UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
Form 10-Q
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number
001-34126
HCI Group, Inc.
(Exact name of registrant as specified in its charter)
Florida
20-5961396
(State of Incorporation)
(IRS EmployerIdentification No.)
3802 Coconut Palm DriveTampa, FL 33619(Address, including zip code, of principal executive offices)
(813) 849-9500(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Shares, no par value
HCI
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate number of shares of the registrant’s common stock, no par value, outstanding as of August 3, 2026 was 12,438,867.
HCI GROUP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I – FINANCIAL INFORMATION
Item 1
Financial Statements
Consolidated Balance Sheets:
June 30, 2026 (unaudited) and December 31, 2025
1-2
Consolidated Statements of Income:
Three and six months ended June 30, 2026 and 2025 (unaudited)
3
Consolidated Statements of Comprehensive Income:
4
Consolidated Statements of Equity:
5-8
Consolidated Statements of Cash Flows:
Six months ended June 30, 2026 and 2025 (unaudited)
9-11
Notes to Consolidated Financial Statements (unaudited)
12-46
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
47-59
Item 3
Quantitative and Qualitative Disclosures About Market Risk
60-61
Item 4
Controls and Procedures
62
PART II – OTHER INFORMATION
Legal Proceedings
63
Item 1A
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
63-64
Defaults Upon Senior Securities
65
Mine Safety Disclosures
Item 5
Other Information
Item 6
Exhibits
66-70
Signatures
71
Item 1 – Financial Statements
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
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
(continued)
1
Consolidated Balance Sheets – (Continued)
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
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
See accompanying Notes to Consolidated Financial Statements (unaudited).
2
Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended
Six Months Ended
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
Consolidated Statements of Comprehensive Income
(In thousands)
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
Comprehensive income
77,946
70,095
156,937
146,416
Comprehensive income attributable to noncontrolling interests
(8,993
(20,574
Comprehensive income after noncontrolling interests
68,953
65,976
136,363
137,751
Consolidated Statements of Equity
For the Three Months Ended June 30, 2026
(In thousands, except per share amount)
Common Stock
AdditionalPaid-In
Retained
AccumulatedOtherComprehensive
TotalStockholders’
Noncontrolling
Total
Shares
Amount
Capital
Earnings
Loss
Equity
Interests
Balance as of March 31, 2026
12,900,905
413,838
679,721
(4,538
1,089,021
84,468
1,173,489
9,103
Other comprehensive loss, net of income taxes
(4,844
(110
Issuance of restricted stock
3,750
Forfeiture of restricted stock
(693
Net share settlements on vesting of restricted stock
(70,452
(11,121
Repurchase of common stock
(363,538
(57,720
Repurchase of noncontrolling interests
(6,580
(3,563
(10,143
Other adjustments to noncontrolling interests
(147
147
Common stock dividends
(5,081
Stock-based compensation
2,584
755
3,339
Reclassification of nonrefundable subscriber surplus contributions
2,423
Balance as of June 30, 2026
12,469,972
5
Consolidated Statements of Equity – (Continued)
For the Three Months Ended June 30, 2025
Income
Balance as of March 31, 2025
10,765,336
124,170
397,171
1,342
522,683
20,149
542,832
4,119
9,020
(1,100
(266
(40
Conversion of senior notes to common stock
2,183,894
172,582
(4,618
1,994
701
2,695
1,138
Balance as of June 30, 2025
12,956,884
298,706
458,713
1,158
758,577
26,107
784,684
6
For the Six Months Ended June 30, 2026
Income (Loss)
Balance as of December 31, 2025
12,992,147
20,739
(10,841
(165
Exercise of stock options
20,000
800
(1,386
(70,930
(11,202
(473,609
(75,221
(259
259
(10,276
5,207
1,491
6,698
4,254
7
For the Six Months Ended June 30, 2025
(Loss) Income
Balance as of December 31, 2024
10,767,184
122,289
331,793
(749
453,333
14,017
467,350
8,665
Other comprehensive income, net of income taxes
10,020
(1,850
(5,533
(679
2,187,063
172,832
(8,924
4,264
1,403
5,667
2,022
8
Consolidated Statements of Cash Flows
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense
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
(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
Changes in operating assets and liabilities:
Income taxes
3,740
16,176
Premiums receivable, net
(20,113
(15,244
Prepaid reinsurance premiums
92,060
Reinsurance recoverable
34,176
120,565
Deferred policy acquisition costs
(8,484
(10,835
(92
3,152
Other assets
(19,842
(14,587
(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
9
Consolidated Statements of Cash Flows – (Continued)
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
Proceeds from sales of available-for-sale fixed-maturity securities
3,643
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:
Proceeds from exercise of stock options
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
(687
(74,476
(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
10
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
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
11
(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
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
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:
Cash and cash equivalents
Restricted cash
Cash and cash equivalents and restricted cash
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
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 orAmortized
Allowance for Credit
GrossUnrealized
EstimatedFair
Cost
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
1,103,778
223
(12,960
As of December 31, 2025
332,284
1,785
(717
333,352
241,843
1,463
(384
242,922
21,256
74
(275
21,055
595,383
3,322
(1,376
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
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
449
15
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:
Proceeds
1,765
749
Gross realized gains
55
38
Gross realized losses
(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
Gross
Unrealized
Fair
(10,736
709,989
(166
2,915
712,904
(1,532
210,056
(188
1,394
211,450
15,666
(12,606
935,711
4,309
940,020
(553
208,273
(164
2,918
211,191
(289
28,303
(95
1,187
29,490
16,749
(1,117
253,325
4,105
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
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:
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:
55,700
5,693
(2,355
61,597
6,204
(1,911
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:
Net gains recognized
1,967
1,321
754
562
Exclude: Net realized gains recognized for securities sold
1,224
141
1,709
1,288
17
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:
20,099
12,079
1,619
508
2,375
1,839
(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:
Carrying
Unfunded
Investment Strategy
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
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
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
Risk-adjusted returns on credit and equity investments, primarily in private equity-owned companies. (b)(k)
4,570
2,085
4,942
1,610
0.54
3,791
3,652
18
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:
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
1,913
2,001
Total, at cost
112,707
113,186
Less: accumulated depreciation
(10,038
(9,440
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
Net Investment Income
The following table summarizes net investment income:
10,221
6,841
18,091
14,355
Equity securities
751
660
1,404
1,147
Investment expense
(206
(154
(409
(339
(75
(32
(399
(658
73
455
528
773
7,995
8,675
16,716
14,918
131
260
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
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:
Maturity
Date
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:
4.55% Promissory Note
2036
5.50% Promissory Note
2033
5.65% Promissory Note
2035
21
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)
Available-for-sale fixed-maturity securities:
804,798
19,506
286,243
57,703
1,335
313,420
19,932
283,909
64,545
1,345
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:
5,201
Long-term debt:
3,931
3,682
11,142
10,995
16,392
16,164
30,841
22
5,223
4,080
3,863
11,262
11,313
16,535
16,615
31,791
Note 7 -- Intangible Assets, Net
The following table summarizes intangible assets, net:
In-place leases
2,221
Policy renewal rights - United
10,100
Non-compete agreements - United (a)
314
12,635
Less: accumulated amortization
(10,711
(9,952
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
Note 9 -- Long-Term Debt
The following table summarizes long-term debt:
Interest
Payment
Debt Description
Issued
Rate
7/6/2018
8/1/2036
4.55%
Monthly
3,973
4,125
6/26/2023
7/1/2033
5.50%
11,292
11,422
7/24/2025
8/1/2035
5.65%
16,736
16,896
Total principal amount
32,001
32,443
Less: unamortized issuance costs
(536
(566
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
The impact of the reinsurance contracts on premiums written and earned is as follows:
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
Net premiums written
280,533
254,023
457,170
443,634
Premiums Earned:
294,540
270,232
580,449
519,634
26,284
32,396
66,581
83,377
Gross earned
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
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:
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
Activity in the liability for losses and LAE is summarized as follows:
Net balance, beginning of period (a)
319,992
316,561
314,357
323,335
Incurred, net of reinsurance, related to:
Current period
Prior periods
Total incurred, net of reinsurance
Paid, net of reinsurance, related to:
(34,880
(23,057
(53,308
(36,152
(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
Add: reinsurance recoverable before allowance for credit losses
229,204
375,335
Gross balance, end of period
696,892
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
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
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:
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
158,345
154,156
642
636
Income taxes receivable
Deferred income tax assets, net
Premiums receivable, net (allowance: $1,558 and $1,406, respectively)
8,414
4,549
Prepaid reinsurance premium
2,499
Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively)
748
Unpaid losses and loss adjustment expenses (allowance: $0 and $1, respectively)
852
1,573
7,493
4,464
1,445
539
247,546
172,011
Liabilities
30,825
71,998
73,086
5,613
1,817
5,173
933
1,841
837
Income taxes payable
1,211
2,857
Deferred income tax liabilities, net
3,809
2,162
120,470
106,629
29
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
The following tables present segment information reconciled to the Company’s consolidated statements of income for the periods presented:
For Three Months EndedJune 30, 2026
InsuranceOperations
Exzeo
ReciprocalExchangeOperations
RealEstate (a)
Corporate/Other (b)
Reclassification/ Elimination
Consolidated
Gross premiums earned (c)
287,180
35,618
(1,974
(92,104
(11,682
1,974
195,076
23,936
Net income from investment portfolio
15,792
2,963
1,534
1,614
(1,048
20,855
1,487
300
(136
4,344
57,787
4,567
5,630
(67,083
216,699
60,750
25,360
7,544
(68,267
84,697
9,308
(22,929
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
666
1,122
453
631
(1,122
283
736
848
(708
1,306
Personnel and other operating expenses
12,091
17,789
232
3,177
5,308
(12,068
26,529
141,074
29,324
17,843
4,478
11,227
(68,266
Income (loss) before income taxes (d)
75,625
31,426
7,517
(3,683
(1
Total revenue from non-affiliates (e)
211,919
6,533
27,334
3,703
1,089
Gross premiums written
338,686
43,659
31
For Three Months EndedJune 30, 2025
Reclassification/Elimination
282,269
21,639
(1,280
(95,017
(8,785
1,280
187,252
12,854
14,583
763
974
2,129
(669
17,780
302
1,160
3,602
56,091
3,493
2,548
(63,171
205,739
56,854
13,832
4,682
(62,680
82,365
4,842
(22,750
27,027
1,415
28,442
15,268
10,074
2,836
1,339
(27,408
2,109
325
706
1,664
1,124
215
3,529
(1,124
611
731
640
194
(505
1,671
12,071
16,454
808
2,064
5,443
(12,430
24,410
137,667
27,965
11,025
2,919
12,169
(64,217
68,072
28,889
2,807
574
(7,487
1,537
201,670
2,513
15,112
2,629
1,327
337,502
19,043
32
For Six Months EndedJune 30, 2026
ExzeoGroup
578,331
72,075
(3,376
(188,624
(20,619
3,376
389,707
51,456
27,727
5,475
2,801
2,692
(1,703
36,992
2,952
695
(420
8,183
113,320
(378
8,763
10,814
(132,549
428,569
118,795
53,879
14,201
(134,672
158,259
18,236
(39,819
55,619
4,714
60,333
34,481
22,212
9,161
6,074
(68,145
3,783
1,346
1,499
3,853
2,232
909
1,098
(2,232
704
1,466
1,705
310
(1,430
2,755
22,896
34,605
544
5,692
10,248
(23,059
50,926
273,305
59,782
34,887
8,306
21,583
(134,685
155,264
59,013
18,992
457
(7,382
419,339
11,257
57,255
7,034
1,621
592,050
70,987
33
For Six Months EndedJune 30, 2025
564,404
41,086
(2,479
(188,444
(16,192
2,479
375,960
24,894
25,442
1,161
1,754
3,894
(1,459
30,792
2,531
6,348
108,498
(5
6,333
6,203
(124,366
410,281
109,659
26,643
10,102
(124,665
153,180
7,614
(37,046
52,271
2,482
54,753
33,601
22,741
5,357
3,467
(62,081
3,085
798
1,429
3,440
431
6,697
1,439
1,150
385
(879
3,317
23,315
30,966
1,063
3,797
9,598
(22,815
45,924
264,387
56,575
18,748
5,378
23,587
(125,053
145,894
53,084
7,895
(13,485
388
402,720
2,911
29,122
4,604
2,165
597,031
48,760
34
The following table presents gross premium earned by geographic location:
291,943
272,473
589,042
543,278
Non-Florida
28,881
30,155
57,988
59,733
The following table presents segment assets reconciled to the Company’s total assets on the consolidated balance sheets:
Segments
Insurance Operations
2,050,786
1,895,081
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
As of June 30, 2026 and December 31, 2025, substantially all of the Company’s assets were located in Florida.
35
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
The computations of basic and diluted earnings per share for the periods presented were as follows:
June 30, 2025
Shares (a)
Per Share
(Numerator)
(Denominator)
Less: Net income attributable to noncontrolling interests
Less: Income attributable to participating securities
(2,925
(2,616
Basic Earnings Per Share:
Income attributable to common stockholders
70,872
12,269
63,544
11,400
Effect of Dilutive Securities:
Stock options
382
392
Convertible senior notes
3,170
Warrants
Net impact from reallocation of undistributed earnings to participating securities
Diluted Earnings Per Share:
70,937
12,658
66,714
12,883
37
(6,186
(5,691
141,018
12,379
130,153
10,846
390
373
5,500
1,611
143
141,161
12,776
135,653
12,837
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:
Beginning balance
4,211
1,637
1,691
Cash contributions
4,215
1,937
6,997
2,770
Return of contributions
(74
(31
(173
(34
(2,423
(1,138
(4,254
(2,022
Ending balance
2,405
Note 17 -- Equity
Stockholders’ Equity
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
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
0.80
Six Months Ended June 30, 2025
4/23/2025
5/16/2025
6/20/2025
1/14/2025
2/21/2025
3/21/2025
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.
