Heritage Insurance Holdings Inc's Business Segments

Heritage Insurance Holdings, Inc., is a property and casualty insurance holding company that provides personal and commercial residential insurance. We are headquartered in Clearwater, Florida and, through our subsidiary, Heritage Property & Casualty Insurance Company (“Heritage P&C”), we provide personal residential insurance for single-family homeowners and condominium owners, rental property insurance and commercial residential insurance in the state of Florida and North Carolina. We are vertically integrated and control or manage substantially all aspects of insurance underwriting, customer service, actuarial analysis, distribution and claims processing and adjusting. We are led by an experienced senior management team with an average of 31 years of insurance industry experience. We began operations in August 2012, and in December 2012 we began selectively assuming policies from Citizens Property Insurance Corporation (“Citizens”), a Florida state-supported insurer, through participation in a legislatively established “depopulation program” designed to reduce the state’s risk exposure by encouraging private companies to assume insurance policies from Citizens. We also write policies outside the Citizens depopulation program, which we refer to as voluntary policies. Heritage P&C is currently rated “A” (“Exceptional”) by Demotech, Inc. (“Demotech”), a rating agency specializing in evaluating the financial stability of insurers.

Our company was initially formed as a Florida limited liability company in 2012. On January 1, 2014, we formed a Delaware limited liability company, also named Heritage Insurance Holdings, LLC, and merged with it in order to domicile the Company in Delaware. Effective May 22, 2014, Heritage Insurance Holdings, LLC converted into a Delaware corporation named Heritage Insurance Holdings, Inc.

Our primary products are personal and commercial residential insurance, which were offered only in Florida under authorization from the Florida Office of Insurance Regulation (“FLOIR”). We conduct our operations under one business segment.

Since our inception, a substantial portion of our revenue has come from policies we assumed from Citizens and Sunshine State Insurance Company (“SSIC”), with the balance of our revenue generated from renewal of these assumed policies and from voluntary policies. Building on these successful transactions, we intend to continue to grow profitably by undertaking the following:

Increase Our Policies in Force in Florida Through Strategic Policy Assumptions and Expansion of Our Voluntary Market Share
We intend to continue assuming policies from Citizens that meet our assumption strategy and underwriting criteria. We also expect continue to pursue opportunities to acquire policies from private insurers. We will also pursue opportunities to increase the number of our voluntary policies by expanding our independent agent distribution network, as well as obtaining approval from national insurance companies to allow their agents to offer our personal residential policies in Florida. We entered into a marketing agreement with National General Insurance Company and began writing homeowners insurance through their distribution network in early 2016 in the state of North Carolina. We also intend to increase our marketing efforts, which we believe will allow us to more effectively penetrate areas of the state where we are not currently writing significant new business.

Opportunistically Diversify Product Offerings
We will continue to grow our commercial residential business, which we launched in the fourth quarter of 2014 with assumption transactions from Citizens, as well as through voluntary sales. We anticipate most of our future growth in commercial residential will come from voluntary sales, as we have already selected most of the commercial policies that meet our underwriting criteria from Citizens. In the fourth quarter of 2014, we also entered into the manufactured housing line of business by assuming approximately 10,100 policies from Citizens. Additional new product lines may include non-residential coverage, such as general liability insurance. We have had no growth in manufacturing housing during 2015, nor do we anticipate any future growth.

Optimize Our Reinsurance Program
We will continue to obtain what we believe to be the most appropriate levels and sources of reinsurance. We believe that the significant additional capital entering portions of the reinsurance market provides us with the opportunity to obtain favorable pricing and contract terms and conditions, including multi-year commitments, which comprise a significant portion of our 2015-2016 reinsurance program. In April 2014 and 2015, we entered into fully collateralized catastrophe reinsurance agreements funded through the issuance of a total of $478.0 million principal amount of catastrophe bonds, and we will continue evaluating such cost-efficient alternatives to traditional reinsurance. Additionally, we will continue to meet certain of our reinsurance needs through the use of our reinsurance subsidiary, Osprey, which mitigates our reinsurance expense and reduces our reliance on third-party reinsurance.

