CLEARWATER, Fla., Nov. 8, 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
September 30, 2016.
Third Quarter Highlights
- 28% increase in gross premiums earned for 3Q16 as compared to
3Q15
- 36% increase in policy count at September 30, 2016 as compared to September 30, 2015
- Net income of $10.9 million for
3Q16 and $36.7 million YTD 2016
- Stockholders' equity of $377.2
million at September 30, 2016
increased 14% compared to September 30,
2015
- Return on average equity of 11.7% in 3Q16
- Repurchased 284,377 shares for a total of $4.0 million in 3Q16; $49
million remains in share repurchase authorization
- Continued growth in voluntary personal lines aided by expansion
in North Carolina with 4,899
policies-in-force at September 30,
2016
- Began writing policies in South
Carolina with production showing steady growth month over
month
Bruce Lucas, the Company's
Chairman and CEO, said, "Florida
experienced its first hurricane in over ten years during the third
quarter. Our vertically integrated claims department was
instrumental in our response to Hurricane Hermine and we were able
to respond efficiently to the needs of our policyholders. Our
ability to quickly service policyholders, many within hours of the
storm, demonstrates the benefits of our unique approach to managing
claims. Losses from the storm were contained, and our current
estimate for losses related to Hurricane Hermine is $4 million. Despite the hurricane, I am pleased
to report net income of $10.9 million
and return on average equity of 11.7 percent for the quarter."
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 fourth quarter
dividend of $0.06 per share is
payable on January 4, 2017 to
stockholders of record as of December 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 nine months ended September 30,
2016 and 2015 (in thousands, except percentages and per
share amounts):
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums
written
|
|
$
|
147,232
|
|
|
$
|
148,993
|
|
|
|
(1%)
|
|
|
$
|
471,793
|
|
|
$
|
418,558
|
|
|
|
13
|
%
|
|
Gross premiums
earned
|
|
$
|
164,696
|
|
|
$
|
128,234
|
|
|
|
28
|
%
|
|
$
|
480,276
|
|
|
$
|
381,336
|
|
|
|
26
|
%
|
|
Ceded
premiums
|
|
$
|
(63,141)
|
|
|
$
|
(45,873)
|
|
|
|
38
|
%
|
|
$
|
(163,461)
|
|
|
$
|
(102,640)
|
|
|
|
59
|
%
|
|
Net premiums
earned
|
|
$
|
101,555
|
|
|
$
|
82,361
|
|
|
|
23
|
%
|
|
$
|
316,815
|
|
|
$
|
278,696
|
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
revenue
|
|
$
|
109,306
|
|
|
$
|
89,244
|
|
|
|
22
|
%
|
|
$
|
336,151
|
|
|
$
|
293,460
|
|
|
|
15
|
%
|
|
Income before
taxes
|
|
$
|
18,612
|
|
|
$
|
27,715
|
|
|
|
(33%)
|
|
|
$
|
60,408
|
|
|
$
|
116,997
|
|
|
|
(48%)
|
|
|
Net income
|
|
$
|
10,930
|
|
|
$
|
16,813
|
|
|
|
(35%)
|
|
|
$
|
36,720
|
|
|
$
|
72,269
|
|
|
|
(49%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per
share
|
|
$
|
13.00
|
|
|
$
|
10.98
|
|
|
|
18
|
%
|
|
$
|
13.00
|
|
|
$
|
10.98
|
|
|
|
18
|
%
|
|
Earnings per diluted
share
|
|
$
|
0.37
|
|
|
$
|
0.55
|
|
|
|
(33%)
|
|
|
$
|
1.23
|
|
|
$
|
2.39
|
|
|
|
(49%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
equity
|
|
|
11.7
|
%
|
|
|
20.9
|
%
|
|
|
(9.2)
|
pts
|
|
|
20.0
|
%
|
|
|
32.8
|
%
|
|
|
(12.8)
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Gross
Premiums Earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceded premium
ratio
|
|
|
38.4
|
%
|
|
|
35.8
|
%
|
|
|
2.6
|
pts
|
|
|
34.0
|
%
|
|
|
26.9
|
%
|
|
|
7.1
|
pts
|
|
Loss ratio
|
|
|
32.7
|
%
|
|
|
27.9
|
%
|
|
|
4.8
|
pts
|
