HCI Group, Inc.

Previous wording

HCI Group, Inc. is a Florida-based company with operations in property and casualty insurance, information technology services, insurance management, real estate and reinsurance. We utilize innovative technology to promote efficiency, refine risk assessment and enhance experiences for clients throughout the insurance process. As described in Change in Segment Information under Note 1 -- “Nature of Operations” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q, our recent organizational change has moved two insurance subsidiaries into one single operating segment to enhance operational efficiency and simplify financial reporting. Accordingly, we manage our operations in the following organizational segments, based on managerial emphasis and evaluation of financial and operating performances:

Current wording

HCI Group, Inc. is a Florida-based company with operations in property and casualty insurance, information technology services, insurance management, real estate and reinsurance. We utilize innovative technology to promote efficiency, refine risk assessment and enhance experiences for clients throughout the insurance process. We manage our operations in the following organizational segments, based on managerial emphasis and evaluation of financial and operating performances:

Previous wording

For the three months ended September 30, 2024 and 2023, revenues from insurance operations before intracompany elimination represented 82.7% and 87.6%, respectively, and revenues from TypTap Group represented 11.0% and 11.0%, respectively, of total revenues of all operating segments. For the nine months ended September 30, 2024 and 2023, revenues from insurance operations before intracompany elimination represented 84.5% and 86.9%, respectively, and revenues from TypTap Group represented 10.8% and 11.6%, respectively, of total revenues of all operating segments. At September 30, 2024 and December 31, 2023, insurance operations’ total assets represented 84.2% and 87.0%, respectively, and TypTap Group’s total assets represented 2.9% and 1.9%, respectively, of the combined assets of all operating segments. See Note 14 -- “Segment Information” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for additional information.

Current wording

For the three months ended March 31, 2025 and 2024, revenues from insurance operations before intracompany elimination represented 77.0% and 85.1%, respectively, and revenues from Exzeo Group represented 16.7% and 12.7%, respectively, of total revenues of all operating segments. At March 31, 2025 and December 31, 2024, insurance operations’ total assets represented 81.1% and 83.6%, respectively, and Exzeo Group’s total assets represented 5.5% and 3.7%, respectively, of the combined assets of all operating segments. See Note 15 -- “Segment Information” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for additional information.

Previous wording

We currently have two insurance subsidiaries: Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”) and TypTap Insurance Company (“TypTap”). We provide various forms of residential insurance products such as homeowners insurance, fire insurance, and wind-only insurance. We are authorized to write residential property and casualty insurance in the states of Alaska, Arizona, Arkansas, California, Connecticut, Florida, Georgia, Kansas, Kentucky, Maryland, Massachusetts, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, and Washington. Currently, our primary market is Florida. We utilize internally developed software technologies to drive efficiency in claim processing and claims settlements, identify profitable underwriting opportunities, generate savings and streamline operations across its insurance operations.

Current wording

We currently have three insurance subsidiaries: Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”) and TypTap Insurance Company (“TTIC”). A third insurance subsidiary, perRisk Insurance Company, has yet to conduct its surplus lines insurance business. We provide various forms of residential insurance products such as homeowners insurance, fire insurance, and wind-only insurance to homeowners, condominium owners and tenants for properties primarily located in Florida and in various states outside of Florida. Although we conduct insurance business in many states, Florida remains our primary market. We utilize internally developed software technologies to drive efficiency in claim processing and claims settlements, identify profitable underwriting opportunities, generate savings and streamline operations across its insurance operations.

Previous wording

Through our recently formed subsidiary Dark Horse, we provide expert reinsurance brokerage services to help insurance companies manage risk by acting as an intermediary between the insurer client and reinsurers. We design tailored reinsurance solutions by assessing our insurer client’s risk portfolio.

Current wording

Through our subsidiary Dark Horse, we provide expert reinsurance brokerage services to help insurance companies manage risk by acting as an intermediary between the insurer client and reinsurers. We design tailored reinsurance solutions by assessing our insurer client’s risk portfolio.

