Paresh Patel, Chairman and CEO of HCI Group, Inc., has reported that his company is facing a total pre-tax net loss of $78 million from Hurricane Ian, with significant use of its reinsurance program to absorb costs.
Speaking during a presentation this week, Patel said that HCI had received 10,000 claims related to Ian in the last few days, and expects to receive a further 2,000 in the coming month.
He also noted that all four of HCI’s reinsurance towers had been hit by the losses and all have retention losses, adding that the company has “significant limits in each of these towers to absorb these losses.”
The company’s overall retentions amount to $37 million, consisting of $14 million for its Homeowners Choice tower, $10 million for TypTap, $3 million for Flood and $10 million for Expansion States.
Additionally, HCI’s Claddagh unit provides reinsurance to some insurance carriers and is expected to take a loss of $28 million.
So together, Patel explained, HCI’s retained losses are $65 million, which makes for a $78 million total net loss when accounting for $13 million from the reversal of accrued benefits.
“But having put that number out there, I want you to remember three key takeaways,” Patel stressed. “HCI has ample resources to meet our primary objective which are the financial obligations to all of our shareholders, we can pay for their claims and more.
“Secondly, for all the policyholders that were not affected by Ian, we have significant reinsurance protection for the remainder of the contract year, which runs through the end of May 2023. So that is also there safely,” he continued.
“And then, finally, because of the strong liquidity and conservative liquidity position that we always maintain, we will still be strong and in a financially good capital position post paying for the $78 million pre-tax loss for Ian.”
For comparison, HCI reported a loss of $540 million following Hurricane Irma in 2017, which was a $20.7 billion industry loss. The impact of this loss on each of HCI’s four reinsurance towers can be seen in the graphic below.
With losses from Ian currently standing at a considerably lower level than from Irma, then, it’s safe to assume that HCI still has a significant amount of reinsurance protection in place for the remainder of the year.
“Our thoughts go out to all who have been affected by this hurricane,” Patel commented in a press release alongside the presentation. “Our focus at this time is on our policyholders and ensuring their claims are handled quickly and efficiently.”
“Earlier this year we secured a robust reinsurance program with four separate reinsurance towers that provide HCI with significant protection in Florida and in our expansion states. Additionally, HCI maintains significant reinsurance protection for the remainder of the contract year.”
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