HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share amounts)
June 30, December 31,
2026 2025
(Unaudited)
Assets
Fixed-maturity securities, available-for-sale, at fair value (amortized cost: $1,103,778 and $595,383, respectively, and allowance for credit losses: $0 and $0, respectively) (a) $ 1,091,041 $ 597,329
Equity securities, at fair value (cost: $55,700 and $61,597, respectively) 59,038 65,890
Limited partnership investments 16,394 17,690
Real estate investments 102,669 103,746
Other investments 5,000 5,000
Total investments 1,274,142 789,655
Cash and cash equivalents (a) 872,336 1,210,126
Restricted cash (a) 4,378 3,748
Income taxes receivable (a) 1,277 1,332
Deferred income tax assets, net (a) 1,088 2,237
Premiums receivable, net (allowance: $5,363 and $4,469, respectively) (a) 77,607 57,494
Prepaid reinsurance premiums (a) — 50,127
Reinsurance recoverable, net of allowance for credit losses:
Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively) (a) 26,613 27,855
Unpaid losses and loss adjustment expenses (allowance: $73 and $97, respectively) (a) 229,131 262,041
Deferred policy acquisition costs (a) 68,206 59,722
Property and equipment, net 27,503 28,939
Intangible assets, net 1,924 2,683
Funds withheld for assumed business 5,346 5,254
Other assets (a) 58,908 27,715
Total assets $ 2,648,459 $ 2,528,928
(a)See Note 12 for details of balances associated with consolidated variable interest entities.
(continued)
1
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets – (Continued)
(In thousands, except share amounts)
June 30, December 31,
2026 2025
(Unaudited)
Liabilities, Redeemable Noncontrolling Interests and Equity
Losses and loss adjustment expenses (a) $ 558,982 $ 576,495
Unearned premiums (a) 659,335 643,328
Advance premiums (a) 44,440 19,302
Ceded reinsurance premiums payable (a) 34,772 27,591
Assumed premiums payable (a) 4,049 1,744
Income taxes payable (a) 16,467 12,782
Deferred income tax liabilities, net (a) 1,001 3,814
Revolving credit facility 36,000 36,000
Long-term debt 31,465 31,877
Accrued expenses and other liabilities (a) 82,887 61,351
Total liabilities 1,469,398 1,414,284
Commitments and contingencies (Note 19)
Redeemable noncontrolling interests (Note 16) 5,929 3,359
Equity:
Common stock (no par value, 40,000,000 shares authorized, 12,469,972 and 12,992,147 shares issued and outstanding, respectively) — —
Additional paid-in capital 340,854 428,109
Retained earnings 748,437 611,509
Accumulated other comprehensive (loss) income (9,382 ) 1,459
Total stockholders’ equity 1,079,909 1,041,077
Noncontrolling interests 93,223 70,208
Total equity 1,173,132 1,111,285
Total liabilities, redeemable noncontrolling interests and equity $ 2,648,459 $ 2,528,928
(a)See Note 12 for details of balances associated with consolidated variable interest entities.
See accompanying Notes to Consolidated Financial Statements (unaudited).
2
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Revenue
Gross premiums earned $ 320,824 $ 302,628 $ 647,030 $ 603,011
Premiums ceded (101,812 ) (102,522 ) (205,867 ) (202,157 )
Net premiums earned 219,012 200,106 441,163 400,854
Net investment income 18,890 16,445 36,191 30,196
Net realized investment gains 1,222 155 1,756 1,322
Net unrealized investment gains (losses) 743 1,180 (955 ) (726 )
Policy fee income 1,651 1,467 3,227 3,696
Other 5,135 2,567 8,153 3,011
Total revenue 246,653 221,920 489,535 438,353
Expenses
Losses and loss adjustment expenses 71,076 64,457 136,676 123,748
Policy acquisition and other underwriting expenses 32,346 30,551 64,116 57,838
General and administrative personnel expenses 23,948 19,985 46,301 40,468
Interest expense 1,084 3,744 2,007 7,128
Other operating expenses 7,226 8,791 14,078 14,440
Total expenses 135,680 127,528 263,178 243,622
Income before income taxes 110,973 94,392 226,357 194,731
Income tax expense 28,073 24,113 58,414 50,222
Net income 82,900 70,279 167,943 144,509
Net income attributable to noncontrolling interests (9,103 ) (4,119 ) (20,739 ) (8,665 )
Net income after noncontrolling interests $ 73,797 $ 66,160 $ 147,204 $ 135,844
Basic earnings per share $ 5.78 $ 5.57 $ 11.39 $ 12.00
Diluted earnings per share $ 5.60 $ 5.18 $ 11.05 $ 10.57
See accompanying Notes to Consolidated Financial Statements (unaudited).
3
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Net income $ 82,900 $ 70,279 $ 167,943 $ 144,509
Other comprehensive (loss) income, net of income taxes:
Available-for-sale fixed-maturity securities (4,954 ) (184 ) (11,006 ) 1,907
Other comprehensive (loss) income, net of income taxes (4,954 ) (184 ) (11,006 ) 1,907
Comprehensive income 77,946 70,095 156,937 146,416
Comprehensive income attributable to noncontrolling interests (8,993 ) (4,119 ) (20,574 ) (8,665 )
Comprehensive income after noncontrolling interests $ 68,953 $ 65,976 $ 136,363 $ 137,751
See accompanying Notes to Consolidated Financial Statements (unaudited).
4
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Equity
For the Three Months Ended June 30, 2026
(Unaudited)
(In thousands, except per share amount)
Common Stock Additional Paid-In Retained Accumulated Other Comprehensive Total Stockholders’ Noncontrolling Total
Shares Amount Capital Earnings Loss Equity Interests Equity
Balance as of March 31, 2026 12,900,905 $ — $ 413,838 $ 679,721 $ (4,538 ) $ 1,089,021 $ 84,468 $ 1,173,489
Net income — — — 73,797 — 73,797 9,103 82,900
Other comprehensive loss, net of income taxes — — — — (4,844 ) (4,844 ) (110 ) (4,954 )
Issuance of restricted stock 3,750 — — — — — — —
Forfeiture of restricted stock (693 ) — — — — — — —
Net share settlements on vesting of restricted stock (70,452 ) — (11,121 ) — — (11,121 ) — (11,121 )
Repurchase of common stock (363,538 ) — (57,720 ) — — (57,720 ) — (57,720 )
Repurchase of noncontrolling interests — — (6,580 ) — — (6,580 ) (3,563 ) (10,143 )
Other adjustments to noncontrolling interests — — (147 ) — — (147 ) 147 —
Common stock dividends — — — (5,081 ) — (5,081 ) — (5,081 )
Stock-based compensation — — 2,584 — — 2,584 755 3,339
Reclassification of nonrefundable subscriber surplus contributions — — — — — — 2,423 2,423
Balance as of June 30, 2026 12,469,972 $ — $ 340,854 $ 748,437 $ (9,382 ) $ 1,079,909 $ 93,223 $ 1,173,132
See accompanying Notes to Consolidated Financial Statements (unaudited).
5
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Equity – (Continued)
For the Three Months Ended June 30, 2025
(Unaudited)
(In thousands, except per share amount)
Common Stock Additional Paid-In Retained Accumulated Other Comprehensive Total Stockholders’ Noncontrolling Total
Shares Amount Capital Earnings Income Equity Interests Equity
Balance as of March 31, 2025 10,765,336 $ — $ 124,170 $ 397,171 $ 1,342 $ 522,683 $ 20,149 $ 542,832
Net income — — — 66,160 — 66,160 4,119 70,279
Other comprehensive loss, net of income taxes — — — — (184 ) (184 ) — (184 )
Issuance of restricted stock 9,020 — — — — — — —
Forfeiture of restricted stock (1,100 ) — — — — — — —
Net share settlements on vesting of restricted stock (266 ) — (40 ) — — (40 ) — (40 )
Conversion of senior notes to common stock 2,183,894 — 172,582 — — 172,582 — 172,582
Common stock dividends — — — (4,618 ) — (4,618 ) — (4,618 )
Stock-based compensation — — 1,994 — — 1,994 701 2,695
Reclassification of nonrefundable subscriber surplus contributions — — — — — — 1,138 1,138
Balance as of June 30, 2025 12,956,884 $ — $ 298,706 $ 458,713 $ 1,158 $ 758,577 $ 26,107 $ 784,684
See accompanying Notes to Consolidated Financial Statements (unaudited).
6
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Equity – (Continued)
For the Six Months Ended June 30, 2026
(Unaudited)
(In thousands, except per share amount)
Common Stock Additional Paid-In Retained Accumulated Other Comprehensive Total Stockholders’ Noncontrolling Total
Shares Amount Capital Earnings Income (Loss) Equity Interests Equity
Balance as of December 31, 2025 12,992,147 $ — $ 428,109 $ 611,509 $ 1,459 $ 1,041,077 $ 70,208 $ 1,111,285
Net income — — — 147,204 — 147,204 20,739 167,943
Other comprehensive loss, net of income taxes — — — — (10,841 ) (10,841 ) (165 ) (11,006 )
Exercise of stock options 20,000 — 800 — — 800 — 800
Issuance of restricted stock 3,750 — — — — — — —
Forfeiture of restricted stock (1,386 ) — — — — — — —
Net share settlements on vesting of restricted stock (70,930 ) — (11,202 ) — — (11,202 ) — (11,202 )
Repurchase of common stock (473,609 ) — (75,221 ) — — (75,221 ) — (75,221 )
Repurchase of noncontrolling interests — — (6,580 ) — — (6,580 ) (3,563 ) (10,143 )
Other adjustments to noncontrolling interests — — (259 ) — — (259 ) 259 —
Common stock dividends — — — (10,276 ) — (10,276 ) — (10,276 )
Stock-based compensation — — 5,207 — — 5,207 1,491 6,698
Reclassification of nonrefundable subscriber surplus contributions — — — — — — 4,254 4,254
Balance as of June 30, 2026 12,469,972 $ — $ 340,854 $ 748,437 $ (9,382 ) $ 1,079,909 $ 93,223 $ 1,173,132
See accompanying Notes to Consolidated Financial Statements (unaudited).
