Heritage Insurance Reports Strong Q3 Earnings Growth

Heritage Insurance Holdings ((HRTG)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Heritage Insurance Holdings was marked by a largely positive sentiment, underscoring significant growth in net income, record in-force premiums, and substantial new business growth. Despite some challenges, such as a slight decline in net premiums earned and an increase in the ceded premium ratio, the overall tone was optimistic, buoyed by strategic progress and key metric improvements.

Significant Increase in Net Income

The company reported a remarkable increase in net income, reaching $50.4 million in the third quarter, a substantial rise from $8.2 million in the same period last year. For the first nine months, net income surged to $129 million, up from $41 million in 2024, showcasing the company’s robust financial performance.

Record In-Force Premiums

Heritage Insurance achieved an all-time record in-force premiums of $1.44 billion, up from approximately $1.1 billion four years ago. This growth reflects the success of the company’s strategic initiatives and its ability to capture market opportunities effectively.

New Business Growth

The company experienced significant new business growth, with new business premium written increasing by 166% to $36 million compared to $13.7 million in the third quarter of last year. This expansion was evident across multiple regions, including Florida, Virginia, Hawaii, and New York.

Improved Net Loss Ratio

A notable improvement was seen in the net loss ratio, which improved by 27.1 points to 38.3%, compared to 65.4% in the same quarter last year. This was primarily due to lower net loss and loss adjustment expenses, contributing to the company’s improved financial health.

Share Repurchase Program

Reflecting confidence in its valuation, Heritage Insurance restarted its share repurchase program, buying back 106,000 shares for $2.3 million. This move indicates the company’s commitment to enhancing shareholder value.

Increase in Book Value Per Share

The book value per share saw a significant increase, rising to $14.15, up 49% from the fourth quarter of 2024 and 56% from the third quarter of 2024, highlighting the company’s strengthened financial position.

Decline in Net Premiums Earned

Despite the positive developments, there was a slight decline in net premiums earned, which decreased by 1.9% from $198.8 million to $195.1 million. This was attributed to increased ceded premiums, a challenge the company is addressing strategically.

Ceded Premium Ratio Increase

The ceded premium ratio increased to 46.1% from 43.9% in the previous year, primarily due to a $4 million reinstatement premium for Hurricane Ian. This reflects the company’s proactive approach in managing risk and maintaining financial stability.

Forward-Looking Guidance

The company provided optimistic forward-looking guidance, driven by strategic initiatives and strong financial performance metrics. Heritage Insurance anticipates policy growth to resume in 2026, supported by a strong capital position and a planned expansion of their market presence, particularly in Florida and other regions. The reinstatement of their share repurchase program further underscores their confidence in future growth.

In summary, Heritage Insurance Holdings’ earnings call conveyed a positive outlook, with significant growth in net income and record in-force premiums. While challenges such as a decline in net premiums earned were noted, the company’s strategic initiatives and improved financial metrics paint an optimistic picture for future growth and market expansion.