|
|
35.3
|
%
|
|
|
26.8
|
%
|
|
|
8.5
|
pts
|
|
Expense
ratio
|
|
|
22.3
|
%
|
|
|
20.1
|
%
|
|
|
2.2
|
pts
|
|
|
22.1
|
%
|
|
|
19.5
|
%
|
|
|
2.6
|
pts
|
|
Combined
ratio
|
|
|
93.4
|
%
|
|
|
83.8
|
%
|
|
|
9.6
|
pts
|
|
|
91.4
|
%
|
|
|
73.2
|
%
|
|
|
18.2
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Net
Premiums Earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
53.1
|
%
|
|
|
43.5
|
%
|
|
|
9.6
|
pts
|
|
|
53.6
|
%
|
|
|
36.7
|
%
|
|
|
16.9
|
pts
|
|
Expense
ratio
|
|
|
36.2
|
%
|
|
|
31.3
|
%
|
|
|
4.9
|
pts
|
|
|
33.4
|
%
|
|
|
26.6
|
%
|
|
|
6.8
|
pts
|
|
Combined
ratio
|
|
|
89.3
|
%
|
|
|
74.8
|
%
|
|
|
14.5
|
pts
|
|
|
87.0
|
%
|
|
|
63.3
|
%
|
|
|
23.7
|
pts
|
|
Third Quarter Financial Results
Net income for the third quarter of 2016 was $10.9 million compared to $16.8 million for the third quarter of
2015.
Gross premiums written were $147.2
million for the third quarter of 2016 compared to
$149.0 million for the third quarter
of 2015. The roll-out of personal residential business in
North Carolina and South Carolina continues with $3.3 million and $200,000 respectively, in gross premium written
for the third quarter. This voluntary business expansion in
addition to the contribution from Zephyr during the quarter were
offset by a lack of Citizens assumption activity as compared to the
third quarter of 2015, in which $33.1
million in assumed premiums written was booked.
Gross premiums earned were $164.7
million for the third quarter of 2016 compared to
$128.2 million for the third quarter
of 2015. Our consolidated premiums in force as of September 30, 2016 and 2015 were approximately
$646.0 million and $542.1 million, respectively, and this
year-over-year increase had a favorable impact on gross premiums
earned.
Ceded premiums as a percentage of gross premiums earned were
38.4% for the third quarter of 2016 compared to 35.8% for the third
quarter of 2015. The increase in ceded premium ratio reflects our
changing business mix to more wind-only policies and commercial
residential business that carry a higher reinsurance expense but
lower attritional losses. In the third quarter of 2016, wind-only
and commercial residential business represented approximately 33%
of our gross premiums earned versus 17% in the third quarter of
2015.
The loss ratio on a gross basis increased to 32.7% for the third
quarter of 2016 from 27.9% for the third quarter of 2015, primarily
due to severe weather activity, including $4
million in insured losses from Hurricane Hermine, and the
impact of litigated and attorney represented claims.
The Company's expense ratio on a gross basis was 22.3% for the
third quarter of 2016 compared to 20.1% for the third quarter of
2015, primarily due to the favorable impact the larger Citizens
takeout activity had on the third quarter 2015 acquisition
costs.
Overall, Heritage's combined ratio on a gross basis was 93.4%
for the third quarter of 2016 compared to 83.8% for the third
quarter of 2015.
First Nine Months of 2016 Financial Results
Net income for the first nine months of 2016 was $36.7 million as compared to $72.3 million for the first nine months of 2015.
The decrease in net income was primarily due to the favorable ceded
premium ratio recorded in 2015 resulting from larger Citizens'
take-out activity and an increase in the Company's incurred loss
ratio in 2016 due to severe weather activity in the first and third
quarters, and adverse development related primarily to litigated
and attorney represented claims.