Previous wording

The following table summarizes our results of operations for the three and nine months ended September 30, 2024 and 2023 (dollar amounts in thousands, except per share amounts):

Current wording

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024 (dollar amounts in thousands, except per share amounts):

Previous wording

Our results of operations for the three months ended September 30, 2024 reflect net income of approximately $9,392,000 or $0.52 diluted earnings per share, compared with net income of approximately $15,669,000 or $1.34 diluted earnings per share, for the three months ended September 30, 2023. The quarter-over-quarter decrease was primarily due to a $39,010,000 increase in losses and loss adjustment expenses, a $5,311,000 increase in general and administrative personnel expenses, and a $4,766,000 increase in policy acquisition, underwriting, and other operating expenses, offset by a $33,668,000 increase in net premiums earned and a $9,081,000 net increase in income from our investment portfolio (consisting of net investment income and net realized and unrealized gains or losses).

Current wording

Our results of operations for the three months ended March 31, 2025 reflect net income of approximately $74,230,000 or $5.35 diluted earnings per share, compared with net income of approximately $56,956,000 or $3.81 diluted earnings per share, for the three months ended March 31, 2024. The quarter-over-quarter increase was primarily due to a $20,631,000 decrease in losses and loss adjustment expenses and a $12,210,000 increase in net premiums earned, offset by a $4,209,000 increase in general and administrative personnel expenses, a $3,690,000 net decrease in income from our investment portfolio (consisting of net investment income and net realized and unrealized gains or losses), and a $3,097,000 increase in policy acquisition, underwriting, and other operating expenses .

Previous wording

Gross Premiums Earned on a consolidated basis for the three months ended September 30, 2024 and 2023 were approximately $265,518,000 and $188,308,000, respectively. The $77,210,000 increase was primarily attributable to the policies assumed from Citizens and premium rate increases. HCPCI gross premiums earned were $139,822,000 for the three months ended September 30, 2024 compared with $102,075,000 for the three months ended September 30, 2023. TypTap gross premiums earned were $108,266,000 for the three months ended September 30, 2024 compared with $86,233,000 for the same comparative period in 2023. Gross premiums earned from reciprocal exchange operations were $17,430,000 for the three months ended September 30, 2024 as opposed to $0 for the three months ended September 30, 2023.

Current wording

Gross Premiums Earned on a consolidated basis for the three months ended March 31, 2025 and 2024 were approximately $300,383,000 and $256,644,000, respectively. The $43,739,000 increase was primarily attributable to the policies assumed from Citizens. Gross premiums earned from insurance operations were $282,135,000 for the three months ended March 31, 2025 compared with $253,472,000 for the three months ended March 31, 2024. Gross premiums earned from reciprocal exchange operations were $19,447,000 for the three months ended March 31, 2025 compared to $3,625,000 for the three months ended March 31, 2024.

Previous wording

Premiums Ceded for the nine months ended September 30, 2024 and 2023 were approximately $254,513,000 and $203,051,000, respectively, representing 32.4% and 36.9%, respectively, of gross premiums earned. The $51,462,000 increase was primarily attributable to increased reinsurance coverage due to growth in the number of policies in force and total insured value and the reversal of previously accrued benefits as described earlier.

Current wording

Premiums Ceded for the three months ended March 31, 2025 and 2024 were approximately $99,635,000 and $68,106,000, respectively, representing 33.2% and 26.5%, respectively, of gross premiums earned. The $31,529,000 increase was primarily attributable to higher reinsurance rates for the 2024-2025 contract year, increased coverage due to growth in the number of policies in force and total insured value.

Previous wording

Our premiums ceded represent costs of reinsurance to cover losses from catastrophes that exceed the retention levels defined by our catastrophe excess of loss reinsurance contracts or to assume a proportional share of losses as defined in a quota share agreement. The rates we pay for reinsurance are based primarily on policy exposures reflected in gross premiums earned. Reinsurance costs can be decreased by a reduction in premiums ceded attributable to retrospective provisions under reinsurance contracts. For the three months ended September 30, 2024, premiums ceded included an increase of $7,707,000 related to retrospective provisions as opposed to a decrease of $6,993,000 for the three months ended September 30, 2023. See “Economic Impact of Reinsurance Contracts with Retrospective Provisions” under “Critical Accounting Policies and Estimates.”

