HCI Group, Inc.

Note 1 -- Nature of Operations

HCI Group, Inc., together with its subsidiaries (“HCI” or the “Company”), is primarily engaged in the property and casualty insurance business through two Florida domiciled insurance companies, Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”) and TypTap Insurance Company (“TTIC”). Both HCPCI and TTIC are authorized to underwrite various homeowners’ property and casualty insurance products and allied lines business in the state of Florida and in other states. A third insurance subsidiary, perRisk Insurance Company (“perRisk”), is domiciled in Arizona and has not yet commenced its surplus lines insurance business. The operations of insurance subsidiaries are supported by HCI Group, Inc. and certain entities within the consolidated group. Exzeo Group, Inc. (formerly known as TypTap Insurance Group, Inc.) (“Exzeo”), its majority-owned subsidiary, provides turn-key insurance technology and operations solutions based on a proprietary platform of purpose-built software and data analytics applications that are specifically designed for the property and casualty insurance ecosystem. Exzeo’s advanced data analytics algorithms and software tools maximize efficiency and optimize underwriting outcomes.

The Company also provides attorney-in-fact (“AIF”) services for reciprocal insurance exchanges owned by their policyholders. The Company's subsidiaries, Core Risk Managers, LLC (“CRM”) and Tailrow Risk Managers, LLC (“TRM”), serve as the AIF for Condo Owners Reciprocal Exchange (“CORE”) and Tailrow Insurance Exchange (“Tailrow”), respectively. Although the Company does not have any equity interest in the reciprocal insurance exchanges, the Company is required to consolidate them as their primary beneficiary. Refer to Note 14 “Variable Interest Entities” for additional information. In addition, Greenleaf Capital, LLC, the Company’s real estate subsidiary, is primarily engaged in the business of owning, developing, and leasing real estate and operating marina facilities.

Assumed Business

Citizens Assumption

From time to time, the Company and its consolidated variable interest entities (“VIEs”) may participate in a “take-out program” through which the Company and its VIEs assume insurance policies held by Citizens Property Insurance Corporation (“Citizens”), a Florida state-supported insurer.

The Company did not assume any policies from Citizens during the three months ended June 30, 2025. During the six months ended June 30, 2025, approximately 13,900 policies were assumed, representing approximately $35,800 in annualized gross written premiums. For the three and six months ended June 30, 2024, approximately 300 and 10,100 policies were assumed, respectively, representing approximately $32,300 and $120,100 in annualized gross premiums, respectively.

Note 2 -- Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s financial position as of June 30, 2025 and the results of operations and cash flows for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ending December 31, 2025. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2024 included in the Company’s Form 10-K, which was filed with the SEC on February 28, 2025.

In preparing the interim unaudited consolidated financial statements, management was required to make certain judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures as of the financial reporting date and throughout the periods being reported upon. Certain of the estimates result from judgments that can be subjective and complex, and consequently actual results may differ from these estimates.

Material estimates that are particularly susceptible to significant change in the near term are related to the Company’s losses and loss adjustment expenses, which include amounts estimated for claims incurred but not yet reported. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make these estimates. In addition, accounting policies specific to reinsurance recoverable, income taxes, stock-based compensation expense, limited partnership investments, and acquired intangible assets involve significant judgments and estimates material to the Company’s consolidated financial statements.

In the case of assumed business, the Company relies entirely on the ceding insurance company to provide information about premiums, losses, and loss adjustment expenses. When the information is not available at the reporting date, the Company will make estimates based on all recent available data. Accordingly, the actual results could differ significantly from those estimates.

All intercompany balances and transactions have been eliminated.

Reclassification

The Company's previously reported segment information has been recast to conform with the current presentation. Refer to Note 15 “Segment Information.”

Note 3 -- Recent Accounting Pronouncements

Adopted

Accounting Standards Update No. 2023-09. In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-09 (“ASU 2023-09”)Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update enhances income tax disclosures by requiring public entities to report income tax expense disaggregated by federal, state, and foreign taxes, with further detail on specific jurisdictions over a quantitative threshold. In addition, public entities must also separately disclose reconciling items equal to or greater than five percent of pretax income from operations by the applicable federal statutory rate. This update has been adopted on a prospective basis for the fiscal year beginning on January 1, 2025 and will result in enhanced income tax disclosures beginning with our consolidated financial statements for the year ending December 31, 2025.

Accounting Standards Update No. 2024-04. In November 2024, the FASB issued Accounting Standards Update No. 2024-04 (“ASU 2024-04”)Debt–Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. This update clarifies whether entities should apply extinguishment accounting or induced conversion accounting when recording the settlement of convertible debt instruments due to an induced conversion. ASU 2024-04 is effective for all entities for fiscal years beginning after December 15, 2025. Early adoption is permitted as of the beginning of a reporting period if the entity has also adopted ASU 2020-06 as of that period. The Company has elected to early adopt this update effective January 1, 2025. The adoption of this update had no impact on the Company’s financial position or results of operation upon adoption as the new guidance applies prospectively from January 1, 2025.

