HCI Group stock surged Friday after the Florida property insurance holding company reported better-than-expected fourth-quarter earnings and revenue, with EPS ballooning compared to last year, late Thursday.
The Tampa, Fla., based company saw earnings surge 5,267% to $3.22 per share in Q4, up from 6 cents per share in Q4 2022. Meanwhile, HCI revenue increased 36% to $162.7 million. Analysts expected EPS of $1.41 and revenue totaling $145.4 million.
For the full year, HCI earnings hit $7.41 per share, up from a $5.48 per share loss in 2022, with revenue increasing 10% to $550.7 million.
HCI stock jumped 13.9% 50 113.04 Friday during market action, breaking out from a three-weeks tight pattern. On Thursday, HCI shares advanced more than 1% to 99.21. The stock is up more than 50% since breaking out in November.
Florida Property Insurance
HCI Chief Executive Paresh Patel said in the earnings release Thursday that since the end of the third quarter, the company has completed four assumptions from Citizens Insurance, which serves as Florida's insurer of last resort. Assumptions are purchases of policies initiated by Citizens.
HCE said it has grown premiums-in-force by approximately 30%.
The company consolidated gross premiums earned in Q4 increased to $215.2 million, up from $183.0 million Q4 2022. This includes $23 million of premium from the assumption of policies from Citizens.
In November and December 2023, HCI Group assumed around 60,000 policies from Citizens Insurance.
Citizens has been reportedly looking to shed policies amid mounting pressures in Florida's property insurance market. As of 2022, Citizens held more than a million policies and has a market share of a little less than 20%.
In late November, The U.S. Senate Budget Committee launched an investigation into Citizens' financial viability. Committee chair Sen. Sheldon Whitehouse (D-R.I.) has requested information about how Citizens will "address increased underwriting losses from climate-related extreme weather events."
Whitehouse told the media that "Florida is on the front line of the climate crisis, and it could take just one major hurricane to render Citizens insolvent."
Property Insurance Stocks
William Blair analyst Adam Klauber upgraded HCI Group to outperform from market perform Friday. Klauber told investors that he sees a "strong runway for elevated earnings growth" and that HCI appears poised to achieve accelerated premium growth given a combination of multiple organic growth vectors and opportunity through its relationship with Florida Citizens.
Meanwhile, property insurance stocks have been rallying in recent weeks. The 61 stocks in IBD's Insurance-Property/Casualty industry group have collectively gained more than 15% in 2024. The industry group currently ranks 16th out of 197 for year-to-date increase.
HCI Group stock ranks 26th in IBD's Insurance-Property/Casualty industry group. The stock has an 89 Composite Rating out of 99. Additionally, the stock has a 94 Relative Strength Rating and its EPS Rating is 81 out of 99.
Among others in the industry, Root has led the charge, surging 505% in the past month and gaining 395% in 2024. Hippo Holdings has skyrocketed more than 100% this year while Kinsale Capital has gained 30% in the past month and is up 59% in 2024.
Progressive and Chubb hold the industry's largest group's market capitalizations, or the total dollar market value of a company's outstanding shares. PGR stock is up 23% in 2024 while Chubb stock has gained around 10%.
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