Good afternoon. Welcome to HCI Group’s First 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 everyone that this conference call is being recorded and will be available for replay through June 3rd, starting later this evening. This call is also being broadcast live via webcast and available via webcast replay until June 3rd on the Investor Information section of the HCI Group website at www.hcigroup.com. I would now like to turn the call over to Kevin Mitchell, the Vice President of Investor Relations for HCI Group. Sir, please proceed.

Thank you, and good afternoon. Welcome to HCI Group’s first 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, Richard will review our financial performance for the first quarter of 2016, 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 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 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 now 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 is Homeowners Choice Property & Casualty Insurance Company, which provides homeowners and flood insurance in Florida. The newest addition to our Company, which we introduced during our last call is TypTap Insurance Company. TypTap, spelled TypTap, focuses on flood insurance to Florida homeowners. We expect to add other lines of business in the future. We encourage our listeners to visit TypTap website at tpytap.com to experience our new platform. It provide a code in seconds and a policy in minutes. Buying insurance has never been easier. We believe this is a way all insurance is processed in the future. Additionally, we have a Bermuda-based reinsurance subsidiary called Claddaugh Casualty Insurance Company, which participates in our reinsurance programs. We also have an information technology operation called Exzeo, which develops innovative products and services for our insurance subsidiaries including the underlying technology pattern typtap.com. We expect to close the leverage of Exzeo technologies in the future. Finally, we have Greenleaf Capital, which owns and manages a diverse and growing portfolio of real estate investments. And as we’ve done throughout the Company’s history, we continue to invest in strategic opportunities to further enhance and diversify our operations. Turning to the quarterly results. As Richard will expand on shortly, we reported profitable results, despite a challenging environment during the first quarter. This marked our 34th consecutive quarter of profit ability. Here, are a few important highlights from the quarter. One, our principal operating subsidiary Homeowners Choice Property & Casualty Insurance Company with approval from the Florida insurance regulators, paid a dividend to the parent in the amount of million 98 million. [Ph] This second such dividend demonstrates our insurance subsidiary continues to be self-sufficient and profitable, it does not require additional cash investment; in fact it generates cash. Secondly, we paid $0.30 per share dividend, marking our 22nd consecutive quarter of paying a dividend. Our cumulative dividends paid since inception now total $5.25 per common share. In addition to the dividend, we repurchased a total of 186,858 shares of common stock at an average price of $32.11 for a total cost of $6 million. This leads a further $14 million remaining on the $20 million repurchase plan, we announced at the end of last year. Thirdly, we repurchased $13 million in principal of our 3.875% convertible senior notes at a significant discount. This resulted in a small gain. Finally, we initiated a soft launch of typtap.com and we are very pleased with the results to-date. With that I’ll turn the call over to Richard. Richard?

Thank you, Paresh, and good afternoon, everyone. For the first quarter of 2016, income available to common stockholders totaled $6.1 million or $0.60 diluted earnings per share, this compares to the same quarter of 2015 of $25.4 or $2.21 diluted earnings per share. Gross premiums earned were $98.8 million for the current quarter, a decrease from $109.6 million for the prior year quarter. This decrease is attributable to normal policy attrition and a slight impact of the 5% rate reduction effective on new and renewal policies beginning January 1, 2016. Ceded premiums earned were $40.4 million in the first quarter of 2016, which increased from $27.8 million in the first quarter of 2015. For the first quarter of 2016, reinsurance costs were 40.9% of gross premiums earned as compared to 25.4% in the same quarter a year ago. This increase is primarily the result of the increased reinsurance cost for the treaty year effective June 1 2015. Through March 31 of 2016 and for reinsurance treaty years beginning June of 2013 and ‘14 with our placement of the multi-year reinsurance treaties, as discussed in prior earnings call, benefits of $4.7 million and approximately $40.4 million were recognized respectively. Net premiums earned for the first quarter of 2016 were $58.4 million compared to $81.7 million in the first quarter of 2015. Loss and loss adjustment expenses increased by approximately $8 million in the quarter compared with the first quarter of 2015. Approximately $5 million of this increase was due to the adverse weather activity and $3 million is related to normal loss activity. Our loss ratio applicable to first quarter of 2016, which we define as losses and also adjustment expense related to gross premiums earned was 27.4% compared with 17.4% in the first quarter of 2015. This percentage increase is…

Thank you, Richard. In light of the adverse weather events, we’re very pleased with our profitable results for the first quarter of 2016. Clearly, it was a difficult quarter but adverse weather will not happen every quarter. Looking ahead, there are important positive developments. We had expected the soft market conditions will lead to a decrease in retention. We are currently not seeing that decrease. Retention levels have remained near 90%, similar to 2015. This could indicate a tightening in the homeowners insurance market. Two, we have not fully completed our insurance program for the 2016-2017 hurricane season, but we expect to be well-reinsured with the first level coverage of approximately $1 billion. We did get off to an early start on our placement this year and we have preliminary numbers, while not yet final that we to set to recognize a less than $120 million of reinsurance expense over the previous year. Finally, we’ve a strong balance sheet. Including a sizeable cash balance, we are prepared for the opportunities and challenges ahead. With that we’re ready to open the call for questions. Operator, please provide the appropriate instructions.