Pending Adoption

Accounting Standards Update No. 2025-01 and 2024-03. In January 2025, the FASB issued Accounting Standards Update No. 2025-01 (“ASU 2025-01”)Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update clarifies the effective date of Accounting Standards Update No. 2024-03 (“ASU 2024-03”)Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which was issued by the FASB in November 2024. For public business entities, ASU 2024-03 enhances disclosures by requiring the disaggregation of certain expense captions presented within the income statement, such as employee compensation and intangible asset amortization. In addition, the total relevant expense caption on the income statement must be reconciled to the aggregate of the separately disclosed expense categories with the difference represented by an “other items” amount which is qualitatively described. ASU 2024-03 is effective for all public business entities for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating its impact on certain disclosures but expects the adoption to result in additional disclosures of certain expenses.

Note 4 -- Cash and Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported on the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:

Restricted cash represents funds in the Company’s sole ownership primarily held by certain states in which the Company’s insurance subsidiaries conduct business to meet the states’ regulatory requirements, and is not available for immediate business use. Funds withheld in an account for which the Company is a co-owner but not the named beneficiary are not considered restricted cash and are included in funds withheld for assumed business on the consolidated balance sheets.

Note 5 -- Investments

Available-for-Sale Fixed-Maturity Securities

The Company holds investments in fixed-maturity securities that are classified as available-for-sale. As of June 30, 2025 and December 31, 2024, the cost or amortized cost, allowance for credit loss, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale fixed-maturity securities by security type were as follows:

Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. The scheduled contractual maturities of available-for-sale fixed-maturity securities as of June 30, 2025 and December 31, 2024 were as follows:

Securities on Deposit

The fair value of available-for-sale fixed-maturity securities on deposit with various regulatory authorities as of June 30, 2025 and December 31, 2024 was $1,802 and $1,794, respectively.

Sales of Available-for-Sale Fixed-Maturity Securities

Proceeds received, and the gross realized gains and losses from sales of available-for-sale fixed-maturity securities, for thethree and six months ended June 30, 2025 and 2024 were as follows:

Gross Unrealized Losses for Available-for-Sale Fixed-Maturity Securities

Available-for-sale fixed-maturity securities with gross unrealized loss positions as of June 30, 2025 and December 31, 2024, aggregated by investment category and length of time the individual securities have been in a continuous loss position, were as follows:

As of June 30, 2025 and December 31, 2024, there were 32 and 56 available-for-sale fixed-maturity securities, respectively, in an unrealized loss position.

Allowance for Credit Losses of Available-for-Sale Fixed-Maturity Securities

The Company regularly reviews its individual available-for-sale fixed-maturity securities for credit impairment. The Company considers various factors in determining whether a credit loss exists for each individual security, including:

•

the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;

•

the extent to which the market value of the security has been below its cost or amortized cost;

•

general market conditions and industry or sector specific factors and other qualitative factors;

•

nonpayment by the issuer of its contractually obligated interest and principal payments; and

•

the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.

There wasno balance or activity in the allowance for credit losses of available-for-sale fixed-maturity securities during the three and six months ended June 30, 2025 and 2024.

Equity Securities

The Company holds investments in equity securities measured at fair values which are readily determinable. As of June 30, 2025 and December 31, 2024, the cost, gross unrealized gains and losses, and estimated fair value of the Company’s equity securities were as follows:

The table below presents the portion of unrealized gains and losses in the Company’s consolidated statements of income related to equity securities still held:

Sales of Equity Securities

Proceeds received, and the gross realized gains and losses from sales of equity securities, for thethree and six months ended June 30, 2025 and 2024 were as follows:

Limited Partnership Investments

The Company has interests in limited partnerships that are not registered or readily tradeable on a securities exchange. These partnerships are private equity funds managed by general partners who make decisions with regard to financial policies and operations. As such, the Company is not the primary beneficiary and does not consolidate these partnerships. The following table provides information related to the Company’s investments in limited partnerships:

(a)

Represents the Company’s percentage investment in the fund as of each balance sheet date.

(b)

Except under certain circumstances, withdrawals from the funds or any assignments are not permitted. Distributions, except income from late admission of a new limited partner, will be received when underlying investments of the funds are liquidated.

(c)

The term is expected to betwo years following the maturity of the fund’s outstanding leverage. Although the capital commitment period has expired, follow-on investments and pending commitments may require additional fundings.

(d)

Effective July 1, 2023, this investment is in the process of winding down. Although the capital commitment period has ended, the general partner could still request an additional funding under certain circumstances.

(e)

At the fund manager’s discretion, the term of the fund may be extended for up totwo additional one-year periods.

(f)

Expected to have aten-year term. The capital commitment period has expired but the general partner may request additional funding for follow-on investment.

(g)

With the consent of a supermajority of partners, the term of the fund may be extended for up tothree additional one-year periods.

