HCI Group HCI Form 10-Q filing Q2 FY2026

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

(a)

See Note 12 for details of balances associated with consolidated variable interest entities.

(continued)

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HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets – (Continued)

(In thousands, except share amounts)

(a)

See Note 12 for details of balances associated with consolidated variable interest entities.

See accompanying Notes to Consolidated Financial Statements (unaudited).

2

See accompanying Notes to Consolidated Financial Statements (unaudited).

3

See accompanying Notes to Consolidated Financial Statements (unaudited).

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HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity

For the Three Months Ended June 30, 2026

(Unaudited)

(In thousands, except per share amount)

See accompanying Notes to Consolidated Financial Statements (unaudited).

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HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity – (Continued)

For the Three Months Ended June 30, 2025

(Unaudited)

(In thousands, except per share amount)

See accompanying Notes to Consolidated Financial Statements (unaudited).

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HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity – (Continued)

For the Six Months Ended June 30, 2026

(Unaudited)

(In thousands, except per share amount)

See accompanying Notes to Consolidated Financial Statements (unaudited).

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HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity – (Continued)

For the Six Months Ended June 30, 2025

(Unaudited)

(In thousands, except per share amount)

See accompanying Notes to Consolidated Financial Statements (unaudited).

8

(continued)

9

(continued)

10

See accompanying Notes to Consolidated Financial Statements (unaudited).

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

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 insurance companies, Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”) and TypTap Insurance Company (“TTIC”). The Company provides various homeowners’ property and casualty insurance products for properties located in Florida, which is the Company's primary market, as well as in other states in the northeast and southeast regions of the United States (“U.S.”). A third insurance subsidiary, perRisk Insurance Company (“perRisk”), is domiciled in the State of Arizona and has not yet commenced its surplus lines insurance business. The Company's insurance operations are supported by other insurance-related subsidiaries within the consolidated group.

Exzeo Group, Inc. (“Exzeo”), a publicly traded majority-owned subsidiary, provides turn-key insurance technology and operations solutions based on a proprietary platform of purpose-built software and data analytics applications specifically designed for the property and casualty insurance ecosystem. The Company utilizes Exzeo's internally developed software technologies to identify profitable underwriting opportunities, drive efficiency in claim processing and settlements, and streamline operations across our insurance operations and other insurance-related businesses.

The Company also provides attorney-in-fact (“AIF”) services for Condo Owners Reciprocal Exchange (“CORE”) and Tailrow Insurance Exchange (“Tailrow”), both of which are reciprocal insurance exchanges owned by their policyholders. Although the Company does not have any equity interest in CORE and Tailrow, the Company is required to consolidate them as their primary beneficiary. In addition, the Company's commercial real estate subsidiary is primarily engaged in developing and operating commercial properties for investment purposes or internal use.

HCI Group, Inc. was incorporated in the State of Florida in 2006 and its 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 its unvested restricted stock.

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 unaudited consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s financial position as of June 30, 2026 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, 2026. 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, 2025 included in the Company’s Form 10-K, which was filed with the SEC on February 26, 2026 (the “2025 Annual

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Report”). Unless otherwise noted, the Company’s accounting policies do not differ from those disclosed in the 2025 Annual Report.

The unaudited consolidated financial statements have been prepared in U.S. dollars and include the accounts of HCI Group, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In addition, the Company evaluates its relationships or investments for consolidation pursuant to authoritative accounting guidance related to the consolidation of variable interest entities (“VIE”) under the Variable Interest Model prescribed by the Financial Accounting Standards Board (“FASB”). A VIE is consolidated when the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Refer to Note 12 “Variable Interest Entities” for additional information.

Certain prior period amounts have been reclassified to conform with current period presentation.

Use of Estimates

The preparation of the interim unaudited consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. The Company's estimates are based on the relevant information available at the end of each period. Actual results could differ materially from these estimates under different assumptions or market conditions. The Company's estimates specific to losses and loss adjustment expenses, reinsurance recoverable, income taxes, stock-based compensation expense, and limited partnership investments involve the most significant judgments and estimates related to the consolidated financial statements.

Note 3 -- Recent Accounting Pronouncements

Adopted

Accounting Standards Update No. 2025-05. In July 2025, the FASB issued Accounting Standards Update No. 2025-05 (“ASU 2025-05”) Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update simplifies the estimation of current expected credit losses on current accounts receivable and current contract assets related to revenue from contracts with customers by allowing all entities to assume that current conditions as of the balance sheet date will not change for the remaining life of the current accounts receivable and current contract assets. ASU 2025-05 is effective for all entities for fiscal years and interim periods beginning after December 15, 2025. The adoption of this update did not have a material impact on the Company’s financial position or results of operation.

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

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

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.

Accounting Standards Update No. 2025-06. In September 2025, the FASB issued Accounting Standards Update No. 2025-06 (“ASU 2025-06”) Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update enhances guidance on the capitalization of software development costs by eliminating project phase based criteria and clarifying the conditions signifying significant development uncertainty used by entities to evaluate when the probable-to-complete recognition threshold is met. ASU 2025-06 is effective for all entities for fiscal years and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating its impact.

Note 4 -- Cash and Cash Equivalents and Restricted Cash

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

The majority of the Company’s cash and cash equivalents are held at major financial institutions. Certain account balances exceed the Federal Deposit Insurance Corporation insurance limits of $250 per account. As a result, there is a concentration of credit risk related to amounts in excess of the insurance limits. The Company regularly monitors the financial stability of these financial institutions and believes there is no exposure to any significant credit risk in cash and cash equivalents.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Note 5 -- Investments

Available-for-Sale Fixed-Maturity Securities

The Company holds investments in fixed-maturity securities classified as available-for-sale. As of June 30, 2026 and December 31, 2025, 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. As of June 30, 2026 and December 31, 2025, the scheduled contractual maturities of available-for-sale fixed-maturity securities, with securities not due at a single maturity date shown separately, were as follows:

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Securities on Deposit

As of June 30, 2026 and December 31, 2025, the fair value of available-for-sale fixed-maturity securities on deposit with various regulatory authorities was $1,137 and $1,807, 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 the three and six months ended June 30, 2026 and 2025 were as follows:

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

As of June 30, 2026 and December 31, 2025, available-for-sale fixed-maturity securities with gross unrealized loss positions by investment category and length of time the individual securities have been in a continuous loss position were as follows:

As of June 30, 2026 and December 31, 2025, there were 70 and 47 available-for-sale fixed-maturity securities in an unrealized loss position, respectively.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

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 affecting 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 was no 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, 2026 and 2025.

