Good afternoon. Welcome to HCI Group’s Third Quarter 2016 Earnings Call. My name is Tim and I will be your conference operator this afternoon. At this time, all participants will be in a listen-only mode. Before we begin today’s call, I would like to remind to everyone that this conference call is being recorded and will be available through replay on December 3rd starting later this evening. The call is also being broadcast live via webcast and available via webcast replay until December 3rd on the Investor Information section of the HCI Group website at www.hcigroup.com. Now, I would like to turn the call over to Mr. Kevin Mitchell, the Vice President of Investor Relations for HCI Group. Sir, please proceed.

Thank you, and good afternoon. Welcome to HCI Group’s third quarter 2016 earnings call. With me today are Paresh Patel, our Chairman and Chief Executive Officer; and Richard Allen, our Chief Financial Officer. Following Paresh’s opening remarks about the recent storm activity in Florida, Richard will review our financial performance for the quarter, and then turn the call back to Paresh for an operational update and business outlook. Finally, we will answer questions. To access today’s webcast, please visit the Investor Relations section of our corporate website at hcigroup.com. Before we begin, I would like to take an 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 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 events, these developments could have material adverse effects on the company’s business, financial conditions, and results of operations. HCI Group, Inc. disclaims all the obligations to update any forward-looking statements. With that said, I would like to turn the call over to Paresh Patel, our Chairman and CEO. Paresh?

Thank you, Kevin, and welcome everyone. As most of you know, HCI Group is a holding company with subsidiaries engaged in diverse yet complementary business activities. Our principal operating subsidiary Homeowners Choice Property & Casualty Insurance Company which provides Homeowners Insurance in Florida. The newest addition to our company which we introduced earlier this year is TypTap Insurance Company featuring typtap.com, an online platform for coding and binding policies. TypTap currently offers private flood insurance to Florida homeowners. We encourage our listeners to visit TypTap website at tpytap.com to experience the platform. It provides a code in seconds and a policy in minutes. Additionally, we have a Bermuda-based reinsurance subsidiary called Claddaugh Casualty Insurance Company, which participates in our Homeowners Choice reinsurance programs. We also have an information technology operation called Exzeo, which develops innovative products and services for insurance subsidiaries including technology powering typtap.com. We expect to find other means to leverage Exzeo technologies capabilities. And finally, we have Greenleaf Capital, which owns and manages our growing portfolio of real-estate investments. Okay, so the big thing everyone wants to talk about is hurricanes and I know you want to hear about it, so I’ll get right to it. First, as with any disaster, our thoughts are out with those who have been impacted. We are working diligently to keep our policyholders get their life back to normal as quickly as possible and they are in our thoughts and prayers. So getting to the specifics, most specifically Hurricane Hermine made landfall in Northwest Florida in early September, making it the first hurricane to hit Florida in 11 years. Thus far, we have received over 300 claims related to Hermine and currently expect losses totaling approximately $2.5 million. Hermine was not a material event for us. Hurricane Matthew a Category 4…

Thank you, Paresh and welcome everyone. For the quarter ended September 30, our net income was $11.3 million, or $1.10 diluted earnings per share compared to the same period of 2015 of $7.4 million or $0.71 diluted earnings per share. From an operational point of view, significant variances or commentary are; net premiums earned was relatively flat with an increase of $535,000, reflecting the reduction in reinsurance premiums quarter-over-quarter as previously discussed, and the impact of our reductions from January and normal policy attrition. Losses and loss adjustment expenses decreased slightly quarter-over-quarter. In the current quarter, we were impacted by Hurricane Hermine while on the same quarter of the prior year, we incurred losses of a significant rain event that centered on the Gulf Coast of Florida. All other expenses increased slightly primarily the result of increased staffing requirements. Other significant contributors for the quarter were; net investment income increased $3.3 million, reflecting gains on our limited partnerships and other investments. We recognized a gain on the Greenleaf purchase of a public anchored shopping center of $2 million, the result of favorable fair value as compared with the purchase price negotiated in the original development contract. Other than temporary impairment losses of $0.2 million we’re lower by $1.7 million as compared to the prior year at same quarter of $1.9 million. During the third quarter, we repurchased a total of 198,055 shares of common stock to an average price of $30.29 for a total cost of $6 million. With the repurchase made in the first six months of the year -- for the first nine months of the year, there remains $2 million as of September 30. As of November 1st, the repurchase plan has been completed. Net book value increased to $25.38 from $23.10 at December 31, 2015. Paresh?