(h)

Expected to have aneight-year term from the commencement date, which can be extended for up totwo additional one-year periods with the consent of either the advisory committee or a majority of limited partners.

(i)

The capital commitment period has ended but an additional funding may be requested.

(j)

The term is expected to end November 27, 2027. The term may be extended for up tofour additional one-year periods at the general partner’s discretion, and up totwo additional one-year periods with the consent of the advisory committee.

(k)

Expected to have aneight-year term after the final admission date. The term may be extended for an additionalone-year period at the general partner’s discretion, and up totwo additional one-year periods with the consent of either the advisory committee or a majority of limited partners.

The following is the summary of aggregated unaudited financial information of limited partnerships included in the investment strategy table above, which in certain cases is presented on a three-month lag due to the unavailability of information at the Company’s respective balance sheet dates. The financial statements of these limited partnerships are audited annually.

*Includes net change in unrealized gains or losses on investments.

For the three and six months ended June 30, 2025, the Company recognized net investment loss of $32 and $658, respectively. During the three and six months ended June 30, 2025, the Company received total cash distributions of $549 and $644, respectively.

For the three and six months ended June 30, 2024, the Company recognized net investment loss of $110 and net investment income of $85, respectively. During the three and six months ended June 30, 2024, the

Company received total cash distributions of $2,756 and $2,918, respectively, including returns on investment of $626.

As of June 30, 2025 and December 31, 2024, the Company’s net cumulative contributed capital to the partnerships at each respective balance sheet date totaled $22,972 and $20,987, respectively, and the Company’s maximum exposure to loss aggregated $19,770 and $20,801, respectively.

Real Estate Investments

Real estate investments consisted of the following as of June 30, 2025 and December 31, 2024:

Depreciation and amortization expense related to real estate investments was $473 and $279 for thethree months ended June 30, 2025 and 2024, respectively, and $812 and $548 for thesix months ended June 30, 2025 and 2024, respectively.

For the three months ended June 30, 2025, proceeds from the sales of real estate investments were $1,189 and resulted in gains of $70. For the six months ended June 30, 2025, proceeds from the sales of real estate investments were $2,013 and resulted in gains of $440. There were no sales of real estate investments for the three and six months ended June 30, 2024.

Net Investment Income

Net investment income, by source, is summarized as follows:

Note 6 -- Other Comprehensive Income (Loss)

Comprehensive income includes net income and other comprehensive income (loss), which relates to changes in unrealized gains or losses of available-for-sale fixed-maturity securities carried at fair value and changes to any credit losses related to these investments. Reclassification adjustments related to the gains or losses recognized on sales of available-for-sale fixed-maturity securities are reflected in net realized investment gains (losses) on the consolidated statements of income. The components of other comprehensive income (loss), inclusive of the related tax effects, were as follows:

Note 7 -- Fair Value Measurements

The Company records and discloses certain financial assets at their estimated fair values. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:

Valuation Methodology

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of money-market funds and certificates of deposit maturing within 90 days from the time of purchase. Their carrying value approximates fair value due to the short maturity and high liquidity of these funds.

Restricted Cash

Restricted cash represents cash held by state authorities and the carrying value approximates fair value.

Available-for-Sale Fixed-Maturity and Equity Securities

Estimated fair values of the Company’s available-for-sale fixed-maturity and equity securities are determined in accordance with U.S. GAAP, using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical securities or other inputs that are observable either directly or indirectly, such as quoted prices for similar securities. In those instances where observable inputs are not available, fair values are measured using unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the security and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.

The estimated fair values for securities that do not trade on a daily basis are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 2 inputs. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to broker-provided data. The Company gains assurance of the overall reasonableness and consistent application of the assumptions and methodologies, and compliance with accounting standards for fair value determination through ongoing monitoring of the reported fair values.

Revolving Credit Facility

From time to time, the Company has an amount outstanding under a revolving credit facility. The interest rate is variable and is periodically adjusted based on the Secured Overnight Financing Rate (“SOFR”) plus a ten basis points adjustment plus a margin based on the debt-to-capital ratio. As a result, carrying value, when outstanding, approximates fair value.

Long-Term Debt

The following table summarizes the Company’s long-term debt and methods used in estimating their fair values:

Assets Measured at Estimated Fair Value on a Recurring Basis

The following tables present information about the Company’s financial assets measured at estimated fair value on a recurring basis. The tables indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of June 30, 2025 and December 31, 2024:

Liabilities Carried at Other Than Fair Value

The following tables present fair value information for financial liabilities that are carried on the consolidated balance sheets at amounts other than fair value as of June 30, 2025 and December 31, 2024:

Note 8 -- Intangible Assets, Net

The Company’s intangible assets, net consist of the following:

(a)

Fully amortized.