Current wording

Our premiums ceded represent costs of reinsurance to cover losses from catastrophes that exceed the retention levels defined by our catastrophe excess of loss reinsurance contracts or to assume a proportional share of losses as defined in a quota share agreement. The rates we pay for reinsurance are based primarily on policy exposures reflected in gross premiums earned. Reinsurance costs can be decreased by a reduction in premiums ceded attributable to retrospective provisions under reinsurance contracts. For the three months ended March 31, 2025, there was no adjustment in premiums ceded related to retrospective provisions as opposed to a decrease of $6,993,000 for the three months ended March 31, 2024.

Previous wording

Net Premiums Written for the three months ended September 30, 2024 and 2023 totaled approximately $160,685,000 and $132,113,000, respectively. Net premiums written represent the premiums charged on policies issued during a fiscal period less any applicable reinsurance costs. The increase in 2024 primarily resulted from an increase in premiums written resulting from increased policies in force, offset by increased premiums ceded to reinsurers as described above. We had approximately 235,000 policies in force at September 30, 2024 as compared with approximately 194,000 policies in force at September 30, 2023.

Current wording

Net Premiums Written for the three months ended March 31, 2025 and 2024 totaled approximately $189,611,000 and $186,880,000, respectively. Net premiums written represent the premiums charged on policies issued during a fiscal period less any applicable reinsurance costs. The increase in 2025 primarily resulted from an increase in gross premiums written from the assumption of Citizens insurance policies, offset by an increase in premiums ceded. We had approximately 278,400 policies in force at March 31, 2025 as compared with approximately 250,500 policies in force at March 31, 2024.

Previous wording

Net Premiums Earned for the three months ended September 30, 2024 and 2023 were approximately $155,824,000 and $122,156,000, respectively, and reflect the gross premiums earned less reinsurance costs as described above.

Current wording

Net Premiums Earned for the three months ended March 31, 2025 and 2024 were approximately $200,748,000 and $188,538,000, respectively, and reflect the gross premiums earned less reinsurance costs as described above.

Previous wording

Net Investment Incomefor the nine months ended September 30, 2024 and 2023 was approximately $44,662,000 and $35,893,000, respectively. The $8,769,000 increase was attributable to a $13,276,000 increase in interest income from cash, cash equivalents, and available-for-sale fixed-maturity securities, offset by a $4,518,000 decrease in income from real estate investments. See Net Investment Income under Note 4 -- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Current wording

Net Investment Incomefor the three months ended March 31, 2025 and 2024 was approximately $13,751,000 and $14,067,000, respectively. The $316,000 decrease was primarily attributable to a $1,175,000 decrease in income from real estate investments, a $946,000 decrease in interest income from cash and cash equivalents, and a $821,000 decrease in income from limited partnership investments, offset by an increase of $2,687,000 in interest income from available-for-sale fixed-maturity securities. See Net Investment Income under Note 5 -- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

Net Realized Investment Gains for the three months ended September 30, 2024 were approximately $2,846,000 as opposed to net realized investment losses of approximately $207,000 for the three months ended September 30, 2023. The increase was primarily attributable to net realized gains of approximately $2,843,000 from sales of fixed-maturity and equity securities during the three months ended September 30, 2024 as opposed to net realized losses of approximately $207,000 from sales of these securities during the corresponding period in 2023.

Current wording

Net Realized Investment Gains for the three months ended March 31, 2025 were approximately $1,167,000 as opposed to $0 for the three months ended March 31, 2024. The increase was primarily attributable to net realized gains of approximately $1,115,000 from sales of equity securities during the three months ended March 31, 2025 as opposed to $0 from sales of these securities during the corresponding period in 2024.

Previous wording

Net Unrealized Investment Incomefor the three months ended September 30, 2024 was approximately $657,000 as opposed to net unrealized investment losses of approximately $1,041,000 for the three months ended September 30, 2023. The increase was primarily attributable to an overall improvement in the equity market compared with the three months ended September 30, 2023.

