Heritage Reports Second Quarter 2026 Results
Rhea-AI Summary
Heritage Insurance (NYSE:HRTG) reported record second quarter 2026 net income of $61.7 million, up 28.5% year over year, and diluted EPS of $2.05, up 32.3%. Total revenue rose 3.0% to $214.2 million, driven by higher net premiums earned and a 17.3% increase in net investment income.
The net loss ratio improved to 30.4% and the net combined ratio to 64.9%, reflecting lower weather losses and significant favorable prior-year loss development. Book value per share increased to $19.09, up 16.5% since year end 2025 and 54.5% year over year, with annualized return on average equity of 45.4%. Operating cash flow reached $166.5 million, up 277%.
Heritage repurchased 1,001,508 shares for $24.6 million year to date under a new $50 million authorization, leaving $37.4 million available, while its Board continued the suspension of the quarterly dividend. Gross premiums written declined 5.5% as the company emphasized underwriting discipline amid competitive commercial residential markets and began writing surplus lines business in Texas.
Positive
- Record Q2 net income of $61.7 million, up 28.5% year over year
- Diluted EPS rose 32.3% to $2.05 in Q2 2026
- Net combined ratio improved to 64.9%, an 8.0-point year-over-year improvement
- Book value per share up 54.5% year over year to $19.09
- Operating cash flow of $166.5 million in Q2, up 277% versus prior year
- Share repurchases of 1,001,508 shares for $24.6 million in 2026 with $37.4 million authorization remaining
Negative
- Gross premiums written declined 5.5% year over year in Q2 2026
- Premiums-in-force fell 1.4% to $1.41 billion versus Q2 2025
- Total policies-in-force decreased 5.2% year over year to 350,887
- Commercial residential premiums-in-force declined 12.7% year over year amid competitive pricing
- Quarterly dividend remains suspended as capital is prioritized for strategic growth
News Explained
By June 30, Heritage’s share base had fallen after repurchases, while cash and cash equivalents were higher than in the March 31 record.
The August 5 results release reports second-quarter performance and shows that, at June 30, Heritage had
AI-generated analysis. How Rhea-AI works. Not financial advice.
Second Quarter 2026 Result Highlights
- Record second quarter net income of
$61.7 million 28.5% from net income of$48.0 million - Earnings per share increased
32.3% to$2.05 $1.55 - Year-to-date net income of
$98.2 million $3.23 $78.5 million $2.54 - Total revenue increased
3.0% to$214.2 million $208.0 million - Net loss ratio improved 8.1 percentage points to
30.4% , from38.5% in the prior-year quarter. - Net combined ratio improved by 8.0 percentage points to
64.9% , from72.9% in the prior-year quarter. - Annualized return on average equity of
45.4% for the second quarter with shareholders' equity up48.1% year-over-year. - Book value per share increased to
$19.09 16.5% from year end 2025 and was up54.5% from the prior-year quarter. - Second quarter cash flow from operations of
$166.5 million 277% as compared to the prior-year quarter. - Repurchased 1,001,508 shares of common stock at a cost of
$24.6 million - Started writing business in
Texas on a surplus lines basis.
Ernie Garateix, Heritage's CEO, commented, "Several years ago, our focus was on improving profitability, strengthening the balance sheet, and reducing volatility in our financial results. Today, we are generating record earnings, producing substantial excess capital and beginning to see encouraging signs that the foundation we have built can support future growth. We believe Heritage has evolved into a stronger, more diversified and more resilient business, operating as a super-regional insurance carrier with opportunities to deploy capital across multiple geographies, products and distribution channels. That flexibility allows us to dynamically allocate capital to the most attractive risk-adjusted return opportunities while maintaining the underwriting discipline that has defined our transformation."
Mr. Garateix continued, "Despite the significant progress we have made over the last several years, we do not believe our current valuation fully reflects the strength of our earnings profile, the durability of our results, or the growth opportunities ahead. As a result, we have repurchased more than one million shares of our common stock year to date because we believe our shares continue to trade below intrinsic value, while we are also still preserving substantial capacity to support future growth. Despite increased competition across many markets, our analytics, team and infrastructure position Heritage to grow prudently while sustaining profitability and underwriting discipline."