The remaining weighted-average amortization periods for the intangible assets as of June 30, 2025 are summarized in the table below:

As of June 30, 2025 and December 31, 2024, contingent liabilities related to renewal rights intangible assets were $371 and are included in other liabilities on the consolidated balance sheets.

Note 9 -- Other Assets

The following table summarizes the Company’s other assets:

Note 10 -- Revolving Credit Facility

As of June 30, 2025, the Company had $40,000 outstanding under a revolving credit facility. For the three months ended June 30, 2025 and 2024, interest expense was$644 and $892, respectively, including $15 and $15 of amortization of issuance costs, respectively. For the six months ended June 30, 2025 and 2024, interest expense was $1,313 and $1,630, respectively, including $30 and $30 of amortization of issuance costs, respectively. As of June 30, 2025, the Company was in compliance with all required covenants and had additional available borrowing capacityof $35,000.

Note 11 -- Long-Term Debt

The following table summarizes the Company’s long-term debt:

(a)

Converted during the six months ended June 30, 2025.

The following table summarizes future maturities of long-term debt as of June 30, 2025:

Information with respect to interest expense related to long-term debt is as follows:

(b)

Includes amortization of debt issuance costs.

Conversion of Debt

4.75% Convertible Senior Notes

During the first quarter of 2025, the Company notified the holders of its outstanding 4.75% Convertible Senior Notes due 2042 (the “Notes”) that the Company had elected to redeem the remaining $172,500 principal balance of the Notes. As a result, the Notes became immediately convertible into the Company’s common shares, with a redemption date of June 5, 2025. The conversion rate of the Notes was 12.6789 shares of common stock per $1 of principal. During the six months ended June 30, 2025, the Company converted $172,500 in aggregate principal into consideration of 2,187,063 shares of HCI’s common stock and $1,133 in cash. The cash consideration included an inducement payment of $1,125 and $8 paid in lieu of fractional shares. The Company recognized an expense related to the inducement payment of $1,125 in other operating expenses on the consolidated statements of income and as financing cash flows on the consolidated statements of cash flows.

4.25% Convertible Senior Notes

During the first quarter of 2024, the Company converted $23,450 principal amount of its 4.25% Convertible Senior Notes for 389,087 shares of common stock plus $1 cash consideration in lieu of fractional shares and redeemed the remaining $466 principal amount of its 4.25% Convertible Senior Notes in cash.

Note 12 -- Reinsurance

Reinsurance obtained from other insurance companies

The Company cedes a portion of its homeowners insurance exposure to other entities under catastrophe excess of loss reinsurance contracts and a portion of its flood insurance exposure under one quota share reinsurance agreement. To mitigate exposure in its commercial residential insurance business, the Company utilizes both facultative reinsurance and catastrophe excess of loss reinsurance contracts. Ceded premiums under most catastrophe excess of loss reinsurance contracts are subject to revision resulting from subsequent adjustments in total insured value. Under the terms of the quota share reinsurance agreement, the Company is entitled to a 30% ceding commission on net ceded premiums written and a profit commission equal to 10% of net profit.

The Company remains liable for claims payments in the event that any reinsurer is unable to meet its obligations under the reinsurance agreements. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. The Company contracts with a number of reinsurers to secure its annual reinsurance coverage, which generally becomes effective June 1 st of each year. The Company purchases reinsurance each year taking into consideration its overall insurance exposure, modeled probable maximum losses, risk tolerance and retention levels, mandatory reinsurance coverage provided by the Florida Hurricane Catastrophe Fund, and overall reinsurance market conditions.

The impact of the reinsurance contracts on premiums written and earned is as follows:

As of June 30, 2025 and December 31, 2024, total net amounts recoverable and receivable from reinsurers were $437,925 and $558,441, respectively. During thethree and six months ended June 30, 2025, the Company decreased its reinsurance recoverable for unpaid losses and loss adjustment expenses by $61,200 as a result of a favorable change in estimated losses from Hurricane Milton.

During the three and six months ended June 30, 2024, the Company recognized ceded losses of $2,672 in each period as reductions in losses and loss adjustment expenses.

As of June 30, 2025 and December 31, 2024, there were 48 and 44 reinsurers participating in the Company’s reinsurance program, respectively. Approximately 66.3% ofthe reinsurance recoverable balance as of June 30, 2025 was receivable from four reinsurers. Based on all available information considered in the rating-based method, allowances for credit losses related to the reinsurance recoverable balance were $137 and $186 as of June 30, 2025 and December 31, 2024, respectively. The Company recognized decreases in credit loss expense of$14 and $49 for thethree and six months ended June 30, 2025, respectively. For the three and six months ended June 30, 2024, the Company recognized decreases in credit loss expense of $3 and $52, respectively.

Prior to June 1, 2025, the Company had one multi-year reinsurance contract containing retrospective provisions, which adjusted premiums in the event of minimal or no losses. Due to the losses from Hurricane Helene and Hurricane Milton during the third and fourth quarters of 2024, these retrospective provisions were fully exhausted and as such, no benefits were accrued during the three and six months ended June 30, 2025. In contrast, for the three and six months ended June 30, 2024, the Company recognized reductions in premiums ceded of $6,993 and $13,986, respectively, related to these adjustments in the consolidated statement of income.