Current wording

Net Unrealized Investment Lossesfor the three months ended March 31, 2025 was approximately $1,906,000 as opposed to net unrealized investment gains of approximately $2,635,000 for the three months ended March 31, 2024. The decrease was primarily attributable to an unfavorable change in the equity market compared with the three months ended March 31, 2024.

Previous wording

Our consolidated Losses and Loss Adjustment Expenses amounted to approximately $263,982,000 and $189,181,000 for the nine months ended September 30, 2024 and 2023, respectively. The increase is due to net losses of $40,000,000 from Hurricane Helene, $6,500,000 from Hurricane Debby, and losses attributable to a greater number of policies in force. The increase was offset by less prior period development in 2024 compared to 2023 by $12,850,000. In addition, the nine months ended September 30, 2023 included $6,500,000 of losses from Hurricane Idalia. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

Current wording

Our consolidated Losses and Loss Adjustment Expenses amounted to approximately $59,291,000 and $79,922,000 for the three months ended March 31, 2025 and 2024, respectively. The decrease is primarily driven by a decline in claims and litigation frequency. The decrease was offset in part by losses on policies assumed from Citizens by the reciprocal exchange operations during 2025. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

Previous wording

Policy Acquisition and Other Underwriting Expenses for the three months ended September 30, 2024 and 2023 were approximately $26,104,000 and $22,768,000 on a consolidated basis, respectively, and primarily reflect the amortization of deferred acquisition costs such as commissions payable to agents for production and renewal of policies and premium taxes. The increase in amortized costs was primarily due to increased premiums in force from the insurance and reciprocal exchange operations.

Current wording

Policy Acquisition and Other Underwriting Expenses for the three months ended March 31, 2025 and 2024 were approximately $27,287,000 and $22,139,000 on a consolidated basis, respectively, and primarily reflect the amortization of deferred acquisition costs such as commissions payable to agents for production and renewal of policies and premium taxes. The increase in amortized costs was primarily due to an increase in premiums in force associated with policy renewals in the insurance and reciprocal exchange operations.

Previous wording

General and Administrative Personnel Expenses for the three months ended September 30, 2024 and 2023 were approximately $19,175,000 and $13,864,000, respectively. Our general and administrative personnel expenses include salaries, wages, payroll taxes, stock-based compensation expenses, and employee benefit costs. Factors such as merit increases, changes in headcount, and periodic restricted stock grants, among others, cause fluctuations in this expense. In addition, our personnel expenses are decreased by the capitalization of payroll costs related to projects to develop software for internal use and the payroll costs associated with the processing and settlement of certain catastrophe claims which are recoverable from reinsurers under reinsurance contracts. The quarter-over-quarter increase of $5,311,000 was primarily attributable to a decrease in recovered payroll costs, an increase in stock-based compensation expense, an increase in employee incentive bonuses, and an increase in employee health benefits, offset by an increase in capitalized payroll costs.

Current wording

General and Administrative Personnel Expenses for the three months ended March 31, 2025 and 2024 were approximately $20,483,000 and $16,274,000, respectively. Our general and administrative personnel expenses include salaries, wages, payroll taxes, stock-based compensation expenses, and employee benefit costs. Factors such as merit increases, changes in headcount, and periodic restricted stock grants, among others, cause fluctuations in this expense. In addition, our personnel expenses are decreased by the capitalization of payroll costs related to projects to develop software for internal use and the payroll costs associated with the processing and settlement of certain catastrophe claims which are recoverable from reinsurers under reinsurance contracts. The quarter-over-quarter increase of $4,209,000 was primarily attributable to an increase in employee incentive bonus, an increase in stock-based compensation expense, an increase in employee health benefits, and merit increases for non-executive employees effective in March 2025, offset by higher payroll costs recoverable from reinsurers

Previous wording

Income Tax Expensefor the three months ended September 30, 2024 and 2023 was approximately $4,688,000 and $4,419,000, respectively, for state, federal, and foreign income taxes, resulting in effective tax rates of 33.3% and 22.0%, respectively. The increase in the effective tax rate was primarily attributable to a lower prior year effective tax rate resulting from the release of valuation allowance during 2023 and a higher effective tax rate resulting from certain non-deductible compensation expense for the third quarter of 2024.