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Matt Carletti of JMP Securities. Matt, please proceeds with your question.

I just had a few questions. I guess Paresh, if I could start, you mentioned a little bit about TypTap, but I was hoping you could give us an update just on how it’s been received so far; what kind of traction you might be seeing. I know it’s early days but any updates since last quarter when you launched would be helpful?

Absolutely, Matt. It’s been incredible to watch it grow in blossoms. We are seeing people do coats in TypTap at a quite an astonishing rate. I think people are just trying it out, so to speak. But the activity that’s going on is quite fascinating to watch. And as the word’s getting out, we are seeing more and more activity. So, we’re very pleased with how TypTap is developing. Clearly we planned this to be a marathon and not a sprint. So, it’s not just about the last two months but the progress so far has been beyond our expectations.

And are you continuing to progress on the path forward getting our homeowners offerings under TypTap as well in addition to flood?

Yes, it’s interesting observation. Most of the people that have come onto the website and/or used iPhone to get a flood coat, about half the time we get -- the next question is actually, when we’re going to buy homeowners insurance the same way. This is so much better than the old way, tells us that we should move as quickly as possible towards that direction. Obviously, it’s a complicated road between regulatory approvals and everything else. But, clearly, we have something that everybody likes.

And then, maybe before I get a couple of number of question, keeping it at high level. Paresh, what do you make of the Florida rate environment today? I mean when you’re competing, Company’s just got a better rate approval, I think it was right hike approval today, I think it was yesterday, we’ve heard other companies talk about raising rates. Most recently, I think we’ve heard you guys cut rates a little. Just curious about your assessment of the landscape. And I noticed you mentioned in your opening comments about maybe there is a turn in the market that we’re seeing?

Yes, Matt. I think, generally speaking, there seems to be a turn. When we had got the rate cut late last year, the general prevailing environment was of softening rates. With the change of events as things have occurred over the last few months, everybody seems to be applying towards rate increases. Having said that what kind of rate increase you want or what kind of rate increases you can get really depends on where you, what position you started from and also how losses are developing in your portfolio. So, the homeowners is one of those same situation that the higher the rate increase you may be looking for, it may be more an indication of what the future looks like for you. From where sit currently, we are not actually planning any rate increases at the moment. We’re rather trying to manage our stable book of business in a manner that we can absorb the impacts of some of these things that are occurring, because we like our policyholders have been with us for a very long period of time and we don’t want just have the rate increase on, because we can or things of that nature.

And then I guess just couple of numbers questions, and I apologize if I missed them, but I don’t think I heard them. What were gross written and net written premiums for the quarter?

Gross written for the quarter was $75.5 million.

Okay.

Net written was $35.2 million.

Our next question comes from the line of Dan Farrell of Piper Jaffray. Please proceed with your question, Dan.

Thank you and good afternoon everyone. Just a question, I realized you haven’t actually finished the reinsurance play, but did I hear you correctly, you said that you expect the cost to be $120 million, is that correct?

That’s correct, yes. Just we expect it to be under that number. And then we are going to amortize as a group, just so I’m clear as to what we are talking about here.

And then, I’m wondering, if you can just -- the level that we’re seeing on the expenses, both sort of acquisition ratio and other expense ratio, just a trend that we should think about as we move forward? And things have stabilized little here, but I know as the reinsurance program is in place that can create some volatility. Is there anything that you can do to help us think about where those might trend?

Yes, Dan. You’re talking about policy acquisition and the other underwriting expenses….

Yes.

I think instead of thinking it as a percentage, because a part of it is more in terms strict dollar terms…

Okay.

It’s gone up a little bit year-over-year, primarily due to the fact that last year, we’d assume the large book of business hadn’t sort of renewed onto our paper. As it renews onto our paper, we get some increase in expenses, because of that direct written versus assumed, so to speak. So that’s what’s maybe go up a little bit plus you do get some normal expense increases, pay raises, those kinds of things. But I wouldn’t expect it to go much higher from here. I think it’s sort of starting to be baked in.

