Good afternoon. Welcome to HCI Group's fourth quarter 2022 earnings call. My name is John, and I will be your conference operator. At this time, all participants will be in a listen-only mode. Before we begin today's call, I would like to remind everyone that this conference call is being recorded and will be available for replay through April 8, 2023, starting later today. The call is also being broadcast live via webcast and available via webcast replay until February 8, 2024 on the investor information section of HCI Group's in website at www.hcigroup.com. I would now like to turn the call over to Matt Glover, Gateway Investor Relations. Matt, please proceed. Thank you, John, and good afternoon, everyone. Welcome to HCI Group's fourth quarter 2022 earnings call. On today's call is Karin Coleman, HCI's Chief Operating Officer; Mark Harmsworth, HCI's Chief Financial Officer; and Paresh Patel, HCI's Chairman and Chief Executive Officer. Following Karin's operational update, Mark will review our financial performance for the fourth quarter of 2022, and then Paresh will provide a strategic update. To access today's webcast, please visit the investor information section of our corporate website at www.hcigroup.com. Before we begin, I would like to take the opportunity to remind our listeners that today's presentation and responses to questions 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 results, these developments could have material adverse effects on the company's business, financial conditions and results of operations. HCI Group disclaims all obligations to update any forward-looking statements. Now, with that, I would like to turn the call over to Karin Coleman, Chief Operating Officer. Karin? Thank you, Matt. Welcome everyone. HCI Group reported net income of $2.6 million and diluted earnings per share of $0.18 for the fourth quarter, an improvement over last year and last quarter. Let me start with our insurance division. Results in our insurance subsidiaries benefited from three factors. First, prior rate actions. Second, a decline in our gross loss ratio to 39.4%. The 39.4% includes costs associated with Hurricane Nicole and Winter Storm Elliott. Third, investment income nearly tripled over Q4 last year as we put our balance sheet to work at yields over 4% while maintaining short duration and ample liquidity. As for Hurricane Ian, the claims received for Homeowners Choice and TypTap Insurance totaled just over 13,000. We continue to support policyholders impacted by Hurricane Ian, leveraging our technology and resources to expedite the claims handling process. Mark will provide more detail in his remarks. On the legislative front, in December, the Florida legislature passed Senate Bill 2-A, which squarely addresses the rising cost of litigation and social inflation in the Florida property insurance market. The provisions of this law build on Senate Bill 2-D, passed in May, and represent substantial changes to the laws governing the litigation of property insurance claims in Florida. Provisions in this landmark bill include three main items. It eliminates one-way attorney fee provisions related to property claims. It abolishes assignment of benefits, and it reduces the filing deadline to one year for policyholders reporting a claim. Mark will detail the favorable impacts we're seeing in our business. We have heard some industry experts projecting a reduction to loss expense on the order of 25%-40%. Obviously, the level of improvement will vary from company to company, but we expect to see a significant change in litigation costs when the changes take full effect. We commend Governor DeSantis and the Florida legislature for taking decisive action to stabilize the property insurance market in Florida. Now, moving to our real estate subsidiary, Greenleaf Capital, we will disclose in our 10-K that we are under contract to sell two of our retail shopping center investment properties for gross proceeds of more than $31 million. Similar to the sale of the Cypress property in 2020 and the Century Park right of way in 2022, these transactions highlight our ability to capitalize on the strength in the Florida real estate market. We plan to provide more detail on these transactions on our next call. Finally, a word on capital. In a difficult year for the industry, HCI continued to return capital to our shareholders through dividends and share repurchases. During the quarter, we repurchased nearly 3% of outstanding shares at an average cost of $37 per share and paid our 49th consecutive quarterly dividend to shareholders at $0.40 per share. These actions underscore the strength of our balance sheet and the commitment we have to our shareholders. Now I'll turn it over to Mark, who will provide more detail on our financial results. Thanks, Karin. As Karin mentioned, net income this quarter was $2.6 million or $0.18 per share. Net income includes a small revaluation gain of about $800,000 related to the UPC book, and loss expense includes $7.5 million for the combined cost of Hurricane Nicole and Winter Storm Elliott. Even with these storm losses included, the fourth quarter consolidated loss ratio was 39.4%, which is the lowest of the year and a point lower than the fourth quarter last year. There are a number of reasons, a number