HCI Group Inc. is evaluating a plan to spin off its insurance technology subsidiary, Exzeo, to shareholders as a tax-free distribution by the end of 2025, according to chairman and chief executive officer Paresh Patel.
Speaking during the company’s latest earnings call, Patel said the decision favors a spin-off over an initial public offering because the business does not require external capital. He noted that Exzeo is “ready to be a standalone company.”
According to a news release, Exzeo, formerly known as TypTap Insurance Group, was rebranded earlier this year as part of HCI’s strategic effort to divide its operations into two distinct units with dedicated leadership and objectives. The move reflects a broader plan to allow each arm to pursue its goals more effectively, the company said in March.
Patel described Exzeo as financially strong and noted its technology has demonstrated value in Florida and other states, particularly in the homeowners insurance segment. The platform has recently expanded into the commercial residential space, a development he said suggests “broad applicability across multiple geographies and lines of business.”
Exzeo has “proven its mettle,” Patel said, adding that a spin-off would “maximize the benefit to the existing shareholders.”
Exzeo president Kevin Mitchell emphasized the group’s opportunity in the US homeowners insurance market, which he described as exceeding $150 billion in size.
In its first-quarter earnings, HCI reported a rise in net income to $74.2 million, up from $57 million in the same quarter last year. Net premiums earned increased to $200.7 million from $188.5 million. Losses and loss adjustment expenses dropped to $59.3 million, compared to $79.9 million a year earlier. The company attributed the improvement to lower claims and reduced litigation frequency.
Following the announcement, HCI Group Inc. (NYSE: HCI) shares traded at $164.37 in the afternoon of May 9, marking a 6.13% increase from the previous close.
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