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
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
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 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
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
Accumulated Other Comprehensive (Loss)
(6,127
(1,534
(4,593
(55
Net unrealized losses
(6,596
(1,652
(4,944
(4,834
Reclassification to net investment income
(16
(12
Reclassification to net realized investment gains
(12,737
(3,190
(9,547
Accumulated Other Comprehensive Income
1,790
448
(232
(58
(174
(14
(10
1,544
386
1,946
487
(14,794
(3,705
(11,089
(10,924
158
118
(47
(35
Accumulated Other Comprehensive (Loss) Income
(999
(250
Net unrealized gains
2,577
645
1,932
(9
(25
42
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,
Restricted stock awards
Exzeo stock options
347
689
Exzeo restricted stock awards
354
714
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
Average
Remaining
Aggregate
Number of
Exercise
Contractual
Intrinsic
Options
Price
Term
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
As of June 30, 2026, there was no unrecognized compensation expense related to stock options under the HCI Plan.
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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:
Restricted
Stock
Grant Date
Awards
Unvested as of December 31, 2025
494,635
73.31
162.12
Vested
(202,255
34.23
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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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
45
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.
46
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) on February 26, 2026 (the “2025 Annual Report”). This section is intended to (i) provide material information relevant to the assessment of our results of operations and cash flows; (ii) enhance the understanding of our financial condition, changes in financial condition, and results of operations; and (iii) discuss material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future performance or of future financial condition.
The following discussion and analysis contains forward-looking statements about our business, operations, and financial performance based on current plans and estimates involving risks, uncertainties, and assumptions, which could differ materially from actual results. Factors that could cause such differences are discussed in the sections of this Quarterly Report on Form 10-Q titled Item 1A “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements, including statements about our plans, objectives, expectations, assumptions or future events, involve risks and uncertainties. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. Typically, forward-looking statements can be identified by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions. The important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include but are not limited to the effects of governmental regulation; changes in insurance regulations; the frequency and extent of claims; uncertainties inherent in reserve estimates; catastrophic events; changes in the demand for, pricing of, availability of or collectability of reinsurance; restrictions on our ability to change premium rates; increased rate pressure on premiums; the severity and impact of cybersecurity incidents; and other risks and uncertainties and other factors listed under Item 1A – “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q as well as the 2025 Annual Report. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made and are not guarantees of future performance. Except as required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
OVERVIEW
HCI Group, Inc., together with its subsidiaries (collectively, “we,” “our,” “us,” the “Company,” or “HCI”), is primarily engaged in the property and casualty insurance business. We provide various homeowners’ property and casualty insurance products for properties located in the Florida, which is our primary market, as well as in other states in the northeast and southeast regions of the U.S. Our 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. We utilize 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.
We also provide attorney-in-fact (“AIF”) services for reciprocal insurance exchanges owned by their policyholders. Although we do not have any equity interest in the reciprocal insurance exchanges, we are required to consolidate them as their primary beneficiary. In addition, we have a commercial real estate group primarily engaged in developing and operating commercial properties for investment purposes or our own use.
HCI Group, Inc.’s 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 unvested restricted stock.
We identify our segments based on the manner in which our Chief Executive Officer, who is the chief operating decision maker, evaluates performance and makes decisions regarding the allocation of resources. We have five reportable segments: Insurance Operations, Exzeo, Reciprocal Exchange Operations, Real Estate, and Corporate and Other. Due to their economic characteristics, our 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 our commercial real estate group primarily engaged in developing and operating commercial properties for investment purposes or our own 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 determination of segments may change over time due to changes in operational emphasis, revenue, and results of operations. Refer to Note 13 “Segment Information” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.
All financial information presented in this section has been prepared in U.S. dollars in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and includes the accounts of HCI Group, Inc. and its subsidiaries and consolidated variable interest entities. All intercompany transactions have been eliminated.
FACTORS AFFECTING OPERATING RESULTS
Our general operating and growth strategies are to continually optimize our existing book of insurance business, organically expand our insurance business, manage our costs and expenses, diversify our business operations, develop and deploy new technologies to streamline operational processes, and maintain a strong balance sheet so we can quickly pursue accretive opportunities when they arise. Our growth strategies also include policy assumption from third-party insurance companies with the intention of renewing and/or replacing them with our policies.
Our insurance business has grown both organically and through strategic policy assumptions, which have been a key driver of our expansion. We have participated in legislatively mandated take-out programs, designed to reduce the state’s risk exposure by transitioning policies from Citizens Property Insurance Corporation (“Citizens”), a
48
Florida state supported insurer, to private insurers. We selectively pursue additional assumption opportunities with Citizens when they align with our risk appetite and growth strategy. We also assume policies from other insurance companies in Florida and/or any other state in which we operate.
The nature of our business is to cover losses that may arise from, among other things, hurricanes and other catastrophic events such as tornadoes, floods and winter storms. The occurrence of any such catastrophes could have a significant adverse effect on our business, results of operations, and financial condition. To mitigate the risk associated with catastrophic events, we purchase reinsurance from other large insurance companies. Even without catastrophic events, we may incur losses and loss adjustment expenses that deviate substantially from our estimates and that may exceed our reserves, in which case our net income and capital would decrease. Our operating and growth strategies may also be impacted by regulation of our business by the State of Florida and other states in which we operate. For example, insurance regulators must approve our policy forms and premium rates as well as monitor our compliance with financial and regulatory requirements.
Seasonality of Our Business
Our insurance business is seasonal as hurricanes and tropical storms affecting Florida and other southeastern states typically occur during the period from June 1st through November 30th of each year. Winter storms in the northeast usually occur during the period between December 1st and March 31st of each year. Also, our reinsurance treaty year is typically effective on June 1st of each year and any variation in the cost of our reinsurance, whether due to changes in reinsurance rates, coverage levels or changes in the total insured value of our policy base, will occur and be reflected in our financial results beginning on June 1st of each year.
RECENT EVENTS
In March 2026, Fortex Reinsurance SPC, Ltd. (“Fortex”), our wholly-owned Cayman Islands domiciled captive reinsurance subsidiary, received its license to operate as a Class B insurer in the Cayman Islands. Fortex will allow us additional flexibility to selectively retain risk and reduce the cost of third-party reinsurance. Fortex is regulated by the Cayman Islands Monetary Authority.
KEY PERFORMANCE INDICATORS
We make strategic decisions, measure our performance, evaluate our business, and identify trends in our business using certain key performance indicators, including the operating metrics gross loss ratio, gross expense ratio, and net combined ratio. Computations of our key performance indicators may not be comparable to other similarly titled measures reported by other companies. Additionally, we compute and disclose other ratios for informational purposes only.
Gross Loss Ratio
Gross loss ratio is defined as losses and loss adjustment expenses in relation to gross premiums earned. The gross loss ratio represents the percentage of our premiums used to cover our losses. We use the gross loss ratio as a metric to measure and monitor our underwriting and pricing practices.
Gross Expense Ratio
Gross expense ratio is defined as total expenses excluding losses and loss adjustment expenses and interest expense in relation to gross premiums earned. The gross expense ratio represents the percentage of our gross premiums used on operating expenses. We use the gross expense ratio as a metric to measure and monitor the efficiency of our operating and overhead costs.