Thank you, Richard. Even with impact of Hurricane Hermine, we are pleased with our results for the third quarter of 2016. Over the past few years, we have begun several strategic initiatives and diversify our business operations - we paid off in Q3. For example, we continue to optimize our book of business by ensuring the policy stood our stringent risk profile. As a consequence, top-line growth slowed. This slow down resulted in a decrease in our gross premiums earned but contributed to a reduced reinsurance spend compared with last year. I have often stated that we’re more interested in the bottom-line than the top-line. Despite the two recent hurricanes, we believe our insurance division is appropriately capitalized for any growth that we contemplate, it doesn’t need additional capital. Additionally this year, we launched our new insurance subsidiary TypTap which sells private flood insurance. Since March, we have seen strong interest from our Asian network and at current, we have over 1,500 TypTap policies enforced. The recent hurricanes had a minimal financial impact on TypTap. We believe the technology underlying TypTap coupled with the current state of a flood insurance market will afford us excellent growth opportunities in the future. We’re saying this considering that the National Flood Insurance Program, NFIP, experienced multiple flood events this year and is up for reauthorization in 2017. We plan to continue strategic investments in technology and real-estate and we’ll have more on that in the future. With that, we’re ready to open the call for questions. Operator, please provide the appropriate instructions.

Thank you, sir. At this time, we will be conducting a question-and-answer session. [Operator Instructions] The first question comes from Matt Carletti of JMP Securities. Please proceed with your question.

Hey thank you. Good afternoon.

Afternoon, Matt.

Paresh, couple of questions to start, first one your loss ratio improved a bit in the quarter at least sequentially even despite the small amount of hurricane losses. Can you comment on that a little bit? I assume it has something to do with may be where your provisions are versus AOB and what the actual are coming out I might be wrong in that. And if it’s not, can you give us an update on AOB and where things stand for HCI more broadly?

Okay, Matt, in terms of extra dollars obviously the loss and loss adjustment expenses went down slightly year-over-year. I think and we took some – pointed out, last year in Q3, we had those 21 days of rain on the West Coast which resulted in a lot of plains etcetera. So the numbers and obviously this year we have Hermine but I think what you’re sort of seeing is may be some of the losses from last year might be little bit small than Hermine was this year. In terms of AOB, I think if you’re doing that comparison of Q3 this year versus Q3 last year, I think it was comparable. So it didn’t improve but it didn’t get any worse. So by Q3 last year, we were already into the full brunt of AOB. So that’s why I think it’s comparable in a flat basis year-over-year.

Yeah. I was looking more on a ratio basis and the loss ratio is improved versus sequentially as we went through the year and I remember the first couple quarters this year at least one of them had some adverse development related to AOB. Was there a less of that or none of that in the quarter or was that similar this quarter?

Yeah, I think that in terms of adverse development, I think there was less thereof. I think we had got our reserve in fixed that point yeah?

Right, that’s what I was getting at, yeah. I think that’s the delta. Okay.

Yeah.

Great. And then second question would be you made an announcement may be just couple weeks ago now about first takeout announcement we’ve seen from you guys in a little while. Just wondering if you could comment on that, often when you guys do takeouts, there’s different flavor to the takeout or is it just as simple as you haven’t done a takeout in a while, Citizens change every day what comes in and out and there’s opportunity for senior business.

Okay, Matt, that’s going to be a slightly complicated answer, I’ll just say that because of what it is right? There are couple of background information items that become well within our decision; one is Citizens is in the process of changing how takeouts are done and there’ll be a new process though going effective of January 1. So we’re at the end of system that we had I’d say got a perfect it – a degree for the last decade, it’s going to come to an end at the end of this year, so this is our last round; that’s one.

