Heritage Insurance Holdings Inc (HRTG) Q3 2024 Earnings Call Highlights: Strong Revenue Growth …

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Heritage Insurance Holdings Inc (HRTG, Financial) reported a net income of $8.2 million or $0.27 per share, a significant improvement from a net loss of $7.4 million or a $0.28 loss per share in the same quarter last year.
• The company achieved a 13.7% increase in total revenues, reaching $211.9 million, driven by higher net earned premiums and investment income.
• Heritage Insurance Holdings Inc (HRTG) has maintained a stable indemnity-based reinsurance program, ensuring robust coverage through year-end 2024.
• The company has strategically reduced policy count by 14.2% while increasing premium in force by $80.6 million or 6%, focusing on profitable geographies and products.
• The Commercial Residential business segment saw a 23.6% increase in premium in force, contributing to a diversified and balanced portfolio.

Negative Points

• Heritage Insurance Holdings Inc (HRTG) faced $48 million in hurricane losses from Hurricanes Debbie and Helen during the quarter.
• The net loss ratio for the quarter, although improved, was still at 65.4%, indicating ongoing challenges in managing losses.
• The company experienced net unfavorable loss development of $6.3 million during the third quarter of 2024.
• Despite improvements, the net combined ratio for the quarter was 100.6%, indicating that expenses and losses still matched revenues.
• The Board of Directors decided to continue the suspension of the quarterly dividend, reflecting ongoing caution in capital management.

Q & A Highlights

Q: The loss ratio, excluding weather and catastrophe events, was notably low. Is this sustainable, or was it just a good quarter?
A: (Kirk Lusk, CFO) It’s a bit of both. The third quarter is typically strong, but we’re seeing favorable trends due to underwriting and rating actions, as well as legislative reforms. We believe this is closer to a new norm for profitability.

Q: How much more rate momentum is expected to flow through the P&L?
A: (Ernie Garateix, CEO) There’s significant rate still to earn through in 2025. We continuously assess rate adequacy across geographies and products to ensure profitability.

Q: What are the more attractive geographies for growth?
A: (Ernie Garateix, CEO) Florida is attractive due to legislative changes and rate adequacy. The Northeast is also appealing as rates in New York and New Jersey are nearing adequacy. We aim for a diversified portfolio.

Q: Can you provide more details on reserve development, particularly regarding Hurricane Irma?
A: (Kirk Lusk, CFO) The reserve development is primarily due to Hurricane Irma. We have a few hundred claims left, and the legal environment adds volatility, but it’s the main driver of reserve changes.

Q: Are there any concerns about reinstatement premiums related to hurricanes?
A: (Kirk Lusk, CFO) We’ve already included reinstatement premiums in our latest estimates, so there are no additional concerns.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.