Net Combined Ratio
Net combined ratio is defined as total expenses excluding interest expense in relation to net premiums earned. The net combined ratio represents the combination of the net loss ratio and net expense ratio. We use the net combined ratio as a metric to measure and monitor our overall profitability.
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RESULTS OF OPERATIONS
The following table summarizes our results of operations for the three and six months ended June 30, 2026 and 2025 (in thousands, except per share amounts or as otherwise indicated):
QTD
YTD
Change*
18,196
710
(3,710
18,906
40,309
2,445
5,995
1,067
434
(437
(229
(469
2,568
5,142
24,733
51,182
6,619
12,928
1,795
6,278
3,963
5,833
(2,660
(5,121
(1,565
(362
8,152
19,556
16,581
31,626
3,960
8,192
12,621
23,434
(4,984
(12,074
7,637
11,360
Ratios to Net Premiums Earned:
Loss Ratio
32.5
%
32.2
31.0
30.9
0.3
0.1
Expense Ratio
29.0
29.7
28.2
28.1
(0.7
)%
Combined Ratio
61.5
61.9
59.2
59.0
(0.4
0.2
Ratios to Gross Premiums Earned:
22.2
21.3
21.1
20.5
0.9
0.6
19.8
19.6
19.2
18.7
0.5
42.0
40.9
40.3
39.2
1.1
Earnings Per Share:
Basic
0.21
(0.61
Diluted
0.42
0.48
* QTD - Quarter-to-Date; YTD - Year-to-Date
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Comparison of the Three Months Ended June 30, 2026 to the Three Months Ended June 30, 2025
Gross Premiums Earned increased primarily due to a higher volume of policies in force as a result of the addition of policies assumed from Citizens during the first and fourth quarters of 2025 while average premium per policy remained relatively consistent.
For the three months ended June 30, 2026, gross premiums earned were $287.2 million from Insurance Operations and $35.6 million from Reciprocal Exchange Operations. For the three months ended June 30, 2025, gross premiums earned were $282.3 million from Insurance Operations and $21.6 million from Reciprocal Exchange Operations.
Premiums Ceded represented 31.7% and 33.9% of gross premiums earned during the three months ended June 30, 2026 and 2025, respectively.
Our premiums ceded represent costs of reinsurance (i) to cover losses from catastrophes that exceed the retention levels defined by our catastrophe excess of loss reinsurance contracts, (ii) to provide additional loss coverage on a high-value individual risk basis through facultative reinsurance, or (iii) to assume a proportional share of losses as defined in a quota share agreement. The rates we pay for reinsurance are based primarily on policy exposures reflected in gross premiums earned. 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 months ended June 30, 2026 and 2025.
Net Premiums Earned represent gross premiums earned less premiums ceded.
The following is a reconciliation of our Net Premiums Written to Net Premiums Earned for the three months ended June 30, 2026 and 2025 (in thousands):
Net Premiums Written
Increase in Unearned Premiums
(61,521
(53,917
Net Premiums Earned
Net premiums written represent premiums charged on policies issued during the period less any applicable reinsurance costs and increased primarily due to a higher volume of policies in force while average premium per policy remained relatively consistent. We had approximately 290,100 policies in force as of June 30, 2026 compared to approximately 270,100 policies in force as of June 30, 2025.
Net Investment Income increased primarily as a result of an increase in our invested assets.
Other Revenue increased primarily as a result of the addition of new insurance carrier customers to Exzeo’s insurance technology platform.
Losses and Loss Adjustment Expenses increased primarily due to a higher volume of policies in force. The gross loss ratio for the three months ended June 30, 2026 was 22.2% compared to 21.3% for the three months ended June 30, 2025. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”
Policy Acquisition and Other Underwriting Expenses primarily reflect the amortization of deferred acquisition costs such as commissions payable to agents for production and renewal of policies and premium taxes. The overall increase was primarily due to a higher volume of premiums in force in the comparative periods.
General and Administrative Personnel Expenses include salaries, wages, payroll taxes, stock-based and other incentive compensation expenses, and employee benefit costs. Factors such as merit increases, changes in headcount, and periodic restricted stock grants, among others, cause fluctuations in this expense. In addition, our personnel expenses are decreased by the capitalization of payroll costs related to projects to develop software for internal use and the payroll costs associated with the processing and settlement of certain catastrophe claims which are recoverable from reinsurers under reinsurance contracts. The quarter-over-quarter increase was driven by additional personnel, annual merit increases, stock-based compensation, and lower reinsurance recoveries related to claims processing for catastrophes.
Interest Expense decreased primarily as a result of the conversion of approximately $172.5 million of 4.75% convertible senior notes, which also resulted in a $1.1 million debt conversion expense included in other operating expenses, during the second quarter of 2025.
Income Tax Expense increased primarily as a result of an increase in income before income taxes. The effective tax rate for the three months ended June 30, 2026 and 2025 was 25.3% and 25.5%, respectively, and each rate represented the federal statutory tax rate of 21.0%, state taxes (net of federal benefits), and unfavorable non-deductible compensation expenses.
Net Income Attributable to Noncontrolling Interests increased primarily as a result of an increase in net income generated by Reciprocal Insurance Exchange Operations as well as the dilution of HCI Group, Inc.’s ownership of Exzeo as a result of Exzeo’s initial public offering in November 2025.
Ratios
The gross loss ratio, gross expense ratio, and net combined ratio each remained relatively consistent for the three months ended June 30, 2026 and 2025.
Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025
For the six months ended June 30, 2026, gross premiums earned were $578.3 million from Insurance Operations and $72.1 million from Reciprocal Exchange Operations. For the six months ended June 30, 2025, gross premiums earned were $564.4 million from Insurance Operations and $41.1 million from Reciprocal Exchange Operations.
Premiums Ceded represented 31.8% and 33.5% of gross premiums earned during the six months ended June 30, 2026 and 2025, respectively.
There were no adjustments to premiums ceded related to retrospective provisions for the six months ended June 30, 2026 and 2025.
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The following is a reconciliation of our Net Premiums Written to Net Premiums Earned for the six months ended June 30, 2026 and 2025 (in thousands):
(16,007
(42,780
Net premiums written increased primarily due to a higher volume of policies in force while average premium per policy remained relatively consistent.
Losses and Loss Adjustment Expenses increased primarily due to a higher volume of policies in force. The gross loss ratio for the six months ended June 30, 2026 was 21.1% compared to 20.5% for the six months ended June 30, 2025. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”
Policy Acquisition and Other Underwriting Expenses increased primarily due to a higher volume of premiums in force in the comparative periods.
General and Administrative Personnel Expenses increased due to additional personnel, annual merit increases, stock-based compensation, and lower reinsurance recoveries related to claims processing for catastrophes.
Income Tax Expense increased primarily as a result of an increase in income before income taxes. The effective tax rate for the six months ended June 30, 2026 and 2025 was 25.8% for each period and each rate represented the federal statutory tax rate of 21.0%, state taxes (net of federal benefits), and unfavorable non-deductible compensation expenses.
The gross loss ratio, gross expense ratio, and net combined ratio each remained relatively consistent for the six months ended June 30, 2026 and 2025.
