false 0001598665 0001598665 2023-11-02 2023-11-02





Washington, D.C. 20549







Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 2, 2023




(Exact name of registrant as specified in its charter)




Delaware   001-36462   45-5338504
(State or other jurisdiction
of incorporation)
File Number)

(I.R.S. Employer

Identification No.)


1401 N. Westshore Blvd

Tampa, Florida

(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (727) 362-7202

(Former name or former address, if changed since last report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class




Name of each exchange

on which registered

Common Stock, par value $0.0001 per share   HRTG   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02

Results of Operations and Financial Conditions.

On November 2, 2023, Heritage Insurance Holdings, Inc. (the “Company”) issued a press release announcing financial results for its fiscal quarter ended September 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1.

The information furnished under this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.


Item 9.01

Financial Statements and Exhibits.

(d) Exhibits. The following exhibit is being furnished as part of this Current Report on Form 8-K.




99.1    Press Release dated November 2, 2023.
104    Cover Page Interactive Data File (the cover page tags are embedded within the Inline XBRL document).



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: November 2, 2023     By:  

/s/ Kirk Lusk


Kirk Lusk

Chief Financial Officer



Exhibit 99.1

Heritage Reports Third Quarter 2023 Results

Tampa, FL – November 2, 2023: Heritage Insurance Holdings, Inc. (NYSE: HRTG) (“Heritage” or the “Company”), a super-regional property and casualty insurance holding company, today reported third quarter of 2023 financial results.

Third Quarter 2023 Result Highlights



Third quarter net loss of $7.4 million or ($0.28) per diluted share improved from net loss of $48.2 million or ($1.83) per diluted share in the prior year quarter, primarily driven by an increase in net premiums earned, higher net investment income, and lower net losses incurred.



Gross premiums earned of $337.0 million, up 9.4% from $308.0 million in the prior year quarter.



Net loss ratio of 74.4%, an improvement of 23.2 points from 97.6% in the prior year quarter.



Net expense ratio of 36.4%, an increase of 0.7 points from 35.7% in the prior year quarter.



Net combined ratio of 110.8%, an improvement of 22.5 points from 133.3% in the prior year quarter.



G&A expense rate increased slightly, predominantly due to investment in systems to drive future efficiencies and speed to market.



Continued successful exposure management with Florida personal lines policies-in-force intentionally declining by 16.0%, as compared to the prior year period.

“Our policyholders, agents, and employees were affected by two catastrophic events this quarter. In early August, wildfires on the island of Maui caused devastating losses, followed by Hurricane Idalia in the Florida panhandle at the end of the month,” said Heritage CEO Ernie Garateix. “Our policyholders and employees affected by these events remain in our thoughts and we are steadfast in our commitment to fair and timely claims handling,” Garateix emphasized.

“Despite challenges in the property insurance space, including social and actual inflation, increased frequency and severity of catastrophic events, and rising reinsurance costs, I’m encouraged to report a substantial improvement in our financial position and strides toward sustained profitability. Our management team continues to drive exposure management, strengthen underwriting criteria, and work toward rate adequacy throughout our book of business. These strategic efforts are showing promising results as we have seen positive outcomes despite the catastrophe weather experienced during the quarter. Our average premium across the book of business continues to rise meaningfully, reflecting the ongoing focus on profitability.” Garateix concluded, “We are in the business of catastrophe risk, and our results this quarter were impacted accordingly. Nonetheless, we maintain our focus on appropriate risk management and high-quality service for our customers. Weather events underscore the importance of our role, and we are prepared to support our clients and communities as we all work toward recovery.”

Strategic Profitability Initiatives

The following provides an update to the Company’s strategic initiatives that are expected to enable Heritage to achieve consistent long-term quarterly earnings and drive shareholder value. The Supplemental Information table included in this earnings release demonstrates progress made on these initiatives compared to the third quarter 2022.



Generate underwriting profit though rate adequacy and more selective underwriting.



Continued significant rating actions throughout the book of business resulting in an increase in average premium per policy throughout the book of 25.5% compared to the third quarter of 2022 and 5.1% from the second quarter of 2023.



