In the news release, Heritage Reports Second Quarter 2022
Results, issued 04-Aug-2022 by
Heritage Insurance Holdings, Inc. over PR Newswire, in the table
titled "Book Value Per Common Share", the value for Common
stockholder's equity for Jun 30, 2021
should read "424,873" rather than "42,873" as incorrectly
transmitted by PR Newswire. The complete, corrected release
follows:
Heritage Reports Second Quarter 2022 Results
TAMPA,
Fla., Aug. 4, 2022 /PRNewswire/ -- Heritage
Insurance Holdings, Inc. (NYSE: HRTG) ("Heritage" or the
"Company"), a super-regional property and casualty insurance
holding company, today reported second quarter of 2022 financial
results.
Second Quarter 2022 Results
- Second quarter net loss of $87.9
million or $3.32 per diluted
share, down from a net loss of $4.0
million or $0.14 per diluted
share in the prior year quarter, with the reduction stemming from a
net $90.8 million or $3.48 per diluted share non-cash goodwill
impairment charge.
- Goodwill impairment charge driven by: (i) disruptions in the
equity markets, specifically for property and casualty insurance
companies, largely due to recent weather-related catastrophe
events; (ii) elevated loss ratios for property insurers in our
markets; and (iii) trading of our stock below book value.
- Second quarter adjusted net income1 of
$2.9 million or $0.11 per diluted share, up from an adjusted net
loss1 of $4.0 million, or
$0.14 per diluted share in the prior
year quarter driven by an improvement in the net combined ratio of
5.8 points, to 99.4%.
- Net loss ratio of 64.1%, 4.7 points lower from the prior year
quarter of 68.8%, driven by higher net earned premium, which
outpaced the 0.7% increase in losses.
- Net current accident year weather losses of $38.1 million, up 7.3% from $35.5 million in the prior year quarter. Current
accident year weather losses include $32.1
million of net current accident quarter catastrophe losses,
up from $24.5 million in the prior
year quarter, and $6.0 million of
other weather losses, down from $11.0
million in the prior year quarter.
- Net expense ratio of 35.3%, down 1.1 point from the prior year
quarter amount of 36.4%.
- Exposure management highlights:
-
- Premiums-in-force of $1.2
billion, up 3.4% year-over-year, with the increase driven by
higher average premium per policy of 11.5% over the prior year
quarter.
- Policies-in-force declined 7.3%, driven primarily by a planned
reduction of policies in the state of Florida, designed to improve underwriting
results. The delta was driven by a combination of fewer new
policies, non-renewals, and lower retention as expected from rate
increases.
- Efforts to increasingly diversify business outside Florida and into Northeast, Mid-Atlantic, West
and Pacific regions resulted in the following reductions in
Florida: an 18.9% reduction in
policies-in-force and a 14.9% reduction of total insured value
("TIV") resulting in only a 5.7% reduction in premiums-in-force
year-over-year.
- Overall TIV increased by 0.2%, despite the reduction in policy
count of approximately 43,000, due to higher average TIV for most
states reflecting continued selective underwriting.
- Gross premiums earned of $296.2
million, up 3.7% from $285.6
million in the prior year quarter, reflecting higher gross
premiums written over the last twelve months driven by higher
average premium per policy.
- Gross premiums written of $365.3
million, up 8.2% from $337.7
million in the prior year quarter, driven by higher rates,
with intentional exposure-management and re-underwriting efforts
resulting in a 4.6% increase in Florida driven by rate actions and growth of
12.1% in other regions.
- Total capital returned to shareholders of $1.6 million, reflects $0.06 per share of the regular quarterly
dividend.
- Continued execution of Heritage's diversification strategy,
with 74.4% of TIV outside of Florida, up from 69.8% as of second quarter
2021.
"Our underwriting profit for the quarter and nearly 6-point
reduction in our combined ratio demonstrate that our focus on
profitability, exposure management and rate adequacy are having the
desired impact," said Heritage CEO Ernie
Garateix. "Our improved metrics are significant in
comparison to the prior year quarter and we expect these
improvements to continue each successive quarter. Additionally, I'm
pleased with the outcome of our catastrophe reinsurance program
which incepted June 1st.
