Heritage Insurance Holdings, Inc. (NYSE:HRTG) reported improved financial performance in its third quarter earnings call on Friday, 3 November 2023, despite facing significant challenges such as the Maui wildfires and Hurricane Idalia in Florida. The company’s CFO, Kirk Lusk, and CEO, Ernie Garateix, led the call.
The company reported a net loss of $7.4 million for the quarter as a result of the aforementioned catastrophic events. However, this was an improvement on the net loss of USD 48.2 million reported in the same quarter last year.
Despite the 13.6% decline in policy numbers, Heritage’s premium in force increased by 8.4% to $1.35 billion. The company’s strategic initiatives resulted in strong average rate growth of 25.5% year over year and 5.1% quarter over quarter.
In Florida, Heritage selectively grew its commercial residential book of business by 75.3%, resulting in a more balanced and diversified portfolio with no state accounting for more than 27% of the company’s total insured value. This diversification strategy was achieved in the midst of significant expansion in the Florida commercial segment.
The company also reported a decrease in losses and loss adjustment expenses of 15.7% in the third quarter, primarily due to lower attritional and weather-related losses. Book value per share improved to $5.65, a significant increase of 24.4% compared to Q3 2022.
The improvement in financial performance was primarily driven by growth in net earned premiums, an increase in net investment income and lower weather and attritional losses. Annualised return on equity for the nine months ended 30 September 2023 was 13.6%, an improvement from the loss reported in the prior year.
Heritage remains committed to continuous improvements in claims handling, including an enhanced claims system to improve efficiency. They remain resolute in their commitment to pay legitimate claims in a timely manner and to deny or contest those that are not owed.
Based on real-time data and tips, it’s clear that Heritage Insurance Holdings, Inc. (HRTG) is on an upward trajectory. The company’s market capitalisation is a solid USD 174.72 million and its P/E ratio is a low 6.07, suggesting that the stock could be undervalued. Furthermore, the company’s revenue has grown by 10.47% over the last twelve months.
Two tips that stand out are the accelerating revenue growth and the expectation of net profit growth this year. This is in line with the company’s reported increase in in-force business and strategic initiatives leading to premium increases. In addition, although the company does not pay a dividend to its shareholders, it has shown a significant yield over the past week, month and year.