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LIQUIDITY AND CAPITAL RESOURCES
Throughout our history, our liquidity requirements have been met through issuances of our common and preferred stock, debt offerings, and funds from operations. We expect our future liquidity requirements will be met by funds from operations, primarily the cash received by our insurance subsidiaries from premiums written and investment income. We may consider raising additional capital through debt and/or equity offerings to support our growth and future investment opportunities.
Our insurance subsidiaries require liquidity and adequate capital to meet ongoing obligations to policyholders and claimants and to fund operating expenses. In addition, we attempt to maintain adequate levels of liquidity and surplus to manage any differences between the duration of our liabilities and invested assets. In the insurance industry, cash collected for premiums from policies written is invested, interest and dividends are earned thereon, and losses and loss adjustment expenses are paid out over a period of years. This period of time varies by the circumstances surrounding each claim. With the exception of litigated claims, substantially all of our losses and loss adjustment expenses are fully settled and paid within approximately 100 days of the claim receipt date. Additional cash outflow occurs through payments of underwriting costs such as commissions, taxes, payroll, and general overhead expenses.
As of June 30, 2026, we have $872.3 million of cash and cash equivalents. We believe that we maintain sufficient liquidity to pay claims and expenses, as well as to satisfy commitments in the event of unforeseen events such as reinsurer insolvencies, inadequate premium rates, or reserve deficiencies. We maintain a comprehensive reinsurance program at levels management considers adequate to diversify risk and safeguard our financial position.
In the future, we anticipate our primary use of funds will be to pay claims, reinsurance premiums, interest and principal on our debt, dividends, and to fund operating expenses and real estate acquisitions. From time to time, our use of funds may also include repurchases of shares of our common stock or other strategic initiatives.
As of June 30, 2026, we had an outstanding balance of $36.0 million under a senior secured revolving credit facility with Fifth Third Bank (“Revolving Credit Facility”). The Revolving Credit Facility currently provides borrowing capacity of up to $150.0 million 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 Secured Overnight Financing Rate 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.
As of June 30, 2026, we were in compliance with all required covenants and had an available borrowing capacity of $114.0 million.
The following table summarizes the principal and interest payment obligations of our long-term debt as of June 30, 2026 (principal in thousands):
Interest Rate
There were no significant changes in long-term debt during the six months ended June 30, 2026.
On January 22, 2024, we implemented an “at-the-market” facility (the “ATM Facility”) which gives us the ability to raise up to $75.0 million through the issuance of new shares of common stock through a sales agent (the “Sales Agent”). We have 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 $75.0 million.
In March 2026, our Board of Directors authorized a program to repurchase up to $80.0 million, excluding commissions and other costs, of shares of our common stock through February 27, 2027 (the “Share Repurchase Program”). The Share Repurchase Program permits us 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 us 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, we repurchased 363,538 and 473,609 shares of common stock for $57.0 million and $74.5 million, respectively, excluding commissions and other costs, under the Share Repurchase Program. As of June 30, 2026, we may repurchase up to $5.5 million, excluding commissions and other costs, of shares of our common stock under the Share Repurchase Program.
On July 17, 2026, we completed the Share Repurchase Program with a total 504,330 shares of common stock repurchased for $80.0 million, excluding commissions and other costs.
In May 2026, Exzeo’s Board of Directors authorized a program to repurchase up to $12.0 million, 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
56
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 $10.0 million, excluding commissions and other costs, under the Exzeo Share Repurchase Program. As of June 30, 2026, Exzeo may repurchase up to $2.0 million, excluding commissions and other costs, of shares of its common stock under the Exzeo Share Repurchase Program.
On July 8, 2026, Exzeo completed the Exzeo Share Repurchase Program with a total 834,250 shares of common stock repurchased for $12.0 million, excluding commissions and other costs.
Investments
The main objective of our investment policy is to maximize our after-tax investment income with a reasonable level of risk given the current financial market. Our excess cash is invested primarily in money market accounts, certificates of deposit, and available-for-sale fixed-maturity and equity securities.
As of June 30, 2026, we had $1.2 billion of available-for-sale fixed-maturity and equity investments, which are carried at fair value, and our available-for-sale fixed-maturity securities had a weighted-average duration of 4.6 years. Changes in the general interest rate environment affect the returns available on new available-for-sale fixed-maturity investments. While a rising interest rate environment enhances the returns available on new investments, it reduces the market value of existing available-for-sale fixed-maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new available-for-sale fixed-maturity investments but increases the market value of existing available-for-sale fixed-maturity investments, creating the opportunity for realized investment gains on disposition.
In the future, we may alter our investment policy with regard to investments in federal, state and municipal obligations, preferred and common equity securities and real estate mortgages, as permitted by applicable law, including insurance regulations.
As of June 30, 2026, we had $16.4 million of limited partnership investments consisting of six private equity funds managed by their general partners. Withdrawals from limited partnership investments are generally not permitted and distributions occur when the underlying investments of the limited partnership investments are liquidated. Additionally, two of these funds have unexpired capital commitments which are callable at the discretion of the fund’s general partner for funding new investments or expenses of the fund. Although capital commitments for the four remaining funds have expired, the general partners may request additional funds under certain circumstances. As of June 30, 2026, there were unexpired capital commitments of $3.8 million.
Real estate investments have long been a significant component of our overall investment portfolio. It diversifies our portfolio and helps offset the volatility of other higher-risk assets. Thus, we may consider expanding our real estate investments portfolio should an opportunity arise.
On July 1, 2026, our 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.
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Sources and Uses of Cash
The following table is a summary of our cash flow activity for the periods presented (in thousands):
Change
(33,078
(620,407
(98,252
(134
(751,871
Cash Flows for the Six Months Ended June 30, 2026
Net cash provided by operating activities consisted primarily of cash received from net premiums written and reinsurance recoveries of approximately $34.2 million, partially offset by cash disbursed for operating expenses, losses and loss adjustment expenses, and interest payments.
Net cash used in investing activities consisted primarily of $547.8 million of purchases of available-for-sale fixed-maturity and equity securities, partially offset by $38.8 million of proceeds from sales of available-for-sale fixed-maturity and equity securities and $8.5 million of proceeds from calls, repayments and maturities of available-for-sale fixed-maturity securities.
Net cash used in financing activities consisted primarily of $74.5 million of repurchases of common stock, $11.3 million of payments for deposit accounting assets, $11.2 million of net share settlements, $10.3 million of common stock dividends, and $10.0 million of repurchases of noncontrolling interests. These cash outflows were partially offset by $6.8 million of net subscriber surplus contributions.
Cash Flows for the Six Months Ended June 30, 2025
Net cash provided by operating activities consisted primarily of cash received from net premiums written and reinsurance recoveries of approximately $59.4 million, partially offset by cash disbursed for operating expenses, losses and loss adjustment expenses, and interest payments.
Net cash provided by investing activities consisted primarily of $263.6 million of proceeds from calls, repayments and maturities of available-for-sale fixed-maturity securities and $25.0 million proceeds from sales of available-for-sale fixed-maturity and equity securities, partially offset by $159.9 million of purchases of available-for-sale fixed-maturity and equity securities and $8.9 million of purchases of real estate investments.
