Heritage Insurance Holdings Inc (HRTG) 2026 Q2 法說會逐字稿

Good morning, and welcome to the Heritage Insurance Holdings second quarter 2026 Earnings Conference Call. Please note today's event is being recorded. I would now like to turn the conference over to Kirk Lusk, Chief Financial Officer for the company. Sir, please go ahead.

早安，歡迎參加 Heritage Insurance Holdings 2026 年第二季財報電話會議。請注意，今天的活動將被錄音。現在我想把會議交給本公司財務長 Kirk Lusk。先生，請開始。

Good morning, and thank you for joining us today. We invite you to visit the Investors 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.

早安，感謝各位今天加入我們。我們邀請您造訪我們網站 investors.heritagepci.com 的投資人專區，財報新聞稿與本次財報電話會議將在該處存檔。這些資料可供您在方便時重播或查閱。今天的電話會議可能包含《1995 年私人證券訴訟改革法》所定義的前瞻性陳述。

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.

這些陳述係基於管理層目前的預期，並受不確定性及情勢變化影響。在我們的財報新聞稿與向 SEC 提交的文件中，我們詳述了可能導致未來結果與預期不同的重大風險。

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.

我們的陳述以今日為準，對於我們可能提出的任何前瞻性陳述，並無義務加以更新。如需了解前瞻性陳述之說明，以及可能導致我們的結果與前瞻性陳述所述內容出現重大差異的風險，請參閱我們的 Form 10-K 年報、財報新聞稿及其他 SEC 申報文件。

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 Garateix, our Chief Executive Officer. I will now turn the call over to Ernie.

我們今天的評論也將包含非 GAAP 財務衡量指標。這些指標的調節表及其他相關資訊可在我們的新聞稿中找到。今天與我一同參與電話會議的還有我們的執行長 Ernie Garateix。現在我把電話會議交給 Ernie。

Thanks, Kirk, and good morning, everyone. Before discussing our second quarter results, I want to step back and frame where Heritage stands today and how meaningfully the business has evolved over the last several years. When we began executing our strategic initiatives, our objectives were clear: improve profitability, achieve rate adequacy, strengthen the balance sheet, reduce volatility, and position Heritage for sustainable long-term growth.

謝謝你，Kirk，各位早安。在討論第二季業績之前，我想先退一步，說明 Heritage 目前的定位，以及過去幾年公司業務如何發生顯著演進。當我們開始推動策略性計畫時，我們的目標很明確：提升獲利能力、達成費率充足性、強化資產負債表、降低波動性，並讓 Heritage 具備可持續的長期成長定位。

Delivering on those objectives required difficult but necessary decisions. We re-underwrote portions of the portfolio, reduced exposure where returns did not justify the risk, implemented meaningful rate actions, strengthened our reserving position, and continued investing in technology and operating infrastructure.

要達成這些目標，需要做出艱難但必要的決策。我們對部分保單組合重新核保，在報酬不足以支撐風險之處降低曝險，採取具實質影響的費率調整行動，強化準備金水位，並持續投資於科技與營運基礎設施。

The results of those efforts are increasingly visible in our financial performance. In the second quarter, Heritage generated record net income of $61.7 million, record diluted earnings per share of $2.05, an annualized return on equity in excess of 45%, and substantial operating cash flow of $166.5 million.

這些努力的成果，正愈來愈清楚地反映在我們的財務表現上。第二季，Heritage 創下 6,170 萬美元的淨利新高、稀釋後每股盈餘 2.05 美元的新高、年化股東權益報酬率超過 45%，以及 1.665 億美元的可觀營運現金流。

Importantly, these results were achieved while maintaining the underwriting discipline that has guided our strategy. We continue to believe long-term shareholder value is created through profitable underwriting and disciplined capital allocation, not by pursuing premium growth at any cost. We also believe the market continues to underappreciate the extent of our geographic diversification and the reduction in earnings volatility that has resulted from that diversification.

重要的是，這些成果是在維持一貫引導我們策略的核保紀律下達成的。我們仍然相信，長期股東價值來自於獲利性的核保與嚴謹的資本配置，而不是不計代價追求保費成長。我們也認為，市場仍低估了我們地理分散化的程度，以及該分散化所帶來的盈餘波動降低幅度。

Heritage has historically been viewed primarily as a Florida-focused property insurer. While Florida remains an important market for us, Heritage today operates as a super-regional insurance platform with business spread across multiple geographies, products, and distribution channels.

過去外界多將 Heritage 視為以佛羅里達州為主的財產保險公司。雖然佛州仍是我們的重要市場，但如今的 Heritage 已作為一個超區域（super-regional）的保險平台運作，業務分布於多個地理區域、產品與通路。

That diversification improves both the quality and durability of our earnings. It gives us the flexibility to allocate capital towards markets and products where we see the strongest risk-adjusted returns, while reducing exposure in areas where competition is excessive or pricing does not support acceptable margins.

