Heritage Insurance Holdings, Inc. · NYSE:HRTG
Heritage Insurance — Merger or Acquisition (August 2017)
18 slides from Heritage Insurance's merger presentation, Aug 9, 2017
Slide 1: Creating a Super Regional Personal Lines Carrier – Acquisition of Narragansett Bay Insurance
Creating a Super Regional Personal Lines Carrier – Acquisition of Narragansett Bay Insurance August 2017
Slide 2: Disclaimer Safe Harbor Statement
Disclaimer Safe Harbor Statement Statements in this presentation that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. Without limiting the generali
Slide 3: Transaction Summary
Transaction Summary Transaction Structure Acquisition of NBIC Holdings, Inc. (“NBIC”) by Heritage NBIC shareholders will receive total consideration of approximately $250 million in cash and Heritage common stock, subject to certain book-value related closing adjustments Transaction Value –~2.1x est
Slide 4: Expanding Leadership in Coastal Markets
Expanding Leadership in Coastal Markets Strategic Rationale • Acquire a market leader in coastal homeowners insurance in the Northeast with approximately $300 million of GWP in NY, NJ, CT, RI, and MA • Heritage would immediately become a diversified Super Regional Carrier • Accelerates geographic ex
Slide 5: Overview of NBIC
Overview of NBIC NBIC is a leading specialty underwriter of personal residential and commercial insurance products and services in states along the Eastern seaboard Established in 2006 with headquarters in Pawtucket, Rhode Island Provides homeowners coverage in New York, New Jersey, Massachusetts, R
Slide 6: NBIC's Capital Efficient Business Model
NBIC’s Capital Efficient Business Model Innovative reinsurance program minimizes risk retention and capital requirements which has allowed NBIC to generate superior returns Written Premiums $307 $278 $240 200 255 170 70 78 51 2014 2015 2016 Net Written Premiums Ceded Written Premiums Net Income: Com
Slide 7: Diversified Super Regional Business Mix
Diversified Super Regional Business Mix Heritage will become the most diversified of the FL Super Regional Carriers with significant diversification benefits. Expect to reduce reliance on FL to 55% of revenue following closing Geography Line of Business Pro Forma Increases operating scale by ~50% wh
Slide 8: Attractive Shareholder Returns
Attractive Shareholder Returns Value Creation Expected to increase GWP by ~50% and NWP by ~14% with ability to further increase net retention through combined reinsurance program Expected to increase earnings by approximately 50% excluding synergies and transaction related expenses(1) The transactio
Slide 9: Pro Forma Capital Structure
Pro Forma Capital Structure Conservative and Well Capitalized Balance Sheet Conservative capital structure to promote sustainability and growth Well capitalized with $363mm in surplus ($195mm HPIC, $72mm Zephyr, $96mm NBIC)(1) Low risk investment portfolio: minimum weighted average credit quality of
Slide 10: Investment Story
Investment Story Heritage’s Investment Story Executing Multiple Business Diversification & Expansion Initiatives Seasoned Management Team Attuned to Demands of an Evolving Marketplace Proven Underwriting & Distribution Coupled with Unique Claims Servicing Model Robust Reinsurance Program with Highly
Slide 11: Overview of Heritage
Overview of Heritage
Slide 12: Company Overview
Company Overview Business Overview Founded in 2012, provides primarily personal and commercial residential insurance in coastal markets Seasoned management team averages over 30 years of experience in the insurance industry; led by Chairman & CEO Bruce Lucas, President Rich Widdicombe, and CFO Steve
Slide 13: Review of Q2 2017 Performance
Review of Q2 2017 Performance Heritage continued to grow its book value per share in the second quarter of 2017, increasing it by 4.5% from $12.41 at YE 2016 to $12.97 at June 30, 2017, while achieving a new record in new voluntary production Overview Execution of Diversification Strategy New busine
Slide 14: Strategic Approach to New Market Opportunities
Strategic Approach to New Market Opportunities 2012 2013 2014 2015 2016 2017 Initial $23 million equity raise Began writing voluntary policies in Florida Participated in 1st Citizens take-out Formed the CAN Managed Repair Vendor Program Second $33 million equity raise Formed Osprey Re Participated i
Slide 15: Strong Diverse Distribution Relationships
Strong Diverse Distribution Relationships Independent Agent Networks – Expansion in New States Florida: ~1,500 independent agents actively writing policies Partnership with FAIA Member Services (“FMS”) expands agent relationships Hawaii: ~80 appointed agents writing polices North Carolina: ~250 agen
Slide 16: Deep Claims Department
Deep Claims Department 24/7 first notice of loss (FNOL) FNOL dispatches mitigation teams to policyholder home In-house claims adjusters and examiners In-house legal reduces losses Vertically integrated water division Typical response time is less than 2 hours from FNOL Prevents AOB contractors from
Slide 17: Robust Reinsurance Program
Robust Reinsurance Program 2017-18 Reinsurance Program Millions $1,752 All Regions $1,629 Florida 116.3 Yr 2015 Citrus A All Regions Ex Hawaii $1,493 $150M xs $40M 100.0 Yr 1st Event HI/ Subsequent $1,356 Event All Regions 2017 Citrus Hawaii Only $125M xs $40M Northeast Only $1,205 FHCF Layer $1,163
Slide 18: Modeled Results Represent Program Strength
Modeled Results Represent Program Strength Worst Individual Storm – Hurricane Description Andrew Probability 1:48 years % of Coverage Exhausted 30.9% After “Andrew storm”, $1.8 billion of reinsurance limit remaining for the same hurricane season Worst Calendar Year – Description 2004 Hurricane Seaso
Heritage Insurance Holdings — Merger or Acquisition (August 2017) on 6ix