HRTG - Earnings call transcript Q4 2020 | Heritage Insurance Holdings, Inc.

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Operator

Good morning, and welcome to the Heritage Insurance Holdings Fourth Quarter 2020 Financial Results Conference Call. My name is Kate, and I will be the operator today. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. Please note this event is being recorded. to President conference at like Soleimani, to now Vice Executive Heritage. would turn over the Arash I Please go ahead.

Arash Soleimani

statements of Litigation where Good and call convenience. we Reform morning and earnings on Act available our In of to are the cause These within section for are uncertainty based you SEC statements today. call detail may We website, and current XXXX. to thanks These our meaning Private may review from that the changes for expectations. our contain visit joining and expectations filings, will Securities risks in be replay our the release forward-looking management's materials results and or earnings Today's of future release differ circumstances. the us archived. material earnings invite our our subject investors.heritagepci.com are press in Investors your at to

and statements to as obligation we of no statements may Our we today are have forward-looking make. any update

For call to release Financial differ forward-looking a now earnings Executive results forward-looking With those and filings. on are Form call over our us the Chief turn in other Garateix, Ernie Officer. described our Officer; our the Lusk, Report SEC Kirk cause will from statements, on statements that the and could today Chief Annual description XX-K, and I refer Ernie. materially our to to risks of please the

Ernie Garateix

you And morning, thank Good us Arash. you, Thank joining today. everyone. for

to like and with remains they high come and from We our Productivity do of we to to had would service no continue that with I have virtually impact quarter, on to our Net thank and development. fourth been very quarter much the value employees XXth also provide our positive distribution business pleased of that Heritage. of fortunate favorable have We has book share income policyholders COVID-XX employees. expect partners our organization. dedication reserve and hard the report prior in their growth the an weather and losses. despite unprecedented were year were to per work to level our for has consecutive

line we XX% our top our including growth raise in as XXXX main the line, continue our increases While double-digit solid the compounded at across will to in be focus bottom footprint, Florida. rates rate quarter, was on in almost

taking boost We are were also to actions underwriting necessary further profitability.

appreciate mentioned will partnership with Nutmeg the Agency, in forward recently with to Hartford now a our subsidiary I coastal offer look and provide working We As a the select of details earnings partnership. release, the call to turn policies financials. home to launched their we to and over on the markets. Agency Nutmeg the more Kirk

Kirk Lusk

Maryland morning. or million were Thank written total the in bringing Gross quarter. XX.X% $XXX.X the for We you, during year started premiums million, Ernie. writing from states quarter, the fourth Good of number up active prior XX. the quarter $XX.X to

For XX.X% over were premiums written increase which same in‐force $XXX.X up the million, an period. the of X.X% versus full-year, policies growth is of

profit obtaining focused As on last we an are I and quarter, adequate making rates. underwriting mentioned

significantly ceded a The and XX.X%. premium true reflects the of quarter largely of by on focus fourth benefit Both I impacted forward, growth X.X fourth weather in were ceded and quarter our look to we expansion. year-over-year quarter as year-over-year ratio margin fourth the the from up third decrease XX.X% year-end was the we the ratio. points As events. down expect down The slow premium quarter,

total. the current XXXX, $XX.X full-year, the company year higher of losses, accident million For million million had $XX.X weather than $XXX.X

quarter trends are X% relatively XX.X% ratio differences, mostly increase the flat. regional weather attributable long-term frequency current is X% The accident quarter, were events. pure net $XX.X prior is than loss of losses higher loss to premium was $XX.X term fourth million, The year driven weather million quarter loss long severity net which the other of than XXXX. X% but of to For XQ, personalized and up with trend ratio to are X% higher between There losses non-cat cat by overall XX%.

in million geography. in rates. states. rate. XXXX, other approximately rate XX% into a excluding of which Overall any in personalized X% expedited generated XXXX, was deduct and $XXX.X of corporate inflation In efforts. to numbers Act, were expanding a just to was depending period, impact tax combined guard X% for over for year, the overall refine the a in we exclude the personal to Florida fourth of rate increases XXXX lines income the across ratio million, to those the adds the is rate over fourth net to anticipated prior exposures on capital footprint up were In structure filing upon lines focused X% In line These for from for The be anticipated reflecting tax to our carry personal are XXXX, reform our XXXX, in our quarter, CARES be and ratio. all reinsurance the we Florida net higher and growth more quarter the due top over year pretax and which XX% continuing Our of XX% at over was $XX.X for able which increases back we result products the XXXX, XXXX. XX% loss and loss

increasing our now on margins. are We focused

We are to now take your available questions.