Okay.

And that’s on a dollar term basis.

And then I’m wondering probably thinking about, you talked about obviously dividend at the holding company. How are you thinking about your capital level, given your -- you’ve given cumulative growth outlook and growth trajectory you might be having; is there anything you can sort of help us think about that in terms of sort of your view of potential excess capital?

Yes. I think if you measure this over the course of time, over the course about few years, because it changes quarter-to-quarter, I know not much, but when you look year-over-year, it starts making -- you start seeing it. A few years ago, we used to be surplus -- gross premiums to surplus used to be close to 4 to 1. And now this year, it will be closer to 2 to 1.

Little over 2 to 1.

Little over 2 to 1 and that’s despite the dividend that was paid out. What we’ve done is as the book has matured and we have come off -- taken our foot off the gas in terms of growth. Our leverage has decreased significantly, but we still continue to have income and earnings and everything else. So, all of these things basically means that as a company, if you’re just talking about insurance subsidiary, which usually about the leverage of 4 to 1, it’s now in the leverage of 2 to 1 with the practice double the size or amount of premium is right, without actually needing anymore practical in that subsidiary, that’s what I meant by, not it does not need cash, it’s actually generating cash at this point.

Our next question comes from the line of Casey Alexander of Ladenburg Thalmann. Please proceed with your question.

A lot of my questions have already been answered. But, I’m curious in terms of the bonds repurchase. Why that the convert as opposed to the stock or I believe you have an available call feature on the straight unsecured bond that you have outstanding?

Sure, Casey. Look, basically, at any given point we look at it and we want to go buy something, we look at the bonds, the stock and the convert as independent items. The stock, we already had a buyback in place, so that was working as it was. So, let’s take that off the table for a second. So now, you have the decision between the baby bonds and the converts. The baby bonds are trading at par, the converts were trading at $0.87 from the dollar.

Right.

It seems like you can buy dollars worth of debt back grading for $0.87. So, it doesn’t really require a lot of science. That’s a good purchase. And as it was available that’s why we went and bought that back, because we’re -- we manage the balance sheet at all times and the converts are due in three years time I believe. So, are doing balance sheet management as we go long. The other thing that helped us move in that direction was if you get into the Q, you will see that we refinanced our corporate head quarters and borrowed $9.2 million early in January. So, we’re shifting the debt from being in the convert and at the holding company down to Greenleaf and being backed by the assets of the real estate, which up to now have no date on it, and of course at the same time, you’re borrowing this money on a longer time basis, like 15 years as opposed to three years. So, it’s all part of optimizing the balance sheet.

Secondly, as it relates to the policy attrition and the strategy to sort of offset the policy attrition, how many quarters do you think it will be, before the growth of TypTap starts to balance out the policy attrition?

My expectation is probably before the end of the year.

Our next question comes from the line of Arash Soleimani of KBW. Please proceed with our question.

Can you say what was prior period development in the quarter, and which accident years that it’s come from?

I think we had a little of development and will go back over ‘13, ‘14 and ‘15 but that’s normal this time year, 2016 will be normal because as you close out the year, you get a little bit of that bleed over into the first year. Some of this is going on because as you know the ongoing AOB items. So, we had a loss the other day from a claim that was aid in 2011, has been closed for four years. AOB is creating a cottage industry as you’ve said many times before.

It definitely seems like a very real issue. What’s the development you said, was there a number or could you quantify it?

It will be identified in the Q, which is filed tomorrow.

Okay. And did you…

Arash, as much as you look at it up in the Q, because it then lays out across all the years as opposed to reading from -- kind of read over the phone.

Did you in your remarks already mention the weighted average diluted shares outstanding.

I’ve got it right here for you; I knew you were going to ask. Weighted average shares, it went into the earnings per share count or 9.641 million [ph].

I had a question on the reinsurance renewal. I think you probably talked about this a bit, but is my understanding correct that some of the more expensive reinsurance you purchased in the past will be rolling off -- or you are going to have the reinsurance pricing benefit that’s greater than, I guess pricing trends, if that makes sense? Prices are that down 5% this year for reinsurance renewals, could you get a bigger price decrease in that since you are rolling off some of the more expensive coverage from three years ago?

