Heritage Insurance Q1 2023 Earnings Report
Key Takeaways
Heritage Insurance Holdings reported a net income of $14.0 million for Q1 2023, a significant improvement from the net loss of $30.8 million in Q1 2022. This turnaround was primarily driven by higher net earned premium and significantly lower weather losses. Premiums-in-force increased by 10.9% year-over-year, while the net combined ratio improved by 35.0 points.
Net income was $14.0 million, or $0.55 per diluted share, compared to a net loss of $30.8 million, or ($1.15) per diluted share, in the prior year quarter.
Premiums-in-force exceeded $1.3 billion, up 10.9% year-over-year, driven by rate increases, while policy count decreased by 9.0%.
Gross premiums written increased by 9.6% to $310.3 million, and gross premiums earned increased by 10.3% to $317.0 million.
The net combined ratio improved to 94.5%, a decrease of 35.0 points from 129.5% in the first quarter of 2022, driven by lower net loss and expense ratios.
Heritage Insurance
Heritage Insurance
Heritage Insurance Revenue by Geographic Location
Forward Guidance
Heritage anticipates that the impact of rate increases and underwriting changes made in 2022 and those made in 2023 will continue to have a favorable impact on its financial position throughout the year. The company remains committed to allocating capital toward products and geographies that maximize long-term returns and is focused on generating an underwriting profit through rate adequacy and more selective underwriting.
Positive Outlook
- Rate increases and underwriting changes are expected to positively impact financial results throughout the year.
- Capital will be allocated to products and geographies that maximize long-term returns.
- The company is focused on generating an underwriting profit through rate adequacy and more selective underwriting.
- Selective growth of the commercial residential business is expected to continue.
- The company is optimistic about achieving consistent long-term quarterly earnings and sustainable shareholder value through strategic profitability initiatives.
Challenges Ahead
- Higher reinsurance costs are being mitigated by making appropriate rate adjustments and managing exposure.
- Policy count for Florida personal lines business intentionally declined by 16.8% as compared to the prior year period.
- The Board of Directors has decided to continue its temporary suspension of the quarterly dividend to shareholders.
- The decrease from first quarter 2022 is attributable to underwriting losses during 2022, coupled with large unrealized losses on the Company’s fixed income securities portfolio, and a non-cash goodwill impairment charge of $90.8 million, net of taxes, made in the second quarter of 2022.
- The Company undertakes no obligations to update, change or revise any forward-looking statement, whether as a result of new information, additional or subsequent developments or otherwise.