of things helping to lead to a lower loss ratio. First, claim frequency has been declining. In the second half of 2022, claim frequency was 12% less than the second half of 2021. Second, while the average premium per policy is going up, claim severity has started to level off. While severity climbed steadily from the first quarter of 2021 to the second quarter of 2022, it has not changed much since then. Third, litigation frequency has started to moderate. For the full year, litigation frequency was only down slightly, but in the fourth quarter of 2022, litigation frequency was 15% less than the fourth quarter of 2021. Looking ahead, we are confident that the downward trajectory of the consolidated loss ratio will continue. As Karin mentioned, the Florida Legislature has passed legislation that should further reduce loss expenses as follows. First, because 15%-20% of our total claims are AOB claims, we expect claims to drop by a similar percentage. Second, because the average severity of an AOB claim is higher than a non-AOB claim, we also expect claims severities to decline. Third, with the abolishment of the one-way legal fee statute and AOBs being unenforceable, we expect lawsuit frequency to drop by 30% or more. In terms of the overall impact on loss expense, we've seen models showing a 25%-40% decrease in loss expense, and while we are modeling at the lower end of that range, we expect this to have a material positive impact on loss expense. There are a couple of other trends in the business that I also wanted to point out. As you can see, investment income was about three times what it was in the fourth quarter last year. When interest rates were low, we kept most of our investable assets in cash. We could capitalize when interest rates increased, as they have. At the end of last year, we had $40 million in fixed income investments, and at the end of this year, we had over $480 million invested, which, combined with higher rates, is driving higher investment income. Another positive trend is in policy acquisition expenses. Gross premiums earned were up 17% from the fourth quarter last year to the fourth quarter this year, yet policy acquisition expenses are slightly lower because of the mix of renewals versus new business, lower commissions, and lower costs related to the UPC business. I wanted to move over to a couple of things in the balance sheet. As you know, Hurricane Ian landed in Florida right at the end of the third quarter. Since then, we've had time to evaluate the claim development, and we have adjusted the ultimate down by about 15%. This of course has no impact on the income statement, but it is important. We're getting more comfortable that the impact of this storm is significantly less than expected. In terms of non-cat claims, I mentioned that the loss ratio was down, but we didn't get there by decreasing reserves. In fact, we have been increasing them. During the year, the LE loss expense was about $40 million higher than losses paid. Reserves are 25% higher at the end of this year than they were at the start. This is significant because it means that loss ratios are going down even as we have increased loss reserves. Just a few other things, we're in a good surplus position with each of our underwriters, with RBC ratios over 330% for both. In terms of holding company liquidity, we have just under $150 million of cash and financial investments at the holding company levels, and our $50 million credit facility with Fifth Third. Karin mentioned it, we completed our share buyback program in the fourth quarter. The total dollar amount bought back under that program was $17 million for the year and when combined with the shares bought back as part of our convert offering, the total number of shares bought back in the year was over 1.4 million or about 14% of the shares outstanding at the start of the year. In summary, average premium per policy is going up, loss ratios are coming down, profitability is improving, legislative changes should lead to further improvement, and if you owned a share of HCI stock at the beginning of the year, you own 16% more of the company than you did a year ago. With that, I'll hand it over to Paresh. Thank you, Mark. I want to begin with a reflection on our history and then discuss the future. We have a track record of being good allocators of capital and doing what we thought was best for shareholders, even if it seemed counter to industry views. For example, we patiently maintained our large cash position when interest rates were at record lows for several years. We are seeing a significant increase in investment income. We've deployed the cash in short-term treasuries. The full impact of our decisions will flow through over time. Second, we are leveraging our investment in technology to change how underwriting is done. TypTap has now grown to have $320 million of enforced premium and is writing business in 13 states. This is up from just $100 million in premium and only operating in one state two short years ago. TypTap is just getting started. We will continue its geographic expansion. Last May, we saw an opening to raise capital at attractive terms and executed on that opportunity. Because of this, we have tremendous amount of liquidity at the holding company, and this gives