Heritage's E&S Segment Fuels Growth: Can it Sustain the Momentum?

The Excess and Surplus (E&S) segment is a key driver of growth for Heritage Insurance Holdings HRTG. It offers diversification to the super-regional U.S. property and casualty insurer’s revenues generated from the admitted insurance market.  HRTG writes personal residential insurance on an admitted basis in Hawaii and on an excess and surplus lines basis in California and Florida.

Heritage has strategically grown its E&S operations through its subsidiary, Heritage E&S Insurance Services, which enables it to underwrite policies tailored for niche markets, such as coastal properties, high-value homes and catastrophe-exposed risks. This specialization not only enhances premium growth opportunities but also supports underwriting profitability by enabling more precise risk selection and pricing. As part of its Strategic Profitability Initiatives, HRTG launched E&S in several states, growing to over $46 million of in-force premium.

The E&S segment strengthens Heritage’s overall business resilience. As admitted markets often face rate pressures and regulatory hurdles, the company’s E&S capabilities offer a buffer against volatility and improve its risk-adjusted returns. This segment also helps optimize the balance of the company’s portfolio, especially in catastrophe-prone regions where admitted markets may be pulling back due to increased loss costs and reinsurance challenges.

With increased frequency and severity of weather events, rising reinsurance costs and selective underwriting across the industry, Heritage’s E&S platform provides a scalable and strategic growth lever.

What About HRTG’s Competitors?

HRTG closely competes with Universal Insurance Holdings UVE and HCI Group HCI, both of which have a strong presence in Florida. 

HCI Group’s property insurance business has played a pivotal role in driving growth, largely through proactive policy assumptions from Florida’s Citizens Property Insurance Corporation. The company’s tech-driven underwriting capabilities, combined with a solid reinsurance framework, underpin its profitability and enhance operational stability.

Universal Insurance Holdings’ property insurance business has significantly contributed to its growth, driven by effective pricing strategies, AI-enabled claims handling and streamlined operations. Improved loss ratio stability has enhanced profitability, creating room for reinvestment in initiatives that support continued expansion.

HRTG’s Price Performance

Shares of HRTG have gained 93.5% year to date, underperforming the industry.

HRTG’s Expensive Valuation

HRTG trades at a price-to-book value ratio of 2.17, above the industry average of 1.56. But it has a Value Score of B.

No Estimates Movement for HRTG

The Zacks Consensus Estimate for HRTG’s second-quarter and third-quarter 2025 EPS witnessed no movement over the past 30 days. The consensus estimates for 2025 and 2026 have also not moved in the same time frame.
 

The consensus estimates for HRTG’s 2025 and 2026 revenues and EPS indicate a year-over-year increase. 

HRTG currently sports a Zacks Rank #1 (Strong Buy). 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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