There wereno benefits accrued under the multi-year reinsurance contract with retrospective provisions as of June 30, 2025 and December 31, 2024.

Reinsurance provided to other insurance companies

United

The Company formerly provided quota share reinsurance to United Property & Casualty Insurance Company (“United”) on its policies in the northeast and southeast regions of the United States. United was placed into receivership by the State of Florida due to its financial insolvency and, as a result, the Company ceased providing quota share reinsurance on United policies. As of June 30, 2025, the Company had a net balance of $879 due to United related to the northeast region, consisting of assumed losses payable of $48 and ceding commission payable of $831. As of December 31, 2024, the Company had a net balance of$831 due to United related to the northeast region, representing ceding commission payable.

As of June 30, 2025, the Company had a net balance of$1,518 due to United related to the southeast region, consisting of premiums payable of $1,712 and assumed losses payable of $80, offset by ceding commission receivable of $274. As of December 31, 2024, the Company had a net balance of $1,438 due to United related to the southeast region, consisting of premiums payable of $1,712, offset by ceding commission receivable of $274.

As of June 30, 2025, the Company had a net amount due to United of$2,397 and funds withheld for assumed business in trust accounts totaling$8,538 for the benefit of policies assumed from United. The Company cannot predict the actions a receiver might take, which may include restrictions on, or use of, funds held in trust. Any such actions could have a material adverse effect on the Company’s financial position and results of operations.

As of June 30, 2025 and December 31, 2024, the balance of funds withheld for assumed business related to the Company’s quota share reinsurance agreements with United was $8,538 and $11,690, respectively.

Citizens Assumption

For the three months ended June 30, 2025, $791 of assumed premiums written related to Citizens policies were derecognized due to policy cancellations. For thesix months ended June 30, 2025, assumed premiums were$19,999. Assumed premiums were $22,613 and$65,704 for thethree and six months ended June 30, 2024, respectively.

Note 13 -- Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses (“LAE”) is determined on an individual case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future claims development and losses incurred but not reported.

The Company primarily writes insurance in states which could be exposed to hurricanes or other natural catastrophes. The occurrence of a major catastrophe could have a significant effect on the Company’s quarterly results and cause a temporary disruption of the normal operations of the Company. However, the Company is unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.

Activity in the liability for losses and LAE is summarized as follows:

*Net balance represents beginning-of-period liability for unpaid losses and LAE less beginning-of-period reinsurance recoverable for unpaid losses and LAE.

The establishment of loss and LAE reserves is an inherently uncertain process and changes in loss and LAE reserve estimates are expected as these estimates are subject to the outcome of future events. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such estimates are adjusted. Lower losses and LAE for the three and six months ended June 30, 2025 primarily resulted from a decrease in claims and litigation related to Florida policies.

Note 14 -- Variable Interest Entities

The Company holds variable interests in two reciprocal insurance exchanges, CORE and Tailrow. The reciprocal insurance exchanges are owned by their policyholders, referred to as subscribers, who gain ownership by buying an insurance policy and making a surplus contribution. The Company is required to assess whether it has a controlling financial interest in its variable interest entities. A controlling financial interest exists if an entity has both: 1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and 2) the obligation to absorb losses from or the right to receive benefits of the VIE that could potentially be significant to the VIE. Under U.S. GAAP, an entity meeting these requirements is considered to be the primary beneficiary of a VIE and is required to consolidate the VIE.

CORE was organized to offer commercial residential multiple peril and wind insurance products and Tailrow was organized to provide homeowners multiple peril insurance. Based on management’s current evaluation, CORE and Tailrow are considered VIEs, and the Company has determined that it is the primary beneficiary of both entities.

CORE’s and Tailrow’s assets are legally restricted for the purpose of fulfilling their obligations. The creditors of the VIEs have no legal right to pursue additional sources of payment from the Company.

The following table summarizes the assets and liabilities related to the Company’s variable interests in consolidated VIEs which are included in the accompanying consolidated balance sheets:

Note 15 -- Segment Information

The Company identifies its operating divisions based on managerial emphasis, organizational structure and revenue source. The Company hasfive reportable segments: Insurance Operations, Exzeo Group, Reciprocal Exchange Operations, Real Estate, and Corporate and Other. Due to their economic characteristics, the Company’s property and casualty insurance division and reinsurance operations, excluding the insurance operations under Reciprocal Exchange Operations, are grouped together into one reportable segment under Insurance Operations. The Exzeo Group segment includes insurance solutions, information technology operations, and its management company’s activities. The Reciprocal Exchange Operations segment represents the insurance operations of CORE and Tailrow. The Real Estate segment includes companies engaged in operating commercial properties the Company owns for investment purposes or for use in its own operations. The Corporate and Other segment represents the activities of the holding companies and any other companies, such as CRM and TRM, that do not meet the quantitative and qualitative thresholds for a reportable segment. The determination of segments may change over time due to changes in operational emphasis, revenue, and results of operations. The Company’s chief executive officer, who serves as the Company’s chief operating decision maker, evaluates each division’s financial and operating performance based on revenue and operating income.

