Investors

CLEARWATER, Fla., Aug. 4, 2014 /PRNewswire/ -- Heritage Insurance Holdings, Inc. (NYSE:HRTG) (Heritage or the Company), a property and casualty insurance holding company, today reported its financial results for the second quarter ended June 30, 2014.

Second Quarter Highlights

• 22% increase in policy count to 171,000 policies
• Year-to-date gross premiums written of $168.2 million
• Year-to-date net income of $17.5 million
• Combined ratio of 79.9% for the quarter and 81.6% year-to-date
• Completed initial public offering and concurrent private placement on May 29, 2014
• Completed the acquisition of 33,000 policies from Sunshine State Insurance Company
• Completed the placement of 2014 reinsurance program, including $200 million of catastrophe bonds issued by Citrus Re Ltd (an unrelated party)
• Began commercial residential operations

Bruce Lucas, the Company's Chairman and CEO, said "I am extremely proud of what we accomplished during the second quarter.  We successfully completed two catastrophe bond transactions, closed our IPO, launched our commercial residential program, and completed our acquisition of Sunshine State Insurance policies.  Additionally, we improved on our first quarter results by increasing gross written premium by $30.4 million, increasing net income by 21.3%, and lowering our loss ratio by almost 4 points.  We have positioned Heritage for a great future."

Results of Operations

The following table summarizes our results of operations for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013 and for the six months ended June 30, 2014 and 2013 (in thousands, except per share amounts):

Quarterly Financial Results

Revenues and net income for the quarter ended June 30, 2014 increased compared to the quarter ended March 31, 2014, but decreased compared to the quarter ended June 30, 2013.  The increase over the first quarter of 2014 is due to continued growth of policies renewed and written during 2014.  The decrease compared to the second quarter of 2013 is due to non-recurring retroactive reinsurance revenue in the second quarter of 2013 and during the second quarter of 2013 premiums ceded being significantly less as a percentage of gross earned premiums due to start-up nature of the company in early 2013, partially offset by significantly lower gross earned premiums in the second quarter of 2013 as compared to the second quarter of 2014.

The Company's gross premiums written for the second quarter of 2014 increased by $30.4 million, or 44.1%, over the prior quarter.  Gross premiums written for the second quarter of 2014 and the first quarter of 2014, respectively, were $99.3 million and $68.9 million. During the second quarter, we completed the acquisition of approximately 33,000 policies from Sunshine State Insurance Company (SSIC), following SSIC's receivership.  This acquisition resulted in assumed premiums written of $29.3 million, representing the unearned premiums on the policies acquired, at the time of the acquisition.  The policies Heritage assumed from SSIC represent approximately $59 million of annual premium.

Below is a table showing the sources of gross premiums written.  Direct premiums written for the quarter ended June 30, 2014 increased by 36.4% over the first quarter, 2014.

Gross Premiums Written

Gross premiums earned were $64.1 million for the second quarter of 2014 compared to $60.9 million for the previous quarter.  Gross premiums earned from the SSIC transaction during the four days following the effective date of June 27 were $600,000.

Ceded premiums as a percentage of gross premiums earned were 30.9% for the second quarter of 2014 compared to the first quarter 2014 ratio of 30.6%.

The loss ratio on a gross basis improved to 30.0% in the second quarter of 2014 from 33.8% in the first quarter 2014.  For the six month ended June 30, 2014, the loss ratio was 31.9%.

The Company's expense ratio on a gross basis was 19.0% for the second quarter of 2014 compared to 18.8% for the first quarter, 2014. 

Overall, Heritage's combined ratio on a gross basis was 79.9% for the second quarter of 2014 compared to 83.3% for the first quarter of 2014, with a year-to-date combined ratio of 81.6%.

Book Value Analysis

Book value per share increased 10.5% during the second quarter of 2014.  In May, 2014, the Company completed its initial public offering, a concurrent private placement and the issuance of common stock associated with the exercise of warrants. The net proceeds from these activities totaled approximately $101.1 million in exchange for 13,431,610 shares of common stock issued, or $7.53 per share.  Total comprehensive income for the second quarter would have increased the book value per share at March 31, 2014 by $0.69 to $7.42.

Conference Call Details:

Website:  To listen to the live webcast, please go to http://www.videonewswire.com/event.asp?id=100065. This webcast will be archived and accessible on the Company's website for approximately 30 days following the call.

About Heritage

Heritage Insurance Holdings, Inc. is a property and casualty insurance holding company headquartered in Clearwater, Florida that began operations in August 2012. Through its subsidiary, Heritage Property & Casualty Insurance Company, it provides personal residential insurance for single-family homeowners and condominium owners, and commercial residential insurance in Florida through a large network of experienced agents. Heritage is led by an experienced senior management team with an average of 26 years of insurance industry experience.

Forward-Looking Statements

Statements in this press release 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. The risks and uncertainties that could cause our actual results to differ from those expressed or implied herein include, without limitation, the success of the Company's marketing initiatives, inflation and other changes in economic conditions (including changes in interest rates and financial markets); the impact of new federal and state regulations that affect the property and casualty insurance market; the costs of reinsurance and the collectability of reinsurance, assessments charged by various governmental agencies; pricing competition and other initiatives by competitors; our ability to obtain regulatory approval for requested rate changes, and the timing thereof; legislative and regulatory developments; the outcome of litigation pending against us, including the terms of any settlements; risks related to the nature of our business; dependence on investment income and the composition of our investment portfolio; the adequacy of our liability for losses and loss adjustment expense; insurance agents; claims experience; ratings by industry services; catastrophe losses; reliance on key personnel; weather conditions (including the severity and frequency of storms, hurricanes, tornadoes and hail); changes in loss trends; acts of war and terrorist activities; court decisions and trends in litigation; and other matters described from time to time by us in our filings with the Securities and Exchange Commission, including, but not limited to, the Company's Prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended with the Securities and Exchange Commission on May 27, 2014. In addition, investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for a major contingency. Reported results may therefore, appear to be volatile in certain accounting periods. The Company undertakes no obligations to update, change or revise any forward-looking statement, whether as a result of new information, additional or subsequent developments or otherwise.

Heritage Insurance Holdings, Inc.
Stephen Rohde
Chief Financial Officer
727-727-7200 ext. 204

investors@heritagepci.com
www.heritagepci.com

SOURCE Heritage Insurance Holdings, Inc.