HCI Group, Inc.

Previous wording

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) on February 26, 2026 (the “2025 Annual Report”). This section is intended to (i) provide material information relevant to the assessment of our results of operations and cash flows; (ii) enhance the understanding of our financial condition, changes in financial condition, and results of operations; and (iii) discuss material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future performance or of future financial condition.

Current wording

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on February 26, 2026 (“2025 Annual Report”). This section is intended to (i) provide material information relevant to the assessment of our results of operations and cash flows; (ii) enhance the understanding of our financial condition, changes in financial condition, and results of operations; and (iii) discuss material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future performance or of future financial condition.

Previous wording

HCI Group, Inc.’s common stock is currently listed on the New York Stock Exchange (“NYSE”) under the symbol “HCI.” Exzeo completed its initial public offering in November of 2025 and is currently listed on the NYSE under the symbol “XZO.” As of June 30, 2026, HCI Group, Inc. owned approximately 83.1% of Exzeo’s outstanding shares of common stock, inclusive of unvested restricted stock.

Current wording

HCI Group, Inc.’s common stock is currently listed on the New York Stock Exchange (“NYSE”) under the symbol “HCI.” Exzeo completed its initial public offering in November of 2025 and is currently listed on the NYSE under the symbol “XZO.” As of September 30, 2026, HCI Group, Inc. owned approximately 83.6% of Exzeo’s outstanding shares of common stock, inclusive of unvested restricted stock.

Previous wording

The following table summarizes our results of operations for the three and six months ended June 30, 2026 and 2025 (in thousands, except per share amounts or as otherwise indicated):

Current wording

The following table summarizes our results of operations for the three and nine months ended September 30, 2026 and 2025 (in thousands, except per share amounts or as otherwise indicated):

Previous wording

For the three months ended June 30, 2026, gross premiums earned were $287.2 million from Insurance Operations and $35.6 million from Reciprocal Exchange Operations. For the three months ended June 30, 2025, gross premiums earned were $282.3 million from Insurance Operations and $21.6 million from Reciprocal Exchange Operations.

Current wording

For the three months ended September 30, 2026, gross premiums earned were $282.4 million from Insurance Operations and $36.8 million from Reciprocal Exchange Operations. For the three months ended September 30, 2025, gross premiums earned were $283.0 million from Insurance Operations and $19.6 million from Reciprocal Exchange Operations.

Previous wording

Premiums Ceded represented 31.7% and 33.9% of gross premiums earned during the three months ended June 30, 2026 and 2025, respectively.

Current wording

Premiums Ceded decreased due to lower costs associated with our 2026-2027 catastrophe reinsurance programs, which began on June 1, 2026, and represented 30.7% and 35.2% of gross premiums earned during the three months ended September 30, 2026 and 2025, respectively.

Previous wording

Net premiums written represent premiums charged on policies issued during the period less any applicable reinsurance costs and increased primarily due to a higher volume of policies in force while average premium per policy remained relatively consistent. We had approximately 290,100 policies in force as of June 30, 2026 compared to approximately 270,100 policies in force as of June 30, 2025.

Current wording

Net premiums written represent premiums charged on policies issued during the period less any applicable reinsurance costs and increased primarily due to a higher volume of policies in force while average premium per policy remained relatively consistent. We had approximately 287,000 policies in force as of September 30, 2026 compared with approximately 264,000 policies in force as of September 30, 2025.

Previous wording

Other Revenue increased primarily as a result of the addition of new insurance carrier customers to Exzeo’s insurance technology platform.

Current wording

Other Revenue increased primarily as a result of the addition of new customers to Exzeo’s insurance technology platform.

Previous wording

Losses and Loss Adjustment Expenses increased primarily due to a higher volume of policies in force. The gross loss ratio for the three months ended June 30, 2026 was 22.2% compared to 21.3% for the three months ended June 30, 2025. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

Current wording

Losses and Loss Adjustment Expenses decreased due to favorable development from prior years recorded during the three months ended September 30, 2026, partially offset by an increase due to a higher volume of policies in force. The gross loss ratio for the three months ended September 30, 2026 was 20.7% compared with 22.0% for the three months ended September 30, 2025. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

Previous wording

Policy Acquisition and Other Underwriting Expenses primarily reflect the amortization of deferred acquisition costs such as commissions payable to agents for production and renewal of policies and premium taxes. The overall increase was primarily due to a higher volume of premiums in force in the comparative periods.