us the flexibility to execute on any new opportunity that may arise. As Karin highlighted, Greenleaf is trading assets now, both buying and selling real estate and creating tremendous value for the parent company. Looking to the future, we want to build on that track record and deliver consistent profitability and strong returns for our shareholders. In 2023, there is an opportunity we think to do both. Let me provide some context and color. Florida is an overlooked opportunity. Putting it simply, look at where the industry is today versus where it was a year ago. In 2022, because of actual inflation as well as social inflation, the industry was playing catch up, raising rates in order to bring back sound operational margins. Those rate actions are now coming through because there's a lag on their implementation. The elimination of one-way attorneys fees and AOBs will lead to improved loss trends. As Mark highlighted, we're already seeing improvement in our gross loss ratios. A year ago, reinsurance costs were increasing, and there were some concerns about the availability of reinsurance. This year, for the upcoming June 1 renewal, we expect reinsurance costs to increase. It's normal given there was a loss. However, it appears to be just a cost issue, not an availability issue, which is fantastic. This is something that we can handle. A year ago, operational and G&A costs were increasing due to inflation in a very tight labor market. This year, those costs have stabilized. Given our disciplined approach to managing our investment portfolio, our investment income is increasing this year versus last year. When you combine all of these different inputs, for the first time in several years, there are more tailwinds than headwinds for the Florida insurance industry. The decisions that we made over the last several years have positioned us for this day. With the improving operating environment in Florida, the moment has arrived. With that, I will open up for questions. Operator, please provide instructions. Thank you, sir. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Mark Hughes with Truist. Mark, please proceed. Yeah, thanks. Good afternoon. Good afternoon, Mark. On the reinsurance outlook, you say it's not availability but cost. Any way to frame that up a bit? It seems like folks have talked about 30% to 50% increases. What do you think? Sure thing, Mark. Yeah, I think some of the rates could go up that much, but it's also a question of will you be paying that across every single dollar of reinsurance spend. To put this into perspective, for both companies, about 60% of the reinsurance limit is purchased from the Florida Hurricane Catastrophe Fund. While that is expected to go up a little bit, it's not gonna be 30%-50%. Secondly, both of our underwriters, both Homeowners Choice and TypTap, deferred the wrap layer from last year. Those layers will be now provided in 2023, and they come at $0 cost. That actually tends to drag down the cost of reinsurance for us. The private market reinsurance will go up and to some of the numbers you talked about. We also have Homeowners Choice, which has a large section at the bottom of its reinsurance program placed on a multi-year basis with fixed renewal terms. Given all of these things, yes, it will go up, but it won't be the headline 30%-50% that you're looking at, yeah? That you alluded to. How much of the program is exposed to more private market adjustments? Well, for Homeowners Choice, very little. I'd say, I'm ad-libbing here a little bit, maybe about $150 million of private market limit, out of a $900 million tower. TypTap, I think, is a similar number, but TypTap doesn't have the benefit of the one multi-year deal that Homeowners Choice does. Yeah? Yeah. Okay. Was there any reserve development in the quarter? Yeah, there's some. I mean, it's, you know, that's something that is, as you know, we've done, you know, consistently over the last, you know, couple years. It's pretty similar to what it was in the fourth quarter of last year. Pretty similar year. If you look at the full year, it's pretty similar to what it was for the full year. No, no real significant changes there. What was it in the fourth quarter of last year? I think it was about 12.5%, something like that, 10%, 12%. Similar this year. I think it's included in the 39.5. Yeah. Of course. Yeah. It's all included in there. Yep. Okay. Yep. You mentioned the $800,000 gain. That's separate from the, there's a $3 million remeasurement item in the income statement. Are those separate? Could you explain both of them? It's. There was sort of two things that happened at the same time. We had to adjust the valuation on the UPC, how that was originally booked. What happened is there's two pieces to it. There was an asset that we set up, and that asset was reduced by a couple million dollars. That was an expense. We also reduced the contingent liability because we had a contingent liability for commissions that were owing over a certain size. The contingent liability comes down, and the asset also went down, and those two sort of offset one another. The net is about $800,000 or $900,000. They show up in two different lines. That's why you see that $3 million in the revenue line. Yeah. Okay. You mentioned the, you think a potential for