Bruce Lucas, the Chairman and Chief Executive Officer (CEO) of Heritage Insurance Holdings, has hailed the firm’s comprehensive reinsurance program after recoveries from its capacity providers helped offset storm losses in the first-quarter of 2018.
Speaking during the insurer’s first-quarter 2018 earnings call, Lucas explained how its “comprehensive” reinsurance program further helps it hedge risks, something that was particularly evident in Q1 as recently acquired NBIC Holdings, Inc.’s (the parent company of Narragansett Bay Insurance Company) portfolio in Northeast U.S. was impacted by severe winter storm activity.
According to Lucas, the gross loss on these storms, which is likely from events including named winter storm Riley, totalled more than $56 million. However, thanks to reinsurance recoveries the net pre-tax retention was lowered to just $9 million, meaning that Heritage ceded roughly $47 million of winter storm losses to its reinsurance providers.
As a result and in spite of record winter storms, Heritage reported a $14.8 million net income and $24 million in operating income in Q1 2018, while its net combined ratio fell from 94.8% to 82.2%, and, “we continue to see improved operating metrics across the company,” said Lucas.
During the call, Heritage also revealed that it’s completed its 2018/19 reinsurance program at almost flat rates, citing a risk adjusted cost increase of just 1% at its latest renewal.
“This is a tremendous result for the company,” said Lucas.
According to Lucas, the Florida headquartered property casualty insurer achieved the best-in-market pricing at its latest renewal, aided by the way it handles its catastrophe business, and the fact it has the lowest loss adjustment expense ratio in the state.
