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HRTG vs HCI: Which Regional Insurance Carrier is a Safer Bet?
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Key Takeaways
HRTG is resuming selective personal lines underwriting while focusing on E&S growth and rate discipline.
HCI is expanding via Citizens policy takeouts and has launched a second reciprocal insurer, Tailrow.
HCI plans a tax-free spin-off of Exzeo to unlock tech value. HRTG initiates a $10M share buyback.
Despite the rise in catastrophic events, the property and casualty (P&C) insurance industry is poised for continued growth, fueled by a shift toward personalized offerings and enhanced customer engagement through digital advancements. Insurers are sustaining profitability through increased premium volumes, driven by strong policyholder retention, expanded exposure across various business lines, and favorable rate environments. Regional carriers such as Heritage Insurance Holdings (HRTG - Free Report) and HCI Group (HCI - Free Report) are particularly well-positioned to leverage these supportive industry dynamics.
To boost financial resilience, insurers are increasingly utilizing reinsurance strategies. The adoption of sophisticated climate risk modeling is further refining risk assessment processes. However, elevated reinsurance costs, more stringent contract terms and persistent inflation are exerting upward pressure on pricing across the industry.
Yet, as an investment option, which stock is more attractive? Let’s closely look at the fundamentals of these stocks.
Factors to Consider for HRTG
Heritage Insurance is sharpening its focus on profitability by maintaining rate adequacy, applying stringent underwriting criteria, and limiting new policy issuance in saturated or underperforming markets. In response to reduced returns and a strained reinsurance market, the company ceased writing new personal lines policies in Florida and the Northeast as of December 2022. However, recent legislative changes in Florida and a more favorable reinsurance environment have prompted Heritage to cautiously resume personal lines underwriting, guided by a measured and strategic growth approach.
For 2025, the company aims to re-enter carefully selected, high-margin markets while maintaining a disciplined approach to capital deployment. Heritage continues to emphasize rate integrity, data-driven exposure management, and operational efficiency to support long-term, sustainable growth. These efforts are expected to stabilize and increase the in-force policy count over the course of 2025 and 2026.
The excess and surplus (E&S) lines segment remains a major growth driver, as Heritage expands its footprint into new states. Its reinsurance strategy is structured to provide strong protection from catastrophic weather events in coastal areas. The company projects a meaningful decrease in its ceded premium ratio, supported by improved reinsurance cost-efficiency and rising gross premiums. Heritage also recently finalized its 2025-2026 indemnity-based catastrophe excess-of-loss reinsurance program across its insurance subsidiaries.
Simultaneously, Heritage is advancing its technology investments to bolster its InsurTech capabilities. Tools such as Guidewire Cloud, its collaboration with Slide, and the use of predictive modeling, cloud-based systems, and pricing analytics are enhancing underwriting precision and expediting claims processing. To further deliver shareholder value, the company has also initiated a $10 million share buyback program.
Factors to Consider for HCI
HCI Group’s property insurance business has been a major growth engine, largely driven by the strategic assumption of policies from Florida’s Citizens Property Insurance Corporation. The company’s use of advanced, tech-enabled underwriting and a strong reinsurance structure has supported both profitability and operational stability.
In February, HCI launched its second reciprocal insurer, Tailrow Reciprocal Exchange, which began operations by acquiring approximately 14,000 policies and $35 million in premiums from Citizens. Management views Tailrow as an important pillar in HCI’s long-term expansion strategy. Its first reciprocal exchange, CORE, began operations in 2024.
This insurer’s growth has been fueled by a significant rise in premiums-in-force, driven by disciplined pricing and a series of Citizens policy takeouts. This has translated into strong gains in gross premiums earned, boosting underwriting revenue and overall profitability. HCI has also improved margins through operational efficiency, cost control, and the strategic use of its proprietary technology. By opting not to renew high-risk policies and concentrating on more profitable market segments, the company has further enhanced its earnings profile.
