Loading...
•
Sep 30, 2022
Heritage Insurance Q3 2022 Earnings Report
Reported a net loss due to current accident year weather losses, including Hurricane Ian, and a valuation allowance on deferred tax assets.
Key Takeaways
Heritage Insurance Holdings, Inc. reported a net loss of $48.2 million for the third quarter of 2022, driven by weather-related losses and a valuation allowance. Gross premiums written increased, but net earned premiums decreased. The company is focused on managing exposure and achieving rate adequacy.
Net loss of $48.2 million, or $1.83 per diluted share, compared to a net loss of $16.4 million, or $0.59 per diluted share, in the prior year quarter.
Gross premiums written increased by 11.1% year-over-year to $304.5 million.
Net earned premiums decreased by 1.7% year-over-year to $159.7 million.
Net current accident year weather losses increased by 24.2% year-over-year to $63.8 million, including $40 million from Hurricane Ian.
Heritage Insurance
Heritage Insurance
Heritage Insurance Revenue by Geographic Location
Revenue by Geographic Location
Florida Premiums-in-force Revenue
CapyFin.com Forward Guidance
Heritage Insurance Holdings is focused on strategic initiatives to achieve consistent long-term quarterly earnings and drive shareholder value. The company aims to generate underwriting profit through rate adequacy and selective underwriting, optimize capital allocation, and improve portfolio diversity.
Positive Outlook
- Premiums-in-force are up 5.8% from the prior year quarter, driven by higher rates.
- Average premium per policy throughout the book increased 13.6% over the prior year quarter.
- Continued offering of Florida commercial lines product with 18.2% growth in annual premium.
- Diversification efforts led to a premium in-force growth of 14.1% in other States.
- TIV in other states improved to 74.8%, compared to 71.3% as of the third quarter of 2021.
Challenges Ahead
- Reduction of policy count for Florida personal lines product is a key focus and will continue if meaningful legislation to reduce abusive claims practices does not occur.
- Policy count for Florida personal lines business intentionally declined by 18.8% as compared to the prior year period.
- Given that Heritage’s stock is trading below tangible book value and the loss in the quarter, Heritage’s Board of Directors has decided to temporarily suspend the quarterly dividend to shareholders.
- Net earned premiums are down 1.7% reflecting a 12.4% increase in contract year reinsurance cost with higher ceded premium outpacing the increase in gross earned premiums for the quarter.
- Book value per share decreased to $4.54 at September 30, 2022, down 64.6% from fourth quarter 2021.