Operator

first [Operator from Backer ahead. Sidoti. question is Go Instructions] Our Marla from

Marla Backer

you. Thank

generated of Hartford, of Can you bit partnership partnerships? business us a talk with with a this of portion And to see you historically what a a has the been the be seems through you by new strategy? working that figure little where going? can has new these the bit about, subsidiary talk talk well. little can you part So your us through, been It

Ernie Garateix

Thank you, Marla.

specifics strategy value that the of years. on as So of the partnerships to don't last continue had partnerships We value necessarily we've forward. those the we've going for with is large yes, a comment we it We'll those couple carriers had. them

started. And be agency, are [nutmeg] we strategy. continues grow relationship. goal, we with new But that as that of coastal new And again, our company. So that part markets, a that a the stated, we we is with as move forward to with just that working we'll on select them relationship is the

Marla Backer

thanks. Okay, now you those get start one to as more reinsurance you is, which of the And you is strategy your think question, some Are tweaking XXXX/XXXX about anyway, negotiations? then strategy. as season, closer to your in

Ernie Garateix

say is strategy. refining I What would we're that that

course geographically with continue We the We've it stay us. on work past. diversification, that helps seen the in to

savings. to We've same believe continue rates the We provide to that others as has the continue seen We've where we have we know, market we'll as believe going work our strategy that. up going and have, received but reinsurance forward. the us, are reinsurance with seen will to savings rates that not continued we

Operator

Our next Mark from from question Truist. is ahead. Hughes Go

Mark Hughes

that to Ernie, geography more pointed a some be Could growth? little deceleration probably any you're going on you a or property mentioned, your detail little lead that in type more and underwriting and you that? changes out will correctly particular of to you're making give underwriting? there Is strict

Ernie Garateix

question Mark. Sure, good

are what you of strategy at doing ensuring line, the the expanding. and underwriting margins it's day, know, bottom So at the and is refining the the that end we're looking

right areas not as where believe So profitability geographic is that are across we there some look we there. our footprint,

way So still margins. obviously where will in increase that grow closing allow other profitability us growth of better, areas to the down, we're That kind and bottom that is the to there. slowing line

Kirk Lusk

to a And that significant geography sure means that really, at risk we make look our geographically, there of it how we where are don't of looking to at driving probably amount business, but on our is standpoint. areas diversified just other want a And are of to that, could which write from that that we top concentration issues trying concentration we're is and P&L.

Mark Hughes

the topic, seems your you sense is lot there competitive in is to how you profitably market? Florida do pain that there there? system, And through have is you On much Yes. environment what It there? grow going a the the Florida? opportunity of like, do of appetite - Are see

Ernie Garateix

selective good as that sized with. bottom right? got classify growth, comfortable not book the We've the we're at It a would is line. pretty expense I of growth

We will growth bottom it opportunities sense to there to the and continue but make to evaluate line. has

have number that shed know, there you here have As some carriers market policies. a the is competitive down, shut of

are where sure the we providing underwriting an profit. underwriting to discipline, at and of holding the in that making our we're it is position So day, now, end the

Mark Hughes

to would I'd to do ratio year have combined if increase Is some the give that get notionally from combined or be wonder or target I like on like two thoughts inflation pricing rate some the you'd numbers target is or could you do the adequate standpoint guard - it, ROE hear? you again your and ratio, ROE with another to your target interested share need or we X% do if you the Is I you think that that. wonder

Ernie Garateix

Yes, a timing combined when it's our at margins issue. type we really well, again, look target stuff, that

pricing So through. does to to that adequacy, premium time earn it for we are a take period however, raid of

look the need do far a we the of in we just that to to as rate how when increases us as to time. earns think So over the It's do that at combined ratio targets and period ROE we getting the timing where targets, get go. issue

Mark Hughes

what combined the is And or ROE? target either

Ernie Garateix

ROEs, or the we single ROE years, high think and amount some the target because in going digits. to be program double we very long-term amount the that cat the the low and in of reinsurance have digits, of reinsurance we of our wanted not think are do to the is high some in in the years, take that, we of purchased. very non-cat ROEs retention I low in of We

idea on be to So in the we're the little the is more ROE bit actually aiming stable a long-term.