Heritage secured appropriate levels of reinsurance, we did not use
the new Florida Reinsurance to Assist Policyholders program, and
our program included deployment of Citrus Re, which brings in
additional collateralized reinsurance through the capital markets.
We are cautiously optimistic that the actions taken by the
Florida legislature will have a
positive impact on our results and the challenging claims
environment, but also believe that more legislative action needs to
be taken to improve the health of the Florida property insurance market."
Capital Management
Given that Heritage's stock is trading below tangible book
value, Heritage's Board of Directors has decided for this quarter
to allocate the $0.06 per share
typically used to pay a quarterly dividend to shareholders to
repurchase common stock, which will be accretive to shareholders.
The Board of Directors will re-evaluate dividend distribution on a
quarterly basis and will make a determination, in part, based on
the current stock trading price as compared to book value.
Results of Operations
The following table summarizes results of operations for the
three and six months ended June 30,
2022 and 2021 (amounts in thousands, except percentages and
per share amounts):
|
|
Three Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Change
|
|
|
|
2022
|
|
|
2021
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
|
163,770
|
|
$
|
|
150,197
|
|
|
|
9.0
|
|
%
|
$
|
|
322,378
|
|
$
|
|
297,441
|
|
|
|
8.4
|
|
%
|
Net
loss
|
$
|
|
(87,866)
|
|
$
|
|
(3,950)
|
|
|
NM
|
|
%
|
$
|
|
(118,625)
|
|
$
|
|
(9,097)
|
|
|
NM
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
(loss) [1]
|
$
|
|
2,908
|
|
$
|
|
(3,950)
|
|
|
|
(173.6)
|
|
%
|
$
|
|
(27,851)
|
|
$
|
|
(9,097)
|
|
|
|
206.2
|
|
%
|
Loss per
share
|
$
|
|
(3.32)
|
|
$
|
|
(0.14)
|
|
|
NM
|
|
%
|
$
|
|
(4.46)
|
|
$
|
|
(0.33)
|
|
|
NM
|
|
%
|
Adjusted net income
(loss)[1]
|
$
|
|
0.11
|
|
$
|
|
(0.14)
|
|
|
|
(178.6)
|
|
%
|
$
|
|
(1.05)
|
|
$
|
|
(0.33)
|
|
|
|
218.2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per
share
|
$
|
|
6.80
|
|
$
|
|
15.20
|
|
|
|
(55.3)
|
|
%
|
$
|
|
6.80
|
|
$
|
|
15.20
|
|
|
|
(55.3)
|
|
%
|
Adjusted book
value[1]
|
$
|
|
8.35
|
|
$
|
|
15.20
|
|
|
|
(45.1)
|
|
%
|
$
|
|
8.35
|
|
$
|
|
15.20
|
|
|
|
(45.1)
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
equity*
|
|
|
(152.0)
|
|
%
|
|
(3.7)
|
|
%
|
|
(148.3)
|
|
pts
|
|
|
(90.6)
|
|
%
|
|
(4.2)
|
|
%
|
|
(86.4)
|
|
pts
|
Adjusted return on
equity[1]*
|
|
|
5.0
|
|
%
|
|
(3.7)
|
|
%
|
|
8.7
|
|
pts
|
|
|
(21.3)
|
|
%
|
|
(4.2)
|
|
%
|
|
(17.1)
|
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting
summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums
written
|
$
|
|
365,284
|
|
$
|
|
337,700
|
|
|
|
8.2
|
|
%
|
$
|
|
648,480
|
|
$
|
|
611,881
|
|
|
|
6.0
|
|
%
|
Gross premiums
earned
|
$
|
|
296,211
|
|
$
|
|
285,646
|
|
|
|
3.7
|
|
%
|
$
|
|
583,579
|
|
$
|
|
556,057
|
|
|
|
4.9
|
|
%
|
Ceded premiums
earned
|
$
|
|
(137,940)
|
|
$
|
|
(139,147)
|
|
|
|
(0.9)
|
|
%
|
$
|
|
(272,379)
|
|
$
|
|
(267,359)
|
|
|
|
1.9
|
|
%
|
Net premiums
earned
|
$
|
|
158,271
|
|
$
|
|
146,499
|
|
|
|
8.0
|
|
%
|
$
|
|
311,200
|
|
$
|
|
288,698
|
|
|
|
7.8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceded premium
