Heritage Insurance (HRTG) 8-K/A Financial Statements and Exhibits

EXHIBIT 99.4

HERITAGE INSURANCE HOLDINGS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On November 30, 2017, Heritage Insurance Holdings, Inc. (“Heritage” or the “Company”) completed the acquisition of all of the outstanding capital stock of NBIC Holdings, Inc. (“NBIC”), the parent company of Narragansett Bay Insurance Company, a leading specialty underwriter of personal residential insurance products and services in several states along the Eastern seaboard. The acquisition resulted in NBIC becoming a wholly-owned subsidiary of the Company (the “Acquisition”). The Company completed the NBIC Acquisition pursuant to the previously disclosed Agreement and Plan of Merger, dated as of August 8, 2017, by and among the Company, Gator Acquisition Merger Sub, Inc., NBIC and PBRA, LLC, in its capacity as Stockholder Representative (the “Merger Agreement”).

The purchase price for the Acquisition was $250 million, including $210 million in cash, plus 2,222,215 shares of the Company’s common stock (the “Stock Consideration”) with an aggregate value of $40 million, subject to a post-closing book value adjustment. The Stock Consideration was issued at closing in an exempt private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. In accordance with the Merger Agreement, 687,802 shares from the Stock Consideration were placed into an escrow account to secure any amounts payable pursuant to the post-closing book value adjustment provisions.

The cash portion of the purchase price for the Acquisition was financed in part through the proceeds of the Company’s offering of its 5.875% Convertible Senior Notes due 2037 (the “Convertible Notes”), which was completed on August 16, 2017. In connection with the issuance of the Convertible Notes, the Company repurchased $40 million of its common stock.

The underlying historical financial information of Heritage and NBIC presented below was derived from the Company’s historical financial statements and NBIC’s historical financial statements filed herewith on this Form8-K/A, as well as adjustments which management believes are reasonable to account for the Acquisition.

The pro forma condensed combined statements of income for the nine months ended September 30, 2017 and for the year ended December 31, 2016 assume that the Acquisition occurred on January 1, 2016. The unaudited pro forma condensed combined balance sheet as of September 30, 2017 assumes the Acquisition occurred on September 30, 2017. The Company presents these pro forma condensed combined financial results for informational purposes only, and the pro forma financial statements are not necessarily indicative of what the combined company’s results of operations or financial position would actually have been had the Acquisition been completed on the dates indicated. In addition, the pro forma condensed combined statements of income do not purport to project the future operating results of the combined company.

The tax rate used for these pro forma combined condensed financial statements is an estimated statutory tax rate. As a result, it will likely vary from the actual effective rate in periods subsequent to the completion of the Acquisition.

The unaudited pro forma condensed combined financial information should be read in conjunction with the following:

• The accompanying notes to the unaudited pro forma condensed consolidated financial information;

• NBIC’s consolidated financial statements and related notes thereto contained in Exhibits 99.1 and 99.2 of this Form8-K/A;

• Heritage’s audited consolidated financial statements and related notes thereto contained in its Annual Report on Form10-K for the years ended December 31, 2016; and

• Heritage’s condensed consolidated financial statements and related notes thereto contained in its Quarterly Report on Form10-Q for the period ended September 30, 2017

1

HERITAGE INSURANCE HOLDINGS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2017

(Amounts in thousands, except per share and share amounts)

