CLEARWATER, Fla., Aug. 3, 2016 /PRNewswire/ -- Heritage
Insurance Holdings, Inc. (NYSE: HRTG) ("Heritage" or the
"Company"), a property and casualty insurance holding company,
today reported its financial results for the fiscal quarter ended
June 30, 2016.
Second Quarter Highlights
- 31% increase year over year in gross premiums written for 2Q16
as compared to 2Q15
- 29% increase in gross premiums earned for 2Q16 as compared to
2Q15
- 49% increase in policy count in 2Q16 as compared to 2Q15
- Net income of $18.4 million for
2Q16
- Gross combined ratio declined to 85.7% in 2Q16 from 95.5% in
1Q16
- Return on average equity of 20.2% for 2Q16
- Repurchased 527,989 shares for a total of $6.9 million in 2Q16; $53.4 million remains in repurchase
authorization
- Continued traction in North
Carolina with more than 2,300 policies-in-force at the end
of 2Q16
Bruce Lucas, the Company's
Chairman and CEO, said, "I am pleased to report a significant
increase in profitability and return on equity in the second
quarter. As compared to the first quarter, we had substantial
growth across the business including gross premiums written and
earned, net income and return on average equity. We are continuing
to exceed our internal expectations in North Carolina and Hawaii, we recently launched operations in
South Carolina, and we are now
writing roughly half of our new policies outside of Florida. Looking ahead, we are extremely
excited about our business prospects as we continue our strategic
diversification. We are focused on delivering the highest returns
to stockholders through continued organic growth, strategic M&A
and capital return."
Announces Quarterly Dividend
The Company announced that its Board of Directors has declared a
quarterly cash dividend on the Company's common stock of
$0.06 per share. The third quarter
dividend of $0.06 per share is
payable on October 3, 2016 to
stockholders of record as of September 15,
2016. The declaration and payment of any future dividends
will be subject to the discretion of the Board of Directors and
will depend on a variety of factors including the Company's
financial condition and results of operations.
Results of Operations
The following table summarizes our results of operations for the
three and six months ended June 30,
2016 and 2015 (in thousands, except percentages and per
share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums
written
|
|
$
|
177,295
|
|
|
$
|
135,597
|
|
|
|
31
|
%
|
|
|
$
|
324,561
|
|
|
$
|
269,565
|
|
|
|
20
|
%
|
|
Gross premiums
earned
|
|
$
|
163,637
|
|
|
$
|
127,101
|
|
|
|
29
|
%
|
|
|
$
|
315,580
|
|
|
$
|
253,102
|
|
|
|
25
|
%
|
|
Ceded
premiums
|
|
$
|
(54,719)
|
|
|
$
|
(32,255)
|
|
|
|
70
|
%
|
|
|
$
|
(100,320)
|
|
|
$
|
(56,767)
|
|
|
|
77
|
%
|
|
Net premiums
earned
|
|
$
|
108,918
|
|
|
$
|
94,846
|
|
|
|
15
|
%
|
|
|
$
|
215,260
|
|
|
$
|
196,335
|
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
revenue
|
|
$
|
85,524
|
|
|
$
|
58,098
|
|
|
|
47
|
%
|
|
|
$
|
185,049
|
|
|
$
|
114,934
|
|
|
|
61
|
%
|
|
Income before
taxes
|
|
$
|
29,757
|
|
|
$
|
40,990
|
|
|
|
(27%)
|
|
|
|
$
|
41,797
|
|
|
$
|
89,282
|
|
|
|
(53%)
|
|
|
Net income
|
|
$
|
18,368
|
|
|
$
|
25,400
|
|
|
|
(28%)
|
|
|
|
$
|
25,791
|
|
|
$
|
55,456
|
|
|
|
(53%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per
share
|
|
$
|
12.71
|
|
|
$
|
10.40
|
|
|
|
22
|
%
|
|
|
$
|
12.71
|
|
|
$
|
10.40
|
|
|
|
22
|
%
|
|
Earnings per diluted
share
|
|
$
|
0.62
|
|
|
$
|