We have a deep and experienced management team led by Bruce Lucas, Chairman and Chief Executive Officer, Richard Widdicombe, President, Stephen Rohde, Chief Financial Officer, Melvin Russell, Chief Underwriting Officer, Ernesto Garateix, Chief Operating Officer, Sharon Binnun, Executive Vice President Finance, Paul Nielsen, Vice President of Claims, Joseph Peiso, Vice President of Compliance, Randy Jones, President Commercial Division and Arlene Luis, Executive Vice President Commercial. Our management team, which averages 31 years of insurance industry experience, has extensive experience in the Florida personal and commercial residential insurance market, has built longstanding relationships with key participants in the insurance industry and is supported by a group of highly qualified individuals with industry expertise, including a Chief Actuary with more than 36 years of industry experience.

 

Heritage Insurance Holdings, Inc. is primarily engaged in the insurance sector, focusing on providing personal and commercial residential insurance products. The company operates under strict regulations set forth by the Florida Office of Insurance Regulation (FLOIR), which authorizes its operations solely within the state of Florida. The companys offerings cater to a variety of client needs, reflecting the understanding of Florida’s unique marketplace and the specific risks associated with residential properties in the region.

Product Segments

1. Personal Residential Insurance:
- Homeowners Insurance: Heritage offers robust homeowners insurance policies designed to protect individual homeowners against various risks, including fire, theft, storm damage, and liability claims. Coverage can be tailored to suit the needs of policyholders, ensuring that both the physical structure of the home and personal belongings are safeguarded.
- Dwelling Fire Insurance: This product provides coverage for properties that might not qualify for standard homeowners insurance, such as rental properties or homes without occupant liabilities. It covers the dwelling itself against specific risks.
- Flood Insurance: Acknowledging Floridas susceptibility to flooding, Heritage offers policies specifically designed to cover water damage from floods, which is often not included in standard homeowners insurance.

2. Commercial Residential Insurance:
- Commercial Property Insurance: This segment addresses the specific needs of commercial property owners, offering coverage for buildings, portions of buildings, and associated risks. This includes coverage against fire, vandalism, and liability—ensuring business owners protect their investments.
- Condominium Association Insurance: Heritage provides specialized insurance products tailored for condominium associations, protecting common areas, and liability issues while meeting regulatory requirements for properties that are divided into multiple units.

Services Offered

1. Risk Assessment and Consultation: Heritage Insurance conducts thorough risk assessments to help customers understand potential hazards and coverage needs, enabling them to make informed decisions about the insurance products that best fit their situation.

2. Claims Processing Support: The company offers comprehensive support throughout the claims process, ensuring policyholders receive assistance and guidance. The claims team works directly with clients to facilitate smooth and efficient claims resolution, reducing the stress often associated with damage or loss.

3. Customer Service: Heritage prioritizes customer satisfaction through dedicated customer service representatives who assist clients with policy inquiries, coverage explanations, and any changes to their accounts. The aim is to ensure clients are well-informed and satisfied with their insurance choices.

4. Policy Management: Clients can benefit from an easy-to-use policy management system that allows them to view their coverage, make payments, and update personal information online. This service enhances convenience and keeps communication fluid.

Business Operations

Heritage Insurance Holdings operates under a single business segment that consolidates its focus on providing personal and commercial residential insurance products. This streamlined operation allows the company to target a specialized market effectively, responding to the unique needs and demands of Floridas housing landscape. The concentration on this geographical area also allows Heritage to develop customized offerings that address the specific risks faced by Floridians, including hurricanes, floods, and other natural disasters.

As such, Heritage Insurance Holdings, Inc. has carved out a niche within Florida’s competitive insurance marketplace, emphasizing a tailored approach to both personal and commercial insurance solutions.