Homeowners Choice Reports Results for 2012 Fourth Quarter and Full Year

Tue Mar 5, 2013 4:01pm EST

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TAMPA, Fla., March 5, 2013 (GLOBE NEWSWIRE) -- Homeowners Choice, Inc. (NYSE:HCI), a Florida-based
insurance holding company, reported its financial results for the fourth quarter and year ended
December 31, 2012.

Fourth Quarter 2012 - Financial Results

Income available to common stockholders in the fourth quarter of 2012 totaled $13.1 million or
$1.19 diluted earnings per common share, compared with $4.6 million or $0.62 diluted earnings per
common share in the fourth quarter of 2011.

Gross premiums earned in the fourth quarter of 2012 increased 44.8% to $72.0 million from $49.8
million in the same year-ago period. The increase was primarily due to policies acquired from
Citizens Property Insurance Corporation in November 2012.

Net premiums earned (defined as gross premiums earned less premiums ceded to reinsurance
companies) in the fourth quarter of 2012 increased 38.3% to $49.6 million from $35.8 million in
the same year-ago period. Premiums ceded in the fourth quarter of 2012 were 31.2% of the company's
gross premiums earned, compared with 28.0% during the same year-ago period.

Net investment income in the fourth quarter of 2012 was $109,000 compared with $504,000 in the
same year-ago period. The decrease was primarily due to operating losses incurred by certain of
the company's real estate investments.

Losses and loss adjustment expenses in the fourth quarter of 2012 were $15.9 million compared with
$16.9 million in the same year-ago period.

Policy acquisition and other underwriting expenses in the fourth quarter of 2012 were $6.2 million
compared with $7.6 million in the comparable period in 2011. The decrease was primarily the result
of the minimal acquisition costs related to the November 2012 Citizens assumption transaction,
which was not subject to commission. Other operating expenses, which include a variety of general
and administrative costs, totaled $7.7 million in the fourth quarter of 2012 compared with $4.1
million in Q4 2011.

Fourth Quarter 2012 - Financial Ratios

The company's loss ratio for the fourth quarter of 2012 (defined as loss and loss adjustment
expenses related to net premiums earned) was 32.1% compared with 47.1% in the fourth quarter of
2011.

The expense ratio applicable to the fourth quarter of 2012 (defined as policy acquisition and
other underwriting expenses plus compensation, employee benefits and other operating expenses
related to net premiums earned) was 28.4% compared with 32.5% in the fourth quarter of 2011.

Expressed as the total of all expenses related to net premiums earned, the combined loss and
expense ratio to net premiums earned was 60.6% for the fourth quarter of 2012 compared with 79.7%
in the same period in 2011.

Full Year 2012 - Financial Results

Income available to common stockholders for 2012 totaled $29.8 million or $3.02 diluted earnings
per common share compared with $9.1 million or $1.34 diluted earnings per common share for 2011.

Gross premiums earned in 2012 increased 62.7% to $233.6 million from $143.6 million in 2011. The
increase was primarily related to additional premiums in 2012 on the renewal of policies assumed
from HomeWise Insurance Company in November 2011 combined with policies assumed from Citizens in
November 2012.

Net premiums earned for 2012 increased 79.0% to $157.7 million from $88.1 million in 2011.
Premiums ceded for 2012 were 32.5% of the company's gross premiums earned compared with 38.7%
during 2011. The ratio decreased because the November 2011 and 2012 assumptions occurred late in
Florida's hurricane season, requiring minimal reinsurance coverage for the remainder of the 2012
reinsurance contract year.

Net investment income for 2012 was $980,000 compared with $2.1 million in 2011.

Losses and loss adjustment expenses in 2012 were $66.3 million compared with $48.2 million in the
same year-ago period. Losses and loss adjustment expenses in 2012 included approximately $3.5
million related to case reported claims from Tropical Storm Debby and Tropical Storm Isaac, which
occurred in June and August 2012.

Policy acquisition and other underwriting expenses for 2012 were $25.9 million compared with $18.1
million for 2011. Other operating expenses totaled $21.1 million in 2012 compared with $11.0
million in 2011.

Full Year 2012 - Financial Ratios

The company's loss ratio applicable to 2012 was 42.1% compared with 54.8% in 2011.

The expense ratio applicable to 2012 was 29.9% compared with 33.1% in the same period in 2011.

The combined loss and expense ratio to net premiums earned in 2012 was 72.0% compared with 87.9%
in the same period in 2011.