Premiums-in-force of $1.3 billion were up 8.4% from the prior year quarter, while policy count was down 13.6%, driven by continued underwriting efforts to manage exposure for personal residential business while selectively growing the Company’s commercial residential business. Continued strategic tightening of underwriting criteria led to a temporary decline in new business, particularly in over-concentrated or underpriced markets. This proactive measure is pivotal for long-term portfolio health and risk management, especially in geographies with higher catastrophe risk.



Allocate capital to products and geographies that maximize long-term returns.



Strategically increased Florida commercial residential premiums-in-force by 75.3% over the prior year quarter while total insured value (“TIV”) for that product increased 30.9% and policies in force increased by only 9.5%.



Reduction of policy count for the Florida personal lines product to continue goal of improving the quality of the book of business. Policies in force for Florida personal lines business intentionally declined by 16.0% as compared to the prior year period and 4.2% from the second quarter of 2023.


This disciplined underwriting approach resulted in a policy count reduction from the prior year quarter of 12.6% in other states with only a 1.1% decrease in premiums-in-force.



Maintain a balanced and diversified portfolio.



Even with the substantial increase in commercial residential business, no state represents over 26.5% of the Company’s TIV.



The top four states grew TIV by an average of 0.6% while the smallest five states grew TIV by 24.5%.



As a result of diversification efforts, the top five personal lines states represented 71.7% of all TIV at third quarter 2023 compared to 72.2% of all TIV at third quarter 2022.



Florida’s TIV increased by 1.8%, a result of intentional growth in the Company’s commercial residential product offerings and the adoption of inflation guard, which ensures accurate replacement cost values across all business sectors. This was partly offset by a reduction in Florida personal lines policies compared to the previous year’s quarter. TIV outside of Florida accounted for 73.5% of the entire portfolio, a slight decrease from 74.8% in the third quarter of 2022. This change was driven by ongoing exposure management in personal lines business across the portfolio and selective expansion of Florida’s commercial lines business.



Provide coverage suitable to the market and return targets.



Selective use of Excess & Surplus lines (“E&S”) premium-in-force in California, Florida, and South Carolina.



Continue to evaluate other strategic states for E&S products.

Capital Management

Heritage’s Board of Directors has decided to continue its suspension of the quarterly dividend to shareholders. The Board of Directors will continue to evaluate dividend distribution and stock repurchases on a quarterly basis. No shares of common stock were repurchased during the quarter.

Results of Operations

The following table summarizes results of operations for the three and nine months ended September 30, 2023 and 2022 (amounts in thousands, except percentages and per share amounts):


     Three Months Ended September 30,     Nine Months Ended September 30,  
     2023     2022     Change     2023     2022     Change  

Total Revenue

   $ 186,300     $ 165,493       12.6   $ 548,532     $ 487,872       12.4

Net (loss) income

   $ (7,424   $ (48,240     (84.6 )%    $ 14,363     $ (166,864     (108.6 )% 

(Loss) earnings per share

   $ (0.28   $ (1.83     (84.7 )%    $ 0.55     $ (6.29     (108.7 )% 

Book value per share

   $ 5.65     $ 4.54       24.4   $ 5.65     $ 4.54       24.4

Return on equity

     (19.0 )%      (129.4 )%      110.4 pts      13.6     (96.6 )%      110.2 pts 

Underwriting summary


Gross premiums written

   $ 309,510     $ 304,501       1.6   $ 1,016,378     $ 952,981       6.7

Gross premiums earned

   $ 336,976     $ 307,959       9.4   $ 984,012     $ 891,539       10.4

Ceded premiums

   $ (160,335   $ (148,266     8.1   $ (464,539   $ (420,645     10.4

Net premiums earned

   $ 176,641     $ 159,693       10.6   $ 519,473     $ 470,894       10.3

Ceded premium ratio

     47.6     48.1     (0.5 )pts      47.2     47.2     0.0 pts 

Ratios to Net Premiums Earned:



Loss ratio

     74.4     97.6     (23.2 )pts      64.6     84.4     (19.8 )pts 

Expense ratio

     36.4     35.7     0.7 pts      35.7     36.3     (0.6 )pts 

Combined ratio

     110.8     133.3     (22.5 )pts      100.2     120.7     (20.5 )pts 

Note: Percentages and sums in the table may not recalculate precisely due to rounding.