Strategic Profitability Initiatives
These initiatives will remain in place while the Company also expands its strategy to include its 2026 initiatives:
- Generating underwriting profit through rate adequacy and continued selective underwriting.
- Allocating capital to products and geographies that maximize long-term returns.
- Targeting a balanced and diversified portfolio.
To continue its progress, the Company expects to also focus on the following profitability initiatives in 2026:
- Target geographies for new business, while closely managing risk and exposure.
- Continue persistent underwriting discipline and focus on rate adequacy while driving prudent top line growth.
- Enhance data driven analytics using AI and other technology tools.
- Continue the refinement of customer service and claims capabilities.
- Leverage infrastructure and capabilities to foster future growth, which includes our entry to the
State of Texas on an excess and surplus lines basis. - Act as opportunities emerge which will continue our diversification and expansion over the next several years.
- Expand our relationship with reinsurance partners to expand capacity and manage volatility while pursuing growth.
Capital Management
The Board of Directors has continued the suspension of the Company's quarterly dividend as it prioritizes strategic growth opportunities and will reassess dividend distributions each quarter. On May 7, 2026, the Board authorized a new
Results of Operations
The following table summarizes results of operations for the three and six months ended June 30, 2026, and 2025 (amounts in thousands, except percentages and per share amounts):
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||
Total revenues | $ | 214,195 | $ | 208,035 | 3.0 | % | $ | 426,854 | $ | 419,554 | 1.7 | % | ||||||||||||||
Net income | $ | 61,710 | $ | 48,024 | 28.5 | % | $ | 98,194 | $ | 78,498 | 25.1 | % | ||||||||||||||
Earnings per share | $ | 2.05 | $ | 1.55 | 32.3 | % | $ | 3.23 | $ | 2.54 | 27.2 | % | ||||||||||||||
Book value per share | $ | 19.09 | $ | 12.36 | 54.5 | % | $ | 19.09 | $ | 12.36 | 54.5 | % | ||||||||||||||
Return on equity * | 45.4 | % | 53.9 | % | (8.5) | pts | 36.6 | % | 46.6 | % | (10.0) | pts | ||||||||||||||
Underwriting summary | ||||||||||||||||||||||||||
Gross premiums written | $ | 388,441 | $ | 410,968 | (5.5) | % | $ | 735,187 | $ | 766,965 | (4.1) | % | ||||||||||||||
Gross premiums earned | $ | 351,153 | $ | 353,594 | (0.7) | % | $ | 704,716 | $ | 707,422 | (0.4) | % | ||||||||||||||
Ceded premiums | $ | (150,029) | $ | (157,278) | (4.6) | % | $ | (303,899) | $ | (311,072) | (2.3) | % | ||||||||||||||
Net premiums earned | $ | 201,124 | $ | 196,316 | 2.4 | % | $ | 400,817 | $ | 396,350 | 1.1 | % | ||||||||||||||
Ceded premium ratio | 42.7 | % | 44.5 | % | (1.8) | pts | 43.1 | % | 44.0 | % | (0.8) | pts | ||||||||||||||
Ratios to Net Premiums Earned: | ||||||||||||||||||||||||||
Loss ratio | 30.4 | % | 38.5 | % | (8.1) | pts | 38.1 | % | 44.2 | % | (6.1) | pts | ||||||||||||||
Expense ratio | 34.5 | % | 34.4 | % | 0.1 | pts | 34.8 | % | 34.6 | % | 0.2 | pts | ||||||||||||||
Combined ratio | 64.9 | % | 72.9 | % | (8.0) | pts | 72.9 | % | 78.8 | % | (5.9) | pts | ||||||||||||||
* Return on equity represents annualized net income for the period divided by average stockholders' equity during the period. |
Note: Percentages and sums in the table may not recalculate precisely due to rounding. |
Ratios
Ceded premium ratio represents ceded premiums as a percentage of gross premiums earned.
Net loss ratio represents net losses and loss adjustment expenses ("LAE") as a percentage of net premiums earned.
Net expense ratio represents policy acquisition costs ("PAC") and general and administrative ("G&A") expenses as a percentage of net premiums earned. Ceding commission income is reported as a reduction of PAC and G&A expenses.