	Heritage As Reported			NBIC			Pro Forma Adjustments			Notes			Heritage Pro Forma
Revenues:
Gross premiums written		455,845			251,630			—						707,475
Change in gross unearned premiums		4,180			(15,013	)		—						(10,833	)
Gross premiums earned		460,025			236,617			—						696,642
Ceded premiums		(182,189	)		(197,590	)		—						(379,779	)
Net premiums earned		277,836			39,027			—						316,863
Net investment income		8,210			1,771			—						9,981
Ceding commission earned		—			61,323			—						61,323
Net realized gains		1,011			—			—						1,011
Other revenue		10,948			935			—						11,883
Total revenue		298,005			103,056			—						401,061
Operating Expenses:
Loss and loss adjustment expenses		156,728			15,788			—						172,516
Policy acquisition costs		66,086			45,833			—						111,919
General and administrative expenses		48,826			15,949			2,043			(a	)		66,818
Total operating expenses		271,640			77,570			2,043						351,253
Operating income (expense)		26,365			25,486			(2,043	)					49,808
Interest expense, net		7,010			—			6,128			(b	)		13,138
Amortization of debt issuance costs		1,153			—			715			(b	)		1,868
Othernon-operating expenses		6,883			—									6,883
Income before income taxes		11,319			25,486			(8,886	)					27,919
Provision for income taxes		7,390			9,263			(3,396	)		(c	)		13,257
Net income		3,929			16,223			(5,490	)					14,662
Weighted average shares outstanding
Basic		27,647,146									(d	)		29,869,361
Diluted		27,647,146									(d	)		29,869,361
Earnings per share:
Basic		0.14									(d	)		0.49
Diluted		0.14									(d	)		0.49

See notes to unaudited condensed consolidated financial statements

2

HERITAGE INSURANCE HOLDINGS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31, 2016

(Amounts in thousands, except per share and share amounts)

	Heritage As Reported			NBIC			Pro Forma Adjustments			Notes			Heritage Pro Forma
Revenues:
Gross premiums written		626,704			306,622			—						933,326
Change in gross unearned premiums		13,814			(13,899	)		—						(85	)
Gross premiums earned		640,518			292,723			—						933,241
Ceded premiums		(228,797	)		(223,291	)		—						(452,088	)
Net premiums earned		411,721			69,432			—						481,153
Net investment income		9,181			2,136			—						11,317
Ceding commission earned		—			69,921			—						69,921
Net realized gains		1,733			—			—						1,733
Other revenue		16,323			1,137			—						17,460
Total revenue		438,958			142,626			—						581,584
Operating Expenses:
Loss and loss adjustment expenses		238,862			29,102			—						267,964
Policy acquisition costs		84,421			56,999			—						141,420
General and administrative expenses		58,910			25,452			7,207			(a	)		91,569
Total operating expenses		382,193			111,553			7,207						500,953
Operating income (expense)		56,765			31,073			(7,207	)					80,631
Interest expense, net		321			—			9,927			(b	)		10,248
Amortization of debt issuance costs		41			—			1,116			(b	)		1,157
Income before income taxes		56,403			31,073			(18,250	)					69,226
Provision for income taxes		22,538			10,887			(6,596	)		(c	)		26,829
Net income		33,865			20,186			(11,654	)					42,397
Weighted average shares outstanding
Basic		29,632,171									(d	)		31,854,386
Diluted		29,634,349									(d	)		31,856,564
Earnings per share
Basic		1.14									(d	)		1.33
Diluted		1.14									(d	)		1.33

See notes to unaudited condensed consolidated financial statements

3

HERITAGE INSURANCE HOLDINGS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2017

(Amounts in thousands)

