Heritage Insurance Holdings has disclosed a Q3 net loss of $7.4 million, somewhat improved from a net loss of $48.2 million in the same quarter last year, primarily driven by an increase in net premiums earned, higher net investment income, and lower net losses incurred.
The firm’s gross premiums written in Q3 were $309.5 million, up 1.6% from the prior year quarter. Heritage said that this reflects 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 were up $5.8 million due to rate increases, despite a 16% reduction in policy count from the prior year quarter.
Meanwhile, Heritage’s Q3 net loss ratio decreased to 74.4%, a 23.2 point decline from 97.6% in the same quarter last year. The firm said this reflects higher net premiums earned ($176.7 million, up 10.6%) and reduced net losses and LAE.
Heritage noted that the reduction in net losses and LAE improved largely due to diminished weather and attritional losses.
The firm continued, “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 totalled $11.5 million, which Heritage observed as showing a reduction from the prior year quarter amount of $23.8 million.
Additionally, the net loss ratio experienced an impact from net unfavourable loss development of $793,000, a deviation from the net favourable $1 million development in Q3 of 2022.
Heritage’s net combined ratio of 110.8% in Q3 marked an improvement of 22.5 points from the 133.3% recorded in the prior year quarter.
Finally, net investment income, inclusive of realised investment losses and unrealised losses on equity securities, was $6.5 million in Q3 2023, up from $2.9 million in the prior year quarter.
Heritage CEO, Ernie Garateix, commented, “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.
“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.”
He continued, “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.”
