Heritage Reports Fourth Quarter and Full Year 2025 Results
Fourth Quarter 2025 Result Highlights
- Heritage reported net income of
$66.7 million , an increase of 228.5% from net income of$20.2 million in the prior year quarter; and earnings per share of$2.15 per diluted share, an increase of 225.8% from$0.66 per diluted share from the prior year quarter. - Gross premiums earned were
$361.7 million , an increase of 0.4% from$360.4 million in the prior year quarter. - Net premiums earned totaled
$202.7 million , an increase of 1.7% from$199.3 million in the prior year quarter. - Net loss ratio was 31.3%, an improvement of 23.4 percentage points from 54.7% in the prior year quarter.
- Net expense ratio was 30.7%, an improvement of 4.3 percentage points from 35.0% in the prior year quarter.
- Net combined ratio was 62.0%, an improvement of 27.7 percentage points from 89.7% in the prior year quarter.
- Return on average equity was 56.6%, up from 28.5% in the prior year quarter.
- Book value per share increased 72.5% from year end 2024 and was up 124.8% from year-end 2023.
"Our fourth quarter results benefited from the cumulative effect of the strategic initiatives launched several years ago and which have been continuously refined over the last two years. Our focus on rate adequacy, disciplined underwriting and high service levels to our agents and policyholders, coupled with favorable weather, resulted in record earnings this quarter and for the full year. Looking forward, we are well-positioned to deliver managed growth with rate adequacy in over 90% of our markets where we are open for new business. As a result, we have seen our new business premium production increase 60.4% in the quarter as compared to the fourth quarter of 2024. We believe we have the right agent relationships, reinsurer partnerships, management team, and infrastructure to prudently grow our top line in 2026. We appreciate our valued agents, agencies and reinsurance partners and recognize their influence on our success," remarked Heritage CEO
Strategic Profitability Initiatives
The Company has focused on three main strategic initiatives aimed at achieving consistent long-term quarterly earnings and driving shareholder value, which include:
- Generating underwriting profit through rate adequacy and more selective underwriting.
- Allocating capital to products and geographies that maximize long-term returns.
- Targeting a balanced and diversified portfolio.
2025 Progress on Strategic Initiatives
- Re-opened profitable geographies and allocated capital to sustain profits and margin on a measured basis.
- Persistent underwriting discipline and focus on rate adequacy.
- Continued data driven analytics.
- Enhanced customer service and claims capabilities.
- Leveraged infrastructure and capabilities to foster future growth.
Strategic Initiatives for 2026
- Target geographies open for new business, while closely managing risk and exposure.
- Continue persistent underwriting discipline and focus on rate adequacy while driving prudent growth of the top line.
- Enhance data driven analytics using AI and other technology tools.
- Continue the refinement of customer service and claims capabilities.
- Leverage infrastructure and capabilities to foster future growth, which includes our plan to enter the
State of Texas to offer products on an excess and surplus lines basis.
