/CORRECTION — Heritage Insurance Holdings, Inc./

/CORRECTION — Heritage Insurance Holdings, Inc./

In the news release, Heritage Reports Second Quarter 2022 Results issued 04 August 2022 by Heritage Insurance Holdings, Inc. via PR Newswire, in the table titled “Book value per common share,” the value of common stockholder’s equity for June 30, 2021 should read “424,873” and not “42,873” as incorrectly reported by PR Newswire. The full, corrected edition follows:

Heritage Reports Q2 2022 Results

TAMPA, FL, August 4, 2022 /PRNewswire/ — Heritage Insurance Holdings, Inc . (NYSE: HRTG) (“Heritage” or the “Company”), a super-regional property and casualty insurance holding company, today reported financial results for the second quarter of 2022.

Heritage Insurance (PRNewsFoto/Heritage Insurance Holdings, Inc) (PRNewsfoto/Heritage Insurance Holdings, In)

Heritage Insurance (PRNewsFoto/Heritage Insurance Holdings, Inc) (PRNewsfoto/Heritage Insurance Holdings, In)

Results for the second quarter of 2022

  • Net loss for the second quarter of $87.9 million or $3.32 per diluted share, down from a net loss of $4.0 million or $0.14 per share with reduced value in the quarter of the previous year, the reduction arising from net value $90.8 million or $3.48 per diluted share non-cash goodwill impairment charge.

  • A goodwill impairment charge caused by: (i) disruptions in equity markets, particularly for property and casualty insurance companies, largely due to recent catastrophic weather-related events; (ii) increased loss ratios for property insurers in our markets; and (iii) trading our shares below book value.

  • Adjusted net income for the second quarter1 on 2.9 million dollars or $0.11 per diluted share, up from adjusted net loss1 on $4.0 millionor $0.14 per diluted share in the year-ago quarter, led by an improvement in the net combined ratio of 5.8 points to 99.4%.

  • Net loss ratio of 64.1%, 4.7 points lower than the prior-year quarter of 68.8%, driven by higher net earned premium, which outpaced a 0.7% increase in losses.

  • Net weather losses for the current accident year $38.1 millionwhich is 7.3% more than $35.5 million in the quarter of the previous year. Time losses for the current accident include $32.1 million of net casualty losses for current casualty quarter, up from 24.5 million dollars during the quarter of the previous year and $6.0 million of other weather losses, down from $11.0 million in the quarter of the previous year.

  • Net expense ratio of 35.3%, down 1.1 points from the prior-year quarter of 36.4%.

  • Exposure Management Highlights:

  • Gross premiums earned from $296.2 millionby 3.7% more than $285.6 million quarter over the prior year, reflecting the higher gross premiums recorded over the past twelve months, driven by the higher average premium per policy.

  • Gross premiums written $365.3 millionby 8.2% more than $337.7 million over the prior-year quarter, driven by higher rates, with deliberate exposure management and reinsurance efforts driving a 4.6% increase in Florida driven by interest rate actions and growth of 12.1% in other regions.

  • The total capital returned to shareholders of 1.6 million dollarsreflects $0.06 per share from the regular quarterly dividend.

  • Continued execution of Heritage’s diversification strategy with 74.4% of TIV outside Floridaan increase of 69.8% to the second quarter of 2021.

“Our underwriting profit for the quarter and a nearly 6-point reduction in our combined ratio show that our focus on profitability, exposure management and rate adequacy are having the desired impact,” said Heritage’s CEO Ernie Garatix. “Our improved performance is significant compared to the prior-year quarter, and we expect these improvements to continue each quarter. I am also pleased with the outcome of our casualty reinsurance program which has commenced 1 JuneSt. Heritage provided adequate levels of reinsurance, we did not use Florida’s new reinsurance program to assist policyholders, and our program included the deployment of Citrus Re, which brings in additional collateralized reinsurance through the capital markets. We are cautiously optimistic that the actions taken by Florida legislature will have a positive impact on our bottom line and the challenging claims environment, but we also believe more legislative action needs to be taken to improve the health of Florida property insurance market.”

Capital management

Given that Heritage’s stock is trading below its tangible book value, Heritage’s Board of Directors has decided for this quarter to distribute $0.06 per share, is typically used to pay a quarterly dividend to shareholders to repurchase common stock, which will be accretive to shareholders. The board of directors will re-evaluate the dividend distribution on a quarterly basis and make a decision based in part on the current market price compared to book value.

Results of operations

The following table summarizes the results of operations for the three and six months ended June 30, 2022 and 2021 (amounts in thousands, excluding percentages and amounts per share):

Three months ending June 30

Six months ending June 30

2022

2021

change

2022

2021

change

income

$

163,770

$

150,197

9.0

%

$

322,378

$

297,441

8.4

%

Net loss

$

(87,866)

$

(3950)

NM

%

$

(118,625)

$

(9,097)

NM

%

Adjusted net income (loss) [1]

$

2,908

$

(3950)

(173.6)

%

$

(27,851)

$

(9,097)

206.2

%

Loss of stock

$

(3.32)

$

(0.14)

NM

%

$

(4.46)

$

(0.33)

NM

%

Adjusted net income (loss)[1]

$

0.11

$

(0.14)

(178.6)

%

$

(1.05)

$

(0.33)

218.2

%

Book value per share

$

6.80

$

15.20

(55.3)

%

$

6.80

$

15.20

(55.3)

%

Adjusted book value[1]

$

8.35

$

15.20

(45.1)

%

$

8.35

$

15.20

(45.1)

%

Return on capital*

(152.0)

%

(3,7)

%

(148.3)

points

(90.6)

%

(4.2)

%

(86.4)

points

Adjusted return on equity[1]*

5.0

%

(3,7)

%

8.7

points

(21.3)

%

(4.2)

%

(17.1)

points

Signing Summary

Gross premiums written

$

365,284

$

337,700

8.2

%

$

648,480

$

611,881

6.0

%

Gross premiums earned

$

296,211

$

285,646

3.7

%

$

583,579

$

556,057

4.9

%

Earned ceded premiums

$

(137,940)

$

(139,147)

(0.9)

%

$

(272,379)

$

(267,359)

1.9

%

Net premiums earned

$

158,271

$

146,499

8.0

%

$

311,200

$

288,698

7.8

%

Ceded premium ratio

46.6

%

48.7

%

(2.1)

points

46.7

%

48.1

%

(1.4)

points

Ratios to net premiums earned:

Loss ratio

64.1

%

68.8

%

(4,7)

points

77.6

%

68.8

%

8.8

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