HCI Group, Inc. (HCI) Business

ITEM 1 – Business

Our Business

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 State of Florida, which is our primary market, as well as in other states in the northeast and southeast regions of the United States (“U.S.”).

Our insurance operations are supported by other insurance-related subsidiaries within the consolidated group. Exzeo Group, Inc. (formerly known as TypTap Insurance Group, Inc.) (“Exzeo”), a majority-owned subsidiary, provides turn-key insurance technology and operations solutions based on a proprietary platform of purpose-built software and data analytics applications that are specifically designed for the property and casualty insurance ecosystem. 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 that is primarily engaged in the business of developing and operating commercial properties for investment purposes or for our own use.

Formation and Key Business Developments

HCI Group, Inc. was incorporated in the State of Florida in 2006 and our common stock is currently listed on the New York Stock Exchange (“NYSE”) under the symbol “HCI.”

The following highlights key updates to our business over the past three years:

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February 2024 – Condo Owners Reciprocal Exchange (“CORE”), a consolidated reciprocal insurance exchange which provides commercial residential multiple peril insurance, commenced business operations.

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July 2024 – TypTap Insurance Company (“TTIC”), a property and casualty insurance carrier subsidiary, was transferred from Exzeo to HCI Group, Inc. This organizational change was implemented to align all insurance operations under a single operating structure within HCI Group, Inc., allowing Exzeo to primarily focus on its industry-leading technology and insurance management activities as an insurance solutions provider.

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February 2025 – Tailrow Insurance Exchange (“Tailrow”), a consolidated reciprocal insurance exchange which specializes in fire and homeowners multiple peril insurance, commenced business operations.

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November 2025 – Exzeo completed its initial public offering and its common stock is currently listed on the NYSE under the symbol “XZO.” The initial public offering was completed to position Exzeo for future growth and to provide technology-based services and solutions to unaffiliated insurance carriers. As of December 31, 2025, we owned approximately 82.5% of Exzeo's outstanding shares of common stock, inclusive of unvested restricted stock. Accordingly, Exzeo remains a consolidated, majority-owned, subsidiary of HCI Group, Inc.

Segment and Geographic Information

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. The determination of segments may change over time due to changes in operational emphasis, revenue, and results of operations. Where applicable, prior periods have been retrospectively adjusted to reflect our current operating and reportable segment structure. The entirety of our revenue is generated in the U.S. and predominately in the State of Florida.

We have five reportable segments:

a)
Insurance Operations

b)
Exzeo

c)
Reciprocal Exchange Operations

d)
Real Estate

e)
Corporate and Other

Refer to Note 15 “Segment Information” to the consolidated financial statements included in this Annual Report on Form 10-K for additional information.

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Insurance Operations

We currently have two operating property and casualty insurance subsidiaries: Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”) and TTIC. We provide various homeowners’ property and casualty insurance products for properties located in the State of Florida, which is our primary market, as well as in other states in the northeast and southeast regions of the U.S. A third insurance subsidiary, perRisk Insurance Company, has not yet commenced its surplus lines insurance business. 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. Additionally, we have a wholly-owned Bermuda domiciled captive reinsurance subsidiary which allows us to selectively retain risk and reduce the cost of third party reinsurance. Currently, we do not provide reinsurance to non-affiliates. Other auxiliary insurance-related operations include claim adjusting and processing services.

Property and Casualty Insurance

The property and casualty insurance industry is large, fragmented, highly regulated, and complex. Property and casualty insurance protects policyholders against a range of losses on items of value, including homes and commercial property, as well as from unforeseen events including natural disaster, litigation, and bodily injury. Property and casualty insurance is pervasive and purchased by nearly all businesses and individuals. While some types of property and casualty insurance are optional, others such as homeowners’ insurance, are often obligatory (e.g. required by mortgage financing). The property and casualty insurance industry is highly competitive and carriers compete primarily on (i) product differentiation, (ii) pricing, (iii) customer service and experience, (iv) marketing and advertising, and (v) affiliate programs and channel strategies. We face competition from national, regional and residual market insurance companies. We may also face competition from new entrants in our markets, and such entrants may create pricing pressure that could lead to overall premium reductions.

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 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.

Our competitive strategies focus on the following key areas:

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Exceptional service – We are committed to maintaining superior service to our policyholders and agents. We leverage technology for process improvements, including enabling faster onboarding, quoting, and service capabilities.