	Heritage As Reported			NBIC			Pro Forma Adjustments			Notes			Heritage Pro Forma
ASSETS
Fixed maturity securities, available for sale, at fair value		494,484			101,257			—						595,741
Equity securities, available for sale, at fair value		25,396			—			—						25,396
Total investments		519,880			101,257			—						621,137
Cash and cash equivalents		352,321			81,154			(210,000	)		(e	)		223,475
Restricted cash		19,853			—			—						19,853
Accrued Investment income		4,635			495			—						5,130
Premiums receivable, net		35,326			30,774			—						66,100
Reinsurance recoverable on paid and unpaid claims		370,751			103,703			—						474,454
Prepaid reinsurance premiums		153,955			137,730			—						291,685
Income taxes receivable		1,649			—			1,591			(i	)		3,240
Deferred income taxes		—			14,679			(14,679	)		(f	)		—
Deferred policy acquisition costs, net		41,888			33,005			(33,005	)		(g	)		41,888
Property and equipment, net		16,198			2,830			—						19,028
Intangibles, net		22,967			435			80,805			(a	)		104,207
Goodwill		46,454			—			109,072			(h	)		155,526
Other assets		13,107			6,403									19,510
Total Assets		1,598,984			512,465			(66,216	)					2,045,233
LIABILITIES AND STOCKHOLDERS’ EQUITY
Unpaid losses and loss adjustment expenses		489,580			87,487			—						577,067
Unearned premiums		313,843			175,493			—						489,336
Reinsurance payable		158,122			52,994			—						211,116
Note payable, net of issuance costs		188,634			—			—						188,634
Deferred income taxes		4,493			—			2,013			(f	)		6,506
Advance premiums		20,397			7,122			—						27,519
Accrued compensation		6,955			2,969			—						9,924
Other liabilities		53,547			76,141			4,718			(i	)		134,406
Funds held by companies under reinsurance treaties		61,732			16			—						61,748
Total Liabilities		1,297,303			402,222			6,731						1,706,256
Stockholders’ Equity
Common stock		2			—			2			(j	)		4
Additionalpaid-in capital		209,338			123,070			(83,072	)		(j	)		249,336
Accumulated other comprehensive loss		(422	)		(2,615	)		2,615			(j	)		(422	)
Treasury stock		(87,185	)		—			—			j			(87,185	)
Retained earnings		179,948			(10,212	)		7,508			(j	)		177,244
Total Stockholders’ Equity		301,681			110,243			(72,947	)					338,977
Total Liabilities and Stockholders’ Equity		1,598,984			512,465			(66,216	)					2,045,233

See notes to unaudited condensed consolidated financial statements

4

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Note 1 – Basis of Preparation

The historical consolidated financial statements have been adjusted in the pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the Acquisition, (2) factually supportable and (3) expected to have a continuing impact on the combined results.

The Company prepared the pro forma condensed combined statements of income under the acquisition method of accounting in accordance with existing U.S. generally accepted accounting principles (“U.S. GAAP”) – Accounting Standard Codification (“ASC”) 805,Business Combinations. Under the acquisition method of accounting, the Company measured the total purchase price (consideration transferred) as described in Note 2, “Consideration Transferred.” The Company based the value of the underlying tangible and intangible assets acquired and liabilities assumed on their respective estimated fair market values as of the balance sheet date, with any excess purchase price allocated to goodwill. The determination of the fair value of NBIC’s assets and liabilities requires extensive use of estimates and management’s judgment. The Company will continue to evaluate information obtained up to and following the closing of the NBIC Acquisition, including during the measurement period, to update the fair value of assets acquired and liabilities assumed, which may differ materially from these preliminary estimates.

The pro forma condensed combined statements of income are preliminary and have been prepared solely for the purpose of providing pro forma financial information prepared in accordance with the rules and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). Differences between these preliminary estimates and the final acquisition accounting will occur, and these differences could have a material impact on the pro forma condensed combined financial information and the Company’s future consolidated results of operations.

Acquisition-related transaction costs (e.g., investment banking, advisory, legal, valuation, and other professional fees) and certain merger-related costs and charges have not been included as a component of consideration transferred, as they must be expensed as incurred. Total transaction costs incurred for the year ended December 31, 2016 and the nine months ended September 30, 2017 are approximately $0 and $2.2 million, respectively. The Company estimates that it will incur transaction costs totaling approximately $6.5 million in connection with the Acquisition. The costs that the Company may ultimately incur could differ materially from this amount.

In order to prepare the pro forma condensed combined statements of income, the Company performed a preliminary review of NBIC’s accounting policies to identify significant differences. During the preparation of the unaudited pro forma condensed combined financial statements, the Company did not become aware of any material differences, other than presentation of certain line items in the condensed combined statements of income and balance sheet, between the accounting policies of the Company and NBIC. The Company is currently conducting a detailed review of NBIC’s accounting policies to determine if differences in accounting policies require further adjustment or reclassification of NBIC’s presented results of operations, assets or liabilities to conform to the Company’s accounting policies and classifications. As a result of that review, the Company may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the pro forma condensed combined financial statements. For the purpose of aligning NBIC’s presentation of certain line items in the pro forma condensed combined statements of income and balance sheet to Heritage’s presentation, reclassification adjustments have been made to NBIC’s historical financial statements, as detailed below.

