HCI to pay $600m-$750m for hurricanes Debby, Helene, Milton. Reinsurance assists

HCI Group, the Florida-focused insurance holding company, said it expects to pay between $600 million and $750 million in claims for hurricanes Debby, Helene and Milton, but net retained losses from the three events could be as low as $185 million.

HCI’s Chairman and Chief Executive Officer Paresh Patel explained, “Our policyholders have experienced three major catastrophe events over the past few months. We are responding to the needs of our policyholders and ensuring that their claims are handled quickly and efficiently.

“Across all three events, HCI expects to pay $600 to $750 million to our policyholders to help them rebuild their lives.”

After taking into consideration reinsurance recoveries that will be made, as well as the reversal of benefits accrued under a multi-year reinsurance agreement, HCI expects hurricanes Debby and Helene will drive a net expense to the company in the third quarter of approximately $60 million.

Even with that impact, HCI said it expects to report a pre-tax profit for the third quarter of 2024.

Hurricane Milton is a fourth-quarter event and HCI Group expects a net retained loss from the larger and potentially more impactful storm of around $125 million, again after considering reinsurance recoveries and the reversal of benefits accrued under a multi-year reinsurance agreement.

So, it appears that HCI could recover a relatively significant amount of its hurricane losses from its reinsurance partners, with more than $415 million in recoveries seemingly possible.

“The company is able to absorb these losses because of our strong balance sheet, our conservative reinsurance program with over $2 billion of occurrence reinsurance limit and over $3 billion of aggregate reinsurance limit, and our profitability,” said Patel.

HCI renewed a large reinsurance tower for its Homeowners Choice Property & Casualty Insurance Company, Inc. subsidiary and digital insurtech company TypTap subsidiaries earlier this year.

The company also said at that time it would look into the feasibility of buying more protection for the US hurricane season and with Patel citing over $3 billion of aggregate limit now, it seems an additional $300 million was added at some stage around the mid-year.

Patel also highlighted that there is no reduction in appetite to continue growing the HCI business in Florida, saying, “We are continuing our participation in Citizens’ Depopulation Program in the fourth quarter and early indications show a strong rate of adoption.”