Book Value Analysis
Book value per share increased by 11% from $11.71 at December 31,
2015 to $13.00 at September 30, 2016. The Company repurchased
approximately 1.4 million shares of common stock in the first nine
months of 2016 pursuant to the Company's repurchase program.
|
As
Of
|
Book Value Per
Share
|
Sep 30,
2016
|
|
Dec 31,
2015
|
|
Sep 30,
2015
|
Numerator:
|
|
|
|
|
|
Common stockholders'
equity
|
$
377,244
|
|
$
356,553
|
|
$
332,400
|
Denominator:
|
|
|
|
|
|
Total Shares
Outstanding
|
29,016,744
|
|
30,441,410
|
|
30,285,410
|
Book Value Per Common
Share
|
$
13.00
|
|
$
11.71
|
|
$
10.98
|
Subsequent Event: Hurricane Matthew
During the fourth quarter of 2016, Hurricane Matthew impacted
Florida and North Carolina where Heritage writes property
insurance. Heritage teams have been working diligently to address
claims of insureds that were impacted by the storm. Heritage has
received approximately 2,500 claims to date related to Hurricane
Matthew. At this time, the Company expects pre-tax catastrophe
losses could reach approximately $30
million, less than its full retention of $40 million.
Conference Call Details:
Wednesday, November 9, 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)
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
ASSETS
|
|
(unaudited)
|
|
|
|
|
|
Fixed maturity
securities, available for sale, at fair value (amortized
cost of $509,184 and
$370,967 in 2016 and 2015, respectively)
|
|
$
|
517,573
|
|
|
$
|
371,783
|
|
Equity securities,
available for sale, at fair value (cost of $33,935 and
$32,439 in 2016 and 2015, respectively)
|
|
|
32,205
|
|
|
|
28,313
|
|
Total
investments
|
|
|
549,778
|
|
|
|
400,096
|
|
Cash and cash
equivalents
|
|
|
130,835
|
|
|
|
236,277
|
|
Restricted
cash
|
|
|
19,261
|
|
|
|
13,085
|
|
Accrued investment
income
|
|
|
4,624
|
|
|
|
3,409
|
|
Premiums receivable,
net
|
|
|
35,161
|
|
|
|
30,565
|
|
Prepaid reinsurance
premiums
|
|
|
168,650
|
|
|
|
78,517
|
|
Income taxes
receivable
|
|
|
5,280
|
|
|
|
—
|
|
Deferred income
taxes
|
|
|
—
|
|
|
|
7,964
|
|
Deferred policy
acquisition costs, net
|
|
|
42,129
|
|
|
|
34,800
|
|
Property and
equipment, net
|
|
|
17,600
|
|
|
|
17,111
|
|
Intangibles,
net
|
|
|
26,402
|
|
|
|
2,120
|
|
Goodwill
|
|
|
48,267
|
|
|
|
8,028
|
|
Other
assets
|
|
|
5,727
|
|
|
|
5,426
|
|
Total
Assets
|
|
$
|
1,053,714
|
|
|
$
|
837,398
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Unpaid losses and loss
adjustment expenses
|
|
$
|
125,695
|
|
|
$
|
83,722
|
|
Unearned
premiums
|
|
|
323,354
|
|
|
|
302,493
|
|
Reinsurance
payable
|
|
|
177,867
|
|
|
|
60,210
|
|
Deferred income
taxes
|
|
|
6,966
|
|
|
|
—
|
|
Income tax
payable
|
|
|
—
|
|
|
|
2,092
|
|
Advance
premiums
|
|
|
20,382
|
|
|
|
12,138
|
|
Accrued
compensation
|
|
|
5,500
|
|
|
|
2,305
|
|
Other
liabilities
|
|
|
16,706
|
|
|
|
17,885
|
|
Total
Liabilities
|
|
|
676,470
|
|
|
|
480,845
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
|
Common stock, $0.0001
par value, 50,000,000 shares authorized,
30,141,742 shares issued and 29,016,744 outstanding at September
30, 2016
and 30,441,410 outstanding at December 31, 2015
|
|
|
3
|
|
|
|
3
|
|
Additional paid-in
capital
|
|
|
206,240
|
|
|
|
202,628
|
|
Accumulated other
comprehensive income (loss)