Net cash used in financing activities consisted primarily of $8.9 million of common stock dividends, net repayment of our Revolving Credit Facility of $4.0 million, and an induced debt conversion payment of $1.1 million, partially offset by net subscriber surplus contributions of $2.7 million.
OFF-BALANCE SHEET ARRANGEMENTS
As of June 30, 2026, we had unexpired capital commitments for limited partnerships investments of $3.8 million as described above. We do not have any other arrangements giving rise to material obligations not reported in our consolidated balance sheets as described in Item 303 of SEC Regulation S-K.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The accompanying consolidated financial statements are prepared in accordance with U.S. GAAP, which requires
58
us to select accounting policies and make estimates that affect amounts reported in the consolidated financial statements and the accompanying notes. Management’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.
We believe our accounting policies and estimates specific to losses and loss adjustment expenses, reinsurance recoverable, income taxes, stock-based compensation expense, and limited partnership investments involve our most significant judgments and estimates material to our consolidated financial statements.
Our accounting policies and estimates and their related risks that we consider to be critical are more fully described in our 2025 Annual Report. During the six months ended June 30, 2026, there have been no material changes with respect to any of our critical accounting policies and estimates.
Reserves for Losses and Loss Adjustment Expenses
Our liability for losses and loss adjustment expenses (“Reserves”) is specific to property insurance, which is our insurance subsidiaries’ only line of business. The Reserves include both case reserves on reported claims and our reserves for incurred but not reported (“IBNR”) losses. As of each period end date, the balance of our Reserves is based on our best estimate of the ultimate cost of reported claims and the IBNR losses based primarily on our historical experience. Changes in the Reserves are charged or credited to operations as the Reserves are adjusted.
The IBNR represents our estimate of the ultimate cost of all claims that have occurred but have not been reported to us, and in some cases may not yet be known to the insured, and future development of reported claims. Estimating the IBNR component of our Reserves involves considerable judgment on the part of management. As of June 30, 2026, $506.9 million of the total $559.0 million of Reserves was attributable to our estimate of IBNR. The remaining $52.1 million related to known cases which have been reported but not yet fully settled and represents our best estimate of the cost to settle such claims. As of June 30, 2026, $42.6 million of the $52.1 million in reserves for known cases related to claims incurred during prior years.
Our Reserves decreased from $576.5 million as of December 31, 2025 to $559.0 million as of June 30, 2026. The $17.5 million decrease was comprised of (i) reductions in our non-catastrophe Reserves of $54.4 million for 2025 and prior loss years; (ii) reductions in our catastrophe Reserves of $46.5 million primarily related to Hurricane Ian, Hurricane Helene, and Hurricane Milton; and (iii) partially offset by $83.4 million in reserves established for the 2026 loss year. The Reserves established for 2026 claims were primarily driven by IBNR as of June 30, 2026. The decrease of $100.9 million related to our 2025 and prior loss-years reserves was due to settlement of such claims.
Based on all information known to us, we believe our Reserves as of June 30, 2026 are adequate to cover our claims for losses incurred, including losses not yet reported to us. However, these estimates are continually reviewed by management as they are subject to significant variability and may be impacted by trends in claim severity and frequency or unusual exposures not yet identified. We review historical data and consider 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 Reserves. 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.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 3 “Recent Accounting Pronouncements” to the consolidated financial statements included in this Quarterly Report on Form 10-Q for further information about recent accounting pronouncements and adoptions.
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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of June 30, 2026, our investment portfolio included available-for-sale fixed-maturity and equity securities, the purposes of which are not for speculation. Our main objective is to maximize after-tax investment income and maintain sufficient liquidity to meet our obligations while minimizing market risk, which is the potential economic loss from adverse fluctuations in securities prices. We consider many factors including credit ratings, investment concentrations, regulatory requirements, anticipated fluctuation of interest rates, durations and market conditions in developing investment strategies. Our investment securities are managed primarily by an investment committee appointed by our Board of Directors. From time to time, our investment committee may decide to invest in low-risk assets such as U.S. government bonds.
Our investment portfolio is exposed to interest rate risk, credit risk, and equity price risk. Fiscal and economic uncertainties caused by any government action or inaction may exacerbate these risks and potentially have adverse impacts on the value of our investment portfolio.
We classify our fixed-maturity securities as available-for-sale and report any unrealized gains or losses, net of deferred income taxes, as a component of accumulated other comprehensive income within our stockholders’ equity. As such, any material temporary changes in their fair value can adversely impact our stockholders’ equity. In addition, we recognize any unrealized gains or losses related to our equity securities in our statement of income. As a result, our results of operations can be materially affected by the volatility in the equity market.
Interest Rate Risk
Our available-for-sale fixed-maturity securities are sensitive to potential losses resulting from unfavorable changes in interest rates. We manage this risk by analyzing anticipated movement in interest rates and considering our future capital needs.
The following table illustrates the impact of hypothetical changes in interest rates to the fair value of our available-for-sale fixed-maturity securities as of June 30, 2026 (dollar amounts in thousands):
Hypothetical Change in Interest Rates
EstimatedFair Value
Change inEstimatedFair Value
PercentageIncrease(Decrease)in EstimatedFair Value
300 basis point increase
954,004
(137,037
-13
200 basis point increase
996,973
(94,068
-9
100 basis point increase
1,042,652
(48,389
-4
100 basis point decrease
1,142,140
51,099
200 basis point decrease
1,195,949
104,908
300 basis point decrease
1,252,469
161,428
Credit Risk
Credit risk can expose us to potential losses arising principally from adverse changes in the financial condition of the issuers of our available-for-sale fixed-maturity securities. We mitigate this risk by investing primarily in investment grade available-for-sale fixed-maturity securities, diversifying our portfolio to avoid concentrations by issuer or business sector, and continually monitoring individual securities for declines in credit quality. While we emphasize credit quality in our investment selection process, significant downturns in the markets or general economy may impact the credit quality of our portfolio.
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The following table presents the composition of our available-for-sale fixed-maturity securities, by rating, as of June 30, 2026 (dollar amounts in thousands):
% of Total
Amortized
Credit Rating
AAA
2,566
0
2,571
AA+, AA, AA-
839,857
76
829,061
A+, A, A-
68,750
68,162
BBB+, BBB, BBB-
179,107
177,969
BB+, BB, BB-
1,300
1,248
B+, B, B-
2,537
2,379
Not Rated
9,661
9,651
Equity Price Risk
As of June 30, 2026, our equity investment portfolio included common stocks, perpetual preferred stocks, mutual funds, and exchange-traded funds. We may incur potential losses due to adverse changes in equity security prices. We manage this risk primarily through industry and issuer diversification and asset mix.
The following table illustrates the composition of our equity securities as of June 30, 2026 (dollar amounts in thousands):
Stocks by sector:
Financial
4,459
Consumer
4,458
Technology
3,634
Communications
2,717
Other (1)
3,110
18,378
Mutual funds and exchange-traded funds by type:
Debt
31,123
3,735
Alternative
5,802
40,660
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Foreign Currency Exchange Risk
As of June 30, 2026, we did not have any material exposure to foreign currency related risk.