For the three months ended June 30, 2025 and 2024, revenue from the Insurance Operations segment before intracompany elimination represented 77.9% and 85.6%, respectively, and revenue from the Exzeo Group segment represented 16.3% and 8.9%, respectively, of total revenue of all operating segments. For the six months ended June 30, 2025 and 2024, revenue from the Insurance Operations segment before intracompany elimination represented 77.5% and 85.4%, respectively, and revenue from the Exzeo Group segment represented 16.5% and 10.7%, respectively, of total revenue of all operating segments. As of June 30, 2025 and December 31, 2024, Insurance Operations’ total assets represented 81.0% and 83.6%, respectively, and Exzeo Group’s total assets represented 6.0% and 3.7%, respectively, of the combined assets of all operating segments.

The following tables present segment information reconciled to the Company’s consolidated statements of income. Intersegment transactions are not eliminated from segment results. However, intracompany transactions are eliminated in segment results below.

(a)

(b)

(c)

Gross premiums earned under insurance operations includes $1,280 earned from reciprocal exchange operations.

(d)

The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The insurance operations and the reciprocal exchange operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo Group and the AIF operations recognize service fee revenue according to revenue recognition standards. Although both service fee expenses and revenue are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.

(e)

(a)

(b)

(c)

Gross premiums earned under insurance operations include $1,212 earned from the reciprocal exchange operations.

(d)

The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The insurance operations and the reciprocal exchange operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo Group and the AIF operations recognize service fee revenue according to revenue recognition standards. Although both service fee expenses and revenue are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.

(e)

(a)

(b)

(c)

Gross premiums earned under insurance operations include $2,479 earned from the reciprocal exchange operations.

(d)

The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The insurance operations and the reciprocal exchange operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo Group and the AIF operations recognize service fee revenue according to revenue recognition standards. Although both service fee expenses and revenue are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.

(e)

(a)

(b)

(c)

Gross premiums earned under insurance operations include $1,665 earned from the reciprocal exchange operations.

(d)

The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The insurance operations and the reciprocal exchange operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo Group and the AIF operations recognize service fee revenue according to revenue recognition standards. Although both service fee expenses and revenue are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.

(e)

The following table presents gross premium earned by geographic location:

The following table presents segment assets reconciled to the Company’s total assets on the consolidated balance sheets:

Note 16 -- Leases

Company as Lessee

The table below summarizes the Company’s right-of-use (“ROU”) assets and corresponding liabilities for operating leases:

The following table summarizes the Company’s operating leases in which the Company is a lessee:

(a)

There are no variable lease payments.

(b)

Rent escalation provisions exist.

As of June 30, 2025, maturities of operating lease liabilities were as follows:

The following table provides quantitative information with regards to the Company’s operating and finance leases:

*Included in other operating expenses on the consolidated statements of income.

Company as Lessor

The following table summarizes the Company’s operating leases in which the Company is a lessor:

(c)

There are no purchase options

In March 2025, the Company entered into an operating lease agreement for its 189,147-square-foot commercial property in Tampa, Florida. The lease commenced in June 2025 and has an initial term of 130 months, with options to renew for two additional 60-month periods. Total net lease payments over the initial term will be $56,866. The underlying asset is presented as part of real estate investments in the consolidated balance sheets.

Note 17 -- Income Taxes

A valuation allowance must be established for deferred income tax assets when it is more likely than not that the deferred income tax assets will not be realized based on available evidence both positive and negative, including recent operating results, available tax planning strategies, and projected future taxable income. The Company evaluates the realizability of its deferred income tax assets each quarter, and as of June 30, 2025, based on all of the available evidence, management concluded that it is more likely than not that the deferred income tax assets will be realized other than a valuation allowance on the sale of TTIC by Exzeo to HCI in the amount of $544 related to the deferred intercompany taxable loss that arose during the third quarter of 2024. The Company didnot have a valuation allowance established as of June 30, 2024.

During the three months ended June 30, 2025 and 2024, the Company recorded income tax expense of $24,113 and $18,927, respectively, resulting in effective tax rates of 25.5% and 24.9%, respectively. The increase in the effective tax rate as compared with the corresponding period in the prior year was primarily attributable to certain non-deductible compensation expense for the second quarter of 2025.

During the six months ended June 30, 2025 and 2024, the Company recorded income tax expense of $50,222 and $39,401, respectively, resulting in effective tax rates of 25.8% and 25.7%, respectively. The increase in the effective tax rate as compared with the corresponding period in the prior year was primarily attributable to certain non-deductible compensation expense for 2025. The Company’s estimated annual effective tax rate differs from the statutory federal tax rate due to state and foreign income taxes as well as certain non-deductible and tax-exempt items.