Current wording

Income Tax Expensefor the three months ended March 31, 2025 and 2024 was approximately $26,109,000 and $20,474,000, respectively, for state, federal, and foreign income taxes, resulting in effective tax rates of 26.0% and 26.4%, respectively.

Previous wording

The loss ratio applicable to the nine months ended September 30, 2024 (losses and loss adjustment expenses incurred related to net premiums earned) was 49.7% compared with 54.5% for the nine months ended September 30, 2023. The decrease was primarily attributable to the increase in net premiums earned, offset in part by the increase in losses and loss adjustment expenses.

Current wording

The loss ratio applicable to the three months ended March 31, 2025 (losses and loss adjustment expenses incurred related to net premiums earned) was 29.5% compared with 42.4% for the three months ended March 31, 2024. The decrease was primarily attributable to the decrease in losses and loss adjustment expenses and the increase in net premiums earned.

Previous wording

The expense ratio applicable to the nine months ended September 30, 2024 (defined as total expenses excluding losses and loss adjustment expenses and interest expense related to net premiums earned) was 27.6% compared with 36.6% for the nine months ended September 30, 2023. The decrease in our expense ratio was primarily attributable to the increase in net premiums earned, offset by the increase in general and administrative personnel expenses and the increase in other operating expenses.

Current wording

The expense ratio applicable to the three months ended March 31, 2025 (defined as total expenses excluding losses and loss adjustment expenses and interest expense related to net premiums earned) was 26.6% compared with 24.5% for the three months ended March 31, 2024. The increase in our expense ratio was primarily attributable to the increase in policy acquisition and other underwriting expense and the increase in general and administrative personnel expenses.

Previous wording

The combined ratio (total of all expenses excluding interest expense in relation to net premiums earned) is the measure of overall underwriting profitability before other income. Our combined ratio for the three months ended September 30, 2024 was 101.3% compared with 89.0% for the three months ended September 30, 2023. The increase in 2024 was attributable to the factors described above.

Current wording

The combined ratio (total of all expenses excluding interest expense in relation to net premiums earned) is the measure of overall underwriting profitability before other income. Our combined ratio for the three months ended March 31, 2025 was 56.1% compared with 66.9% for the three months ended March 31, 2024. The decrease in 2025 was attributable to the factors described above.

Previous wording

Our limited partnership investments consist of six private equity funds managed by their general partners. Two of these funds have unexpired capital commitments which are callable at the discretion of the fund’s general partner for funding new investments or expenses of the fund. Although capital commitments for the four remaining funds have expired, the general partners may request additional funds under certain circumstances. At September 30, 2024, there was an aggregate unfunded capital balance of $3,255,000. See Limited Partnership Investments under Note 4 -- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Current wording

Our limited partnership investments consist of six private equity funds managed by their general partners. Two of these funds have unexpired capital commitments which are callable at the discretion of the fund’s general partner for funding new investments or expenses of the fund. Although capital commitments for the four remaining funds have expired, the general partners may request additional funds under certain circumstances. At March 31, 2025, there was an aggregate unfunded capital balance of $3,160,000. See Limited Partnership Investments under Note 5 -- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

