Florida P&C insurer Heritage Insurance has unveiled its financial results for the fourth quarter of 2023, showcasing improvements across several metrics.
The company reported a net income of $30.9 million, or $1.15 per diluted share, marking an increase from $12.5 million, or $0.48 per diluted share, recorded in the same period the previous year. This upswing was largely attributed to successful rate, underwriting, and exposure management strategies implemented over the past two years.
The company witnessed a 6.9% growth in net premiums earned, reaching $177.7 million, and a 36.1% increase in net investment income, which amounted to $5.8 million. Furthermore, there was a 12.6% reduction in net losses and loss adjustment expenses (LAE), despite facing higher policy administration and general and administrative expenses due to the growth in gross premiums written and the costs associated with the implementation of a new claims system.
As of the end of the fourth quarter of 2023, Heritage reported premiums-in-force totaling $1.4 billion, a 5.6% increase from the previous year. This growth was fueled by proactive underwriting and rate actions, alongside expansion in the commercial lines business, despite a reduction of approximately 79,000 personal lines policies.
Gross premiums written saw a rise of 1.5% to $326.7 million, driven by organic growth in Florida’s commercial residential lines and higher average premiums per policy, a result of rating actions and the application of inflation guards. Gross premiums earned also rose by 7.0% to $339.6 million, reflecting the company’s strategic increase in written premiums over the last 12 months.
The net loss ratio also improved, decreasing to 51.0% from 62.4% in the previous year, due to higher net premiums earned and reduced net losses and LAE. This was largely due to decreased weather and attritional losses, including a reduction in net weather losses to $11.0 million and catastrophe losses to $3.1 million.
Despite the brief respite from storms, Heritage has recently made strides to secure new capacity by venturing into the bond market, aiming to secure at least $100 million in collateralized reinsurance specifically for US named storms.
Meanwhile, its net expense ratio saw a slight increase to 33.9%, primarily due to higher general and administrative costs related to software upgrades and a new claims system.
The company achieved a net combined ratio of 84.9%, an 11.2-point improvement from 96.1% in the prior year, underscoring a lower net loss ratio partially offset by a marginally higher net expense ratio.
Ernie Garateix, CEO of Heritage, highlighted the company’s strategic focus on rate adequacy.
“These actions, the subsequent results, and our recent capital raise position us well for selective growth going forward. As we look ahead, I am confident in our ability to maintain this momentum across our 16-state platform, driven by our solid foundation, strategic clarity, and the dedication of an experienced workforce,” Garateix said.
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