ratio
|
|
|
46.6
|
|
%
|
|
48.7
|
|
%
|
|
(2.1)
|
|
pts
|
|
|
46.7
|
|
%
|
|
48.1
|
|
%
|
|
(1.4)
|
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Net Premiums
Earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
64.1
|
|
%
|
|
68.8
|
|
%
|
|
(4.7)
|
|
pts
|
|
|
77.6
|
|
%
|
|
68.8
|
|
%
|
|
8.8
|
|
pts
|
Expense
ratio
|
|
|
35.3
|
|
%
|
|
36.4
|
|
%
|
|
(1.1)
|
|
pts
|
|
|
36.6
|
|
%
|
|
37.6
|
|
%
|
|
(1.0)
|
|
pts
|
Combined
ratio
|
|
|
99.4
|
|
%
|
|
105.2
|
|
%
|
|
(5.8)
|
|
pts
|
|
|
114.2
|
|
%
|
|
106.4
|
|
%
|
|
7.8
|
|
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.
|
NM: Not
meaningful
|
Ratios
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 net combined ratio under 100% generally reflects
profitable underwriting results.
Second Quarter 2022 Financial Results
Second quarter 2022 net loss was $87.9
million, compared to a net loss of $4.0 million in the prior year quarter. The
year-over-year change was primarily attributed to a net
$90.8 million non-cash goodwill
impairment charge. The goodwill impairment charge was recorded
following an interim valuation review and principally stemmed the
decline in the fair value of common stock.
Adjusted net income[1] was $2.9 million, up from an adjusted net loss of
$4.0 million in the prior year
quarter. Adjusted net income growth primarily stemmed from an
$11.8 million, or 8.0% increase in
net earned premium which exceeded the 2.1% increase in losses and
expenses. over the prior year quarter.
Gross premiums written were $365.3
million, up 8.2% from $337.7
million in the prior year quarter, reflecting a 4.6% rate
related increase in Florida and
12.1% growth in other states. Rate increases continued to
meaningfully benefit written premiums throughout the book of
business.
Premiums-in-force were $1.2
billion, up 3.4% from second quarter 2021, while
policies-in-force were down 7.3%, with the variance stemming
primarily from rate increases and a small policy in-force increase
outside of Florida.
Gross premiums earned were $296.2
million, up 3.7% from $285.6
million in the prior year quarter. The increase reflects
higher gross premiums written over the last twelve months,
primarily related to higher rates on a smaller book of
business.
The ceded premium ratio was 46.6%, down 2.1 points from 48.7% in
the prior year quarter. The decrease primarily stems from gross
premiums earned growth outpacing ceded premium growth. While the
higher cost of the June 2022
catastrophe excess of loss program is reflected in these results,
the second quarter of 2021 included significant reinstatement
premium on the severe convective storm reinsurance contract, which
drove up the ceded premium ratio.
The net loss ratio was 64.1%, down 4.7 points from 68.8% in the
prior year quarter. The decrease is primarily due to a lower
attritional loss ratio, partly offset by less favorable loss
development.
The net expense ratio was 35.3%, down 1.1 point from 36.4% in
the prior year quarter. The decrease was primarily due to a lower
PAC expense ratio.
The net combined ratio was 99.4%, down 5.8 points from 105.2% in
the prior year quarter. The improvement was due to a lower net loss
ratio, coupled with a small decrease in the net expense ratio, as
described above.