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Claims settlement practices – We focus on fair and timely settlement of policyholder claims.

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Disciplined underwriting – We analyze exposures and utilize available underwriting data to ensure policies meet our selective criteria. We incorporate tools and processes that help streamline underwriting workflows, supporting more consistent risk evaluation and contributing to stronger underwriting performance.

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New product offerings – We may cross-sell additional insurance products to our existing policyholders in order to broaden our lines of business and product mix or identify other lines of insurance to offer.

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Effective and efficient use of technology – We strive to add or improve technology that can effectively and efficiently enhance service to our policyholders and agents. Our primary technology applications are internally developed by Exzeo as described in further detail below.

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Geographical expansion – We continue to pursue opportunities to further expand our business within the state of Florida and in other states to increase overall geographic diversification.

•
Distribution channel – We continue to improve our relationship with independent agents through collaboration and implementation of technologies that facilitate independent agents in finding the right insurance policies for their clients.

Losses and Loss Adjustment Expenses

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

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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. See Item 1A, “Risk Factors,” below.

Our liability for losses and loss adjustment expenses represents our estimate of the total cost of (i) claims that have been reported, but not yet paid (“case reserves”), (ii) losses that have been incurred but not yet reported (“IBNR”), and (iii) loss adjustment expenses (“LAE”) which are intended to cover the ultimate cost of adjusting, investigating and settling claims, including investigation and defense of any litigation arising from such claims. We base our estimates on various assumptions and actuarial data we believe to be reasonable under the circumstances. The process of estimating the liability is inherently subjective and is influenced by many variables such as past loss experience, current claim trends and the prevailing social, economic and legal environments.

Significant time can elapse between the occurrence of an insured loss, the reporting of the loss to us and our payment of that loss. Our liability for losses and LAE, which we believe represents the best estimate at a given point in time based on facts, circumstances and historical trends then known, may necessarily be adjusted to reflect additional facts that become available during the loss settlement period.

For a discussion and summary of the activity in the liability for losses and LAE for the years ended December 31, 2025, 2024 and 2023, see Note 13 “Losses and Loss Adjustment Expenses” to our consolidated financial statements under Item 8 of this Annual Report on Form 10-K.

Seasonality of Our Insurance Business

Our insurance business is seasonal. Hurricanes and tropical storms affecting Florida, our primary market, 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. In addition, our reinsurance contracts are generally effective 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 be reflected in our financial results beginning June 1st of each year.

Government Regulation over Insurance Business

We are subject to the laws and regulations in any state in which we conduct our insurance business, including those applicable to managing general agent (“MGA”) activities, as well as data privacy, cybersecurity and claims administration. The regulations cover all aspects of our business and are generally designed to protect the interests of insurance policyholders as opposed to the interests of shareholders. Such regulations relate to a wide variety of financial and non-financial matters including:

•
authorized lines of business;

•
capital and surplus requirements;

•
approval of allowable rates and forms;

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approval of reinsurance contracts;

•
investment parameters;

•
underwriting limitations;

•
transactions with affiliates;

•
dividend limitations;

•
changes in control; and

•
market conduct.

Our failure to comply with certain provisions of applicable insurance laws and regulations could have a material, adverse effect on our business, results of operations or financial condition.

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State Licensure and Approval

All states require licensure and regulatory approval prior to the marketing of insurance products. Typically, licensure review is comprehensive and includes a review of a company’s business plan, solvency, reinsurance, rates, and forms, the character of its officers and directors and other of its financial and non-financial aspects. The regulatory authorities may prevent entry into a new market by not granting a license. In addition, regulatory authorities may preclude or delay our entry into markets by disapproving or withholding approval of our product filings.

Statutory Reporting and Examination

All insurance companies must file quarterly and annual statements with certain regulatory agencies in any state in which they are licensed to transact business and are subject to regular and special examinations by those agencies. The National Association of Insurance Commissioners mandates that all insurance companies be examined a minimum of once every five years. However, the Florida Department of Financial Services, Office of Insurance Regulation (“FLOIR”) has the authority to conduct an examination whenever it is deemed appropriate.

