Heritage Insurance Holdings Inc
For the period ended Jun 5, 2024. Filed Apr 25, 2024.
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What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.
Jun 5, 2024 · Filed Apr 25, 2024
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DEF 14A 1 d781498ddef14a.htm DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement |
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| ☐ | Confidential, for Use of Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| ☒ | Definitive Proxy Statement |
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| ☐ | Definitive Additional Materials |
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| ☐ | Soliciting Material Pursuant to §240.14a-12 |
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Heritage Insurance Holdings, Inc.
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ☒ | No fee required. |
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| ☐ | Fee paid previously with preliminary materials: |
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| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Heritage Insurance Holdings, Inc.
1401 N Westshore Blvd,
Tampa, Florida 33607
April 25, 2024
To Our Stockholders:
On behalf of the Board of Directors and management of Heritage Insurance Holdings, Inc., we cordially invite you to attend the annual meeting of stockholders to be held on Wednesday, June 5, 2024 at 10:00 a.m. (ET). Our annual meeting will be held as a “hybrid meeting” which means that we will host the meeting in person at the Fort Lauderdale Marriott Harbor Beach Resort & Spa, 3030 Holiday Dr., Fort Lauderdale, FL, 33316 and also enable remote participation, including voting, via the Internet. Accordingly, you will be able to attend the annual meeting virtually and vote and submit questions by visiting meetnow.global/MUYZCHR.
The following pages contain the formal notice of the annual meeting, the proxy statement and the proxy card. Please review this material for information concerning the business to be conducted at the meeting including the nominees for election as directors. You may also find electronic copies of these documents online at http://www.edocumentview.com/HRTG.
The purpose of the meeting is to consider and vote upon proposals to (i) elect nine directors, (ii) ratify the appointment of our independent registered public accounting firm for 2024, (iii) approve, on an advisory basis, the compensation of our named executive officers, and (iv) transact such other business as may properly come before the meeting.
Whether or not you plan to attend the meeting, your vote is important. We encourage you to vote in advance of the meeting by telephone, by Internet or by signing, dating and returning your proxy card by mail. You may also vote by attending the meeting in person or virtually at meetnow.global/MUYZCHR. Full instructions for attending the meeting are contained in the proxy statement and in the enclosed proxy card.
Sincerely yours,
Richard Widdicombe* *
Chairman
We mailed a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy statement and annual report on or about April 25, 2024.
This proxy statement and our 2023 Annual Report are available online at
http://www.edocumentview.com/HRTG
NOTICE OF 2024 ANNUAL MEETING
OF STOCKHOLDERS
OF HERITAGE INSURANCE HOLDINGS, INC.
| Date and Time: | Wednesday, June 5, 2024 at 10:00 a.m. (ET). |
|---|---|
| Location: | (1) In person at Fort Lauderdale Marriott Harbor Beach Resort & Spa, 3030 Holiday Dr., Fort Lauderdale, FL, 33316; and (2) Virtually via live audio webcast at meetnow.global/MUYZCHR. |
| Admission: | Only stockholders of Heritage Insurance Holdings, Inc. (the “Company”) or their duly authorized proxies may attend the annual meeting. If you plan to attend the meeting in person, you must present photo identification, such as a driver’s license when you arrive. Beneficial owners must also provide evidence of stock holdings, such as a recent brokerage account or bank statement. If you plan to attend the meeting virtually, you may do so by visiting the link meetnow.global/MUYZCHR. By visiting this link, you will be able to attend and participate in the annual meeting online, vote your shares electronically and submit your questions prior to and during the meeting. To participate in the annual meeting, you will need the 16-digit control number that appears on your proxy card or the instructions that accompanied your proxy materials. Beneficial owners will need to register at least three business days prior to the annual meeting in order to attend the meeting virtually. For more instructions, please refer to the section “Annual Meeting Procedures” on page 5. |
| Record Date: | April 15, 2024 |
| Voting: | Each share of common stock entitles you to one vote on each matter to be voted on at the annual meeting. Cumulative voting is not permitted. |
| Items of Business: | (1) To elect nine members of the Board of Directors to serve until the 2025 Annual Meeting of Stockholders or until their respective successors are elected and qualified; (2) To ratify the appointment of Plante & Moran, PLLC as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2024; (3) To approve, on an advisory basis, the compensation of our named executive officers; and (4) To transact such other business as may properly come before the meeting. |
EVEN IF YOU CANNOT ATTEND THE ANNUAL MEETING, PLEASE TAKE THE TIME TO PROMPTLY VOTE YOUR SHARES BY CAREFULLY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD. IF YOU WISH TO VOTE USING A PAPER PROXY CARD, PLEASE SIGN, DATE AND RETURN THE PROXY CARD IN THE RETURN ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE. YOU CAN REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS EXERCISED.
Important Notice of Internet Availability of Proxy Materials for the Annual Meeting to be Held on June 5, 2024: The Proxy Statement for the Annual Meeting and the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 are available at http://www.edocumentview.com/HRTG.
PROXY SUMMARY
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider, and you should read the entire proxy statement carefully before voting.