Net combined ratio represents the sum of net losses and LAE, PAC and G&A expenses as a percentage of net premiums earned. The net combined ratio is a key measure of underwriting performance traditionally used in the property and casualty industry. A combined ratio under
Second Quarter 2026 Results:
Second quarter 2026 net income increased to
Premiums-in-force were
Gross premiums written decreased
Gross premiums earned were
Ceded premiums decreased
In addition, Heritage successfully completed the placement of its catastrophe excess of loss reinsurance program with higher coverage levels than the prior-year while achieving a lower total and risk-adjusted cost. As operating and reinsurance costs improve, the Company expects policyholders to benefit through more competitive pricing while continuing to maintain appropriate underwriting margins. This should also favorably impact ceded premiums over the next four quarters.
Net premiums earned increased
Total revenue increased
Net losses and LAE were
The net expense ratio was
The net combined ratio improved 8.0 points to
The effective tax rate was
Supplemental Information:
Policies-in-force: | Q2 2026 | Q2 2025 | % Change | |||||||||
Personal Residential | 338,817 | 357,294 | (5.2) | % | ||||||||
Commercial Residential | 3,140 | 2,992 | 4.9 | % | ||||||||
Other | 8,930 | 9,823 | (9.1) | % | ||||||||
Total | 350,887 | 370,109 | (5.2) | % | ||||||||
Premiums-in-force: | ||||||||||||
Personal Residential | 1,162,853,241 | 1,148,876,238 | 1.2 | % | ||||||||
Commercial Residential | 236,726,188 | 271,156,884 | (12.7) | % | ||||||||
Other | 10,010,765 | 9,458,112 | 5.8 | % | ||||||||
Total | 1,409,590,194 | 1,429,491,234 | (1.4) | % | ||||||||
Total Insured Value: | ||||||||||||
Personal Residential | 318,809,611,090 | 319,578,562,554 | (0.2) | % | ||||||||
Commercial Residential | 49,442,769,123 | 45,455,781,220 | 8.8 | % | ||||||||
Total | 368,252,380,213 | 365,034,343,774 | 0.9 | % | ||||||||
Book Value Analysis:
Book Value Per Share | As Of | ||||||||||
June 30, 2026 | December 31, 2025 | June 30, 2025 | |||||||||
Numerator: | |||||||||||
Common stockholders' equity | $ | 567,728 | $ | 505,251 | $ | 383,302 | |||||
Denominator: | |||||||||||
Total Shares Outstanding | $ | 29,732,416 | $ | 30,833,776 | $ | 31,017,570 | |||||
Book Value Per Common Share | $ | 19.09 | $ | 16.39 | $ | 12.36 | |||||
Book value per share was
The unrealized losses are unrelated to credit risk but are instead attributable to rising interest rates, with the increase in unrealized losses driven by higher interest rates during the year. Heritage does not anticipate a need to sell investments in advance of their maturity. As such, the Company expects unrealized losses to continue to roll off the portfolio as investments mature. The average duration of the fixed income portfolio is 3.4 years as the Company has extended duration to take advantage of higher yields further out on the yield curve, while still maintaining a short duration, high credit quality portfolio.
Conference Call Details:
Thursday, August 6, 2026– 9:00 a.m. ET
North American Dial-in Numbers Toll Free: 1-888-346-3095
International Dial In: 1-412-902-4258
Webcast: To listen to the live webcast, please go to http://investors.heritagepci.com, This webcast will be archived and accessible on the Company's website.
