSIC, Inc. (2001-2009)• Served in various capacities at Florida Progress Corp (NYSE: FPC),
a utility holding company, now part of Duke Energy (NYSE: DUK) (1987-2000)
KARIN COLEMANPresident, Homeowners Choice
17
• General Counsel since 2008• Served in various capacities, including General Counsel for Trinsic
(1999-2007)• Served on Internal Audit Committee of Hillsborough County, Florida,
since 2011• Hillsborough Community College trustee (2007-2011)
• Director since 2007; President of Greenleaf Capital since 2013• Former VP of full-service real estate firm in Palm Harbor, Florida (2005-
2013)• Managing Partner of 13 commercial CRE entities in Florida and New
York since 2001• Director of First Home Bank since 2011; Chairman since 2015
ANDREW GRAHAMGeneral Counsel
ANTHONY SARAVANOS President, Greenleaf Capital
KEVIN MITCHELLPresident, TypTap Insurance
Experienced & Focused Leadership Team
• Previously, SVP and VP of Investor Relations (2013-2019)• Former Area Director of Financial Institutions practice at Arthur J.
Gallagher (NYSE: AJG) (2008-2013)• Previously, employed by Oswald Companies, one of the nation’s largest
independent insurance brokerage firms (2005-2008)
Vision for the Future
Grow TypTap to $300M in revenue
Dividends and share repurchases
Continued focus on profitability
Continue to grow the earnings power of the
company
Why Invest in HCI
1. Technology not reflected in current valuation
2. Operating cash to invest and grow our technology platform
3. Consistent track record of reducing the share count
4. Built an InsurTech platform that is profitable and has ability to scale
P R E M I U M S I N F O R C E ( Q 1 2 0 2 0 )
$71.9M
G R O S S W R I T T E N P R E M I U M( Q 1 2 0 2 0 )
$18.4MG R O S S W R I T T E N P R E M I U M
G R O W T H( Q 1 2 0 2 0 v s . Q 1 2 0 1 9 )
202%
19
20
Strict underwriting standards, excellent exposure management, and industry-leading claims technology ensure profitable policy selection and high customer retention
70% of Homeowners Choice policyholders have never filed a claim
Average customer stays with HCI for more than 6 years 0
5,000
10,000
15,000
20,000
25,000
30,000
1 2 3 4 5 6 7 8 9 10 11 12 13
*Po
licy
Co
un
t
# of years policyholder has been with HCPCIC
*Policy count as of YE2018
Policy Count by Number of Years with HCI
Insourced Business Model Ensures High Customer Retention
Specialization in Florida Breeds Success
75% of stochastic events
miss Florida
COASTALDistance to Gulf of Mexico: 0.385 miles (0.620 km)
Coastal vs Inland Construction: Hurricane Michael
INLAND Distance to Gulf of Mexico: 16.443 miles (26.462 km)
Leveraging Big Data Analytics and Technology Platform
HCI’s technology division develops innovative products and offers value-added services to Homeowners Choice, TypTap, and the insurance industry
23
5.3 million homes –every residential unit
in Florida
48 distinct risk attributes
>254 million data points
SELF-LEARNING PROCESSES
FORECASTING ALGORITHMS
GEO-SPATIAL TECHNOLOGY
Facilitates a collaborative, real-time work environment across policy issuance and claims administration
Allows underwriters and claims staff the ability to evaluate risk exposure and to identify, track, and measure claim activity
Proprietary multi-dimensional database of 48 different risk attributes for 5.3 million residential units in FL
Creating Value Through Real Estate
24
Commercial Properties
PropertyLand Size
Combined Sq. Ft.
Net Book Value (1)
Appraised Value (2)
Class A Office Portfolio2- Prestigious Westshore Tampa Locations
1- Ocala Location12 Acres 228,000 sf $18M $31M
Anchored Retail Center Portfolio2- Grocery Anchored
2-Gas/Convenience Store Anchored37 Acres 120,000 sf 32M 41M
Waterfront Specialty Use PortfolioFeaturing:
Two Marinas Waterfront Restaurant
16 Acres 74,000 sf 17M 33M
Retail Center Under development
Clearwater, FL
5 Acres 68,000 sf 12M TBD
Waterfront Vacant LandUnder development – office/hotel/retail Westshore Tampa, FL
9 Acres 600,000 sf 9M TBD
Total 79 Acres +1 Million sf $88M $105M
(1) Value as of 3/31/2020, rounded to millions(2) Based on independent appraisals, rounded to millions
EXIS
TIN
GU
ND
ER
DEV
ELO
PM
ENT
Tenant partners include:
Greenleaf Capital manages and develops HCI’s growing real estate portfolio. Its holdings include a blend of properties with reliable cash flow and investment grade tenants, along with development opportunities that offer exceptional potential for appreciation in value.
⚫ 10 Commercial Properties
⚫ $5.2M Net Operating Income (NOI) from operating properties. Yield of 9% on cost basis, 15% levered.
⚫ ~ $125M Appraised Value, $88M Net Asset Value
⚫ Estimated $37 million real estate market value in excess of carrying amount, not recognized in stockholders’ equity. Approximately $3.64 after tax book value per share.
HCI GROUP, INC.
5300 W. Cypress Street, Suite 100
Tampa, FL 33607
Tel (813) 849-9500
www.hcigroup.com/
COMPANY CONTACT
Rachel Swansiger, Esq.
Investor Relations
HCI GROUP, INC.
Tel (813) 405-3206
INVESTOR RELATIONS CONTACT
Matt Glover
Gateway Investor Relations
Tel (949) 574-3860
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