We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Heritage Insurance's Profitability Anchored to Its Combined Ratio?
Read MoreHide Full Article
Key Takeaways
{\"0\":\"HRTG\'s net combined ratio improved to 94.2% in 2024, with further improvement in the first half of 2025.\",\"1\":\"The company has raised premiums, tightened underwriting, and diversified geographically.\",\"2\":\"Tech upgrades like Guidewire Cloud and predictive modeling are boosting underwriting precision.\"}
Heritage Insurance Holdings’ (HRTG - Free Report) profitability is underpinned by its combined ratio, a key measure of underwriting performance in the property and casualty (P&C) insurance industry. A combined ratio — defined as loss ratio plus expense ratio — below 100% signals underwriting profitability.
For Heritage, operating in catastrophe-prone markets such as Florida and the Northeast, maintaining a disciplined combined ratio is crucial to long-term profitability. The super-regional U.S. P&C insurance holding company has historically faced challenges from elevated catastrophe losses, adverse claims severity and rising reinsurance costs, all of which have weighed on underwriting results and earnings stability. In response, management has pursued prudent measures, including premium increases, tighter underwriting standards and greater geographic diversification to strengthen margins and reduce reliance on high-risk markets.
Investment income cannot adequately compensate for underwriting shortfalls—and with the Federal Reserve’s recent rate cut and anticipated further easing putting additional pressure on yields—sustained profitability depends on keeping the combined ratio below 100%. Encouragingly, Heritage has shown progress. Its net combined ratio improved to 94.2% in 2024, reflecting a 210-basis-point year-over-year gain, and strengthened further in the first half of 2025 with a significant 1,430-basis-point improvement.
Heritage is selectively re-entering profitable markets while preserving capital discipline. Priorities include maintaining rate adequacy, applying advanced analytics to refine risk management, and leveraging strategic technology investments. Initiatives such as Guidewire Cloud adoption, predictive modeling, pricing analytics, and its Slide partnership are enhancing underwriting capabilities and positioning Heritage for more sustainable and competitive growth.
What About HRTG’s Peers?
HCI Group (HCI - Free Report) and Universal Insurance Holdings (UVE - Free Report) have been continuously focusing on improving their combined ratios and strengthening underwriting profitability.
Both HCI Group and Universal Insurance ensure better pricing, stricter underwriting standards, geographic diversification (including expanding into less catastrophe-prone markets to reduce concentration risk), proper reinsurance, technological upgrades and digitalization (use of AI, predictive modeling, pricing analytics) and control operating costs.
These measures collectively help HCI Group and Universal Insurance deliver a lower combined ratio, thus reducing earnings volatility and supporting sustainable long-term growth.
HRTG’s Price Performance
Shares of HRTG have gained 124% year to date, outperforming the industry.
Image Source: Zacks Investment Research
HRTG’s Expensive Valuation
HRTG trades at a price-to-book value ratio of 2.3, above the industry average of 1.54. But it carries a Value Score of A.
Image Source: Zacks Investment Research
Estimate Movement for HRTG
The Zacks Consensus Estimate for HRTG’s third-quarter and fourth-quarter 2025 EPS witnessed 103.8% and 6.1% northward movement, respectively, in the past 60 days. The same for full-year 2025 and 2026 has increased 26.2% and 12.8%, respectively.
Image Source: Zacks Investment Research
The consensus estimates for HRTG’s 2025 and 2026 revenues and EPS indicate year-over-year increases.
Image: Bigstock
Is Heritage Insurance's Profitability Anchored to Its Combined Ratio?
Key Takeaways
Heritage Insurance Holdings’ (HRTG - Free Report) profitability is underpinned by its combined ratio, a key measure of underwriting performance in the property and casualty (P&C) insurance industry. A combined ratio — defined as loss ratio plus expense ratio — below 100% signals underwriting profitability.
For Heritage, operating in catastrophe-prone markets such as Florida and the Northeast, maintaining a disciplined combined ratio is crucial to long-term profitability. The super-regional U.S. P&C insurance holding company has historically faced challenges from elevated catastrophe losses, adverse claims severity and rising reinsurance costs, all of which have weighed on underwriting results and earnings stability. In response, management has pursued prudent measures, including premium increases, tighter underwriting standards and greater geographic diversification to strengthen margins and reduce reliance on high-risk markets.
Investment income cannot adequately compensate for underwriting shortfalls—and with the Federal Reserve’s recent rate cut and anticipated further easing putting additional pressure on yields—sustained profitability depends on keeping the combined ratio below 100%. Encouragingly, Heritage has shown progress. Its net combined ratio improved to 94.2% in 2024, reflecting a 210-basis-point year-over-year gain, and strengthened further in the first half of 2025 with a significant 1,430-basis-point improvement.
Heritage is selectively re-entering profitable markets while preserving capital discipline. Priorities include maintaining rate adequacy, applying advanced analytics to refine risk management, and leveraging strategic technology investments. Initiatives such as Guidewire Cloud adoption, predictive modeling, pricing analytics, and its Slide partnership are enhancing underwriting capabilities and positioning Heritage for more sustainable and competitive growth.
What About HRTG’s Peers?
HCI Group (HCI - Free Report) and Universal Insurance Holdings (UVE - Free Report) have been continuously focusing on improving their combined ratios and strengthening underwriting profitability.
Both HCI Group and Universal Insurance ensure better pricing, stricter underwriting standards, geographic diversification (including expanding into less catastrophe-prone markets to reduce concentration risk), proper reinsurance, technological upgrades and digitalization (use of AI, predictive modeling, pricing analytics) and control operating costs.
These measures collectively help HCI Group and Universal Insurance deliver a lower combined ratio, thus reducing earnings volatility and supporting sustainable long-term growth.
HRTG’s Price Performance
Shares of HRTG have gained 124% year to date, outperforming the industry.
Image Source: Zacks Investment Research
HRTG’s Expensive Valuation
HRTG trades at a price-to-book value ratio of 2.3, above the industry average of 1.54. But it carries a Value Score of A.
Image Source: Zacks Investment Research
Estimate Movement for HRTG
The Zacks Consensus Estimate for HRTG’s third-quarter and fourth-quarter 2025 EPS witnessed 103.8% and 6.1% northward movement, respectively, in the past 60 days. The same for full-year 2025 and 2026 has increased 26.2% and 12.8%, respectively.
Image Source: Zacks Investment Research
The consensus estimates for HRTG’s 2025 and 2026 revenues and EPS indicate year-over-year increases.
HRTG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.