Equity Securities

The Company holds investments in equity securities measured at fair values which are readily determinable. As of June 30, 2026 and December 31, 2025, 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:

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Sales of Equity Securities

Proceeds received and the gross realized gains and losses from sales of equity securities for the three and six months ended June 30, 2026 and 2025 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 summarizes limited partnership investments:

(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.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

(c)

The term is expected to be two 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 to two additional one-year periods.

(f)

Expected to have a ten-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 to three additional one-year periods.

(h)

Expected to have an eight-year term from the commencement date, which can be extended for up to two 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 to four additional one-year periods at the general partner’s discretion, and up to two additional one-year periods with the consent of the advisory committee.

(k)

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

As of June 30, 2026 and December 31, 2025, the Company’s net cumulative contributed capital to the limited partnership investments totaled $17,800 and $18,697, respectively, and the Company’s maximum exposure to loss aggregated $16,394 and $17,690, respectively.

Real Estate Investments

The following table summarizes real estate investments:

Depreciation expense related to real estate investments was $677 and $473 for the three months ended June 30, 2026 and 2025, respectively, and $1,406 and $812 for the six months ended June 30, 2026 and 2025, respectively.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Net Investment Income

The following table summarizes net investment income:

Note 6 -- Fair Value Measurements

The Company records and discloses certain financial assets and liabilities 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:

Level 1 – Unadjusted quoted prices in active markets for identical assets.

Level 2 – Other inputs that are observable for the asset, either directly or indirectly such as quoted prices for identical assets that are not observable throughout the full term of the asset.

Level 3 – Inputs that are unobservable.

Valuation Methodology

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of cash as well as money-market funds and certificates of deposit maturing within three months 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.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

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 determined using quoted prices in active markets for identical securities or other directly or indirectly observable inputs, including quoted prices for similar securities. In those instances where observable inputs are not available, fair values are determined 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 are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 1 or level 2 inputs depending on the asset class. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to other market 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.

Other Investments

The following table summarizes other investments held by the Company and the method used in estimating the fair value:

Revolving Credit Facility

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, the carrying value approximates fair value.

Long-Term Debt

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

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

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, 2026 and December 31, 2025:

Assets and Liabilities Carried at Other Than Fair Value

The following tables present fair value information for assets and liabilities carried on the consolidated balance sheets at amounts other than fair value as of June 30, 2026 and December 31, 2025:

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Note 7 -- Intangible Assets, Net

The following table summarizes intangible assets, net:

(a)

Fully amortized.

Amortization expense for intangible assets was $310 and $638 for the three months ended June 30, 2026 and 2025, respectively, and $759 and $1,279 for the six months ended June 30, 2026 and 2025, respectively.

Note 8 -- Revolving Credit Facility

As of June 30, 2026 and December 31, 2025, the Company had an outstanding balance of $36,000 under a senior secured revolving credit facility with Fifth Third Bank (“Revolving Credit Facility”). The Revolving Credit Facility, as amended on November 5, 2025, currently provides borrowing capacity of up to $150,000 and expires on November 5, 2030. Borrowings under the Revolving Credit Facility bear interest at an annual rate equal to the one or three month SOFR plus a ten basis points adjustment plus a margin based on the debt-to-capital ratio, with interest payments due in arrears on January 1, April 1, July 1, and October 1. In addition, the Company is subject to an unused commitment fee.

Interest expense for the Revolving Credit Facility was $631 and $644 for the three months ended June 30, 2026 and 2025, respectively, and $1,098 and $1,313 for the six months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, the Company was in compliance with all required covenants and had an available borrowing capacity of $114,000.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Note 9 -- Long-Term Debt

The following table summarizes long-term debt:

There were no significant changes in the Company’s long-term debt during the six months ended June 30, 2026. During the six months ended June 30, 2025, the Company converted $172,500 in aggregate principal of its 4.75% convertible senior notes into consideration of 2,187,063 shares of the Company’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.

Interest expense for long-term debt was $453 and $3,100 for the three months ended June 30, 2026 and 2025, respectively, and $909 and $5,815 for the six months ended June 30, 2026 and 2025, respectively.

Note 10 -- Reinsurance

Reinsurance obtained from other insurance companies

In the normal course of business, the Company seeks to reduce the loss that may arise from catastrophes or other events by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers. The Company contracts with a number of reinsurers to secure its annual reinsurance coverage, which generally becomes effective June 1st 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 (a tax-exempt state trust fund), and overall reinsurance market conditions. Amounts recoverable from reinsurers are estimated in a manner consistent with the applicable reinsurance contract or contracts. Premiums ceded to other companies have been reported as a reduction of gross premiums earned to arrive at net premiums earned. Prepaid reinsurance premiums represent the unexpired portion of premiums ceded to reinsurers.

Reinsurance contracts that do not transfer insurance risk are accounted for using the deposit method. Under the deposit method, amounts paid, less any retained fees, are recorded as deposits within other assets in the consolidated balance sheets and within financing activities in the consolidated statements of cash flows.

The Company remains liable for claims payments in the event 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 and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

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

As of June 30, 2026 and December 31, 2025, net amounts recoverable from reinsurers were $255,744 and $289,896, respectively. There were no ceded losses from catastrophic events or significant adjustment to ceded losses from prior periods during the three and six months ended June 30, 2026. During the three and six months ended June 30, 2025, the Company derecognized ceded losses of $61,200 related to a favorable change in estimated losses from Hurricane Milton.

As of June 30, 2026 and December 31, 2025, there were over 40 reinsurers participating in the Company’s reinsurance program. As of June 30, 2026, approximately 75.5% of the reinsurance recoverable balance was receivable from six reinsurers, one of which was the Florida Hurricane Catastrophe Fund. The allowance for credit losses related to reinsurance recoverable was not material to the consolidated balance sheets or consolidated statements of income for the periods presented.

Under contracts in effect prior to June 1, 2025, reinsurance costs could be adjusted by retrospective provisions under reinsurance contracts. There were no adjustments to premiums ceded related to retrospective provisions for the three and six months ended June 30, 2026 and 2025.

Reinsurance provided to other insurance companies

United Property & Casualty Insurance Company

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 U.S. United was placed into receivership by the State of Florida due to its financial insolvency. As a result, the Company ceased providing quota share reinsurance on United policies, together with other administrative services, in March 2023. The liabilities and obligations under this quota-share reinsurance agreement were not material as of June 30, 2026 and December 31, 2025. Additionally, the balance of funds withheld for assumed business, which represent net amounts owed to

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

the Company related to the Company’s quota share reinsurance agreements with United, were not material as of June 30, 2026 and December 31, 2025.

Citizens Property Insurance Corporation

The Company may participate in a “take-out program” through which the Company assumes insurance policies held by Citizens Property Insurance Corporation (“Citizens”), a Florida state-supported insurer. The take-out program is a legislatively mandated program designed to reduce the state’s risk exposure by encouraging private companies to assume policies from Citizens.