這種分散化同時提升了我們獲利的品質與持久性。它讓我們能將資本配置到我們認為具備最佳風險調整後報酬的市場與產品，同時在競爭過度或定價不足以支撐可接受利潤的領域降低曝險。

As market conditions evolve, we can shift our focus and capital towards opportunities that we believe will create the best long-term returns for shareholders, while maintaining compliance with insurance regulatory requirements.

隨著市場環境演變，我們可以把重點與資本轉向我們認為能為股東創造最佳長期報酬的機會，同時維持符合保險監理要求。

We are seeing that flexibility play out today. While commercial residential pricing in portions of Florida has become highly competitive, we continue to see attractive opportunities across many of the personal residential markets throughout our footprint.

我們正看到這種彈性在當下發揮作用。雖然佛州部分地區的商業住宅定價已變得高度競爭，但在我們版圖內的許多個人住宅市場，我們仍持續看到具吸引力的機會。

This flexibility is important because it allows us to remain disciplined. We do not need to chase underpriced business or force growth in any single geography. Instead, we can allocate capital where underwriting conditions are most favorable and where we believe we can generate attractive long-term returns.

這種彈性很重要，因為它讓我們能維持紀律。我們不需要追逐被低估定價的業務，也不必在任何單一地理區域強行推動成長。相反地，我們可以把資本配置到核保條件最有利、且我們相信能產生具吸引力長期報酬的地方。

As a result, Heritage's earning profile today is significantly more durable and resilient than it was just a few years ago. Over the last several years, policy count declines were largely the result of deliberate actions taken to improve profitability, achieve rate adequacy, and reposition the portfolio.

因此，Heritage 如今的獲利輪廓比幾年前更具持久性與韌性。過去幾年，保單件數下滑主要是我們為提升獲利、達成費率充足性並重新定位保單組合而採取的刻意行動所致。

Those actions have been successful, and we believe the vast majority of that work is now behind us. Today, nearly all of our territories are open for new business, our agency relationships remain strong, and production trends continue moving in the right direction. Most importantly, the pace of policy count decline continues to moderate. As a result, we believe our personal residential business is approaching an important inflection point.

這些行動已取得成功，我們相信其中絕大部分工作如今已告一段落。目前，我們幾乎所有地區都已開放承作新業務，我們與代理人的合作關係依然穩固，產能趨勢也持續朝正確方向發展。最重要的是，保單件數下滑的速度持續趨緩。因此，我們認為個人住宅業務正接近一個重要的轉折點。

New business production continues to strengthen, retention remains healthy, and we are seeing encouraging trends across a number of our reopened territories. As those territories mature and production continues to build, we believe the foundation is in place for a return to policy count growth. Our transition back to growth has been temporarily slowed by the rollout of Guidewire.

新業務產出持續增強，續保率維持健康，我們也在多個重新開放的地區看到令人鼓舞的趨勢。隨著這些地區逐步成熟、產出持續提升，我們相信回到保單件數成長的基礎已經到位。我們回到成長的轉換，因 Guidewire 的導入而暫時放緩。

As the implementation creates a short-term learning curve for agents and can result in several months of slower production. Importantly, we have consistently seen activity improve meaningfully once agents become familiar with the platform. Agent feedback has been overwhelmingly positive. Agents consistently tell us that Guidewire is easier to use, more automated, and significantly more efficient than our legacy system.

由於導入會在短期內為代理人帶來學習曲線，並可能造成數個月的產出放緩。重要的是，我們一貫看到當代理人熟悉平台後，活動量會明顯改善。代理人回饋極為正面。代理人一再告訴我們，Guidewire 比我們的舊系統更容易使用、自動化程度更高，且效率顯著提升。

As implementation progresses across our footprint and the temporary transition effects begin to fade, we believe production will continue to improve, positioning us for a return to policy count growth in the coming quarters. Equally important is what we're hearing directly from our agent partners. Across reopened territories, agents continue to express a desire to place more business with Heritage.

隨著導入在我們的版圖內持續推進，且暫時性的轉換影響開始消退，我們相信產出將持續改善，讓我們在未來幾季有望回到保單件數成長。同樣重要的是，我們直接從代理合作夥伴那裡聽到的聲音。在重新開放的地區，代理人持續表達希望把更多業務交由 Heritage 承作。

We worked hard to maintain these relationships during the years in which we prioritized profitability and portfolio repositioning. We communicated transparently about our strategy, the reasons behind our decisions, and our long-term intentions. As a result, agents have welcomed us back into markets where production was previously restricted and are actively looking to grow with us. We also wrote our first policy in Texas through our excess and surplus lines platform.

在我們優先追求獲利能力與保單組合重新定位的那些年裡，我們努力維繫這些合作關係。我們就策略、決策背後的原因以及長期意圖進行透明溝通。因此，代理人歡迎我們回到先前曾限制承作的市場，並積極希望與我們一同成長。我們也透過超額與剩餘險（excess and surplus lines）平台在德州簽下第一張保單。

While the initial contribution will be modest. Texas represents another attractive market where we can leverage our underwriting expertise and agency relationships. We view Texas as another step in the continued diversification of our business and another opportunity to allocate capital towards attractive long-term growth. We are also evaluating additional opportunities across both personal and commercial lines.

