First Quarter 2026 Result Highlights
Heritage reported record first quarter net income of $36.5 million, an increase of 19.7% from net income of $30.5 million in the prior year quarter; and earnings per share of $1.19 per diluted share, an increase of 20.2% from $0.99 per diluted share in the prior year quarter.
Gross and Net premiums earned were consistent with the prior year quarter.
Net loss ratio improved 3.8 percentage points to 45.9%, from 49.7% in the prior year quarter.
Net combined ratio improved by 3.5 percentage points to 81.0%, from 84.5% in the prior year quarter.
Return on average equity of 28.5% with average equity up 65.5% from the prior year quarter.
Book value per share increased 4.6% from year end 2025 and was up 61.5% from the first quarter of 2025.
First quarter cash flow from operations of $24.9 million.
Through the date of this earnings release, repurchased 446,884 shares of common stock during 2026 at a cost of $12.0 million.
On track to start writing business in Texas on a surplus lines basis.
Four new products rolled out in Q1 with six additional products slated to launch in the second half of 2026.
Ernie Garateix, Heritage's CEO, commented, "Our first quarter was the most profitable first quarter for the Company since becoming public in 2014. Our net loss ratio was also the lowest delivered in a first quarter since 2015 even with $37 million of weather related losses in the quarter. These results were derived from the consistent application of our strategic profitability initiatives established several years ago that focused on rate adequacy and underwriting discipline, allocating capital to products and geographies that maximize long-term returns, and targeting a balanced and diversified portfolio."
Mr. Garateix, continued, "As our strategic initiatives have taken hold, we have re-opened over 90% of our geographies as they have become rate adequate and through our disciplined underwriting program, the quality of the book of business has greatly improved. This strategy is delivering results with new business written rising 62.7% from the first quarter of 2025 and over 30.0% from fourth quarter of 2025. We have expanded geographically, added products, enhanced our data analytics and demonstrated our ability to perform during adverse weather and challenging market conditions. We are also extremely well positioned to take advantage of any market disruptions or emerging opportunities. With our capabilities and financial strength, we will focus on evaluating and allocating capital to profitable products or geographies and we are positioned to expand organically or as accretive business opportunities arise."
Strategic Profitability Initiatives
The Company has focused on three main strategic initiatives aimed at achieving consistent long-term quarterly earnings and driving shareholder value, which include:
Generating underwriting profit through rate adequacy and more selective underwriting.
Allocating capital to products and geographies that maximize long-term returns.
Targeting a balanced and diversified portfolio.
These three initiatives will remain in place while we also expand our strategy to include our 2026 initiatives. To continue executing on these three strategic initiatives throughout 2026, the Company expects to focus on the following profitability initiatives:
Target geographies open 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 plan to enter 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, manage volatility while pursuing growth.
Capital Management
Heritage's Board of Directors has decided to continue its suspension of the quarterly shareholder dividend to prioritize strategic growth. The Board of Directors will continue to evaluate dividend distributions on a quarterly basis. The Company repurchased 446,484 shares of common stock during 2026 through the current date, at a cost of $12.0 million under the Company's previously announced share repurchase authorization, which authorized the repurchase of up to an aggregate of $25.0 million of common stock through December 31, 2026. On May 7, 2026, the Board of Directors authorized a new $50.0 million share repurchase plan, replacing the prior plan. The new plan is effective immediately through December 31, 2026.
Results of Operations
The following table summarizes results of operations for the three months ended March 31, 2026, and 2025 (amounts in thousands, except percentages and per share amounts):
Three Months Ended March 31,
2026
2025
Change
Total revenues
$
212,658
$
211,520
0.5
%
Net income
$
36,483
$
30,474
19.7
%
Earnings per share
$
1.19
$
0.99
20.2
%
Book value per share
$
17.15
$
10.62
61.5
%
Return on equity *
28.5
%
39.3
%
(10.8)
pts
Underwriting summary
Gross premiums written
$
346,745
$
355,997
(2.6)
%
Gross premiums earned
$
353,562
$
353,828
(0.1)
%
Ceded premiums
$
(153,870)
$
(153,794)
0.0
%
Net premiums earned
$
199,692
$
200,034
(0.2)
%
Ceded premium ratio
43.5
%
43.5
%
—
pts
Ratios to Net Premiums Earned:
Loss ratio
45.9
%
49.7
%
(3.8)
pts
Expense ratio
35.2
%
34.8
%
0.4
pts
Combined ratio
81.0
%
84.5
%
(3.5)
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 100% generally reflects profitable underwriting results.
First Quarter 2026 Results:
First quarter 2026 net income was $36.5 million or $1.19 per diluted share, compared to net income of $30.5 million or $0.99 per diluted share in the prior year quarter, primarily driven by higher investment income and a reduction in losses, partly offset by higher general and administrative expenses. The reduction in losses is attributable to a slightly lower net attritional loss ratio resulting from the positive impact of rate actions, underwriting actions, and targeted exposure management taken over the last several years, which continue to favorably impact results, as well as lower weather losses. Policy acquisition costs were lower from the prior year quarter by 1.0%, driven mostly by lower costs associated with premium processing. General and administrative costs increased 4.4% from the prior year quarter driven primarily by human capital costs, with the net general and administrative expense ratio at 12.5% compared to 11.9% for the prior year quarter.
Premiums-in-force were $1.427 billion, a decrease of 0.4% compared to $1.432 billion as of the first quarter 2025.
Gross premiums written of $346.7 million were down 2.6% from $356.0 million in the prior year quarter, primarily driven by a reduction in commercial residential business which was partly offset by higher gross premiums written for personal lines business. The Florida commercial residential market has become increasingly competitive and management is committed to maintaining adequate margins; as such Heritage will only write business that meets our ...