The table below shows the number of policies (in actuals) and annualized gross premiums assumed from Citizens during the periods presented:

Note 11 -- Losses and Loss Adjustment Expenses

The Company accrues for losses and loss adjustment expenses (“LAE”) in the period in which the underlying loss event occurred. LAE are costs associated with the investigation, evaluation, adjustment, and settlement of insurance claims and can be either allocated, costs directly attributable to a specific claim, or unallocated, costs that cannot be directly attributed to a specific claim. Reserves for losses and LAE are determined by establishing liabilities in amounts estimated to cover incurred losses and LAE. Such reserves are determined based on the assessment of claims reported and the development of pending claims. These reserves are based on individual case estimates for reported losses and LAE and estimates of amounts incurred but not reported.

The estimates of unpaid losses and LAE are subject to trends in claim severity and frequency and are continually reviewed. As part of the process, the Company reviews historical data and considers various factors, including known and anticipated regulatory and legal developments, changes in social attitudes, inflation, and economic conditions. As experience develops and other data becomes available, these estimates are revised, as required, resulting in increases or decreases to the existing unpaid losses and LAE. Adjustments are reflected in the results of operations in the period in which they are made and the liabilities may deviate substantially from prior estimates. Losses and LAE ceded to or recovered from reinsurers are recorded as a reduction to losses and LAE on the consolidated statements of income. Accordingly, losses and LAE in the consolidated statements of income are net of reinsurance.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

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

(a)

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

Incurred losses and LAE increased for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 primarily due to a higher volume of policies in force. There were no losses from catastrophic events during the three and six months ended June 30, 2026 and 2025.

Note 12 -- Variable Interest Entities

The Company includes two consolidated VIEs related to 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. Each subscriber has rights in their respective reciprocal insurance exchange to (i) receive dividends or premium credits if the reciprocal insurance exchange generates a surplus, and (ii) elect members to the subscribers’ advisory committee. The subscribers’ advisory committee oversees the financial affairs of its respective reciprocal insurance exchange and appoints the AIF. Each subscribers’ advisory committee requires at least two-thirds of its members to be subscribers who are independent of the AIF.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Both CORE and Tailrow each received initial funding through the issuance of a subordinated surplus note to the Company as neither had any subscribers nor sufficient surplus to fund their insurance operations at the time of formation. In addition, CORE and Tailrow each entered into an AIF agreement with Core Risk Managers, LLC (“CRM”) and Tailrow Risk Managers, LLC (“TRM”), respectively. Both CRM and TRM are wholly-owned subsidiaries of HCI Group, Inc. The AIF agreements, which were approved by the Florida Office of Insurance Regulation (“FLOIR”), can be terminated at any time by mutual agreement of both parties or with cause, if the FLOIR or a court of competent jurisdiction determines a material breach of the agreement has occurred. Under the AIF agreements, CRM and TRM have the power of attorney to directly or indirectly conduct the daily operations of CORE and Tailrow, respectively, by underwriting insurance policies, collecting premiums, investing funds, and processing claims. As such, subscribers do not possess the power to directly manage the operations of CORE and Tailrow. The AIF agreements also permit CRM and TRM to contract with service providers, including other HCI Group, Inc. subsidiaries, to perform certain functions.

The AIF agreements, together with the subordinated surplus notes, result in both CORE and Tailrow to be consolidated VIEs. As CORE and Tailrow are owned by their underlying policyholders, their net assets and results of operations are included in noncontrolling interests.

CORE

CORE was formed and issued a $25,000 subordinated surplus note with an annual interest rate of 9% during 2023. CORE commenced business operations during 2024.

As of June 30, 2026 and December 31, 2025, the Company’s maximum exposure to loss relating to CORE was $25,000. CORE’s assets are legally restricted for the purpose of fulfilling obligations specific to CORE and its creditors have no legal right to pursue additional sources of payment from the Company.

Tailrow

Tailrow was formed and issued a $25,000 subordinated surplus note with an annual interest rate of 9% during 2024. Tailrow commenced business operations during 2025.

As of June 30, 2026 and December 31, 2025, the Company’s maximum exposure to loss relating to Tailrow was $25,000. Tailrow’s assets are legally restricted for the purpose of fulfilling obligations specific to Tailrow and its creditors have no legal right to pursue additional sources of payment from the Company.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

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:

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Note 13 -- Segment Information

The Company has five reportable segments: Insurance Operations, Exzeo, Reciprocal Exchange Operations, Real Estate, and Corporate and Other. Due to their economic characteristics, the Company’s property and casualty insurance and reinsurance operations, excluding the insurance operations under Reciprocal Exchange Operations, are grouped together into one reportable segment under Insurance Operations. The Exzeo segment represents Exzeo’s operations related to insurance technology and operations solutions for property and casualty insurance carriers. The Reciprocal Exchange Operations segment represents the insurance operations of consolidated reciprocal insurance exchanges owned by their policyholders. The Real Estate segment represents the operations of the Company’s commercial real estate group primarily engaged in developing and operating commercial properties for investment purposes or internal use. The Corporate and Other segment represents the activities of the holding companies and any other operations that do not meet the quantitative and qualitative thresholds for a reportable segment.

The Company’s segments are based on the manner in which the Company’s Chief Executive Officer, who is the chief operating decision maker (the “CODM”), evaluates performance and makes decisions regarding the allocation of resources. The CODM evaluates performance and allocates resources using various measures primarily through reviews of various operational performance packages, investor presentations, and the Company’s SEC filings, as well as through the approval of the Company’s annual budget and forecast. The Company’s reported segment profit measure is income (loss) before income taxes as this measure is most consistent with the amounts included in the consolidated statements of income. Intersegment transactions are not eliminated from segment results while intrasegment transactions are eliminated from segment results. The accounting policies of the Company’s reportable segments are the same as those of the Company, except as otherwise noted. The determination of segments may change over time due to changes in operational emphasis, revenue, and results of operations.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

The following tables present segment information reconciled to the Company’s consolidated statements of income for the periods presented:

(a)

Other revenue under Real Estate primarily consisted of rental income from investment properties.

(b)

Other revenue under Corporate and Other primarily consisted of management fees for AIF services.

(c)

Gross premiums earned under Insurance Operations included $1,974 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 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)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

(a)

Other revenue under Real Estate primarily consisted of rental income from investment properties.

(b)

Other revenue under Corporate and Other primarily consisted of management fees for AIF services.

(c)

Gross premiums earned under Insurance Operations included $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 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)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

(a)

Other revenue under Real Estate primarily consisted of rental income from investment properties.