Supplemental
Information
|
|
|
|
|
|
|
|
|
At June
30,
|
|
|
|
2022
|
|
|
2021
|
|
Policies in
force:
|
|
|
|
|
|
|
Florida
|
|
|
195,987
|
|
|
|
241,581
|
|
Other States
|
|
|
354,534
|
|
|
|
352,205
|
|
Total
|
|
|
550,521
|
|
|
|
593,786
|
|
|
|
|
|
|
|
|
Premiums in
force:
|
|
|
|
|
|
|
Florida
|
$
|
|
564,814,121
|
|
$
|
|
598,869,936
|
|
Other States
|
|
|
648,621,713
|
|
|
|
574,888,835
|
|
Total
|
$
|
|
1,213,435,834
|
|
$
|
|
1,173,758,771
|
|
|
|
|
|
|
|
|
Total Insured
Value:
|
|
|
|
|
|
|
Florida
|
$
|
|
103,200,520,845
|
|
$
|
|
121,256,973,834
|
|
Other States
|
|
|
299,177,714,835
|
|
|
|
280,332,366,098
|
|
Total
|
$
|
|
402,378,235,680
|
|
$
|
|
401,589,339,932
|
|
Book Value Analysis
Book value per share decreased to $6.80 at June 30,
2022, down 47.0% from fourth quarter 2021. The decrease from
December 31, 2021 is attributable to
the goodwill impairment and year-to-date operating losses discussed
above, as well as unrealized losses on the Company's
available-for-sale fixed income securities portfolio. The
unrealized losses were due to the sharp decline in bond prices
during 2022 as a result of the higher interest rate environment.
The Company's fixed income portfolio average credit rating is A+
with a duration of 3.6 years at June 30,
2022. Adjusted book value per common share[1]
decreased to $8.35 at June 30, 2022, down from fourth quarter 2021
adjusted book value per share[1] of $12.99.
Book Value Per
Common Share
|
As Of
|
|
June 30, 2022
|
|
Mar 31, 2022
|
|
Dec 31, 2021
|
|
Jun 30, 2021
|
Numerator:
|
|
|
|
|
|
|
|
Common stockholder's equity
|
$
180,546
|
|
$
281,766
|
|
$
343,051
|
|
$
424,873
|
Denominator:
|
|
|
|
|
|
|
|
Total Shares Outstanding
|
26,544,096
|
|
26,444,720
|
|
26,753,511
|
|
27,946,941
|
Book Value Per Common Share
|
$
6.80
|
|
$
10.65
|
|
$
12.82
|
|
$
15.20
|
Adjusted Book Value Per Common Share[1]
|
$
8.35
|
|
$
11.75
|
|
$
12.99
|
|
$
15.20
|
Conference Call Details:
Friday, August 5, 2022– 9:30 a.m. ET
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
Webcast:
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.
[1] Represents a non-GAAP financial measure.
Information regarding non-GAAP financial measures, including
required reconciliations, are set forth below under the
"Non-GAAP Financial Measures" section of this
release.
HERITAGE INSURANCE
HOLDINGS, INC.
Condensed
Consolidated Balance Sheets
(Amounts in
thousands, except share amounts)
|
|
|
|
June 30,
2022
|
|
|
December 31,
2021
|
|
ASSETS
|
|
(unaudited)
|
|
|
|
|
Fixed maturities,
available-for-sale, at fair value
|
|
$
|
635,458
|
|
|
$
|
669,354
|
|
Equity securities, at
fair value
|
|
|
1,514
|
|
|
|
1,415
|
|
Other investments,
net
|
|
|
17,352
|
|
|
|
23,929
|
|
Total
investments
|
|
|
654,324
|
|
|
|
694,698
|
|
Cash and cash
equivalents
|
|
|
290,932
|
|
|
|
359,337
|
|
Restricted
cash
|
|
|
5,416
|
|
|
|
5,415
|
|
Accrued investment
income
|
|
|
3,215
|
|
|
|
3,167
|
|
Premiums receivable,
net
|
|
|
81,277
|
|
|
|
71,925
|
|
Reinsurance
recoverable on paid and unpaid claims, net
|
|
|
289,106
|
|
|
|
269,391
|
|
