Heritage Insurance Announces Completion of 2017-2018 Reinsurance Program

June 5, 2017 – Heritage Insurance Holdings, Inc. (NYSE: HRTG) (“Heritage” or the “Company”), a property and casualty insurance holding company, today announced that its insurance subsidiaries, Heritage Property & Casualty Insurance Company (“Heritage P&C”) and Zephyr Insurance Company (“Zephyr”) completed the placement of their 2017-2018 reinsurance programs. The programs are incorporated into one reinsurance structure and are allocated amongst traditional reinsurance, collateralized reinsurance, catastrophe bonds issued by Citrus Re and coverage by the Florida Hurricane Catastrophe Fund (FHCF). The new program provides first event reinsurance protection for catastrophic losses of up to $1.75 billion in Florida and up to $731 million in Hawaii, with multiple event coverage up to $2.62 billion. This exceeds the requirements established by the Company’s rating agency, Demotech, Inc., the Florida Office of Insurance Regulation and the Hawaii Insurance Division.

Bruce Lucas, Chairman and CEO of Heritage, said, “Our 2017 reinsurance treaty is a significant improvement over the 2016 treaty. We have reduced catastrophe reinsurance costs by over $20 million, or 8.3%, while improving treaty terms and conditions. Notably, our first event retention was reduced from $40 million to $20 million and our ground up retention for second event coverage is $16 million. We continue to minimize our reliance on state government sponsored reinsurance and maintained our participation in the FHCF at 45%. Our new program was placed on a cascading basis which provides greater horizontal protection in a multiple small events scenario and features additional coverage enhancements. In addition, Heritage expanded its use of multi-year, fully collateralized catastrophe bonds and has $687.5 million in catastrophe bond coverage today.”

The Company’s estimated net cost for the 2017-2018 catastrophe reinsurance program is approximately $223 million. The total estimated cost for per risk and facultative coverage is projected to be an additional $7 million. The primary factors causing the decrease from last year are the proactive exposure management executed by the Company over the past 12 months coupled with significantly improved pricing.

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