0.84
|
|
|
|
(26%)
|
|
|
|
$
|
0.86
|
|
|
$
|
1.84
|
|
|
|
(53%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
equity
|
|
|
20.2
|
%
|
|
|
33.9
|
%
|
|
|
(13.7)
|
|
|
pts
|
|
14.2
|
%
|
|
|
39.1
|
%
|
|
|
(24.9)
|
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Gross
Premiums Earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceded premium
ratio
|
|
|
33.5
|
%
|
|
|
25.4
|
%
|
|
|
8.1
|
|
|
pts
|
|
31.8
|
%
|
|
|
22.4
|
%
|
|
|
9.4
|
|
pts
|
Loss ratio
|
|
|
29.8
|
%
|
|
|
26.7
|
%
|
|
|
3.1
|
|
|
pts
|
|
36.7
|
%
|
|
|
26.3
|
%
|
|
|
10.4
|
|
pts
|
Expense
ratio
|
|
|
22.4
|
%
|
|
|
19.0
|
%
|
|
|
3.4
|
|
|
pts
|
|
22.0
|
%
|
|
|
19.2
|
%
|
|
|
2.8
|
|
pts
|
Combined
ratio
|
|
|
85.7
|
%
|
|
|
71.1
|
%
|
|
|
14.6
|
|
|
pts
|
|
90.5
|
%
|
|
|
67.9
|
%
|
|
|
22.6
|
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Net
Premiums Earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
44.8
|
%
|
|
|
35.8
|
%
|
|
|
9.0
|
|
|
pts
|
|
53.8
|
%
|
|
|
33.8
|
%
|
|
|
20.0
|
|
pts
|
Expense
ratio
|
|
|
33.7
|
%
|
|
|
25.5
|
%
|
|
|
8.2
|
|
|
pts
|
|
32.2
|
%
|
|
|
24.7
|
%
|
|
|
7.5
|
|
pts
|
Combined
ratio
|
|
|
78.5
|
%
|
|
|
61.3
|
%
|
|
|
17.2
|
|
|
pts
|
|
86.0
|
%
|
|
|
58.5
|
%
|
|
|
27.5
|
|
pts
|
Quarterly Financial Results
Net income for the second quarter of 2016 was $18.4 million compared to $25.4 million for the second quarter of
2015. In the second quarter of 2015, the ceded premium and
expense ratios were lower benefitting from larger Citizen
assumptions in the fourth quarter of 2014 and first quarter of 2015
when compared to the assumptions in the fourth quarter of 2015 and
first quarter of 2016. And despite the improvement from the first
quarter of 2016, the loss ratio negatively impacted the second
quarter compared to the previous year. Zephyr contributed
$3.2 million to net income for the
second quarter of 2016.
Gross premiums written were $177.3
million for the second quarter of 2016 compared to
$135.6 million for the second quarter
of 2015. Part of the growth resulted from Zephyr's gross premiums
written of $14.8 million and our
expansion into North Carolina,
which produced $2.4 million of gross
premiums written.
Gross premiums earned were $163.6
million for the second quarter of 2016 compared to
$127.1 million for the second quarter
of 2015. Our consolidated premiums in force as of June 30, 2016 and 2015 were approximately
$659.6 million and $510.2 million, respectively.
Ceded premiums as a percentage of gross premiums earned were
33.5% for the second quarter of 2016 compared to 25.4% for the
second quarter of 2015. Ceded premiums in the second quarter of
2016 included one month's cost of our catastrophe reinsurance
program that renewed on June 1, 2016
and two months of the 2015-2016 program. The cost of the 2016-2017
reinsurance program was approximately $240
million and provides coverage we believe is suited to our
changing mix of business including more wind-only policies and
commercial residential policies. Our 2016-2017 reinsurance program
provides first event coverage up to $1.9
billion in Florida, first
event coverage up to $1.1 billion in
Hawaii, and multiple event
coverage up to $3.0 billion. As
previously disclosed when we announced our new reinsurance program,
our expectations for the ceded premium ratio were in the 37% range.
The ceded premium ratio could increase slightly by 1 to 2
percentage points depending on the level of Citizens policies
assumed over this timeframe.