Current wording

Policy Acquisition and Other Underwriting Expenses primarily reflect the amortization of deferred acquisition costs such as commissions payable to agents for production and renewal of policies and premium taxes. The overall increase was primarily due to a higher volume of premiums in force, partially offset by a premium tax refund recognized during the three months ended September 30, 2026.

Previous wording

Income Tax Expense increased primarily as a result of an increase in income before income taxes. The effective tax rate for the three months ended June 30, 2026 and 2025 was 25.3% and 25.5%, respectively, and each rate represented the federal statutory tax rate of 21.0%, state taxes (net of federal benefits), and unfavorable non-deductible compensation expenses.

Current wording

Income Tax Expense increased primarily as a result of an increase in income before income taxes. The effective tax rate for the three months ended September 30, 2026 and 2025 was 25.9% and 25.1%, respectively, and each rate represented the federal statutory tax rate of 21.0%, state taxes (net of federal benefits), and unfavorable non-deductible compensation expenses.

Previous wording

Net Income Attributable to Noncontrolling Interests increased primarily as a result of an increase in net income generated by Reciprocal Insurance Exchange Operations as well as the dilution of HCI Group, Inc.’s ownership of Exzeo as a result of Exzeo’s initial public offering in November 2025.

Current wording

Net Income Attributable to Noncontrolling Interests increased primarily as a result of the dilution of HCI Group, Inc.’s ownership of Exzeo as a result of Exzeo’s initial public offering in November 2025, partially offset by a decrease in net income generated by Reciprocal Insurance Exchange Operations.

Previous wording

The gross loss ratio, gross expense ratio, and net combined ratio each remained relatively consistent for the six months ended June 30, 2026 and 2025.

Current wording

The gross expense ratio remained relatively consistent for the three months ended September 30, 2026 and 2025.

Previous wording

Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025

Current wording

Comparison of the Nine Months Ended September 30, 2026 to the Nine Months Ended September 30, 2025

Previous wording

For the six months ended June 30, 2026, gross premiums earned were $578.3 million from Insurance Operations and $72.1 million from Reciprocal Exchange Operations. For the six months ended June 30, 2025, gross premiums earned were $564.4 million from Insurance Operations and $41.1 million from Reciprocal Exchange Operations.

Current wording

For the nine months ended September 30, 2026, gross premiums earned were $860.8 million from Insurance Operations and $108.9 million from Reciprocal Exchange Operations. For the nine months ended September 30, 2025, gross premiums earned were $847.4 million from Insurance Operations and $60.6 million from Reciprocal Exchange Operations.

Previous wording

There were no adjustments to premiums ceded related to retrospective provisions for the six months ended June 30, 2026 and 2025.

Current wording

There were no adjustments to premiums ceded related to retrospective provisions for the nine months ended September 30, 2026 and 2025.

Previous wording

The following is a reconciliation of our Net Premiums Written to Net Premiums Earned for the six months ended June 30, 2026 and 2025 (in thousands):

Current wording

The following is a reconciliation of our Net Premiums Written to Net Premiums Earned for the nine months ended September 30, 2026 and 2025 (in thousands):

Previous wording

Other Revenue increased primarily as a result of the addition of new insurance carrier customers to Exzeo’s insurance technology platform.

Current wording

Other Revenue increased primarily as a result of the addition of new customers to Exzeo’s insurance technology platform.

Previous wording

Losses and Loss Adjustment Expenses increased primarily due to a higher volume of policies in force. The gross loss ratio for the six months ended June 30, 2026 was 21.1% compared to 20.5% for the six months ended June 30, 2025. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

Current wording

Losses and Loss Adjustment Expenses increased due to a higher volume of policies in force, partially offset by favorable development from prior years recorded during the nine months ended September 30, 2026. The gross loss ratio was 21.0% for both the nine months ended September 30, 2026 and 2025. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

Previous wording

Policy Acquisition and Other Underwriting Expenses increased primarily due to a higher volume of premiums in force in the comparative periods.

Current wording

Policy Acquisition and Other Underwriting Expenses increased primarily due to a higher volume of premiums in force, partially offset by a premium tax refund recognized during the nine months ended September 30, 2026.