7
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Equity – (Continued)
For the Six Months Ended June 30, 2025
(Unaudited)
(In thousands, except per share amount)
Common Stock Additional Paid-In Retained Accumulated Other Comprehensive Total Stockholders’ Noncontrolling Total
Shares Amount Capital Earnings (Loss) Income Equity Interests Equity
Balance as of December 31, 2024 10,767,184 $ — $ 122,289 $ 331,793 $ (749 ) $ 453,333 $ 14,017 $ 467,350
Net income — — — 135,844 — 135,844 8,665 144,509
Other comprehensive income, net of income taxes — — — — 1,907 1,907 — 1,907
Issuance of restricted stock 10,020 — — — — — — —
Forfeiture of restricted stock (1,850 ) — — — — — — —
Net share settlements on vesting of restricted stock (5,533 ) — (679 ) — — (679 ) — (679 )
Conversion of senior notes to common stock 2,187,063 — 172,832 — — 172,832 — 172,832
Common stock dividends — — — (8,924 ) — (8,924 ) — (8,924 )
Stock-based compensation — — 4,264 — — 4,264 1,403 5,667
Reclassification of nonrefundable subscriber surplus contributions — — — — — — 2,022 2,022
Balance as of June 30, 2025 12,956,884 $ — $ 298,706 $ 458,713 $ 1,158 $ 758,577 $ 26,107 $ 784,684
See accompanying Notes to Consolidated Financial Statements (unaudited).
8
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
June 30,
2026 2025
Cash flows from operating activities:
Net income after noncontrolling interests $ 147,204 $ 135,844
Net income attributable to noncontrolling interests 20,739 8,665
Net income 167,943 144,509
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense 6,698 5,667
Net accretion of discount on investments in available-for-sale fixed-maturity securities (498 ) (1,389 )
Depreciation and amortization 4,285 6,560
Deferred income tax expense (benefit) 2,013 (1,353 )
Net realized investment gains (1,756 ) (1,322 )
Net unrealized investment losses 955 726
Credit loss expense - reinsurance recoverable (24 ) (49 )
Net loss from limited partnership investments 399 658
Debt conversion expense — 1,125
Gain on sale of real estate investments (354 ) (440 )
Foreign currency remeasurement loss 192 47
Other non-cash items 317 71
Changes in operating assets and liabilities:
Income taxes 3,740 16,176
Premiums receivable, net (20,113 ) (15,244 )
Prepaid reinsurance premiums 50,127 92,060
Reinsurance recoverable 34,176 120,565
Deferred policy acquisition costs (8,484 ) (10,835 )
Funds withheld for assumed business (92 ) 3,152
Other assets (19,842 ) (14,587 )
Losses and loss adjustment expenses (17,513 ) (149,008 )
Unearned premiums 16,007 42,781
Advance premiums 25,138 24,810
Reinsurance payable on paid losses and loss adjustment expenses — (2,369 )
Ceded reinsurance premiums payable 7,181 19,808
Assumed premiums payable 2,305 (1,801 )
Accrued expenses and other liabilities 21,127 26,687
Net cash provided by operating activities 273,927 307,005
(continued)
9
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows – (Continued)
(Unaudited)
(In thousands)
Six Months Ended
June 30,
2026 2025
Cash flows from investing activities:
Investments in limited partnerships — (270 )
Return of capital from limited partnership investments 897 644
Purchase of property and equipment (625 ) (2,254 )
Purchase of real estate investments (983 ) (8,862 )
Purchase of available-for-sale fixed-maturity securities (520,005 ) (136,582 )
Purchase of equity securities (27,760 ) (23,293 )
Proceeds from sales of real estate investments 760 2,013
Proceeds from sales of available-for-sale fixed-maturity securities 3,643 3,359
Proceeds from calls, repayments and maturities of available-for-sale fixed-maturity securities 8,512 263,643
Proceeds from sales of equity securities 35,173 21,621
Net cash (used in) provided by investing activities (500,388 ) 120,019
Cash flows from financing activities:
Common stock dividends (10,276 ) (8,924 )
Proceeds from exercise of stock options 800 —
Payment of other noncontrolling interests issuance costs (375 ) —
Repayment under revolving credit facility, net — (4,000 )
Subscriber surplus contributions, net 6,824 2,736
Repayment of long-term debt (442 ) (268 )
Debt conversion costs paid — (1,125 )
Payment of net share settlements and other (11,202 ) (687 )
Repurchase of common stock (74,476 ) —
Repurchase of noncontrolling interests (10,043 ) —
Payment for deposit accounting assets (11,330 ) —
Net cash used in financing activities (110,520 ) (12,268 )
Effect of exchange rate changes on cash (179 ) (45 )
Net (decrease) increase in cash and cash equivalents and restricted cash (337,160 ) 414,711
Cash and cash equivalents and restricted cash at beginning of period 1,213,874 536,185
Cash and cash equivalents and restricted cash at end of period $ 876,714 $ 950,896
(continued)
10
HCI GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows – (Continued)
(Unaudited)
(In thousands)
Six Months Ended
June 30,
2026 2025
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds $ 52,662 $ 37,952
Interest paid 1,864 3,697
Non-cash investing and financing activities:
Unrealized (loss) gain on investments in available-for-sale fixed-maturity securities, net of income taxes (11,006 ) 1,907
Conversion of 4.75% Convertible Senior Notes — 172,500
Receivable from sale of equity securities 121 —
Payable on purchase of equity securities 115 184
Payable on purchase of available-for-sale fixed-maturity securities — 127
Payable related to repurchase of common stock 745
Payable related to repurchase of noncontrolling interests 100 —
See accompanying Notes to Consolidated Financial Statements (unaudited).
11
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Note 1 -- Nature of Operations
HCI Group, Inc., together with its subsidiaries (“HCI” or the “Company”), is primarily engaged in the property and casualty insurance business through two insurance companies, Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”) and TypTap Insurance Company (“TTIC”). The Company provides various homeowners’ property and casualty insurance products for properties located in Florida, which is the Company's primary market, as well as in other states in the northeast and southeast regions of the United States (“U.S.”). A third insurance subsidiary, perRisk Insurance Company (“perRisk”), is domiciled in the State of Arizona and has not yet commenced its surplus lines insurance business. The Company's insurance operations are supported by other insurance-related subsidiaries within the consolidated group.
Exzeo Group, Inc. (“Exzeo”), a publicly traded majority-owned subsidiary, provides turn-key insurance technology and operations solutions based on a proprietary platform of purpose-built software and data analytics applications specifically designed for the property and casualty insurance ecosystem. The Company utilizes Exzeo's internally developed software technologies to identify profitable underwriting opportunities, drive efficiency in claim processing and settlements, and streamline operations across our insurance operations and other insurance-related businesses.
The Company also provides attorney-in-fact (“AIF”) services for Condo Owners Reciprocal Exchange (“CORE”) and Tailrow Insurance Exchange (“Tailrow”), both of which are reciprocal insurance exchanges owned by their policyholders. Although the Company does not have any equity interest in CORE and Tailrow, the Company is required to consolidate them as their primary beneficiary. In addition, the Company's commercial real estate subsidiary is primarily engaged in developing and operating commercial properties for investment purposes or internal use.
HCI Group, Inc. was incorporated in the State of Florida in 2006 and its common stock is currently listed on the New York Stock Exchange (“NYSE”) under the symbol “HCI.” Exzeo completed its initial public offering in November of 2025 and is currently listed on the NYSE under the symbol “XZO.” As of June 30, 2026, HCI Group, Inc. owned approximately 83.1% of Exzeo’s outstanding shares of common stock, inclusive of its unvested restricted stock.
Note 2 -- Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying unaudited consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s financial position as of June 30, 2026 and the results of operations and cash flows for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ending December 31, 2026. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2025 included in the Company’s Form 10-K, which was filed with the SEC on February 26, 2026 (the “2025 Annual
12
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Report”). Unless otherwise noted, the Company’s accounting policies do not differ from those disclosed in the 2025 Annual Report.
The unaudited consolidated financial statements have been prepared in U.S. dollars and include the accounts of HCI Group, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In addition, the Company evaluates its relationships or investments for consolidation pursuant to authoritative accounting guidance related to the consolidation of variable interest entities (“VIE”) under the Variable Interest Model prescribed by the Financial Accounting Standards Board (“FASB”). A VIE is consolidated when the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Refer to Note 12 “Variable Interest Entities” for additional information.
Certain prior period amounts have been reclassified to conform with current period presentation.
Use of Estimates
The preparation of the interim unaudited consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. The Company's estimates are based on the relevant information available at the end of each period. Actual results could differ materially from these estimates under different assumptions or market conditions. The Company's estimates specific to losses and loss adjustment expenses, reinsurance recoverable, income taxes, stock-based compensation expense, and limited partnership investments involve the most significant judgments and estimates related to the consolidated financial statements.
Note 3 -- Recent Accounting Pronouncements
Adopted
Accounting Standards Update No. 2025-05. In July 2025, the FASB issued Accounting Standards Update No. 2025-05 (“ASU 2025-05”) Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update simplifies the estimation of current expected credit losses on current accounts receivable and current contract assets related to revenue from contracts with customers by allowing all entities to assume that current conditions as of the balance sheet date will not change for the remaining life of the current accounts receivable and current contract assets. ASU 2025-05 is effective for all entities for fiscal years and interim periods beginning after December 15, 2025. The adoption of this update did not have a material impact on the Company’s financial position or results of operation.
Pending Adoption
Accounting Standards Update No. 2025-01 and 2024-03. In January 2025, the FASB issued Accounting Standards Update No. 2025-01 (“ASU 2025-01”) Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update clarifies the effective date of Accounting Standards Update No. 2024-03 (“ASU 2024-03”) Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which was issued by the FASB in November 2024. For public business entities, ASU 2024-03 enhances disclosures by requiring the disaggregation of certain expense captions presented within the income
13
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
statement, such as employee compensation and intangible asset amortization. In addition, the total relevant expense caption on the income statement must be reconciled to the aggregate of the separately disclosed expense categories with the difference represented by an “other items” amount which is qualitatively described. ASU 2024-03 is effective for all public business entities for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating its impact.
Accounting Standards Update No. 2025-06. In September 2025, the FASB issued Accounting Standards Update No. 2025-06 (“ASU 2025-06”) Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update enhances guidance on the capitalization of software development costs by eliminating project phase based criteria and clarifying the conditions signifying significant development uncertainty used by entities to evaluate when the probable-to-complete recognition threshold is met. ASU 2025-06 is effective for all entities for fiscal years and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating its impact.