Exzeo

Exzeo provides turnkey insurance technology and operations solutions to property and casualty insurance carriers and their agents through a proprietary platform of purpose‑built software and data analytics applications (“Exzeo Platform”). The Exzeo Platform consists of a suite of configurable applications designed to support the core operational and administrative functions required by property and casualty insurance carriers, including quoting and underwriting, policy administration, claims management, data reporting, and financial reporting. The Exzeo Platform enables us to deliver technology based solutions that streamline and automate the interaction between carriers, agents, and policyholders. These applications are designed to improve workflow efficiency, support underwriting discipline, enhance operational visibility, and enable customers to scale their businesses without significant upfront technology investment. Exzeo currently holds insurance agency or MGA licenses in the states necessary to support their customer base as well as in certain additional states where we maintain licenses in anticipation of future customer needs. In addition, Exzeo provides expert reinsurance placement services to help insurance companies manage risk by acting as an intermediary between the insurance carrier and reinsurers.

The Exzeo Platform includes, but is not limited to, the following:

•
SAMSTM – Web-based system designed to automate and streamline the process of managing insurance policies

•
HarmonyTM – Next-generation policy administration platform that easily supports multiple companies and their products.

•
ClaimColonyTM – End-to-end claims management platform used by insurance companies, third-party administrators, independent adjusters and insurance litigation services. Comprehensive policy administration platform that streamlines the entire policy lifecycle, from quoting to binding, while offering advanced underwriting capabilities. Its intuitive design enhances user experiences, ensuring a seamless and efficient workflow.

•
AtlasViewer® – A mapping and data visualization platform that integrates location-based data from multiple sources, providing users with a comprehensive and tailored view of risk. By transforming data into actionable insights, AtlasViewer helps drive smarter business decisions. In addition, AtlasViewer provides a unique, visual way to look at claims and manage the claims lifecycle, driving better efficiency and improving operational outcomes.

Intellectual Property

The insurance technology and software industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding patent and other intellectual property rights. Our success and ability to compete depends in part upon our ability to protect our proprietary technology, to establish and adequately protect our intellectual property rights, and to protect against third-party claims and litigation related to intellectual property.

To accomplish these objectives, we rely on a combination of trademark, copyright, and trade secret laws in the U.S., as well as contractual protections.

We also rely on several registered and unregistered trademarks, as well as pending applications for such registrations, in order to protect our brand in the U.S.

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We also seek to protect our intellectual property rights by entering into confidentiality and invention assignment agreements with our employees and contractors, as well as confidentiality agreements with third parties.

Reciprocal Exchange Operations

Our reciprocal exchange operations relate to the insurance operations of consolidated reciprocal insurance exchanges that are owned by their policyholders.

A reciprocal insurance exchange is a policyholder-owned entity where members, known as subscribers, gain ownership by purchasing an insurance policy. These subscribers collectively assume one another’s risks by exchanging insurance contracts, effectively acting as both insurers and insureds. The exchanges’ operations are managed by us as part of our AIF services.

Real Estate

The Real Estate segment relates to our commercial real estate group that is primarily engaged in the business of developing and operating commercial properties for investment purposes or for our own use.

Properties Used in Operations

Our real estate used in operations consists of an office building located in Tampa, Florida with gross area of 64,850 square feet, an office building in Tampa, Florida with a gross area of 68,908 square feet, and an office building with gross area of approximately 12,896 square feet in Ocala, Florida.

Investment Properties

Our portfolio of investment properties includes two marinas with accompanying rental space, three retail shopping centers, two corporate office parks, and undeveloped land which we are holding for future development opportunities. Except for the undeveloped land, we generate income from our investment properties by leasing vacancies to unaffiliated tenants. While we intend to hold our investment properties, we would consider reasonable offers that align with our valuation expectations.

The table below sets forth information concerning our investment properties:

Corporate and Other

Corporate and Other is comprised of our holding company, HCI Group, Inc., plus other operations that do not meet the quantitative and qualitative thresholds for a reportable segment.

We currently provide AIF services to reciprocal insurance exchange operations. Our AIF services relate to services in which we oversee the general administration, marketing, underwriting, accounting, policy administration, claims adjusting, and information technology for the reciprocal insurance exchanges.

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Human Capital Management

As of December 31, 2025, we employed 594 full-time employees and 12 employees through a professional employer organization, the majority of whom are based in Florida. None of our employees are subject to any collective bargaining agreement. We believe our relations with our employees have generally been positive.

