- Strong balance sheet: $103 million in cash and short term and liquid investments with no debt
- Book value of $7.21 per share increased 13.5 percent from first quarter 2009
CLEARWATER, Fla., May 14, 2010 (GLOBE NEWSWIRE) -- Homeowners Choice, Inc. (Nasdaq:HCII), a Florida-based provider of homeowners' insurance, today announced its results of operations for the three months ended March 31, 2010.
Net income for the first quarter of 2010 was $698,000, or $0.10 per diluted share, compared with net income of $6.3 million, or $0.87 per diluted share, for the first quarter of 2009. Book value per share increased from $7.03 at December 31, 2009 to $7.21 at March 31, 2010, an increase of 2.6 percent.
Gross premiums earned were $30.3 million for each of the quarters ended March 31, 2010 and 2009. Net premiums earned for the first quarter of 2010 decreased 24 percent to $16.2 million from $21.3 million in the prior year quarter. "Net premiums earned" reflects gross premiums earned reduced by premiums ceded to reinsurance companies that cover certain of the risks from hurricanes and other catastrophes. The company's reinsurance costs increased significantly beginning June 1, 2009 when it renewed its reinsurance policies. During the first quarter of 2010, reinsurance costs were 46 percent of the company's gross premiums earned compared with 30 percent in the prior year quarter. Homeowners Choice also reported investment income of $531,000 for the first quarter compared with $358,000 in the prior year first quarter.
Losses and loss adjustment expenses for the first quarter were $9.8 million compared with $10.0 million in the prior year quarter. Policy acquisition and other underwriting expenses for the first quarter of 2010 were $4.3 million compared with $0.9 million during the first quarter of 2009. This increase was primarily due to commissions and other underwriting expenses associated with renewal policies which accounted for $23.3 million of gross premiums in the 2010 first quarter compared with $9.6 million in the first quarter of 2009. Other operating expenses, which include a variety of general and administrative expenses, for the three months ended March 31, 2010 and 2009 were $1.7 million and $1.2 million, respectively.
During the first quarter of 2010, the company repurchased a total of 54,143 of its common shares as part of its publicly announced repurchase plan, plus an additional 200,000 shares under a stock purchase agreement outside of this plan. These repurchases were in addition to the 452,000 common shares purchased in 2009. At March 31, 2010, the company's weighted average diluted shares totaled 6,814,000, a 6.1 percent decrease from the 7,255,000 weighted average shares reported at March 31, 2009.
"Given the high-rate reinsurance contracts covering the 2009 hurricane season, we are pleased to report another consecutive profitable quarter," said Homeowners Choice Chief Executive Officer F.X. McCahill. "During the past year we worked hard to optimize our book of business in order to mitigate reinsurance costs, improve loss ratios and maximize profitability. As part of that process, we allowed our policy count to shrink over much of 2009, but then we added policies in December 2009 by participating in our seventh assumption from Citizens Property Insurance Corporation. As of March 31, 2010, the net policy count from this assumption after consumer opt outs was approximately 17,000 policies.
"Looking out over the remainder of 2010, we expect continued profitably with bottom-line improvement as a result of an easing of reinsurance rates combined with an average rate increase of 14 percent, which began rolling through our book of business in April 2010."
Conference Call
The company will host an earnings conference call Tuesday, May 18, 2010, at 4:30 p.m. E.D.T. to discuss its first quarter 2010 results. Interested parties are invited to listen to the call live over the Internet at http://www.ir-site.com/hcpci/events.asp">http://www.ir-site.com/hcpci/events.asp. The call is also available by dialing (877) 407-9210 (toll-free). International participants should instead call (201) 689-8049. Participants should dial into the conference call approximately 10 minutes before the scheduled start time. Replays of the webcast will be available until August 18, 2010.
Homeowners Choice, Inc. is a Florida-based insurance holding company headquartered in Clearwater. Through its subsidiary corporations, Homeowners Choice provides property and casualty homeowners' insurance, condominium owners' insurance and tenants' insurance solely to Florida property owners. Founded in 2006, Homeowners Choice today serves approximately 69,000 policyholders throughout Florida representing approximately $127 million in annualized premiums. The company's common shares trade on the NASDAQ Global Market under the ticker symbol HCII and are included in the Russell Microcap Index. Warrants trade on the same market under the ticker symbol HCIIW. More information about Homeowners Choice, Inc. is available at www.hcpci.com.
