Heritage Insurance Holdings, Inc. (HRTG), a property and casualty insurance holding company, has released its financial results for the fourth quarter of 2024. The company’s earnings were impacted by Hurricane Milton.
Financial Performance
Net income for the quarter was reported at $20.3 million, or $0.66 per diluted share. This reflects a decrease compared to the $30.9 million, or $1.15 per diluted share, recorded in the same quarter of the prior year. The impact of Hurricane Milton resulted in a $57.0 million pre-tax effect on the company’s results.
Gross premiums earned increased to $360.4 million, up 6.1% from $339.6 million in the prior year. Net premiums earned also saw a rise, increasing by 12.1% to $199.3 million from $177.7 million. However, the net loss ratio increased by 3.7 points to 54.7%, primarily due to catastrophic weather events. The net expense ratio also increased, by 1.1 points to 35.0%, which led to a net combined ratio of 89.7%, an increase of 4.8 points from the previous year.
Operational Highlights
Despite the challenges posed by Hurricane Milton, Heritage Insurance Holdings achieved significant growth. Premiums-in-force increased by 5.7%, reaching $1.43 billion by the end of the fourth quarter of 2024. Gross premiums written were $338.7 million, a 3.7% increase year-over-year. This growth was largely driven by the commercial residential and surplus lines businesses as well as appropriate actions on rates and the use of inflation guard to ensure property values were covered.
Strategic Initiatives and Developments
Over the past three years, Heritage Insurance Holdings has focused on three key strategic initiatives: generating underwriting profit through rate adequacy and selective underwriting, allocating capital effectively across products and geographies to maximize long-term returns, and maintaining a balanced and diversified portfolio.
Notable achievements include a 12-quarter streak of in-force premium growth, a 26.5% reduction in policies in force, and nearly a 100% increase in the in-force premium for the commercial portfolio.
Management Commentary
CEO Ernie Garateix expressed his appreciation for the organization’s employees and their dedication to customers who were impacted by the catastrophic events.
“Our teams are the backbone of our support and response to our policyholders,” Garateix noted. “We are focused on rate adequacy, managing exposure, and enhancing underwriting discipline.”
Garateix also highlighted the positive effects of legislative actions taken in Florida to curb claims practices and the stabilization of reinsurance pricing. These elements contribute to a positive outlook for achieving consistent, long-term profitability.
Future Outlook
Looking ahead, Heritage Insurance Holdings plans to strategically re-open territories for new personal lines business and allocate capital to profitable geographies and products. The company aims to continue its disciplined underwriting and exposure management to deliver profitable growth in 2025. The Board of Directors has decided to continue suspending the quarterly shareholder dividend to prioritize strategic growth and achieve a robust return on equity.