Cash Flows for the Nine Months Ended September 30, 2024

Current wording

Cash Flows for the Three Months Ended March 31, 2025

Previous wording

Net cash provided by operating activities for the nine months ended September 30, 2023 was approximately $77,321,000, which consisted primarily of cash received from net premiums written, and reinsurance recoveries of approximately $206,901,000 less cash disbursed for operating expenses, losses and loss adjustment expenses and interest payments. Net cash provided by investing activities of $25,714,000 was primarily due to the proceeds from calls, repayments and maturities of fixed-maturity securities of $263,654,000, the proceeds from sales of fixed-maturity and equity securities of $27,794,000, the proceeds from sales of real estate investments of $21,746,000, and distributions received from limited partnership investments of $3,088,000, offset by the purchases of fixed-maturity and equity securities of $280,493,000, the purchases of property and equipment of $5,184,000, the purchases of real estate investments of $2,296,000, and the purchase of intangible assets of $1,810,000. Net cash used in financing activities totaled $13,752,000, which was primarily due to $10,295,000 of cash dividend payments, the redemption of long-term debt of $6,895,000, cash dividends paid to redeemable noncontrolling interest of $6,762,000, $784,000 of share repurchases, and repayments of long-term debt of $437,000, offset by the proceeds from issuance of long-term debt of $12,000,000.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2025 was approximately $162,006,000, which consisted primarily of cash received from net premiums written, and reinsurance recoveries of approximately $30,707,000 less cash disbursed for operating expenses, losses and loss adjustment expenses and interest payments. Net cash provided by investing activities of $66,271,000 was primarily due to the proceeds from calls, repayments and maturities of fixed-maturity securities of $81,211,000, the proceeds from sales of fixed-maturity and equity securities of $12,152,000, and the proceeds from the sale of real estate property of $824,000, offset by the purchases of fixed-maturity and equity securities of $24,327,000, the purchases of real estate investments of $1,857,000, and the purchases of property and equipment of $1,732,000. Net cash used in financing activities totaled $6,248,000, which was primarily due to $4,306,000 of cash dividend payments, net repayment of our revolving credit facility of $2,000,000, $639,000 of share repurchases, and repayments of long-term debt of $133,000, offset by net contribution from noncontrolling interests of $830,000.

Previous wording

Cash Flows for the Nine Months Ended September 30, 2023

Current wording

Cash Flows for the Three Months Ended March 31, 2024

Previous wording

Net cash provided by operating activities for the nine months ended September 30, 2024 was approximately $257,129,000, which consisted primarily of cash received from net premiums written, and reinsurance recoveries of approximately $73,927,000 less cash disbursed for operating expenses, losses and loss adjustment expenses and interest payments. Net cash used in investing activities of $205,062,000 was primarily due to the purchases of fixed-maturity and equity securities of $728,775,000, the purchases of real estate investments of $14,181,000, the purchases of property and equipment of $2,991,000, and additional investments in limited partnership interests of $1,204,000, offset by the proceeds from calls, repayments and maturities of fixed-maturity securities of $410,207,000, the proceeds from sales of fixed-maturity and equity securities of $129,112,000, and distributions received from limited partnership investments of $2,760,000. Net cash used in financing activities totaled $69,701,000, which was primarily due to the redemption of redeemable noncontrolling interests of $100,000,000, $12,354,000 of cash dividend payments, cash dividends paid to redeemable noncontrolling interests of $2,923,000, $1,037,000 of share repurchases, purchases of noncontrolling interests of $480,000, redemption of promissory notes of $466,000, and repayments of long-term debt of $387,000, offset by net borrowing under the line of credit agreement of $46,000,000 and net contribution from noncontrolling interests of $2,045,000.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2024 was approximately $181,989,000, which consisted primarily of cash received from net premiums written, and reinsurance recoveries of approximately $19,151,000 less cash disbursed for operating expenses, losses and loss adjustment expenses and interest payments. Net cash used in investing activities of $4,872,000 was primarily due to the purchases of fixed-maturity and equity securities of $180,015,000 and purchases of real estate investments of $5,244,000, offset by the proceeds from calls, repayments and maturities of fixed-maturity securities of $172,024,000 and the proceeds from sales of fixed-maturity and equity securities of $9,546,000. Net cash used in financing activities totaled $58,199,000, which was primarily due to the redemption of redeemable noncontrolling interests of $100,000,000, $3,993,000 of cash dividend payments, and cash dividends paid to redeemable noncontrolling interest of $2,923,000, offset by $50,000,000 of net borrowing under the line of credit agreement.