HERITAGE INSURANCE HOLDINGS, INC. Condensed Consolidated Balance Sheets (Amounts in thousands, except share amounts)
| |||||||
June 30, 2026 | December 31, 2025 | ||||||
ASSETS | (unaudited) | ||||||
Fixed maturities, available-for-sale, at fair value | $ | 801,910 | $ | 713,237 | |||
Equity securities, at fair value | 816 | 1,064 | |||||
Other investments, net | 1,259 | 1,285 | |||||
Total investments | 803,985 | 715,586 | |||||
Cash and cash equivalents | 587,597 | 559,274 | |||||
Restricted cash | 13,782 | 13,307 | |||||
Accrued investment income | 7,507 | 6,556 | |||||
Premiums receivable, net | 94,034 | 95,331 | |||||
Reinsurance recoverable on paid and unpaid claims, net | 305,175 | 318,588 | |||||
Prepaid reinsurance premiums | 460,694 | 307,039 | |||||
Deferred income tax asset, net | 6,003 | 5,855 | |||||
Deferred policy acquisition costs, net | 68,921 | 64,544 | |||||
Property and equipment, net | 27,715 | 28,254 | |||||
Right-of-use lease asset, finance | 11,374 | 12,598 | |||||
Right-of-use lease asset, operating | 6,086 | 4,878 | |||||
Intangibles, net | 27,147 | 30,189 | |||||
Other assets | 32,416 | 33,823 | |||||
Total Assets | $ | 2,452,436 | $ | 2,195,822 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Unpaid losses and loss adjustment expenses | $ | 481,997 | $ | 579,477 | |||
Unearned premiums | 738,384 | 707,923 | |||||
Reinsurance payable | 501,033 | 232,801 | |||||
Long-term debt, net | 71,287 | 78,428 | |||||
Advance premiums | 26,635 | 19,164 | |||||
Income tax payable, net | 5,660 | 4,282 | |||||
Accrued compensation | 6,618 | 8,844 | |||||
Lease liability, finance | 14,254 | 15,587 | |||||
Lease liability, operating | 6,293 | 5,800 | |||||
Accounts payable and other liabilities | 32,547 | 38,265 | |||||
Total Liabilities | $ | 1,884,708 | $ | 1,690,571 | |||
Stockholders' Equity: | |||||||
Common stock, | 3 | 3 | |||||
Additional paid-in capital | 359,501 | 365,736 | |||||
Accumulated other comprehensive loss, net of taxes | (15,446) | (10,555) | |||||
Treasury stock, at cost | (157,773) | (133,183) | |||||
Retained earnings | 381,443 | 283,250 | |||||
Total Stockholders' Equity | 567,728 | 505,251 | |||||
Total Liabilities and Stockholders' Equity | $ | 2,452,436 | $ | 2,195,822 | |||
HERITAGE INSURANCE HOLDINGS, INC. Condensed Consolidated Statements of Operations (Amounts in thousands, except per share and share amounts) (Unaudited)
| ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2026 | 2025 | 2026 | 2025 | |||||||||||||
REVENUE: | ||||||||||||||||
Gross premiums written | $ | 388,441 | $ | 410,968 | $ | 735,187 | $ | 766,965 | ||||||||
Change in gross unearned premiums | (37,288) | (57,374) | (30,471) | (59,543) | ||||||||||||
Gross premiums earned | 351,153 | 353,594 | 704,716 | 707,422 | ||||||||||||
Ceded premiums | (150,029) | (157,278) | (303,899) | (311,072) | ||||||||||||
Net premiums earned | 201,124 | 196,316 | 400,817 | 396,350 | ||||||||||||
Net investment income | 10,595 | 9,034 | 20,462 | 17,609 | ||||||||||||
Net realized (losses) gains on debt securities and other investments | (37) | 4 | (21) | — | ||||||||||||
Other revenue | 2,513 | 2,681 | 5,596 | 5,595 | ||||||||||||
Total revenue | 214,195 | 208,035 | 426,854 | 419,554 | ||||||||||||
EXPENSES: | ||||||||||||||||
Losses and loss adjustment expenses | 61,057 | 75,620 | 152,654 | 175,027 | ||||||||||||
Policy acquisition costs | 45,510 | 43,146 | 90,845 | 88,961 | ||||||||||||
General and administrative expenses | 23,778 | 24,399 | 48,687 | 48,260 | ||||||||||||
Total expenses | 130,345 | 143,165 | 292,186 | 312,248 | ||||||||||||
Operating income | 83,850 | 64,870 | 134,668 | 107,306 | ||||||||||||
Interest expense, net | 1,690 | 1,880 | 3,468 | 4,306 | ||||||||||||
Income before taxes | $ | 82,160 | $ | 62,990 | $ | 131,200 | $ | 103,000 | ||||||||
Income tax expense | 20,450 | 14,966 | 33,006 | 24,502 | ||||||||||||
Net income | $ | 61,710 | $ | 48,024 | $ | 98,194 | $ | 78,498 | ||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 30,017,180 | 31,004,218 | 30,349,056 | 30,851,022 | ||||||||||||
Diluted | 30,076,443 | 31,063,481 | 30,408,347 | 30,910,285 | ||||||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 2.06 | $ | 1.55 | $ | 3.24 | $ | 2.54 | ||||||||
Diluted | $ | 2.05 | $ | 1.55 | $ | 3.23 | $ | 2.54 | ||||||||
About Heritage
Heritage Insurance Holdings, Inc. is a super-regional property and casualty insurance holding company. Through its insurance subsidiaries and a large network of experienced agents, the Company writes approximately
Forward-Looking Statements
