HCI Group Announces Completion of its 2025 – 2026 Catastrophe Reinsurance Programs

Rhea-AI Summary

HCI Group has completed its catastrophe reinsurance programs for 2025-2026, securing over $3.5 billion in excess of loss aggregate limit across three reinsurance towers. The program covers multiple subsidiaries including Homeowners Choice, TypTap Insurance, and CORE, with statutory retentions of $18 million for Towers 1 and 2, and $3 million for Tower 3. Claddaugh Casualty Insurance Company's maximum retained loss is approximately $117 million for first events and $35 million for second events. The company expects to incur net consolidated reinsurance premiums of approximately $422 million, with all participating reinsurers rated 'A-' or better by AM Best or having fully collateralized obligations.

Positive

• Secured substantial coverage with over $3.5 billion in excess of loss aggregate limit
• All participating reinsurers are highly rated (A- or better) or fully collateralized
• Strong support from global reinsurance partners indicating confidence in HCI's underwriting
• Comprehensive coverage across multiple subsidiaries with full reinstatement premium protection

Negative

• Significant reinsurance costs with expected premiums of $422 million
• Substantial retained loss exposure of $117 million for first events

Insights

Insurance Financial Analyst

HCI secures robust $3.5B catastrophe reinsurance program, strengthening financial stability despite $422M premium cost.

HCI Group has completed a comprehensive catastrophe reinsurance program for 2025-2026, demonstrating strong risk management discipline in a challenging insurance environment. The company has structured three distinct reinsurance towers providing over $3.5 billion in excess of loss aggregate limit with full reinstatement protection.

The program architecture shows sophisticated risk segmentation across HCI's multiple insurance entities. Towers 1 and 2 have $18 million statutory retentions for first and second events, while Tower 3 (covering CORE policies) maintains a more conservative $3 million retention - appropriate given the specialized condo risk profile.

The $422 million estimated premium cost represents a significant but necessary operational expense that provides crucial catastrophe protection. This expense is partially mitigated through Claddaugh (HCI's captive reinsurer) strategically participating across all towers, allowing the company to retain some premium within its corporate structure while maintaining appropriate risk transfer.

Particularly noteworthy is the quality assurance built into the program - all participating reinsurers carry 'A-' or better AM Best ratings or have fully collateralized their obligations. This quality focus demonstrates prudent counterparty risk management, essential for ensuring claims-paying reliability during catastrophic events.

With Claddaugh's maximum retained loss capped at $117 million for a first event and $35 million for a second event, HCI has established clear risk tolerance boundaries while maintaining meaningful skin in the game - a balanced approach that should resonate positively with both reinsurance partners and shareholders.

TAMPA, Fla., June 02, 2025 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE: HCI) has successfully completed its catastrophe reinsurance programs for the 2025-2026 treaty year, which runs from June 1, 2025 through May 31, 2026.

“We are grateful for the strong support from our global reinsurance partners, whose continued confidence in HCI underscores the quality of our underwriting and our disciplined approach to risk,” said Paresh Patel, HCI’s chairman and chief executive officer. “We believe our reinsurance programs are prudently structured to protect the long-term financial stability of our insurance companies. With the reinsurance placement now finalized, we are well-positioned to pursue strategic initiatives aimed at delivering sustained value to our shareholders.”

HCI secured three reinsurance towers for the 2025-2026 treaty year. Reinsurance Tower 1 is shared between HCI subsidiary, Homeowners Choice Property & Casualty Insurance Company, and HCI sponsored reciprocal insurance company, Tailrow Insurance Exchange, and covers all Homeowners Choice policies issued in Florida and all Tailrow policies issued in Florida. Reinsurance Tower 2 is shared between HCI subsidiary, TypTap Insurance Company, and Homeowners Choice and covers all TypTap policies (whether issued in Florida or outside of Florida) and all Homeowners Choice policies issued outside of Florida. Reinsurance Tower 3 covers all Condo Owners Reciprocal Exchange policies issued in Florida. Condo Owners Reciprocal Exchange, known as CORE, is a reciprocal insurance company sponsored by HCI.

Across the three reinsurance towers, HCI secured over $3.5 billion in excess of loss aggregate limit and full reinstatement premium protection for the 2025-2026 treaty year. Claddaugh Casualty Insurance Company Ltd, HCI’s Bermuda-based reinsurance subsidiary, selectively participates across all three reinsurance towers. All participating reinsurers are AM Best rated ‘A-’ (Excellent) or better or have fully collateralized their obligations to HCI.

The statutory retentions for the first and second event are $18 million for both Reinsurance Tower 1 and Reinsurance Tower 2, and $3 million for Reinsurance Tower 3. Claddaugh’s estimated maximum retained loss is approximately $117 million for a first event and $35 million for a second event.

For the three reinsurance towers, HCI expects to incur net consolidated reinsurance premiums ceded to third parties, excluding Claddaugh, of approximately $422 million from June 1, 2025 through May 31, 2026. The reinsurance premiums are an estimate based on exposure projections and subject to true up at September 30, 2025.

More information is available in the Company’s Form 8-K, filed today with the U.S. Securities and Exchange Commission.

About HCI Group, Inc.
HCI Group is a holding company with two distinct operating units. The first unit includes four top-performing insurance companies, a captive reinsurance company, and operations in claims management and real estate. The second unit, called Exzeo Group, is a leading innovator of insurance technology that utilizes advanced underwriting algorithms and data analytics. Exzeo empowers property and casualty insurers to transform underwriting outcomes and achieve industry-leading results.

The company's common shares trade on the New York Stock Exchange under the ticker symbol "HCI" and are included in the Russell 2000 and S&P SmallCap 600 Index. HCI Group, Inc. regularly publishes financial and other information in the Investor Information section of the company’s website. For more information about HCI Group and its subsidiaries, visit www.hcigroup.com.

Company Contact:
Bill Broomall, CFA
Investor Relations
HCI Group, Inc.
Tel (813) 776-1012
wbroomall@exzeo.com

Investor Relations Contact:
Matt Glover
Gateway Group, Inc.
Tel 949-574-3860
HCI@gateway-grp.com

FAQ

What is the total reinsurance coverage secured by HCI Group for 2025-2026?

HCI Group secured over $3.5 billion in excess of loss aggregate limit across three reinsurance towers for the 2025-2026 treaty year.

How much will HCI Group pay in reinsurance premiums for 2025-2026?

HCI expects to pay approximately $422 million in net consolidated reinsurance premiums to third parties from June 1, 2025 through May 31, 2026.

What is HCI's maximum retained loss exposure for catastrophic events?

Through Claddaugh, HCI's maximum retained loss is approximately $117 million for a first event and $35 million for a second event.

What are the statutory retentions for HCI's reinsurance towers?

The statutory retentions are $18 million for both Reinsurance Tower 1 and Tower 2, and $3 million for Tower 3.

Which HCI subsidiaries are covered under the new reinsurance program?

The program covers Homeowners Choice Property & Casualty Insurance, TypTap Insurance Company, Tailrow Insurance Exchange, and Condo Owners Reciprocal Exchange (CORE).