Previous wording

Interest Expense decreased primarily as a result of the conversion of approximately $172.5 million of 4.75% convertible senior notes, which also resulted in a $1.1 million debt conversion expense included in other operating expenses, during the second quarter of 2025.

Current wording

Interest Expense decreased primarily as a result of approximately $172.5 million of 4.75% convertible senior notes being converted during the second quarter of 2025. The conversion also resulted in $1.1 million of debt conversion expense included in other operating expenses.

Previous wording

Income Tax Expense increased primarily as a result of an increase in income before income taxes. The effective tax rate for the six months ended June 30, 2026 and 2025 was 25.8% for each period and each rate represented the federal statutory tax rate of 21.0%, state taxes (net of federal benefits), and unfavorable non-deductible compensation expenses.

Current wording

Income Tax Expense increased primarily as a result of an increase in income before income taxes. The effective tax rate for the nine months ended September 30, 2026 and 2025 was 25.8% and 25.6%, respectively. Each rate represented the federal statutory tax rate of 21.0%, state taxes (net of federal benefits), and unfavorable non-deductible compensation expenses.

Previous wording

The gross loss ratio, gross expense ratio, and net combined ratio each remained relatively consistent for the three months ended June 30, 2026 and 2025.

Current wording

The gross loss ratio, gross expense ratio, and net combined ratio each remained relatively consistent for the nine months ended September 30, 2026 and 2025.

Previous wording

As of June 30, 2026, we have $872.3 million of cash and cash equivalents. We believe that we maintain sufficient liquidity to pay claims and expenses, as well as to satisfy commitments in the event of unforeseen events such as reinsurer insolvencies, inadequate premium rates, or reserve deficiencies. We maintain a comprehensive reinsurance program at levels management considers adequate to diversify risk and safeguard our financial position.

Current wording

As of September 30, 2026, we have $743.5 million of cash and cash equivalents. We believe that we maintain sufficient liquidity to pay claims and expenses, as well as to satisfy commitments in the event of unforeseen events such as reinsurer insolvencies, inadequate premium rates, or reserve deficiencies. We maintain a comprehensive reinsurance program at levels management considers adequate to diversify risk and safeguard our financial position.

Previous wording

There were no significant changes in long-term debt during the six months ended June 30, 2026.

Current wording

There were no significant changes in long-term debt during the nine months ended September 30, 2026.

Previous wording

On January 22, 2024, we implemented an “at-the-market” facility (the “ATM Facility”) which gives us the ability to raise up to $75.0 million through the issuance of new shares of common stock through a sales agent (the “Sales Agent”). We have 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, 2026 the remaining availability under the ATM Facility was $75.0 million.

Current wording

On January 22, 2024, we implemented an “at-the-market” facility (“ATM Facility”) which gives us the ability to raise up to $75.0 million through the issuance of new shares of common stock through a sales agent (“Sales Agent”). We have 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 September 30, 2026, the remaining availability under the ATM Facility was $75.0 million.

Previous wording

In March 2026, our Board of Directors authorized a program to repurchase up to $80.0 million, excluding commissions and other costs, of shares of our common stock through February 27, 2027 (the “Share Repurchase Program”). The Share Repurchase Program permits us to repurchase shares for cash periodically in open market purchases, block transactions, privately negotiated transactions in accordance with applicable federal securities laws, or by other means, including through the use of trading programs intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions, including Rule 10b-18 under that Act. The Share Repurchase Program does not obligate us to repurchase a specific number of shares of common stock, and may be canceled or suspended at any time without notice.

Current wording

In March 2026, our Board of Directors authorized a program to repurchase up to $80.0 million, excluding commissions and other costs, of shares of our common stock through February 27, 2027 (“Share Repurchase Program”). The Share Repurchase Program permitted us to repurchase shares for cash periodically in open market purchases, block transactions, privately negotiated transactions in accordance with applicable federal securities laws, or by other means, including through the use of trading programs intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions, including Rule 10b-18 under that Act. The Share Repurchase Program did not obligate us to repurchase a specific number of shares of common stock and could have been canceled or suspended at any time without notice.

Previous wording

During the three and six months ended June 30, 2026, we repurchased 363,538 and 473,609 shares of common stock for $57.0 million and $74.5 million, respectively, excluding commissions and other costs, under the Share Repurchase Program. As of June 30, 2026, we may repurchase up to $5.5 million, excluding commissions and other costs, of shares of our common stock under the Share Repurchase Program.

