By Chris Munro

March 11 - (The Insurer) - Heritage Insurance Holdings’ net combined ratio deteriorated 4.8 points year on year to 89.7% with the increase fuelled by higher net losses and loss adjustment expenses driven by Hurricane Milton.

• CR worsens 4.8 points YoY to 89.7%

• Faces $40.0 million of catastrophe losses in Q4, up from $3.1 million in Q4 2023

• GPW up 3.7% YoY to $338.7 million

• Net income of $20.3 million, compared with Q4 2023’s $30.9 million

• Reopening for personal lines business in select states

The company booked a net loss ratio of 54.7% for the final three months of 2024, up 3.7 points from the prior year period, with the Hurricane Milton-fuelled increase offset partly by lower attritional losses.

Heritage faced $40.0 million of catastrophe losses in Q4 2024, compared with $3.1 million in the prior year period.

Other weather losses totaled $5.6 million, down from Q4 2023’s $7.9 million.

Tampa, Florida-based Heritage’s fourth quarter 2024 net loss ratio was also impacted by net unfavorable loss development of $3.8 million, compared with net unfavorable loss development of $1.8 million in the prior year period.

The company’s net expense ratio climbed 1.1 points year on year to 35.0% in Q4 2024, with the increase driven primarily by higher policy acquisition costs and general and administrative expenses.

Heritage generated gross premiums written (GPW) of $338.7 million in 2024’s fourth quarter, up 3.7% year on year.

The increase, Heritage said, reflected organic growth in its commercial residential and surplus lines business, and rate actions throughout the book.

The use of inflation guard, which the company says ensures appropriate property values, also contributed to higher GPW over the prior year quarter.

Backin January, Heritage announced it expects to take a $35mn to $40mn pre-tax hit from losses arising from the California wildfires.

In its January update, Heritage also said its Q4 2024 results would include an estimated $57mn impact from Hurricane Milton, while the company would also record its best quarterly earnings of last year in the period.

In its actual results Heritage reported $20.3 million of net income for Q4 2024, down from the prior year period’s $30.9 million.

Heritage recorded earnings per diluted share of $0.66 in 2024’s fourth quarter, a decrease on the $1.15 generated in Q4 2023.

Net investment income, inclusive of realized gains, was $7.8 million, up $2.0 million year on year, with the increase reflecting larger investment balances and actions to align the investments with the yield curve, while maintaining a high-quality portfolio of short duration, Heritage said.

"The year 2024 was marked by numerous destructive hurricanes affecting communities across the Southeastern United States and in 2025, we've seen devastating wildfires affect residents of California," said Ernie Garateix, Heritage’s CEO.

“Our financial foundation continues to strengthen and provides our customers with the confidence that we will stand behind them during the most difficult times.

“Our fourth quarter results clearly demonstrate our efforts over the last several years to attain rate adequacy, manage exposure, and enhance our underwriting discipline,” the executive added.

In the earnings commentary, Garateix noted that one of Heritage’s strategic goals is to achieve consistent long-term earnings and drive shareholder value.

“Our 2024 results clearly demonstrate the successful achievement of this goal,” he said.

REOPENING FOR PERSONAL LINES

Following publication of Heritage’s Q2 2024 earningslast August, Garateix said the firm was ready to resume underwriting personal lines business in Florida and the Northeast US having paused doing so in December 2022 owing to profitability concerns.

In the latest earnings update, Garateix said that as a result of Heritage’s focused efforts, the company is “now positioned to strategically re-open territories for new personal lines business”.

“We plan to continue to allocate capital to profitable geographies and products and apply our underwriting and pricing discipline as we strive to deliver profitable growth in 2025,” Garateix said.

“We are beginning to see positive impacts from legislative actions taken in Florida to reduce abusive claims practices as well as stabilization of reinsurance pricing.

“These positive factors, coupled with our strategic initiatives, provides me with optimism that Heritage can deliver consistent long-term profitability.

“Additionally, I would like to thank our dedicated reinsurance partners who have supported our business throughout multiple catastrophic events over the last several years and look forward to their continued partnership as we work to expand the company,” Garateix added.