Prepaid reinsurance
premiums
|
|
|
468,748
|
|
|
|
265,873
|
|
Income tax
receivable
|
|
|
13,281
|
|
|
|
11,739
|
|
Deferred income tax
asset, net
|
|
|
9,762
|
|
|
|
—
|
|
Deferred policy
acquisition costs, net
|
|
|
99,468
|
|
|
|
93,881
|
|
Property and
equipment, net
|
|
|
19,622
|
|
|
|
17,426
|
|
Right-of-use lease
asset, net
|
|
|
26,047
|
|
|
|
27,753
|
|
Intangibles,
net
|
|
|
52,751
|
|
|
|
55,926
|
|
Goodwill
|
|
|
—
|
|
|
|
91,959
|
|
Other
assets
|
|
|
15,956
|
|
|
|
12,272
|
|
Total
Assets
|
|
$
|
2,029,905
|
|
|
$
|
1,980,762
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Unpaid losses and loss
adjustment expenses
|
|
$
|
553,909
|
|
|
$
|
590,166
|
|
Unearned
premiums
|
|
|
655,351
|
|
|
|
590,419
|
|
Reinsurance
payable
|
|
|
375,284
|
|
|
|
191,728
|
|
Long-term debt,
net
|
|
|
122,990
|
|
|
|
120,757
|
|
Deferred income tax
liability, net
|
|
|
—
|
|
|
|
9,426
|
|
Advance
premiums
|
|
|
37,827
|
|
|
|
24,504
|
|
Accrued
compensation
|
|
|
7,730
|
|
|
|
8,014
|
|
Lease
liability
|
|
|
29,647
|
|
|
|
31,172
|
|
Accounts payable and
other liabilities
|
|
|
66,621
|
|
|
|
71,525
|
|
Total
Liabilities
|
|
$
|
1,849,359
|
|
|
$
|
1,637,711
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Common stock, $0.0001
par value
|
|
|
3
|
|
|
|
3
|
|
Additional paid-in
capital
|
|
|
333,747
|
|
|
|
332,797
|
|
Accumulated other
comprehensive loss, net of taxes
|
|
|
(41,194)
|
|
|
|
(4,573)
|
|
Treasury stock, at
cost
|
|
|
(128,557)
|
|
|
|
(123,557)
|
|
Retained
earnings
|
|
|
16,547
|
|
|
|
138,381
|
|
Total Stockholders'
Equity
|
|
|
180,546
|
|
|
|
343,051
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
2,029,905
|
|
|
$
|
1,980,762
|
|
HERITAGE INSURANCE
HOLDINGS, INC.
Condensed
Consolidated Statements of Operations and Other Comprehensive
Loss
(Amounts in
thousands, except share amounts)
(Unaudited)
|
|
|
For the Three
Months Ended
June 30,
|
|
|
For the Six
Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums
written
|
|
$
|
365,284
|
|
|
$
|
337,700
|
|
|
$
|
648,480
|
|
|
$
|
611,881
|
|
Change in gross
unearned premiums
|
|
|
(69,073)
|
|
|
|
(52,054)
|
|
|
|
(64,901)
|
|
|
|
(55,824)
|
|
Gross premiums
earned
|
|
|
296,211
|
|
|
|
285,646
|
|
|
|
583,579
|
|
|
|
556,057
|
|
Ceded
premiums
|
|
|
(137,940)
|
|
|
|
(139,147)
|
|
|
|
(272,379)
|
|
|
|
(267,359)
|
|
Net premiums
earned
|
|
|
158,271
|
|
|
|
146,499
|
|
|
|
311,200
|
|
|
|
288,698
|
|
Net investment
income
|
|
|
2,163
|
|
|
|
956
|
|
|
|
4,163
|
|
|
|
2,249
|
|
Net realized
losses
|
|
|
(102)
|
|
|
|
(1,000)
|
|
|
|
(118)
|
|
|
|
(920)
|
|
Other
revenue
|
|
|
3,438
|
|
|
|
3,742
|
|
|
|
7,133
|
|
|
|
7,414
|
|
Total
revenues
|
|
|
163,770
|
|
|
|
150,197
|
|
|
|
322,378
|
|
|
|
297,441
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss
adjustment expenses
|
|
|
101,522
|
|
|
|
100,834
|
|
|
|
241,560
|
|
|
|
198,743
|
|
Policy acquisition
costs, net
|
|
|
38,375
|
|
|
|
37,833
|
|
|
|
76,632
|
|
|
|
73,199
|
|
General and
administrative expenses, net
|
|
|
17,466
|
|
|
|
15,520
|
|
|
|
37,190
|
|
|
|
35,320
|
|
Goodwill
impairment
|
|
|
