Heritage Insurance holds Market Perform rating from JMP

On Thursday, JMP Securities maintained a Market Perform rating on Heritage Insurance (NYSE:HRTG), with analyst Matthew Carletti highlighting the company’s latest earnings report. Heritage Insurance surpassed earnings per share (EPS) expectations with an operating EPS of $0.68, which was higher than JMP’s forecast of $0.65 and the consensus estimate of $0.56. According to InvestingPro data, the company maintains a strong financial health score of 3.34 (rated as GREAT) and trades at an attractive P/E ratio of 5.97x, suggesting potential undervaluation relative to peers.

The outperformance was attributed to a lower-than-expected ex-catastrophe accident year loss ratio, which came in at 30% compared to the estimated 35%. However, this positive was slightly offset by a few factors: higher weather-related and catastrophe losses, which accounted for 23 percentage points versus the anticipated 20 points; a drop in net investment income (NII) to $8.5 million, below the $10.0 million estimate due to a reduced investment portfolio following the hurricane season; and unfavorable prior-period development, which resulted in a $3.8 million adverse outcome against an expectation of no impact. Despite these challenges, InvestingPro data shows the company achieved impressive revenue growth of 11.08% over the last twelve months, with total revenue reaching $817 million.

Heritage Insurance also reported a 4% growth in gross written premiums, which was below JMP’s estimate of a 7% increase. The growth was primarily driven by the company’s Florida commercial residential lines business and an increase in the average premium per policy across the broader book of business. This rise in premiums was influenced by rating actions and the use of inflation guard measures.

Furthermore, Heritage Insurance’s management announced their intention to strategically re-enter additional territories for new personal lines business. This move is aimed at expanding the company’s market presence and pursuing growth opportunities.

In other recent news, Heritage Insurance Holdings Inc. reported its Q4 2024 earnings, exceeding analyst expectations with an earnings per share (EPS) of $0.66, compared to the forecasted $0.33. The company also surpassed revenue projections, reporting $210.26 million against a forecast of $208.37 million. Despite these positive results, the company projects pretax net catastrophe losses for Q1 2025 to be between $35-$40 million. Heritage Insurance’s full-year net income for 2024 increased to $61.5 million, up from $45.3 million in 2023, demonstrating strong financial performance. The company continues to focus on expanding its commercial residential business, which contributed to a 13% rise in premiums in this segment. Analysts have noted that Heritage Insurance is maintaining a robust level of reinsurance coverage, highlighting effective risk management strategies. The company’s strategic initiatives have been focused on rate adequacy and enhancing shareholder value, with expectations for continued rate increases in 2025. Heritage Insurance plans to reopen profitable territories across its geographic footprint as part of its growth strategy.

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