Heritage new admitted personal lines takeup will accelerate through 2025

By Chris Munro

March 12 - (The Insurer) - Heritage Insurance Holdings’ admitted market new business growth will accelerate across its portfolio as 2025 progresses, while the company is currently evaluating which states to begin underwriting on an E&S basis.

Profitability concerns prompted Tampa, Florida-based Heritage to press pause on writing new admitted lines business in December 2022.

After Heritage released its Q2 2024 earnings last August, CEO Ernie Garateix said the company was ready to resume underwriting new personal lines business in Florida and the Northeast U.S.

And on a call with analysts on Wednesday to discuss Heritage’s fourth-quarter and full-year 2024 results, Garateix provided further updates on the company’s new business growth plans.

“We have selectively started writing new personal lines business anchored by a continued focus on risk management and stringent underwriting,” the executive said.

“Our expectation is that our new business growth will be controlled, but will begin to accelerate through 2025,” he added.

In its native Florida, Garateix said recent legislative changes in the state “are having a positive impact on the economics of writing new profitable business”.

Florida is just one region where Heritage is looking to write new business, however.

“It's just everywhere,” he said. “Our entire footprint – Northeast, Southeast.”

Garateix said Heritage’s E&S business, which it currently writes in California, Florida and South Carolina, “continues to provide options for our product offerings”.

“We also plan to continue to evaluate more states for E&S opportunities as we focus on our controlled growth strategy.

“What makes this business so attractive is that we can adjust our rates and coverages to the changing dynamics state by state to ensure we continue to earn appropriate risk-adjusted returns while providing consumers in those states with needed insurance protection,” Garateix noted.

During the earnings call, Garateix explained why the E&S market appeals to Heritage.

“We’re using (E&S) in very distinct markets. That gives us the ability to adapt to those market dynamics state by state.

“So obviously, we look at what's going on in those markets, the regulatory environment, the ability to get rate, the ability to change coverages.

“We look at each of those markets individually and make a decision whether the admitted product or the E&S product is the best fit for that market,” Garateix said.

Heritage CFO Kirk Lusk added that all the business that Heritage writes in California is on an E&S basis.

“Really, (California has) been the bulk of the growth in the E&S product,” said Lusk.

UPDATES ON CALIFORNIA WILDFIRE LOSS

Earlier this year, Heritage announced it expects to take a $35 million to $40 million pre-tax hit from losses arising from the California wildfires.

Garateix during the earnings call once again confirmed that loss estimate and provided further insight into how Heritage was affected by the blazes.

According to the executive, Heritage was hit with 15 total losses, with the remaining “20 or so” claims attributed to “some kind of smoke damage”, Garateix explained.

“We have a couple (of claims) in the Eaton fire and then the remaining being in Palisades,” Garateix said.