(b)

Other revenue under Corporate and Other primarily consisted of management fees for AIF services.

(c)

Gross premiums earned under Insurance Operations included $3,376 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 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)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

33

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

(a)

Other revenue under Real Estate primarily consisted of rental income from investment properties.

(b)

Other revenue under Corporate and Other primarily consisted of management fees for AIF services.

(c)

Gross premiums earned under Insurance Operations included $2,479 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 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)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

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:

As of June 30, 2026 and December 31, 2025, substantially all of the Company’s assets were located in Florida.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Note 14 -- Income Taxes

There were no significant changes in the Company’s valuation allowance on deferred income tax assets during the three and six months ended June 30, 2026.

During the three months ended June 30, 2026 and 2025, the Company recorded income tax expense of $28,073 and $24,113, respectively, resulting in effective tax rates of 25.3% and 25.5%, respectively. Each rate represented the federal statutory tax rate of 21.0%, state taxes (net of federal benefits), and unfavorable non-deductible compensation expenses.

During the six months ended June 30, 2026 and 2025, the Company recorded income tax expense of $58,414 and $50,222, respectively, resulting in an effective tax rate of 25.8% for each period. Each rate represented the federal statutory tax rate of 21.0%, state taxes (net of federal benefits), and unfavorable non-deductible compensation expenses.

Note 15 -- Earnings Per Share

The Company applies the two-class method for computing and presenting earnings per share since the Company’s unvested restricted stock awards represent participating securities due to the right to share in dividends, if declared, equally with common stockholders. The two-class method allocates current period net income to common stock and participating securities based on (i) dividends declared and (ii) participation rights in the remaining undistributed income. For a majority-owned subsidiary, the Company’s proportionate share in that majority-owned subsidiary’s earnings per share is added to the computation of earnings per share on a consolidated basis.

Basic earnings per share is computed by dividing income attributable to common stockholders using the two-class method by the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings per share gives effect to all securities having a dilutive effect on income attributable to common stockholders, weighted-average shares of common stock outstanding, or both. The effect from dilutive securities included, but was not limited to: (i) incremental shares of common stock calculated using the if-converted method for convertible debt instruments; (ii) incremental shares of common stock calculated using the treasury stock method for warrants and share-based compensation awards; (iii) adjustments to a majority-owned subsidiary's earnings per share due to its dilutive securities; and (iv) the corresponding impact to income attributable to common stockholders associated with the preceding considerations. Net losses are not allocated to participating securities as the participating securities do not have a contractual obligation to share in losses.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

The computations of basic and diluted earnings per share for the periods presented were as follows:

(a)

Shares in thousands.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

(a)

Shares in thousands.

For the periods presented, all dilutive securities for Exzeo were excluded from Exzeo's diluted earnings per share computation because their (i) effect would be anti-dilutive, (ii) exercise prices were out-of-the-money, or (iii) contingent exercise conditions were unsatisfied.

Note 16 -- Redeemable Noncontrolling Interests

Subscriber Surplus Contributions

Subscriber surplus contributions in redeemable noncontrolling interests represent a refundable portion of the surplus contributions received from policyholders of CORE and Tailrow. The surplus contributions are reclassified to noncontrolling interests once they are no longer refundable.

The following table summarizes the activity of subscriber surplus contributions:

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Note 17 -- Equity

Stockholders’ Equity

Common Stock

Each share of common stock entitles the stockholder to one vote.

Share Repurchase Program

In March 2026, the Company’s Board of Directors authorized a program to repurchase up to $80,000, excluding commissions and other costs, of shares of the Company’s common stock through February 27, 2027 (the “Share Repurchase Program”). The Share Repurchase Program permits the Company 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 the Company to repurchase a specific number of shares of common stock, and may be canceled or suspended at any time without notice.

During the three and six months ended June 30, 2026, the Company repurchased 363,538 and 473,609 shares of common stock for $56,968 and $74,466, respectively, excluding commissions and other costs, under the Share Repurchase Program. All of the shares repurchased were treated as retirements and reduced the number of shares issued and outstanding. The excess of the purchase price over the par value per share was recorded as a reduction of additional paid-in capital. Commissions and other costs on repurchases of common stock were not material for the three and six months ended June 30, 2026.

As of June 30, 2026, the Company may repurchase up to $5,534, excluding commissions and other costs, of shares of its common stock under the Share Repurchase Program.

Dividends

Stockholders are entitled to receive dividends when, as, and if declared by the Company’s Board of Directors out of funds legally available for that purpose. Unvested restricted stock awards have the right to share in dividends, if declared, equally with common stockholders on a nonforfeitable basis.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

The following table represents the frequency and amount of all cash dividends declared on common stock for the periods presented:

Preferred Stock

As of June 30, 2026 and December 31, 2025, the Company had 20,000,000 preferred shares authorized, with no shares issued and outstanding.

Warrants

As of June 30, 2026 and December 31, 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, 2026 the remaining availability under the ATM Facility was $75,000.

Noncontrolling Interests

Exzeo

As of June 30, 2026, HCI Group, Inc. owned 75,000,000 of the 90,200,252 shares of Exzeo’s outstanding common stock. Of the shares not owned by HCI Group, Inc., 2,541,953 represent unvested restricted stock awards granted to Exzeo's employees.

Other adjustments to noncontrolling interests in the consolidated statements of equity primarily relates to (i) the net settlement of Exzeo common shares surrendered by employees to satisfy payroll tax liabilities associated with the vesting of restricted stock awards issued under Exzeo’s stock-based compensation plan and (ii) the change in ownership of Exzeo as a result of the vesting of restricted stock awards issued under Exzeo’s stock-based compensation plan.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Exzeo Share Repurchase Program

In May 2026, Exzeo’s Board of Directors authorized a program to repurchase up to $12,000, 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.

During the three and six months ended June 30, 2026, Exzeo repurchased 726,828 shares of its common stock for $10,029, excluding commissions and other costs, under the Exzeo Share Repurchase Program. All of the shares repurchased were treated as retirements and reduced the number of shares issued and outstanding of Exzeo. Commissions and other costs on repurchases of noncontrolling interests were not material during the three and six months ended June 30, 2026.

As of June 30, 2026, Exzeo may repurchase up to $1,971, excluding commissions and other costs, of shares of its common stock under the Exzeo Share Repurchase Program.

Subscriber Surplus Contributions

Subscriber surplus contributions in noncontrolling interests represent the nonrefundable portion of the surplus contributions received from policyholders of CORE and Tailrow. The surplus contributions are reclassified from redeemable noncontrolling interest once they are no longer refundable. As CORE and Tailrow are owned by their underlying policyholders, their net assets are included in noncontrolling interests.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) relates to the unrealized gains or losses on available-for-sale fixed-maturity securities carried at fair value, net of income taxes. Accumulated other comprehensive income (loss) is reclassified to either net investment income or net realized investment gains (losses) in the consolidated statements of income as underlying transactions are recognized in earnings. Other comprehensive income (loss) represents the net change in accumulated other comprehensive income (loss).