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ITEM 4 – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2026.
Changes in Internal Control Over Financial Reporting
During the three months ended June 30, 2026, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 1 – LEGAL PROCEEDINGS
Refer to Note 19 “Commitments and Contingencies” to the consolidated financial statements under the heading “Litigation and Other Legal Matters” included in this Quarterly Report on Form 10-Q for legal proceedings and related matters.
ITEM 1A – RISK FACTORS
There have been no material changes to the risk factors previously disclosed in Part I, Item 1A of the 2025 Annual Report.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Equity Securities
None.
Use of Proceeds from Registered Equity Securities
Issuer Purchases of Equity Securities
Under our publicly announced Share Repurchase Program, we are permitted 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 timing and total amount of any stock repurchases will be determined at management's discretion and depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices and other considerations. The Share Repurchase Program does not obligate us to repurchase a specific number of shares of common stock, and may be canceled or suspended at any time without notice.
In addition, we generally withhold shares of our common stock to satisfy our employees’ payroll tax liabilities associated with the vesting of restricted stock awards issued under our share-based compensation plan.
During the three months ended June 30, 2026, we repurchased shares of our common stock as follows (dollar amounts in thousands, except share and per share amounts):
TotalNumberof Shares
AveragePricePaid
TotalNumber ofSharesPurchasedas Part ofPubliclyAnnounced Plans
MaximumDollarValue of SharesThat May YetBe PurchasedUnderThe Plans
For the Month Ended
Purchased
or Programs (a)
April 30, 2026
129,364
154.60
42,502
May 31, 2026
199,400
155.76
129,211
22,516
105,226
161.84
104,963
5,534
433,990
156.89
363,538
Working Capital Restrictions and Other Limitations on the Payment of Dividends
We are not subject to working capital restrictions or other limitations on the payment of dividends. However, our insurance subsidiaries are subject to restrictions on the dividends and other distributions they may pay. Those restrictions could impact our ability to pay dividends in the future.
Under Florida law, a domestic insurer may not pay any dividend or distribute cash or other property to its stockholders except out of that part of its available and accumulated capital and surplus funds which is derived from realized net operating profits on its business and net realized capital gains. Additionally, a Florida domestic insurer may not make dividend payments or distributions to its stockholders without prior approval of the Florida Office of Insurance Regulation (“FLOIR”) if the dividend or distribution would exceed the larger of (1) the lesser of (a) 10.0% of its capital surplus or (b) net income, not including realized capital gains, plus a two year carry forward, (2) 10.0% of capital surplus with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains or (3) the lesser of (a) 10.0% of capital surplus or (b) net investment income plus a three year carry forward with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains.
Alternatively, a Florida domestic insurer may pay a dividend or distribution without the prior written approval of the FLOIR if (1) the dividend is equal to or less than the greater of (a) 10.0% of the insurer’s capital surplus as regards to policyholders derived from realized net operating profits on its business and net realized capital gains or (b) the insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year, (2) the insurer will have policy holder capital surplus equal to or exceeding 115.0% of the minimum required statutory capital surplus after the dividend or distribution, (3) the insurer files a notice of the dividend or distribution with the FLOIR at least ten business days prior to the dividend payment or distribution and (4) the notice includes a certification by an officer of the insurer attesting that, after the payment of the dividend or distribution, the insurer will have at least 115% of required statutory capital surplus as to policyholders. Except as provided above, a Florida domiciled insurer may only pay a dividend or make a distribution (1) subject to prior approval by the FLOIR or (2) 30 days after the FLOIR has received notice of such dividend or distribution and has not disapproved it within such time.
During the six months ended June 30, 2026, our insurance subsidiaries made cash distributions of $77.5 million to HCI Group, Inc.
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ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
ITEM 4 – MINE SAFETY DISCLOSURES
ITEM 5 – OTHER INFORMATION
During the three months ended June 30, 2026, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).
ITEM 6 – EXHIBITS
The exhibits listed on the accompanying Index to Exhibits are filed, furnished or incorporated by reference as part of this Quarterly Report on form 10-Q.
Index to Exhibits
The information required by this Item is set forth on the index to exhibits below.
Exhibit Number
Exhibit Description
Form
Exhibit
Filing Date
3.1
Articles of Incorporation, with amendments.
10-Q
8/7/2013
3.1.1
Articles of Amendment to Articles of Incorporation designating the rights, preferences and limitations of Series B Junior Participating Preferred Stock.
8-K
10/18/2013
3.1.2
Articles of Amendment to Articles of Incorporation canceling the rights, preferences and limitations of Series B Junior Participating Preferred Stock.
5/15/2020
3.2
Bylaws, with amendments.
9/13/2019
4.1
Form of common stock certificate.
11/7/2013
4.2
Common Stock Purchase Warrant, dated February 26, 2021, issued by HCI Group, Inc. to CB Snowbird Holdings, L.P.
3/1/2021
4.3
See Exhibits 3.1, 3.1.1, 3.1.2 and 3.2 of this report for provisions of the Articles of Incorporation, as amended, and our Bylaws, as amended, defining certain rights of security holders.
10.1^
HCI Group, Inc. 2012 Omnibus Incentive Plan as revised April 26, 2022.
10.5
5/6/2022
10.2^
Executive Employment Agreement dated November 23, 2016 between Mark Harmsworth and HCI Group, Inc.
10.7
8/3/2017
10.3*
Reimbursement Contract effective June 1, 2026 between Homeowners Choice Property & Casualty Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund.
10.4*#
Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2026 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.5*#
Reinstatement Premium Protection Reinsurance Contract effective June 1, 2026 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.6*#
Reinstatement Premium Protection Reinsurance Contract effective June 1, 2026 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.7*#
Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2026 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.8*
Reimbursement Contract effective June 1, 2026 between TypTap Insurance Company and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund.
66
10.9*#
Reinstatement Premium Protection Reinsurance Contract effective June 1, 2026 issued to Condo Owners Reciprocal Exchange and Tailrow Insurance Exchange and Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.10*#
Facultative Excess of Loss Reinsurance Contract effective June 1, 2026 issued to Condo Owners Reciprocal Exchange by Subscribing Reinsurers.
10.11*#
Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2026 issued to Condo Owners Reciprocal Exchange and Tailrow Insurance Exchange and Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.12*#
10.13*#
10.14*
Reimbursement Contract effective June 1, 2026 between Condo Owners Reciprocal Exchange and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund.
10.15*
Reimbursement Contract effective June 1, 2026 between Tailrow Insurance Exchange and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund.
10.19#
First Layer Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2025 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and Tailrow Insurance Exchange by Subscribing Reinsurers.
10.25
8/8/2025
10.20#
Second Layer Reinstatement Premium Protection Reinsurance Contract effective June 1, 2025 issued to Homeowners Choice Property & Casualty Company, Inc. and Tailrow Insurance Exchange by Subscribing Reinsurers.
10.26
10.21#
Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2025 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and Tailrow Insurance Exchange by Subscribing Reinsurers.
