Heritage Insurance (HRTG) Tops Q1 EPS by 4c

Heritage Insurance (NYSE: HRTG) reported Q1 EPS of $0.27, $0.04 better than the analyst estimate of $0.23.

• Net income for the quarter was $7.6 million, or $0.27 per diluted share.
• Book value per share increased to $16.11, up 9.0% from March 31, 2019 and 2.9% (11.5% annualized growth rate) from year-end 2019.
• Gross premiums written of $229.1 million, up 8.9% year-over-year, including 12.0% growth outside Florida and 6.4% growth in Florida.
• Favorable prior year reserve development of $4.1 million, representing seventh consecutive quarter of favorable prior year reserve development.
• Net current accident quarter weather losses of $21.2 million, including $17.0 million of net current accident quarter catastrophe losses. In the prior year quarter, net current accident quarter weather and catastrophe losses were $20.5 million and $15.0 million, respectively.
• Repurchased 766,900 shares for $8.0 million at an average price of $10.41 per share, 35.4% below first quarter 2020 book value per share. Total capital returned to shareholders of $9.7 million, including $0.06 per share regular quarterly dividend.
• Began writing homeowners insurance in California on an excess & surplus lines basis.

Bruce Lucas, the Company's Chairman and CEO, said, "I want to thank healthcare workers and other essential personnel, including our employees, for supporting our communities during these unprecedented times. As a super-regional property insurer that's prevailed through multiple hurricanes, we're well equipped to operate in the current environment and continue to provide our policyholders and agency partners with the high levels of service they're accustomed to. Homeowners insurance, our core focus, is a must-have product for most consumers, positioning us well in uncertain economic times. Given our confidence in the resilience of our business model, in the first quarter we repurchased 766,900 shares, representing over 3% of year-end 2019 float."

COVID-19 Update We are currently monitoring the short- and long-term impacts of COVID-19. During first quarter 2020, we saw virtually no impact to our business. As a residential property insurer, we view our business as relatively insulated from an economic slowdown, as property owners and renters generally view our products as a necessity. The majority of our gross and net premiums written are from renewals of expiring policies. New business, which accounts for a smaller proportion of our sales volume, could be impacted if consumers are not buying as many new homes in our geographies, but this could be partially or fully offset by increased retention in our renewal portfolio.

While we acknowledge uncertainties associated with future economic conditions, we do not expect a material impact to our business going forward. We will continue to monitor economic conditions and, in the case of a prolonged economic slowdown as a result of COVID-19, will take necessary actions to mitigate any negative impacts to our business, operations or financial results.

For earnings history and earnings-related data on Heritage Insurance (HRTG) click here.

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