Note 4 -- Cash and Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Company’s consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:
June 30, December 31,
2026 2025
Cash and cash equivalents $ 872,336 $ 1,210,126
Restricted cash 4,378 3,748
Cash and cash equivalents and restricted cash $ 876,714 $ 1,213,874
The majority of the Company’s cash and cash equivalents are held at major financial institutions. Certain account balances exceed the Federal Deposit Insurance Corporation insurance limits of $250 per account. As a result, there is a concentration of credit risk related to amounts in excess of the insurance limits. The Company regularly monitors the financial stability of these financial institutions and believes there is no exposure to any significant credit risk in cash and cash equivalents.
14
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Note 5 -- Investments
Available-for-Sale Fixed-Maturity Securities
The Company holds investments in fixed-maturity securities classified as available-for-sale. As of June 30, 2026 and December 31, 2025, the cost or amortized cost, allowance for credit loss, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale fixed-maturity securities by security type were as follows:
Cost or Amortized Allowance for Credit Gross Unrealized Gross Unrealized Estimated Fair
Cost Loss Gains Losses Value
As of June 30, 2026
U.S. Treasury and U.S. government agencies $ 835,084 $ — $ 122 $ (10,902 ) $ 824,304
Corporate 242,419 — 52 (1,720 ) 240,751
Commercial mortgage-backed securities 26,275 — 49 (338 ) 25,986
Available-for-sale fixed-maturity securities $ 1,103,778 $ — $ 223 $ (12,960 ) $ 1,091,041
As of December 31, 2025
U.S. Treasury and U.S. government agencies $ 332,284 $ — $ 1,785 $ (717 ) $ 333,352
Corporate 241,843 — 1,463 (384 ) 242,922
Commercial mortgage-backed securities 21,256 — 74 (275 ) 21,055
Available-for-sale fixed-maturity securities $ 595,383 $ — $ 3,322 $ (1,376 ) $ 597,329
Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. As of June 30, 2026 and December 31, 2025, the scheduled contractual maturities of available-for-sale fixed-maturity securities, with securities not due at a single maturity date shown separately, were as follows:
June 30, 2026 December 31, 2025
Cost or Estimated Cost or Estimated
Amortized Cost Fair Value Amortized Cost Fair Value
Due in one year or less $ 44,388 $ 44,366 $ 10,202 $ 10,214
Due after one year through five years 531,003 527,011 353,454 354,648
Due after five years through ten years 501,611 493,265 209,970 210,963
Due after ten years 501 413 501 449
Commercial mortgage-backed securities 26,275 25,986 21,256 21,055
Available-for-sale fixed-maturity securities $ 1,103,778 $ 1,091,041 $ 595,383 $ 597,329
15
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Securities on Deposit
As of June 30, 2026 and December 31, 2025, the fair value of available-for-sale fixed-maturity securities on deposit with various regulatory authorities was $1,137 and $1,807, respectively.
Sales of Available-for-Sale Fixed-Maturity Securities
Proceeds received and the gross realized gains and losses from sales of available-for-sale fixed-maturity securities for the three and six months ended June 30, 2026 and 2025 were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Proceeds $ 1,765 $ 749 $ 3,643 $ 3,359
Gross realized gains $ 6 $ 14 $ 55 $ 38
Gross realized losses $ (8 ) $ — $ (8 ) $ (4 )
Gross Unrealized Losses for Available-for-Sale Fixed-Maturity Securities
As of June 30, 2026 and December 31, 2025, available-for-sale fixed-maturity securities with gross unrealized loss positions by investment category and length of time the individual securities have been in a continuous loss position were as follows:
Less Than Twelve Months Twelve Months or Longer Total
Gross Estimated Gross Estimated Gross Estimated
Unrealized Fair Unrealized Fair Unrealized Fair
As of June 30, 2026 Losses Value Losses Value Losses Value
U.S. Treasury and U.S. government agencies $ (10,736 ) $ 709,989 $ (166 ) $ 2,915 $ (10,902 ) $ 712,904
Corporate (1,532 ) 210,056 (188 ) 1,394 (1,720 ) 211,450
Commercial mortgage-backed securities (338 ) 15,666 — — (338 ) 15,666
Total $ (12,606 ) $ 935,711 $ (354 ) $ 4,309 $ (12,960 ) $ 940,020
Less Than Twelve Months Twelve Months or Longer Total
Gross Estimated Gross Estimated Gross Estimated
Unrealized Fair Unrealized Fair Unrealized Fair
As of December 31, 2025 Losses Value Losses Value Losses Value
U.S. Treasury and U.S. government agencies $ (553 ) $ 208,273 $ (164 ) $ 2,918 $ (717 ) $ 211,191
Corporate (289 ) 28,303 (95 ) 1,187 (384 ) 29,490
Commercial mortgage-backed securities (275 ) 16,749 — — (275 ) 16,749
Total $ (1,117 ) $ 253,325 $ (259 ) $ 4,105 $ (1,376 ) $ 257,430
As of June 30, 2026 and December 31, 2025, there were 70 and 47 available-for-sale fixed-maturity securities in an unrealized loss position, respectively.
16
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Allowance for Credit Losses of Available-for-Sale Fixed-Maturity Securities
The Company regularly reviews its individual available-for-sale fixed-maturity securities for credit impairment. The Company considers various factors in determining whether a credit loss exists for each individual security, including:
•the financial condition and near-term prospects of the issuer, including any specific events affecting its operations or earnings;
•the extent to which the market value of the security has been below its cost or amortized cost;
•general market conditions and industry or sector specific factors and other qualitative factors;
•nonpayment by the issuer of its contractually obligated interest and principal payments; and
•the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.
There was no balance or activity in the allowance for credit losses of available-for-sale fixed-maturity securities during the three and six months ended June 30, 2026 and 2025.
Equity Securities
The Company holds investments in equity securities measured at fair values which are readily determinable. As of June 30, 2026 and December 31, 2025, the cost, gross unrealized gains and losses, and estimated fair value of the Company’s equity securities were as follows:
Gross Unrealized Gross Unrealized Estimated Fair
Cost Gains Losses Value
June 30, 2026 $ 55,700 $ 5,693 $ (2,355 ) $ 59,038
December 31, 2025 $ 61,597 $ 6,204 $ (1,911 ) $ 65,890
The table below presents the portion of unrealized gains and losses in the Company’s consolidated statements of income related to equity securities still held:
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Net gains recognized $ 1,967 $ 1,321 $ 754 $ 562
Exclude: Net realized gains recognized for securities sold 1,224 141 1,709 1,288
Net unrealized investment gains (losses) $ 743 $ 1,180 $ (955 ) $ (726 )
17
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Sales of Equity Securities
Proceeds received and the gross realized gains and losses from sales of equity securities for the three and six months ended June 30, 2026 and 2025 were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Proceeds $ 20,099 $ 12,079 $ 35,173 $ 21,621
Gross realized gains $ 1,619 $ 508 $ 2,375 $ 1,839
Gross realized losses $ (395 ) $ (367 ) $ (666 ) $ (551 )
Limited Partnership Investments
The Company has interests in limited partnerships that are not registered or readily tradeable on a securities exchange. These partnerships are private equity funds managed by general partners who make decisions with regard to financial policies and operations. As such, the Company is not the primary beneficiary and does not consolidate these partnerships.
The following table summarizes limited partnership investments:
June 30, 2026 December 31, 2025
Carrying Unfunded Carrying Unfunded
Investment Strategy Value Balance (%) (a) Value Balance (%) (a)
Primarily in senior secured loans and, to a limited extent, in other debt and equity securities of private U.S. lower-middle-market companies. (b)(c)(e) $ 1,668 $ — 12.22 $ 1,877 $ — 12.31
Value creation through active distressed debt investing primarily in bank loans, public and private corporate bonds, asset-backed securities, and equity securities received in connection with debt restructuring. (b)(d)(e) 573 — 1.30 587 — 1.27
High returns and long-term capital appreciation through investments in the power, utility and energy industries, and in the infrastructure sector. (b)(f)(g) 2,854 — 0.18 2,769 — 0.18
Value-oriented investments in less liquid and mispriced senior and junior debts of private equity-backed companies. (b)(h)(i) 1,198 — 0.53 1,333 — 0.53
Value-oriented investments in mature real estate private equity funds and portfolios globally. (b)(j) 5,531 1,706 1.32 6,182 2,042 1.32
Risk-adjusted returns on credit and equity investments, primarily in private equity-owned companies. (b)(k) 4,570 2,085 0.53 4,942 1,610 0.54
Limited partnership investments $ 16,394 $ 3,791 $ 17,690 $ 3,652
(a)Represents the Company’s percentage investment in the fund as of each balance sheet date.
(b)Except under certain circumstances, withdrawals from the funds or any assignments are not permitted. Distributions, except income from late admission of a new limited partner, will be received when underlying investments of the funds are liquidated.
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HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
(c)The term is expected to be two years following the maturity of the fund’s outstanding leverage. Although the capital commitment period has expired, follow-on investments and pending commitments may require additional fundings.
(d)Effective July 1, 2023, this investment is in the process of winding down. Although the capital commitment period has ended, the general partner could still request an additional funding under certain circumstances.
(e)At the fund manager’s discretion, the term of the fund may be extended for up to two additional one-year periods.
(f)Expected to have a ten-year term. The capital commitment period has expired but the general partner may request additional funding for follow-on investment.
(g)With the consent of a supermajority of partners, the term of the fund may be extended for up to three additional one-year periods.
(h)Expected to have an eight-year term from the commencement date, which can be extended for up to two additional one-year periods with the consent of either the advisory committee or a majority of limited partners.
(i)The capital commitment period has ended but an additional funding may be requested.
(j)The term is expected to end November 27, 2027. The term may be extended for up to four additional one-year periods at the general partner’s discretion, and up to two additional one-year periods with the consent of the advisory committee.
(k)Expected to have an eight-year term after the final admission date. The term may be extended for an additional one-year period at the general partner’s discretion, and up to two additional one-year periods with the consent of either the advisory committee or a majority of limited partners.
As of June 30, 2026 and December 31, 2025, the Company’s net cumulative contributed capital to the limited partnership investments totaled $17,800 and $18,697, respectively, and the Company’s maximum exposure to loss aggregated $16,394 and $17,690, respectively.
