HRTG - Earnings call 3 2023 | Heritage Insurance Holdings, Inc.

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Operator

Good day and welcome to the HRTG Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I'd now like to turn the conference over to Kirk Lusk, CFO. Please go ahead.

Kirk Lusk

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

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

statements forward-looking and earnings results annual forward-looking risks refer For that from our a the Form release description our cause the to filings. SEC those could of XX-K, to other on report described statements, materially and differ in the please

information regarding measures found today release. With on now our Executive be will me to these press include call in will I comments Chief call turn Garateix, measures. our also the Ernie other over today The Officer. is the financial can Our and non-GAAP reconciliations of Ernie.

Ernesto Garateix

profitability. property to today. floor in our catastrophic towards into sustained frequency strategic financial metrics, my you, position updates we'll insurance financial progress initiatives our everyone open our in then report Thank strides inflation, improvement Kirk substantial reinsurance will sustained on overview, joining to and a of and discuss and and including challenges for costs, I actual our the rising and social profitability. quarter and questions. Despite events space, progress of us the increased severity I'm our Kirk, provide performance, third towards delve will After encouraged and

year. from loss an last the quarter saw quarter Our a improvement net with third same but

end caused early quarter. the the of month. Idalia island wildfires X agents the by at and policyholders, employees Our followed losses on by the significantly Panhandle affected Florida August, devastating in Hurricane of catastrophic this events In were Maui

in shared are a a strategic and policyholders our our we affected continue to guide year-over-year claim profitability steadfast year and We've timely handling. The events seen premium employees we X.X% by remain fair Our thoughts, XX.X% per initiatives our and quarter-over-quarter. actions. average to policy increase in increase these in ago commitment a and

up meticulous in billion with count our commercial manage at are a exposures, efforts signify by premiums-in-force premiums-in-force we reduction residential policy residential to These residential XX.X% XX.X%. by business, while improvements by selectively particularly Our created our in with Florida, personal business. In grew expanding even commercial $X.X company's diversified disciplined led and XX% a a growth. policies-in-force with decrease maintaining value, lines while personal exceeding to has in significant total approach no insured a a commercial the of balanced portfolio that year-over-year. This XX% business Florida state more X.X% approach

and value Florida's slightly management insured down of Florida expansion XXXX. exposure total in strategy This the change driven XX.X% quarter conscious commercial by portfolio, accounts entire careful Our our segment. same for of a XX.X% from of reflects in outside selective

Our focus unaltered. remains

continue We and prioritize returns. allocation selective long-term to judicious adequacy, products to geographies, rate underwriting capital and promising

to allow timely work commitment contest committed not claims we We claim to remain improvements upgraded or pay and claim an deny including legitimate claims claim handling, are continuous what team in resolute efficiently. We processes, will which more in to owe. our system and our do

are translating fruit, quarterly shareholder bear long-term will earnings We strategic that consistent value. and continue our confident in initiatives enhanced to

financial Kirk in to key turn for Let and quarter metrics. of performance me things over results review the the a

Kirk Lusk

in to third be equivalent in it the diluted share compared share, loss to attritional per per same loss losses. Premiums-in-force growth of quarters $X.XX in primarily last quarter can reflects Ernie. and increase The in the and net X.X% billion, to from earned third in Both $X.X is quarter $X.XX of while an diluted which $XX attributed does quarter XX.X% quarter. in premiums the and growth experienced positive experienced million. XXXX. our net increased per products you, or in increases average $XX.X investment cat of our Thank The This rate million policy losses Good Despite growth portfolio's strategically the increase commercial quarter improvement lower million, year a selective from XXXX to net residential of weather year. demonstrate trajectory net and premium prior is a continued $X.XX the result of reducing the policy net an increase of morning, income everyone. count.

our addition, experienced X.X% growth gross In million. of to premiums earned $XXX

quarter income the investment third increase net from of increase for year, revenues increase the XX.X% total quarter in a a premiums XXXX. twofold last in driven million, million compared of and were to by Our earned net $XXX.X $XX.X

We with expenses third decreased have due lower the adjustment returns. Losses align consequently by designed and loss and curve, yield both quarter our investment weather to for mainly the to XXXX and of and augmenting XX.X% attritional reinvestment losses. liquidity strategies

just losses LAE significantly, the and Our in ratio noted. The with combined net higher concluded from of XX.X% reflecting retained strengthening third events of despite reflecting net to our loss quarter of XX.X% X $XX million. and losses this underwriting premiums earned ratio improved quarter XXX.X%, dropping a with discipline XXXX, reduced quarter catastrophic

rate annual differences domiciled to Re, Our changes an pretax variance rate the Osprey to allowance driven elections as impact updated quarterly, relation the quarter. tax captive X.X% permanent effective a XX.X% fluctuated, corporate Bermuda. or tax by rate to of relates effective in in to as income is the year by made of The reaching of an loss. effective Valuation prior compared is which valuation projected company's allowance, in well reinsurer

valuation current the for valuation decreased the prior quarter, established. For year allowance year was quarter, while the the allowance

from $X.XX, to quarter per of XX.X% XXXX. of the and quarter increase share value increase the Our a book a XXXX improved third from fourth XX.X% which represents has

registers the the for our financial at for enhancing made September months ended September ended we've marking improvement equity XX.X% reported XXXX, months This on XX, return X the X annualized the and XX, significant loss Our underscores in from XXXX. year-to-date, an strides stability profitability. XX% bolstering

position. continued to committed value strategic decisions. Thank business enhancing attention. your focus sound on and our our profit quarter We initiatives overall remain improving demonstrate shareholder investments consistently this and through for results for and Our financial you prudent margins

questions. ready We to your are take now

Operator

Sandler. comes question Paul Newsome from first Today's Instructions] at Piper [Operator