Work Environment

Our success depends on our ability to attract, develop, and retain talented employees across the organization. In order to attract and retain top talent, we focus on having a diverse, inclusive, and safe work environment. We offer competitive compensation and a benefits program intended to support employee health and financial security, including health coverage options, a 401(k) plan that includes a company match, and employer-paid short-term and long-term disability insurance. We offer flexible work arrangements where appropriate, including remote or hybrid work options, which enable us to attract and retain talent across multiple geographies while maintaining service quality and operational effectiveness. Most employees are shareholders of the Company and have an equity ownership stake that is intended to align employee retention and value creation. Additionally, our Bravo program allows employees to earn paid time off as well as cash bonuses for engaging in charitable causes, continued education and professional development activities.

We are committed to the highest standards of ethics and compliance and making sure every team member understands and embraces our core values of ethics, integrity, and respect for others. Our code of ethics provides a framework of what is expected of our employees and fosters a culture of high integrity and compliance. Our code of ethics is supplemented by a variety of additional policies applicable to all team members which are designed to further foster ethical and sound business practices.

We maintain policies and procedures intended to promote a respectful workplace, including a harassment prevention policy that outlines reporting mechanisms, investigation processes, and prohibitions against retaliation. Harassment prevention training is required for all employees.

Diversity and Inclusion

We are committed to building and sustaining a culture of inclusive diversity. Our culture aims to recognize and embrace all forms of diversity in order to drive innovation and growth. Talent diversity starts with the recruitment and hiring process and continues through the learning, development, advancement, and retention of employees with wide-ranging backgrounds and experiences. We believe that a workforce with varied backgrounds and experiences contributes to organizational effectiveness. Our workforce reflects a range of backgrounds, experiences, and professional expertise. We prohibit discrimination based on legally protected characteristics and seek to maintain an environment that supports respectful communication and collaboration.

Health, Wellness, and Engagement

We consider employee health, safety, and engagement to be important to our operations. We periodically review our policies and programs related to employee wellness, safety, and professional development. These programs include benefits and wellness offerings intended to support employee engagement and retention.

We support professional development through training opportunities, including virtual skill-building workshops and growth opportunities for employees in remote or hybrid roles. We utilize a structured in-person collaboration model, under which employees are expected to work onsite on designated collaboration days to support teamwork, communication, and operational effectiveness.

Environmental, Social and Governance Considerations

Environmental and social considerations are integrated into our long-term strategy and our enterprise risk management processes. Our Sustainability Committee, established by the Board of Directors (the “Board”) and operating under a written charter, provides oversight of material environmental, social, and other sustainability matters. Management regularly reports to the Committee on initiatives, key metrics, and developments affecting the Company. During the year, we continue evaluating potential impacts of environmental regulations, climate-related risks, workforce dynamics, and community engagement efforts on our operations and financial performance. These activities are intended to support operational efficiency, risk mitigation, and long-term value creation. Additional details regarding the Sustainability Committee and its charter are available on our website at www.hcigroup.com under “Investors” and “Governance.” Forward‑looking statements about our sustainability efforts are subject to the cautionary factors described under “Risk Factors.”

As a property owner, we are subject to regulations under various federal, state, and local laws concerning the environment, including laws addressing the discharge of pollutants into the air and water and the management and disposal of hazardous substances and wastes and the cleanup of contaminated sites.

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Available Information

Availability of SEC Reports

Our website is located at https://www.hcigroup.com. Our investor relations website is located at https://investors.hcigroup.com. We make available free of charge on our investor relations website under “Financials” our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, reports filed pursuant to Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”), other Securities and Exchange Commission (“SEC”) filings, and any amendments to those reports that are filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file or furnish such materials to the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding our filings at https://www.sec.gov.

Use of Website to Provide Information

From time to time, we have used, and expect in the future to use, our website as a means of disclosing material information to the public in a broad, non-exclusionary manner, including for purposes of the SEC’s Regulation Fair Disclosure (Reg FD). Financial and other material information regarding the Company is routinely posted on our website and accessible at https://investors.hcigroup.com. In order to receive notifications regarding new postings to our website, investors are encouraged to enroll on our website to receive automatic email alerts. None of the information on our website is incorporated into this Annual Report.

Refer to Exzeo's website at www.exzeo.com and its filings with the SEC for additional information and reporting for Exzeo.