Income available to common stockholders in the third quarter of 2015 totaled $7.4 million, or $0.71 diluted earnings per common share, compared with $14.1 million, or $1.23 diluted earnings per common share in the third quarter of 2014.

Gross premiums earned in the third quarter of 2015 increased 16.7% to $103.8 million from $88.9 million in the same period in 2014. The increase was primarily due to the assumption of approximately 6,000 homeowners multi-peril policies and approximately 30,000 wind-only policies from Florida's state sponsored Citizens Property Insurance Corporation in December 2014 and 4,000 primarily homeowners multi-peril policies from Citizens in February 2015.

Premiums ceded in the third quarter of 2015 were $41.1 million, or 39.6% of gross premiums earned, compared with $27.7 million, or 31.1% of gross premiums earned during the same period in 2014. The quarter over quarter increase is primarily due to higher rates implemented by the Florida Hurricane Catastrophe Fund and an overall increase in units of reinsurance purchased for the 2015/16 reinsurance program.

Net premiums earned (defined as gross premiums earned less premiums ceded to reinsurance companies) in the third quarter of 2015 increased 2.5% to $62.8 million from $61.3 million in the same period in 2014.

Investment related losses during the quarter ended September 30, 2015 totaled $0.8 million. In addition, the company recognized a net non-cash charge of $1.9 million due to declines in the fair value of securities owned by the company determined to be other than temporary. The losses are primarily due to material market declines and volatility that occurred during the quarter.  This loss compares with $4.5 million in investment related income in the third quarter of 2014, which included $3.3 million of net realized gains from investment sales.

Losses and loss adjustment expenses during the third quarter of 2015 were $26.2 million compared with $22.0 million in the same period in 2014. We experienced significant weather-related events during the current quarter, which contributed to an increase in the volume of reported claims and losses incurred when compared to the same period in 2014. We also experienced unfavorable development during the quarter attributable to the settlement and further development of older claims.

Policy acquisition and other underwriting expenses in the third quarter of 2015 were $10.7 million compared with $10.0 million in the comparable period in 2014. The increase was primarily attributable to commissions and premium taxes related to the policies assumed in December 2014 from Citizens that have renewed and are included in 2015 premiums.

Salaries and wages during the third quarter of 2015 were $5.0 million compared with $4.4 million in the same period in 2014. The increase is primarily attributable to an increase in headcount at the Tampa headquarters.

Other operating expenses, which include a variety of general and administrative expenses, totaled $4.7 million in the third quarter of 2015 compared with $5.2 million in the third quarter of 2014. The decrease was primarily attributable to a $1.0 million decrease in stock-based compensation expense.

Third Quarter 2015 - Financial Ratios

The loss ratio applicable to the three months ended September 30, 2015 (defined as losses and loss adjustment expenses related to net premiums earned) was 41.7% compared with 35.9% in the three months ended September 30, 2014. The increase is attributable to higher reinsurance costs, which impacted net premiums earned, combined with significant weather-related events as well as unfavorable development that increased losses and loss adjustment expenses during the quarter.

The expense ratio applicable to the three months ended September 30, 2015 (defined as underwriting expenses, salaries and wages, interest and other operating expenses related to net premiums earned) was 36.9% compared with 36.2% for the three months ended September 30, 2014.

Expressed as a total of all expenses in relation to net premiums earned, the combined loss and expense ratio to net premiums earned was 78.6% in the third quarter of 2015 compared with 72.1% for the three months ended September 30, 2014.

Nine months Ended September 30, 2015 - Financial Results

Income available to common stockholders for the nine months ended September 30, 2015 totaled $54.8 million, or $4.84 diluted earnings per common share, compared with $48.1 million, or $4.07 diluted earnings per common share, for the nine months ended September 30, 2014.

Gross premiums earned for the nine months ended September 30, 2015 increased 17.2% to $321.2 million from $274.1 million in the same year-ago period.

Premiums ceded for the nine months ended September 30, 2015 were $100.3 million, or 31.2% of gross premiums earned, compared with $83.8 million, or 30.6% of the gross premiums earned, during the same period in 2014.

Net premiums earned for the nine months ended September 30, 2015 increased 16.1% to $220.9 million from $190.3 million in the same period in 2014.

Investment related income in the nine months ended September 30, 2015 was $2.1 million, which was offset by a $3.9 million non-cash charge for declines in the fair value of securities owned by the company determined to be other than temporary. This income amount compares with $8.2 million in investment related income in the nine months ended September 30, 2014, which included $4.5 million of net realized gains from investment sales.

Losses and loss adjustment expenses for the nine months ended September 30, 2015 and 2014 were $65.8 million and $58.9 million respectively.

Policy acquisition and other underwriting expenses for the nine months ended September 30, 2015 were $30.9 million compared with $28.7 million for the nine months ended September 30, 2014.

Salaries and wages during the nine months ended September 30, 2015 were $15.2 million compared with $12.6 million in the same period in 2014.

Other operating expenses totaled $14.0 million for the nine months ended September 30, 2015 compared with $15.9 million for the nine months ended September 30, 2014.

Nine months Ended September 30, 2015 - Financial Ratios

The loss ratio applicable to the nine months ended September 30, 2015 was 29.8% compared with 31.0% in the nine months ended September 30, 2014.

The expense ratio applicable to the nine months ended September 30, 2015 was 30.9% compared with 34.1% in the same period in 2014.

Expressed as a total of all expenses related to net premiums earned, the combined loss and expense ratio to net premiums earned was 60.7% in the nine months ended September 30, 2015 compared with 65.1% in the same period in 2014.

Management Commentary

"Despite the heavy rains in parts of Florida during the third quarter, our geographically diversified book of homeowners' insurance business was again able to produce profitable results," said Paresh Patel, HCI Group's chairman and chief executive officer. "As we look to the remainder of 2015 and beyond, our capital position allows us to patiently seek opportunities to add shareholder value."