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Mar 31, 2023
Heritage Insurance Q1 2023 Earnings Report
Reported a net income for the first quarter of 2023, reversing a net loss from the prior year quarter due to higher net earned premium and lower weather losses.
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
Revenue by Geographic Location
Florida Premiums-in-force Revenue
CapyFin.com 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.