|
|
|
4,116
|
|
|
|
(2,033)
|
|
Treasury stock, at
cost, 1,424,666 shares at September 30, 2016
|
|
|
(20,562)
|
|
|
|
—
|
|
Retained
earnings
|
|
|
187,447
|
|
|
|
155,955
|
|
Total
Stockholders' Equity
|
|
|
377,244
|
|
|
|
356,553
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
1,053,714
|
|
|
$
|
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 September 30,
|
|
|
Nine Months
Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums
written
|
|
$
|
147,232
|
|
|
$
|
148,993
|
|
|
$
|
471,793
|
|
|
$
|
418,558
|
|
Change in gross
unearned premiums
|
|
|
17,464
|
|
|
|
(20,759)
|
|
|
|
8,483
|
|
|
|
(37,222)
|
|
Gross premiums
earned
|
|
|
164,696
|
|
|
|
128,234
|
|
|
|
480,276
|
|
|
|
381,336
|
|
Ceded
premiums
|
|
|
(63,141)
|
|
|
|
(45,873)
|
|
|
|
(163,461)
|
|
|
|
(102,640)
|
|
Net premiums
earned
|
|
|
101,555
|
|
|
|
82,361
|
|
|
|
316,815
|
|
|
|
278,696
|
|
Net investment
income
|
|
|
2,326
|
|
|
|
1,973
|
|
|
|
6,586
|
|
|
|
5,696
|
|
Net realized
gains
|
|
|
1,119
|
|
|
|
1,946
|
|
|
|
1,762
|
|
|
|
1,827
|
|
Other
revenue
|
|
|
4,306
|
|
|
|
2,964
|
|
|
|
10,988
|
|
|
|
7,241
|
|
Total
revenue
|
|
|
109,306
|
|
|
|
89,244
|
|
|
|
336,151
|
|
|
|
293,460
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss
adjustment expenses
|
|
|
53,906
|
|
|
|
35,791
|
|
|
|
169,663
|
|
|
|
102,239
|
|
Policy acquisition
costs
|
|
|
22,597
|
|
|
|
15,512
|
|
|
|
61,478
|
|
|
|
40,858
|
|
General and
administrative expenses
|
|
|
14,191
|
|
|
|
10,226
|
|
|
|
44,602
|
|
|
|
33,366
|
|
Total
expenses
|
|
|
90,694
|
|
|
|
61,529
|
|
|
|
275,743
|
|
|
|
176,463
|
|
Income before income
taxes
|
|
|
18,612
|
|
|
|
27,715
|
|
|
|
60,408
|
|
|
|
116,997
|
|
Provision for income
taxes
|
|
|
7,682
|
|
|
|
10,902
|
|
|
|
23,688
|
|
|
|
44,728
|
|
Net
income
|
|
$
|
10,930
|
|
|
$
|
16,813
|
|
|
$
|
36,720
|
|
|
$
|
72,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in net
unrealized gains (losses) on
investments
|
|
|
(1,237)
|
|
|
|
(1,168)
|
|
|
|
11,773
|
|
|
|
(6,638)
|
|
Reclassification
adjustment for net realized
investment (gains) losses
|
|
|
(1,119)
|
|
|
|
(1,946)
|
|
|
|
(1,762)
|
|
|
|
(1,827)
|
|
Income tax benefit
(expense) related to items of
other comprehensive income (loss)
|
|
|
908
|
|
|
|
1,201
|
|
|
|
(3,862)
|
|
|
|
3,265
|
|
Total
comprehensive income
|
|
$
|
9,482
|
|
|
$
|
14,900
|
|
|
$
|
42,869
|
|
|
$
|
67,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
29,213,222
|
|
|
|
30,177,633
|
|
|
|
29,742,984
|
|
|
|
29,952,668
|
|
Diluted
|
|
|
29,213,222
|
|
|
|
30,483,553
|
|
|
|
29,786,156
|
|
|
|
30,289,328
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.37
|
|
|
$
|
0.56
|
|
|
$
|
1.23
|
|
|
$
|
2.41
|
|
Diluted
|
|
$
|
0.37
|
|
|
$
|
0.55
|
|
|
$
|
1.23
|
|
|
$
|
2.39
|
|
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 $587
million and $58 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: weather conditions (including the severity and
frequency of storms, hurricanes, tornadoes and hail); 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 liability 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; 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-third-quarter-of-2016-300359436.html
SOURCE Heritage Insurance Holdings, Inc.