91,959
|
|
|
|
—
|
|
|
|
91,959
|
|
|
|
—
|
|
Total
expenses
|
|
|
249,322
|
|
|
|
154,187
|
|
|
|
447,341
|
|
|
|
307,262
|
|
Operating
Loss
|
|
|
(85,552)
|
|
|
|
(3,990)
|
|
|
|
(124,963)
|
|
|
|
(9,821)
|
|
Interest expense,
net
|
|
|
1,751
|
|
|
|
1,925
|
|
|
|
3,723
|
|
|
|
3,803
|
|
Loss before income
taxes
|
|
|
(87,303)
|
|
|
|
(5,915)
|
|
|
|
(128,686)
|
|
|
|
(13,624)
|
|
Provision (benefit)
for income taxes
|
|
|
563
|
|
|
|
(1,965)
|
|
|
|
(10,061)
|
|
|
|
(4,527)
|
|
Net
loss
|
|
$
|
(87,866)
|
|
|
$
|
(3,950)
|
|
|
$
|
(118,625)
|
|
|
$
|
(9,097)
|
|
OTHER COMPREHENSIVE
LOSS
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in net
unrealized losses on investments
|
|
|
(16,161)
|
|
|
|
3,625
|
|
|
|
(47,932)
|
|
|
|
(6,972)
|
|
Reclassification
adjustment for net realized investment losses (gains)
|
|
|
102
|
|
|
|
(22)
|
|
|
|
118
|
|
|
|
(102)
|
|
Income tax benefit
(expense) related to items of other comprehensive losses
(gains)
|
|
|
3,759
|
|
|
|
(835)
|
|
|
|
11,193
|
|
|
|
1,640
|
|
Total comprehensive
loss
|
|
$
|
(100,166)
|
|
|
$
|
(1,182)
|
|
|
$
|
(155,246)
|
|
|
$
|
(14,531)
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
26,453,456
|
|
|
|
27,904,923
|
|
|
|
26,620,418
|
|
|
|
27,866,364
|
|
Diluted
|
|
|
26,453,456
|
|
|
|
27,904,923
|
|
|
|
26,620,418
|
|
|
|
27,866,364
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(3.32)
|
|
|
$
|
(0.14)
|
|
|
$
|
(4.46)
|
|
|
$
|
(0.33)
|
|
Diluted
|
|
$
|
(3.32)
|
|
|
$
|
(0.14)
|
|
|
$
|
(4.46)
|
|
|
$
|
(0.33)
|
|
About Heritage
Heritage Insurance Holdings,
Inc. is a super-regional property and casualty insurance holding
company. Through its insurance subsidiaries and a large network of
experienced agents, the Company writes approximately $1.2 billion of gross personal and commercial
residential premium across its multi-state footprint.
Non-GAAP Financial Measures
We measure our performance with several financial and operating
metrics. We use these metrics to assess the progress of our
business, make decisions on where to allocate capital, time and
investments and assess the long-term performance of our company.
Certain of these financial metrics are reported in accordance with
U.S. GAAP and certain of these metrics are considered non-GAAP
financial measures. As our business evolves, we may make changes to
our key financial and operating metrics used to measure our
performance. For further information and a reconciliation to the
most applicable financial measures under U.S. GAAP, refer to our
reconciliations below.
Non-GAAP adjusted net income is a non-GAAP financial measure and
the most directly comparable GAAP financial measure is net income.
Non-GAAP adjusted net income is calculated by adding back the
non-recurring, non-cash charges of $90.8
million, net of taxes related to impairment of goodwill for
the three months and six months ended June
30, 2022, respectively.
Non-GAAP adjusted earnings per share (EPS) is a non-GAAP measure
and is calculated by dividing the non-GAAP adjusted net income by
the number of fully diluted shares at end the of period.
