Florida domiciled property and casualty (P&C) insurer, Heritage Insurance Holdings, Inc. has reported that its net income increased 5% to $28.6 million in 2019.
The company explained that the increase reflected higher non-core pre-tax charges in the prior year and lower interest expense in the current year, mostly associated with debt refinancing.
Looking at the fourth quarter of the year only, net income stood at $12.8 million, up from $3.9 million in the prior year quarter, again reflecting $11.3 million of Q4 2018 charges associated with debt refinancing.
Gross premiums written were $235.4 million in Q4 2019, up 6.2% from $221.7 million in 2018.
This increase consists of 9.4% growth outside Florida and 3.5% growth in Florida, reflecting organic growth across all states and lines of business.
Heritage’s ceded premium ratio was down 5.3 points to 44.0% in Q4 due to a reduction in overall quota share reinsurance coverage and reinsurance synergies, partly offset by additional catastrophe excess-of-loss reinsurance coverage.
Effective December 31, 2019, net quota share reinsurance coverage, which only applies to a portion of the Heritage’s business, increased from 52.0% to 56.0%.
The net combined ratio was 89.3% in Q4, up 2.9 points from 86.4% in 2018 due to a higher net expense ratio.
Heritage’s expense ratio was up 2.2 points to 38.3%, mainly due to the timing of variable compensation accruals and higher expenses associated with insurance licenses and fees, partly offset by a lower ceded premium ratio.
Meanwhile, the net loss ratio was 51.0%, up 70 basis points from 50.3% in the prior year quarter, reflecting higher attritional losses and lower income from vertically integrated operations, partly offset by lower weather-related losses.
Bruce Lucas, Heritage’s Chairman and CEO, commented on the results: “I’m really proud of our fourth quarter results, which included an acceleration to 6.2% organic gross premiums written growth, as our de-risking efforts are basically complete, while our new business generation and retention remain strong.
“Underwriting performance was solid and we reported our sixth consecutive quarter of favorable reserve development,” he added. “I believe we are well positioned for 2020 and look forward to the year ahead.”
