Homeowners Choice Reports Profitable Third Quarter

Tampa, Florida, UNITED STATES



 -- Ninth consecutive quarter of profitability

 -- Strong balance sheet: $109 million in cash and short term and
    liquid investments with no debt

 -- Book value of $6.99 per share is up 29% year to date

CLEARWATER, Fla., Nov. 10, 2009 (GLOBE NEWSWIRE) -- Homeowners Choice, Inc. (Nasdaq:HCII), a Florida-based provider of homeowners' insurance, today announced its results of operations for the three- and nine-month periods ended Sept. 30, 2009.

Net income for the third quarter of 2009 increased 2% to $815,000, or $0.11 per diluted share, compared with net income of $802,000, or $0.12 per diluted share, for the third quarter of 2008. Book value increased from $5.43 at Dec. 31, 2008 to $6.99 at Sept. 30, 2009, an increase of 29%.

Gross premiums earned for the third quarter of 2009 more than doubled to $25.2 million from $12 million in the prior year quarter. Net premiums earned for the third quarter of 2009 increased 49% to $12.0 million from $8.1 million in the prior year quarter. "Net premiums earned" is gross premiums earned reduced by the premiums ceded to reinsurance companies.

Reinsurance costs increased significantly beginning June 1, 2009 when the company renewed its reinsurance policies. The company's Condensed Consolidated Statements of Earnings, which appear below, indicate that during the third quarter the company ceded more than half of its gross premiums earned to reinsurers. Homeowners Choice also reported investment income of $516,000 for the third quarter compared with $425,000 in the prior year period.

Losses and loss adjustment expenses for the third quarter were $6.7 million compared with $4.6 million in the prior year period. This reflects increases in actual claims incurred and claim reserves primarily due to higher numbers of policies and insured values. At Sept. 30, 2009, policies in force were approximately 53,000 compared with approximately 20,000 at Sept. 30, 2008. Policy acquisition and other underwriting expenses for the three months ended 2009 and 2008 were $3.4 million and $1.4 million, respectively. Other operating expenses, which include a variety of general and administrative costs, for the three months ended Sept. 30, 2009 and 2008 were $1.4 million in both periods.

For the nine months ended Sept. 30, 2009, net income increased 34% to $10.1 million, or $1.40 per diluted share, from net income of $7.5 million, or $1.33 per diluted share, for the prior year period.

Gross premiums earned for the nine months ended Sept. 30, 2009 more than doubled to $84.1 million from $37.0 million in the prior year period. Net premiums earned for the first nine months of 2009 increased 87% to $53.0 million from $28.3 million in the prior year period. Investment income for the nine month period ended Sept. 30, 2009 was $1.2 million, up 7% from the prior year period.

Losses and loss adjustment expenses for the nine months ended Sept. 30, 2009 were $29.3 million compared with $11.0 million in the prior year period, which reflects an increase in outstanding policies and insured values. Policy acquisition and other underwriting expenses for the nine months ended Sept. 30, 2009 and 2008 were $5.7 million and $4.2 million, respectively. Other operating expenses were $4.1 million for the nine month period ended Sept. 30, 2009 compared with $2.7 million in the prior year period.

"We are pleased to continue to report profitable underwriting results despite what has been a challenging environment, particularly with regard to reinsurance costs," said Homeowners Choice Chief Executive Officer F.X. McCahill. "Our business strategy continues to focus on prudent risk mitigation and as such we rely on adequate levels of reinsurance to protect the company and policy holders in the event of a major storm. In 2009, the cost of reinsurance reduced our net premiums earned in the quarter by more than 50%, or $13.2 million, with rates well above those charged in prior years.

"Having successfully navigated the third quarter, we are now well positioned to resume policy growth. As we recently announced, we have been approved by the Florida Office of Insurance Regulation to assume 60,000 policies from Citizens, with a maximum of 30,000 policies in December 2009. Also, we were recently selected by the Florida Department of Financial Services as the replacement insurer for policyholders of American Keystone Insurance Company, which is in receivership. We plan to pursue strategic growth opportunities as they arise, including potential acquisitions and opportunities derived from the anticipated pullback by larger national carriers."

Homeowners Choice Executive Chairman Paresh Patel added, "While we have dropped recent efforts to acquire 21st Century Holding Company, we still have opportunities to grow significantly, whether organically or through other means. Despite our rapid growth over the last two years, we still have less than two percent of the Florida homeowners' insurance market today. With our experienced management team and solid financial condition, we are well positioned to compete and grow our market share in Florida and further increase book value for our shareholders."