Got you.

Secondly, because of the AOB stuff, year ago everybody was rushing to do takeout and obviously we stepped back. It’s amazing how much difference a year makes because at this point now very few people advocating takeout. We tend to have a same viewpoint regardless whether it’s popular or unpopular when we look at things. So all of these things were there. The other preventing item that causes the question to come up is gee Citizens – all the good policies are gone. Yes, if you talk in generalization but this is all about detail and where we got into details is the following set of things that make this thing happen. One is that we shrank all the years, so consequently we have extra capacity with which we’ve taken some more policies and we don’t necessarily increase our risk, we just replenish the risk compared to what we already shed it over the course of the year.

Okay.

But secondly, in the fact that everybody else steps back and we now have a clear shot at it, there is a underlying thing, there were lot of people who would tag for takeout by other carriers in previous years and they opted out. They didn’t want to lose Citizens, may be they didn’t want to leave Citizens because of the carried out they would end up with. So all of those people are still sitting in there, we’ve been keeping track of all this stuff. So given that the system is going to change in January, it was a clear opportunity to take one final shot at those people and giving them an alternative to come join the happy customer base of HCI and see if they want to leave Citizens for us as opposed to somebody else. So given all of those things, it was a wonderful clear opportunity to do this and obviously it’s because of what do they do to the planning and the organization of this company that we had plan for all of this back in the summer time and despite Matthew coming ashore on October 6 -- by October 20, we were sending out letters for this takeout etcetera. We’ve basically not made a big deal of it because I think it’s going to be 5,000 to 10,000 policies which is more of a replenishment than anything else and we didn’t want to send mixed messages over it.

Got you. Okay. That’s very helpful. And then just for Richard, a few numbers questions and I apologize if I miss them, but gross written and net written premiums and then just what you have for book value per share fully diluted at quarter end.

Gross written for the current quarter is $93,264,000.

Okay.

Prior quarter $105,371,000 that’s in thousands, you need the nine months?

No, just the quarter.

Okay. And then what was it, net written premiums?

Net written premiums, yeah.

Current quarter $64,022,000, prior quarter $64,294,000.

Great. And just quarter on book value?

Well the quarter on book value, we had spoken – you wanted the shares too? Share counts go into that…

Yeah.

The book value was 25.38

$25.38?

Yes.

All right. Great. Thank you very much.

Thank you.

[Operator Instructions]. Our next question comes from the line of Arash Soleimani of KBW. Please proceed with your question.

Hi, good afternoon.

Good afternoon.

Just had one follow up to Matt’s question, looking up the loss ratio, what was -- was there any development at all this quarter for 3Q16?

Repeat your question please.

I’m just trying to back into the accident year loss ratio, so I wanted to know what prior period development was for this quarter.

The actual dollar amount for the current quarter, I’m not sure of yet. We are still working on that for the statutory --

Okay. But it sounds like it’s fair to assume that that’s lower than last quarter or last year, you seem to –

I would say less than prior quarter.

Less than prior quarter? Okay. And the other question I had was can you give me the policy count if you have that handy?

Glad you asked, it’s about 146,000 and I’m keeping it near a thousand plus or minus couple of thousand just for the simple reason that I think this quarter should hopefully – to everybody, policy count isn’t how business is managed, it’s loss ratios and everything else that count. And it seemed like you asked the question and I know it’s been an ongoing item. This is an interesting question where we shrank the top-line to gross premium, we were even on the debt premium line and we were up on the pre-tax earnings despite there being a cap, sometimes makes you wonder about if growth is the only way of running a business doesn’t it?

I was just…

Arash I weren’t suggesting that you were suggesting that, I was mainly pointing out that has been a quarterly conversation that has been going on for several quarters and it might be a useful point to have that conversation in the reverse scenario at this point yeah?