The loss ratio on a gross basis increased to 29.8% for the
second quarter of 2016 from 26.7% for the second quarter of 2015,
primarily due to the continued heightened level of water claims we
have experienced this year related to the assignment of benefits
trend we have seen in the Florida
marketplace and attorney involvement in the process.
The Company's expense ratio on a gross basis was 22.4% for the
second quarter of 2016 compared to 19.0% for the second quarter of
2015. The second quarter of 2015 expense ratio benefited from the
larger Citizens assumption activity.
Overall, Heritage's combined ratio on a gross basis was 85.7%
for the second quarter of 2016 compared to 71.1% for the second
quarter of 2015. The combined ratio for the second quarter of 2016
saw a sequential improvement as compared to 95.5% reported in the
first quarter, which was impacted by adverse weather and adverse
loss development.
Book Value Analysis
Book value per share increased by 9% from $11.71 at December 31,
2015 to $12.71 at June 30, 2016. The Company repurchased 527,989
shares of common stock in the second quarter pursuant to the
Company's repurchase program.
|
As
Of
|
Book Value Per
Share
|
June 30,
2016
|
|
December 31,
2015
|
|
June 30,
2015
|
Numerator:
|
|
|
|
|
|
Common stockholders'
equity
|
$
372,367
|
|
$
356,553
|
|
$
312,100
|
Denominator:
|
|
|
|
|
|
Total Shares
Outstanding
|
29,301,121
|
|
30,441,410
|
|
29,995,560
|
Book Value Per Common
Share
|
$
12.71
|
|
$
11.71
|
|
$
10.40
|
Conference Call Details:
Thursday, August 4, 2016 –
8:30 a.m. EDT
Participant Dial-in Numbers Toll
Free: 1-888-346-3095
Participant International Dial In: 1-412-902-4258
Canada Toll Free: 1-855-669-9657
Webcast:
To listen to the live webcast, please go to
http://investors.heritagepci.com/. This webcast will be archived
and accessible on the Company's website.
HERITAGE INSURANCE
HOLDINGS, INC.
Consolidated
Balance Sheets
(Amounts in
thousands, except share amounts)
|
|
|
|
June 30,
2016
|
|
|
December 31, 2015
|
|
ASSETS
|
|
(unaudited)
|
|
|
|
|
|
Fixed maturity
securities, available for sale, at fair value (amortized
cost of $507,091 and $370,967 in 2016 and
2015, respectively)
|
|
$
|
518,211
|
|
|
$
|
371,783
|
|
Equity securities,
available for sale, at fair value (cost of $33,998 and $32,439 in
2016 and 2015, respectively)
|
|
|
31,856
|
|
|
|
28,313
|
|
Total
investments
|
|
|
550,067
|
|
|
|
400,096
|
|
Cash and cash
equivalents
|
|
|
142,952
|
|
|
|
236,277
|
|
Restricted
cash
|
|
|
18,644
|
|
|
|
13,085
|
|
Accrued investment
income
|
|
|
4,329
|
|
|
|
3,409
|
|
Premiums receivable,
net
|
|
|
34,856
|
|
|
|
30,565
|
|
Prepaid reinsurance
premiums
|
|
|
226,627
|
|
|
|
78,517
|
|
Income taxes
receivable
|
|
|
2,969
|
|
|
|
—
|
|
Deferred income
taxes
|
|
|
—
|
|
|
|
7,964
|
|
Deferred policy
acquisition costs, net
|
|
|
42,568
|
|
|
|
34,800
|
|
Property and
equipment, net
|
|
|
17,873
|
|
|
|
17,111
|
|
Intangibles,
net
|
|
|
28,467
|
|
|
|
2,120
|
|
Goodwill
|
|
|
48,845
|
|
|
|
8,028
|
|
Other
assets
|
|
|
4,768
|
|
|
|
5,426
|
|
Total
Assets
|
|
$
|
1,122,965
|
|
|
$
|
837,398
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Unpaid losses and loss
adjustment expenses
|
|
$
|
117,485
|
|
|
$
|
83,722
|
|
Unearned
premiums
|
|
|
340,818
|
|
|
|
302,493
|
|
Reinsurance
payable
|
|
|
237,020
|
|
|
|
60,210
|
|
Deferred income
taxes
|
|
|
7,616
|
|
|
|
—
|
|
Income tax
payable
|
|
|
—
|
|
|
|
2,092
