Heritage Insurance Q2 Earnings Call Highlights

Heritage Insurance reported second-quarter net income of $61.7 million, or $2.05 per diluted share, up from $48 million a year earlier. The annualized return on average equity reached 45.4%. The net loss ratio improved to 30.4% and the combined ratio to 64.9%, aided by lower weather losses and $23.4 million in favorable reserve development. Net premiums earned rose 2.4%, although gross premiums written declined 5.5% due largely to Florida commercial-residential reductions. Heritage secured more than $2.2 billion of catastrophe reinsurance limit, expected to generate approximately $63 million in annualized savings. Book value per share rose 16.5% from year-end 2025, while the company repurchased over 1 million shares during the first half.

Heritage Insurance reported record second-quarter net income of $61.7 million, or $2.05 per diluted share, as lower weather-related losses, favorable reserve development, higher net premiums earned and increased investment income supported results. The insurer’s net income increased from $48 million, or $1.55 per diluted share, in the prior-year quarter. For the first six months of 2026, net income rose 25% year over year to $98.2 million. Chief Financial Officer Kirk Lusk said the company generated an annualized return on average equity of 45.4% in the quarter.

Chief Executive Officer Ernie Garateix said the results reflect years of portfolio re-underwriting, rate actions, exposure reductions in less attractive markets, strengthened reserves, and investments in technology and operations. “We continue to believe long-term shareholder value is created through profitable underwriting and disciplined capital allocation, not by pursuing premium growth at any cost,” Garateix said.

Heritage’s net loss ratio improved to 30.4% in the second quarter from 38.5% a year earlier, while its combined ratio improved to 64.9% from 72.9%. Lusk attributed the improvement to favorable prior-year reserve development, lower weather losses and continued claims performance. The company recognized $23.4 million of favorable prior-year reserve development, compared with $2.3 million in the prior-year period. Lusk said the development was spread across multiple accident years and was concentrated primarily at Heritage’s HBCIC unit, with contributions from Narragansett Bay. He cited stabilized claim frequency, manageable severity, lower late-reported claims and claims closing at amounts below expectations. Lusk told analysts that the company expects underlying loss ratios to remain stable excluding reserve development, which he described as more of a one-time benefit. He also said new business production is being written within Heritage’s existing underwriting guidelines and margin standards.

Net premiums earned rose 2.4% to $201.1 million, while gross premiums earned declined slightly to $351.2 million from $353.6 million. Gross premiums written fell 5.5% to $380.4 million, primarily due to reductions in Florida commercial residential business. Premiums in force totaled $1.41 billion at quarter-end, down 1.4% from a year earlier. Commercial residential premiums faced pricing pressure, particularly in Florida, while personal residential premiums in force increased 1.2% year over year.

Garateix said Heritage now operates as a “super-regional” insurer across multiple geographies, products and distribution channels, rather than solely as a Florida-focused property insurer. The company said it can direct capital toward markets and products offering strong.