5

The following reclassifications have been made to conform NBIC’s historical financial statements to Heritage’s presentation of the unaudited pro forma condensed combined statements of income:

					For the Nine Months Ended September 30, 2017
(in thousands)			Gross premiums written		Change in gross unearned premiums			Ceded premiums			Net investment income		Net realized gains		Other revenue		Policy acquisition costs			General and admin expenses
Net premiums earned	36,164			251,630		(15,013	)		(200,453	)		—		—		—		—			—
Net investment income	1,938			—		—			—			1,771		—		167		—			—
Other Income	3,620			—		—			2,863			—		—		768		—			(11	)
Net Total	41,722			251,630		(15,013	)		(197,590	)		1,771		—		935		—			(11	)
Policy acquisition costs	(44,699	)		—		—			—			—		—		—		(44,699	)		—
General and administrative expenses	(17,072	)		—		—			—			—		—		—		(1,134	)		(15,938	)
Net Total	(20,049	)		251,630		(15,013	)		(197,590	)		1,771		—		935		(45,833	)		(15,949	)

					For the Year Ended December 31, 2016
(in thousands)			Gross premiums written		Change in gross unearned premiums			Ceded premiums			Net investment income		Net realized gains		Other revenue		Policy acquisition costs			General and admin expenses
Net premiums earned	65,622			306,622		(13,899	)		(227,101	)		—		—		—		—			—
Net investment income	2,209			—		—			—			2,136		—		73		��			—
Other Income	4,874			—		—			3,810					—		1,064		—			—
Net Total	72,705			306,622		(13,899	)		(223,291	)		2,136		—		1,137		—			—
Policy acquisition costs	(56,048	)		—		—			—			—		—		—		(56,048	)		—
General and administrative expenses	(26,403	)		—		—			—			—		—		—		(951	)		(25,452	)
Net Total	(9,746	)		306,622		(13,899	)		(223,291	)		2,136		—		1,137		(56,999	)		(25,452	)

6

The following reclassifications have been made to conform NBIC’s historical financial statements to Heritage’s presentation of the unaudited pro forma condensed combined balance sheet:

	As of September 30, 2017
(in thousands)			Fixed maturity securities, available for sale, at fair value		Cash and cash equivalents		Reinsurance recoverable on paid and unpaid claims		Prepaid re- insurance premiums		Property and equipment, net		Intangibles, net		Other assets
Fixed maturity securities, available for sale, at fair value	$	98,263	$	98,263		—		—		—		—		—		—
Cash and cash equivalents		84,148		2,994		81,154		—		—		—		—		—
Land and buildings		1,860		—		—		—		—		1,860		—		—
Reinsurance recoverable on paid losses		34,433		—		—		34,433		—		—		—		—
Reinsurance recoverable on unpaid losses		69,270		—		—		69,270		—		—		—		—
Ceded unearned premium reserves		137,730		—		—		—		137,730		—		—		—
Furniture, equipment and software		970				—		—		—		970		—		—
Equity from pools and associations		3,701		—		—		—		—		—		—		3,701
Other assets		3,137		—		—		—		—		—		435		2,702
Net total		433,512		101,257		81,154		103,703		137,730		2,830		435		6,403

			As of September 30, 2017
(in thousands)			Accrued compensation		Other liabilities
Unearned ceding commission	$	57,953		—	$	57,953
Commissions payable		9,085		—		9,085
Accrued expenses and accounts payable		8,562		—		8,562
Accrued retirement plan		3,510		2,969		541
Net total		79,110		2,969		76,141

The pro forma condensed combined statements of income do not reflect the realization of any expected reinsurance or operational synergies from the Acquisition following the completion of the business combination. The pro forma condensed combined statements of income also do not include any adjustment for costs that may result from integration activities, as management has not completed its assessment of the costs, if any, associated with such activities. Significant costs may ultimately be recorded for other exit and integration activities.

7

Note 2 – Consideration Transferred

In accordance with the terms of the Merger Agreement governing the Acquisition, total consideration for the Acquisition consisted of (i) approximately $210.0 million in cash and (ii) shares of Heritage common stock with an aggregate value of approximately $40.0 million, subject to a post-closing book value related adjustment.

