Heritage Insurance (HRTG) Sidoti's Year End Virtual Investor Conference summary

Business overview and recent initiatives

• Operates in 16 markets, with regional focus and specialized subsidiaries for Northeast, Southeast, Hawaii, and California E&S business.

• Recent years focused on profitability through rate increases, agent and policy pruning, and disciplined underwriting.

• Portfolio re-underwriting over three years led to a smaller but more profitable book; now rate adequate in 95% of geographies.

• Shifted from top-line growth to managed, controlled growth with continued underwriting discipline by region.

• Commercial residential book totals $273 million in premium, with a focus on lower-rise properties.

Financial performance and growth trajectory

• Achieved profitability even with catastrophe losses; 2024 saw $105 million in losses but strong profit.

• 2025 YTD net income is nearly $129 million, including $33 million in California wildfire losses.

• Gradual reopening of markets as rate adequacy is achieved, with Georgia remaining restricted.

• Strong agent relationships and communication have supported positive market receptiveness to reopening.

• Controlled growth strategy expected to drive future earnings trajectory.

Rate environment, competition, and regulatory factors

• Rate increases now align with claims inflation (4%-8%) in most geographies; Florida is an outlier with negative loss trends and a -3% rate change.

• Inflation Guard provides additional premium growth.

• Industry consolidation is approached selectively, with a focus on strategic fit and bottom-line impact.

• Market share in Florida is just under 3%, with a focus on organic rather than takeout-driven growth.

• Competition is increasing, especially in Florida, but diversification allows for flexible growth management.