10.27
10.22#
Second Layer Reinstatement Premium Protection Reinsurance Contract effective June 1, 2025 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and Tailrow Insurance Exchange by Subscribing Reinsurers.
10.28
10.23#
Second Layer Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2025 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and Tailrow Insurance Exchange by Subscribing Reinsurers.
10.29
10.24#
Reinstatement Premium Protection Reinsurance Contract effective June 1, 2025 issued to Homeowners Property & Casualty Insurance Company, Inc. and Tailrow Insurance Exchange by Subscribing Reinsurers.
10.30
10.25#
First Layer Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2025 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.31
67
10.26#
Second Layer Reinstatement Premium Protection Reinsurance Contract effective June 1, 2025 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.32
10.27#
Second Layer Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2025 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.33
10.28#
10.34
10.29#
Sixth Layer Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2025 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.35
10.30#
Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2025 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.36
10.31#
Reinstatement Premium Protection Reinsurance Contract effective June 1, 2025 issued to TypTap Insurance Company and Homeowners Choice Property & Casualty Insurance Company, Inc. by Subscribing Reinsurers.
10.37
10.32#
Reinstatement Premium Protection Contract effective June 1, 2025 issued to Condo Owners Reciprocal Exchange by Subscribing Reinsurers.
10.38
10.33#
Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2025 issued to Condo Owners Reciprocal Exchange by Subscribing Reinsurers.
10.39
Equity Distribution Agreement between HCI Group, Inc., Truist Securities, Inc. and Citizens JMP Securities, LLC.
S-3
1.2
1/22/2024
Amended and Restated Common Stock Purchase Warrant between HCI Group, Inc. and CB Snowbird Holdings, L.P.
4.17
Registration Rights Agreement between HCI Group, Inc. and CB Snowbird Holdings, L.P.
4.18
Stock Redemption Agreement between TypTap Insurance Group, Inc. and CB Snowbird Holdings, L.P.
4.19
Assumption Agreement between Homeowners Choice Property & Casualty Insurance Company, Inc. and Citizens Property Insurance Corporation.
99.1
10/2/2023
Assumption Agreement between TypTap Insurance Company and Citizens Property Insurance Corporation.
11/6/2023
10.40#
10.46
10.41#
10.47
10.42^
Exzeo Group, Inc. 2021 Equity Incentive Plan
10.43^
Form of Restricted Stock Award Agreement of TypTap Insurance Group, Inc.
10.6
10.44^
Stock Option Agreement between Paresh Patel and TypTap Insurance Group, Inc. dated October 1, 2021.
10/7/2021
10.45^
Exzeo Group, Inc. 2021 Omnibus Incentive Plan.
99.2
10.46^
Form of Stock Option Award under the Exzeo Group, Inc. under the 2021 Omnibus Plan
S-1
10.17
9/25/2025
10.47^
Form of Restricted Stock Award Agreement of Exzeo Group, Inc. under the 2021 Omnibus Plan
10.18
10.48^
Stock Option Agreement between Paresh Patel and HCI Group, Inc. dated September 15, 2023.
10.54
11/8/2023
10.49^
Form of executive restricted stock award contract.
5/1/2014
10.50#
Facultative Excess of Loss Reinsurance Contract effective June 1, 2025 issued to Condo Owners Reciprocal Exchange by Subscribing Reinsurers.
10.59
10.51
Amended and Restated Credit Agreement, dated June 2, 2023, between HCI Group, Inc. and Fifth Third Bank.
6/8/2023
10.52
Security and Pledge Agreement dated June 2, 2023, between HCI Group, Inc. and Fifth Third Bank
10.53
Revolving Credit Promissory Note, dated June 2, 2023, between HCI Group, Inc. and Fifth Third Bank
99.3
6/8/20223
Second Amended and Restated Credit Agreement, dated November 3, 2023, between HCI Group, Inc. and Fifth Third Bank
11/9/2023
10.55
Second Amended and Restated Security and Pledge Agreement, dated November 3, 2023, between HCI Group, Inc. and Fifth Third Bank.
10.56
Renewed, Amended and Restated Revolving Credit Promissory Note, dated November 3, 2023 between HCI Group, Inc. and Fifth Third Bank
10.57^
Executive Employment Agreement between Paresh Patel and HCI Group, Inc. dated April 17, 2024.
4/23/2024
10.58^
Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated April 17, 2024.
10.59^
Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated January 16, 2020.
1/23/2020
10.60^
Nonqualified Stock Option Agreement between Paresh Patel and HCI Group, Inc. dated January 16, 2020.
10.61
Reimbursement Contract effective June 1, 2025 between Condo Owners Reciprocal Exchange and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund.
10.107
10.62
Reimbursement Contract effective June 1, 2025 between Homeowners Choice Property & Casualty Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund.
10.108
10.63
Reimbursement Contract effective June 1, 2025 between Tailrow Insurance Exchange and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund.
10.109
10.64
Reimbursement Contract effective June 1, 2025 between TypTap Insurance Company and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund.
10.110
69
10.65
Property Quota Share Reinsurance Contract effective December 31, 2020 issued to United Property and Casualty Insurance Company by Homeowners Choice Property & Casualty Insurance Company.
10-K
10.124
3/10/2022
10.66
Renewal Rights Agreement effective January 18, 2021 by and among United Property and Casualty Insurance Company, United Insurance Holdings Corp., United Insurance Management, L.C. and Homeowners Choice Property & Casualty Insurance Company.
10.125
10.67
Property Quota Share Reinsurance Contract effective June 1, 2021 issued to United Property and Casualty Insurance Company by Homeowners Choice Property & Casualty Insurance Company and TypTap Insurance Company.
10.126
10.68
Renewal Rights Agreement effective December 30, 2021 by and among United Property and Casualty Insurance Company, United Insurance Holdings Corp., United Insurance Management, L.C. and Homeowners Choice Property & Casualty Insurance Company.
10.127
10.69
Property Quota Share Reinsurance Contract effective December 31, 2021 issued to United Property and Casualty Insurance Company by Homeowners Choice Property & Casualty Insurance Company.
10.128
10.70
Property Quota Share Reinsurance Contract effective June 1, 2022 issued to United Property and Casualty Insurance Company by TypTap Insurance Company.
10.129
8/9/2022
10.71^
Exzeo Group Inc. 2025 Omnibus Incentive Plan.
S-1/A
10.19
10/16/2025
10.72^
Form of Stock Option Award under the 2025 Omnibus Plan.
10.20
10.73^
Form of Restricted Stock Award Agreement under the 2025 Omnibus Plan.
10.21
10.74^
Employment Agreement, dated December 9, 2025, by and between Exzeo Group, Inc. and Paresh S. Patel
12/23/2025
31.1*
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*
XBRL Instant Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104*
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
*
Filed herewith.
**
Furnished herewith.
^
Management contract or compensatory plan.
#
Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv) because it is immaterial and would be competitively harmful if publicly disclosed. Information that has been omitted is indicated with brackets.
70
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 7, 2026
By:
/s/ Paresh Patel
Paresh Patel
Chief Executive Officer
(Principal Executive Officer)
/s/ James Mark Harmsworth
James Mark Harmsworth
Chief Financial Officer
(Principal Financial and Accounting Officer)