The following table summarizes the components of the consideration transferred:

(in thousands, except per share and share amounts)
Shares of Heritage common stock issued (1)		2,222,215
Share price		18.00
Stock consideration to NBIC stakeholders		40,000
Cash consideration to NBIC stakeholders		210,000
Total purchase price	$	250,000

(1) The value of each share of the Company’s common stock was based on the volume-weighted average price of the Company’s common stock during the fivebusiness-day period ending on November 29, 2017.

Note 3 – Preliminary Purchase Price Allocation

The total purchase price as summarized above was allocated to NBIC’s tangible and intangible assets acquired and liabilities assumed for purposes of the pro forma condensed combined financial information, based on their estimated relative fair values assuming the Acquisition was completed as of the pro forma balance sheet date presented.

The following table presents the Company’s preliminary estimates of the fair values of NBIC’s tangible and intangible assets acquired and liabilities assumed. These preliminary estimates are based on the information available as of the balance sheet date and have been made solely for the purpose of providing the pro forma condensed combined financial statements.

The Company is continuing to evaluate the underlying inputs and assumptions used in its valuations. Accordingly, these preliminary estimates are subject to change following the closing of the Acquisition, including during the measurement period.

The following table summarizes the allocation of the preliminary purchase price as of the balance sheet date:

(in thousands)	Amount
Cash and cash equivalents	$	81,154
Investments		101,258
Premiums receivable		30,774
Reinsurance recoverable on paid and unpaid claims		103,703
Prepaid reinsurance premiums		137,730
Intangible assets		81,240
Other assets		9,728
Total assets acquired	$	545,587
Unpaid losses and loss adjustment expenses		87,487
Unearned premiums		175,493
Reinsurance payable		52,994
Other liabilities assumed		88,685
Total liabilities assumed	$	404,659
Total net assets acquired	$	140,928
Goodwill		109,072
Total purchase price	$	250,000

8

Note 4 – Pro Forma Adjustments

a) Reflects an adjustment to the NBIC’s amortization expense of $4.3 million and $7.2 million for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively, related to acquired intangible assets partially offset by the related amortization reversal and acquisition transaction costs incurred to date. In addition, included in the adjustment is the reversal of amortization expense for the nine months ended September 30, 2017 and the year ended December 31, 2016 related to NBIC’s historical intangible assets eliminated for the purpose of the pro forma condensed combined financial statements.

The following table presents the preliminary fair values that the Company has assigned to the identifiable intangible assets, the average estimated useful lives, and the estimated amortization expense related to these identifiable intangible assets:

	Estimated Fair Value (in thousands)		Average Estimated Useful Life (in years)			Amortization for the Nine Months Ended September 30, 2017 (in thousands)			Amortization for the Year Ended December 31, 2016 (in thousands)
Agent Relationships		10,700		10		$	803		$	1,070
Trade Name		7,000		10			525			700
Insurance Licenses		1,140		Indefinite			—			—
Non-Compete Agreements		4,000		1-2			941			2,745
Renewal Rights		40,600		15			2,030			2,707
Business Acquired “VOBA” (1)		17,800		(1	)		—			—
Total	$	81,240				$	4,299		$	7,222
(in thousands)
NBIC’s amortization of historical intangibles							(11	)		(15	)
Transaction costs							(2,245	)		—
Net general and administrative expense adjustments						$	2,043		$	7,207

(1) NBIC’s historical amortization of deferred policy acquisition costs reflects the estimated continuing impact on the statements of income of the combined entity. As such, a pro forma adjustment for the amortization of VOBA over an estimated 12 month period has not been reflected in the unaudited pro forma condensed combined statements of income presented.

In addition, reflected in this adjustment is the derecognition of NBIC’s intangible assets of $0.4 million, which reflects the assets’ values as of September 30, 2017.