Non-GAAP adjusted return on equity is a non-GAAP measure and is
calculated by using non-GAAP adjusted net income as the base for
the calculation.
Non-GAAP adjusted book value per share is a non-GAAP measure and
is calculated by dividing total stockholders' equity excluding
accumulated other comprehensive loss, net of tax, by the total
common shares outstanding.
We use these non-GAAP financial measures internally as
performance measures and believe that these measures reflect the
financial performance of the Company's ongoing business and core
operations. As a supplement to the primary GAAP presentations,
non-GAAP financial measures provide meaningful supplemental
information about our operating performance. We believe that these
non-GAAP financial measures facilitate comparisons with our
historical results and with the results of peer companies who
present similar measures (although other companies may define
non-GAAP measures differently than we define them, even when
similar terms are used to identify such measures). These metrics
should only be considered as supplemental to net income, earnings
per share and return on equity as measures of our performance.
These measures should also not be used as a supplement to, or
substitute for, cash flow from operating activities (computed in
accordance with U.S. GAAP).
The following tables are reconciliations of adjusted net income,
adjusted earnings per share and adjusted return on equity to the
most directly comparable U.S. GAAP financial measures for the three
and six months ended June 30, 2022
and 2021, respectively:
Statement of
Operations Non-GAAP Reconciliation
|
|
Three Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Change
|
|
|
|
2022
|
|
|
2021
|
|
|
Change
|
|
|
Income Statement
Data
|
|
(in thousands except
per share data)
|
|
|
|
Net loss
|
$
|
|
(87,866)
|
|
$
|
|
(3,950)
|
|
|
NM
|
|
%
|
$
|
|
(118,625)
|
|
$
|
|
(9,097)
|
|
$
|
NM
|
|
%
|
|
Less: Goodwill
impairment, net of tax
|
|
|
(90,774)
|
|
|
|
—
|
|
|
NM
|
|
|
|
|
(90,774)
|
|
|
|
—
|
|
|
NM
|
|
|
|
Non-GAAP adjusted net
income (loss)
|
$
|
|
2,908
|
|
$
|
|
(3,950)
|
|
|
|
(173.6)
|
|
%
|
$
|
|
(27,851)
|
|
$
|
|
(9,097)
|
|
$
|
|
206.2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
|
(3.32)
|
|
$
|
|
(0.14)
|
|
|
NM
|
|
%
|
$
|
|
(4.46)
|
|
$
|
|
(0.33)
|
|
|
NM
|
|
%
|
|
Less: Goodwill
impairment1
|
|
|
(3.43)
|
|
|
|
—
|
|
|
NM
|
|
|
|
|
(3.41)
|
|
|
|
—
|
|
|
NM
|
|
|
|
Non-GAAP adjusted net
income (loss)
|
$
|
|
0.11
|
|
$
|
|
(0.14)
|
|
|
|
(178.6)
|
|
%
|
$
|
|
(1.05)
|
|
$
|
|
(0.33)
|
|
|
|
203.0
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Equity
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
Equity
|
|
|
(152.0)
|
|
%
|
|
(3.7)
|
|
%
|
|
(148.3)
|
|
pts
|
|
|
(90.6)
|
|
%
|
|
(4.2)
|
|
%
|
|
(86.4)
|
|
pts
|
|
Less: Goodwill
impairment, net of tax
|
|
|
(157.1)
|
|
%
|
|
—
|
|
%
|
|
(157.1)
|
|
pts
|
|
|
(69.3)
|
|
%
|
|
—
|
|
%
|
|
(69.3)
|
|
pts
|
|
Non-GAAP adjusted
return on equity
|
|
|
5.0
|
|
%
|
|
(3.7)
|
|
%
|
|
8.7
|
|
pts
|
|
|
(21.3)
|
|
%
|
|
(4.2)
|
|
%
|
|
(17.1)
|
|
pts
|
|
1 Amount is calculated by dividing
the goodwill impairment, net of tax, of $90.8 million by the
diluted weighted average shares outstanding at June 30, 2022 of
26,453,456.