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

The following table summarizes the activity with respect to accumulated other comprehensive income (loss) during the three and six months ended June 30, 2026 and 2025:

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Note 18 -- Stock-Based Compensation

The Company grants stock-based awards to participants under HCI Group, Inc.’s 2012 Omnibus Incentive Plan (“HCI Plan”) and Exzeo Group, Inc.’s 2025 Omnibus Incentive Plan (“Exzeo Plan”). Stock-based compensation expense is included in general and administrative personnel expenses in the consolidated statements of income and consisted of the following for the periods presented:

Stock-based compensation awards are classified as equity and awards related to the Exzeo Plan are included as a component of noncontrolling interests.

HCI Plan

As of June 30, 2026, there were 641,937 shares available for issuance under the HCI Plan.

Stock Options

The following table summarizes the activity related to stock options granted under the HCI Plan during the six months ended June 30, 2026:

As of June 30, 2026, there was no unrecognized compensation expense related to stock options under the HCI Plan.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Restricted Stock Awards

The following table summarizes the activity related to restricted stock awards granted under the HCI Plan during the six months ended June 30, 2026:

In May 2026, there were 193,500 restricted stock awards that vested as a result of meeting the requisite market condition that the price per share exceeded $140 for a period of 30 consecutive trading days in May 2025.

As of June 30, 2026, there were 200,000 unvested restricted stock awards granted under the HCI Plan with market conditions. These awards have not met the requisite market condition of the Company’s share price reaching $200 per share for 30 consecutive trading days.

As of June 30, 2026, there was $16,089 of unrecognized compensation expense related to unvested restricted stock awards granted under the HCI Plan, which is expected to be recognized over a weighted-average period of 2.0 years.

Exzeo Plan

Exzeo maintained its 2021 Omnibus Plan under which shares of Exzeo common stock were authorized for issuance as stock-based compensation awards. On November 4, 2025, Exzeo terminated its 2021 Omnibus Plan and adopted the Exzeo Plan, which authorizes the issuance of up to 10,000,000 shares of Exzeo’s common stock. Awards outstanding under the Exzeo 2021 Omnibus Plan continue to be governed by the terms of that plan and are incremental to, and do not count against, the authorized share pool of the Exzeo Plan. As of June 30, 2026, there were 9,768,170 shares available for issuance under the Exzeo Plan.

Exzeo Stock Options

As of June 30, 2026, there were 6,350,000 Exzeo stock options outstanding with a weighted-average exercise price of $23.00. All of the Exzeo stock options were fully vested, however, 6,000,000 Exzeo stock options were non-exercisable without approval from HCI Group, Inc.’s Board of Directors.

Exzeo Restricted Stock Awards

As of June 30, 2026, there were 2,541,953 unvested Exzeo restricted stock awards outstanding with a weighted-average grant date fair value of $4.82. There was $10,599 of unrecognized compensation expense related to unvested Exzeo restricted stock awards, which is expected to be recognized over a weighted-average period of 3.8 years.

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HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

Note 19 -- 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. 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.

Rental Income

The Company as a lessor leases its commercial and retail properties, boat slips, and docks to non-affiliates at various terms. There were no significant changes in the Company’s minimum rental payments to be received under operating leases during the three and six months ended June 30, 2026.

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, 2026, there was an aggregate unfunded balance of $3,791.

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, 2026 and December 31, 2025, the FIGA assessments payable by the Company were $3,415 and $2,034, respectively.

Note 20 -- Related Party Transactions

HCPCI, TTIC, CORE, and Tailrow have reinstatement premium protection reinsurance contracts (“RPP”) with various reinsurers. 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”) participated as a subscribing reinsurer with HCPCI and Tailrow as collective reinsureds for the 2025 - 2026 treaty year. 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 net annual premium was $930 and was paid by HCPCI and Tailrow over four installments. Management believes the premium rate was competitive with market rates. A trust account has been established with HCPCI and Tailrow as collective beneficiaries and Oxbridge as

45

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(In thousands, except share and per share amounts, unless otherwise stated)

grantor. Each of the four premium installments was 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. Total net premiums to Oxbridge were $910 for the 2024-2025 treaty year. During the three and six months ended June 30, 2026, the Company paid Oxbridge $408 in fees for transaction services related to the 2026 - 2027 treaty year. Oxbridge did not participate as a subscribing reinsurer for the 2026 - 2027 treaty year.

Note 21 -- Subsequent Events

On July 1, 2026, the Company’s Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends are payable on September 18, 2026 to stockholders of record on August 21, 2026.

On July 8, 2026, the Company completed the Exzeo Share Repurchase Program with a total 834,250 shares of Exzeo’s common stock repurchased for $12,000, excluding commissions and other costs.

On July 17, 2026, the Company completed the Share Repurchase Program with a total 504,330 shares of common stock repurchased for $80,000, excluding commissions and other costs.

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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

The following discussion and analysis contains forward-looking statements about our business, operations, and financial performance based on current plans and estimates involving risks, uncertainties, and assumptions, which could differ materially from actual results. Factors that could cause such differences are discussed in the sections of this Quarterly Report on Form 10-Q titled Item 1A “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

OVERVIEW

HCI Group, Inc., together with its subsidiaries (collectively, “we,” “our,” “us,” the “Company,” or “HCI”), is primarily engaged in the property and casualty insurance business. We provide various homeowners’ property and casualty insurance products for properties located in the Florida, which is our primary market, as well as in other states in the northeast and southeast regions of the U.S. Our insurance operations are supported by other insurance-related subsidiaries within the consolidated group.

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Exzeo Group, Inc. (“Exzeo”), a publicly traded majority-owned subsidiary, provides turn-key insurance technology and operations solutions based on a proprietary platform of purpose-built software and data analytics applications specifically designed for the property and casualty insurance ecosystem. We utilize Exzeo's internally developed software technologies to identify profitable underwriting opportunities, drive efficiency in claim processing and settlements, and streamline operations across our insurance operations and other insurance-related businesses.

We also provide attorney-in-fact (“AIF”) services for reciprocal insurance exchanges owned by their policyholders. Although we do not have any equity interest in the reciprocal insurance exchanges, we are required to consolidate them as their primary beneficiary. In addition, we have a commercial real estate group primarily engaged in developing and operating commercial properties for investment purposes or our own use.

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.