Management Commentary

"2012 was a good year for our company," said Paresh Patel, Homeowners Choice chairman and chief
executive officer. "We achieved 30 percent growth in policy count and record earnings. Our policy
growth was fueled primarily by the 2011 HomeWise and 2012 Citizens assumption transactions. Most
important, we achieved growth while maintaining diligent underwriting standards. Our balance sheet
remains strong with $230 million in cash and cash equivalents at year end."

Conference Call

Homeowners Choice will hold a conference call later today (March 5, 2013) to discuss these
financial results. The company's chairman and chief executive officer, Paresh Patel, and chief
financial officer, Richard Allen, will host the call starting at 4:30 p.m. Eastern time. A
question and answer session will follow management's presentation.

The conference call will be broadcast live at www.ir-site.com/hcpci/events.asp
http://www.globenewswire.com/newsroom/ctr?d=10024118&l=28&a=www.ir-site.com%2Fhcpci%2Fevents.asp&u=http%3A%2F%2Fwww.ir-site.com%2Fhcpci%2Fevents.asp
 and will be available for replay until June 6, 2013.

Those who wish to participate on the conference call, please contact Jay Madhu, Homeowners Choice
vice president of investor relations, at 813-405-3660 or jmadhu@hcpci.com
http://www.globenewswire.com/newsroom/ctr?d=263579&l=6&a=jmadhu%40hcpci.com&u=mailto%3Ajmadhu%40hcpci.com
.

For those who wish to listen to the call via telephone, please dial the listen-only telephone
number below at least 5-10 minutes before the scheduled start time:

Toll-Free Number: 877-407-9210

International Number: 201-689-8049

About Homeowners Choice, Inc
http://www.globenewswire.com/newsroom/ctr?d=10024118&l=33&a=About%20Homeowners%20Choice%2C%20Inc&u=http%3A%2F%2Fwww.hcpci.com%2F
.

Homeowners Choice, Inc. is a Florida-based insurance holding company headquartered in Tampa.
Through its subsidiary corporations, Homeowners Choice provides property and casualty homeowners'
insurance, condominium owners' insurance and tenants' insurance. The company's common shares and
8% senior notes trade on the New York Stock Exchange under the ticker symbols "HCI" and "HCJ." Its
common shares are included in the Russell 2000 Index. Its 7% Series A, cumulative redeemable
preferred shares trade on the NASDAQ Capital Market under the ticker symbol "HCIIP." More
information about Homeowners Choice is available at www.hcigroup.com
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.

The Homeowners Choice, Inc. logo is available at
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Forward-Looking Statements

This news release may contain forward-looking statements made pursuant to the Private Securities
Litigation Reform Act of 1995. Words such as "anticipate," "estimate," "expect," "intend," "plan"
and "project" and other similar words and expressions are intended to signify forward-looking
statements. Forward-looking statements are not guarantees of future results and conditions but
rather are subject to various risks and uncertainties. Some of these risks and uncertainties are
identified in the company's filings with the Securities and Exchange Commission. Should any risks
or uncertainties develop into actual events, these developments could have material adverse
effects on the company's business, financial condition and results of operations. Homeowners
Choice, Inc. disclaims all obligations to update any forward-looking statements.

 HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES                                                                                                                                                                                                                                   
 Consolidated Balance Sheets                                                                                                                                                                                                                                                
 (Dollars in thousands, except share amounts)                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                              At December 31, 2012  At December 31, 2011  
                                                                                                                                                                                                                              (Unaudited)                                 
 Assets                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                          
 Fixed-maturity securities, available-for-sale, at fair value                                                                                                                                                                 $ 35,953              35,788                
 Equity securities, available-for-sale, at fair value                                                                                                                                                                         8,876                 4,061                 
 Time deposits                                                                                                                                                                                                                -                     12,427                
 Other investments                                                                                                                                                                                                            16,087                6,483                 
 Total investments                                                                                                                                                                                                            60,916                58,759                
 Cash and cash equivalents                                                                                                                                                                                                    230,214               100,355               
 Accrued interest and dividends receivable                                                                                                                                                                                    375                   408                   
 Premiums and reinsurance receivable                                                                                                                                                                                          10,642                13,909                
 Prepaid reinsurance premiums                                                                                                                                                                                                 9,112                 14,169                
 Deferred policy acquisition costs                                                                                                                                                                                            10,032                12,321                
 Property and equipment, net                                                                                                                                                                                                  10,853                10,499                
 Goodwill                                                                                                                                                                                                                     -                     161                   
 Deferred income taxes                                                                                                                                                                                                        3,848                 2,368                 
 Other assets                                                                                                                                                                                                                 2,296                 1,869                 
                                                                                                                                                                                                                                                                          
 Total assets                                                                                                                                                                                                                 $ 338,288             214,818               
                                                                                                                                                                                                                                                                          
