Over the years, we have broadened and diversified our business portfolio through
acquisitions to include information technologies and investment real estate.
Based on our organizational structure, revenue sources, and evaluation of financial
and operating performances by management, we manage our operations under one
business segment, which includes the following operations:
Property and casualty insurance
Reinsurance
Real estate
Information technology
Our principal operating subsidiary, Homeowners Choice Property & Casualty
Insurance Company, Inc. (“HCPCI”), was incorporated and began operations
in 2007. Through HCPCI, we currently provide property and casualty insurance
to homeowners, condominium owners and tenants residing in Florida.
We face various challenges to implementing our operating and growth strategies.
Since we currently write policies that cover Florida homeowners, condominium
owners, and tenants, we cover losses that may arise from, among other things,
catastrophes, which could have a significant adverse effect on our business,
results of operations, and financial condition. To mitigate our risk of such
catastrophic losses, we cede a portion of our exposure to reinsurers under contracts
called catastrophe excess of loss reinsurance treaties and one quota share arrangement.
Even without catastrophic events, we may incur losses and loss adjustment expenses
that deviate substantially from our estimates and that may exceed our reserves,
in which case our net income and capital would decrease. Our operating and growth
strategies may also be impacted by regulation of our business by the State of
Florida, which must approve our policy forms and premium rates as well as monitor
HCPCI’s compliance with financial and regulatory requirements.
We have a Bermuda domiciled wholly owned reinsurance subsidiary, Claddaugh
Casualty Insurance Company Ltd. We selectively retain risk in Claddaugh, displacing
the need for HCPCI to pay premiums to third party reinsurers. Claddaugh fully
collateralizes its exposure to HCPCI by depositing funds into a trust account.
Claddaugh also mitigates a portion of its risk through one retrocession contract.
Our real estate operations consist of real properties we own, operations located
at those owned properties and investments in three commercial development projects,
two of which are at our own properties and managed through joint ventures.
Our information technology operations include a team of experienced software
developers with extensive knowledge in developing web-based products and applications
for mobile devices. The operations, which are in Noida, India and in Tampa,
Florida, are focused on developing cloud-based, innovative products or services
that can be marketed to the public in addition to providing affiliates with
back-office technology support services designed to facilitate and improve our
ongoing operations. Some of the technologies originally developed in-house for
our own insurance operations have been launched for use by third parties.
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