Real Estate Investments
The following table summarizes real estate investments:
June 30, December 31,
2026 2025
Land $ 49,630 $ 50,052
Land improvements 14,401 14,760
Buildings and building improvements 43,792 44,019
Tenant and leasehold improvements 2,149 2,265
Construction in progress 822 89
Other 1,913 2,001
Total, at cost 112,707 113,186
Less: accumulated depreciation (10,038 ) (9,440 )
Real estate investments $ 102,669 $ 103,746
Depreciation expense related to real estate investments was $677 and $473 for the three months ended June 30, 2026 and 2025, respectively, and $1,406 and $812 for the six months ended June 30, 2026 and 2025, respectively.
19
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Net Investment Income
The following table summarizes net investment income:
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Available-for-sale fixed-maturity securities $ 10,221 $ 6,841 $ 18,091 $ 14,355
Equity securities 751 660 1,404 1,147
Investment expense (206 ) (154 ) (409 ) (339 )
Limited partnership investments (75 ) (32 ) (399 ) (658 )
Real estate investments 73 455 528 773
Cash and cash equivalents 7,995 8,675 16,716 14,918
Other 131 — 260 —
Net investment income $ 18,890 $ 16,445 $ 36,191 $ 30,196
Note 6 -- Fair Value Measurements
The Company records and discloses certain financial assets and liabilities at their estimated fair values. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:
Level 1 – Unadjusted quoted prices in active markets for identical assets.
Level 2 – Other inputs that are observable for the asset, either directly or indirectly such as quoted prices for identical assets that are not observable throughout the full term of the asset.
Level 3 – Inputs that are unobservable.
Valuation Methodology
Cash and Cash Equivalents
Cash and cash equivalents primarily consist of cash as well as money-market funds and certificates of deposit maturing within three months from the time of purchase. Their carrying value approximates fair value due to the short maturity and high liquidity of these funds.
Restricted Cash
Restricted cash represents cash held by state authorities and the carrying value approximates fair value.
20
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Available-for-Sale Fixed-Maturity and Equity Securities
Estimated fair values of the Company’s available-for-sale fixed-maturity and equity securities are determined in accordance with U.S. GAAP, using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally determined using quoted prices in active markets for identical securities or other directly or indirectly observable inputs, including quoted prices for similar securities. In those instances where observable inputs are not available, fair values are determined using unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the security and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.
The estimated fair values for securities are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 1 or level 2 inputs depending on the asset class. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to other market data. The Company gains assurance of the overall reasonableness and consistent application of the assumptions and methodologies, and compliance with accounting standards for fair value determination through ongoing monitoring of the reported fair values.
Other Investments
The following table summarizes other investments held by the Company and the method used in estimating the fair value:
MaturityDate Valuation Methodology
10.50% Surplus Note 2030 Discounted cash flow method/Level 3 inputs
Revolving Credit Facility
The Company has an amount outstanding under a revolving credit facility. The interest rate is variable and is periodically adjusted based on the Secured Overnight Financing Rate (“SOFR”) plus a ten basis points adjustment plus a margin based on the debt-to-capital ratio. As a result, the carrying value approximates fair value.
Long-Term Debt
The following table summarizes the Company’s long-term debt and methods used in estimating their fair values:
MaturityDate Valuation Methodology
4.55% Promissory Note 2036 Discounted cash flow method/Level 3 inputs
5.50% Promissory Note 2033 Discounted cash flow method/Level 3 inputs
5.65% Promissory Note 2035 Discounted cash flow method/Level 3 inputs
21
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Assets Measured at Estimated Fair Value on a Recurring Basis
The following tables present information about the Company’s financial assets measured at estimated fair value on a recurring basis. The tables indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of June 30, 2026 and December 31, 2025:
Fair Value Measurements Using
(Level 1) (Level 2) (Level 3) Total
As of June 30, 2026
Cash and cash equivalents $ 872,336 $ — $ — $ 872,336
Restricted cash $ 4,378 $ — $ — $ 4,378
Available-for-sale fixed-maturity securities:
U.S. Treasury and U.S. government agencies $ 804,798 $ 19,506 $ — $ 824,304
Corporate — 240,751 — 240,751
Commercial mortgage-backed securities — 25,986 — 25,986
Available-for-sale fixed-maturity securities $ 804,798 $ 286,243 $ — $ 1,091,041
Equity securities $ 57,703 $ 1,335 $ — $ 59,038
Fair Value Measurements Using
(Level 1) (Level 2) (Level 3) Total
As of December 31, 2025
Cash and cash equivalents $ 1,210,126 $ — $ — $ 1,210,126
Restricted cash $ 3,748 $ — $ — $ 3,748
Available-for-sale fixed-maturity securities:
U.S. Treasury and U.S. government agencies $ 313,420 $ 19,932 $ — $ 333,352
Corporate — 242,922 — 242,922
Commercial mortgage-backed securities — 21,055 — 21,055
Available-for-sale fixed-maturity securities $ 313,420 $ 283,909 $ — $ 597,329
Equity securities $ 64,545 $ 1,345 $ — $ 65,890
Assets and Liabilities Carried at Other Than Fair Value
The following tables present fair value information for assets and liabilities carried on the consolidated balance sheets at amounts other than fair value as of June 30, 2026 and December 31, 2025:
Carrying Fair Value Measurements Using Estimated
Value (Level 1) (Level 2) (Level 3) Fair Value
As of June 30, 2026
Other investments $ 5,000 $ — $ — $ 5,201 $ 5,201
Revolving credit facility $ 36,000 $ — $ 36,000 $ — $ 36,000
Long-term debt:
4.55% Promissory Note $ 3,931 $ — $ — $ 3,682 $ 3,682
5.50% Promissory Note 11,142 — — 10,995 10,995
5.65% Promissory Note 16,392 — — 16,164 16,164
Long-term debt $ 31,465 $ — $ — $ 30,841 $ 30,841
22
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Carrying Fair Value Measurements Using Estimated
Value (Level 1) (Level 2) (Level 3) Fair Value
As of December 31, 2025
Other investments $ 5,000 $ — $ — $ 5,223 $ 5,223
Revolving credit facility $ 36,000 $ — $ 36,000 $ — $ 36,000
Long-term debt:
4.55% Promissory Note $ 4,080 $ — $ — $ 3,863 $ 3,863
5.50% Promissory Note 11,262 — — 11,313 11,313
5.65% Promissory Note 16,535 — — 16,615 16,615
Long-term debt $ 31,877 $ — $ — $ 31,791 $ 31,791
Note 7 -- Intangible Assets, Net
The following table summarizes intangible assets, net:
June 30, December 31,
2026 2025
In-place leases $ 2,221 $ 2,221
Policy renewal rights - United 10,100 10,100
Non-compete agreements - United (a) 314 314
Total, at cost 12,635 12,635
Less: accumulated amortization (10,711 ) (9,952 )
Intangible assets, net $ 1,924 $ 2,683
(a)Fully amortized.
Amortization expense for intangible assets was $310 and $638 for the three months ended June 30, 2026 and 2025, respectively, and $759 and $1,279 for the six months ended June 30, 2026 and 2025, respectively.
Note 8 -- Revolving Credit Facility
As of June 30, 2026 and December 31, 2025, the Company had an outstanding balance of $36,000 under a senior secured revolving credit facility with Fifth Third Bank (“Revolving Credit Facility”). The Revolving Credit Facility, as amended on November 5, 2025, currently provides borrowing capacity of up to $150,000 and expires on November 5, 2030. Borrowings under the Revolving Credit Facility bear interest at an annual rate equal to the one or three month SOFR plus a ten basis points adjustment plus a margin based on the debt-to-capital ratio, with interest payments due in arrears on January 1, April 1, July 1, and October 1. In addition, the Company is subject to an unused commitment fee.
Interest expense for the Revolving Credit Facility was $631 and $644 for the three months ended June 30, 2026 and 2025, respectively, and $1,098 and $1,313 for the six months ended June 30, 2026 and 2025, respectively.
As of June 30, 2026, the Company was in compliance with all required covenants and had an available borrowing capacity of $114,000.
23
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Note 9 -- Long-Term Debt
The following table summarizes long-term debt:
Interest Payment June 30, December 31,
Debt Description Issued Maturity Rate Date 2026 2025
4.55% Promissory Note 7/6/2018 8/1/2036 4.55% Monthly $ 3,973 $ 4,125
5.50% Promissory Note 6/26/2023 7/1/2033 5.50% Monthly 11,292 11,422
5.65% Promissory Note 7/24/2025 8/1/2035 5.65% Monthly 16,736 16,896
Total principal amount 32,001 32,443
Less: unamortized issuance costs (536 ) (566 )
Long-term debt $ 31,465 $ 31,877
There were no significant changes in the Company’s long-term debt during the six months ended June 30, 2026. During the six months ended June 30, 2025, the Company converted $172,500 in aggregate principal of its 4.75% convertible senior notes into consideration of 2,187,063 shares of the Company’s common stock and $1,133 in cash. The cash consideration included an inducement payment of $1,125 and $8 paid in lieu of fractional shares. The Company recognized an expense related to the inducement payment of $1,125 in other operating expenses on the consolidated statements of income and as financing cash flows on the consolidated statements of cash flows.
Interest expense for long-term debt was $453 and $3,100 for the three months ended June 30, 2026 and 2025, respectively, and $909 and $5,815 for the six months ended June 30, 2026 and 2025, respectively.
Note 10 -- Reinsurance
Reinsurance obtained from other insurance companies
In the normal course of business, the Company seeks to reduce the loss that may arise from catastrophes or other events by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers. The Company contracts with a number of reinsurers to secure its annual reinsurance coverage, which generally becomes effective June 1st of each year. The Company purchases reinsurance each year taking into consideration its overall insurance exposure, modeled probable maximum losses, risk tolerance and retention levels, mandatory reinsurance coverage provided by the Florida Hurricane Catastrophe Fund (a tax-exempt state trust fund), and overall reinsurance market conditions. Amounts recoverable from reinsurers are estimated in a manner consistent with the applicable reinsurance contract or contracts. Premiums ceded to other companies have been reported as a reduction of gross premiums earned to arrive at net premiums earned. Prepaid reinsurance premiums represent the unexpired portion of premiums ceded to reinsurers.
Reinsurance contracts that do not transfer insurance risk are accounted for using the deposit method. Under the deposit method, amounts paid, less any retained fees, are recorded as deposits within other assets in the consolidated balance sheets and within financing activities in the consolidated statements of cash flows.
The Company remains liable for claims payments in the event any reinsurer is unable to meet its obligations under the reinsurance agreements. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies.
