Homeowners Choice Inc. (HCII, Financial) filed Quarterly Report for the period ended 2010-09-30.
Homeowners Choice Inc. has a market cap of $50.3 million; its shares were traded at around $8.25 with a P/E ratio of 17.9 and P/S ratio of 0.7.
On October 12, 2010, we entered into a purchase agreement with an unrelated third party to acquire approximately 1.5 million shares of common stock of United Insurance Holdings Corp. (United), a Florida-based property and casualty insurance company. This purchase represents approximately 14.6% of Uniteds outstanding common stock as reported by United in its Form 10-Q filed August 9, 2010. The total purchase price for the shares to be acquired is $4.6 million, or approximately $2.95 per share, which represents a 28.3% premium to the closing market price of Uniteds common stock on October 12, 2010. In addition, the purchase agreement provides for the transfer to the Company of a warrant for a purchase price of $100. The warrant, if exercised prior to the October 4, 2011 expiration date, will allow us to purchase 220,047 additional shares of United common stock at a price of $6.00 per share. We entered into the agreement, the closing of which is subject to regulatory approval, for investment purposes and as an indication of our serious interest in exploring with United the possibility of combining companies.
Our results of operations for the three months ended September 30, 2010 reflect net income of $1.7 million, or $0.25 earnings per diluted share, compared to net income of $0.8 million, or $0.11 earnings per diluted share, for the three months ended September 30, 2009.
Net Premiums Earned for the three months ended September 30, 2010 and 2009 were $15.1 million and $12.0 million, respectively, and reflect the gross premiums earned less the appropriate reinsurance costs as described above. Net premiums earned increased by $3.1 million in 2010 as compared to 2009 as a result of the $4.2 million increase in gross earned premiums offset by the $1.1 million increase in our reinsurance premiums.
Our results of operations for the nine months ended September 30, 2010 reflect net income of $3.6 million, or $0.54 earnings per diluted share, compared to net income of $10.1 million, or $1.40 earnings per diluted share, for the nine months ended September 30, 2009.
our Reserves is based on our best estimate of the ultimate cost of each claim for those known cases and the IBNR loss reserves are estimated based primarily on our historical experience. Our Reserves increased from $19.2 million at December 31, 2009 to $22.7 million at September 30, 2010. The $3.5 million increase in our Reserves during 2010 is comprised of a $13.1 million increase specific to the 2010 accident year offset by a reduction of $9 million and $0.6 million in our Reserves for 2009 and 2008 accident years, respectively. The $13.1 million in Reserves established for 2010 claims is due to the reported claims and policy exposure resulting from the December 2009 assumption. The decrease of $9.6 million specific to our 2009 and 2008 accident-year reserves is due to favorable development arising from lower than expected loss development during 2010 relative to expectations used to establish our Reserve estimates at the end of 2009. Factors that are attributable to this favorable development may include a lower severity of claims than the severity of claims considered in establishing our Reserves and actual case development may be more favorable than originally anticipated.
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Homeowners Choice Inc. has a market cap of $50.3 million; its shares were traded at around $8.25 with a P/E ratio of 17.9 and P/S ratio of 0.7.
Highlight of Business Operations:
Homeowners Choice, Inc. is a property and casualty insurance holding company incorporated in Florida in 2006. Through our subsidiaries, we provide property and casualty homeowners insurance, condominium-owners insurance, and tenants insurance to individuals owning property in Florida. We offer these insurance products at competitive rates, while pursuing profitability using selective underwriting criteria. Our principal revenues are earned premiums, which are reported net of reinsurance costs, and investment income. We cede a substantial portion of our earned premiums to reinsurers to mitigate risks primarily associated with hurricanes and other catastrophic events. Our principal expenses are claims from policyholders, policy acquisition costs, and other underwriting expenses. As of September 30, 2010, we had total assets of $156.7 million and stockholders equity of $47.0 million. Our net income was approximately $3.6 million for the nine months ended September 30, 2010. Our book value per share increased to $7.74 as of September 30, 2010 compared to $7.03 as of December 31, 2009.On October 12, 2010, we entered into a purchase agreement with an unrelated third party to acquire approximately 1.5 million shares of common stock of United Insurance Holdings Corp. (United), a Florida-based property and casualty insurance company. This purchase represents approximately 14.6% of Uniteds outstanding common stock as reported by United in its Form 10-Q filed August 9, 2010. The total purchase price for the shares to be acquired is $4.6 million, or approximately $2.95 per share, which represents a 28.3% premium to the closing market price of Uniteds common stock on October 12, 2010. In addition, the purchase agreement provides for the transfer to the Company of a warrant for a purchase price of $100. The warrant, if exercised prior to the October 4, 2011 expiration date, will allow us to purchase 220,047 additional shares of United common stock at a price of $6.00 per share. We entered into the agreement, the closing of which is subject to regulatory approval, for investment purposes and as an indication of our serious interest in exploring with United the possibility of combining companies.
Our results of operations for the three months ended September 30, 2010 reflect net income of $1.7 million, or $0.25 earnings per diluted share, compared to net income of $0.8 million, or $0.11 earnings per diluted share, for the three months ended September 30, 2009.
Net Premiums Earned for the three months ended September 30, 2010 and 2009 were $15.1 million and $12.0 million, respectively, and reflect the gross premiums earned less the appropriate reinsurance costs as described above. Net premiums earned increased by $3.1 million in 2010 as compared to 2009 as a result of the $4.2 million increase in gross earned premiums offset by the $1.1 million increase in our reinsurance premiums.
Our results of operations for the nine months ended September 30, 2010 reflect net income of $3.6 million, or $0.54 earnings per diluted share, compared to net income of $10.1 million, or $1.40 earnings per diluted share, for the nine months ended September 30, 2009.
our Reserves is based on our best estimate of the ultimate cost of each claim for those known cases and the IBNR loss reserves are estimated based primarily on our historical experience. Our Reserves increased from $19.2 million at December 31, 2009 to $22.7 million at September 30, 2010. The $3.5 million increase in our Reserves during 2010 is comprised of a $13.1 million increase specific to the 2010 accident year offset by a reduction of $9 million and $0.6 million in our Reserves for 2009 and 2008 accident years, respectively. The $13.1 million in Reserves established for 2010 claims is due to the reported claims and policy exposure resulting from the December 2009 assumption. The decrease of $9.6 million specific to our 2009 and 2008 accident-year reserves is due to favorable development arising from lower than expected loss development during 2010 relative to expectations used to establish our Reserve estimates at the end of 2009. Factors that are attributable to this favorable development may include a lower severity of claims than the severity of claims considered in establishing our Reserves and actual case development may be more favorable than originally anticipated.
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