 Liabilities and Stockholders' Equity                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                          
 Losses and loss adjustment expenses                                                                                                                                                                                          41,168                27,424                
 Unearned premiums                                                                                                                                                                                                            154,249               108,677               
 Advance premiums                                                                                                                                                                                                             4,029                 2,132                 
 Assumed reinsurance balances payable                                                                                                                                                                                         1,377                 -                     
 Accrued expenses                                                                                                                                                                                                             3,041                 3,478                 
 Dividends payable                                                                                                                                                                                                            42                    218                   
 Income taxes payable                                                                                                                                                                                                         8,813                 4,956                 
 Other liabilities                                                                                                                                                                                                            4,316                 4,103                 
                                                                                                                                                                                                                                                                          
 Total liabilities                                                                                                                                                                                                            217,035               150,988               
                                                                                                                                                                                                                                                                          
 Stockholders' equity:                                                                                                                                                                                                                                                    
 7% Series A cumulative convertible preferred stock (liquidation preference $10.00 per share), no par value, 1,500,000 shares authorized, 241,182 and 1,247,700 shares issued and outstanding in 2012 and 2011, respectively  -                     -                     
 Preferred stock (no par value, 18,500,000 shares authorized, no shares issued or outstanding)                                                                                                                                -                     -                     
 Common stock (no par value, 40,000,000 shares authorized, 10,877,537 and 6,202,485 shares issued and outstanding in 2012 and 2011, respectively)                                                                             -                     -                     
 Additional paid-in capital                                                                                                                                                                                                   63,875                29,636                
 Retained income                                                                                                                                                                                                              55,758                33,986                
 Accumulated other comprehensive income                                                                                                                                                                                       1,620                 208                   
                                                                                                                                                                                                                                                                          
 Total stockholders' equity                                                                                                                                                                                                   121,253               63,830                
                                                                                                                                                                                                                                                                          
 Total liabilities and stockholders' equity                                                                                                                                                                                   $ 338,288             214,818               


                                                                                                        
 HOMEOWNERS CHOICE, INC. AND SUBSIDIARIES                                                               
 Consolidated Statements of Income                                                                      
 (Dollars in thousands, except per share amounts)                                                       
                                                                                                    
                                                     Three Months Ended       Years Ended             
                                                     December 31,             December 31,            
                                                     2012        2011        2012         2011      
                                                     (Unaudited)              (Unaudited)            
                                                                                                    
 Revenue                                                                                            
                                                                                                    
 Gross premiums earned                               $ 72,028    49,751      $ 233,607    143,606   
 Premiums ceded                                      (22,464)    (13,918)    (75,939)     (55,525)  
                                                                                                    
 Net premiums earned                                 49,564      35,833      157,668      88,081    
                                                                                                    
 Net investment income                               109         504         980          2,061     
 Policy fee income                                   371         160         2,538        1,438     
 Realized investment gains (losses)                  250         (126)       276          290       
 Gain on bargain purchase                            -           -           179          936       
 Other                                               783         195         1,424        1,003     
                                                                                                    
 Total revenue                                       51,077      36,566      163,065      93,809    
                                                                                                    
 Expenses                                                                                           
                                                                                                    
 Losses and loss adjustment expenses                 15,928      16,886      66,310       48,243    
 Policy acquisition and other underwriting expenses  6,240       7,557       25,930       18,129    
 Goodwill impairment loss                            161         -           161          -         
 Other operating expenses                            7,683       4,100       21,084       11,032    
                                                                                                    
 Total expenses                                      30,012      28,543      113,485      77,404    
                                                                                                    
 Income before income taxes                          21,065      8,023       49,580       16,405    
                                                                                                    
 Income taxes                                        7,964       3,227       19,423       6,441     
                                                                                                    
 Net income                                          $ 13,101    4,796       $ 30,157     9,964     
                                                                                                    
 Preferred stock dividends                           (36)        (218)       (322)        (815)     
                                                                                                    
 Income available to common stockholders             $ 13,065    4,578       $ 29,835     9,149     
                                                                                                    
 Basic earnings per common share                     $ 1.27      0.74        $ 3.45       1.49      
                                                                                                    
 Diluted earnings per common share                   $ 1.19      0.62        $ 3.02       1.34      
                                                                                                    
 Dividends per common share                          $ 0.33      0.23        $ 0.88       0.53      


CONTACT: Company Contact:
         Jay Madhu, V.P. of Investor Relations
         Homeowners Choice, Inc.
         Tel (813) 405-3660
         jmadhu@hcpci.com
         
         Investor Relations Contact:
         Matt Glover or Michael Koehler
         Liolios Group, Inc.
         Tel (949) 574-3860
         hci@liolios.com