雖然初期貢獻將相對有限。德州是另一個具吸引力的市場，我們可在此運用核保專業與代理人關係。我們將德州視為持續推動業務分散化的另一個步驟，也是將資本配置到具吸引力長期成長的另一個機會。我們也正在評估個人險與商業險兩大領域的其他機會。

Every opportunity must meet the same underwriting, profitability, and return standards that have guided the transformation of Heritage over the last several years. Growth remains important, but profitable growth remains the priority. The transformation of our business is also reflected in the support we continue to receive from our reinsurance partners, who remain willing to provide capacity to support our growth.

每一項機會都必須符合相同的核保、獲利能力與報酬標準，而這些標準在過去數年一直引導著 Heritage 的轉型。成長仍然重要，但獲利性成長仍是首要任務。我們業務的轉型也反映在我們持續獲得再保險合作夥伴的支持上；他們仍願意提供承保能力以支持我們的成長。

During the second quarter, we successfully completed our 2026-2027 catastrophe excess of loss program, securing greater protection while reducing our overall reinsurance cost. We placed more than $2.2 billion of limit, expanded our use of multi-year coverage and catastrophe bonds, and generated approximately $63 million of annualized savings compared to the prior year program.

在第二季期間，我們成功完成 2026-2027 年度的巨災超額損失再保險計畫，在降低整體再保險成本的同時，取得更高的保障。我們配置了超過 22 億美元的承保限額，擴大多年度保障與巨災債券的使用，並相較於前一年度計畫，創造約 6,300 萬美元的年化節省。

We believe this outcome reflects both the strength of our franchise and the continued improvement in the underlying fundamentals of the Florida market as the positive impact of legislative reform becomes more evident.

我們相信，這項成果同時反映了我們特許經營的實力，以及隨著立法改革的正面影響日益明顯，佛羅里達市場基本面持續改善。

Litigation activity remains dramatically lower than it was before reform, and reinsurers now have the benefit of real-world claims experience following Hurricane Milton. As claims have developed, the results have continued to validate many of the reforms enacted in Florida and support a more favorable view of the market's long-term risk profile.

訴訟活動仍顯著低於改革前的水準，而再保險人如今也能受益於颶風 Milton 之後的實際理賠經驗。隨著理賠案件的發展，結果持續驗證佛羅里達州所通過的多項改革，並支持對該市場長期風險概況更為有利的看法。

Before turning the call back to Kirk, I want to spend a few moments on capital allocation. As I noted earlier, we generated significant operating cash flow during the quarter, further strengthening our balance sheet and enhancing our flexibility to invest in organic growth while also returning capital to shareholders.

在把電話交回給 Kirk 之前，我想花幾分鐘談談資本配置。如我先前所提到的，我們在本季產生了可觀的營運現金流，進一步強化資產負債表，並提升我們在投資有機成長的同時也能回饋股東的彈性。

Year to date, we have repurchased more than 1 million shares of common stock at a cost of approximately $24.6 million, representing roughly 3% of shares outstanding. We believe these repurchases have been highly accretive and reflect our confidence in the current earnings power of the company and the opportunities ahead. Simply put, we do not believe our current valuation fully reflects the strength of our operating performance, the consistency of our earnings, or the durability of the business we have built.

今年迄今，我們已回購超過 100 萬股普通股，成本約 2,460 萬美元，約占流通在外股數的 3%。我們認為這些回購具有高度增益效果，並反映我們對公司目前獲利能力與未來機會的信心。簡而言之，我們不認為目前的估值已充分反映我們營運表現的強勁、獲利的一致性，或我們所建立之業務的持久性。

As long as that disconnect exists, share repurchases will remain an important part of our capital allocation toolkit. At the same time, we retain the flexibility to invest in attractive growth opportunities as they emerge. We believe this balanced approach best supports long-term value creation for shareholders.

只要這種落差仍然存在，股票回購就會持續是我們資本配置工具箱中的重要一環。同時，我們也保留彈性，在具吸引力的成長機會出現時進行投資。我們相信，這種平衡的作法最能支持為股東創造長期價值。

In closing, we believe Heritage is entering a new chapter in its evolution. We are generating record earnings, producing substantial excess capital, and prudently positioning the business for growth. The consistency and durability of our earnings profile are stronger than at any other point in our history as a public company, and we are excited about the opportunities ahead to create long-term value for shareholders. I want to thank our employees, agents, policyholders, reinsurers, and shareholders for their continued support and partnership. Kirk, I'll turn the call back over to you.