Note 18 -- Earnings Per Share

U.S. GAAP requires the Company to use the two-class method in computing basic earnings (loss) per share since holders of the Company’s restricted stock have the right to share in dividends, if declared, equally with common stockholders. These participating securities affect the computation of both basic and diluted earnings (loss) per share during periods of net income or loss. For a majority-owned subsidiary, its basic and diluted earnings (loss) per share are first computed separately. Then, the Company’s proportionate share in that majority-owned subsidiary’s earnings is added to the computation of both basic and diluted earnings (loss) per share at a consolidated level.

A summary of the numerator and denominator of the basic and diluted earnings per common share is presented below:

(a)

Shares in thousands.

(a)

Shares inthousands.

Note 19 -- Redeemable Noncontrolling Interests

Exzeo - Series A Preferred Stock

Exzeo previously issued shares of its Series A Preferred Stock to a private investment management fund. These shares were presented as redeemable noncontrolling interest on the consolidated balance sheet until the redemption was completed during the first quarter of 2024. For the six months ended June 30, 2024, net income attributable to redeemable noncontrolling interest was $10,149, consisting of accrued cash dividends of $424, accretion related to increasing dividend rates of $111, an adjustment to maximum redemption value of $6,228, and a deemed dividend resulting from warrant modifications of $3,386.

VIE - Subscriber Surplus Contribution

Subscriber surplus contributions in redeemable noncontrolling interests represent a refundable portion of the surplus contributions received from policyholders of the VIEs.

The following table summarizes the activity of the refundable portion of subscriber surplus contributions during thethree and six months ended June 30, 2025 and 2024:

Note 20 -- Equity

Stockholders’ Equity

Common Stock

On April 23, 2025, the Company’s Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends were paid on June 20, 2025 to stockholders of record on May 16, 2025.

Warrants

On March 11, 2024,300,000 warrants were exercised through a cashless transaction resulting in the issuance of 155,049 shares of common stock.

As of June 30, 2025, there were 11,250 warrants outstanding at an exercise price of $54.40 with an expiration date of December 31, 2028.

At-The-Market Facility

On January 22, 2024, the Company implemented an “at-the-market” facility (the “ATM Facility”) which gives the Company the ability to raise up to $75,000 through the issuance of new shares of common stock through a sales agent (the “Sales Agent”). The Company has no obligation to sell, and the Sales Agent has no obligation to buy or sell, any shares of common stock under the ATM Facility. As of June 30, 2025 the remaining availability under the ATM Facility was $75,000.

Noncontrolling Interests

Exzeo

During the three and six months ended June 30, 2025, Exzeo did not repurchase and retire any shares of common stock from current or former employees. During the three and six months ended June 30, 2024, Exzeo repurchased and retired a total of 23,071 and 45,858 shares, respectively, of its common stock. The total cost of purchasing noncontrolling interests during thethree and six months ended June 30, 2024 was $49 and $82, respectively. Exzeo repurchased common shares from its current employees to satisfy payroll tax liabilities in connection with the vesting of restricted stock awards.

In addition, Exzeo repurchased and retired a total of 6,830 shares of its common stock from former Exzeo employees for a total cost of $12 for thethree and six months ended June 30, 2024. The total cost included the fair value of Exzeo common stock and a $2 inducement cost for the purpose of curtailing the spread of share ownership.

As of June 30, 2025, there were 82,701,189 shares of Exzeo’s common stock outstanding, of which 7,701,189 shares were not owned by HCI.

Consolidated Variable Interest Entities

As described in Note 14 “Variable Interest Entities,” the Company has no equity interest at risk in consolidated VIEs. An insurance exchange receives surplus contributions from its subscribers in addition to policy premiums. The surplus contribution is payable to an insurance exchange on or prior to the initial effective date of coverage, in installments for certain payment plans, and on or prior to the effective date of all endorsements generating an additional premium.

Note 21 -- Stock-Based Compensation

2012 Omnibus Incentive Plan

The Company currently has outstanding stock-based awards granted under the 2012 Omnibus Incentive Plan (“the Plan”) which is currently active and available for future grants. As of June 30, 2025, there were 683,676 shares available for grant.

Stock Options

Stock options granted and outstanding under the Plan vest over a period offour years and are exercisable over the contractual term often years.

A summary of the stock option activity for thethree and six months ended June 30, 2025 and 2024 is as follows (option amounts not in thousands):

Restricted Stock Awards

From time to time, the Company has granted and may grant restricted stock awards to certain executive officers, other employees, and non-employee directors in connection with their service to the Company. The terms of the Company’s outstanding restricted stock grants may include service, performance, and market-based conditions. The determination of fair value with respect to the awards containing only service-based conditions is based on the market value of the Company’s common stock on the grant date. For awards with market-based conditions, the fair value is determined using a Monte Carlo simulation method, which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome.