Arash, I think, our year-over-year reinsurance rate has a lot of things, moving parts that make it difficult to sort of say just to do with one thing or the other; some of it is, yes, there is slight softening of the reinsurance market but also as we’ve -- one of our multi-year contractors you’re talking about which would have raised prices [ph] from 2014 bakes into them, you get a much bigger delta as you move over to 2016, so you get some of that. You also get some benefits as we’ve re-optimized our insurance tower to fully integrate in the wind only policy from a couple of years ago. So you get all of those things that are benefiting us. Against that, I would tell you that we have in certain areas, especially in replacement of the cat fund actually paid a premium to the cat fund, because we wanted better coverage going forward. Slightly more expensive but it’s a better coverage, so that’s what we did.

And I apologize if you’ve already mentioned this. Could you break down what was the dollar amount this quarter related to weather loses? I think you said 5 million if I’m not mistaken, but can you just confirm the dollar amount for weather? And then how much of it was related to AOB? Because in the press release you mentioned that there was something related to AOB, so I just wanted to see what those two parts contributed?

We identified $5 million for the weather events and we had $3 million of reserve strengthening -- $4 million of reserve strengthening, and we didn’t really specify anything for the AOBs.

Okay. But it’s fair to think of the reserve strengthening as coming from AOB?

Just a general…

Arash, look, we tend not to think of it that way and break it out because at some point what that suddenly starts becoming, is that well if it wasn’t for this, if it wasn’t for that our losses would have been at certain other number. We had $27 million losses for the quarter and we generally sort of talk in terms of what the actual numbers were as opposed to, if only this hadn’t happened, the number would have been something different. So reality, that’s why we don’t break out the AOB to it, how much of it is AOB or how much of it’s just due to increased claim severity or mixture of claims being different or any of those kinds of things.

Okay. So, I guess just maybe if I ask something a little differently. So, in the press release, there was a line in there that said our 2016 losses were impacted by -- I guess that was a reserve. I just wanted to clarify if that line in there that said, really events occurring in the quarter and reserve strengthening due to another trends evolving, I may. That’s fine. Last question, I think you mentioned the claim and litigation that got settled, are you seeing an increased the number of things that are going into litigation, AOB or non-AOB just in general? And you guys reserve differently for claims like one for litigation versus other claims?

Well, let’s go through that in a quite a different fashion. We reserve the way we reserve, and we reserve the claims to what think the value of the claim is. Obviously when you get litigation, you have to change reserves just for the layers fees involved. So that in itself causes some changes. But generally speaking, what I’m talking about the past et cetera is that litigation usually starts in some cases quite a long time after the claim has been filed and/or the claim has been filed and closed. And so, consequently, you would not have reserve against that claim till the data lawsuit comes or the additional reserve against that claim because data lawsuit comes in. That’s what’s creating some of the adverse development I think for a number of carriers at the moment, us included.

But then just aside from the reserving piece, is the number going up in terms of litigation or are you just more litigation going up just as a general trend?

It’s in a slight upward trend. Now, actually, I’m going to diverse that question and talk about some of the things that we’re doing using our technology division. We’ve actually been mapping every claim that’s had a litigation attached to it. Every property has a litigation attached to it for the last 2.5 years. And as you look at those trends et cetera. we note that while we are seeing a slight upward trend for the homeowners choice book of business, our rate of increase is materially less than the rate of increase we’re seeing in a number of other carriers. And equally well, just to balance them right, there are a couple of carriers that we see who are not see any increase in litigation trend. So on a blended average basis, I think we’re seeing a slight increase, but we seem to be well below what seems to be the market average.

And I lied before, I have one more question actually. On TypTap, I think you’ve mentioned in response to Casey’s question that you expect TypTap to offset I guess premium declines and within homeowners. So, I just wanted to just double check on that point , because I guess that would imply TypTap should be going pretty quickly through the balance of this year. Is that the right way to think of it?

Yes. It’s the right way to think of it. One of the items, I would just clarify, Casey was asking about policy count stuff; you’re asking about premium. There is a slight difference in what the average premium off and the book. So, the two things don’t cross over the same time.

Okay. What’s the difference in those policies -- in the premiums per policy on average?

It’s too early to quantify yet, and just know that there will be a different, because different lines of business.

Okay. But is flood typically here; is that like just as a rule of thumb, is that a fair…

It’s difficult to answer Arash, because while there is an item of flood, there is also a question of the mixture of policies that are rolling off the books. So for example, our flood policy is considerably higher than a renters policy, but it may not be higher than wind those policy. But depending on what mixture of policies you’re looking at on the homeowners choice side, it could have a different impact.

[Operator Instructions] There are no further questions in audio portion of the conference. I would like to turn the conference back over Kevin Mitchell for the closing remarks.

On behalf of the entire management team, I would like to express our appreciation for the continued support we receive from our shareholders, employees, agents, and most importantly, our policyholders. We look forward to continued success.

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