最後，我們相信 Heritage 正進入其演進的新篇章。我們正創造創紀錄的獲利、產生可觀的超額資本，並審慎地為業務成長進行布局。作為上市公司，我們的獲利結構之穩定性與持久性比歷史上任何時點都更強，我們也對未來為股東創造長期價值的機會感到振奮。我要感謝我們的員工、代理人、保戶、再保險人與股東持續的支持與合作。Kirk，我把電話交回給你。

Thank you, Ernie, and good morning, everyone. Turning to our financial highlights, Heritage reported record second quarter net income of $61.7 million or $2.05 per diluted share compared to $48 million or $1.55 per diluted share in the prior year quarter.

謝謝你，Ernie，各位早安。接著看我們的財務重點，Heritage 公布第二季淨利創新高，達 6,170 萬美元，或稀釋後每股盈餘 2.05 美元；相較之下，去年同期為 4,800 萬美元，或稀釋後每股盈餘 1.55 美元。

Through the first six months of 2026, we generated $98.2 million of net income, up 25% from the same period last year. These results demonstrate the continued strength of our underwriting platform, the benefits of our strategic initiatives, and the improved profitability of the business.

2026 年前六個月，我們創造 9,820 萬美元的淨利，較去年同期成長 25%。這些結果展現了我們核保平台的持續強勁、策略性措施帶來的效益，以及業務獲利能力的提升。

We also generated $166.5 million of operating cash flow during the quarter, providing substantial financial flexibility as we continue to invest for growth while returning capital to shareholders. The increase in second quarter earnings was primarily driven by lower net losses and loss adjustment expenses, reflecting favorable prior period reserve development and lower weather-related losses, as well as higher net premiums earned and increased investment income. These benefits were partially offset by higher policy acquisition costs.

本季我們也產生 1.665 億美元的營運現金流，提供可觀的財務彈性，使我們能在持續投資成長的同時回饋股東。第二季獲利增加主要由較低的淨損失與損失調整費用所帶動，反映前期準備金有利發展與較低的天候相關損失，以及較高的已賺淨保費與投資收益增加。上述效益部分被較高的保單取得成本所抵銷。

Our strong profitability generated an annualized return on average equity of 45.4% during the quarter, while shareholders' equity increased 48.1% compared with the prior year period. Premiums in force totaled $1.41 billion at quarter end, down 1.4% from $1.43 billion in the prior year quarter. The decline was primarily driven by lower commercial residential premiums due to competitive pricing pressure, particularly in Florida. As Ernie noted, we remain disciplined and will not sacrifice profitability for volume.

我們強勁的獲利能力使本季平均股東權益年化報酬率達 45.4%，同時股東權益較去年同期增加 48.1%。季末有效保費（in force）合計 14.1 億美元，較去年同期的 14.3 億美元下降 1.4%。下降主要由商業住宅保費降低所致，原因是競爭性定價壓力，尤其在佛羅里達州。如 Ernie 所提，我們仍維持紀律，不會為了追求保費量而犧牲獲利能力。

Encouragingly, personal residential premiums in force increased 1.2% year-over-year, reflecting improving trends in that business. Gross premiums earned were $351.2 million compared with $353.6 million in the prior year quarter.

令人鼓舞的是，個人住宅有效保費年增 1.2%，反映該業務的趨勢正在改善。本季已賺毛保費為 3.512 億美元，去年同期為 3.536 億美元。

Net premiums earned increased 2.4% to $201.1 million compared to $196.3 million in the prior year quarter, reflecting lower ceded premiums and the continued benefits of actions we have taken to optimize our reinsurance program.

已賺淨保費較去年同期增加 2.4% 至 2.011 億美元（去年同期為 1.963 億美元），反映分出保費降低，以及我們為優化再保險計畫所採取行動的效益持續顯現。

Gross premiums written were $380.4 million, down 5.5% from the prior quarter, primarily reflecting the reduction in Florida commercial residential business. Underwriting performance remained exceptionally strong. The net loss ratio improved to 30.4% compared to 38.5% in the prior year quarter, while the combined ratio improved to 64.9% from 72.9%.

本季簽單毛保費為 3.804 億美元，較前一季下降 5.5%，主要反映佛羅里達商業住宅業務的縮減。核保表現仍然極為強勁。淨損失率改善至 30.4%（去年同期為 38.5%），綜合率則由 72.9% 改善至 64.9%。

The improvement was driven by favorable prior year reserve development, lower weather losses, and continued strong underlying claims performance. During the quarter, we recognized $23.4 million of favorable prior year reserve development compared with $2.3 million favorable in the prior year period. More importantly, we continue to see stable frequency trends, manageable severity trends, and favorable claims outcomes across the portfolio.

改善主要由前一年準備金有利發展、天候損失降低，以及持續強勁的基礎理賠表現所帶動。本季我們認列 2,340 萬美元的前一年準備金有利發展，去年同期為 230 萬美元的有利發展。更重要的是，我們持續看到穩定的出險頻率趨勢、可控的損失嚴重度趨勢，以及整體投資組合理賠結果的有利表現。

We believe these results reflect the benefit of our underwriting, pricing, and claims management actions over the last several years, along with a positive impact on recent legislative reforms in Florida. The net expense ratio was 34.5%, essentially flat from the prior year quarter. Policy acquisition costs increased modestly quarter-over-quarter, primarily due to lower ceding commissions following the reduction of our Northeast Quota Share program at year-end 2025.