Sure, no that makes sense. Thank you. And I guess sounded like you told Matt AOB is basically the same I guess in terms of its impact last year versus this year. Just from a litigation perspective, I know last quarter you provided some trends in your book. What are the litigation trends looking like this quarter compared to prior quarters?

Okay Arash I’ll give you more detail probably you’d care for but in terms of law suits and things, we actually had seen a slight – in the summer but for the last two or three months it’s come back to normal expectations and normal expectations is the same amount of law suits as we were getting last year which is about 100 a month. So we are back to that kind of number, so that’s why we can’t sit here and say AOB is getting worse, equally if you’re getting 100 law suits a month which is about the same as last year, they’re not getting any better either.

Right, right. And are you seeing any kind of heightened AOB activity from like Matthew or Hermine, were you seeing I guess public adjusters trying to take advantage of those situations or…

Great question but to be fair about Hermine and Matthew, those events are too fresh for some of that activity to start yet. I suspect while in those things it’s at a minimal level currently, it will escalate over the course of time, that’s just naturally how these things work out. It’s too early to tell yeah?

And I know you said the takeout that you had signed up for was I guess because you said it was the last opportunity that could be there for – so you haven’t actually – do you have any plans of actually doing a takeout or you just wanted to have that on the shelf?

No I think the takeout’s underway and just so that I clarify my statement as to last opportunity -- it’s the last opportunity under the current Citizens takeout process, not say it’s the last opportunity to ever do a takeout ever again. I’m just saying Citizens is going through a material change of process as of January and the current process we know very well and we’ve used for years. So one last time. The takeout is in process as we speak, yeah?

So what will the actual takeout date be?

I think we assume the policy as of November 22nd

Okay. And can you – I apologize if you’ve already mentioned this, just what the amount of policies for annualized premiums would be associated with that?

It’s not going to be a great deal. We think it’s going to be somewhere 5,000 to 10,000 policies and you can therefore extrapolate to 12 million to 24 million in premiums enforced.

So that’s on an annualized premium enforced okay.

Yeah.

And I assume this new process that you’re saying is coming, just seems like – is it more difficult or seems like is it worse in a certain way or…

No I wouldn’t have any such kind of a thing. Citizens has been working hard at this and has planned a major overhaul of the takeout process for a quite a while and it’s being implemented in January. In some ways, I think if you would ask Citizens, they’d probably tell you it’s an improvement and it’s more consumer friendly etcetera. So my point should not be taken as we saying anything bad about the new process, it’s just that it’s different and we are very familiar with the current process.

Sure, sure. And just another question on the loss ratio, is what we saw this quarter kind of a fair run rate?

Let me give you a very caveated answer, it may be a fair number assuming a few sets of things; one, the AOB litigation environment doesn’t change, it can get better, it can get worse; two, obviously the number that we’ve got for the quarter obviously has Hermine built into it, so you have to back that out; and three, it obviously- the number will move based on other what’s the phrase that we’ve been using kitty Cat event that may add to the underlying number. But all of those variations are part of doing the business, yeah?

Sure, sure. And I know you said this in the beginning, how many claims – you had 300 claims from Hermine, how many was it from Matthew?

I said more than 300 for Hermine and approximately 2,000 for Matthew thus far.

Okay. And then any updates on TypTap are you getting I guess more traction with that? Any changes in I guess appetite from policyholders?

Yes absolutely, TypTap keeps improving week after week. I think last week was a record week in terms of number of policies down etcetera. So every week life gets better and I think as I said in my prepared statements, we currently have 1,500 policies in force for TypTap and it continues to grow.

Can you remind, what was the average premium for policy in TypTap?

I don’t think I went into that but I think you’re looking at a couple of million dollars may be a little bit in premium.

Alright. That was all my questions. Thanks very much and congrats on the quarter.

Thank you.

Thank you.

There are no further questions at this time over the audio portion of the conference. I would now like to turn the conference back over to Kevin Mitchell who has a few closing remarks.

Thank you for joining us on today’s call. We look forward to updating you in the future.

Thank you for joining us for our presentation. This concludes today’s call. You may now disconnect.