Heritage Announces 2021-2022 Catastrophe Reinsurance Program

Rhea-AI Summary

Heritage Insurance Holdings, Inc. (NYSE: HRTG) announced the completion of its 2021-2022 catastrophe reinsurance program, with a total cost of approximately $312 million, representing 28% of March 31, 2021 premiums-in-force. The reinsurance plan includes a first event exhaustion point of $1.4 billion and a total limit of $2.5 billion. Key features involve prepaid reinstatement premiums totaling $640 million and significant participation from the Florida Hurricane Catastrophe Fund at 90%. CEO Ernie Garateix emphasized improved program strength and simplified structures.

Positive

• The 2021-2022 catastrophe reinsurance program has a total limit of $2.5 billion, enhancing financial protection.
• The cost of the reinsurance program, at $312 million, is strategically aligned with 28% of premiums-in-force.
• Prepaid reinstatement premiums of $640 million increase liquidity and reduce future cash outflows.

Negative

• First event loss retention in the southeast of $32 million may expose the company to significant risks during catastrophic events.
• Dependence on the Florida Hurricane Catastrophe Fund, despite 90% participation, may not provide complete financial security.

CLEARWATER, Fla., May 26, 2021 /PRNewswire/ -- Heritage Insurance Holdings, Inc. (NYSE: HRTG) ("Heritage" or the "Company"), a super-regional property and casualty insurance holding company, announced today that it placed its 2021-2022 catastrophe reinsurance program for its statutory insurance subsidiaries, including Heritage Property Casualty Insurance Company (HPCIC), Narragansett Bay Insurance Company (NBIC) and Zephyr Insurance Company (ZIC).

2021-2022 catastrophe reinsurance program key points:

• Total cost to Heritage of approximately $312 million, accounting for 28% of March 31, 2021 premiums-in-force.
• First event reinsurance tower exhaustion point of $1.4 billion and total limit of $2.5 billion in the southeast.
• $640 million of private market layers automatically reinstate, all of which are prepaid and included in the cost above.
• First event loss retention in the southeast and Hawaii of $32.0 million and $20.7 million in the northeast.
• Florida Hurricane Catastrophe Fund participation of 90%.

Ernie Garateix, Heritage's CEO, said, "We completed our 2021-2022 catastrophe reinsurance program meaningfully earlier this year, which is a testament to our strong reinsurance partner relationships, diversified book of business and solid reserving track record. Compared to last year, we prepaid reinstatement premiums for all layers with a reinstatement available and substantially eliminated co-participations in the reinsurance tower above our regional retentions. Overall, we have a stronger program with fewer moving parts. We are grateful to our reinsurance partners for their support."

Financial information, including material announcements about Heritage, is routinely posted on investors.heritagepci.com. 

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 over $1.1 billion of gross personal and commercial residential premium across its multi-state footprint.

Forward-Looking Statements
Statements in this press release 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. Forward-looking statements in this press release include management's expectations regarding the 2021-2022 catastrophe reinsurance program. The risks and uncertainties that could cause our actual results to differ from those expressed or implied herein include, the matters described from time to time by the Company in its 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, 2020 filed with the Securities and Exchange Commission on March 9, 2021.  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:
Arash Soleimani, CFA, CPA
Executive Vice President
727.871.0206
asoleimani@heritagepci.com

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SOURCE Heritage Insurance Holdings, Inc.

FAQ

What is Heritage Insurance's catastrophe reinsurance program cost for 2021-2022?

The catastrophe reinsurance program costs approximately $312 million.

What is the total limit of Heritage Insurance's 2021-2022 reinsurance program?

The total limit is $2.5 billion.

How much of the reinsurance layers are prepaid in the 2021-2022 program?

$640 million of private market layers are prepaid.

What is the first event exhaustion point for the 2021-2022 reinsurance program?

The first event exhaustion point is $1.4 billion.

What portion of the Florida Hurricane Catastrophe Fund does Heritage Insurance participate in?

Heritage Insurance participates at a rate of 90%.