HCI Group (HCI)

Insurance and technology company HCI Group (NYSE:HCI) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 52.1% year on year to $246.2 million. Its GAAP profit of $7.25 per share was 58.5% above analysts’ consensus estimates.

Company Overview

Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE:HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.

Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by 'social inflation'—the trend of rising litigation costs and larger jury awards.

HCI Group competes with other property and casualty insurers operating in Florida and the southeastern United States, including Universal Insurance Holdings (NYSE:UVE), United Insurance Holdings (NASDAQ:UIHC), Heritage Insurance Holdings (NYSE:HRTG), and larger national insurers like Allstate (NYSE:ALL) and State Farm.

Insurance companies generate revenue three ways. The first is the core insurance business itself, represented in the income statement as premiums earned. The second source is investment income from investing the “float” (premiums collected but not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from policy administration, annuities, and other value-added services. Over the last five years, HCI Group grew its revenue at an incredible 23.7% compounded annual growth rate. Its growth surpassed the average insurance company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. HCI Group’s annualized revenue growth of 27.9% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, HCI Group reported magnificent year-on-year revenue growth of 52.1%, and its $246.2 million of revenue beat Wall Street’s estimates by 3.8%.

Net premiums earned made up 91.2% of the company’s total revenue during the last five years, meaning HCI Group lives and dies by its underwriting activities because non-insurance operations barely move the needle.

Our experience and research show the market cares primarily about an insurer’s net premiums earned growth as investment and fee income are considered more susceptible to market volatility and economic cycles.

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are:

• Gross premiums - what’s ceded to reinsurers as a risk mitigation and transfer strategy

HCI Group’s net premiums earned has grown at a 25.6% annualized rate over the last five years, much better than the broader insurance industry and faster than its total revenue.

When analyzing HCI Group’s net premiums earned over the last two years, we can see that growth accelerated to 28.7% annually. This performance was similar to its total revenue.

HCI Group’s net premiums earned came in at $225.8 million this quarter, up a hearty 54.3% year on year and topping Wall Street Consensus estimates by 6.3%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

This is because insurers are balance sheet businesses, where assets and liabilities define the core economics. This means that interest income and expense should be factored into the definition of profit but taxes - which are largely out of a company’s control - should not.

Over the last five years, HCI Group’s pre-tax profit margin has fallen by 35.8 percentage points, going from 2.8% to 47.7%. It has also expanded by 26.3 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

HCI Group’s pre-tax profit margin came in at 58.5% this quarter. This result was 54.8 percentage points better than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

HCI Group’s EPS grew at an astounding 47.9% compounded annual growth rate over the last five years, higher than its 23.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into HCI Group’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, HCI Group’s pre-tax profit margin expanded by 35.8 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For HCI Group, its two-year annual EPS growth of 73% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q4, HCI Group reported EPS of $7.25, up from $0.23 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects HCI Group’s full-year EPS of $22.61 to shrink by 30.4%.

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float–premiums collected but not yet paid out–are invested, creating an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate.

HCI Group’s BVPS grew at an incredible 25.4% annual clip over the last five years. BVPS growth has also accelerated recently, growing by 55% annually over the last two years from $33.36 to $80.13 per share.

Over the next 12 months, Consensus estimates call for HCI Group’s BVPS to grow by 13% to $76.25, solid growth rate.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

HCI Group currently has $67.88 million of debt and $1.04 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.1×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 1.0× for an insurance business. Anything below 0.5× is a bonus.

Return on equity (ROE) is a crucial yardstick for insurance companies, measuring their ability to generate returns on the capital provided by shareholders. Insurers that consistently deliver superior ROE tend to create more value for their investors over time through strategic capital allocation and shareholder-friendly policies.

Over the last five years, HCI Group has averaged an ROE of 16.3%, impressive for a company operating in a sector where the average shakes out around 12.5% and those putting up 20%+ are greatly admired. This shows HCI Group has a strong competitive moat.

We were impressed by how significantly HCI Group blew past analysts’ book value per share expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock remained flat at $165 immediately following the results.

Updated: February 25, 2026 at 11:58 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own HCI Group, you should also grasp the company’s longer-term business quality and valuation.

HCI Group is an amazing business ranking highly on our list. First of all, the company’s revenue growth was exceptional over the last five years. And while its projected EPS for the next year is lacking, its net premiums earned growth was exceptional over the last five years. Additionally, HCI Group’s expanding pre-tax profit margin shows the business has become more efficient.

HCI Group’s P/B ratio based on the next 12 months is 1.8x. Looking at the insurance space today, HCI Group’s qualities as one of the best businesses really stand out, and we like it at this price.

Wall Street analysts have a consensus one-year price target of $245 on the company (compared to the current share price of $164.00), implying they see 49.4% upside in buying HCI Group in the short term.