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
Return on Equity
Non-GAAP Reconciliation
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
|
|
(in thousands except
per share data)
|
|
|
Income Statement
Data
|
|
(annualized)
|
Net loss
|
$
|
|
(351,464)
|
|
$
|
|
(15,800)
|
|
$
|
|
(237,250)
|
|
$
|
|
(18,194)
|
|
|
Adjusted net income
(loss)
|
$
|
|
11,634
|
|
$
|
|
(15,800)
|
|
$
|
|
(55,702)
|
|
$
|
|
(18,194)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divided by Average
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity at
the beginning of period
|
$
|
|
281,766
|
|
$
|
|
427,448
|
|
$
|
|
343,051
|
|
$
|
|
442,344
|
|
|
Shareholders' equity at
the end of period
|
|
|
180,546
|
|
|
|
424,873
|
|
|
|
180,546
|
|
|
|
424,873
|
|
|
Average
Shareholders' Equity
|
$
|
|
231,156
|
|
$
|
|
426,161
|
|
$
|
|
261,798
|
|
$
|
|
433,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
Equity
|
|
|
(152.0)
|
|
%
|
|
(3.7)
|
|
%
|
|
(90.6)
|
|
%
|
|
(4.2)
|
|
%
|
Adjusted return on
equity
|
|
|
5.0
|
|
%
|
|
(3.7)
|
|
%
|
|
(21.3)
|
|
%
|
|
(4.2)
|
|
%
|
|
|
As Of
|
|
|
|
|
Jun
30,
|
|
|
Mar
31,
|
|
|
Dec
31,
|
|
|
Jun
30,
|
|
Stockholders' Equity
to Adjusted Stockholders' Equity Reconciliation
|
|
2022
|
|
|
2022
|
|
|
2021
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stockholders'
equity
|
$
|
|
180,546
|
|
$
|
|
281,766
|
|
$
|
|
343,051
|
|
$
|
|
424,873
|
|
Add: Accumulated other
comprehensive loss, net of tax
|
|
|
41,194
|
|
|
|
28,894
|
|
|
|
4,573
|
|
|
|
—
|
|
Non-GAAP adjusted
common stockholders' equity
|
$
|
|
221,740
|
|
$
|
|
310,660
|
|
$
|
|
347,624
|
|
$
|
|
424,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted shares
outstanding
|
|
|
26,544
|
|
|
|
26,444
|
|
|
|
26,754
|
|
|
|
27,947
|
|
Book value per common
share
|
$
|
|
6.80
|
|
$
|
|
10.66
|
|
$
|
|
12.82
|
|
$
|
|
15.20
|
|
Non-GAAP adjusted book
value per common share
|
$
|
|
8.35
|
|
$
|
|
11.75
|
|
$
|
|
12.99
|
|
$
|
|
15.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Percentages
and sums in the tables may not recalculate precisely due to
rounding.
|
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 the impact of our strategic initiatives on our future
financial results, including focus on profitability, exposure
management, rate adequacy and our ability to create value for our
shareholders; future dividend payments; the impact of legislation
on the homeowner's insurance marketplace and litigious practices in
Florida; our ability to
successfully manage inflationary pressures; expectations regarding
our fixed income investment portfolio; and our ability to
successfully regain value in the Company and achieve our target
return on equity. 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
underwriting and profitability initiatives; the continued and
potentially prolonged impact of the COVID-19 pandemic on the
economy, demand for our products and our operations; inflation and
other changes in economic conditions (including changes in interest
rates and financial and real estate markets), including as a result
of the COVID-19 pandemic; the impact of macroeconomic and
geopolitical conditions, including the impact of supply chain
constraints, inflationary pressures, labor availability and the
conflict between Russia and
Ukraine; 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; 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, 2021 filed with the Securities and
Exchange Commission on March 14, 2022
and subsequent filings. 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:
Kirk
Lusk
Chief Financial Officer
klusk@heritagepci.com
investors@heritagepci.com
Mike Houston and Julia Ward
Lambert
HRTG@lambert.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/heritage-reports-second-quarter-2022-results-301600497.html
SOURCE Heritage Insurance Holdings, Inc.