Previous wording

At September 30, 2024, we had $724,564,000 of fixed-maturity and equity investments, which are carried at fair value. Changes in the general interest rate environment affect the returns available on new fixed-maturity investments. While a rising interest rate environment enhances the returns available on new investments, it reduces the market value of existing fixed-maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new fixed-maturity investments but increases the market value of existing fixed-maturity investments, creating the opportunity for realized investment gains on disposition.

Current wording

At March 31, 2025, we had $708,087,000 of fixed-maturity and equity investments, which are carried at fair value. Changes in the general interest rate environment affect the returns available on new fixed-maturity investments. While a rising interest rate environment enhances the returns available on new investments, it reduces the market value of existing fixed-maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new fixed-maturity investments but increases the market value of existing fixed-maturity investments, creating the opportunity for realized investment gains on disposition.

Previous wording

The IBNR represents our estimate of the ultimate cost of all claims that have occurred but have not been reported to us, and in some cases may not yet be known to the insured, and future development of reported claims. Estimating the IBNR component of our Reserves involves considerable judgment on the part of management. At September 30, 2024, $531,072,000 of the total $612,354,000 we have reserved for losses and loss adjustment expenses is attributable to our estimate of IBNR. The remaining $81,282,000 relates to known cases which have been reported but not yet fully settled in which case we have established a reserve based on currently available information and our best estimate of the cost to settle each claim. At September 30, 2024, $56,208,000 of the $81,282,000 in reserves for known cases relates to claims incurred during prior years.

Current wording

The IBNR represents our estimate of the ultimate cost of all claims that have occurred but have not been reported to us, and in some cases may not yet be known to the insured, and future development of reported claims. Estimating the IBNR component of our Reserves involves considerable judgment on the part of management. At March 31, 2025, $715,819,000 of the total $798,146,000 we have reserved for losses and loss adjustment expenses is attributable to our estimate of IBNR. The remaining $82,327,000 relates to known cases which have been reported but not yet fully settled in which case we have established a reserve based on currently available information and our best estimate of the cost to settle each claim. At March 31, 2025, $76,962,000 of the $82,327,000 in reserves for known cases relates to claims incurred during prior years.

Previous wording

Our Reserves increased from $585,073,000 at December 31, 2023 to $612,354,000 at September 30, 2024. The $27,281,000 increase is comprised of $198,436,000 in reserves established for 2024 loss year, including $61,000,000 specific to Hurricane Helene, offset by reductions in our catastrophe Reserves of $79,615,000 primarily specific to Hurricane Ian and Hurricane Irma, and reductions in our non-catastrophe Reserves of $52,597,000 for 2023 and $38,943,000 for 2022 and prior loss years. The Reserves established for 2024 claims are primarily driven by an allowance for those claims that have been incurred but not reported to the company as of September 30, 2024. The decrease of $171,155,000 specific to our 2023 and prior loss-years reserves is due to settlement of claims related to those loss years.

Current wording

Our Reserves decreased from $845,900,000 at December 31, 2024 to $798,146,000 at March 31, 2025. The $47,754,000 decrease is comprised of reductions in our catastrophe Reserves of $56,785,000 primarily specific to Hurricane Ian, Hurricane Helene as well as Hurricane Milton, and reductions in our non-catastrophe Reserves of $23,808,000 for 2024 and $13,357,000 for 2023 and prior loss years, offset by $46,196,000 in reserves established for 2025 loss year. The Reserves established for 2025 claims are primarily driven by an allowance for those claims that have been incurred but not reported to the company as of March 31, 2025. The decrease of $93,950,000 specific to our 2024 and prior loss-years reserves is due to settlement of claims related to those loss years.

Previous wording

The above and other accounting estimates and their related risks that we consider to be our critical accounting estimates are more fully described in our Annual Report on Form 10-K, which we filed with the SEC on March 8, 2024. For the nine months ended September 30, 2024, there have been no other material changes with respect to any of our critical accounting policies.

Current wording

The above and other accounting estimates and their related risks that we consider to be our critical accounting estimates are more fully described in our Annual Report on Form 10-K, which we filed with the SEC on February 28, 2025. For the three months ended March 31, 2025, there have been no other material changes with respect to any of our critical accounting policies.