losses to improve 25%-40% when fully implemented. When do you think that will be when, I think you said you're modeling kind of at the lower end of that improvement range, but when does that fully kick in, do you think? Well, I mean, it's a little hard to say because these things are gonna transition, right? You know, when we talk about the low end of that range, say 25%, you know, I think it's probably gonna take a couple of years. It could potentially take a couple of years to fully get to that as the, as some of the, you know, AOB, for example, transitions through. But you'll see significant improvement obviously in 2023. I think, I think that will... You know, we had talked before about the loss ratios, you know, coming down over time, and I think that that will continue through 2023 and 2024 as that sort of transitions through the book. Final question. Your growth, presumably you're modulating your growth depending on what you see here in the market. Looks like you're a little more restrained in the fourth quarter. Correct me if you see it differently. How do you see that stacking up in 2023, the your enthusiasm about growing the top line? Look, I think, Mark, it's similar to the question that we already what I said in my statement. We have a lot more tailwinds than headwinds, but the one headwind that is there is the cost of reinsurance. You know, and we do live in a cat-prone country at the moment. Given both of those things, you know, we are both energized about growing, but making sure we grow at the right time in the right way. You know, we've passed on deals to grow already in the last few months because it wasn't the right deal at the right time. It's opportunities as they arise and executing on them when they do, yeah. Hey, Mark, it's Mark. Just one thing I just wanted to add in there. I know embedded in your question there, I think you were probably referring to the gross written premium number in Q4, which is down. Yeah. Yep. Yeah. Yeah. Part of that is, there's a bit of an anomaly there, in the way that the UPC quota share agreements are accounted for. In the fourth quarter of last year, we signed the fourth UPC quota share agreement. And the way those are booked is when you set up the quota share, you book all of the unearned premium. It gets booked to written premium, and then the offset is in unearned premium. That was $35 million in the fourth quarter of last year. And then the written premium you see in the fourth quarter this year is just sort of as the book renews. You have to sort of, you know, factor that out. If you do that, gross written premium's up about 7% quarter-over-quarter. Premiums in force, which you could argue, you know, may be a better way to look at it, premiums in force have continued to grow throughout the year. That, that drop that you see in the fourth quarter is a little impacted by that, you know, just that UPC thing. Does that make sense? Sure does. Yep. Thank you very much. Mm-hmm. Once again, if you have a question or a comment, please indicate so by pressing star one on your touch tone phone. The next question is coming from Matthew Carletti with JMP. Please proceed. Hey, good afternoon. Good afternoon, Matt. If I try to put it all together, kind of a lot of what has been talked about in terms of the kind of Mark, you talked about the magnitude of the impact just from really some of the models on the reforms and the timing. We think about, you know, obviously reinsurance costing more, but you guys doing a good job of taking rate and, you know, inflation guard and things like that. When we get to kind of say that two years that Mark was talking about, what do you think combined ratios look like? Are we back in kind of the 85% and 90% world that I think of as kind of, you know, HCI putting up over the long run, or where do you think you can get to? Great question, Matt. Let me try to answer this question in a couple of items. By the way, one of the things that we've been very careful in doing, I'll speak a little bit on Mark's behalf here. When we do loss provisioning for a quarter, we do it in the quarter. We already have set money aside for losses with the data loss in Q1 2022, for example, even though the claim may come in. You know, this summer. We put those money up aside. What we're seeing already in Q1, et cetera, is that the claims now are dropping off. They're not coming in as fast. Why that becomes important, if the claim doesn't come in, then later on there can be a lawsuit that would come in. The claim frequency goes down, the lawsuit frequency goes down. Where this is ultimately going to lead to is the money we have to reserve for each quarter is going to improve as we go forward. It'll take a while for it to roll through, but some of that is also important to know that each quarter we sort of start from fresh to say, "What will it eventually cost?" To your bigger question, this is the importance of why you got to have a healthy Florida insurance industry, because we took, along with the rest of the industry, paid, you know, pick a number, between $20 billion and $30 billion in expenses in Ian, and that was all done through private insurance and reinsurance. We thank the legislature and the Governor for passing the reform, which is gonna give us a better outcome. Here's