Ceded premium ratio represents ceded premiums as a percentage of gross premiums earned.

Net loss ratio represents net losses and loss adjustment expenses (“LAE”) as a percentage of net premiums earned.

Net expense ratio represents policy acquisition costs (“PAC”) and general and administrative (“G&A”) expenses as a percentage of net premiums earned. Ceding commission income is reported as a reduction of PAC and G&A expenses.

Net combined ratio represents the sum of net losses and LAE, PAC and G&A expenses as a percentage of net premiums earned. The net combined ratio is a key measure of underwriting performance traditionally used in the property and casualty industry. A combined ratio under 100% generally reflects profitable underwriting results.

Third Quarter 2023 Results



Third quarter net loss of $7.4 million or $(0.28) per diluted share, an improvement from a net loss of $48.2 million or ($1.83) per diluted share in the prior year quarter. This improvement is attributable to growth of 10.6% in net premiums earned, an increase of 137.8% in net investment income, and a reduction of 15.7% in net losses and LAE. It was partly offset by elevated policy administration and general and administrative costs, largely due to the increase in gross premiums written over the prior year quarter and operational investments, culminating in a lower combined ratio compared to the same period last year.



Premiums-in-force of $1.3 billion, represented an 8.4% increase from third quarter 2022 due to continued proactive rate increases across the entire portfolio and underwriting actions, despite an intentional policy count reduction of approximately 74,000 policies. Premiums-in-force were also favorably impacted by strategic growth of the Company’s commercial residential product and use of inflation guard across all products.



Gross premiums written were $309.5 million, up 1.6% from $304.5 million in the prior year quarter, reflecting a strategic and substantial increase in Florida commercial residential lines business and a higher average premium per policy throughout the book of business, partly offset by targeted exposure management. Gross premiums written for Florida personal lines business was up $5.8 million due to rate increases, despite a 16.0% reduction in policy count from the prior year quarter.



Gross premiums earned of $337.0 million, up 9.4% from $308.0 million in the prior year quarter, reflecting higher gross premiums written over the last twelve months driven by a higher average premium per policy and organic growth of the commercial residential business.



Net premiums earned of $176.7 million, up 10.6% from $160.0 million in the prior year quarter, reflecting higher gross premium earned outpacing the increase in ceded premiums for the quarter.



Ceded premium ratio of 47.6%, down 0.5 points from 48.1% in the prior year quarter driven by 9.4% growth in gross premiums earned outpacing the growth of ceded premiums of 8.1%.



Net loss ratio decreased to 74.4%, a 23.2 point decline from 97.6% in the same quarter last year reflecting higher net premiums earned and reduced net losses and LAE. The reduction in net losses and LAE improved largely due to diminished weather and attritional losses. Net weather losses for the current accident year were $51.6 million, a decrease from $63.8 million in the previous year’s quarter. Catastrophe losses remained consistent at $40.0 million, with this quarter’s losses attributed to the Maui wildfire and Hurricane Idalia and prior year quarter’s losses from Hurricane Ian. Other weather losses totaled $11.5 million, showing a reduction from the prior year quarter amount of $23.8 million. Additionally, the net loss ratio experienced an impact from net unfavorable loss development of $793,000, a deviation from the net favorable $1.0 million development in the third quarter of 2022.



The net expense ratio was 36.4% in third quarter 2023, up 0.7 points from the prior year quarter amount of 35.7%, driven by higher general and administrative costs mostly related to software and associated costs with the implementation of a new claims system aimed at driving future efficiencies.



Net combined ratio of 110.8%, improved 22.5 points from 133.3% in the prior year quarter, driven by a lower net loss ratio as described above.



Net investment income, inclusive of realized investment losses and unrealized losses on equity securities, was $6.5 million in third quarter 2023, up from $2.9 million in the prior year quarter reflecting actions to align the investments with the yield curve.



Effective tax rate was 38.3% compared to 2.2% in the prior year quarter, driven by the impact of changes to a valuation allowance which is updated quarterly, as well as permanent differences in relation to projected annual pre-tax income or loss. The valuation allowance relates to tax elections made by Osprey Re, the Company’s captive reinsurer domiciled in Bermuda. For the current year quarter, the valuation allowance decreased, while for the prior year quarter, the valuation allowance was established.

