Investment Story

Investment Story

Sustainable Market Opportunity

  • Multi-State Expansion Underway
  • Commercial Business Mix-Shift
  • Voluntary Policy Growth
  • M&A

Returns

  • 2015 Return on Average Equity (ROAE) 30%
  • 2016 Return on Average Equity (ROAE) 9.5%1
  • Long-term Potential for ROAE Outperformance

1 2016 return achieved despite 2 hurricanes & unprecedented tornadic activity during year
ROAE = Net income / (Beginning stockholders equity + ending stockholders equity / 2)

Solid Balance Sheet

  • Rated “A” (Exceptional) by Demotech
  • Conservative & Innovative, Multi-Year Approach with Reinsurance
  • Capital Structure Provides for Sustainability & Growth
Group Revenue, £m
X-axis Statutory Surplus Equity*
Bar Color #2f80c1 #012e72
Font Color #524a47 #524a47
FY12 27 28
FY13 63 101
FY14 173 255
FY15 216 357
FY16 276 358

*note – Heritage Insurance Holdings, Inc.

Differentiated Approach with Customers

  • Water Mitigation & Restoration Services In-house
  • Lowers Severity & Claim Resolution Time for Customer
  • Proactivity Helps with the Assignment of Benefit Issue Facing Industry
  • Improves Loss Ratio

Contractors Alliance NetworkBRC RestorationHeritage Insurance

History

Strategic Approach to Market Opportunities

  • Began writing P&C policies in Georgia
  • Approved to write P&C in Alabama, Mississippi & Georgia
  • Began writing P&C policies in North Carolina & South Carolina
  • Closed acquisition of Zephyr in 1Q16
  • Launched General Liability in 1Q16
  • Partnership with National General
  • Assumed ~12K personal policies
  • $79.5MM private placement of senior notes
  • Acquired BRC Restoration Specialists
  • Approved to write P&C in North & South Carolina
  • Announced acquisition of Zephyr
  • Participated in ~68K personal and ~830 commercial take-outs in 2015
  • IPO: NYSE "HRTG"
  • Acquired the assets of SVM (water mitigation firm) and formed Heritage Claims Response Team
  • Built commercial residential department
  • Acquired SSIC policies
  • Participated in ~57K personal and 2.2K commercial take-outs
  • Formed the CAN Managed Repair Vendor Program
  • Second $33MM equity raise
  • Formed Osprey Re
  • Participated in 5 Citizens personal residential take-outs totaling ~90K
  • Initial $23MM equity raise
  • Began writing voluntary policies in Florida
  • Participated in 1st Citizens take-out