Heritage Insurance Holdings, Inc.

Heritage reported second-quarter 2026 net income of $61.7 million, or $2.05 per diluted share, versus $48 million, or $1.55 per diluted share, in the prior-year quarter. Gross premiums earned were $351.2 million versus $353.6 million a year ago, and net premiums earned increased 2.4% to $201.1 million from $196.3 million. The net loss ratio improved to 30.4% from 38.5%, and the combined ratio improved to 64.9% from 72.9%. Favorable prior-period reserve development was $23.4 million, compared with $2.3 million a year ago. Operating cash flow was $166.5 million, annualized ROE was 45.4%, and book value per share was $19.09, up 16.5% from year-end 2025 and 54.5% from June 30, 2025. Premiums in force were $1.41 billion, down 1.4% year over year. Management did not give formal next-quarter or full-year earnings guidance, but said Florida rate changes are being finalized and could be down 3% to 5%, while outside Florida rates should see modest increases. They also said the new reinsurance program should lower ceded premium ratio by about 1 to 2 points, and Texas will be a small contribution this year with expected growth over the next two to three years.

Ernie Garateix emphasized that Heritage has shifted from a turnaround to a more durable growth platform, with improved profitability, stronger capital, and less earnings volatility. He said the company is prioritizing profitable underwriting over premium growth, and believes the business is now a super-regional insurer rather than just a Florida-focused carrier. He was upbeat about reopened territories, agent relationships, and the potential for a return to policy count growth once the Guidewire transition fades.

Kirk Lusk focused on the quarter’s financial strength: net income of $61.7 million, EPS of $2.05, net premiums earned up 2.4% to $201.1 million, and a combined ratio of 64.9%. He highlighted $23.4 million of favorable prior-year reserve development, $10.6 million of net investment income, and $166.5 million of operating cash flow. On the balance sheet, he cited $1.39 billion of cash and invested assets, $567.7 million of shareholders’ equity, book value per share of $19.09, non-regulated cash of $47.8 million, statutory surplus of $439.5 million, and a debt-to-capital ratio of 11%. He also said the company repurchased more than 1 million shares for $24.6 million year to date, with $37.4 million still available under the authorization.

Analysts focused on the implications of lower reinsurance costs, Florida rate cuts, and whether commercial residential weakness was nearing a bottom. Management said Florida rates likely move down 3% to 5% because reinsurance costs fell materially, while other states should see modest increases that keep margins roughly flat. On commercial residential, they said competition remains intense and they have walked away from some inadequately priced accounts, but they also see the pressure leveling off and broader commercial expansion in places like Hawaii, New York, and New Jersey. Questions also covered the large operating cash flow number, which management attributed to cumulative earnings and balance-sheet improvements, and Texas, where they said they have already written a couple of policies and expect only a small 2026 contribution but growth over the next two to three years.