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Heritage widens Q3 net loss to $16.4mn

Heritage Insurance logo storm surge.jpg

Florida-headquartered insurer Heritage fell to a $16.4mn loss in Q3, widening its loss from the $5.2mn downturn reported last year, due to lower realized capital gains and ongoing underwriting losses.

Premiums: The carrier’s top line shrank by 1.5% year-on-year to $274.2mn for the quarter, with ceded premiums rising 13% to $132.0mn

However, earned premium income was up 17.5% to $162.4mn. The company said premium rates were generally rising by mid- to high single digits, in some places by double digits, with higher rates expected to keep earning through in the next two years.

Underwriting results: The carrier narrowed its underwriting loss, with its combined ratio improving by 10.2 points to 112.5%. Both the underwriting and expense ratio improved, by 6.8 points and 3.4 points, respectively.

Catastrophe losses: Heritage reported $16.0mn of net catastrophe losses from third-quarter events, down from $24.5mn in the year-ago period. But “other weather” losses rose by 56% to $35.5mn.

Prior-year reserve development was favorable at $0.8mn.

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On the firm’s earnings call, CFO Kirk Lusk said the firm was factoring recurring severe weather losses as well as social inflation into rate indications as soon as possible.

“Despite the weather events and the loss for the quarter, we are seeing favorable trends that we believe will lead to continued improvements in subsequent quarters as we return to consistent profitability.”

Commentary: Ernie Garateix, Heritage’s CEO, said, “While we were disappointed with the loss in the quarter, I’m encouraged by underlying signs of improvement that I expect will continue next quarter and throughout 2022. For example, year-over-year premiums-in-force growth significantly outpaced policies-in-force growth.”

The firm’s premium growth was up 13%, with policies in force growing only 3% over the same timeframe.

The CEO added on the earnings call that the company had no plans to increase in the Gulf, and was focusing expansion on the Carolinas and the north.

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