On August 6, 2024, Heritage Insurance Holdings Inc (HRTG, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Heritage Insurance Holdings Inc is a regional property and casualty insurance company that offers a variety of personal and commercial insurance products. Through its subsidiaries, Heritage Property & Casualty Insurance, Narragansett Bay Insurance, and Zephyr Insurance, the company issues personal residential property insurance in various states in the United States. It also offers commercial residential insurance predominantly for its Florida properties. Heritage Insurance manages insurance underwriting, customer services, actuarial analysis, distribution, and claims processing internally.
Performance Overview
Heritage Insurance Holdings Inc (HRTG, Financial) reported a net income of $18.9 million or $0.61 per diluted share for Q2 2024, significantly surpassing the analyst estimate of $0.02 per share. This represents a substantial improvement from the net income of $7.8 million or $0.30 per diluted share in the prior year quarter. The company’s gross premiums earned increased by 6.1% to $350.1 million, while net premiums earned rose by 7.6% to $190.3 million.
Key Financial Achievements
The company’s net loss ratio improved to 55.7%, a 4.6-point decline from 60.3% in the same quarter last year. The net combined ratio also improved to 92.5%, down 2.6 points from 95.1% in the prior year quarter. These improvements are attributed to the company’s strategic initiatives, including rate adequacy and selective underwriting.
“Our strong results demonstrate the continued execution of our underwriting and rate adequacy initiatives over the last three years,” remarked Ernie Garateix, CEO at Heritage.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Total Revenues | $203.57 million | $185.31 million | 9.9% |
| Net Income | $18.87 million | $7.78 million | 142.6% |
| Earnings Per Share | $0.61 | $0.30 | 103.3% |
| Gross Premiums Earned | $350.07 million | $330.01 million | 6.1% |
| Net Premiums Earned | $190.32 million | $176.80 million | 7.6% |
Balance Sheet and Cash Flow
As of June 30, 2024, Heritage Insurance Holdings Inc reported total assets of $2.60 billion, up from $2.15 billion as of December 31, 2023. The company’s book value per share increased to $8.32, up 32.7% from $6.27 in the prior year quarter. The increase in book value is primarily attributable to net income and a reduction in unrealized losses on the company’s fixed income securities portfolio.
Strategic Initiatives and Future Outlook
Heritage Insurance Holdings Inc has been focusing on generating underwriting profit through rate adequacy and more selective underwriting. The company has also been allocating capital to products and geographies that maximize long-term returns. The commercial residential premium in force increased by 29.4% compared to the second quarter of 2023, while the total insured value only increased by 9.9%. This disciplined approach has resulted in a policy count reduction of just over 69,000 or 14.1% throughout its footprint from the second quarter of 2023, while premium in force increased by $81.2 million or 6.1%.
“Looking forward, we plan to pursue a strategy of controlled growth anchored by continued risk management and stringent underwriting,” added Garateix.
Heritage Insurance Holdings Inc continues to maintain a balanced and diversified portfolio, with no state representing over 27.3% of the company’s total insured value. The company’s Board of Directors has decided to continue its suspension of the quarterly shareholder dividend to prioritize financial stability and strategic growth.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Heritage Insurance Holdings Inc for further details.
