Heritage posts higher net income in Q2’25 as CoR improves to 72.9%

Heritage Insurance has reported Q2 2025 net income of $48 million, up from $18.9 million in the prior year quarter, primarily driven by a reduction in losses and loss adjustment expenses and a reduction in other operating expenses, with an increase in net premiums earned.

According to Heritage, the improvement in net income is also attributable to the positive impact of rate actions, underwriting actions, and targeted exposure management taken over the last several years, which continue to favourably impact results.

Meanwhile, gross premiums written in Q2 2025 were $411 million, down slightly from $424.5 million in the same period of 2024, reportedly reflecting exposure management trends over the last several years for personal lines business.

Heritage said that the trend is anticipated to reverse by the end of 2025, based on new business written trends and expectations.

At the same time, gross premiums earned in Q2 2025 were $353.6 million, up 1% from $350.1 million in the prior year quarter, and net premiums earned were $196.3 million, up 3.2% from $190.3 million.

Heritage’s net weather losses for Q2 2025 were $12.5 million, a decrease of $7.2 million from $19.7 million in the same period of 2024.

As mentioned, the firm’s net combined ratio in Q2 2025 was 72.9%, an improvement of 19.6 points, driven primarily by a lower net loss ratio as well as a lower net expense ratio.

Finally, Heritage’s net investment income was $9 million, a $0.8 million decrease from $9.8 million in the prior year quarter, which the firm attributed to a lower interest rate environment for its sweep accounts and money market funds.

Ernie Garateix, Heritage’s CEO, commented, “Our second quarter results have further demonstrated the successful execution of our strategic initiatives and the corresponding increase in the Company’s earnings trajectory, which started at the end of 2023.

“Over the last several years, we have focused on disciplined underwriting, driving rate adequacy, and refining customer service. Taken together, these actions have created significant earnings power within our Company.

“We have also continued to provide our insureds with quality customer service and an efficient and thorough claims handling experience to ensure they receive the support and service that they expect, especially in times of crisis.”

Garateix continued, “As I noted last quarter, we are now positioned to return the Company to growth given favourable market conditions combined with a majority of our markets having achieved rate adequacy.

“As a result, nearly all of our capacity is now open, compared to only about 30% of our capacity being open last year at this time. This can be seen in our new business premium written for the second quarter, which was 46.3% higher than new business written for the year-ago second quarter, when we only had 30% of our territories open.

“Our new business growth this quarter was accomplished while continuing to maintain our disciplined underwriting process, which resulted in a lower net loss ratio.”