Heritage Holds Combined Ratio Near 73 After Weather Losses

The Tip Desk · November 9, 2026 · 3 min read

Third-quarter net income was $51.1 million, or $1.72 a share, after $15.8 million of pre-tax catastrophe losses.

Heritage Insurance Holdings (HRTG), a super-regional property and casualty insurer, reported third-quarter net income of $51.1 million, or $1.72 a share, after absorbing $15.8 million of pre-tax catastrophe losses, compared with none a year earlier.

Diluted earnings per share rose 5.5% from $1.63 a year earlier, aided by a 4.0% reduction in diluted shares outstanding. The result followed a record second-quarter net income of $61.7 million, or $2.05 a share. The net loss ratio moved to 39.6% from 30.4% in the second quarter, and the net combined ratio to 73.0% from 64.9%.

Total revenue increased 3.2% to $219.2 million from $212.5 million in the prior-year quarter. Net premiums earned rose 5.4% to $205.6 million from $195.1 million as ceded premiums fell 11.8% to $147.2 million from $166.8 million. Gross premiums written decreased 3.1% to $322.8 million from $333.2 million, primarily reflecting lower commercial residential premiums, partially offset by growth in personal lines.

The company said the reduction in ceded premiums reflected a full quarter of savings from improved pricing of its June 2026 catastrophe excess-of-loss program and a decrease in the northeast net quota-share program effective December 31, 2025. The catastrophe excess-of-loss placement generated treaty-year expense savings of $63.2 million, of which seven-twelfths will be recognized in calendar 2026. Net investment income rose 17.3% to $11.4 million from $9.7 million, driven by growth in invested assets. Cash and invested assets were $1.4 billion at September 30, 2026, up 8.8% from December 31, 2025.

The net loss ratio increased 1.3 points to 39.6% from 38.3% a year earlier. Net weather and catastrophe losses were $33.6 million, compared with $13.8 million in the prior-year quarter, including $9.1 million from Hurricanes Lala and Lowell and $6.7 million from other catastrophe weather events, primarily a late-September nor’easter. Favorable prior-year loss development was $14.0 million, versus $5.0 million a year earlier.

The net expense ratio improved 1.2 points to 33.4% from 34.6%, leaving the net combined ratio relatively flat at 73.0% versus 72.9%. General and administrative expenses increased 5.2%, reflecting higher employee compensation and related costs offset by a decrease in corporate insurance expense, primarily from a non-recurring premium refund. The effective tax rate was 24.5%, compared with 26.2% in the prior-year quarter.

Premiums-in-force were $1.40 billion, down 2.8% from $1.44 billion in the third quarter of 2025, primarily due to commercial residential premium reductions from competitive pricing pressure. Commercial residential premiums-in-force fell 16.1% to $232.1 million from $276.7 million. Personal residential premiums-in-force were $1.157 billion. The company said a reduction in Florida personal lines in-force premiums was more than offset by personal lines growth in other states, and that management continues to require commercial residential business to meet Heritage’s pricing and risk standards.

Book value per share was $20.22 at September 30, 2026, up 42.9% from $14.15 a year earlier. Annualized return on equity was 35.1%, versus 49.2% a year earlier, as average stockholders’ equity increased 42.2%. The debt-to-capital ratio improved to 10.5% from 15.3% in the prior-year quarter.

In the third quarter the company repurchased 100,000 shares for about $3.3 million. For 2026 it had repurchased 1,101,508 shares for $27.9 million, leaving $34.1 million remaining under the existing authorization. On October 28, 2026, the board established a new share-repurchase program of up to $50.0 million through December 31, 2027, to commence upon expiration of the existing program on December 31, 2026.