The Homeowners Choice, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6712
Forward-Looking Statements
This news release may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "estimate," "expect," "intend," "plan" and "project" and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. For example, there can be no assurance that the company will obtain reinsurance rate relief, improved profitability or bottom-line improvement during 2010. Some of these risks and uncertainties are identified in the company's filings with the Securities and Exchange Commission. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on the company's business, financial condition and results of operations. Homeowners Choice, Inc. disclaims all obligations to update any forward-looking statements.
| HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Statements of Earnings | ||
| (Unaudited) | ||
| (Dollars in thousands, except per share amounts) | ||
| Three Months Ended | ||
| March 31, | ||
| 2010 | 2009 | |
| Revenue | ||
| Gross premiums earned | $30,344 | 30,337 |
| Premiums ceded | (14,103) | (9,007) |
| Net premiums earned | 16,241 | 21,330 |
| Net investment income | 531 | 358 |
| Other | 215 | 635 |
| Total revenue | 16,987 | 22,323 |
| Expenses | ||
| Losses and loss adjustment expenses | 9,813 | 10,022 |
| Policy acquisition and other underwriting expenses | 4,292 | 920 |
| Other operating expenses | 1,696 | 1,244 |
| Total expenses | 15,801 | 12,186 |
| Income before income taxes | 1,186 | 10,137 |
| Income taxes | 488 | 3,853 |
| Net income | $698 | 6,284 |
| Basic earnings per share | $0.11 | 0.91 |
| Diluted earnings per share | $0.10 | 0.87 |
| Dividends per share | $— | — |
| HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Balance Sheets | ||
| (Dollars in thousands, except share amounts) | ||
| At March 31, 2010 | At December 31, 2009 | |
| (Unaudited) | ||
| Assets | ||
| Investment in fixed maturity securities, held-to-maturity, at amortized cost (fair value $7,756 and $4,250) | $7,556 | 4,049 |
| Investment in fixed maturity securities, available-for-sale, at fair value (amortized cost $19,778 and $19,763) | 19,909 | 19,266 |
| Time deposits | 13,634 | 13,507 |
| Short-term investments | 7,301 | 11,521 |
| Total investments | 48,400 | 48,343 |
| Cash and cash equivalents | 54,440 | 43,453 |
| Accrued interest and dividends receivable | 321 | 176 |
| Premiums receivable | 4,284 | 4,899 |
| Assumed reinsurance balances receivable | -- | 19,525 |
| Prepaid reinsurance premiums | 9,402 | 7,205 |
| Deferred policy acquisition costs | 7,126 | 10,496 |
| Property and equipment, net | 471 | 399 |
| Deferred income taxes | 1,862 | 2,438 |
| Other assets | 1,869 | 958 |
| Total assets | $128,175 | 137,892 |
| Liabilities and Stockholders' Equity | ||
| Losses and loss adjustment expenses | 20,805 | 19,178 |
| Unearned premiums | 46,930 | 68,509 |
| Advance premiums | 6,623 | 713 |
| Assumed reinsurance balances payable | 5,211 | 0 |
| Accrued expenses | 3,495 | 3,742 |
| Income taxes payable | 80 | 167 |
| Other liabilities | 326 | 205 |
| Total liabilities | 83,470 | 92,514 |
| Stockholders' equity: | ||
| Preferred stock (no par value 20,000,000 shares authorized, | ||
| no shares issued or outstanding) | — | — |
| Common stock, (no par value, 40,000,000 shares authorized, 6,202,492 | ||
| and 6,456,635 shares issued and outstanding in 2010 and 2009) | — | — |
| Additional paid-in capital | 19,407 | 21,164 |
| Retained earnings | 25,218 | 24,520 |
| Accumulated other comprehensive income (loss) | 80 | (306) |
| Total stockholders' equity | 44,705 | 45,378 |
| Total liabilities and stockholders' equity | $128,175 | 137,892 |