我們相信，這些結果反映了過去數年我們在核保、定價與理賠管理方面採取行動的效益，以及佛羅里達近期立法改革帶來的正面影響。淨費用率為 34.5%，與去年同期基本持平。保單取得成本較前一季小幅上升，主要因 2025 年底縮減東北地區比例分保（Quota Share）計畫後，分出佣金降低所致。

This was partially offset by lower general and administrative expenses reflecting continued expense discipline across the organization. Net investment income increased 17.3% to $10.6 million from $9 million in the prior quarter, driven by growth in invested assets. We continue to maintain a conservatively positioned investment portfolio focused on high-quality fixed income securities with asset durations closely matched to our liabilities.

上述影響部分被一般及行政費用下降所抵銷，反映全組織持續的費用紀律。淨投資收益較前一季增加 17.3% 至 1,060 萬美元（前一季為 900 萬美元），主要由投資資產成長所帶動。我們持續維持保守配置的投資組合，聚焦於高品質固定收益證券，且資產存續期間與負債高度匹配。

The effective tax rate of the quarter was 24.9% compared to 23.8% in the prior year quarter. The increase was primarily driven by changes in pre-tax income and certain permanent tax items. As a reminder, our effective tax rate can fluctuate throughout the year as earnings levels change and estimates are refined.

本季有效稅率為 24.9%，去年同期為 23.8%。上升主要由稅前所得變動以及若干永久性稅務項目所致。提醒各位，我們的有效稅率可能在全年期間隨獲利水準變動及估計值精進而波動。

Turning to the balance sheet, we ended the quarter with total assets of $2.45 billion, including $1.39 billion of cash and invested assets, and shareholders' equity of $567.7 million. Book value per share increased to $19.09 as of June 30, 2026, up 16.5% from December 31, 2025, and up 54.5% from June 30, 2025.

轉向資產負債表，我們在本季末的總資產為24.5億美元，其中包括13.9億美元的現金及投資資產，股東權益為5.677億美元。截至2026年6月30日，每股帳面價值增至19.09美元，較2025年12月31日上升16.5%，較2025年6月30日上升54.5%。

The increase from year-end 2025 was driven primarily by strong earnings generation, partially offset by a $4.9 million net of tax increase in unrealized losses within the fixed income portfolio and the repurchase of $24.6 million of common stock during the first six months of 2026.

相較於2025年年底的增幅，主要由強勁的獲利能力所帶動，但部分被固定收益投資組合未實現損失（稅後）增加490萬美元，以及2026年前六個月回購2,460萬美元普通股所抵銷。

Despite these capital deployment activities, book value per share continues to grow meaningfully, reflecting the strength of our operating performance and capital generation. Non-regulated cash at quarter end was $47.8 million. Cash flow from operations was $166.5 million, and combined statutory surplus increased $47 million from year-end 2025 to $439.5 million.

儘管進行了這些資本運用活動，每股帳面價值仍持續顯著成長，反映出我們營運表現與資本創造能力的強勁。季末非監管現金為4,780萬美元。營運活動現金流為1.665億美元，合併法定盈餘自2025年年底增加4,700萬美元至4.395億美元。

Importantly, our debt-to-capital ratio has continued to decline as the company's earnings power and cash generation have improved. At the end of the second quarter, our debt-to-capital ratio was 11%, reflecting the successful implementation of our strategic initiatives.

重要的是，隨著公司獲利能力與現金創造能力提升，我們的負債對資本比率持續下降。截至第二季末，我們的負債對資本比率為11%，反映我們策略性舉措的成功落實。

Our significant non-regulated cash, strong operating cash flow, available leverage capacity, and increased statutory capital position us well to support growth as open territories continue to scale new business production.

我們可觀的非監管現金、強勁的營運現金流、可用的槓桿空間，以及提升的法定資本水位，使我們具備良好條件以支持成長，因開放地區持續擴大新業務產出。

As the company's earnings power has increased, we have continued to build capital, which we are prioritizing for organic growth and other growth opportunities, along with opportunistic share repurchases when we believe our shares are undervalued relative to our financial performance and future earnings potential.

隨著公司獲利能力提升，我們持續累積資本，並優先用於內生成長及其他成長機會；同時，當我們認為股價相對於財務表現與未來獲利潛力被低估時，也會機會性地回購股份。

Year to date, we have repurchased more than 1 million shares of common stock for $24.6 million. Of that amount, $12.6 million was repurchased under the Board-authorized $50 million share repurchase program announced in the first quarter and available through December 31, 2026, leaving $37.4 million of remaining authorization.