Current wording

We completed the Share Repurchase Program on July 17, 2026. During the three and nine months ended September 30, 2026, we repurchased 30,721 and 504,330 shares of common stock for $5.5 million and $80.0 million, respectively, excluding commissions and other costs, under the Share Repurchase Program.

Previous wording

In May 2026, Exzeo’s Board of Directors authorized a program to repurchase up to $12.0 million, excluding commissions and other costs, of shares of Exzeo’s common stock (the “Exzeo Share Repurchase Program”). The Exzeo Share Repurchase Program permits Exzeo to repurchase shares for cash periodically in open market purchases, block transactions, privately negotiated transactions in accordance with applicable federal securities laws, or by other means, including through the use of trading programs intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions, including Rule 10b-18 under that Act. The Exzeo Share Repurchase Program does not obligate Exzeo to repurchase a specific number of shares of common stock, and may be canceled or suspended at any time without notice.

Current wording

In August 2026, Exzeo’s Board of Directors authorized a program to repurchase up to $25.0 million, excluding commissions and other costs, of shares of Exzeo’s common stock (“August 2026 Exzeo Share Repurchase Program”). The August 2026 Exzeo Share Repurchase Program permits Exzeo to repurchase shares for cash periodically in open market purchases, block transactions, privately negotiated transactions in accordance with applicable federal securities laws, or by other means, including through the use of trading programs intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions, including Rule 10b-18 under that Act. The August 2026 Exzeo Share Repurchase Program does not obligate Exzeo to repurchase a specific number of shares of common stock and may be canceled or suspended at any time without notice.

Previous wording

During the three and six months ended June 30, 2026, Exzeo repurchased 726,828 shares of its common stock for $10.0 million, excluding commissions and other costs, under the Exzeo Share Repurchase Program. As of June 30, 2026, Exzeo may repurchase up to $2.0 million, excluding commissions and other costs, of shares of its common stock under the Exzeo Share Repurchase Program.

Current wording

During the three and nine months ended September 30, 2026, Exzeo repurchased 303,163 shares of its common stock for $5.0 million, excluding commissions and other costs, under the August 2026 Exzeo Share Repurchase Program. As of September 30, 2026, Exzeo may repurchase up to approximately $20.0 million of additional shares of its common stock under the August 2026 Exzeo Share Repurchase Program.

Previous wording

As of June 30, 2026, we had $1.2 billion of available-for-sale fixed-maturity and equity investments, which are carried at fair value, and our available-for-sale fixed-maturity securities had a weighted-average duration of 4.6 years. Changes in the general interest rate environment affect the returns available on new available-for-sale fixed-maturity investments. While a rising interest rate environment enhances the returns available on new investments, it reduces the market value of existing available-for-sale fixed-maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new available-for-sale fixed-maturity investments but increases the market value of existing available-for-sale fixed-maturity investments, creating the opportunity for realized investment gains on disposition.

Current wording

As of September 30, 2026, we had $1.3 billion of available-for-sale fixed-maturity and equity investments, which are carried at fair value, and our available-for-sale fixed-maturity securities had a weighted-average duration of 4.1 years. Changes in the general interest rate environment affect the returns available on new available-for-sale fixed-maturity investments. While a rising interest rate environment enhances the returns available on new investments, it reduces the market value of existing available-for-sale fixed-maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new available-for-sale fixed-maturity investments but increases the market value of existing available-for-sale fixed-maturity investments, creating the opportunity for realized investment gains on disposition.

Previous wording

As of June 30, 2026, we had $16.4 million of limited partnership investments consisting of six private equity funds managed by their general partners. Withdrawals from limited partnership investments are generally not permitted and distributions occur when the underlying investments of the limited partnership investments are liquidated. Additionally, 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. As of June 30, 2026, there were unexpired capital commitments of $3.8 million.

Current wording

As of September 30, 2026, we had $16.1 million of limited partnership investments consisting of six private equity funds managed by their general partners. Withdrawals from limited partnership investments are generally not permitted and distributions occur when the underlying investments of the limited partnership investments are liquidated. Additionally, 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. As of September 30, 2026, there were unexpired capital commitments of $4.3 million.