Items to be Voted on at the 2024 Annual Meeting of Stockholders
| Proposals | Board of Directors’Recommendation | |
|---|---|---|
| PROPOSAL 1 | Elect nine members of the Board of Directors to serve until the 2025 Annual Meeting of Stockholders or until their respective successors are elected and qualified | FOR |
| PROPOSAL 2 | Ratify the appointment of Plante & Moran, PLLC as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2024 | FOR |
| PROPOSAL 3 | Approve, on an advisory basis, the compensation of our named executive officers, which we refer to as “Say on Pay” | FOR |
Director Nominees
| Committee Memberships | |||||
| Name | Director Since | Independent | AC | CC | CGN |
|---|---|---|---|---|---|
| Ernie Garateix (CEO) | 2020 | No | |||
| Richard Widdicombe (Chairman) | 2012 | Yes | |||
| Pete Apostolou | 2012 | Yes | M | ||
| Irini Barlas | 2014 | Yes | C, F | M | |
| Mark Berset | 2019 | No | |||
| Nicholas Pappas | 2014 | Yes | M | C | |
| Joseph Vattamattam | 2014 | Yes | M, F | C | |
| Vijay Walvekar | 2012 | Yes | M | M | |
| Paul L. Whiting | 2023 | Yes | M, F | M | M |
| AC: | Audit Committee | CGN: | Corporate Governance and Nominating Committee |
|---|---|---|---|
| CC: | Compensation Committee | M: | Member |
| C: | Chair | F: | Financial Expert |
Shareholder Engagement
In 2023, we continued our proactive shareholder outreach efforts and actively engaged with our institutional investors on a variety of corporate governance matters, including the alignment of our executive compensation program with the interests of our shareholders. We held targeted investor meetings on a variety of these matters, continued our assertive outreach campaign and executed on our strategy to attract new categories of investors to broaden our shareholder base.
Our investor relations efforts have been geared toward invigorating investor interest through strategic engagement, transparent financial communication, and a commitment to keeping investor relations materials current and compelling. We welcome the opportunity to engage with our shareholders on matters important to them and take that feedback into account in our decision making process.
Corporate Governance
We are committed to high standards of ethical and business conduct and strong corporate governance practices. This commitment is highlighted by the practices described below.
| What We Do | What We Don’t Do |
|---|---|
| Over 75% of the directors are independent | No shareholder rights plan, commonly known as a “poison pill” |
| Board Committees comprised entirely of independent directors | Limited perquisites |
| Directors elected annually for one-year terms | No stock options granted below fair market value |
| Short and long-term incentives designed to deliver long-term growth and drive shareholder value | No special supplemental executive retirement programs or pensions |
| Maintain a compensation program that is heavily performance-based and uses multiple performance measures | No repricing or backdating of stock options without shareholder approval |
| Compensation benchmarked to peer and market data during compensation decision-making process | No acceleration of vesting of equity awards in connection with terminations, absent a change in control |
| Utilize independent compensation consultant reporting directly to the Compensation Committee | No tax gross-ups on perquisites |
| No liberal change in control definition in equity plans or employment agreements |
2023 Performance Highlights
We have been focused on executing on our strategic profitability initiatives which include generating underwriting profit through rate adequacy and selective underwriting, allocating capital to maximize stockholder return, maintaining a balanced and diversified portfolio and providing coverages and return targets suitable to the market, and our results for 2023 demonstrate the progress we have made since the prior year:
| • | Net income for the year ended December 31, 2023 of $45.3 million or $1.73 per diluted share, compared to a net loss of $154.4 million or $5.86 diluted loss per share in the prior year, driven by the positive impact of rate increases, underwriting actions, and exposure management, coupled with fewer weather related events. The net loss for the year ended December 31, 2022 also included the impact of a $90.8 million non-cash goodwill impairment charge. |
| • | Return on equity of 25.8% compared to (65.1)% in the prior year. |
| • | Book value per share of $7.29 at December 31, 2023, was up 42.1% from $5.13 at December 31, 2022. |
| • | Premiums-in-force were $1.4 billion as of December 31, 2023, representing a 5.6% increase from December 31, 2022, reflecting continued proactive underwriting and rate actions as well as growth in commercial lines business, despite an intentional reduction of approximately 79,000 personal lines policies. Significant rating actions throughout the book of business resulted an increase in the average premium per policy of 24.2% over the prior year. |
| • | Gross premiums written of $1.34 billion, up 5.3% from $1.28 billion in the prior year, driven primarily by rate actions taken to address loss cost inflation and higher reinsurance cost, with a policy count reduction of 7.2% driven substantially by a reduction in the number of Florida personal lines policies. |
| • | Gross premiums earned of $1.32 billion, up 9.5% from $1.21 billion in the prior year, reflecting higher gross premiums written over the last twelve months driven by a higher average premium per policy. |
| • | Net premiums earned of $697.2 million, up 9.4% from $637.1 million in the prior year, reflecting the higher gross earned premium outpacing the increase in ceded premiums for the year. |
| • | Expanded in-force premium for Excess & Surplus lines (“E&S”) policies in California, Florida and added South Carolina during 2023. E&S business is unique as the forms and rates are generally not subject to regulation and Heritage therefore has the ability to more timely implement market adjustments. |
| • | Net loss ratio of 61.1%, an improvement of 17.6 points over the prior year of 78.7%, driven by lower weather and attritional losses incurred and benefiting from higher net premiums earned as described above. |
| • | Continued execution of our diversification strategy, which includes a reduction of Florida policies-in-force and TIV by 16.0% and 0.2%, respectively, as compared to the prior year, while in-force premium increased 15.9% as a result of rate actions taken and strategic growth of the commercial residential business. This resulted in a more stable book of business in Florida which will benefit long-term underwriting results. |
| • | Successful placement of 2023-2024 catastrophe excess-of-loss reinsurance program with highly rated or collateralized reinsurers and $235 million of fully collateralized limit placed in the Insurance Linked Securities (“ILS”) Market. The placement of the bonds in the ILS Market further expands the availability and diversification of our reinsurance capacity while providing multi-year fully collateralized reinsurance protection. Strategically used subsidiary captive reinsurer to reduce retained losses at each insurance company subsidiary while retaining premium within holding company system. |
Proxy Statement for the Annual Meeting of Stockholders of
HERITAGE INSURANCE HOLDINGS, INC.
To Be Held on June 5, 2024
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.