|
|
Advance
premiums
|
|
|
23,827
|
|
|
|
12,138
|
|
Accrued
compensation
|
|
|
6,238
|
|
|
|
2,305
|
|
Other
liabilities
|
|
|
17,594
|
|
|
|
17,885
|
|
Total
Liabilities
|
|
|
750,598
|
|
|
|
480,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
|
Common stock, $0.0001
par value, 50,000,000 shares authorized, 30,426,121 shares issued
and 29,301,121 outstanding at June 30, 2016 and 30,441,410
outstanding at December 31, 2015
|
|
|
3
|
|
|
|
3
|
|
Additional paid-in
capital
|
|
|
205,036
|
|
|
|
202,628
|
|
Accumulated other
comprehensive income (loss)
|
|
|
5,563
|
|
|
|
(2,033)
|
|
Treasury stock, at
cost, 1,140,289 shares at June 30, 2016
|
|
|
(16,562)
|
|
|
|
—
|
|
Retained
earnings
|
|
|
178,327
|
|
|
|
155,955
|
|
Total
Stockholders' Equity
|
|
|
372,367
|
|
|
|
356,553
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
1,122,965
|
|
|
$
|
837,398
|
|
HERITAGE INSURANCE
HOLDINGS, INC.
Consolidated
Statements of Income and Other Comprehensive Income
(Amounts in
thousands, except per share and share amounts)
Unaudited
|
|
|
|
Three Months
Ended June 30,
|
|
|
Six Months
Ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums
written
|
|
$
|
177,295
|
|
|
$
|
135,597
|
|
|
$
|
324,561
|
|
|
$
|
269,565
|
|
Change in gross
unearned premiums
|
|
|
(13,658)
|
|
|
|
(8,496)
|
|
|
|
(8,981)
|
|
|
|
(16,463)
|
|
Gross premiums
earned
|
|
|
163,637
|
|
|
|
127,101
|
|
|
|
315,580
|
|
|
|
253,102
|
|
Ceded
premiums
|
|
|
(54,719)
|
|
|
|
(32,255)
|
|
|
|
(100,320)
|
|
|
|
(56,767)
|
|
Net premiums
earned
|
|
|
108,918
|
|
|
|
94,846
|
|
|
|
215,260
|
|
|
|
196,335
|
|
Net investment
income
|
|
|
2,223
|
|
|
|
2,090
|
|
|
|
4,260
|
|
|
|
3,723
|
|
Net realized gains
(losses)
|
|
|
263
|
|
|
|
(116)
|
|
|
|
644
|
|
|
|
(119)
|
|
Other
revenue
|
|
|
3,877
|
|
|
|
2,268
|
|
|
|
6,682
|
|
|
|
4,277
|
|
Total
revenue
|
|
|
115,281
|
|
|
|
99,088
|
|
|
|
226,846
|
|
|
|
204,216
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss
adjustment expenses
|
|
|
48,794
|
|
|
|
33,909
|
|
|
|
115,757
|
|
|
|
66,448
|
|
Policy acquisition
costs
|
|
|
20,753
|
|
|
|
12,253
|
|
|
|
38,881
|
|
|
|
25,346
|
|
General and
administrative expenses
|
|
|
15,977
|
|
|
|
11,936
|
|
|
|
30,411
|
|
|
|
23,140
|
|
Total
expenses
|
|
|
85,524
|
|
|
|
58,098
|
|
|
|
185,049
|
|
|
|
114,934
|
|
Income before income
taxes
|
|
|
29,757
|
|
|
|
40,990
|
|
|
|
41,797
|
|
|
|
89,282
|
|
Provision for income
taxes
|
|
|
11,389
|
|
|
|
15,590
|
|
|
|
16,006
|
|
|
|
33,826
|
|
Net
income
|
|
$
|
18,368
|
|
|
$
|
25,400
|
|
|
$
|
25,791
|
|
|
$
|
55,456
|
|
OTHER
COMPREHENSIVE INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in net
unrealized gains (losses) on investments
|
|
|
8,928
|
|
|
|
(2,663)
|
|
|
|
13,010
|
|
|
|
(5,470)
|
|
Reclassification
adjustment for net realized investment (gains) losses
|
|
|
(263)
|
|
|
|
116
|
|
|
|
(644)
|
|
|
|
119
|
|
Income tax (expense)
benefit related to items of other comprehensive income
(loss)
|
|
|
(3,348)
|
|
|
|
983
|
|
|
|
(4,770)
|
|
|
|
2,064
|
|
Total
comprehensive income
|
|
$
|
23,685
|
|
|
$
|
23,836
|
|
|
$
|
33,387
|
|
|
$
|
52,169
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
29,653,668
|
|
|
|
29,877,636
|
|
|
|
30,010,776
|
|
|
|
29,838,322
|
|
Diluted
|
|
|
29,653,668
|
|
|
|
30,268,496
|
|
|
|
30,072,624
|
|
|
|
30,192,216
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.62
|
|
|
$
|
0.85
|
|
|
$
|
0.86
|
|
|
$
|
1.86
|
|
Diluted
|
