The super-regional U.S. property and casualty insurance holding company Heritage Insurance Holdings, Inc. HRTG has made significant improvements in its net margin. Its net margin showed an improvement of 3080 basis points over the last two years, which continued into the first quarter of 2025, wherein net margin improved by 320 basis points. 

Heritage Insurance is prioritizing profitability by ensuring rate adequacy, implementing profit-focused underwriting criteria and limiting new business in saturated or low-performing markets.

HRTG stated that given the current dislocation in California, the homeowner’s business is more likely to move to Excess and Surplus (E&S) insurers from traditional insurers. This creates business opportunities for Heritage Insurance as it is increasingly focusing on the E&S segment and considers it an important growth area. It is thus exploring expansion into more states in this regard.

Heritage is also channeling capital toward technology investments and high-margin businesses. Continued investment in technology in data analytics, predictive modeling and cloud-based solutions is further driving operational efficiency. 

These efforts, alongside prudent underwriting execution and rate adequacy initiatives pursued over the last three years, should help HRTG sustain margin growth.
Despite margin improvement, cash and cash equivalents dropped 5.9% at first-quarter end. Though the debt balance improved 52% at the end of the first quarter, its leverage compares unfavorably with the industry average.

HRTG closely competes with Universal Insurance Holdings UVE and HCI Group HCI, both of which have a strong presence in Florida. Both these insurers have been showing margin improvement over the years.

HCI Group has steadily strengthened its margins through operational streamlining, disciplined cost control and effective use of proprietary technology platforms. By not renewing high-risk policies and focusing on more profitable market segments, the company has significantly boosted profitability. 

In tandem with industry trends, Universal Insurance is also investing in technology. It leverages advanced data analytics and AI to improve its underwriting and claims processes, as well as efficiency that is reflected in continuous margin expansion.

Shares of HRTG have gained 98.8% year to date, outperforming the industry.

Image Source: Zacks Investment Research

HRTG trades at a price-to-book value ratio of 2.27, above the industry average of 1.61. But it carries a Value Score of B.