Super-regional property and casualty insurance holding company, Heritage Insurance Holdings, Inc., has reported a net loss of $49.2 million for the fourth quarter of 2021, and a loss of $74.7 million for the full year.
This compares with positive income of $2.8 million for the fourth quarter of the previous year, and income of $9.3 million for the whole of 2020.
Heritage attributed the quarterly downturn to a $60.5 million non-cash goodwill impairment charge and a large tax benefit in the prior year quarter, partly offset by higher underwriting income associated with rate increases, re-underwriting efforts and normalized weather.
In contrast, the company’s Q4 combined ratio improved notably from 108.7% in 2020 to 93.2% last year, with the full year combined ratio also improving from 107.1% to 104.6%.
This was helped by a 8.5 percentage point reduction in the loss ratio during Q4, which came to 61.9%, as well as a 7.0 point decrease in the expense ratio, which came to 31.3%.
The decrease in the loss ratio mainly owes to a $9.1 million reduction in net current accident quarter weather losses, Heritage said, including a $12.7 million decline in catastrophe losses and a $3.6 million increase in other weather losses, partly offset by lower favorable prior year reserve development.
Net current accident quarter weather was $29.8 million in fourth quarter 2021, including $11.7 million of catastrophe losses and $18.1 million of other weather losses.
Gross premiums written in Q4 were $278.8 million, down 1.2% year-over-year, as intentional exposure-management and re-underwriting efforts resulted in a 17.8% decline in Florida that was largely offset by 16.7% growth in other states.
Meanwhile, the ceded premium ratio was 45.5% in fourth quarter 2021, up 2.6 points from 42.9% in the prior year quarter, mainly due to ceded premium growth that outpaced gross premiums earned growth, as well as year-end reinsurance true-ups in the prior year quarter.
“As expected, we are beginning to see the initial benefits of the strategic initiatives we launched in 2021, as we focus on meaningful rate increases, re-underwriting existing business, selectively accepting new business, optimizing our distribution network, enhancing the agent experience and improving expense management,” said Heritage CEO Ernie Garateix.
“The result of those actions was solid underwriting performance in the fourth quarter, as weather losses normalized and year-over-year, the attritional loss ratio, which excludes current accident quarter weather losses and prior year development, improved by over 4 points,” he continued.
“We also continued to execute our diversification strategy, with significant opportunities for future growth in geographies where we already have meaningful and proven distribution partnerships. I’m pleased with our progress and expect continued positive momentum in 2022 and beyond.”