Jon Paul Newsome

Can you hear now? me

Operator

Mr. -- Yes, now. can you we sir. hear

Ernesto Garateix

Yes, we can you, Paul. hear

Jon Paul Newsome

the -- any Sorry, recent phone. of reform I this? signs your Can talk views tort on we could most about perhaps and mute we

Ernesto Garateix

Paul? you We hear can repeat sorry, I'm there. you that, didn't

Jon Paul Newsome

had Florida you there? some you results see anything tort reform. Could could stood quarter's And recent your -- this most talk in out? about do thoughts that you

Ernesto Garateix

Sure.

trend slight seeing we'd is litigation, are the that to we So of like it. data piece in on see decrease which

think is signs that in of and But that down. litigation I think are the things anniversary as one we Ian, of see there we're is positive just marketplace Hurricane monitoring that the develops. I X-year the to received how

Jon Paul Newsome

fingers underlying in pricing Super where losses, a outside you're crossed. but the going ignoring reform sort margin and the terms the Fantastic. what perspective, a from Could markets Florida cat you a ignoring like written basis how do maybe our moment? with think you also tort the Florida you that where are moment, the you inflation? up So losses improvement about in talk of cat think normalizing for ranks on at of claims you think perspective,

Kirk Lusk

adequacy focus Well, again, in on territories. our rate is I our all mean,

years. the substantial increases in the Florida taken of -- rate last and couple have market Southeast in over the We particularly

from that substantially. And say, Reinsurance close inflation that up I is has that the dropped COVID say is rates would the claims adequacy. to aspect actually, that the are rate So years. would of I other

So due the say the therefore, reinsurance some portfolio. The than the recently. has there to increases Northeast, need Southeast would is claims the still in for inflation rate I throughout higher that been

has more not be type rate up probably And so that rates Southeast up taking rate has had we'll historically experienced. therefore, the increasing are Also, the reinsurance And of Northeast increases there. the there.

little So adequacy of a a bit rate there there's from catch-up standpoint.

the of that's how we -- where landscape. that's see So kind

Jon Paul Newsome

any New out York get in about Allstate Obviously, New pushback increases their got York. you challenges in Have rates? rate on talking to yesterday was

Ernesto Garateix

No.

very been I think work kind of with. New good to York has

the documents to they've reinsurance think work very to -- And of think data they've respect on with and we've inflation on and been in all I good that. piece that provided it. regarding I that that actuarial seen

Jon Paul Newsome

else more I'll ask. ask and somebody one question let

telling They're reinsurance, And your particularly increased is make book. changes really It's competitors yesterday -- has me need the what's essentially actually not of as higher they're they costs. single-digit happened experience their low in that this about because was reinsurance their gotten there. because One expensive what's Hawaiian business that worry some seeing to of Is returns your the your also after reinsurance book. well? in there. Do very you

Kirk Lusk

Yes.

addressing had we're fairly Hawaiian We and reinsurance the already discussions there. department have in are over that market, seeing increase and a substantial in the with

Operator

comes Truist. And Hughes Mark our next from today question with

Mark Hughes

Can you me? hear

Ernesto Garateix

Yes.

Mark Hughes

share The for and that the can wildfires Idalia, number? gross you Maui losses

Kirk Lusk

combined We $XX just haven't kind We've million net. number of disclosed a those the numbers individual given of yet.

Mark Hughes

gross volume? the That's much your How is larger net?

Kirk Lusk

The large gross is not significantly there.

a have It's little risk just reinsurance bit million. a little on about less $X per than there. We of actually

Mark Hughes

Okay.

program on that reinsurers So seemingly, will your this returns the pretty year. have Is fair? made good

Kirk Lusk

I think a yes. fair that is assessment,

Mark Hughes

yes. Yes,

Okay. get can How like business? bigger? run room you is residential it market commercial much feel on How think your more do Do the there? you to share

Ernesto Garateix

is plans again, We're can areas piece and piece. to heading for We area But we're bigger that in some piece. But get that we on of concentrated it's making we that as at on think on look be making right runway and the that as at 'XX a going slightly into evaluating it. profitability, all overly sure piece. there on that think one any we market dependent now looking not more do

Kirk Lusk

give agents explore that that some Also, would And Yes. number of there additional meetings runway. us opportunities we kind been additional of there to some are opportunities. have a think there with

Mark Hughes

Yes.

losses. non-cat, some at similar year? good? I Would XQ? that think you would see normal in bit to losses in non-weather you say improvement look Okay. perhaps They're up Do litigation. around progression just said, that sequentially. XQ Ernie, that? to year-over-year, terms your XQ Want a characterize that had Is non-weather from definitely you're substantially last ticked of pattern the you non-cat, little a down seasonality you maybe was How seeing

Ernesto Garateix

when last end on of of to say would good. you It's that year. piece quarter I right, the third a also get Yes. bit it's seasonality, that

attritional a right, Hurricane whether it's very our take that Ian, we on right, it. obviously But If you in that Ian, see is heading low which direction hope piece the look pleased after were that, that what and losses continues. we normally at are of

Kirk Lusk

down, count count bit little to there policy drive it that Yes. PIF the aspect down actually is our One with a frequency tendency about also. a has down, other

of our being up when PIF down, losses, look at you attritional So one premiums counting that's the with also the drivers. and

Operator

to And ladies this team question-and-answer over to like the for turn concludes back management remarks. conference the any closing our and gentlemen, I'd session.

Ernesto Garateix

everyone We appreciate today on call great a weekend. wish joining the us and everybody

Operator

today's concludes attending all This today's for conference presentation. you. Thank thank call. you We

now disconnect a may lines, have your You and day. wonderful

Heritage Insurance (HRTG) 3 Nov 232023 Q3 Earnings call transcript