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.
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