In a move to unlock shareholder value, HCI has announced a tax-free spin-off of its technology arm, Exzeo. The separation is expected to enable clearer market valuation of both HCI’s core P&C business and Exzeo’s high-margin tech operations.
It strengthened its capital position by redeeming $172 million in convertible notes, thereby reducing leverage and enhancing flexibility. With a track record of 16 consecutive years of dividend payments—at a yield above the industry average—HCI continues to demonstrate strong shareholder alignment and confidence.
Estimates for HRTG and HCI
The Zacks Consensus Estimate for HRTG’s 2025 revenues and EPS implies a year-over-year increase of 4.6% and 61.7%, respectively. EPS estimates have moved 33.7% northward over the past 30 days.
Image Source: Zacks Investment Research
On the other hand, the Zacks Consensus Estimate for HCI’s 2025 revenues implies a year-over-year increase of 18.4%, while the same for EPS indicates an increase of 109.7% year over year. EPS estimates have moved 3.7% northward over the past 30 days.
Image Source: Zacks Investment Research
Are HRTG and HCI Shares Expensive?
Heritage is trading at a price-to-book multiple of 2.19, above its median of 1.33 over the last five years. HCI’s price-to-book multiple sits at 2.96, above its median of 2.62 over the last five years.
Image Source: Zacks Investment Research
Conclusion
A growing commercial residential business, expanded personal lines capacity, improving E&S business, better pricing, increasing top line, expanding margins and solid earnings bode well for HRTG’s growth.
HCI Group, on the other hand, brings together a solid core insurance operation—underpinned by prudent underwriting and financial strength—and a fast-growing technology spin-off poised to unlock significant incremental value.
On the basis of return on equity, which reflects a company’s efficiency in generating profit from shareholders' equity as well as gives a clear picture of the company's financial health, HCI, with ROE of 27.7% scores slightly higher than HRTG, with ROE of 27%.
Yet, HRTG shares have gained 92.3% year to date, while those of HCI have gained 28.3%. Both outperformed the industry. HRTG shares are less expensive than HCI. HRTG sports a Zacks Rank #1 (Strong Buy) while HCI carries a Zacks Rank #2 (Buy). Thus, HRTG seems a safer bet.
Image: Bigstock
HRTG vs HCI: Which Regional Insurance Carrier is a Safer Bet?
Key Takeaways
Despite the rise in catastrophic events, the property and casualty (P&C) insurance industry is poised for continued growth, fueled by a shift toward personalized offerings and enhanced customer engagement through digital advancements. Insurers are sustaining profitability through increased premium volumes, driven by strong policyholder retention, expanded exposure across various business lines, and favorable rate environments. Regional carriers such as Heritage Insurance Holdings (HRTG - Free Report) and HCI Group (HCI - Free Report) are particularly well-positioned to leverage these supportive industry dynamics.
To boost financial resilience, insurers are increasingly utilizing reinsurance strategies. The adoption of sophisticated climate risk modeling is further refining risk assessment processes. However, elevated reinsurance costs, more stringent contract terms and persistent inflation are exerting upward pressure on pricing across the industry.
Yet, as an investment option, which stock is more attractive? Let’s closely look at the fundamentals of these stocks.
Factors to Consider for HRTG
Heritage Insurance is sharpening its focus on profitability by maintaining rate adequacy, applying stringent underwriting criteria, and limiting new policy issuance in saturated or underperforming markets. In response to reduced returns and a strained reinsurance market, the company ceased writing new personal lines policies in Florida and the Northeast as of December 2022. However, recent legislative changes in Florida and a more favorable reinsurance environment have prompted Heritage to cautiously resume personal lines underwriting, guided by a measured and strategic growth approach.
For 2025, the company aims to re-enter carefully selected, high-margin markets while maintaining a disciplined approach to capital deployment. Heritage continues to emphasize rate integrity, data-driven exposure management, and operational efficiency to support long-term, sustainable growth. These efforts are expected to stabilize and increase the in-force policy count over the course of 2025 and 2026.