We identify our segments based on the manner in which our Chief Executive Officer, who is the chief operating decision maker, evaluates performance and makes decisions regarding the allocation of resources. We have five reportable segments: Insurance Operations, Exzeo, Reciprocal Exchange Operations, Real Estate, and Corporate and Other. Due to their economic characteristics, our property and casualty insurance and reinsurance operations, excluding the insurance operations under Reciprocal Exchange Operations, are grouped together into one reportable segment under Insurance Operations. The Exzeo segment represents Exzeo’s operations related to insurance technology and operations solutions for property and casualty insurance carriers. The Reciprocal Exchange Operations segment represents the insurance operations of consolidated reciprocal insurance exchanges owned by their policyholders. The Real Estate segment represents the operations of our commercial real estate group primarily engaged in developing and operating commercial properties for investment purposes or our own use. The Corporate and Other segment represents the activities of the holding companies and any other operations 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. Refer to Note 13 “Segment Information” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

All financial information presented in this section has been prepared in U.S. dollars in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and includes the accounts of HCI Group, Inc. and its subsidiaries and consolidated variable interest entities. All intercompany transactions have been eliminated.

FACTORS AFFECTING OPERATING RESULTS

Our general operating and growth strategies are to continually optimize our existing book of insurance business, organically expand our insurance business, manage our costs and expenses, diversify our business operations, develop and deploy new technologies to streamline operational processes, and maintain a strong balance sheet so we can quickly pursue accretive opportunities when they arise. Our growth strategies also include policy assumption from third-party insurance companies with the intention of renewing and/or replacing them with our policies.

Our insurance business has grown both organically and through strategic policy assumptions, which have been a key driver of our expansion. We have participated in legislatively mandated take-out programs, designed to reduce the state’s risk exposure by transitioning policies from Citizens Property Insurance Corporation (“Citizens”), a

48

Florida state supported insurer, to private insurers. We selectively pursue additional assumption opportunities with Citizens when they align with our risk appetite and growth strategy. We also assume policies from other insurance companies in Florida and/or any other state in which we operate.

The nature of our business is to cover losses that may arise from, among other things, hurricanes and other catastrophic events such as tornadoes, floods and winter storms. The occurrence of any such catastrophes could have a significant adverse effect on our business, results of operations, and financial condition. To mitigate the risk associated with catastrophic events, we purchase reinsurance from other large insurance companies. Even without catastrophic events, we may incur losses and loss adjustment expenses that deviate substantially from our estimates and that may exceed our reserves, in which case our net income and capital would decrease. Our operating and growth strategies may also be impacted by regulation of our business by the State of Florida and other states in which we operate. For example, insurance regulators must approve our policy forms and premium rates as well as monitor our compliance with financial and regulatory requirements.

Seasonality of Our Business

Our insurance business is seasonal as hurricanes and tropical storms affecting Florida and other southeastern states typically occur during the period from June 1st through November 30th of each year. Winter storms in the northeast usually occur during the period between December 1st and March 31st of each year. Also, our reinsurance treaty year is typically effective on June 1st of each year and any variation in the cost of our reinsurance, whether due to changes in reinsurance rates, coverage levels or changes in the total insured value of our policy base, will occur and be reflected in our financial results beginning on June 1st of each year.

RECENT EVENTS

In March 2026, Fortex Reinsurance SPC, Ltd. (“Fortex”), our wholly-owned Cayman Islands domiciled captive reinsurance subsidiary, received its license to operate as a Class B insurer in the Cayman Islands. Fortex will allow us additional flexibility to selectively retain risk and reduce the cost of third-party reinsurance. Fortex is regulated by the Cayman Islands Monetary Authority.

KEY PERFORMANCE INDICATORS

We make strategic decisions, measure our performance, evaluate our business, and identify trends in our business using certain key performance indicators, including the operating metrics gross loss ratio, gross expense ratio, and net combined ratio. Computations of our key performance indicators may not be comparable to other similarly titled measures reported by other companies. Additionally, we compute and disclose other ratios for informational purposes only.

Gross Loss Ratio

Gross loss ratio is defined as losses and loss adjustment expenses in relation to gross premiums earned. The gross loss ratio represents the percentage of our premiums used to cover our losses. We use the gross loss ratio as a metric to measure and monitor our underwriting and pricing practices.

Gross Expense Ratio

Gross expense ratio is defined as total expenses excluding losses and loss adjustment expenses and interest expense in relation to gross premiums earned. The gross expense ratio represents the percentage of our gross premiums used on operating expenses. We use the gross expense ratio as a metric to measure and monitor the efficiency of our operating and overhead costs.

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Net Combined Ratio

Net combined ratio is defined as total expenses excluding interest expense in relation to net premiums earned. The net combined ratio represents the combination of the net loss ratio and net expense ratio. We use the net combined ratio as a metric to measure and monitor our overall profitability.

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RESULTS OF OPERATIONS

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):

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

Gross Premiums Earned increased primarily due to a higher volume of policies in force as a result of the addition of policies assumed from Citizens during the first and fourth quarters of 2025 while average premium per policy remained relatively consistent.

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.

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

Our premiums ceded represent costs of reinsurance (i) to cover losses from catastrophes that exceed the retention levels defined by our catastrophe excess of loss reinsurance contracts, (ii) to provide additional loss coverage on a high-value individual risk basis through facultative reinsurance, or (iii) 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. Under contracts in effect prior to June 1, 2025, reinsurance costs could be adjusted by retrospective provisions under reinsurance contracts. There were no adjustments to premiums ceded related to retrospective provisions for the three months ended June 30, 2026 and 2025.

Net Premiums Earned represent gross premiums earned less premiums ceded.

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

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.

Net Investment Income increased primarily as a result of an increase in our invested assets.

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

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.”

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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.

General and Administrative Personnel Expenses include salaries, wages, payroll taxes, stock-based and other incentive 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 was driven by additional personnel, annual merit increases, stock-based compensation, and lower reinsurance recoveries related to claims processing for catastrophes.

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.

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.

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.

Ratios

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.

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

Gross Premiums Earned increased primarily due to a higher volume of policies in force as a result of the addition of policies assumed from Citizens during the first and fourth quarters of 2025 while average premium per policy remained relatively consistent.

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.

Premiums Ceded represented 31.8% and 33.5% of gross premiums earned during the six months ended June 30, 2026 and 2025, respectively.

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

Net Premiums Earned represent gross premiums earned less premiums ceded.

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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):

Net premiums written increased primarily due to a higher volume of policies in force while average premium per policy remained relatively consistent.

Net Investment Income increased primarily as a result of an increase in our invested assets.

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

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.”

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

General and Administrative Personnel Expenses increased due to additional personnel, annual merit increases, stock-based compensation, and lower reinsurance recoveries related to claims processing for catastrophes.