This adjustment also reflects the derecognition of transaction costs related to the Acquisition. Heritage estimates total transaction costs for the Acquisition will be approximately $6.5 million. The costs that Heritage may ultimately incur could differ materially from this amount. Transaction costs include fees for investment banking, advisory, legal, valuation, and other professional services. As the transaction costs will not have a continuing impact, Heritage has not shown the transaction costs in the pro forma statements of income. The pro forma statements of income remove $2.2 million in nonrecurring transaction costs from General & Administrative Expenses for the nine months ended September 30, 2017. Heritage reflects the remaining transaction costs in the pro forma balance sheet as of September 30, 2017 as an increase to Other Liabilities and a decrease to Retained Earnings.

b) In connection with the Acquisition, the Company issued $136.8 million aggregate principal amount of Convertible Notes to finance a portion of the cash component of the consideration paid to NBIC stakeholders.

The interest expense adjustment reflects interest expense of $6.1 million and $9.9 million for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively, related to the Convertible Notes issued in connection with the Acquisition. The Company’s historical financial statements for the nine months ended September 30, 2017 include interest expense of $1.3 million related to the Convertible Notes.

The amortization adjustment of $0.7 million and $1.1 million for the nine months ended September 30, 2017 and for the year ended December 31, 2016, respectively, is to reflect amortization of capitalized costs incurred in connection with the issuance of the Convertible Notes. The Company’s historical financial statements as at September 30, 2017 include amortization of $0.1 million related to the Convertible Notes.

9

c) Reflects the federal and state tax impact for combination income adjustments and the impact of recording state taxes on historical results for the business combination.

d) The following table shows the Company’s calculation of pro forma combined basic and diluted earnings per share for the nine months ended September 30, 2017 and the year ended December 31, 2016:

Earnings per share

(in thousands, except per share and share data)	Nine Months Ended September 30, 2017		Year Ended December 31, 2016
Pro forma net income from continuing operations	$	14,662	$	42,397
Basic weighted average Heritage shares outstanding		27,647,146		29,632,171
Heritage shares issued as Acquisition consideration		2,222,215		2,222,215
Pro forma basic weighted average shares outstanding		29,869,361		31,854,386
Heritage historical dilutive shares outstanding		—		2,178
Pro forma diluted weighted average shares outstanding		29,869,361		31,856,564
Pro forma basic earnings per share from continuing operations	$	0.49	$	1.33
Pro forma diluted earnings per share from continuing operations	$	0.49	$	1.33

As described in Note 2, total purchase price consideration included 2,222,215 shares of the Company’s common stock, subject to post-closing book value adjustments that may impact the number of shares issued in connection with the Acquisition.

e) Reflects cash consideration of $210 million, in accordance with the terms of the Merger Agreement governing the Acquisition.

f) Reflects the federal and state impact for combination balance sheet adjustments. Furthermore, reflects the impact of recording state taxes on historical results for the business combination. In addition, reflects an adjustment to reclassify deferred income taxes in order to present a net deferred taxes asset or liability on the balance sheet in accordance with U.S. GAAP.

Deferred income taxes

(in thousands)	As of 9/30/2017
Adjustment to reclassify NBIC’s deferred income taxes asset position	$	(14,679	)
Net deferred income taxes liability adjustments resulting from the Acquisition		16,692
Net deferred income taxes adjustments	$	2,013

g) Reflects elimination of NBIC’s historical deferred policy acquisition costs asset of $33.0 million for the nine months ended September 30, 2017 as a result of the Acquisition.

h) Reflects recognition of goodwill of $109.1 million resulting from the Acquisition, as further detailed in Note 3.

i) Adjustments to Other liabilities reflects a fair value adjustment of $0.4 million related to NBIC’s accrued retirement plan, as well as the remaining estimated transaction costs of $4.3 million in connection with the Acquisition, for which a corresponding Income tax receivable of $1.6 million has been recognized.

j) Reflect adjustments to eliminate NBIC’s historical equity and impacts of other adjustments resulting from the Acquisition.

Adjustments toAdditionalpaid-in capital reflects (1) elimination of NBIC’s historical additionalpaid-in capital balance and (2) issuance of Heritage’s stock to NBIC stockholders as part of total consideration.

