HCI Group Takes Strategic Steps to Better Position Company for Future Opportunities

TAMPA, Fla., Jan. 22, 2024 (GLOBE NEWSWIRE) -- HCI Group, Inc. (NYSE: HCI), a holding company with operations in homeowners insurance, information technology services, real estate, and reinsurance, along with its majority owned subsidiary, TypTap Insurance Group, Inc., announced today the undertaking of several strategic steps designed to increase operational and capital flexibility and to better position the company for future growth opportunities. These steps include the modification of the company’s relationship with Centerbridge Partners L.P., including extending the warrant held by Centerbridge and redeeming all outstanding preferred shares of TypTap Insurance Group held by Centerbridge.

“We are taking steps to simplify our balance sheet and give us maximum flexibility to pursue attractive opportunities in the future,” said Paresh Patel, HCI’s chairman and chief executive officer. “We believe this modification could lead to an immediate benefit to HCI’s financial results by eliminating future dividends that would have otherwise accrued on the preferred shares, but more importantly, gives the company added autonomy and flexibility to pursue future growth opportunities that could unlock additional shareholder value in the future.”

As part of the transaction, Centerbridge and HCI have agreed to extend the expiration date of the warrant currently held by Centerbridge to purchase up to 750,000 shares of HCI common stock. The amended and restated warrant extends the expiration as to 450,000 underlying warrant shares in 150,000-share increments during the period December 31, 2026 through December 31, 2028, and the expiration of the remaining 300,000 underlying warrant shares will remain the same as the originally scheduled expiration date of February 26, 2025. HCI will recognize a one-time non-cash deemed dividend related to the warrant extension in the first quarter of 2024. HCI and Centerbridge also entered into a registration rights agreement to grant resale registration rights to Centerbridge with respect to Centerbridge’s warrant and the shares of HCI common stock issuable pursuant to the warrant.

TypTap has also redeemed all of the TypTap Series A Preferred Stock held by Centerbridge -- more than one year before Centerbridge’s optional February 26, 2025 redemption date. The redemption totaled approximately $100 million plus accrued and unpaid dividends of approximately $2.9 million. The redemption results in the elimination of any future dividends that would have otherwise accrued on the preferred shares, including dividends at the increased dividend rate of 9.5% that would have commenced in February 2024. The redemption is being funded with cash on hand, as well as approximately $50 million from HCI’s existing credit facility with Fifth Third Bank.