HCI Group, Inc. Income Taxes Disclosure
Note 16 -- Income Taxes
The Company is subject to U.S. federal, various states, and foreign income tax jurisdictions. State income taxes are primarily related to the State of Florida while foreign income taxes are related to the Company's subsidiary in India. Additionally, CORE and Tailrow are each subject to their own U.S. federal and state income tax jurisdictions.
Significant components of income tax expense for the periods presented were as follows:
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
88,410 |
|
|
$ |
34,507 |
|
|
$ |
23,997 |
|
State |
|
|
22,234 |
|
|
|
8,849 |
|
|
|
5,431 |
|
Foreign |
|
|
209 |
|
|
|
84 |
|
|
|
67 |
|
Current income tax expense |
|
|
110,853 |
|
|
|
43,440 |
|
|
|
29,495 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
(1,512 |
) |
|
|
1,915 |
|
|
|
(738 |
) |
State |
|
|
(416 |
) |
|
|
494 |
|
|
|
(365 |
) |
Foreign |
|
|
10 |
|
|
|
(3 |
) |
|
|
1 |
|
Deferred income tax (benefit) expense |
|
|
(1,918 |
) |
|
|
2,406 |
|
|
|
(1,102 |
) |
Income tax expense |
|
$ |
108,935 |
|
|
$ |
45,846 |
|
|
$ |
28,393 |
|
Significant components of income taxes paid, net of refunds, for the periods presented were as follows:
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Federal |
|
$ |
83,954 |
|
|
$ |
34,344 |
|
|
$ |
16,092 |
|
State |
|
|
20,237 |
|
|
|
11,681 |
|
|
|
2,750 |
|
Foreign |
|
|
198 |
|
|
|
129 |
|
|
|
145 |
|
Income taxes paid, net of refunds |
|
$ |
104,389 |
|
|
$ |
46,154 |
|
|
$ |
18,987 |
|
The reconciliation between the income tax expense and the amount computed at the statutory U.S. federal income tax rate for the periods presented was as follows:
|
|
Years Ended December 31, |
|
|||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||||||||||||||
|
|
Amount |
|
|
% |
|
|
Amount |
|
|
% |
|
|
Amount |
|
|
% |
|
||||||
Income taxes at statutory rate |
|
$ |
90,160 |
|
|
|
21.0 |
|
|
$ |
36,420 |
|
|
|
21.0 |
|
|
$ |
24,706 |
|
|
|
21.0 |
|
Increase in income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
State income taxes, net of federal |
|
|
17,600 |
|
|
|
4.1 |
|
|
|
7,387 |
|
|
|
4.3 |
|
|
|
4,951 |
|
|
|
4.2 |
|
Foreign tax effect |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
India - statutory tax rate |
|
|
195 |
|
|
|
— |
|
|
|
35 |
|
|
|
— |
|
|
|
62 |
|
|
|
— |
|
Effect of tax rate changes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(155 |
) |
|
|
(0.1 |
) |
Change in valuation allowances |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,549 |
) |
|
|
(2.2 |
) |
Nontaxable or nondeductible items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-deductible executive |
|
|
2,688 |
|
|
|
0.7 |
|
|
|
2,336 |
|
|
|
1.3 |
|
|
|
1,035 |
|
|
|
0.9 |
|
Stock-based compensation |
|
|
(1,860 |
) |
|
|
(0.4 |
) |
|
|
(506 |
) |
|
|
(0.3 |
) |
|
|
(49 |
) |
|
|
0.0 |
|
Other |
|
|
152 |
|
|
|
— |
|
|
|
174 |
|
|
|
0.1 |
|
|
|
392 |
|
|
|
0.3 |
|
Income tax expense |
|
$ |
108,935 |
|
|
|
25.4 |
|
|
$ |
45,846 |
|
|
|
26.4 |
|
|
$ |
28,393 |
|
|
|
24.1 |
|
Significant components of the Company’s net deferred income tax liabilities were as follows:
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred income tax assets: |
|
|
|
|
|
|
||
Unearned premiums |
|
$ |
23,580 |
|
|
$ |
21,310 |
|
Losses and loss adjustment expenses |
|
|
3,981 |
|
|
|
3,896 |
|
Stock-based compensation |
|
|
1,633 |
|
|
|
1,593 |
|
Unearned revenue |
|
|
3,104 |
|
|
|
209 |
|
Intercompany deferred loss |
|
|
1,208 |
|
|
|
544 |
|
Other |
|
|
899 |
|
|
|
1,194 |
|
Total deferred income tax assets |
|
|
34,405 |
|
|
|
28,746 |
|
Valuation allowance |
|
|
(1,208 |
) |
|
|
(544 |
) |
Deferred income tax assets, net of valuation allowance |
|
|
33,197 |
|
|
|
28,202 |
|
Deferred income tax liabilities: |
|
|
|
|
|
|
||
Gain on involuntary conversion |
|
|
(3,975 |
) |
|
|
(11,753 |
) |
Deferred policy acquisition costs |
|
|
(15,574 |
) |
|
|
(15,285 |
) |
Property and equipment |
|
|
(10,700 |
) |
|
|
— |
|
Other |
|
|
(4,525 |
) |
|
|
(3,817 |
) |
Total deferred income tax liabilities |
|
|
(34,774 |
) |
|
|
(30,855 |
) |
Net deferred income tax liabilities |
|
$ |
(1,577 |
) |
|
$ |
(2,653 |
) |
The reconciliation of net deferred income tax liabilities shown in the preceding table to the amounts reported within the consolidated balance sheets for the periods presented was as follows:
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred income tax assets, net |
|
$ |
2,237 |
|
|
$ |
72 |
|
Deferred income tax liabilities, net |
|
|
(3,814 |
) |
|
|
(2,830 |
) |
Net deferred income tax liabilities |
|
$ |
(1,577 |
) |
|
$ |
(2,758 |
) |
As of December 31, 2025, it is more likely than not that the Company's deferred income tax assets will be realized, other than the deferred income tax asset related to the intercompany deferred loss that was recognized as a result of the sale of TTIC from Exzeo to HCI during 2024. As of December 31, 2025 and 2024, the intercompany deferred loss was $1,208 and $544, respectively, and had a full valuation allowance associated with it.
There were no federal or state net operating loss carryforwards as of December 31, 2025 and 2024.
There were no unrecognized tax benefits and the amount of any interest and penalties included in income tax expense was not material for the periods presented.
The Company's income tax filings are subject to audit by the relevant taxing authorities. These audits may culminate in proposed assessments which may ultimately result in a change to the estimated income taxes. The following is a summary of open tax years by jurisdiction:
Jurisdiction |
|
Years Open to Audit |
Federal |
|
2022 - 2024 |
State |
|
2022 - 2024 |
India |
|
2022 - 2024 |
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA resulted in additional tax depreciation for 2025, resulting in a tax benefit of approximately $1,853 and additional deductible research and development costs for 2025, resulting in a tax benefit of approximately $386.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 10, 2022 | |
| 2020 | Mar 12, 2021 | |
| 2019 | Mar 6, 2020 | |
| 2018 | Mar 8, 2019 | |
| 2017 | Mar 7, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Mar 4, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.