年初至今，我們已以2,460萬美元回購超過100萬股普通股。其中1,260萬美元係依董事會核准的5,000萬美元庫藏股回購計畫回購，該計畫於第一季宣布並可執行至2026年12月31日，尚餘授權額度3,740萬美元。

As we enter the second half of the year, we believe Heritage is exceptionally well positioned. We are generating record earnings, producing substantial excess capital, and seeing encouraging signs of return to growth.

進入下半年，我們認為Heritage具備極佳的有利位置。我們正在創造創紀錄的獲利、產生可觀的超額資本，並看到重回成長的令人鼓舞跡象。

Importantly, we see meaningful opportunities to profitably expand the business and continue developing long-term value for our shareholders, agents, and policyholders. Thank you for your time today. Operator, we're now ready to take questions.

重要的是，我們看到具實質意義的機會，可在獲利的前提下擴大業務，並持續為股東、代理人與保戶創造長期價值。感謝各位今天撥冗參與。接線生，我們現在準備開始提問。

(Operator Instructions)

(接線生指示)

Mark Hughes, Truist.

Mark Hughes，Truist。

Ernie, Kirk, the rate expectations, when we think about Florida, obviously there's been really good benefits from reform, you're seeing in the loss ratio, what does that kind of translate into when you look at your rate filings over the next 6-12 months, and same question for the book as a whole, including other states.

Ernie、Kirk，關於費率預期，談到佛羅里達州，顯然改革帶來了很好的效益，你們在損失率上也看得到；那麼在未來6到12個月的費率申報上，這大概會轉化成什麼結果？同樣的問題也想問整體保單簿（含其他州）。

Yes. Well, I mean, we're evaluating that now simply from the standpoint of the reinsurance went down rather substantially. We think that is going to translate into rate reductions in Florida. Outside of Florida, I would say that we're probably going to see modest rate increases. From the standpoint, we're rate adequate almost across the board. So you're going to see rate increases comparable with claims inflation that kind of keep the margins flat with where they are.

是的。嗯，我的意思是，我們目前正在評估，主要是因為再保成本大幅下降。我們認為這將轉化為佛羅里達州的降費率。在佛州以外，我會說我們可能會看到溫和的費率上調。從費率充足性的角度來看，我們幾乎在各方面都已達到費率充足。因此你會看到與理賠通膨相當的費率上調，讓利潤率大致維持在目前水準。

Yes. With the decline in reinsurance costs, what do you think it means for Florida? What's the range of potential outcomes?

是的。隨著再保成本下降，你認為對佛羅里達州意味著什麼？可能結果的區間會是什麼？

We're finalizing that, Mark, but if you take a look last year, we were down 3% to 5%. So I would say it'd be in that range once we finalize it.

Mark，我們正在定案，但如果你看去年，我們下調了3%到5%。所以我會說，等我們定案後，大概也會在那個區間。

Okay. And, Kirk, what's a good ceded premium number for the third quarter with the new program?

好的。那Kirk，採用新方案後，第三季一個合理的分出保費（ceded premium）數字會是多少？

Yes, well, I think that you can count on a ratio probably dropping, you know, 1 to 2 points, with the new reinsurance program.

是的，我想你可以預期比率大概會下降1到2個百分點，因為新的再保方案。

So it's been kind of 43-ish in the first half, so maybe 42-ish?

所以今年上半年大概是43左右，那可能是42左右？

Yes, I'd say maybe even a little better than that.

是的，我會說可能甚至會更好一些。

41-ish? But it's in the ish.

41左右？但就是大概那個「左右」。

Yes.

是的。

Okay. The new production kind of starting to grow again in new states. Is that going to have a meaningful impact on the loss pick? Presumably that business is being written at a higher combined ratio. How should we think about that?

好的。新州的新業務產出似乎又開始成長。這會對損失率假設（loss pick）造成顯著影響嗎？推測那部分業務是以較高的綜合率承保。我們應該如何看待？

Yes, no, we're actually sticking to our underwriting guidelines and margins. I mean, I don't think it's going to have much detrimental impact to the loss ratios.

是的，不會，我們其實仍然遵循我們的核保指引與利潤率。我的意思是，我不認為它會對損失率造成太多不利影響。

Yes, okay. The cash from operations, the $166.5 million. If there's some quarterly dynamic that I'm not familiar with, let me know. But that seems like a really strong number. What's driving that?

好的。營運活動現金流1.665億美元。如果有我不熟悉的季度性因素請告訴我。但那看起來是個非常強勁的數字。是什麼在驅動？

Basically, a lot of it is just the net income that we've had over the last year, that type of stuff. So that's one of the big factors there.

基本上，很大一部分就是我們過去一年累積的淨利，諸如此類。所以那是其中一個主要因素。

Yes, the $166.5 million is 2Q alone, is that correct? Or is that first half?

是的，1.665億美元是單指第二季嗎，對嗎？還是指上半年？

2Q.

第二季。

Okay. Seems a lot stronger than your net income. But just good financials or is there some working cap or is something else going on in the cash flow?