Statements in this press release and on our earnings conference call that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "or "continue" or the other negative variations thereof or comparable terminology are intended to identify forward-looking statements. This release and our earnings conference call include forward-looking statements, including statements relating to our strategic initiatives for 2026 and our ability to profitably grow our business and deliver value to our shareholders either organically or through accretive business opportunities; our ability to take advantage of emerging opportunities; our positioning to deliver managed growth with rate adequacy in our markets and our intent not to write policies that we believe are underpriced or do not meet our underwriting standards; our expectations and plans regarding our margins and maintaining adequate margins; our expectations and plans regarding premiums, including premium growth and ceded premium outlook; our beliefs regarding commercial residential market competitiveness, generally, and pricing pressure in Florida, specifically; our expectations regarding our catastrophe excess of loss program; our capital allocation strategy, including our Board's evaluation of dividend distributions and share repurchases and our evaluation of the intrinsic value of our common stock; our new geography and product diversification and expansion strategy, including our plans relating to building relationships in any new market; our focus on underwriting discipline, exposure management and rate adequacy in existing and new geographies, leveraging our scale, continued enhancement of data and AI-driven analytics and our other strategic priorities for 2026; and our expectations regarding our financial results in 2026 and beyond and the drivers of such results. The risks and uncertainties that could cause our actual results to differ from those expressed or implied herein include, without limitation: the success of the Company's underwriting and profitability initiatives; inflation and other changes in economic conditions (including changes in interest rates and financial and real estate markets), including changes that may impact demand for our products and our operations; lack of effectiveness of exclusions and loss limitation methods in the insurance policies we assume or write; inherent uncertainty of our models and our reliance on artificial intelligence as a tool in creating and using such models; the impact of macroeconomic and geopolitical conditions, including the impact of interest rates, supply chain constraints, inflationary pressures, tariffs, labor availability and geopolitical conflicts; the impact of new federal and state regulations that affect the property and casualty insurance market and our failure to meet increased regulatory requirements, including minimum capital and surplus requirements; continued and increased impact of abusive and unwarranted claims; the cost of reinsurance, the collectability of reinsurance and our ability to obtain reinsurance coverage on terms and at a cost acceptable to us; assessments charged by various governmental agencies; pricing competition and other initiatives by competitors; our ability to obtain regulatory approval for requested rate changes, and the timing thereof; legislative and regulatory developments; the outcome of litigation pending against us, including the terms of any settlements; risks related to the nature of our business; dependence on investment income and the composition of our investment portfolio; the adequacy of our liability for losses and loss adjustment expense; our ability to build and maintain relationships with insurance agents; claims experience; ratings by industry services; catastrophe losses; reliance on key personnel; weather conditions (including the severity and frequency of storms, hurricanes, tornadoes, wildfires and hail); changes in loss trends; acts of war and terrorist activities; court decisions and trends in litigation; and other matters described from time to time by us in our filings with the Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission on March 12, 2026, and subsequent filings. The Company undertakes no obligations to update, change or revise any forward-looking statement, whether as a result of new information, additional or subsequent developments or otherwise.
Investor Contact:
Kirk Lusk
Chief Financial Officer
investors@heritagecompanies.com
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SOURCE Heritage Insurance Holdings, Inc.