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.

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.

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.

Ratios

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.

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LIQUIDITY AND CAPITAL RESOURCES

Throughout our history, our liquidity requirements have been met through issuances of our common and preferred stock, debt offerings, and funds from operations. We expect our future liquidity requirements will be met by funds from operations, primarily the cash received by our insurance subsidiaries from premiums written and investment income. We may consider raising additional capital through debt and/or equity offerings to support our growth and future investment opportunities.

Our insurance subsidiaries require liquidity and adequate capital to meet ongoing obligations to policyholders and claimants and to fund operating expenses. In addition, we attempt to maintain adequate levels of liquidity and surplus to manage any differences between the duration of our liabilities and invested assets. In the insurance industry, cash collected for premiums from policies written is invested, interest and dividends are earned thereon, and losses and loss adjustment expenses are paid out over a period of years. This period of time varies by the circumstances surrounding each claim. With the exception of litigated claims, substantially all of our losses and loss adjustment expenses are fully settled and paid within approximately 100 days of the claim receipt date. Additional cash outflow occurs through payments of underwriting costs such as commissions, taxes, payroll, and general overhead expenses.

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.

In the future, we anticipate our primary use of funds will be to pay claims, reinsurance premiums, interest and principal on our debt, dividends, and to fund operating expenses and real estate acquisitions. From time to time, our use of funds may also include repurchases of shares of our common stock or other strategic initiatives.

Revolving Credit Facility

As of June 30, 2026, we had an outstanding balance of $36.0 million under a senior secured revolving credit facility with Fifth Third Bank (“Revolving Credit Facility”). The Revolving Credit Facility currently provides borrowing capacity of up to $150.0 million and expires on November 5, 2030. Borrowings under the Revolving Credit Facility bear interest at an annual rate equal to the one or three month Secured Overnight Financing Rate plus a ten basis points adjustment plus a margin based on the debt-to-capital ratio, with interest payments due in arrears on January 1, April 1, July 1, and October 1.

As of June 30, 2026, we were in compliance with all required covenants and had an available borrowing capacity of $114.0 million.

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Long-Term Debt

The following table summarizes the principal and interest payment obligations of our long-term debt as of June 30, 2026 (principal in thousands):

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

At-The-Market Facility

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.

Share Repurchase Program

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.

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.

On July 17, 2026, we completed the Share Repurchase Program with a total 504,330 shares of common stock repurchased for $80.0 million, excluding commissions and other costs.

Exzeo Share Repurchase Program

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

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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.

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.

On July 8, 2026, Exzeo completed the Exzeo Share Repurchase Program with a total 834,250 shares of common stock repurchased for $12.0 million, excluding commissions and other costs.

Investments

The main objective of our investment policy is to maximize our after-tax investment income with a reasonable level of risk given the current financial market. Our excess cash is invested primarily in money market accounts, certificates of deposit, and available-for-sale fixed-maturity and equity securities.

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.

In the future, we may alter our investment policy with regard to investments in federal, state and municipal obligations, preferred and common equity securities and real estate mortgages, as permitted by applicable law, including insurance regulations.

Limited Partnership Investments

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.

Real Estate Investments

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.

Dividends

On July 1, 2026, our Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends are payable on September 18, 2026 to stockholders of record on August 21, 2026.

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Sources and Uses of Cash

The following table is a summary of our cash flow activity for the periods presented (in thousands):

Cash Flows for the Six Months Ended June 30, 2026

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.

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.

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.

Cash Flows for the Six Months Ended June 30, 2025

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.

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.

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.

OFF-BALANCE SHEET ARRANGEMENTS

As of June 30, 2026, we had unexpired capital commitments for limited partnerships investments of $3.8 million as described above. We do not have any other arrangements giving rise to material obligations not reported in our consolidated balance sheets as described in Item 303 of SEC Regulation S-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The accompanying consolidated financial statements are prepared in accordance with U.S. GAAP, which requires

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us to select accounting policies and make estimates that affect amounts reported in the consolidated financial statements and the accompanying notes. Management’s estimates are based on the relevant information available at the end of each period. Actual results could differ materially from these estimates under different assumptions or market conditions.

We believe our accounting policies and estimates specific to losses and loss adjustment expenses, reinsurance recoverable, income taxes, stock-based compensation expense, and limited partnership investments involve our most significant judgments and estimates material to our consolidated financial statements.

Our accounting policies and estimates and their related risks that we consider to be critical are more fully described in our 2025 Annual Report. During the six months ended June 30, 2026, there have been no material changes with respect to any of our critical accounting policies and estimates.

Reserves for Losses and Loss Adjustment Expenses

Our liability for losses and loss adjustment expenses (“Reserves”) is specific to property insurance, which is our insurance subsidiaries’ only line of business. The Reserves include both case reserves on reported claims and our reserves for incurred but not reported (“IBNR”) losses. As of each period end date, the balance of our Reserves is based on our best estimate of the ultimate cost of reported claims and the IBNR losses based primarily on our historical experience. Changes in the Reserves are charged or credited to operations as the Reserves are adjusted.

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. As of June 30, 2026, $506.9 million of the total $559.0 million of Reserves was attributable to our estimate of IBNR. The remaining $52.1 million related to known cases which have been reported but not yet fully settled and represents our best estimate of the cost to settle such claims. As of June 30, 2026, $42.6 million of the $52.1 million in reserves for known cases related to claims incurred during prior years.

Our Reserves decreased from $576.5 million as of December 31, 2025 to $559.0 million as of June 30, 2026. The $17.5 million decrease was comprised of (i) reductions in our non-catastrophe Reserves of $54.4 million for 2025 and prior loss years; (ii) reductions in our catastrophe Reserves of $46.5 million primarily related to Hurricane Ian, Hurricane Helene, and Hurricane Milton; and (iii) partially offset by $83.4 million in reserves established for the 2026 loss year. The Reserves established for 2026 claims were primarily driven by IBNR as of June 30, 2026. The decrease of $100.9 million related to our 2025 and prior loss-years reserves was due to settlement of such claims.

Based on all information known to us, we believe our Reserves as of June 30, 2026 are adequate to cover our claims for losses incurred, including losses not yet reported to us. However, these estimates are continually reviewed by management as they are subject to significant variability and may be impacted by trends in claim severity and frequency or unusual exposures not yet identified. We review historical data and consider various factors, including known and anticipated regulatory and legal developments, changes in social attitudes, inflation, and economic conditions. As experience develops and other data becomes available, these estimates are revised, as required, resulting in increases or decreases to the Reserves. Adjustments are reflected in the results of operations in the period in which they are made, and the liabilities may deviate substantially from prior estimates.

