Heritage Insurance Holdings, Inc.

Good morning, everyone, and welcome to Heritage Insurance Holdings' fourth quarter 2021 financial results conference call. My name is Jamie, and I will be the operator today. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Please note that today's event is being recorded. At this time, I'd like to turn the conference call over to Kirk Lust, Chief Financial Officer at Heritage. Please go ahead.

Good morning and thank you for joining us today. We invite you to visit the investor section of our website, investors.heritagepci.com, where the earnings release and our earnings call will be archived. These materials are available for replay or review at your convenience. Today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations and subject to uncertainty and changes in circumstances. In our earnings press release and our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, and we have no obligation to update any forward-looking statements we may make. For a description of the forward-looking statements and the risks that could cause our results to differ materially from those described in the forward-looking statements, please refer to our annual report on Form 10-K, earnings release, and other SEC filings. Our comments today will also include non-GAAP financial measures. The reconciliations of and other information regarding these measures can be found in our press release. With me on the call today is Ernie Garite, our Chief Executive Officer. I will now turn the call over to Ernie. Thank you, Kirk.

Good morning, everyone, and thank you for joining us today. I would like to thank our employees and our board for the continued hard work and dedication. I also would like to thank our shareholders for their continued support as we work towards delivering improving profitability and strong shareholder value for years to come. Despite the challenges the industry faced in 2021, we returned to positive adjusted net income in the fourth quarter, with strong results driven by a solid 93.2% net combined ratio. representing our first sub-100% combined ratio since the first quarter of 2020. Weather losses normalized this quarter, and the impact of rate increases and underwriting enhancements has started to benefit results. While we're not pleased to take the good wear impairment charge in the quarter, it's important to note that it's a non-cash charge with no economic impact to our business and no relation to our core underwriting and investing operations. It will not distract our team from the continued execution of our well-defined strategy to reduce volatility and generate sustainable returns on equity. Our focus over the past year has been on improving profitability by implementing meaningful rate increases, re-underwriting our existing business and being more selective when we consider and accept new business. We also made meaningful form changes, vetted out agent network to ensure that we're writing new business through our most profitable partnership, and intensified our focus on expense management. We also continued to diversify away from Florida to reduce the volatility of our book. As of the fourth quarter, Florida total insured value only accounted for 26.9% of total TIB, down from 31.3% last year. As I mentioned, rate increases benefited fourth quarter results, and we expect higher rate to continue to increase our earned premiums throughout the year. As of the fourth quarter, the total average premium per policy was up 10.1% year over year, while we implemented even more meaningful increases in Florida, where our average premium per policy was up 15.5%. Further, our Florida TIV decreased by 3.2%, while the premium in force increased nominally. Our focus on rate adequacy can also be seen by looking at our premiums relative to our policy count. For example, Our overall premiums in force increased by 8.3% year-over-year as of the fourth quarter, while policies in force declined by 1.7%, representing a 10-point delta. This was more pronounced in our Florida Homeowners Book, where premium growth outpaced policy growth by 13.3 points. We will continue to aggressively take rate as appropriate throughout our portfolios. We believe the underwriting progress that we delivered in the fourth quarter represents the early innings of our underwriting profitability improvement, and we're confident that our strategic initiatives will continue to move us forward in 2022 and beyond. Given our confidence in the actions we're taking, we repurchased $7.2 million of stock in the fourth quarter, which was accretive to tangible book value per share. I'm pleased with our progress and expect continued positive momentum in 2022 and beyond. I will now turn the call back to Kirk to provide more details on our financials.