Homeowners Choice Reports Profitable Second Quarter

Tampa, Florida, UNITED STATES


CLEARWATER, Fla., Aug. 4, 2011 (GLOBE NEWSWIRE) -- Homeowners Choice, Inc. (Nasdaq:HCII), a Florida-based provider of homeowners' insurance, today announced its results of operations for the three and six months ended June 30, 2011.

Income available to common stockholders for the second quarter of 2011 was $1,940,000, or $0.30 diluted earnings per common share, compared with $1,282,000, or $0.19 diluted earnings per common share, for the second quarter of 2010. Income available to common stockholders for the six months ended June 30, 2011 was $2,716,000, or $0.43 diluted earnings per common share, compared with $1,980,000, or $0.29 diluted earnings per common share, for the six months ended June 30, 2010. Results for 2011 include a one-time bargain purchase gain of $575,000 (net of income taxes), or $0.07 and $0.08 diluted earnings per common share for the three and six months ended June 30, 2011, respectively. The gain resulted from an investment in a marina property treated as a business acquisition for accounting purposes in which the fair value of the net assets acquired exceeded the purchase price paid.

Gross premiums earned were $31.2 million for the three months ended June 30, 2011 compared with $30.0 million for the three months ended June 30, 2010. Gross premiums earned for the six months ended June 30, 2011 were $62.1 million compared with $60.3 million for the six months ended June 30, 2010. Net premiums earned (gross premiums earned reduced by premiums ceded to reinsurance companies that cover certain of the risks from hurricanes and other catastrophes) for the second quarter of 2011 increased approximately nine percent to $17.0 million from $15.6 million in the prior year quarter. Net premiums earned for the six months ended June 30, 2011 increased approximately six percent to $33.7 million from $31.9 million for the six months ended June 30, 2010.

Losses and loss adjustment expenses (the expenses associated with investigating and settling claims) for the three months ended June 30, 2011 were $10.5 million compared with $10.9 million for the three months ended June 30, 2010 and $20.9 million for the six months ended June 30, 2011 compared with $20.7 million for the six months ended June 30, 2010. Policy acquisition and other underwriting expenses for the three months ended June 30, 2011 were $2.8 million compared with $2.7 million for the three months ended June 30, 2010 and were $7.0 million for both the six months ended June 30, 2011 and June 30, 2010.

"We are pleased to report our 15th consecutive profitable quarter," said Homeowners Choice Chief Executive Officer Paresh Patel. "We have achieved growth and consistent profitability and are now a dividend-paying company. We look forward to bigger things to come."

Financial information is below.

Conference Call

The Company will host an earnings conference call on Thursday, Aug. 4 at 4:30 ET to discuss its second quarter 2011 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 Sept. 4, 2011.

About Homeowners Choice, Inc.

Homeowners Choice, Inc. is a Florida-based insurance holding company headquartered in Tampa. Through its subsidiary corporations, Homeowners Choice provides property and casualty homeowners' insurance, condominium owners' insurance and tenants' insurance. Founded in 2006, Homeowners Choice today serves approximately 59,500 policyholders throughout Florida representing approximately $130 million in annualized premiums. The company's common shares trade on the NASDAQ Global Select Market under the ticker symbol HCII and are included in the Russell Microcap Index. Its warrants trade on the same market under the ticker symbol HCIIW. Its Series A, 7 percent cumulative convertible preferred shares trade on the NASDAQ Capital Market under the ticker symbol HCIIP. 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 the company will continue profitability. 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 Balance Sheets 
(Dollars in thousands, except share amounts) 
     
  At June 30, 2011 At December 31, 2010
  (Unaudited)  
Assets    
     
Investment in fixed maturity securities, available-for-sale, at fair value (amortized cost $23,276 and $28,456)  23,404  28,564
Equity securities, available-for-sale, at fair value  5,025  884
Time deposits  14,306  14,033
 Total investments 42,735 43,481
Cash and cash equivalents  80,256  54,849
Accrued interest and dividends receivable  186  180
Premiums receivable  10,263  5,822
Assumed reinsurance balances receivable  26
Prepaid reinsurance premiums  8,866  17,787
Deferred policy acquisition costs  10,062  9,407
Income taxes receivable  3,033
Property and equipment, net  15,778  7,755
Deferred income taxes  584
Other assets  1,665  1,057
     
Total assets $ 172,844 140,948
     
Liabilities and Stockholders' Equity    
     
Losses and loss adjustment expenses 24,973 22,146
Unearned premiums 70,530 65,034
Advance premiums 6,900 1,114
Deferred income taxes 1,432
Payable for securities purchased 3,002
Accrued expenses 2,848  2,385
Assumed reinsurance balances payable  51
Dividends payable  218
Income taxes payable 310
Other liabilities  4,857  3,330
     
Total liabilities 114,811 94,319
     
Stockholders' equity:    
7% Series A cumulative convertible preferred stock (liquidation preference $10.00 per share), no par value, 1,500,000 shares authorized, 1,247,700 shares issued and outstanding in 2011
Preferred stock (no par value 18,500,000 shares authorized, no shares issued or outstanding)
Common stock, (no par value, 40,000,000 shares authorized, 6,101,802 and 6,205,396 shares issued and outstanding in 2011 and 2010)
Additional paid-in capital 28,532 18,606
Retained earnings 29,559  28,065
Accumulated other comprehensive loss  (58)  (42)
     
Total stockholders' equity 58,033 46,629
     
Total liabilities and stockholders' equity $ 172,844 140,948
 
HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES 
Condensed Consolidated Statements of Earnings
(Unaudited)
(Dollars in thousands, except per share amounts) 
         
  Three Months Ended Six Months Ended
  June 30, June 30,
  2011 2010 2011 2010
         
Revenue        
         
Gross premiums earned  $ 31,218  29,978  $ 62,114  60,322
Premiums ceded  (14,174)  (14,333)  (28,396)  (28,436)
         
Net premiums earned  17,044  15,645  33,718  31,886
         
Net investment income  509  569  1,073  1,100
Realized investment gains  140 505  293 505
Gain on bargain purchase  936  936
Other  1,155  692  1,813  908
         
Total revenue  19,784  17,411  37,833  34,399
         
Expenses        
         
Losses and loss adjustment expenses  10,523  10,863  20,926  20,676
Policy acquisition and other underwriting expenses  2,780  2,668  7,043  6,960
Other operating expenses  2,660  1,886  4,787  3,583
         
Total expenses  15,963  15,417  32,756  31,219
         
Income before income taxes  3,821  1,994  5,077  3,180
         
Income taxes  1,520  712  1,983  1,200
         
Net income  $ 2,301  1,282  $ 3,094  1,980
         
Preferred stock dividends  (361)  —  (378)  —
         
Income available to common stockholders  $ 1,940  1,282 $ 2,716  1,980
         
Basic earnings per common share  $ 0.32  0.21  $ 0.44  0.32
         
Diluted earnings per common share  $ 0.30  0.19  $ 0.43  0.29
         
Dividends per common share  $ 0.10  —  $ 0.20  —


        

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