Washington, D.C. 20549







Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 4, 2020


        HOLDINGS, INC.        

(Exact name of registrant as specified in its charter)







(State or other jurisdiction of incorporation)   (Commission File Number)  

(I.R.S. Employer

Identification No.)

2600 McCormick Drive, Suite 300

Clearwater, Florida



(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (727) 362-7202

                    Not Applicable                    

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class


Trading Symbol(s)


Name of each exchange on which registered

Common Stock, par value $0.0001 per share   HRTG   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02

Results of Operations and Financial Conditions.

On May 4, 2020, Heritage Insurance Holdings, Inc. issued a press release announcing financial results for its fiscal quarter ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1.

The information furnished under this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.


Item 9.01

Financial Statements and Exhibits.

(d) Exhibits. The following exhibit is being furnished as part of this Current Report on Form 8-K.





99.1    Press Release dated May 4, 2020.


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: May 4, 2020     By:   /s/ Bruce Lucas

Bruce Lucas

Chairman and Chief Executive Officer


Exhibit 99.1

Heritage Reports First Quarter 2020 Results

Clearwater, FL – May 4, 2020: Heritage Insurance Holdings, Inc. (NYSE: HRTG) (“Heritage” or the “Company”), a property and casualty insurance holding company, today reported first quarter 2020 financial results.

First Quarter 2020 Highlights



Net income for the quarter was $7.6 million, or $0.27 per diluted share.



Book value per share increased to $16.11, up 9.0% from March 31, 2019 and 2.9% (11.5% annualized growth rate) from year-end 2019.



Gross premiums written of $229.1 million, up 8.9% year-over-year, including 12.0% growth outside Florida and 6.4% growth in Florida.



Favorable prior year reserve development of $4.1 million, representing seventh consecutive quarter of favorable prior year reserve development.



Net current accident quarter weather losses of $21.2 million, including $17.0 million of net current accident quarter catastrophe losses. In the prior year quarter, net current accident quarter weather and catastrophe losses were $20.5 million and $15.0 million, respectively.



Repurchased 766,900 shares for $8.0 million at an average price of $10.41 per share, 35.4% below first quarter 2020 book value per share. Total capital returned to shareholders of $9.7 million, including $0.06 per share regular quarterly dividend.



Began writing homeowners insurance in California on an excess & surplus lines basis.

Bruce Lucas, the Company’s Chairman and CEO, said, “I want to thank healthcare workers and other essential personnel, including our employees, for supporting our communities during these unprecedented times. As a super-regional property insurer that’s prevailed through multiple hurricanes, we’re well equipped to operate in the current environment and continue to provide our policyholders and agency partners with the high levels of service they’re accustomed to. Homeowners insurance, our core focus, is a must-have product for most consumers, positioning us well in uncertain economic times. Given our confidence in the resilience of our business model, in the first quarter we repurchased 766,900 shares, representing over 3% of year-end 2019 float.”

COVID-19 Update

We are currently monitoring the short- and long-term impacts of COVID-19. During first quarter 2020, we saw virtually no impact to our business. As a residential property insurer, we view our business as relatively insulated from an economic slowdown, as property owners and renters generally view our products as a necessity. The majority of our gross and net premiums written are from renewals of expiring policies. New business, which accounts for a smaller proportion of our sales volume, could be impacted if consumers are not buying as many new homes in our geographies, but this could be partially or fully offset by increased retention in our renewal portfolio.

While we acknowledge uncertainties associated with future economic conditions, we do not expect a material impact to our business going forward. We will continue to monitor economic conditions and, in the case of a prolonged economic slowdown as a result of COVID-19, will take necessary actions to mitigate any negative impacts to our business, operations or financial results.