好的。看起來比你們的淨利強很多。這只是財務表現很好，還是有一些營運資金變動，或現金流中還有其他因素在發生？

Well, you know, we're working on our balance sheet. You know, have over the last several years as far as, you know, what our expenses, what our debt is, the investment income. So it's just a myriad of things we've been kind of working on, on the overall balance sheet also, which is starting to translate a little bit more into free cash flow.

嗯，你知道，我們一直在改善資產負債表。過去幾年在費用、負債、投資收益等方面都持續調整。所以就是我們在整體資產負債表上做的各種工作，開始更明顯地轉化為自由現金流。

Yes. And then the $23.4 million, the favorable development, could you talk about that? Was that 2025 stuff, even older? What -- it seems like a nice number.

是的。另外，那2,340萬美元的有利發展（favorable development），可以談談嗎？那是2025年的案子，還是更早的？這個數字看起來很不錯。

Yes, it's spread throughout a number of years. It also is spread through -- it's predominantly with HPCIC but also Narragansett Bay. And really, what it reflects, it's several positive trends that basically have come evident even more over the last several quarters. Key drivers are the stabilization of frequency, severity also being within a manageable range. I would say the late reported claims have leveled off and are really lower than what they have historically been.

是的，它分布在多個年度。也分布在——主要是在HPCIC，但Narragansett Bay也有。而它真正反映的是，過去幾個季度有幾項正向趨勢變得更加明顯。關鍵驅動因素是出險頻率趨於穩定，損失嚴重度也維持在可控範圍。我會說，延遲通報的理賠已趨於平穩，而且確實低於過往的歷史水準。

And that's just related to us closing claims lower than what we had expected. So it's accumulation. And what we did is we kind of held on to those for a while just to make sure that those trends were consistent and were stabilizing before we realized the development on.

而這僅僅與我們結案的理賠金額低於我們原先預期有關。所以這是累積效應。我們的做法是先把這些情況保留觀察一段時間，以確保這些趨勢一致並且在我們確認入帳之前已趨於穩定。

Okay. I might ask another one, the commercial residential, you talked about prices under pressure there. It's more competitive. Where do you think that stands in the cycle here? How close are we to the bottom? Is there any sign that those are stabilizing at all? How do you think about that?

好的。我可能再問一個，關於商業住宅，你提到那邊價格承壓。競爭更激烈。你認為目前在這個循環中處於什麼位置？我們離底部還有多近？有任何跡象顯示那些正在穩定嗎？你怎麼看這件事？

So as we look at that, Mark, right, we know there's more competition out there. We're sticking to our underwriting guidelines. We know there's new entrants into the market. There have been a number of accounts, just to be frank, that we walked away from because it's priced inadequate, but we see that leveling off.

所以我們在看這一塊時，Mark，沒錯，我們知道外部競爭更激烈。我們會堅守我們的核保指引。我們知道有新的參與者進入市場。坦白說，有不少帳戶我們選擇退出，因為定價不足，但我們看到這種情況正在趨於平緩。

The good news is commercial has also expanded into other areas, including Hawaii, New York and New Jersey have increased for us as well. So that's kind of lessening in Florida. And again, we will be competitive, but we'll be responsibly competitive.

好消息是，我們的商業業務也擴展到其他地區，包括夏威夷、紐約以及新澤西，對我們而言也都有所增加。因此佛羅里達那邊的比重就相對降低。再說一次，我們會保持競爭力，但會以負責任的方式競爭。

Okay. So maybe some signs of a leveling off in Florida?

好的。所以佛羅里達可能有一些趨於平緩的跡象？

And Mark, also, by the way, one more thing is that the (technical difficulty) operation is for the first six months.

另外，Mark，順帶一提，還有一件事是（技術問題）這個營運數據是前六個月的。

For six months, okay -- even so, it's still quite a strong number.

前六個月，好的——即便如此，這仍然是相當強勁的數字。

Yes.

是的。

Karol Chmiel, Citizens.

Karol Chmiel，Citizens。

Hi, yes, Mark just asked went into the prior period development that I was going to ask about. So that was great. I'll just follow up with just one other question. It's regarding your debt level, the fact that you're paying it off. Is it something you want to continue to pay off throughout the year and into next year?

嗨，是的，Mark 剛剛問到我原本也想問的前期期間發展（prior period development）。所以那很好。我再追問一個問題就好。是關於你們的負債水位，以及你們正在償還負債這件事。這是你們想在今年並延續到明年持續償還的事情嗎？

No, not necessarily. We were pretty happy with the rate we had there. And what we did is we had a couple of other smaller loans. For example, we had a mortgage on a building last year that we sold. This year we actually did have a little bit of loan at Federal Home Loan Bank Des Moines for Zephyr, which we paid off simply from the standpoint the rate on that was higher than what we were getting from a return standpoint.