|
$
|
0.62
|
|
|
$
|
0.84
|
|
|
$
|
0.86
|
|
|
$
|
1.84
|
|
About Heritage
Heritage Insurance Holdings, Inc. is a property and casualty
insurance holding company headquartered in Clearwater, Florida. Its subsidiaries,
Heritage Property & Casualty Insurance Company and Zephyr
Insurance Company, write approximately $600
million and $60 million,
respectively, of personal and commercial residential premium
through a large network of experienced agents. The Company is
currently writing property and casualty insurance policies in
Florida, Hawaii, North
Carolina and South
Carolina. Heritage Insurance Holdings, Inc. is led by a
seasoned senior management team with an average of 30 years of
insurance industry experience.
Forward-Looking Statements
Statements in this press release that are not historical facts
are forward-looking statements that are subject to certain risks
and uncertainties that could cause actual events and results to
differ materially from those discussed herein. Without limiting the
generality of the foregoing, words such as "may," "will," "expect,"
"believe," "anticipate," "intend," "could," "would," "estimate,"
"or "continue" or the other negative variations thereof or
comparable terminology are intended to identify forward-looking
statements. The risks and uncertainties that could cause our actual
results to differ from those expressed or implied herein include,
without limitation: the success of the Company's marketing
initiatives; inflation and other changes in economic conditions
(including changes in interest rates and financial markets); the
impact of new federal and state regulations that affect the
property and casualty insurance market; the costs of reinsurance
and the collectability of reinsurance; assessments charged by
various governmental agencies; pricing competition and other
initiatives by competitors; our ability to obtain regulatory
approval for requested rate changes, and the timing thereof;
legislative and regulatory developments; the outcome of litigation
pending against us, including the terms of any settlements; risks
related to the nature of our business; dependence on investment
income and the composition of our investment portfolio; the
adequacy of our reserves for losses and loss adjustment expense;
our ability to build and maintain relationships with insurance
agents; claims experience; ratings by industry services;
catastrophe losses; reliance on key personnel; weather conditions
(including the severity and frequency of storms, hurricanes,
tornadoes and hail); changes in loss trends; acts of war and
terrorist activities; court decisions and trends in litigation; and
other matters described from time to time by us in our filings with
the Securities and Exchange Commission, including, but not limited
to, the Company's Annual Report on Form 10-K for the year ended
December 31, 2015 filed with the
Securities and Exchange Commission on March
8, 2016. 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.
Heritage Insurance Holdings Inc.
Investor Contact:
Steve
Martindale, CFO
727-362-7203
smartindale@heritagepci.com
or
Melanie Skijus, Investor Relations
Director
727-362-7262
mskijus@heritagepci.com
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To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/heritage-insurance-holdings-inc-reports-financial-results-for-second-quarter-of-2016-300308725.html
SOURCE Heritage Insurance Holdings, Inc.