Capital Management
Heritage's Board of Directors has decided to continue its suspension of the quarterly shareholder dividend to prioritize strategic growth. The Board of Directors will continue to evaluate dividend distributions on a quarterly basis. The Company repurchased 106,135 shares of common stock during 2025 at a cost of
Results of Operations
The following table summarizes results of operations for the three-months and years ended
|
|
|
Three Months Ended |
|
|
|
Year Ended |
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|||||||||||||||||||
|
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|
|
2025 |
|
|
|
2024 |
|
|
Change |
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|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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||||||
|
Total revenue |
$ |
|
215,317 |
|
$ |
|
210,264 |
|
|
|
2.4 |
|
% |
$ |
|
847,330 |
|
|
$ |
|
816,985 |
|
|
|
3.71 |
|
% |
|
Net income |
$ |
|
66,675 |
|
$ |
|
20,294 |
|
|
|
228.5 |
|
% |
$ |
|
195,594 |
|
|
$ |
|
61,539 |
|
|
|
217.8 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Earnings Per Diluted Share |
$ |
|
2.15 |
|
$ |
|
0.66 |
|
|
|
225.8 |
|
% |
$ |
|
6.32 |
|
|
$ |
|
2.01 |
|
|
|
214.4 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Book value per share |
$ |
|
16.39 |
|
$ |
|
9.50 |
|
|
|
72.5 |
|
% |
$ |
|
16.39 |
|
|
$ |
|
9.50 |
|
|
|
72.5 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Return on equity* |
|
|
56.6 |
|
% |
|
28.5 |
|
% |
|
28.1 |
|
pts |
|
|
49.1 |
|
% |
|
|
24.1 |
|
% |
|
25.0 |
|
pts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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||||||
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Underwriting summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written |
$ |
|
336,221 |
|
$ |
|
338,742 |
|
|
|
(0.7) |
|
% |
$ |
|
1,436,346 |
|
|
$ |
|
1,432,942 |
|
|
|
0.2 |
|
% |
|
Gross premiums earned |
$ |
|
361,720 |
|
$ |
|
360,448 |
|
|
|
0.4 |
|
% |
$ |
|
1,431,103 |
|
|
$ |
|
1,406,106 |
|
|
|
1.8 |
|
% |
|
Ceded premiums |
$ |
|
(159,045) |
|
$ |
|
(161,170) |
|
|
|
(1.3) |
|
% |
$ |
|
(636,946) |
|
|
$ |
|
(638,246) |
|
|
|
(0.2) |
|
% |
|
Net premiums earned |
$ |
|
202,676 |
|
$ |
|
199,278 |
|
|
|
1.7 |
|
% |
$ |
|
794,157 |
|
|
$ |
|
767,860 |
|
|
|
3.4 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Ceded premium ratio |
|
|
44.0 |
|
% |
|
44.7 |
|
% |
|
(0.7) |
|
pts |
|
|
44.5 |
|
% |
|
|
45.4 |
|
% |
|
(0.9) |
|
pts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||||
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Ratios to Net Premiums Earned: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Loss ratio |
|
|
31.3 |
|
% |
|
54.7 |
|
% |
|
(23.4) |
|
pts |
|
|
39.4 |
|
% |
|
|
58.2 |
|
% |
|
(18.8) |
|
pts |
|
Expense ratio |
|
|
30.7 |
|
% |
|
35.0 |
|
% |
|
(4.3) |
|
pts |
|
|
33.6 |
|
% |
|
|
36.0 |
|
% |
|
(2.4) |
|
pts |
|
Combined ratio |
|
|
62.0 |
|
% |
|
89.7 |
|
% |
|
(27.7) |
|
pts |
|
|
73.1 |
|
% |
|
|
94.2 |
|
% |
|
(21.1) |
|
pts |
|
|
|
* Return on equity represents annualized net income for the period divided by average stockholders' equity during the period. Note: Percentages and sums in the table may not recalculate precisely due to rounding. |
Ratios
Ceded premium ratio represents ceded premiums as a percentage of gross premiums earned.
Net loss ratio represents net losses and loss adjustment expenses ("LAE") as a percentage of net premiums earned.
Net expense ratio represents policy acquisition costs ("PAC") and general and administrative ("G&A") expenses as a percentage of net premiums earned. Ceding commission income is reported as a reduction of PAC and G&A expenses.
Net combined ratio represents the sum of net losses and LAE, PAC, and G&A expenses as a percentage of net premiums earned. The net combined ratio is a key measure of underwriting performance traditionally used in the property and casualty industry. A combined ratio under 100% generally reflects profitable underwriting results.
Fourth Quarter 2025 Results:
Fourth quarter 2025 net income was
Premiums-in-force were
Gross premiums written of
Gross premiums earned were
Net premiums earned were
Net loss ratio was 31.3%, a 23.4 point improvement from 54.7% in the same quarter last year reflecting significantly lower net losses and LAE coupled with higher net premiums earned. Net weather losses for the current accident quarter were
The net expense ratio was 30.7%, a 4.3 point improvement from the prior year quarter amount of 35.0%, driven primarily by a reduction in policy acquisition costs from higher ceding commission income as well as relatively flat general and administrative expenses, coupled with an increase in net premiums earned.