RECENT ACCOUNTING PRONOUNCEMENTS

Refer to Note 3 “Recent Accounting Pronouncements” to the consolidated financial statements included in this Quarterly Report on Form 10-Q for further information about recent accounting pronouncements and adoptions.

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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of June 30, 2026, our investment portfolio included available-for-sale fixed-maturity and equity securities, the purposes of which are not for speculation. Our main objective is to maximize after-tax investment income and maintain sufficient liquidity to meet our obligations while minimizing market risk, which is the potential economic loss from adverse fluctuations in securities prices. We consider many factors including credit ratings, investment concentrations, regulatory requirements, anticipated fluctuation of interest rates, durations and market conditions in developing investment strategies. Our investment securities are managed primarily by an investment committee appointed by our Board of Directors. From time to time, our investment committee may decide to invest in low-risk assets such as U.S. government bonds.

Our investment portfolio is exposed to interest rate risk, credit risk, and equity price risk. Fiscal and economic uncertainties caused by any government action or inaction may exacerbate these risks and potentially have adverse impacts on the value of our investment portfolio.

We classify our fixed-maturity securities as available-for-sale and report any unrealized gains or losses, net of deferred income taxes, as a component of accumulated other comprehensive income within our stockholders’ equity. As such, any material temporary changes in their fair value can adversely impact our stockholders’ equity. In addition, we recognize any unrealized gains or losses related to our equity securities in our statement of income. As a result, our results of operations can be materially affected by the volatility in the equity market.

Interest Rate Risk

Our available-for-sale fixed-maturity securities are sensitive to potential losses resulting from unfavorable changes in interest rates. We manage this risk by analyzing anticipated movement in interest rates and considering our future capital needs.

The following table illustrates the impact of hypothetical changes in interest rates to the fair value of our available-for-sale fixed-maturity securities as of June 30, 2026 (dollar amounts in thousands):

Credit Risk

Credit risk can expose us to potential losses arising principally from adverse changes in the financial condition of the issuers of our available-for-sale fixed-maturity securities. We mitigate this risk by investing primarily in investment grade available-for-sale fixed-maturity securities, diversifying our portfolio to avoid concentrations by issuer or business sector, and continually monitoring individual securities for declines in credit quality. While we emphasize credit quality in our investment selection process, significant downturns in the markets or general economy may impact the credit quality of our portfolio.

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The following table presents the composition of our available-for-sale fixed-maturity securities, by rating, as of June 30, 2026 (dollar amounts in thousands):

Equity Price Risk

As of June 30, 2026, our equity investment portfolio included common stocks, perpetual preferred stocks, mutual funds, and exchange-traded funds. We may incur potential losses due to adverse changes in equity security prices. We manage this risk primarily through industry and issuer diversification and asset mix.

The following table illustrates the composition of our equity securities as of June 30, 2026 (dollar amounts in thousands):

(1)

Represents an aggregate of less than 5% sectors.

Foreign Currency Exchange Risk

As of June 30, 2026, we did not have any material exposure to foreign currency related risk.

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ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2026.

Changes in Internal Control Over Financial Reporting

During the three months ended June 30, 2026, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

Refer to Note 19 “Commitments and Contingencies” to the consolidated financial statements under the heading “Litigation and Other Legal Matters” included in this Quarterly Report on Form 10-Q for legal proceedings and related matters.

ITEM 1A – RISK FACTORS

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A of the 2025 Annual Report.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Equity Securities

None.

Use of Proceeds from Registered Equity Securities

None.

Issuer Purchases of Equity Securities

Under our publicly announced Share Repurchase Program, we are permitted 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 timing and total amount of any stock repurchases will be determined at management's discretion and depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices and other considerations. 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.

In addition, we generally withhold shares of our common stock to satisfy our employees’ payroll tax liabilities associated with the vesting of restricted stock awards issued under our share-based compensation plan.

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During the three months ended June 30, 2026, we repurchased shares of our common stock as follows (dollar amounts in thousands, except share and per share amounts):

(a)

On March 3, 2026, we announced our Board of Directors authorized a program which permits us to repurchase up to $80.0 million, excluding commissions and other costs, of shares of our common stock through February 27, 2027. On July 17, 2026, the Share Repurchase Program was completed with a total 504,330 shares of common stock repurchased for $80.0 million, excluding commissions and other costs.

Working Capital Restrictions and Other Limitations on the Payment of Dividends

We are not subject to working capital restrictions or other limitations on the payment of dividends. However, our insurance subsidiaries are subject to restrictions on the dividends and other distributions they may pay. Those restrictions could impact our ability to pay dividends in the future.

Under Florida law, a domestic insurer may not pay any dividend or distribute cash or other property to its stockholders except out of that part of its available and accumulated capital and surplus funds which is derived from realized net operating profits on its business and net realized capital gains. Additionally, a Florida domestic insurer may not make dividend payments or distributions to its stockholders without prior approval of the Florida Office of Insurance Regulation (“FLOIR”) if the dividend or distribution would exceed the larger of (1) the lesser of (a) 10.0% of its capital surplus or (b) net income, not including realized capital gains, plus a two year carry forward, (2) 10.0% of capital surplus with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains or (3) the lesser of (a) 10.0% of capital surplus or (b) net investment income plus a three year carry forward with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains.

Alternatively, a Florida domestic insurer may pay a dividend or distribution without the prior written approval of the FLOIR if (1) the dividend is equal to or less than the greater of (a) 10.0% of the insurer’s capital surplus as regards to policyholders derived from realized net operating profits on its business and net realized capital gains or (b) the insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year, (2) the insurer will have policy holder capital surplus equal to or exceeding 115.0% of the minimum required statutory capital surplus after the dividend or distribution, (3) the insurer files a notice of the dividend or distribution with the FLOIR at least ten business days prior to the dividend payment or distribution and (4) the notice includes a certification by an officer of the insurer attesting that, after the payment of the dividend or distribution, the insurer will have at least 115% of required statutory capital surplus as to policyholders. Except as provided above, a Florida domiciled insurer may only pay a dividend or make a distribution (1) subject to prior approval by the FLOIR or (2) 30 days after the FLOIR has received notice of such dividend or distribution and has not disapproved it within such time.

During the six months ended June 30, 2026, our insurance subsidiaries made cash distributions of $77.5 million to HCI Group, Inc.

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ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 – MINE SAFETY DISCLOSURES

None.

ITEM 5 – OTHER INFORMATION

During the three months ended June 30, 2026, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).

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ITEM 6 – EXHIBITS

The exhibits listed on the accompanying Index to Exhibits are filed, furnished or incorporated by reference as part of this Quarterly Report on form 10-Q.

Index to Exhibits

The information required by this Item is set forth on the index to exhibits below.

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