HCI Group's (HCI) Premium Growth Impresses, Rising Costs Ail
Zacks Investment Research | Mar 24, 2019 11:24PM ET
HCI Group, Inc. (NYSE:HCI) has been delivering higher premiums over a considerable period of time and we expect this momentum to stay in the near term. This probable growth in future will primarily stem from TypTap Insurance Company, which is the company’s technology-based insurance unit.
The expansion of TypTap Insurance Company and its profitability streak will add fuel to the property and casualty (P&C) insurer’s solid premium trajectory. Notably, the insurance subsidiary’s contribution is anticipated to be the company’s primary growth driver in 2019.
Banking on the rising interest rates, the insurer has been experiencing sound investment results and we expect this trend to continue in the future as well. An estimated increase in limited partnership income and higher interest rates on fixed-term securities, short-term investments and cash can lead to better investment income in the near term.
With respect to shareholder value addition, the company has been involved in a string of shareholder-oriented activities like share repurchases and dividend payments. Such efforts underline the company’s strong liquidity position and further preserve the existing investors’ confidence in the stock and attract fresh ones as well.
Interestingly, the company has been focusing on lowering its share count through strategic buybacks. A lower share count translates into individual shares, representing a higher percentage of ownership. Hence, the company will be able to hike dividends without a significant increase in actual cash flows.
Additionally, a solid capital position cushions the company against market uncertainties while retaining its financial strength and flexibility required to chase new opportunities.
Shares of this Zacks Rank #3 (Hold) P&C insurer have lost 17.9% year to date against the Zacks Investment Research
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