Previous wording

Real estate investments have long been a significant component of our overall investment portfolio. It diversifies our portfolio and helps offset the volatility of other higher-risk assets. Thus, we may consider expanding our real estate investments portfolio should an opportunity arise.

Current wording

Real estate investments have long been a significant component of our overall investment portfolio and help offset the volatility of other higher-risk assets. Thus, we may consider expanding our real estate investments portfolio should an opportunity arise.

Previous wording

Cash Flows for the Six Months Ended June 30, 2026

Current wording

Cash Flows for the Nine Months Ended September 30, 2026

Previous wording

Net cash provided by operating activities consisted primarily of cash received from net premiums written and reinsurance recoveries of approximately $34.2 million, partially offset by cash disbursed for operating expenses, losses and loss adjustment expenses, and interest payments.

Current wording

Net cash provided by operating activities consisted primarily of cash received from net premiums written and reinsurance recoveries of approximately $49.4 million, partially offset by cash disbursed for operating expenses, losses and loss adjustment expenses, and interest payments.

Previous wording

Net cash used in investing activities consisted primarily of $547.8 million of purchases of available-for-sale fixed-maturity and equity securities, partially offset by $38.8 million of proceeds from sales of available-for-sale fixed-maturity and equity securities and $8.5 million of proceeds from calls, repayments and maturities of available-for-sale fixed-maturity securities.

Current wording

Net cash used in investing activities consisted primarily of $752.8 million of purchases of available-for-sale fixed-maturity and equity securities, partially offset by $46.8 million of proceeds from sales of available-for-sale fixed-maturity and equity securities and $13.9 million of proceeds from calls, repayments and maturities of available-for-sale fixed-maturity securities.

Previous wording

Net cash used in financing activities consisted primarily of $74.5 million of repurchases of common stock, $11.3 million of payments for deposit accounting assets, $11.2 million of net share settlements, $10.3 million of common stock dividends, and $10.0 million of repurchases of noncontrolling interests. These cash outflows were partially offset by $6.8 million of net subscriber surplus contributions.

Current wording

Net cash used in financing activities consisted primarily of $80.0 million of repurchases of common stock, $17.0 million of repurchases of noncontrolling interests, $15.2 million of common stock dividends, $11.3 million of payments for deposit accounting assets, and $11.3 million of net share settlements. These cash outflows were partially offset by $12.5 million of net subscriber surplus contributions.

Previous wording

Cash Flows for the Six Months Ended June 30, 2025

Current wording

Cash Flows for the Nine Months Ended September 30, 2025

Previous wording

Net cash provided by operating activities consisted primarily of cash received from net premiums written and reinsurance recoveries of approximately $59.4 million, partially offset by cash disbursed for operating expenses, losses and loss adjustment expenses, and interest payments.

Current wording

Net cash provided by operating activities consisted primarily of cash received from net premiums written and reinsurance recoveries of approximately $116.1 million, partially offset by cash disbursed for operating expenses, losses and loss adjustment expenses, and interest payments.

Previous wording

Net cash provided by investing activities consisted primarily of $263.6 million of proceeds from calls, repayments and maturities of available-for-sale fixed-maturity securities and $25.0 million proceeds from sales of available-for-sale fixed-maturity and equity securities, partially offset by $159.9 million of purchases of available-for-sale fixed-maturity and equity securities and $8.9 million of purchases of real estate investments.

Current wording

Net cash provided by investing activities consisted primarily of $440.0 million of proceeds from calls, repayments and maturities of available-for-sale fixed-maturity securities and $33.9 million of proceeds from sales of available-for-sale fixed-maturity and equity securities, partially offset by $317.7 million of purchases of available-for-sale fixed-maturity and equity securities and $28.5 million of purchases of real estate investments.

Previous wording

Net cash used in financing activities consisted primarily of $8.9 million of common stock dividends, net repayment of our Revolving Credit Facility of $4.0 million, and an induced debt conversion payment of $1.1 million, partially offset by net subscriber surplus contributions of $2.7 million.

Current wording

Net cash used in financing activities consisted primarily of $14.1 million of common stock dividends, a $6.0 million net repayment of our Revolving Credit Facility, and a $1.1 million induced debt conversion payment, partially offset by $17.0 million of proceeds from the issuance of promissory notes and $4.9 million of net subscriber surplus contributions.