HRTG vs. UVE: Which Regional P&C Insurer is a Safer Bet Now?

Despite a rise in catastrophic activities, the property and casualty insurance industry is poised to grow as it continually focuses on personalized offerings to enhance customer experience, leveraging digitalization.  Solid retention, exposure growth across business lines and improved pricing are driving higher premiums and helping insurers maintain profitability. Heritage Insurance Holdings, Inc. HRTG and Universal Insurance Holdings, Inc. UVE — regional P&C insurers operating primarily in Florida and focusing on homeowners insurance — are expected to grow, banking on these positives.

Given its primary presence in Florida, which faces the wrath of hurricanes the most, these insurers are exposed to losses from hurricanes and other natural events. As a result, such big insurers either lower or exit the Florida market. To encourage insurers to focus on Florida, the state has lowered reinsurance costs and implemented measures to curb legal system abuses, among others.

To safeguard the balance sheet, insurers are increasingly seeking reinsurance arrangements. Climate risk modeling is also helping a lot. Insurers’ pricing is thus influenced by higher reinsurance costs and more restrictive terms, as well as higher inflation. 

Yet, as an investment option, which stock is more attractive? Let’s closely look at the fundamentals of these stocks. 

Factors to Consider for HRTG

Heritage Insurance is sharpening its focus on profitability by ensuring rates remain adequate, enforcing underwriting standards centered on profit, and limiting new business in saturated or underperforming regions. Owing to declining returns and a tightening reinsurance market, the insurer halted new personal lines policy issuance in Florida and the Northeast as of December 2022.

For 2025, Heritage aims to re-enter select profitable markets and allocate capital strategically to sustain margins and profitability. Its priorities include reinforcing rate adequacy, leveraging data-driven analytics for exposure management and optimizing existing infrastructure to support continued growth.

A key driver of future expansion is the excess and surplus (E&S) lines segment, with plans to broaden its presence across additional states. The company’s reinsurance strategy is built to provide solid protection against hurricanes and severe weather events in coastal regions. Heritage anticipates a significant decline in its ceded premium ratio, supported by a more cost-effective reinsurance arrangement and increased gross premiums. It has already secured full coverage for its 2025–2026 indemnity-based catastrophe excess-of-loss reinsurance program.

To further its long-term growth agenda, Heritage is channeling investment into technology and high-margin business segments. As part of its capital return strategy, the company has also approved a $10 million share buyback program.

Net margin was 9.3% in the first quarter, a huge improvement from negative 16.1% two years back.

Its return on equity of 33.5% is better than the industry average of 7.8%

Factors to Consider for UVE

Primarily operating in Florida, Universal Insurance is a leading holding company of personal residential homeowners insurance and services writing business in 11 out of the largest 15 states in the United States. This also exposes it to geographic concentration.

The insurer ensures revenue generation from its diversified portfolio of renters, flood, and commercial insurance, apart from homeowners insurance. Universal Insurance has also been increasing its focus on non-risk-bearing insurance revenues. This, in turn, provides relief during challenging underwriting periods.

Also, to safeguard its balance sheet, Universal Insurance has already secured $352 million of additional multi-year coverage for the 2026-2027 hurricane season. 

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.  The continued development of the digital agency Clovered.com bears testimony to this.

Its return on equity of 16.8% is better than the industry average.

Estimates for HRTG and UVE

The Zacks Consensus Estimate for HRTG’s 2025 revenues and EPS implies a year-over-year increase of 4.6% and 61.7%, respectively. The consensus estimate has moved north in the last 30 days.

The Zacks Consensus Estimate for UVE’s 2025 revenues implies a year-over-year decrease of 2.1%, while EPS implies a year-over-year increase of 48%. 

Are HRTG and UVE Shares Expensive?

HRTG is trading at a price-to-book multiple of 2.16, above its median of 0.68 over the last five years. UVE’s price-to-book multiple sits at 1.76, above its median of 1.22 over the last five years.

Conclusion

A growing commercial residential business, improving E&S business, better pricing, increasing top line, expanding margins and solid earnings bode well for HRTG’s growth. On the other hand, a solid market presence, technological advancement, a diversified portfolio, which lowers dependency on a single revenue stream, and a financially stable position, make Universal Insurance well-poised for growth.

Both these insurers have weathered cost challenges well, as evident from their continued net margin improvement.

Yet, on the basis of return on equity, which reflects a company’s efficiency in generating profit from shareholders' equity and gives a clear picture of the company's financial health, HRTG scores higher than UVE.  

HRTG shares have gained 91% year to date, while UVE has gained 25%. Both have outperformed the industry. HRTG sports a Zack Rank #1 (Strong Buy) while UVE carries a Zacks Rank #2 (Buy). HRTG seems a safer bet than UVE at the moment.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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