Supplemental Information:


Policies-in-force:    Q3 2023      Q3 2022      % Change  


     158,914        188,383        (15.6 )% 

Other States

     308,683        352,989        (12.6 )% 











     467,597        541,372        (13.6 )% 













   $ 681,067,580      $ 569,589,537        19.6

Other States

     665,351,760        672,812,875        (1.1 )% 











   $ 1,346,419,340      $ 1,242,402,412        8.4










Total Insured Value:



   $ 104,654,005,306      $ 102,784,056,201        1.8

Other States

     290,916,611,744        304,657,398,158        (4.5 )% 











   $ 395,570,617,050      $ 407,441,454,359        (2.9 )% 










Book Value Analysis

Book value per share of $5.65 at September 30, 2023, was up 10.1% from fourth quarter 2022 and 24.4% from third quarter 2022. The increase from the comparable quarter of 2022 is primarily attributable to year-to-date net income through the third quarter of 2023 as well as a reduction in unrealized losses on the Company’s fixed income securities portfolio from the third quarter of 2022. The unrealized losses are unrelated to credit risk but due to the rising interest rate environment during 2022 and 2023.

Book Value Per Share


     As Of  
     September 30, 2023      December 31, 2022      September 30, 2022  



Common stockholders’ equity

   $ 151,386      $ 131,039      $ 117,697  



Total Shares Outstanding

   $ 26,796,586      $ 25,539,433      $ 25,898,930  










Book Value Per Common Share

     5.65        5.13        4.54  










Conference Call Details:

Friday, November 3, 2023 – 9:00 a.m. ET

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


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.


Condensed Consolidated Balance Sheets

(Amounts in thousands, except share amounts)


     September 30, 2023     December 31, 2022  



Fixed maturities, available-for-sale, at fair value

   $ 651,520     $ 635,572  

Equity securities, at fair value

     1,739       1,514  

Other investments, net

     11,745       16,484  







Total investments

     665,004       653,570  

Cash and cash equivalents

     228,848       280,881  

Restricted cash

     9,733       6,691  

Accrued investment income

     3,725       3,817  

Premiums receivable, net

     80,256       92,749  

Reinsurance recoverable on paid and unpaid claims, net

     727,435       805,059  

Prepaid reinsurance premiums

     403,684       306,977  

Income tax receivable

     14,872       12,118  

Deferred income tax asset, net

     16,092       16,841  

Deferred policy acquisition costs, net

     104,098       99,617  

Property and equipment, net

     32,418       25,729  

Right-of-use lease asset, finance

     18,214       20,132  

Right-of-use lease asset, operating

     7,166       7,335  

Intangibles, net

     44,101       49,575  

Other assets

     13,060       11,509  







Total Assets

   $ 2,368,706     $ 2,392,600  









Unpaid losses and loss adjustment expenses

   $ 971,321     $ 1,131,807  

Unearned premiums

     688,872       656,641  

Reinsurance payable

     282,663       199,803  

Long-term debt, net

     122,066       128,943  

Advance premiums

     33,706       26,516  

Accrued compensation

     8,611       6,594  

Lease liability, finance

     20,903       22,557  

Lease liability, operating

     8,439       8,690  

Accounts payable and other liabilities

     80,739       80,010  







Total Liabilities

   $ 2,217,320     $ 2,261,561  







Stockholders’ Equity:


Common stock, $0.0001 par value

     3       3  

Additional paid-in capital

     336,829       334,711  

Accumulated other comprehensive loss, net of taxes

     (49,719     (53,585

Treasury stock, at cost

     (130,900     (130,900

Retained deficit

     (4,827     (19,190







Total Stockholders’ Equity

     151,386       131,039  







Total Liabilities and Stockholders’ Equity

   $ 2,368,706     $ 2,392,600  








Condensed Consolidated Statements of Operations and Other Comprehensive (Loss) Income

(Amounts in thousands, except share amounts)



     For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
     2023     2022     2023     2022  