Net combined ratio of 62.0% improved 27.7 points from 89.7% in the prior year quarter, driven by a lower net loss ratio and lower net expense ratio as described above.
Net investment income was
The effective tax rate was 24.2% compared to 29.9% in the prior year quarter. The effective tax rate for the current year quarter was slightly lower than the statutory rate, driven primarily by higher pre-tax income which diluted the impacts of permanent tax differences. The effective tax rate for the prior year quarter was higher than the statutory rate, driven largely by the impact of the true up during the fourth quarter of 2024 from the previous three quarterly estimates. The impact of permanent tax differences on projected results of operations for the calendar year affects the effective tax rate, which can also fluctuate throughout the year as estimates used in the quarterly tax provision are updated with additional information.
Supplemental Information:
|
|
|
At |
|||||||||||
|
Policies in force: |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
|||
|
|
|
|
123,437 |
|
|
|
133,775 |
|
|
|
(7.7) |
|
% |
|
Other States |
|
|
233,838 |
|
|
|
255,700 |
|
|
|
(8.5) |
|
% |
|
Total |
|
|
357,275 |
|
|
|
389,475 |
|
|
|
(8.3) |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Premiums in force: |
|
(In thousands) |
|
|
|
|
|
||||||
|
|
$ |
|
679,079 |
|
$ |
|
707,197 |
|
|
|
(4.0) |
|
% |
|
Other States |
|
|
752,738 |
|
|
|
726,048 |
|
|
|
3.7 |
|
% |
|
Total |
$ |
|
1,431,817 |
|
$ |
|
1,433,245 |
|
|
|
(0.1) |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total Insured Value: |
|
(In thousands) |
|
|
|
|
|
||||||
|
|
$ |
|
105,997,817 |
|
$ |
|
102,661,095 |
|
|
|
3.3 |
|
% |
|
Other States |
|
|
257,533,142 |
|
|
|
264,950,914 |
|
|
|
(2.8) |
|
% |
|
Total |
$ |
|
363,530,959 |
|
$ |
|
367,612,009 |
|
|
|
(1.1) |
|
% |
Book Value Analysis:
|
|
As Of |
|
|||||||||
|
Book Value Per Share |
|
|
|
|
|
|
|
|
|||
|
Numerator: |
|
|
|
|
|
|
|
|
|||
|
Common stockholders' equity |
$ |
505,251 |
|
|
$ |
290,799 |
|
|
$ |
220,280 |
|
|
Denominator: |
|
|
|
|
|
|
|
|
|||
|
Total Shares Outstanding |
|
30,833,776 |
|
|
|
30,607,039 |
|
|
|
30,218,938 |
|
|
Book Value Per Common Share |
$ |
16.39 |
|
|
$ |
9.50 |
|
|
$ |
7.29 |
|
Book value per share of
Conference Call Details:
International Dial In: 1-412-902-4258
Webcast: To listen to the live webcast, please go to http://investors.heritagepci.com. This webcast will be archived and accessible on the Company's website.