24
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
The impact of the reinsurance contracts on premiums written and earned is as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Premiums Written:
Direct $ 383,351 $ 357,336 $ 665,355 $ 625,792
Assumed (1,006 ) (791 ) (2,318 ) 19,999
Gross written 382,345 356,545 663,037 645,791
Ceded (101,812 ) (102,522 ) (205,867 ) (202,157 )
Net premiums written $ 280,533 $ 254,023 $ 457,170 $ 443,634
Premiums Earned:
Direct $ 294,540 $ 270,232 $ 580,449 $ 519,634
Assumed 26,284 32,396 66,581 83,377
Gross earned 320,824 302,628 647,030 603,011
Ceded (101,812 ) (102,522 ) (205,867 ) (202,157 )
Net premiums earned $ 219,012 $ 200,106 $ 441,163 $ 400,854
As of June 30, 2026 and December 31, 2025, net amounts recoverable from reinsurers were $255,744 and $289,896, respectively. There were no ceded losses from catastrophic events or significant adjustment to ceded losses from prior periods during the three and six months ended June 30, 2026. During the three and six months ended June 30, 2025, the Company derecognized ceded losses of $61,200 related to a favorable change in estimated losses from Hurricane Milton.
As of June 30, 2026 and December 31, 2025, there were over 40 reinsurers participating in the Company’s reinsurance program. As of June 30, 2026, approximately 75.5% of the reinsurance recoverable balance was receivable from six reinsurers, one of which was the Florida Hurricane Catastrophe Fund. The allowance for credit losses related to reinsurance recoverable was not material to the consolidated balance sheets or consolidated statements of income for the periods presented.
Under contracts in effect prior to June 1, 2025, reinsurance costs could be adjusted by retrospective provisions under reinsurance contracts. There were no adjustments to premiums ceded related to retrospective provisions for the three and six months ended June 30, 2026 and 2025.
Reinsurance provided to other insurance companies
United Property & Casualty Insurance Company
The Company formerly provided quota share reinsurance to United Property & Casualty Insurance Company (“United”) on its policies in the northeast and southeast regions of the U.S. United was placed into receivership by the State of Florida due to its financial insolvency. As a result, the Company ceased providing quota share reinsurance on United policies, together with other administrative services, in March 2023. The liabilities and obligations under this quota-share reinsurance agreement were not material as of June 30, 2026 and December 31, 2025. Additionally, the balance of funds withheld for assumed business, which represent net amounts owed to
25
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
the Company related to the Company’s quota share reinsurance agreements with United, were not material as of June 30, 2026 and December 31, 2025.
Citizens Property Insurance Corporation
The Company may participate in a “take-out program” through which the Company assumes insurance policies held by Citizens Property Insurance Corporation (“Citizens”), a Florida state-supported insurer. The take-out program is a legislatively mandated program designed to reduce the state’s risk exposure by encouraging private companies to assume policies from Citizens.
The table below shows the number of policies (in actuals) and annualized gross premiums assumed from Citizens during the periods presented:
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Policies Assumed — — — 13,917
Annualized Gross Premiums $ — $ — $ — $ 35,820
Note 11 -- Losses and Loss Adjustment Expenses
The Company accrues for losses and loss adjustment expenses (“LAE”) in the period in which the underlying loss event occurred. LAE are costs associated with the investigation, evaluation, adjustment, and settlement of insurance claims and can be either allocated, costs directly attributable to a specific claim, or unallocated, costs that cannot be directly attributed to a specific claim. Reserves for losses and LAE are determined by establishing liabilities in amounts estimated to cover incurred losses and LAE. Such reserves are determined based on the assessment of claims reported and the development of pending claims. These reserves are based on individual case estimates for reported losses and LAE and estimates of amounts incurred but not reported.
The estimates of unpaid losses and LAE are subject to trends in claim severity and frequency and are continually reviewed. As part of the process, the Company reviews historical data and considers various factors, including known and anticipated regulatory and legal developments, changes in social attitudes, inflation, and economic conditions. As experience develops and other data becomes available, these estimates are revised, as required, resulting in increases or decreases to the existing unpaid losses and LAE. Adjustments are reflected in the results of operations in the period in which they are made and the liabilities may deviate substantially from prior estimates. Losses and LAE ceded to or recovered from reinsurers are recorded as a reduction to losses and LAE on the consolidated statements of income. Accordingly, losses and LAE in the consolidated statements of income are net of reinsurance.
26
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Activity in the liability for losses and LAE is summarized as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Net balance, beginning of period (a) $ 319,992 $ 316,561 $ 314,357 $ 323,335
Incurred, net of reinsurance, related to:
Current period 71,076 64,457 136,676 123,748
Prior periods — — — —
Total incurred, net of reinsurance 71,076 64,457 136,676 123,748
Paid, net of reinsurance, related to:
Current period (34,880 ) (23,057 ) (53,308 ) (36,152 )
Prior periods (26,410 ) (36,404 ) (67,947 ) (89,374 )
Total paid, net of reinsurance (61,290 ) (59,461 ) (121,255 ) (125,526 )
Net balance, end of period 329,778 321,557 329,778 321,557
Add: reinsurance recoverable before allowance for credit losses 229,204 375,335 229,204 375,335
Gross balance, end of period $ 558,982 $ 696,892 $ 558,982 $ 696,892
(a)Net balance represents beginning-of-period liability for unpaid losses and LAE less beginning-of-period reinsurance recoverable for unpaid losses and LAE.
Incurred losses and LAE increased for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 primarily due to a higher volume of policies in force. There were no losses from catastrophic events during the three and six months ended June 30, 2026 and 2025.
Note 12 -- Variable Interest Entities
The Company includes two consolidated VIEs related to reciprocal insurance exchanges, CORE and Tailrow.
The reciprocal insurance exchanges are owned by their policyholders, referred to as subscribers, who gain ownership by buying an insurance policy and making a surplus contribution. Each subscriber has rights in their respective reciprocal insurance exchange to (i) receive dividends or premium credits if the reciprocal insurance exchange generates a surplus, and (ii) elect members to the subscribers’ advisory committee. The subscribers’ advisory committee oversees the financial affairs of its respective reciprocal insurance exchange and appoints the AIF. Each subscribers’ advisory committee requires at least two-thirds of its members to be subscribers who are independent of the AIF.
27
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Both CORE and Tailrow each received initial funding through the issuance of a subordinated surplus note to the Company as neither had any subscribers nor sufficient surplus to fund their insurance operations at the time of formation. In addition, CORE and Tailrow each entered into an AIF agreement with Core Risk Managers, LLC (“CRM”) and Tailrow Risk Managers, LLC (“TRM”), respectively. Both CRM and TRM are wholly-owned subsidiaries of HCI Group, Inc. The AIF agreements, which were approved by the Florida Office of Insurance Regulation (“FLOIR”), can be terminated at any time by mutual agreement of both parties or with cause, if the FLOIR or a court of competent jurisdiction determines a material breach of the agreement has occurred. Under the AIF agreements, CRM and TRM have the power of attorney to directly or indirectly conduct the daily operations of CORE and Tailrow, respectively, by underwriting insurance policies, collecting premiums, investing funds, and processing claims. As such, subscribers do not possess the power to directly manage the operations of CORE and Tailrow. The AIF agreements also permit CRM and TRM to contract with service providers, including other HCI Group, Inc. subsidiaries, to perform certain functions.
The AIF agreements, together with the subordinated surplus notes, result in both CORE and Tailrow to be consolidated VIEs. As CORE and Tailrow are owned by their underlying policyholders, their net assets and results of operations are included in noncontrolling interests.
CORE
CORE was formed and issued a $25,000 subordinated surplus note with an annual interest rate of 9% during 2023. CORE commenced business operations during 2024.
As of June 30, 2026 and December 31, 2025, the Company’s maximum exposure to loss relating to CORE was $25,000. CORE’s assets are legally restricted for the purpose of fulfilling obligations specific to CORE and its creditors have no legal right to pursue additional sources of payment from the Company.
Tailrow
Tailrow was formed and issued a $25,000 subordinated surplus note with an annual interest rate of 9% during 2024. Tailrow commenced business operations during 2025.
As of June 30, 2026 and December 31, 2025, the Company’s maximum exposure to loss relating to Tailrow was $25,000. Tailrow’s assets are legally restricted for the purpose of fulfilling obligations specific to Tailrow and its creditors have no legal right to pursue additional sources of payment from the Company.
28
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
The following table summarizes the assets and liabilities related to the Company’s variable interests in consolidated VIEs which are included in the accompanying consolidated balance sheets:
June 30, December 31,
2026 2025
Assets
Fixed-maturity securities, available-for-sale, at fair value (amortized cost: $33,637 and $0, respectively, and allowance for credit losses: $0 and $0, respectively) $ 33,621 $ —
Total investments 33,621 —
Cash and cash equivalents 158,345 154,156
Restricted cash 642 636
Income taxes receivable 1,277 1,332
Deferred income tax assets, net 1,088 2,237
Premiums receivable, net (allowance: $1,558 and $1,406, respectively) 8,414 4,549
Prepaid reinsurance premium — 2,499
Reinsurance recoverable, net of allowance for credit losses:
Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively) 748 26
Unpaid losses and loss adjustment expenses (allowance: $0 and $1, respectively) 852 1,573
Deferred policy acquisition costs 7,493 4,464
Other assets 1,445 539
Total assets $ 247,546 $ 172,011
Liabilities
Losses and loss adjustment expenses $ 30,825 $ 24,810
Unearned premiums 71,998 73,086
Advance premiums 5,613 1,817
Ceded reinsurance premiums payable 5,173 933
Assumed premiums payable 1,841 837
Income taxes payable 1,211 2,857
Deferred income tax liabilities, net — 127
Accrued expenses and other liabilities 3,809 2,162
Total liabilities $ 120,470 $ 106,629
29
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Note 13 -- Segment Information
The Company has five reportable segments: Insurance Operations, Exzeo, Reciprocal Exchange Operations, Real Estate, and Corporate and Other. Due to their economic characteristics, the Company’s property and casualty insurance and reinsurance operations, excluding the insurance operations under Reciprocal Exchange Operations, are grouped together into one reportable segment under Insurance Operations. The Exzeo segment represents Exzeo’s operations related to insurance technology and operations solutions for property and casualty insurance carriers. The Reciprocal Exchange Operations segment represents the insurance operations of consolidated reciprocal insurance exchanges owned by their policyholders. The Real Estate segment represents the operations of the Company’s commercial real estate group primarily engaged in developing and operating commercial properties for investment purposes or internal use. The Corporate and Other segment represents the activities of the holding companies and any other operations that do not meet the quantitative and qualitative thresholds for a reportable segment.
