Heritage Insurance Holdings, Inc. Reports Financial Results for Fourth Quarter and Full Year 2016; Enters 2017 in Strong Capital Position

CLEARWATER, Fla., March 15, 2017

Highlights

• 26% increase in policy count in 4Q16 as compared to 4Q15
• Gross premiums written and gross premiums earned increased 7 percent and 22 percent, respectively, in 2016 as compared to 2015
• Net loss for the fourth quarter 2016 was $2.9 million; net income for the full year 2016 was $33.9 million
• Return on average equity was 9.5% for full year 2016
• $358 million in stockholders' equity at December 31, 2016
• Book value per share improved year over year to $12.41 as of December 31, 2016
• Repurchased 334,664 shares of our common stock for a total of $5.0 million in 4Q16; 1,759,330 shares repurchased for a total of $25.6 million for the full year 2016
• $73 million in net proceeds raised in a private placement of senior notes to be used for M&A and strategic investments
• Heritage has addressed and closed roughly 2,500 claims out of over 2,700 filed claims related to Hurricane Matthew and roughly 500 claims out of over 530 filed claims related to Hurricane Hermine
• Board of Directors approved a fourth quarter dividend of $0.06/share.
• All HO3 policies are now approved for a 9.9% overall average rate increase

Bruce Lucas, the Company's Chairman and CEO, said, "2016 was a challenging year for the Company. We had record tornados, two hurricanes, and significantly increased loss reserves in response to the current Florida claims environment. Despite these headwinds, we produced $33.9 million in net income, repurchased $25.6 million of our common stock, declared over $7 million in dividends, and delivered a 9.5% return on average equity. I'm proud of our Company's performance post hurricanes – our claims team delivered timely service to policyholders, our water mitigation and construction divisions performed as planned, and we demonstrated that our vertically-integrated service model works. During 2016, we continued to successfully diversify our business, writing and renewing voluntary personal and commercial residential policies which now account for over 47% of policies-in-force, while policies assumed from Citizens now account for roughly 53%. Importantly, our exposure in personal residential within the tri-county is reduced with the segment in Florida now making up approximately 18% of our total insured value. As we move into 2017, we look to strengthen our position and further diversify our risk portfolio through M&A and strategic investments. We anticipate continued consolidation in our industry and we believe Heritage is in a prime position to selectively participate. We will remain diligent to ensure we are operating the business with a profitable risk profile while focusing on growth in new states. Our priority is managing the business for bottom line results to achieve high returns for our stockholders."

Results of Operations

The following table summarizes our results of operations for the three months and years ended December 31, 2016 and 2015, respectively (in thousands, except percentages and per share amounts):