HRTG Stock Forecast & Price Target

Heritage Insurance Holdings Inc. reported a statutory surplus of $352 million at quarter-end, reflecting a $66 million increase this year, indicating a strong financial foundation for growth. The company achieved new business of $36 million, which represents a remarkable year-over-year increase of 166%, with $17 million stemming from the Florida market, showcasing its expansion capabilities in a unique regulatory environment. Additionally, the premiums-in-force reached $1.4 billion, up 1% year over year and sequentially, with the company positioned to grow its policy count at a sustainable pace in the low-to-mid-single-digits, further highlighting its robust growth profile.

Heritage Insurance Holdings Inc. is experiencing a decline in net premiums earned, which decreased by 2% year over year to $195 million, influenced by higher ceded premiums, raising concerns about revenue stability. The company’s net combined ratio improved to 72.9% from 100.6% in the previous year; however, the net expense ratio remains elevated at 34.6%, slightly exceeding model expectations and suggesting ongoing cost management issues. Additionally, a significant reduction in legal department staffing, from 155 to approximately half, may impede the company's operational efficiency, especially as it navigates through pre-reform backlogs and anticipates potential declines in residential rates in Florida.