The excess and surplus (E&S) lines segment remains a major growth driver, as Heritage expands its footprint into new states. Its reinsurance strategy is structured to provide strong protection from catastrophic weather events in coastal areas. The company projects a meaningful decrease in its ceded premium ratio, supported by improved reinsurance cost-efficiency and rising gross premiums. Heritage also recently finalized its 2025-2026 indemnity-based catastrophe excess-of-loss reinsurance program across its insurance subsidiaries.
Simultaneously, Heritage is advancing its technology investments to bolster its InsurTech capabilities. Tools such as Guidewire Cloud, its collaboration with Slide, and the use of predictive modeling, cloud-based systems, and pricing analytics are enhancing underwriting precision and expediting claims processing. To further deliver shareholder value, the company has also initiated a $10 million share buyback program.
Factors to Consider for HCI
HCI Group’s property insurance business has been a major growth engine, largely driven by the strategic assumption of policies from Florida’s Citizens Property Insurance Corporation. The company’s use of advanced, tech-enabled underwriting and a strong reinsurance structure has supported both profitability and operational stability.
In February, HCI launched its second reciprocal insurer, Tailrow Reciprocal Exchange, which began operations by acquiring approximately 14,000 policies and $35 million in premiums from Citizens. Management views Tailrow as an important pillar in HCI’s long-term expansion strategy. Its first reciprocal exchange, CORE, began operations in 2024.
This insurer’s growth has been fueled by a significant rise in premiums-in-force, driven by disciplined pricing and a series of Citizens policy takeouts. This has translated into strong gains in gross premiums earned, boosting underwriting revenue and overall profitability. HCI has also improved margins through operational efficiency, cost control, and the strategic use of its proprietary technology. By opting not to renew high-risk policies and concentrating on more profitable market segments, the company has further enhanced its earnings profile.
In a move to unlock shareholder value, HCI has announced a tax-free spin-off of its technology arm, Exzeo. The separation is expected to enable clearer market valuation of both HCI’s core P&C business and Exzeo’s high-margin tech operations.
It strengthened its capital position by redeeming $172 million in convertible notes, thereby reducing leverage and enhancing flexibility. With a track record of 16 consecutive years of dividend payments—at a yield above the industry average—HCI continues to demonstrate strong shareholder alignment and confidence.
Estimates for HRTG and HCI
The Zacks Consensus Estimate for HRTG’s 2025 revenues and EPS implies a year-over-year increase of 4.6% and 61.7%, respectively. EPS estimates have moved 33.7% northward over the past 30 days.
Image Source: Zacks Investment Research
On the other hand, the Zacks Consensus Estimate for HCI’s 2025 revenues implies a year-over-year increase of 18.4%, while the same for EPS indicates an increase of 109.7% year over year. EPS estimates have moved 3.7% northward over the past 30 days.
Image Source: Zacks Investment Research
Are HRTG and HCI Shares Expensive?
Heritage is trading at a price-to-book multiple of 2.19, above its median of 1.33 over the last five years. HCI’s price-to-book multiple sits at 2.96, above its median of 2.62 over the last five years.
Image Source: Zacks Investment Research
Conclusion
A growing commercial residential business, expanded personal lines capacity, improving E&S business, better pricing, increasing top line, expanding margins and solid earnings bode well for HRTG’s growth.
HCI Group, on the other hand, brings together a solid core insurance operation—underpinned by prudent underwriting and financial strength—and a fast-growing technology spin-off poised to unlock significant incremental value.
On the basis of return on equity, which reflects a company’s efficiency in generating profit from shareholders' equity as well as gives a clear picture of the company's financial health, HCI, with ROE of 27.7% scores slightly higher than HRTG, with ROE of 27%.
Yet, HRTG shares have gained 92.3% year to date, while those of HCI have gained 28.3%. Both outperformed the industry. HRTG shares are less expensive than HCI. HRTG sports a Zacks Rank #1 (Strong Buy) while HCI carries a Zacks Rank #2 (Buy). Thus, HRTG seems a safer bet.
You can see the complete list of today’s Zacks #1 Rank stocks here.