What HCI Group, Inc. told the SEC could break it.

HCI is a property & casualty insurer whose business and balance sheet are concentrated in a single, catastrophe-exposed state: substantially all of the Company's assets were located in Florida as of year-end 2025, and Florida is its primary homeowners-insurance market (with a smaller presence in the U.S. northeast and southeast). This concentrates its insured exposure in the country's peak hurricane/windstorm peril zone, so a single major Florida hurricane season can drive outsized losses, capital strain, and reinsurance cost spikes with no geographic diversification to offset. An extreme single-state catastrophe concentration — the defining risk for a Florida homeowners insurer.

“As of December 31, 2025 and 2024, substantially all of the Company's assets were located in Florida.”

HCI operates in a regulatory environment that requires state approval of rate increases and that can dictate underwriting practices. For a Florida-concentrated homeowners insurer facing rising hurricane losses and reinsurance costs, the risk is a mismatch between cost and price: if regulators deny, delay, or trim requested rate increases, HCI may be unable to achieve rate adequacy, compressing margins and capital. Changes in the level or interpretation of insurance regulation could further restrict its ability to operate, reduce profitability, and limit growth. A sector- and state-specific regulatory exposure tightly coupled to its catastrophe and reinsurance economics.

“A regulatory environment that requires approval of rate increases”

As a Florida catastrophe insurer, HCI's ability to write and retain hurricane exposure depends on access to affordable third-party reinsurance — its critical upstream 'supply' of risk capacity. It discloses that any variation in the cost of its reinsurance — from reinsurance rate changes, coverage-level changes, or changes in the total insured value of its policy base — flows directly into financial results beginning June 1 of each year (the catastrophe-program renewal aligned with hurricane season). A hard reinsurance market, capacity withdrawal, or a post-event rate spike would raise costs or reduce coverage, squeezing margins and limiting growth. This reinsurance-capacity dependence is the insurer's key supply-shock-relevant input.

“variation in the cost of our reinsurance, whether due to changes in reinsurance rates, coverage levels or changes in the total insured value of our policy base, will be reflected in our financial results beginning June 1 st of each year.”