Operator

is Piper ahead. from Paul from Go next question Sandler. Newsome Our

Paul Newsome

XX% quarter, there? about the the growth just start of talk Could components little a you that in and maybe bit

Arash Soleimani

bigger growth is Florida. bit this Florida Arash, growth to and the Florida outside a higher a is lower contributor and was Paul, rate in in

Operator

Instructions] no have more [Operator we time, this questions. At

I Garateix go sorry. our with it question-and-answer wait, to turn we So this I'm Ernie for questions. more would to two a like remarks. session. closing wait, have question. We'll on Oh, back concludes

Hughes have we So Mark Go from ahead. Truist.

Mark Hughes

the last year versus million $XX think there weather The losses question? whether how of you. kind or is was of expected good XXXX curious about you year a XXXX sort level? Thank year, this was I'm a that bad year, million just a $XXX

Kirk Lusk

not since the XXXX. new And the last speaking, weather either look are several now been a we're of know, weather Yes, question. or losses year, have high. look XXXX the seeing I about question When is abnormalities. year so the you extraordinarily at we you that, therefore, at very are norm losses up, some that's was, good XXXX being a they is, generally think good and And

and look including losses as much of can, our as we However, contemplate to we and weather looking we results, and indications. that rates our the look at are we at as going the own forward, as

So again, maybe not. question that probably, norm. this best, I you the higher much think but new norm is that or XXXX for that for being of how And but for even high and XXXX a idea was the but planning just the gives it hoping new think, an I we're, is, is,

Ernie Garateix

mind keep XX in this And record XXXX Mark, had storms named year.

keep nevertheless. we Will going be that norm forward. mentioned, just go but forward. as Hopefully Kirk that in preparing So as not, mind the we're

Mark Hughes

from What and is? I increases? perspective you in you X% are What industry about a in the Arash think Florida think? Florida think the you How look rate overall, When understood. Yes, across of for do most described requesting was the average pointed Florida, in rate. you growth you out what rate do

Ernie Garateix

across taken What in I rates taking is, everyone the I Obviously, mean rates. seeing industry, would Florida. being double-digit you're say and is

always year We not rate take a to when and storms. needed, is there's steady bad continue held that just when we have rate

making actually, So we constantly looking in our and are portfolio. rates that sure sound are at

So that going we'll to continue do forward.

increases forward. that's looking rate, do some years now. taken to have And been for smaller those We we'll over number have been happening and continue that of time that

Mark Hughes

the up double-digit? industry Is

Ernie Garateix

Yes, is. definitely

Operator

next Matt is Go ahead. Carletti from from question Our JMP.

Matt Carletti

on just I a sort little follow-up wanted around focusing to more comments the of profitability. you’re on

of kind you your you sort Is in of your a huge like, and high longer I'm structure single-digit or current something material clean instead of of you volatility? any higher cat structure guys double-digit, of to are just of thinking made term, mentioned, low we to events? think years the a that? for about changes think targeting comment as footprints? I you reducing and your about, change, Are contemplating help sideways kind any mean achieve reinsurance I years XXXX, a kind is and exposed, the protection, you're that sufficient frequency loss, thinking your of exposure - excess

Ernie Garateix

reinsurance we're as now, would the negotiating we're I placement. at middle What our is, of especially say all in options looking the right

So you for makes to bottom the at day that look reinsurance that broker. and And sense for of end we're the is something working know, with that opportunity us placement again, our the we'll ensure line. hits every

Operator

would the now remarks. to concludes to This closing session. our for over turn like Garateix I question-and-answer conference Ernie back

Ernie Garateix

We'd for everybody We like wonderful to have today. you joining a weekend. and hope thank us safe

Operator

concluded. has now presentation. The Thank you attending conference for today's

now disconnect. may You

Heritage Insurance (HRTG) 4 Mar 212020 Q4 Earnings call transcript