The Company’s segments are based on the manner in which the Company’s Chief Executive Officer, who is the chief operating decision maker (the “CODM”), evaluates performance and makes decisions regarding the allocation of resources. The CODM evaluates performance and allocates resources using various measures primarily through reviews of various operational performance packages, investor presentations, and the Company’s SEC filings, as well as through the approval of the Company’s annual budget and forecast. The Company’s reported segment profit measure is income (loss) before income taxes as this measure is most consistent with the amounts included in the consolidated statements of income. Intersegment transactions are not eliminated from segment results while intrasegment transactions are eliminated from segment results. The accounting policies of the Company’s reportable segments are the same as those of the Company, except as otherwise noted. The determination of segments may change over time due to changes in operational emphasis, revenue, and results of operations.
30
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
The following tables present segment information reconciled to the Company’s consolidated statements of income for the periods presented:
For Three Months Ended June 30, 2026 Insurance Operations Exzeo Reciprocal Exchange Operations Real Estate (a) Corporate/ Other (b) Reclassification/ Elimination Consolidated
Revenue
Gross premiums earned (c) $ 287,180 $ — $ 35,618 $ — $ — $ (1,974 ) $ 320,824
Premiums ceded (92,104 ) — (11,682 ) — — 1,974 (101,812 )
Net premiums earned 195,076 — 23,936 — — — 219,012
Net income from investment portfolio 15,792 2,963 1,534 — 1,614 (1,048 ) 20,855
Policy fee income 1,487 — — — 300 (136 ) 1,651
Other 4,344 57,787 (110 ) 4,567 5,630 (67,083 ) 5,135
Total revenue 216,699 60,750 25,360 4,567 7,544 (68,267 ) 246,653
Expenses
Losses and loss adjustment expenses 84,697 — 9,308 — — (22,929 ) 71,076
Amortization of deferred policy acquisition costs 27,780 — 2,664 — — — 30,444
Other policy acquisition expenses 15,557 10,039 4,517 — 3,228 (31,439 ) 1,902
Stock-based compensation expense 666 760 — — 1,913 — 3,339
Interest expense — — 1,122 453 631 (1,122 ) 1,084
Depreciation and amortization 283 736 — 848 147 (708 ) 1,306
Personnel and other operating expenses 12,091 17,789 232 3,177 5,308 (12,068 ) 26,529
Total expenses 141,074 29,324 17,843 4,478 11,227 (68,266 ) 135,680
Income (loss) before income taxes (d) $ 75,625 $ 31,426 $ 7,517 $ 89 $ (3,683 ) $ (1 ) $ 110,973
Total revenue from non-affiliates (e) $ 211,919 $ 6,533 $ 27,334 $ 3,703 $ 1,089
Gross premiums written $ 338,686 $ — $ 43,659
(a)Other revenue under Real Estate primarily consisted of rental income from investment properties.
(b)Other revenue under Corporate and Other primarily consisted of management fees for AIF services.
(c)Gross premiums earned under Insurance Operations included $1,974 earned from Reciprocal Exchange Operations.
(d)The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The Insurance Operations and the Reciprocal Exchange Operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo and the AIF operations recognize service fee revenue according to revenue recognition standards. Although both service fee expenses and revenue are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.
(e)Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.
31
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
For Three Months Ended June 30, 2025 Insurance Operations Exzeo Reciprocal Exchange Operations Real Estate (a) Corporate/ Other (b) Reclassification/ Elimination Consolidated
Revenue
Gross premiums earned (c) $ 282,269 $ — $ 21,639 $ — $ — $ (1,280 ) $ 302,628
Premiums ceded (95,017 ) — (8,785 ) — — 1,280 (102,522 )
Net premiums earned 187,252 — 12,854 — — — 200,106
Net income from investment portfolio 14,583 763 974 — 2,129 (669 ) 17,780
Policy fee income 302 — — — 5 1,160 1,467
Other 3,602 56,091 4 3,493 2,548 (63,171 ) 2,567
Total revenue 205,739 56,854 13,832 3,493 4,682 (62,680 ) 221,920
Expenses
Losses and loss adjustment expenses 82,365 — 4,842 — — (22,750 ) 64,457
Amortization of deferred policy acquisition costs 27,027 — 1,415 — — — 28,442
Other policy acquisition expenses 15,268 10,074 2,836 — 1,339 (27,408 ) 2,109
Stock-based compensation expense 325 706 — — 1,664 — 2,695
Interest expense — — 1,124 215 3,529 (1,124 ) 3,744
Depreciation and amortization 611 731 — 640 194 (505 ) 1,671
Personnel and other operating expenses 12,071 16,454 808 2,064 5,443 (12,430 ) 24,410
Total expenses 137,667 27,965 11,025 2,919 12,169 (64,217 ) 127,528
Income (loss) before income taxes (d) $ 68,072 $ 28,889 $ 2,807 $ 574 $ (7,487 ) $ 1,537 $ 94,392
Total revenue from non-affiliates (e) $ 201,670 $ 2,513 $ 15,112 $ 2,629 $ 1,327
Gross premiums written $ 337,502 $ — $ 19,043
(a)Other revenue under Real Estate primarily consisted of rental income from investment properties.
(b)Other revenue under Corporate and Other primarily consisted of management fees for AIF services.
(c)Gross premiums earned under Insurance Operations included $1,280 earned from Reciprocal Exchange Operations.
(d)The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The Insurance Operations and the Reciprocal Exchange Operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo and the AIF operations recognize service fee revenue according to revenue recognition standards. Although both service fee expenses and revenue are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.
(e)Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.
32
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
For Six Months Ended June 30, 2026 Insurance Operations Exzeo Group Reciprocal Exchange Operations Real Estate (a) Corporate/ Other (b) Reclassification/ Elimination Consolidated
Revenue
Gross premiums earned (c) $ 578,331 $ — $ 72,075 $ — $ — $ (3,376 ) $ 647,030
Premiums ceded (188,624 ) — (20,619 ) — — 3,376 (205,867 )
Net premiums earned 389,707 — 51,456 — — — 441,163
Net income from investment portfolio 27,727 5,475 2,801 — 2,692 (1,703 ) 36,992
Policy fee income 2,952 — — — 695 (420 ) 3,227
Other 8,183 113,320 (378 ) 8,763 10,814 (132,549 ) 8,153
Total revenue 428,569 118,795 53,879 8,763 14,201 (134,672 ) 489,535
Expenses
Losses and loss adjustment expenses 158,259 — 18,236 — — (39,819 ) 136,676
Amortization of deferred policy acquisition costs 55,619 — 4,714 — — — 60,333
Other policy acquisition expenses 34,481 22,212 9,161 — 6,074 (68,145 ) 3,783
Stock-based compensation expense 1,346 1,499 — — 3,853 — 6,698
Interest expense — — 2,232 909 1,098 (2,232 ) 2,007
Depreciation and amortization 704 1,466 — 1,705 310 (1,430 ) 2,755
Personnel and other operating expenses 22,896 34,605 544 5,692 10,248 (23,059 ) 50,926
Total expenses 273,305 59,782 34,887 8,306 21,583 (134,685 ) 263,178
Income (loss) before income taxes (d) $ 155,264 $ 59,013 $ 18,992 $ 457 $ (7,382 ) $ 13 $ 226,357
Total revenue from non-affiliates (e) $ 419,339 $ 11,257 $ 57,255 $ 7,034 $ 1,621
Gross premiums written $ 592,050 $ — $ 70,987
(a)Other revenue under Real Estate primarily consisted of rental income from investment properties.
(b)Other revenue under Corporate and Other primarily consisted of management fees for AIF services.
(c)Gross premiums earned under Insurance Operations included $3,376 earned from Reciprocal Exchange Operations.
(d)The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The Insurance Operations and the Reciprocal Exchange Operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo and the AIF operations recognize service fee revenue according to revenue recognition standards. Although both service fee expenses and revenue are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.
(e)Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.
33
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
For Six Months Ended June 30, 2025 Insurance Operations Exzeo Group Reciprocal Exchange Operations Real Estate (a) Corporate/ Other (b) Reclassification/ Elimination Consolidated
Revenue
Gross premiums earned (c) $ 564,404 $ — $ 41,086 $ — $ — $ (2,479 ) $ 603,011
Premiums ceded (188,444 ) — (16,192 ) — — 2,479 (202,157 )
Net premiums earned 375,960 — 24,894 — — — 400,854
Net income from investment portfolio 25,442 1,161 1,754 — 3,894 (1,459 ) 30,792
Policy fee income 2,531 — — — 5 1,160 3,696
Other 6,348 108,498 (5 ) 6,333 6,203 (124,366 ) 3,011
Total revenue 410,281 109,659 26,643 6,333 10,102 (124,665 ) 438,353
Expenses
Losses and loss adjustment expenses 153,180 — 7,614 — — (37,046 ) 123,748
Amortization of deferred policy acquisition costs 52,271 — 2,482 — — — 54,753
Other policy acquisition expenses 33,601 22,741 5,357 — 3,467 (62,081 ) 3,085
Stock-based compensation expense 798 1,429 — — 3,440 — 5,667
Interest expense — — 2,232 431 6,697 (2,232 ) 7,128
Depreciation and amortization 1,222 1,439 — 1,150 385 (879 ) 3,317
Personnel and other operating expenses 23,315 30,966 1,063 3,797 9,598 (22,815 ) 45,924
Total expenses 264,387 56,575 18,748 5,378 23,587 (125,053 ) 243,622
Income (loss) before income taxes (d) $ 145,894 $ 53,084 $ 7,895 $ 955 $ (13,485 ) $ 388 $ 194,731
Total revenue from non-affiliates (e) $ 402,720 $ 2,911 $ 29,122 $ 4,604 $ 2,165
Gross premiums written $ 597,031 $ — $ 48,760
(a)Other revenue under Real Estate primarily consisted of rental income from investment properties.
(b)Other revenue under Corporate and Other primarily consisted of management fees for AIF services.
(c)Gross premiums earned under Insurance Operations included $2,479 earned from Reciprocal Exchange Operations.
(d)The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The Insurance Operations and the Reciprocal Exchange Operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo and the AIF operations recognize service fee revenue according to revenue recognition standards. Although both service fee expenses and revenue are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.
(e)Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.