(in thousands)	As of 9/30/2017		��
Elimination of NBIC’s historical additionalpaid-in capital as of September 30, 2017	$	(123,070	)
Issuance of common stock (consideration transferred)		39,998
Net additionalpaid-in capital adjustments	$	(83,072	)

Adjustments to Accumulated other comprehensive loss reflect the elimination of NBIC’s historical accumulated other comprehensive loss balance for the nine months ended September 30, 2017.

Adjustments to Retained earnings reflect (1) elimination of NBIC’s historical retained earnings balance $10.2 million and (2) additional transaction costs, net of $2.7 million resulting from the Acquisition for the nine months ended September 30, 2017.

10

Note 5 – Subsequent Debt Financing Considerations

The Company held a Special Meeting of Stockholders on December 1, 2017, at which the Company’s stockholders’ approved, as required by Rule 312 of the New York Stock Exchange Listed Company Manual, on the issuance of the Company’s common stock upon conversion of the Convertible Notes. Pursuant to the approval, the Company will have the ability to settle the conversion option in shares of common stock, cash or a combination thereof. Upon conversion of the Convertible Notes, the Company intends to pay cash in respect of only the principal amount of the Convertible Notes being converted or (if lower) the conversion value thereof, and to settle any amounts in excess thereof in cash, shares of common stock or a combination thereof, at the Company’s election.

Prior to receipt of stockholder approval, the Company recorded the fair value of the derivative liability on its balance sheet at fair value with changes in the fair values reflected in the consolidated statement of operations. As of September 30, 2017, the derivative liability was marked to fair value with a corresponding adjustment in the condensed consolidated statement of operations. For the nine months ended September 30, 2017, the Company recognized a loss on change in the fair value totaling $6.9 million. The Company may recognize additional loss on a change in the fair value of the derivative liability as a result of fluctuations in the Company’s stock price between September 30, 2017 and December 1, 2017, the date on which Stockholder approval was obtained, and such additional loss may be material.

Beginning December 1, 2017, the conversion option of the Convertible Notes qualifies for equity classification and will no longer be accounted for as a separate derivative instrument liability in accordance with applicable U.S. GAAP guidance. The following table reflects the impact of the stockholder approval on the pro forma condensed combined balance sheet as of September 30, 2017, reclassifying the conversion option into shareholder equity.

ASSETS	Heritage Pro Forma (as stated)			Note 5 Adjustments			Heritage  Pro Forma (as adjusted)
Fixed maturity securities, available for sale, at fair value		595,741						595,741
Equity securities, available for sale, at fair value		25,396						25,397
Total investments		621,137						621,138
Cash and cash equivalents		223,475						223,475
Restricted cash		19,853						19,853
Accrued Investment income		5,130						5,130
Premiums receivable, net		66,100						66,100
Reinsurance recoverable on paid and unpaid claims		474,454						474,454
Prepaid reinsurance premiums		291,685						291,685
Income taxes receivable		3,240						3,240
Deferred income taxes		—						—
Deferred policy acquisition costs, net		41,888						41,888
Property and equipment, net		19,028						19,028
Intangibles, net		104,207						104,207
Goodwill		155,526						155,526
Other assets		19,510						19,510
Total Assets		2,045,233			—			2,045,233
LIABILITIES AND STOCKHOLDERS’ EQUITY
Unpaid losses and loss adjustment expenses		577,067						577,067
Unearned premiums		489,336						489,336
Reinsurance payable		211,116						211,116
Note payable, net of issuance costs		188,634						188,634
Deferred income taxes		6,506						6,506
Advance premiums		27,519						27,519
Accrued compensation		9,924						9,924
Other liabilities		134,406			(23,721	)		110,685
Funds held by companies under reinsurance treaties		61,748						61,748
Total Liabilities		1,706,256			(23,721	)		1,682,535
Stockholders’ Equity
Common stock		4						4
Additionalpaid-in capital		249,336			23,721			273,057
Accumulated other comprehensive loss		(422	)					(422	)
Treasury stock		(87,185	)					(87,185	)
Retained earnings		177,244						177,244
Total Stockholders’ Equity		338,977			23,721			362,698
Total Liabilities and Stockholders’ Equity		2,045,233			—			2,045,233

11