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|
|
||||||
|
Consolidated Balance Sheets |
|
||||||
|
(Amounts In thousands, except share amounts) |
|
||||||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
ASSETS |
|
|
|
|
|
||
|
Fixed maturities, available-for-sale, at fair value |
$ |
713,237 |
|
|
$ |
655,555 |
|
|
Equity securities, at fair value |
|
1,064 |
|
|
|
1,936 |
|
|
Other investments, net |
|
1,285 |
|
|
|
5,952 |
|
|
Total investments |
|
715,586 |
|
|
|
663,443 |
|
|
Cash and cash equivalents |
|
559,274 |
|
|
|
452,666 |
|
|
Restricted cash |
|
13,307 |
|
|
|
10,979 |
|
|
Accrued investment income |
|
6,556 |
|
|
|
5,592 |
|
|
Premiums receivable, net |
|
95,331 |
|
|
|
102,134 |
|
|
Reinsurance recoverable on paid and unpaid claims, net |
|
318,588 |
|
|
|
740,204 |
|
|
Prepaid reinsurance premiums |
|
307,039 |
|
|
|
309,802 |
|
|
Deferred income tax asset, net |
|
5,855 |
|
|
|
13,876 |
|
|
Deferred policy acquisition costs, net |
|
64,544 |
|
|
|
63,204 |
|
|
Property and equipment, net |
|
28,254 |
|
|
|
38,080 |
|
|
Right-of-use lease asset, finance |
|
12,598 |
|
|
|
15,082 |
|
|
Right-of-use lease asset, operating |
|
4,878 |
|
|
|
5,850 |
|
|
Intangibles, net |
|
30,189 |
|
|
|
36,372 |
|
|
Other assets |
|
33,823 |
|
|
|
11,640 |
|
|
Total Assets |
$ |
2,195,822 |
|
|
$ |
2,468,924 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
||
|
Unpaid losses and loss adjustment expenses |
$ |
579,477 |
|
|
$ |
1,042,687 |
|
|
Unearned premiums |
|
707,923 |
|
|
|
702,707 |
|
|
Reinsurance payable |
|
232,801 |
|
|
|
227,060 |
|
|
Long-term debt, net |
|
78,428 |
|
|
|
116,319 |
|
|
Advance premiums |
|
19,164 |
|
|
|
15,186 |
|
|
Income tax payable, net |
|
4,282 |
|
|
|
846 |
|
|
Accrued compensation |
|
8,844 |
|
|
|
8,926 |
|
|
Lease liability, finance |
|
15,587 |
|
|
|
18,071 |
|
|
Lease liability, operating |
|
5,800 |
|
|
|
6,945 |
|
|
Accounts payable and other liabilities |
|
38,265 |
|
|
|
39,378 |
|
|
Total Liabilities |
$ |
1,690,571 |
|
|
$ |
2,178,125 |
|
|
Stockholders' Equity: |
|
|
|
|
|
||
|
Common stock, |
|
3 |
|
|
|
3 |
|
|
Additional paid-in capital |
|
365,736 |
|
|
|
362,644 |
|
|
Accumulated other comprehensive loss, net of taxes |
|
(10,555) |
|
|
|
(28,604) |
|
|
|
|
(133,183) |
|
|
|
(130,900) |
|
|
Retained earnings |
|
283,250 |
|
|
|
87,656 |
|
|
Total Stockholders' Equity |
|
505,251 |
|
|
|
290,799 |
|
|
Total Liabilities and Stockholders' Equity |
$ |
2,195,822 |
|
|
$ |
2,468,924 |
|
|
|
|
||||||||||||||
|
Consolidated Statements of Income and Other Comprehensive Income |
|
||||||||||||||
|
(Amounts in thousands, except per share and share amounts) |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
|
Year Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Gross premiums written |
$ |
336,221 |
|
|
$ |
338,742 |
|
|
$ |
1,436,346 |
|
|
$ |
1,432,942 |
|
|
Change in gross unearned premiums |
|
25,499 |
|
|
|
21,706 |
|
|
|
(5,243) |
|
|
|
(26,836) |
|
|
Gross premiums earned |
|
361,720 |
|
|
|
360,448 |
|
|
|
1,431,103 |
|
|
|
1,406,106 |
|
|
Ceded premiums |
|
(159,045) |
|
|
|
(161,170) |
|
|
|
(636,946) |
|
|
|
(638,246) |
|
|
Net premiums earned |
|
202,676 |
|
|
|
199,278 |
|
|
|
794,157 |
|
|
|
767,860 |
|
|
Net investment income |
|
9,861 |
|
|
|
8,510 |
|
|
|
37,156 |
|
|
|
36,631 |
|
|
Net realized gains on debt securities and other investments |
