Super-regional property and casualty insurance holding company, Heritage Insurance Holdings, Inc, has reported first quarter 2025 net income of $30.5 million, compared to Q1’24’s $14.2 million, driven by increased net premiums earned, relatively flat total expenses, and a positive impact of rate actions, underwriting actions, and targeted exposure management in the last several years.
For Heritage, net weather and catastrophe losses for Q1’25 were $43.5 million, an increase of $25.1 million from $18.4 million last year. This include non-hurricane catastrophe losses of $31.8 million from the California wildfires, which was a $15.9 million increase over the non-hurricane catastrophe losses of $15.9 million incurred in the prior year quarter.
Other weather losses totalled $11.7 million, an increase of $9.2 million from $2.5 million in Q1’24.
The higher catastrophe and weather losses were more than offset by significantly lower attritional losses and favourable reserve development compared to the prior year quarter.
Favourable net loss development was $7.8 million in the current year quarter compared to adverse development of $6.7 million in the prior year quarter.
For the quarter, premiums-in-force were $1.43 billion, an increase of 3.3% compared to $1.39 billion in Q1’24. Gross premiums written were down 0.2% to $356 million in Q1’25, from $356.7 million last year.
Gross premiums earned were $353.8 million, up 3.6% from $341.4 million in Q1’24, driven by higher gross premiums written in the last year from commercial residential business growth and rating actions.
Meanwhile, net premiums earned were up 11.5% to $200 million in Q1’25 from $179.4 million in the prior year quarter, reflecting higher gross premiums earned, as well as a reduction in ceded premiums in the quarter.
The reduction in ceded premium is driven primarily by a $8.7 million reinstatement premium for Hurricane Ian during Q1’24, coupled with a reduction in previously accrued reinstatement premiums of $1.4 million during Q1’25, explained the firm.
The ceded premium ratio was 43.5%, down 3.9 points from 47.4% in the prior year quarter, driven by growth in gross premiums earned and less ceded premium as described above.
The firm’s net loss ratio decreased to 49.7%, a 7.2 point improvement from 56.9% in Q1’24, reflecting higher net premiums earned, coupled with slightly lower net losses and LAE.
Meanwhile, the net combined ratio for the quarter is 84.5%, an improvement of 9.5 points from 94% in Q1’24, driven by a lower net loss ratio and lower net expense ratio.
Lastly, net investment income remained flat year on year at $8.6 million, with a return on average equity of 39.3%, up from 25% in Q1’24.
Ernie Garateix, Chief Executive Officer, Heritage, commented, “Our first quarter results have once again demonstrated the resilience of our business model as a property insurer operating in catastrophe exposed geographies. The first quarter of 2025 marked the third consecutive quarter in which Heritage was impacted by significant catastrophe losses and also generated returns to shareholders. We have worked diligently over the past several years to provide our insureds with quality customer service and an efficient and thorough claims handling experience, while improving our underlying portfolio with disciplined underwriting and appropriate rates to deliver shareholder value. We believe the momentum in our business will continue as we enter the next phase of our strategy focused on controlled growth.”
He added, “As a result of carefully managing our exposure, obtaining rate adequacy and diversifying our business throughout the last several years, we are well-positioned to enter a managed growth phase, where we are opening territories for new personal lines business. Based upon our historic production, we only had 30% of our production capacity open for new business as of June 2024. Given the positive outlook for our personal lines business, we have started to open capacity for growth across our geographies with approximately 17% of additional capacity opened in the fourth quarter of 2024, an additional 8% of capacity in the first quarter of 2025, and recently opening an additional 16% of our production capacity. This now places us with nearly 75% of our production capacity open and our expectation is that the balance will be opened by year end 2025. As we open territories, we plan to collaborate with our dedicated independent agent business partners to work toward ramping our production, in a prudent manner, without altering our disciplined underwriting process.”
Garateix concluded, “Additionally, the positive impact of actions taken by the Florida legislature to curtail claims abuse has improved our outlook on the Florida market. As such, we are gradually opening more territories to write new personal lines business and offer needed products to our customer base. As territories are opened, we expect to increase the pace of production growth.”
