Heritage Insurance is stepping back from parts of Florida’s commercial residential market as competition for condominium and homeowners association business intensifies. Cheaper reinsurance is helping to keep its profits near record levels.
The St. Petersburg-based insurer reported third-quarter net income of $51.1 million, or $1.72 per diluted share, compared with $50.4 million a year earlier. Its net combined ratio was 73.0%, almost unchanged from 72.9%, despite $15.8 million of pre-tax catastrophe losses, compared with none in the same quarter last year.
Gross premiums written fell 3.1% to $322.8 million, mainly because of lower commercial residential premiums. Premiums in force declined 2.8% to $1.40 billion.
Heritage said the Florida commercial residential market remains highly competitive. It is requiring that business to meet its pricing and risk standards rather than chasing volume. Florida personal lines premiums in force also declined, but growth in personal lines in other states more than made up for that.
“Our expanding geographic reach and the capabilities we have built position Heritage to capitalize on selective growth opportunities across our markets while remaining selective in areas where competition has intensified,” said Ernie Garateix, chief executive.
The insurer is also expanding beyond its admitted markets, including entering Texas on an excess and surplus lines basis.
Lower reinsurance costs played a major role in the quarter. Ceded premiums fell 11.8% to $147.2 million, and the share of gross premium ceded to reinsurers dropped to 41.7% from 46.1%.
Heritage said its June 2026 catastrophe excess of loss program was placed at better prices, saving $63.2 million in reinsurance costs over the treaty year. It also reduced a northeast quota share arrangement from the end of 2025. As a result, net premiums earned rose 5.4% even though gross earned premium fell.
The net loss ratio rose 1.3 points to 39.6%. Weather and catastrophe losses for the quarter were $33.6 million, compared with $13.8 million a year earlier. These included $9.1 million from Hurricanes Lala and Lowell and $6.7 million from other events, mainly a late-September nor’easter. They were largely offset by $14.0 million of favorable prior-year reserve development.
For agents placing condo and homeowners association business in Florida, Heritage’s pullback is a sign of how much the market has changed. After years of capacity shortages, more carriers are now competing for well-maintained buildings, pushing prices down. Associations with strong risk profiles and up-to-date structural inspections are likely to have more options and better pricing at renewal. Older or poorly maintained buildings may find less competition for their business.
The reinsurance savings show why Florida carriers’ results have improved so much. Lower reinsurance costs, together with the state’s claims and litigation reforms, have significantly reduced costs for domestic carriers. That gives them room to compete, but it also means their results depend on reinsurance pricing staying soft. A major hurricane season could quickly change that.
For brokers outside Florida, Heritage’s growth in other states and its move into Texas E&S business point to a carrier with capacity to deploy and an interest in diversifying, which may mean more appetite for new business in those markets.