what the numbers now look like, right? If a year ago you took $1 of premium, you're probably looking at. I'm just approximating numbers here, so don't try to reconcile them, but it's pretty reasonably accurate. A year ago, you took $1 of premium, you spent about $0.36-$0.38 on reinsurance. You may have got $0.01 of investment income because interest rates were so low. You also had about $0.40 of attritional or non-cat losses. Then you had, you know, policy acquisition costs, corporate overhead, et cetera, around $0.23, all of which would basically leave you with a very, a 1% margin share, we say, yeah? What's happening as this thing bakes through. Because of the rate increases-- Actually let's go the other way around. Let's start from the bottom. The corporate overhead, which is about $0.23, is going to stay roughly about the same. For Mark's earlier comments, what we're seeing in attritional losses because of legislation passed, is probably likely to go from $0.40 to maybe around $0.30. Now, offsetting that, the reinsurance costs will go up. They'll go up from, like, $0.38 to, say, $0.45. They'll go up some pennies there. If you had your investment portfolio well positioned, instead of making $0.01, you're gonna make about $0.03. All of these pennies are now starting to add up. The biggest item that will also happen is because rates went up, you will make about $1.20 in premium. Take a while, but that's where you're gonna get to. Therefore, your margins will increase substantially, and that is what we needed to replenish surplus and create a healthy Florida industry. The steps that have been taken will eventually lead to that outcome. That is a very, very, very positive outcome, and that's what keeps us very excited in terms of if you add up those numbers as to what it does to margins, yeah? Yeah. Very helpful and very, very easy way to think about it, so thank you. One other, if I could, just a quick one. You mentioned, Greenleaf, selling or, you know, entering, an agreement to sell the two retail properties. I think I heard $31 million in gross proceeds. What are those carried at in terms of book value today? Any, any guidance you can give on when you think that transaction might close? Yeah. Hey, Matt, look, we wanted to make sure we mentioned it because it's in our 10-K and not everybody reads our 10-K in subsequent events and everything. The two properties are under contract. They haven't closed. you know, we tend not to add up the number, count the dollars till we actually have them in our hands. We only mentioned it because we want, you know, full transparent disclosure to everybody, yeah? that's why. we will, and as Karin alluded to, we will talk further about it at the next earnings call when we hope to report that we've actually sold two properties, yeah? Fair enough. Sounds great. Thank you for the color. Appreciate it. If there are any remaining questions, please indicate so by pressing star one on your touch tone phone. The next question comes from Casey Alexander with Compass Point. Please proceed. Yeah. Hi, good afternoon. A lot of my questions have been answered, but I do have one question. The expected 25% improvement in loss expenses would really only apply to those expenses that come from the State of Florida, if I understand it correctly. As you look forward and the expansion of the book, including TypTap outside the State of Florida, what percentage of your losses would you be expecting to come from the State of Florida as opposed to that percentage that you would expect to be coming from outside the State of Florida? It's Mark. You're right. The 25% or so that we talked about is on the Florida loss expense. Florida is about 80% of our book. That 25% drop is not gonna be on the non-Florida. There's other things going on that are already affecting the loss ratio as well. You know, rate, you know, drops in frequency that we are already starting to seeing even before the legislation. You know, when we talk about the consolidated loss ratio going, let's say, from 40 down to 30, you know, we're sort of looking at that 25% drop on the 80% of the book that's Florida. Also I, I think the loss ratio on Florida will drop more than that when you take into account some of those other things. That'll get us, I think, to 25% on the full, on the consolidated loss ratio, even though, to your point, 20% of the book is outside of Florida. Yeah. Okay. That's the only question I had left. Thank you. Yeah. Thank you. At this time, this concludes our question and answer session. I would now like to turn the call back over to Paresh Patel, who has a few closing remarks. On behalf of the entire management team, I would like to thank our shareholders, employees, agents, and most importantly, our policyholders for their continued support. As we end this call, I want to summarize my earlier comments. There is an increasing demand for our product and a realization of the importance of a healthy insurance market. We have all the pieces in place to benefit from a tremendous opportunity in front of us, we have the right management team to execute on this opportunity. We look forward to providing you with an update on our progress on our next earnings call. Thank you very much. At this time, this concludes our question and answer session.