34
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
The following table presents gross premium earned by geographic location:
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Florida $ 291,943 $ 272,473 $ 589,042 $ 543,278
Non-Florida 28,881 30,155 57,988 59,733
Gross premiums earned $ 320,824 $ 302,628 $ 647,030 $ 603,011
The following table presents segment assets reconciled to the Company’s total assets on the consolidated balance sheets:
June 30, December 31,
2026 2025
Segments
Insurance Operations $ 2,050,786 $ 1,895,081
Exzeo 385,783 347,734
Reciprocal Exchange Operations 224,134 184,453
Real Estate 137,465 130,971
Corporate and Other 122,020 120,686
Consolidation and Elimination (271,729 ) (149,997 )
Total assets $ 2,648,459 $ 2,528,928
As of June 30, 2026 and December 31, 2025, substantially all of the Company’s assets were located in Florida.
35
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Note 14 -- Income Taxes
There were no significant changes in the Company’s valuation allowance on deferred income tax assets during the three and six months ended June 30, 2026.
During the three months ended June 30, 2026 and 2025, the Company recorded income tax expense of $28,073 and $24,113, respectively, resulting in effective tax rates of 25.3% and 25.5%, respectively. Each rate represented the federal statutory tax rate of 21.0%, state taxes (net of federal benefits), and unfavorable non-deductible compensation expenses.
During the six months ended June 30, 2026 and 2025, the Company recorded income tax expense of $58,414 and $50,222, respectively, resulting in an effective tax rate of 25.8% for each period. Each rate represented the federal statutory tax rate of 21.0%, state taxes (net of federal benefits), and unfavorable non-deductible compensation expenses.
Note 15 -- Earnings Per Share
The Company applies the two-class method for computing and presenting earnings per share since the Company’s unvested restricted stock awards represent participating securities due to the right to share in dividends, if declared, equally with common stockholders. The two-class method allocates current period net income to common stock and participating securities based on (i) dividends declared and (ii) participation rights in the remaining undistributed income. For a majority-owned subsidiary, the Company’s proportionate share in that majority-owned subsidiary’s earnings per share is added to the computation of earnings per share on a consolidated basis.
Basic earnings per share is computed by dividing income attributable to common stockholders using the two-class method by the weighted-average number of shares of common stock outstanding during the period.
Diluted earnings per share gives effect to all securities having a dilutive effect on income attributable to common stockholders, weighted-average shares of common stock outstanding, or both. The effect from dilutive securities included, but was not limited to: (i) incremental shares of common stock calculated using the if-converted method for convertible debt instruments; (ii) incremental shares of common stock calculated using the treasury stock method for warrants and share-based compensation awards; (iii) adjustments to a majority-owned subsidiary's earnings per share due to its dilutive securities; and (iv) the corresponding impact to income attributable to common stockholders associated with the preceding considerations. Net losses are not allocated to participating securities as the participating securities do not have a contractual obligation to share in losses.
36
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
The computations of basic and diluted earnings per share for the periods presented were as follows:
Three Months Ended Three Months Ended
June 30, 2026 June 30, 2025
Income Shares (a) Per Share Income Shares (a) Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Net income $ 82,900 $ 70,279
Less: Net income attributable to noncontrolling interests (9,103 ) (4,119 )
Net income after noncontrolling interests 73,797 66,160
Less: Income attributable to participating securities (2,925 ) (2,616 )
Basic Earnings Per Share:
Income attributable to common stockholders 70,872 12,269 $ 5.78 63,544 11,400 $ 5.57
Effect of Dilutive Securities:
Stock options — 382 — 392
Convertible senior notes — — 3,170 1,084
Warrants — 7 — 7
Net impact from reallocation of undistributed earnings to participating securities 65 — — —
Diluted Earnings Per Share:
Income attributable to common stockholders $ 70,937 12,658 $ 5.60 $ 66,714 12,883 $ 5.18
(a)Shares in thousands.
37
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Six Months Ended Six Months Ended
June 30, 2026 June 30, 2025
Income Shares (a) Per Share Income Shares (a) Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Net income $ 167,943 $ 144,509
Less: Net income attributable to noncontrolling interests (20,739 ) (8,665 )
Net income after noncontrolling interests 147,204 135,844
Less: Income attributable to participating securities (6,186 ) (5,691 )
Basic Earnings Per Share:
Income attributable to common stockholders 141,018 12,379 $ 11.39 130,153 10,846 $ 12.00
Effect of Dilutive Securities:
Stock options — 390 — 373
Convertible senior notes — — 5,500 1,611
Warrants — 7 — 7
Net impact from reallocation of undistributed earnings to participating securities 143 — — —
Diluted Earnings Per Share:
Income attributable to common stockholders $ 141,161 12,776 $ 11.05 $ 135,653 12,837 $ 10.57
(a)Shares in thousands.
For the periods presented, all dilutive securities for Exzeo were excluded from Exzeo's diluted earnings per share computation because their (i) effect would be anti-dilutive, (ii) exercise prices were out-of-the-money, or (iii) contingent exercise conditions were unsatisfied.
Note 16 -- Redeemable Noncontrolling Interests
Subscriber Surplus Contributions
Subscriber surplus contributions in redeemable noncontrolling interests represent a refundable portion of the surplus contributions received from policyholders of CORE and Tailrow. The surplus contributions are reclassified to noncontrolling interests once they are no longer refundable.
The following table summarizes the activity of subscriber surplus contributions:
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Beginning balance $ 4,211 $ 1,637 $ 3,359 $ 1,691
Cash contributions 4,215 1,937 6,997 2,770
Return of contributions (74 ) (31 ) (173 ) (34 )
Reclassification of nonrefundable subscriber surplus contributions (2,423 ) (1,138 ) (4,254 ) (2,022 )
Ending balance $ 5,929 $ 2,405 $ 5,929 $ 2,405
38
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Note 17 -- Equity
Stockholders’ Equity
Common Stock
Each share of common stock entitles the stockholder to one vote.
Share Repurchase Program
In March 2026, the Company’s Board of Directors authorized a program to repurchase up to $80,000, excluding commissions and other costs, of shares of the Company’s common stock through February 27, 2027 (the “Share Repurchase Program”). The Share Repurchase Program permits the Company to repurchase shares for cash periodically in open market purchases, block transactions, privately negotiated transactions in accordance with applicable federal securities laws, or by other means, including through the use of trading programs intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions, including Rule 10b-18 under that Act. The Share Repurchase Program does not obligate the Company to repurchase a specific number of shares of common stock, and may be canceled or suspended at any time without notice.
During the three and six months ended June 30, 2026, the Company repurchased 363,538 and 473,609 shares of common stock for $56,968 and $74,466, respectively, excluding commissions and other costs, under the Share Repurchase Program. All of the shares repurchased were treated as retirements and reduced the number of shares issued and outstanding. The excess of the purchase price over the par value per share was recorded as a reduction of additional paid-in capital. Commissions and other costs on repurchases of common stock were not material for the three and six months ended June 30, 2026.
As of June 30, 2026, the Company may repurchase up to $5,534, excluding commissions and other costs, of shares of its common stock under the Share Repurchase Program.
Dividends
Stockholders are entitled to receive dividends when, as, and if declared by the Company’s Board of Directors out of funds legally available for that purpose. Unvested restricted stock awards have the right to share in dividends, if declared, equally with common stockholders on a nonforfeitable basis.
39
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
The following table represents the frequency and amount of all cash dividends declared on common stock for the periods presented:
Declaration Date Date of Record Payment Date Per Share Amount
Six Months Ended June 30, 2026
4/22/2026 5/15/2026 6/18/2026 $ 0.40
1/14/2026 2/20/2026 3/20/2026 $ 0.40
Total $ 0.80
Six Months Ended June 30, 2025
4/23/2025 5/16/2025 6/20/2025 $ 0.40
1/14/2025 2/21/2025 3/21/2025 $ 0.40
Total $ 0.80
Preferred Stock
As of June 30, 2026 and December 31, 2025, the Company had 20,000,000 preferred shares authorized, with no shares issued and outstanding.
Warrants
As of June 30, 2026 and December 31, 2025, there were 11,250 warrants outstanding at an exercise price of $54.40 with an expiration date of December 31, 2028.
At-The-Market Facility
On January 22, 2024, the Company implemented an “at-the-market” facility (the “ATM Facility”) which gives the Company the ability to raise up to $75,000 through the issuance of new shares of common stock through a sales agent (the “Sales Agent”). The Company has no obligation to sell, and the Sales Agent has no obligation to buy or sell, any shares of common stock under the ATM Facility. As of June 30, 2026 the remaining availability under the ATM Facility was $75,000.
Noncontrolling Interests
Exzeo
As of June 30, 2026, HCI Group, Inc. owned 75,000,000 of the 90,200,252 shares of Exzeo’s outstanding common stock. Of the shares not owned by HCI Group, Inc., 2,541,953 represent unvested restricted stock awards granted to Exzeo's employees.
Other adjustments to noncontrolling interests in the consolidated statements of equity primarily relates to (i) the net settlement of Exzeo common shares surrendered by employees to satisfy payroll tax liabilities associated with the vesting of restricted stock awards issued under Exzeo’s stock-based compensation plan and (ii) the change in ownership of Exzeo as a result of the vesting of restricted stock awards issued under Exzeo’s stock-based compensation plan.
40
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Exzeo Share Repurchase Program
In May 2026, Exzeo’s Board of Directors authorized a program to repurchase up to $12,000, excluding commissions and other costs, of shares of Exzeo’s common stock (the “Exzeo Share Repurchase Program”). The Exzeo Share Repurchase Program permits Exzeo to repurchase shares for cash periodically in open market purchases, block transactions, privately negotiated transactions in accordance with applicable federal securities laws, or by other means, including through the use of trading programs intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions, including Rule 10b-18 under that Act. The Exzeo Share Repurchase Program does not obligate Exzeo to repurchase a specific number of shares of common stock, and may be canceled or suspended at any time without notice.
During the three and six months ended June 30, 2026, Exzeo repurchased 726,828 shares of its common stock for $10,029, excluding commissions and other costs, under the Exzeo Share Repurchase Program. All of the shares repurchased were treated as retirements and reduced the number of shares issued and outstanding of Exzeo. Commissions and other costs on repurchases of noncontrolling interests were not material during the three and six months ended June 30, 2026.
As of June 30, 2026, Exzeo may repurchase up to $1,971, excluding commissions and other costs, of shares of its common stock under the Exzeo Share Repurchase Program.
