Heritage Insurance (US:HRTG)2022-08-08 20:12Financial Performance - Total assets increased to $2,029,905 thousand as of June 30, 2022, compared to $1,980,762 thousand at December 31, 2021, reflecting a growth of approximately 2.6%[15] - Gross premiums written for the three months ended June 30, 2022, were $365,284 thousand, up from $337,700 thousand in the same period of 2021, representing an increase of about 8.5%[16] - Net premiums earned rose to $158,271 thousand for the three months ended June 30, 2022, compared to $146,499 thousand in the prior year, marking an increase of approximately 8.0%[16] - Total revenues for the six months ended June 30, 2022, were $322,378 thousand, an increase from $297,441 thousand in the same period of 2021, reflecting a growth of about 8.4%[16] - The company reported a net loss of $87,866 thousand for the three months ended June 30, 2022, compared to a net loss of $3,950 thousand for the same period in 2021, indicating a significant decline in profitability[16] - The net loss for the six months ended June 30, 2022, was $118.625 million, compared to a net loss of $9.097 million for the same period in 2021[22] - The company reported a total comprehensive loss of $100,166 thousand for the three months ended June 30, 2022, compared to a loss of $1,182 thousand in the same period of 2021, indicating a substantial increase in losses[16] Asset and Liability Management - Total liabilities increased to $1,849,359 thousand as of June 30, 2022, from $1,637,711 thousand at December 31, 2021, representing a rise of approximately 12.9%[15] - The company recorded a goodwill impairment of $91,959 thousand for the three months ended June 30, 2022, which significantly impacted the overall financial results[16] - The company recorded a goodwill impairment charge of $92.0 million during Q2 2022, resulting in a total goodwill balance of $0 as of June 30, 2022, down from $91.959 million at the end of 2021[59] - The total carrying value of non-consolidated VIEs was $17,352,000, down from $23,929,000 as of December 31, 2021, representing a decrease of approximately 27.4%[44] Investment Activities - The Company’s total investments measured at fair value as of June 30, 2022, amounted to $635,458,000, compared to $669,354,000 as of December 31, 2021, indicating a decrease of about 5.1%[48] - The Company’s net investment income for the three months ended June 30, 2022, was $2.654 million, an increase from $2.003 million in the same period of 2021[39] - The Company reported total realized gains of $32 and total realized losses of $150 for the six months ended June 30, 2022, resulting in net realized losses of $118[36] - The Company has not established an allowance for credit losses as of June 30, 2022, as the decline in fair value was attributed to increased market interest rates[41] Cash Flow and Financing - Net cash used in operating activities was $(47.535) million, a decrease from $104.402 million provided in the same period last year[22] - Cash and cash equivalents were $290.9 million as of June 30, 2022, down from $359.3 million as of December 31, 2021, due to timing of reinsurance payments[204] - The Company drew $15 million from its Revolving Credit Facility to purchase and retire $11.7 million of Convertible Notes during the first half of 2022[210] - The effective interest rate for the Term Loan Facility was 3.526% and for the Revolving Credit Facility was 4.0625% as of June 30, 2022[106] Premiums and Policies - Direct premiums written for the three months ended June 30, 2022, were $365.3 million, compared to $337.7 million for the same period in 2021[92] - The average premium per policy increased by 11.5% for the quarter ended June 30, 2022, compared to the prior year quarter[143] - Policies in force in Florida decreased by 18.9% to 195,987 as of June 30, 2022, down from 241,581 in the prior year[148] - Total insured value in Florida declined by 14.9% to $103,200,520,845 as of June 30, 2022, from $121,256,973,834 in the prior year[148] Operating Expenses - Total operating expenses increased by 61.7% to $249.3 million in Q2 2022, primarily due to a $92.0 million goodwill impairment charge[165] - The total operating expenses were $447.3 million for the six months ended June 30, 2022, up 45.6% from $307.3 million in the prior year, primarily due to a goodwill impairment charge[190] Tax and Deferred Assets - The company recorded a tax provision of $563,000 for the three months ended June 30, 2022, compared to an income tax benefit of $2.0 million in the same period of 2021[70] - The total deferred tax asset increased to $50.419 million as of June 30, 2022, from $34.801 million as of December 31, 2021, marking a growth of approximately 44.8%[72] Strategic Initiatives - The company may pursue acquisitions and strategic investments, potentially increasing capital expenditures to support growth strategies[206] - The company plans to use its revolving credit facility to issue a standby letter of credit amounting to $31.8 million for a reinsurance agreement[139]