A summary of the restricted stock awards activity for thethree and six months ended June 30, 2025 and 2024 is as follows:

The Company recognized compensation expense related to restricted stock awards, which is included in general and administrative personnel expenses, of$1,994 and $1,720 for the three months ended June 30, 2025 and 2024, respectively, and $4,264 and $2,587 for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025 and December 31, 2024, there was approximately $17,454, and $20,296, respectively, of total unrecognized compensation expense related to nonvested restricted stock awards. The Company expects to recognize the remaining compensation expense over a weighted-average period of 2.7 years.

The following table summarizes information about deferred tax benefits recognized and tax benefits realized related to restricted stock awards and paid dividends, and the fair value of vested restricted stock for thethree and six months ended June 30, 2025 and 2024.

Subsidiary Equity Plan

Exzeo issues stock-based compensation awards to its employees under a separate stock-based compensation plan. The Company records activity related to Exzeo’s stock-based compensation as an adjustment to noncontrolling interest. For the three months ended June 30, 2025 and 2024, the Company recognized compensation expense related to Exzeo’s stock-based awards of $701 and $656, respectively. For thesix months ended June 30, 2025 and 2024, the Company recognized compensation expense related to Exzeo’s stock-based awards of $1,403 and $1,357, respectively. As of June 30, 2025 and December 31, 2024, there was $7,765 and $9,495, respectively, of unrecognized compensation expense related to Exzeo’s nonvested restricted stock and stock options.

Note 22 -- Commitments and Contingencies

Litigation and Other Legal Matters

The Company is party to litigation and other legal matters arising in the ordinary course of business. From time to time, the Company is also subject to regulatory and governmental examinations, information requests and subpoenas, inquiries, investigations, and threatened legal actions and proceedings.

The Company records accruals for losses that are probable and reasonably estimable. These accruals are based on a variety of factors such as judgment, probability of loss, and opinions of internal and external legal counsel. Legal costs in connection with litigation and other legal matters arising in the ordinary course of business are expensed as incurred.

Although the Company cannot predict with certainty the ultimate resolution of the litigation and other legal matters it is party to, the Company does not believe that any known or potential litigation and other legal matters will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

Capital Commitments

As described in Note 5 “Investments” under Limited Partnership Investments, the Company is contractually committed to capital contributions for limited partnership investments. As of June 30, 2025, there was an aggregate unfunded balance of $2,985.

FIGA Assessments

The Company’s insurance subsidiaries, as member insurers, are required to collect and remit the pass-through assessments to Florida Insurance Guaranty Association (“FIGA”) on a quarterly basis. As of June 30, 2025, the FIGA assessments payable by the Company were $3,594 and are included in other liabilities on the consolidated balance sheet.

Note 23 -- Related Party Transactions

HCPCI, TTIC, CORE, and Tailrow have reinstatement premium protection reinsurance contracts (“RPP”) with various reinsurers for the 2025-2026 treaty year. The purpose of the RPP contracts is to indemnify HCPCI, TTIC, CORE, and Tailrow for the reinstatement premium which HCPCI, TTIC, CORE, and Tailrow pay or become liable to pay under the reinstatement provisions of the respective excess of loss reinsurance contracts. For one of the RPP contracts, Oxbridge Reinsurance Limited (“Oxbridge”) participates as a subscribing reinsurer with HCPCI and Tailrow as collective reinsureds. One of the Company’s non-employee directors, Jay Madhu, serves as Oxbridge’s chairman of its board of directors and chief executive officer and is an investor in that company. For its participation on the RPP contract, Oxbridge’s annual premium is $1,033 and is paid by HCPCI and Tailrow over four installments. Management believes the premium rate is competitive with market rates. A trust account has been established with HCPCI and Tailrow as collective beneficiaries and Oxbridge as grantor. Each of the four premium installments is deposited into the trust account in order to fully collateralize Oxbridge’s obligations under the RPP contract. Trust assets may be withdrawn by HCPCI and Tailrow to indemnify HCPCI and Tailrow for Oxbridge’s obligations under the provisions of the RPP contract.

Note 24 -- Subsequent Events

On July 1,2025, the Company’s Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends are payable on September 19, 2025 to stockholders of record on August 15, 2025.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing its impact on its consolidated financial statements and will recognize the income tax effects in the consolidated financial statements beginning in the period in which the OBBBA was signed into law.

On July 24, 2025, the Company entered into a $17,000 loan agreement which bears interest at 5.65% with a maturity date of August 1, 2035. The loan is secured by commercial real estate in Haines City, Florida.

On August 1, 2025, the Company entered into a purchase and sale agreement for a 179,779 square-foot commercial property located in St. Petersburg, Florida at a purchase price of $17,500. The purchase is scheduled to be closed during the third quarter of 2025 and will be funded using available cash on hand.