Gross premiums written

   $ 309,510     $ 304,501     $ 1,016,378     $ 952,981  

Change in gross unearned premiums

     27,466       3,458       (32,366     (61,442













Gross premiums earned

     336,976       307,959       984,012       891,539  

Ceded premiums

     (160,335     (148,266     (464,539     (420,645













Net premiums earned

     176,641       159,693       519,473       470,894  

Net investment income

     6,867       2,887       19,048       7,050  

Net realized losses and impairment losses

     (379     (3     (49     (121

Other revenue

     3,171       2,916       10,060       10,049  













Total revenues

     186,300       165,493       548,532       487,872  



Losses and loss adjustment expenses

     131,397       155,849       335,495       397,409  

Policy acquisition costs, net

     42,427       39,194       124,202       115,826  

General and administrative expenses, net

     21,911       17,758       61,022       54,947  

Goodwill and intangible asset impairment

     —        —        767       91,959  













Total expenses

     195,735       212,801       521,486       660,141  













Operating (loss) income

     (9,435     (47,308     27,046       (172,269

Interest expense, net

     2,591       2,027       8,211       5,750  













(Loss) income before income taxes

     (12,026     (49,335     18,835       (178,019













(Benefit) provision for income taxes

     (4,602     (1,095     4,472       (11,155













Net (loss) income

   $ (7,424   $ (48,240   $ 14,363     $ (166,864















Change in net unrealized (losses) gains on investments

     (4,494     (17,471     4,664       (65,403

Reclassification adjustment for net realized investment losses

     379       3       390       121  

Income tax benefit (expense) related to items of other comprehensive (loss) income

     970       4,089       (1,188     15,282  













Total comprehensive (loss) income

   $ (10,569   $ (61,619   $ 18,229     $ (216,864













Weighted average shares outstanding



     26,698,806       26,369,265       25,941,422       26,536,700  














     26,698,806       26,369,265       25,980,931       26,536,700  













(Loss) earnings per share



   $ (0.28   $ (1.83   $ 0.55     $ (6.29


   $ (0.28   $ (1.83   $ 0.55     $ (6.29

About Heritage

Heritage Insurance Holdings, Inc. is a super-regional property and casualty insurance holding company. Through its insurance subsidiaries and a large network of experienced agents, the Company writes approximately $1.3 billion of gross personal and commercial residential premium across its multi-state footprint.

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. This release includes forward-looking statements relating to the expected positive impact of our strategic initiatives on our future financial results, including focus on profitability through rating action and selective underwriting, capital allocation, exposure management and strategic reduction of policy count in certain geographies; impact of rate increases, including the ability to mitigate the expected impact of increased reinsurance costs through rate adjustments; ability to achieve consistent long-term sustainable growth and long-term quarterly earnings and drive shareholder value; continued increase in average premium per policy; future dividend payments and stock repurchases; our ability to maintain a balanced and diversified portfolio; and expectations regarding our fixed income investment portfolio. 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 underwriting and profitability initiatives; inflation and other changes in economic conditions (including changes in interest rates and financial and real estate markets), including changes that may impact demand for our products and our operations; the impact of macroeconomic and geopolitical conditions, including the impact of supply chain constraints, inflationary pressures, labor availability and the conflict between Russia and Ukraine; the impact of new federal and state regulations that affect the property and casualty insurance market; the cost of reinsurance, the collectability of reinsurance and our ability to obtain reinsurance coverage on terms and at a cost acceptable to us; 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; 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, 2022 filed with the Securities and Exchange Commission on March 13, 2023, and subsequent filings. 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.


Investor Contact:

Kirk Lusk

Chief Financial Officer



Mike Houston and Zack Mukewa



Document and Entity Information
Nov. 02, 2023
Cover [Abstract]  
Amendment Flag false
Entity Central Index Key 0001598665
Document Type 8-K
Document Period End Date Nov. 02, 2023
Entity Incorporation State Country Code DE
Entity File Number 001-36462
Entity Tax Identification Number 45-5338504
Entity Address, Address Line One 1401 N. Westshore Blvd
Entity Address, City or Town Tampa
Entity Address, State or Province FL
Entity Address, Postal Zip Code 33607
City Area Code (727)
Local Phone Number 362-7202
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, par value $0.0001 per share
Trading Symbol HRTG
Security Exchange Name NYSE
Entity Emerging Growth Company false

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