Subscriber Surplus Contributions
Subscriber surplus contributions in noncontrolling interests represent the nonrefundable portion of the surplus contributions received from policyholders of CORE and Tailrow. The surplus contributions are reclassified from redeemable noncontrolling interest once they are no longer refundable. As CORE and Tailrow are owned by their underlying policyholders, their net assets are included in noncontrolling interests.
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) relates to the unrealized gains or losses on available-for-sale fixed-maturity securities carried at fair value, net of income taxes. Accumulated other comprehensive income (loss) is reclassified to either net investment income or net realized investment gains (losses) in the consolidated statements of income as underlying transactions are recognized in earnings. Other comprehensive income (loss) represents the net change in accumulated other comprehensive income (loss).
41
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
The following table summarizes the activity with respect to accumulated other comprehensive income (loss) during the three and six months ended June 30, 2026 and 2025:
Before Tax Income Tax Effect Total Noncontrolling Interests Accumulated Other Comprehensive (Loss)
Balance as of March 31, 2026 $ (6,127 ) $ (1,534 ) $ (4,593 ) $ (55 ) $ (4,538 )
Net unrealized losses (6,596 ) (1,652 ) (4,944 ) (110 ) (4,834 )
Reclassification to net investment income (16 ) (4 ) (12 ) — (12 )
Reclassification to net realized investment gains 2 — 2 — 2
Balance as of June 30, 2026 $ (12,737 ) $ (3,190 ) $ (9,547 ) $ (165 ) $ (9,382 )
Before Tax Income Tax Effect Total Noncontrolling Interests Accumulated Other Comprehensive Income
Balance as of March 31, 2025 $ 1,790 $ 448 $ 1,342 $ — $ 1,342
Net unrealized losses (232 ) (58 ) (174 ) — (174 )
Reclassification to net realized investment gains (14 ) (4 ) (10 ) — (10 )
Balance as of June 30, 2025 $ 1,544 $ 386 $ 1,158 $ — $ 1,158
Before Tax Income Tax Effect Total Noncontrolling Interests Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2025 $ 1,946 $ 487 $ 1,459 $ — $ 1,459
Net unrealized losses (14,794 ) (3,705 ) (11,089 ) (165 ) (10,924 )
Reclassification to net investment income 158 40 118 — 118
Reclassification to net realized investment gains (47 ) (12 ) (35 ) — (35 )
Balance as of June 30, 2026 $ (12,737 ) $ (3,190 ) $ (9,547 ) $ (165 ) $ (9,382 )
Before Tax Income Tax Effect Total Noncontrolling Interests Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2024 $ (999 ) $ (250 ) $ (749 ) $ — $ (749 )
Net unrealized gains 2,577 645 1,932 — 1,932
Reclassification to net realized investment gains (34 ) (9 ) (25 ) — (25 )
Balance as of June 30, 2025 $ 1,544 $ 386 $ 1,158 $ — $ 1,158
42
HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Note 18 -- Stock-Based Compensation
The Company grants stock-based awards to participants under HCI Group, Inc.’s 2012 Omnibus Incentive Plan (“HCI Plan”) and Exzeo Group, Inc.’s 2025 Omnibus Incentive Plan (“Exzeo Plan”). Stock-based compensation expense is included in general and administrative personnel expenses in the consolidated statements of income and consisted of the following for the periods presented:
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Restricted stock awards $ 2,584 $ 1,994 $ 5,207 $ 4,264
Exzeo stock options — 347 — 689
Exzeo restricted stock awards 755 354 1,491 714
Stock-based compensation expense $ 3,339 $ 2,695 $ 6,698 $ 5,667
Stock-based compensation awards are classified as equity and awards related to the Exzeo Plan are included as a component of noncontrolling interests.
HCI Plan
As of June 30, 2026, there were 641,937 shares available for issuance under the HCI Plan.
Stock Options
The following table summarizes the activity related to stock options granted under the HCI Plan during the six months ended June 30, 2026:
Weighted
Weighted Average
Average Remaining Aggregate
Number of Exercise Contractual Intrinsic
Options Price Term Value
Outstanding as of December 31, 2025 590,000 $ 51.54 3.9 years $ 82,687
Granted — $ —
Exercised (20,000 ) $ 40.00
Forfeited — $ —
Outstanding as of June 30, 2026 570,000 $ 51.95 3.5 years $ 70,283
Exercisable as of June 30, 2026 570,000 $ 51.95 3.5 years $ 70,283
As of June 30, 2026, there was no unrecognized compensation expense related to stock options under the HCI Plan.
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HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Restricted Stock Awards
The following table summarizes the activity related to restricted stock awards granted under the HCI Plan during the six months ended June 30, 2026:
Number of Weighted
Restricted Average
Stock Grant Date
Awards Fair Value
Unvested as of December 31, 2025 494,635 $ 73.31
Granted 3,750 $ 162.12
Vested (202,255 ) $ 34.23
Forfeited (1,386 ) $ 131.96
Unvested as of June 30, 2026 294,744 $ 100.99
In May 2026, there were 193,500 restricted stock awards that vested as a result of meeting the requisite market condition that the price per share exceeded $140 for a period of 30 consecutive trading days in May 2025.
As of June 30, 2026, there were 200,000 unvested restricted stock awards granted under the HCI Plan with market conditions. These awards have not met the requisite market condition of the Company’s share price reaching $200 per share for 30 consecutive trading days.
As of June 30, 2026, there was $16,089 of unrecognized compensation expense related to unvested restricted stock awards granted under the HCI Plan, which is expected to be recognized over a weighted-average period of 2.0 years.
Exzeo Plan
Exzeo maintained its 2021 Omnibus Plan under which shares of Exzeo common stock were authorized for issuance as stock-based compensation awards. On November 4, 2025, Exzeo terminated its 2021 Omnibus Plan and adopted the Exzeo Plan, which authorizes the issuance of up to 10,000,000 shares of Exzeo’s common stock. Awards outstanding under the Exzeo 2021 Omnibus Plan continue to be governed by the terms of that plan and are incremental to, and do not count against, the authorized share pool of the Exzeo Plan. As of June 30, 2026, there were 9,768,170 shares available for issuance under the Exzeo Plan.
Exzeo Stock Options
As of June 30, 2026, there were 6,350,000 Exzeo stock options outstanding with a weighted-average exercise price of $23.00. All of the Exzeo stock options were fully vested, however, 6,000,000 Exzeo stock options were non-exercisable without approval from HCI Group, Inc.’s Board of Directors.
Exzeo Restricted Stock Awards
As of June 30, 2026, there were 2,541,953 unvested Exzeo restricted stock awards outstanding with a weighted-average grant date fair value of $4.82. There was $10,599 of unrecognized compensation expense related to unvested Exzeo restricted stock awards, which is expected to be recognized over a weighted-average period of 3.8 years.
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HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
Note 19 -- Commitments and Contingencies
Litigation and Other Legal Matters
The Company is party to litigation and other legal matters arising in the ordinary course of business. The Company is also subject to regulatory and governmental examinations, information requests and subpoenas, inquiries, investigations, and threatened legal actions and proceedings.
The Company records accruals for losses that are probable and reasonably estimable. These accruals are based on a variety of factors such as judgment, probability of loss, and opinions of internal and external legal counsel. Legal costs in connection with litigation and other legal matters arising in the ordinary course of business are expensed as incurred.
Although the Company cannot predict with certainty the ultimate resolution of the litigation and other legal matters it is party to, the Company does not believe that any known or potential litigation and other legal matters will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.
Rental Income
The Company as a lessor leases its commercial and retail properties, boat slips, and docks to non-affiliates at various terms. There were no significant changes in the Company’s minimum rental payments to be received under operating leases during the three and six months ended June 30, 2026.
Capital Commitments
As described in Note 5 “Investments” under Limited Partnership Investments, the Company is contractually committed to capital contributions for limited partnership investments. As of June 30, 2026, there was an aggregate unfunded balance of $3,791.
FIGA Assessments
The Company’s insurance subsidiaries, as member insurers, are required to collect and remit the pass-through assessments to Florida Insurance Guaranty Association (“FIGA”) on a quarterly basis. As of June 30, 2026 and December 31, 2025, the FIGA assessments payable by the Company were $3,415 and $2,034, respectively.
Note 20 -- Related Party Transactions
HCPCI, TTIC, CORE, and Tailrow have reinstatement premium protection reinsurance contracts (“RPP”) with various reinsurers. The purpose of the RPP contracts is to indemnify HCPCI, TTIC, CORE, and Tailrow for the reinstatement premium which HCPCI, TTIC, CORE, and Tailrow pay or become liable to pay under the reinstatement provisions of the respective excess of loss reinsurance contracts. For one of the RPP contracts, Oxbridge Reinsurance Limited (“Oxbridge”) participated as a subscribing reinsurer with HCPCI and Tailrow as collective reinsureds for the 2025 - 2026 treaty year. One of the Company’s non-employee directors, Jay Madhu, serves as Oxbridge’s Chairman of its Board of Directors and Chief Executive Officer and is an investor in that company. For its participation on the RPP contract, Oxbridge’s net annual premium was $930 and was paid by HCPCI and Tailrow over four installments. Management believes the premium rate was competitive with market rates. A trust account has been established with HCPCI and Tailrow as collective beneficiaries and Oxbridge as
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HCI GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except share and per share amounts, unless otherwise stated)
grantor. Each of the four premium installments was deposited into the trust account in order to fully collateralize Oxbridge’s obligations under the RPP contract. Trust assets may be withdrawn by HCPCI and Tailrow to indemnify HCPCI and Tailrow for Oxbridge’s obligations under the provisions of the RPP contract. Total net premiums to Oxbridge were $910 for the 2024-2025 treaty year. During the three and six months ended June 30, 2026, the Company paid Oxbridge $408 in fees for transaction services related to the 2026 - 2027 treaty year. Oxbridge did not participate as a subscribing reinsurer for the 2026 - 2027 treaty year.
Note 21 -- Subsequent Events
On July 1, 2026, the Company’s Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends are payable on September 18, 2026 to stockholders of record on August 21, 2026.
On July 8, 2026, the Company completed the Exzeo Share Repurchase Program with a total 834,250 shares of Exzeo’s common stock repurchased for $12,000, excluding commissions and other costs.
On July 17, 2026, the Company completed the Share Repurchase Program with a total 504,330 shares of common stock repurchased for $80,000, excluding commissions and other costs.
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