Conference Call

The Company will host an earnings conference call today, Tuesday, Nov. 10, 2009, at 4:30 p.m. E.S.T. to discuss its third quarter results. Interested parties are invited to listen to the call live over the Internet at 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 Feb. 10, 2010.

About Homeowners Choice, Inc.

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 53,000 policyholders throughout Florida representing approximately $100 million in annualized premiums. The company's common shares trade on the NASDAQ Global Market under the ticker symbol HCII and were recently added to 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's policy growth will resume, the company will successfully complete an assumption of policies from Citizens Property Insurance Corporation, strategic growth opportunities will arise or that the company will pursue them when they do, the company's application for a rate increase will be successful or that the company will be successful in growing its market share. 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    Nine Months Ended
                                  September 30,        September 30,
                               ------------------   ------------------
                                 2009      2008       2009      2008
                               --------  --------   --------  --------

 Revenue


 Gross premiums earned         $ 25,204    12,017   $ 84,155    36,986
 Ceded premiums earned          (13,193)   (3,966)   (31,199)   (8,677)
                               --------  --------   --------  --------
 Net premiums earned             12,011     8,051     52,956    28,309
 Net investment income              516       425      1,236     1,152
 Other                              254       189      1,264       591
                               --------  --------   --------  --------

   Total revenue                 12,781     8,665     55,456    30,052
                               --------  --------   --------  --------

 Expenses


 Losses and loss
  adjustment expenses             6,650     4,565     29,277    11,011
 Policy acquisition and
  other underwriting
  expenses                        3,430     1,421      5,670     4,163
 Other operating expenses         1,365     1,353      4,124     2,730
                               --------  --------   --------  --------

   Total expenses                11,445     7,339     39,071    17,904
                               --------  --------   --------  --------

 Income before income
  taxes                           1,336     1,326     16,385    12,148

 Income taxes                       521       524      6,282     4,610
                               --------  --------   --------  --------

   Net income                  $    815       802   $ 10,103     7,538
                               ========  ========   ========  ========

   Basic earnings per
    share                      $   0.12      0.13   $   1.48      1.36
                               ========  ========   ========  ========

   Diluted earnings per
    share                      $   0.11      0.12   $   1.40      1.33
                               ========  ========   ========  ========


   Dividends per share         $     --        --   $     --        --
                               ========  ========   ========  ========


                HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES
                 Condensed Consolidated Balance Sheets
                        (Dollars in thousands)

                                    At September 30,  At December 31,
                                           2009            2008
                                    ----------------  ----------------
                                       (Unaudited)

      Assets


 Investment in fixed maturity
  securities, held-to-maturity,
  at amortized cost (fair
  value $2,136 at September
  30, 2009)                            $       1,898                --  
 Investment in fixed maturity
  securities, available-for-
  sale, at fair value
  (amortized cost $19,715 at
  September 30, 2009)                  $      19,954                --
 Short-term investments                       28,052            27,582
 Cash and cash equivalents                    61,102            81,060
 Accrued interest and
  dividends receivable                           187                63
 Premiums receivable                          18,360             5,021
 Note receivable                                  --               450
 Reinsurance balances receivable                  --               157
 Prepaid reinsurance premiums                  1,867             7,122
 Deferred policy acquisition
  costs                                       11,339             6,292
 Property and equipment, net                     346               267
 Deferred income taxes                         2,361             3,563
 Income taxes receivable                          84                --
 Other assets                                    335               412
                                    ----------------  ----------------

   Total assets                        $     145,885           131,989
                                    ================  ================

    Liabilities and Stockholders' Equity

 Losses and loss adjustment expenses          21,732            14,763
 Unearned premiums                            73,361            67,219
 Reinsurance balances payable                     --             6,136
 Accrued expenses                              4,222             1,535
 Income taxes payable                             --             4,704
 Other liabilities                               582               239
                                    ----------------  ----------------

   Total liabilities                          99,897            94,596
                                    ----------------  ----------------

 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, 6,581,265 and
    6,892,668 shares issued
    and outstanding at
    September 30, 2009 and
    December 31, 2008,
    respectively)                                 --                --
   Additional paid-in capital                 22,128            23,783
   Retained earnings                          23,713            13,610
   Accumulated other
    comprehensive income                         147                --
                                    ----------------  ----------------

     Total stockholders' equity               45,988            37,393
                                    ----------------  ----------------

     Total liabilities and
      stockholders' equity             $     145,885           131,989
                                    ================  ================


        

Contact Data