Results of Operations

The following table summarizes our results of operations for the months ended March 31, 2020 and 2019 (amounts in thousands, except percentages and per share amounts):


     Three Months Ended March 31,  
     2020     2019     Change  

Total revenues

   $ 132,706     $ 118,261       12.2

Net Income

   $ 7,620     $ 6,964       9.4

Per Share

   $ 0.27     $ 0.24       12.5

Book value per share

   $ 16.11     $ 14.78       9.0

Return on equity*

     6.8     6.5     0.3 pts 

Underwriting summary


Gross premiums written

   $ 229,102     $ 210,348       8.9

Gross premiums earned

   $ 234,716     $ 228,590       2.7

Ceded premiums

   $ (108,710   $ (118,899     (8.6 )% 

Net premiums earned

   $ 126,006     $ 109,691       14.9

Ceded premium ratio

     46.3     52.0     (5.7 )pts 

Ratios to Net Premiums Earned:


Loss ratio

     54.1     56.6     (2.5 )pts 

Expense ratio

     41.1     40.7     0.4 pts 

Combined ratio

     95.2     97.3     (2.1 )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.


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.

Quarterly Financial Results

First quarter 2020 net income was $7.6 million, up from $7.0 million in the prior year quarter. The increase primarily reflects higher net premiums earned and a lower net combined ratio, partly offset by lower investment gains and other income and a higher effective tax rate.

Gross premiums written were $229.1 million in first quarter 2020, up 8.9% from $210.3 million in the prior year quarter, including 12.0% growth outside Florida and 6.4% growth in Florida. All states and lines of business experienced positive growth.

Premiums-in-force were $958.1 million in first quarter 2020, representing a 7.4% annualized growth rate from year-end 2019. The increase stems from the same items impacting gross premiums written.

Gross premiums earned were $234.7 million in first quarter 2020, up 2.7% from $228.6 million in the prior year quarter. The increase primarily reflects higher gross premiums written, as described above.

The ceded premium ratio was 46.3% in first quarter 2020, down 5.7 points from 52.0% in the prior year quarter. The decrease is primarily attributable to a reduction in overall quota share reinsurance coverage and reinsurance synergies, partly offset by additional catastrophe excess-of-loss reinsurance coverage.

The net loss ratio was 54.1% in first quarter 2020, down 2.5 points from 56.6% in the prior year quarter. The decrease primarily stems from lower current accident year attritional and weather net loss ratios and higher favorable prior year reserve development, partly offset by lower income from vertically integrated operations. Catastrophe and weather losses in the current year quarter primarily stemmed from February hail, tornado and wind events in the southeast.

The net expense ratio was 41.1% in first quarter 2020, up 0.4 points from 40.7% in the prior year quarter. The increase primarily stems from a modestly higher G&A expense ratio.

The net combined ratio was 95.2% in first quarter 2020, down 2.1 points from 97.3% in the prior year quarter. The decrease stems from a lower net loss ratio, partly offset by a higher net expense ratio, as described above.

Book Value Analysis

Book value per share increased to $16.11 at March 31, 2020, up 9.0% from March 31, 2019.


     As Of  
Book Value Per Share    March 31,
     December 31,
     March 31,



Common stockholders’ equity

   $ 449,297      $ 448,799      $ 435,087  












Total Shares Outstanding

     27,891,518        28,650,918        29,432,217  










Book Value Per Common Share

   $ 16.11      $ 15.66      $ 14.78  










Conference Call Details:

Tuesday, May 5, 2020 – 8:30 a.m. EDT

Participant Dial-in Numbers Toll Free: 1-888-346-3095

Participant International Dial In: 1-412-902-4258

Canada Toll Free: 1-855-669-9657


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.


Condensed Consolidated Balance Sheets

(Amounts in thousands, except share amounts)



     March 31,
    December 31,



Fixed maturities, available-for-sale, at fair value

   $ 613,355     $ 587,256  

Equity securities, at fair value

     1,599       1,618  

Other investments

     6,375       6,375  







Total investments

     621,329       595,249  

Cash and cash equivalents

     313,360       268,351  

Restricted cash

     16,069       14,657  

Accrued investment income

     4,262       4,377  

Premiums receivable, net

     62,914       63,685  

Reinsurance recoverable on paid and unpaid claims, net

     374,994       428,903  

Prepaid reinsurance premiums

     146,029       224,102  

Income taxes receivable


Deferred policy acquisition costs, net

     74,895       77,211  

Property and equipment, net

     20,395       20,753  

Intangibles, net

     67,051       68,642  


     152,459       152,459  

Other assets

     26,738       18,110  







Total Assets

   $ 1,880,495     $ 1,939,670  









Unpaid losses and loss adjustment expenses

   $ 607,177     $ 613,533  

Unearned premiums

     480,627       486,220  

Reinsurance payable

     101,960       156,351  

Long-term debt, net

     125,775       129,248  

Income taxes payable


Deferred income tax, net

     8,627       12,623  

Advance premiums

     29,394       16,504  

Accrued compensation

     8,237       5,347  

Accounts payable and other liabilities

     64,962       71,045  







Total Liabilities

   $ 1,431,198     $ 1,490,871  







Stockholders’ Equity:


Common stock

     3       3  

Additional paid-in capital

     330,680       329,568  

Accumulated other comprehensive income

     8,842       7,330  

Treasury stock, at cost,

     (113,354     (105,368

Retained earnings

     223,126       217,266  







Total Stockholders’ Equity

     449,297       448,799  







Total Liabilities and Stockholders’ Equity

   $ 1,880,495     $ 1,939,670  








Condensed Consolidated Statements of Operations and Other Comprehensive Income

(Amounts in thousands, except share amounts)



     For the Three Months
Ended March 31,
     2020     2019  



Gross premiums written

   $ 229,102     $ 210,348  

Change in gross unearned premiums

     5,614       18,242  







Gross premiums earned

     234,716       228,590  

Ceded premiums

     (108,710     (118,899







Net premiums earned

     126,006       109,691  

Net investment income

     3,670       3,672  

Net realized and unrealized gains

     59       1,024  

Other revenue

     2,971       3,874  







Total revenues

     132,706       118,261  



Losses and loss adjustment expenses

     68,181       62,139  

Policy acquisition costs, net

     30,047       26,020  

General and administrative expenses, net

     21,718       18,604  







Total expenses

     119,946       106,763  







Operating income

     12,760       11,498  

Interest expense, net

     1,966       2,117  

Other non-operating loss, net








Income before income taxes

     10,794       9,333  







Provision for income taxes

     3,174       2,369  







Net income

   $ 7,620     $ 6,964  









Change in net unrealized gains on investments

     2,027       8,036  

Reclassification adjustment for net realized investment (gains) losses

     (59     335  

Income tax expense related to items of other comprehensive income

     (456     (2,408







Total comprehensive income

   $ 9,132     $ 12,927  







Weighted average shares outstanding



     28,548,830       29,540,514  








     28,549,012       29,544,563  







Earnings per share



   $ 0.27     $ 0.24  


   $ 0.27     $ 0.24  

About Heritage

Heritage Insurance Holdings, Inc. is a super-regional property and casualty insurance holding company headquartered in Clearwater, Florida. Through its insurance subsidiaries and a large network of experienced agents, the Company writes over $950 million of gross personal and commercial residential premium across its multi-state footprint.

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. This release includes forward-looking statements relating to (i) the impact of the COVID-19 pandemic on our business, results of operations and financial condition and our ability to navigate the uncertainty, (ii) our core focus on homeowners’ policies and its impact on our ability to mitigate the impact of the economic effects of the COVID-19 pandemic, (iii) our beliefs with respect to the drivers of our performance relative to our peers, (iv) our intent to continue our share repurchase program, and (v) our expectations regarding organic growth in 2020. The risks and uncertainties that could cause our actual results to differ from those expressed or implied herein include, without limitation: our ability to comply with our obligations under the new credit facilities, including the financial and other covenants contained therein, the success of the

Company’s marketing initiatives; the impact of the COVID-19 pandemic on the economy, demand for our products and our operations, including measures taken by the governmental authorities to address COVID-19, which may precipitate or exacerbate other risks and/or uncertainties; 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, the collectability of reinsurance and our ability to obtain reinsurance coverage on terms and at a cost acceptable to us; 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; our ability to build and maintain relationships with 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; our ability to continue our stock repurchase program, which will depend on, among other things, the trading price, which may be positively or negatively impacted by the repurchase program, market, business and economic conditions, including the impact of the COVID-19 pandemic, the availability of stock, our financial performance or determinations following the date of this announcement in order to use our funds for other purposes; 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 Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 10, 2019. 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.

Investor Contact:

Arash Soleimani, CFA, CPA

Executive Vice President


Email: asoleimani@heritagepci.com