Heritage to grow back into Florida thanks to reforms & reinsurance stability: CEO

Heritage Insurance Holdings, Inc. is ready to begin selectively growing its property insurance business back into Florida, as the legislative reforms have taken positive effect and reinsurance markets are now more stable, CEO Ernie Garateix has explained.

Heritage has been actively working to improve the quality of its insurance book over the last few years, part of which involved pulling-back in its once core state of Florida.

But, increasingly the company has cited improving conditions there and now with a robust reinsurance program renewed for 2024, the insurer sees that market as having stabilised as well.

The company reported improved results, with second quarter net income reaching $18.9 million, up from $7.8 million in H2 2023.

Gross premiums written grew 6.1% to $350.1 million, while premiums-in-force grew at the same rate to $1.4 billion and the company reported a 2.6 point improvement in its combined ratio to 92.5%.

All of which is a much better platform for profitability and so now Heritage seems ready to grow again.

“With regard to the second quarter, our strong results demonstrate the continued execution of our underwriting and rate adequacy initiatives over the last three years,” Heritage CEO Ernie Garateix explained.

“Through our proactive actions to improve rates and organically grow our commercial residential business, we are achieving top line growth while expanding our margins and delivering stronger earnings,” Garateix continued. “A key component of this strategy was our decision in December of 2022 to largely cease writing new personal lines policies in Florida and the Northeast given the wavering profitability of our book of business, coupled with tightening reinsurance markets at that that time.”

Garateix went on to say that, “Importantly, we have now reached an inflection point which positions us to selectively resume writing new business in these regions.

“Looking forward, we plan to pursue a strategy of controlled growth anchored by continued risk management and stringent underwriting.

“This is an opportune time to accelerate growth given the disruption in many of our markets that is opening up significant market share, combined with the positive impact of Florida legislative changes and a stabilized reinsurance market where we continue to receive support from our partners.

“I’m pleased with the progress that we have made, and even more encouraged with the opportunities ahead, which would not be possible without the experience and dedication of our employees.”

It’s a good time to have stabilised a business, cleaned up its portfolios of risk and to still have the sales teams necessary to move back into regions where the company had pulled-back and Heritage stands well-positioned.

The appetite for risk in Florida continues to grow, albeit that the reforms are still relatively new and could need extending or revisiting in some areas such as condos.

But, with reinsurance support returned to the state of Florida as well and profitable carriers seemingly happy with the rates they are paying for that coverage, those that have adapted fastest and most successfully to the reinsurance market reset of attachments, terms and price are now the best positioned to capitalise on growth opportunities.

Heritage believes it is one of them.