|
(33) |
|
|
|
(722) |
|
|
|
2,713 |
|
|
|
(705) |
|
|
Other revenue |
|
2,814 |
|
|
|
3,198 |
|
|
|
13,304 |
|
|
|
13,199 |
|
|
Total revenue |
|
215,317 |
|
|
|
210,264 |
|
|
|
847,330 |
|
|
|
816,985 |
|
|
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Losses and loss adjustment expenses |
|
63,453 |
|
|
|
109,065 |
|
|
|
313,246 |
|
|
|
447,048 |
|
|
Policy acquisition costs |
|
39,818 |
|
|
|
48,528 |
|
|
|
173,961 |
|
|
|
191,189 |
|
|
General and administrative expenses |
|
22,367 |
|
|
|
21,153 |
|
|
|
92,972 |
|
|
|
85,138 |
|
|
Total expenses |
|
125,639 |
|
|
|
178,746 |
|
|
|
580,179 |
|
|
|
723,375 |
|
|
Operating income |
$ |
89,678 |
|
|
$ |
31,518 |
|
|
$ |
267,151 |
|
|
$ |
93,610 |
|
|
Interest expense, net |
|
1,730 |
|
|
|
2,569 |
|
|
|
7,887 |
|
|
|
10,934 |
|
|
Income before taxes |
$ |
87,948 |
|
|
$ |
28,949 |
|
|
$ |
259,264 |
|
|
$ |
82,676 |
|
|
Income tax expense |
|
21,273 |
|
|
|
8,655 |
|
|
|
63,670 |
|
|
|
21,136 |
|
|
Net income |
$ |
66,675 |
|
|
$ |
20,294 |
|
|
$ |
195,594 |
|
|
$ |
61,539 |
|
|
OTHER COMPREHENSIVE INCOME: |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Change in net unrealized gains (losses) on investments |
|
3,031 |
|
|
|
(11,582) |
|
|
|
23,588 |
|
|
|
8,771 |
|
|
Reclassification adjustment for net realized investment losses (gains) |
|
112 |
|
|
|
(34) |
|
|
|
107 |
|
|
|
(51) |
|
|
Income tax expense related to items of other comprehensive income |
|
(760) |
|
|
|
2,742 |
|
|
|
(5,646) |
|
|
|
(2,074) |
|
|
Total comprehensive income |
$ |
69,058 |
|
|
$ |
11,420 |
|
|
$ |
213,643 |
|
|
$ |
68,185 |
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
30,897,929 |
|
|
|
30,670,779 |
|
|
|
30,890,609 |
|
|
|
30,595,348 |
|
|
Diluted |
|
30,957,245 |
|
|
|
30,730,042 |
|
|
|
30,949,899 |
|
|
|
30,654,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
$ |
2.16 |
|
|
$ |
0.66 |
|
|
$ |
6.33 |
|
|
$ |
2.01 |
|
|
Diluted |
$ |
2.15 |
|
|
$ |
0.66 |
|
|
$ |
6.32 |
|
|
$ |
2.01 |
|
|
|
|||||||||||||||
About Heritage
Forward-Looking Statements
Statements in this press release and on our earnings conference call that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "or "continue" or the other negative variations thereof or comparable terminology are intended to identify forward-looking statements. This release and our earnings conference call include forward-looking statements, including statements relating to our strategic initiatives for 2026 and our ability to profitably grow our business and deliver value to our shareholders; our positioning to deliver managed growth with rate adequacy in our markets and our intent not to write policies that we believe are underpriced or do not meet our underwriting standards; our belief regarding having the right team and infrastructure in place to prudently grow our top line in 2026; our capital allocation strategy, including our Board's evaluation of dividend distributions and share repurchases and our evaluation of the intrinsic value of our common stock; our new geography and product diversification and expansion strategy, including our plan to enter the
Investor Contact:
Chief Financial Officer
investors@heritagecompanies.com
View original content:https://www.prnewswire.com/news-releases/heritage-reports-fourth-quarter-and-full-year-2025-results-302707657.html
SOURCE