不一定。我們對當時的利率其實相當滿意。我們做的是處理了幾筆較小的貸款。例如，我們去年賣掉了一棟大樓，當時那棟樓有一筆抵押貸款。今年我們確實在聯邦住房貸款銀行（Federal Home Loan Bank）得梅因分行為 Zephyr 有一小筆貸款，我們把它還清，純粹是因為那筆貸款利率高於我們從報酬角度所能取得的回報。

So we'll prudently look at paying down this stuff, but right now we're pretty happy with the debt facility. And so therefore, we'll probably kind of maintain that. We also, at this point, still have $75 million left as a deferred term loan on that facility, in the event we wanted to use it.

所以我們會審慎評估是否償還這些負債，但目前我們對這個債務融資安排相當滿意。因此我們大概會維持現狀。此外，就目前而言，該融資安排中我們仍有 7,500 萬美元的遞延定期貸款額度，若我們想使用的話。

Okay. And then just the last one here since I'm on the call already. You said the loss ratios could be stable, but if you were just to, break it apart into the components, accident year versus prior period. Are you thinking that on a net basis, it will be stable, but accident year might, rise over time with the lower rates in Florida, but then your prior period development would be favorable. And as a net, it would just be more of a flat loss ratio?

好的。那最後一個，既然我已經在線上。你說損失率可能會穩定，但如果把它拆成組成部分，事故年度（accident year）對比前期期間（prior period）。你是否認為在淨額基礎上會穩定，但事故年度可能會因佛羅里達較低的費率而隨時間上升，然而前期期間發展會是有利的。因此淨額來看，就會是比較持平的損失率？

Yes, well, I'm saying, you know, flat excluding the development. We do think that we're definitely adequately reserved, but again, it's like that is more of a one-time item, so therefore backing that out would be the stabilization of the loss ratio.

是的，我的意思是，排除發展（development）後會是持平。我們確實認為準備金是充分的，但同樣地，那更像是一次性項目，所以把它剔除後，損失率就會呈現穩定。

Cam Bianchi, Piper Sandler.

Cam Bianchi，Piper Sandler。

Good morning. This is Cam on for Paul. My first question is on commercial residential. This grew 4.9%, but commercial premiums in force fell 12.7%. I'm just wondering if you could unpack the gap between policy count growth and premium contractions, more pure rate or pricing pressure, or is it also a mixed shift towards maybe smaller accounts?

早安。我是 Cam，代 Paul 提問。我第一個問題是關於商業住宅。這部分成長了 4.9%，但商業在保保費（premiums in force）下降了 12.7%。我想請你拆解一下保單件數成長與保費收縮之間的落差，是純粹費率或定價壓力，還是也有組合轉向，例如偏向較小帳戶？

Yes. It is competitive pressure on those accounts. What we had to do is we are walking away from some accounts simply due to the extent of the rate decreases. We are able to write some even with the rate decreases. New business, the policy count is up because we are writing some smaller commercial accounts from a new business perspective.

是的。這些帳戶確實面臨競爭壓力。我們必須做的是，因為降費率幅度太大，我們會選擇退出一些帳戶。即使在降費率的情況下，我們仍能承作部分業務。新業務方面，保單件數上升是因為我們從新業務角度承作了一些較小的商業帳戶。

So therefore, that is increasing our policy count. And again, that has a lot to do with where we see the pricing favorability on those accounts. We also have our dedicated commercial agents, which do an absolutely great job of evaluating the risks. And so therefore, from an underwriting standpoint and from a pricing standpoint, we're very comfortable writing the new business that we've been getting.

因此這推升了我們的保單件數。而且這與我們在那些帳戶上看到的定價有利性有很大關係。我們也有專職的商業保險代理人，他們在評估風險方面做得非常出色。因此，從核保與定價角度來看，我們對目前取得的新業務承作起來非常有信心。

Awesome. Got it. And then, just one more from me. You started writing in Texas, you mentioned. What's the underwriting appetite there and how quickly do we see that scale relative to maybe like the Florida commercial book?

太好了。了解。那我再問最後一個。你提到你們開始在德州承作。你們在那邊的核保偏好是什麼？相較於例如佛羅里達的商業業務簿，規模化的速度會有多快？

Yes. Yes, so we're really excited about Texas. Just launched it in July, so early stages, but very well received. We've got a couple policies already and meeting with several agents out there. So there is, you know, appetite for us. But as we said, it will be a small contribution this year, and we expect it to grow over the next two to three years.

是的。是的，所以我們對德州非常興奮。我們在 7 月才剛推出，所以還在早期階段，但市場反應非常好。我們已經有幾張保單，並且正在與那邊的多位代理人會面。所以，確實有市場對我們的需求。但如同我們所說，今年的貢獻會很小，我們預期在未來兩到三年會成長。

Ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to Ernie Garateix for any final remarks.

各位女士先生，我們的問答環節到此結束。我想把電話會議交回給 Ernie Garateix，請他做最後的結語。

We'd like to thank everybody for joining the call and especially thank our employees for all their hard work.

我們要感謝各位參與本次電話會議，也特別感謝我們的員工付出的所有辛勞。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

本次電話會議現在結束。感謝各位出席今天的簡報。您現在可以掛線。