Heritage Insurance Holdings, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to assure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this Annual Report, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2021. Limitations on Effectiveness of Controls Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all errors and fraud. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control system must reflect the fact that there are resource constraints, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. As of December 31, 2021, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework, or 2013 Framework. Based on this assessment, our management concluded that, as of December 31, 2021, our internal control over financial reporting was effective based on those criteria. Plante & Moran, PLLC, the independent registered public accounting firm who also audited the Company’s consolidated financial statements included in this Form 10-K, has issued their attestation report on the Company’s internal control over financial reporting presented in Part IV, Item 15 of this report under “Report of Independent Registered Public Accounting Firm.” Changes in Internal Control Over Financial Reporting There has been no change in our internal controls over financial reporting during our most recent quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 86 Item 9B. Other Information Not applicable Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections Not applicable 87 PART III Item 10. Directors, Executive Of ficers and Corporate Governance The items required by Part III, Item 10 are incorporated herein by reference from the Registrant’s Proxy Statement for its 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2021. Item 11. Executi ve Compensation The items required by Part III, Item 11 are incorporated herein by reference from the Registrant’s Proxy Statement for its 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2021. Item 12. Security Ownership of Certain Beneficial Ow ners and Management and Related Stockholder Matters The items required by Part III, Item 12 are incorporated herein by reference from the Registrant’s Proxy Statement for its 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2021. Item 13. Certain Relationships and Relate d Transactions, and Director Independence The items required by Part III, Item 13 are incorporated herein by reference from the Registrant’s Proxy Statement for its 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2021. Item 14. Principal Accou ntant Fees and Services The items required by Part III, Item 14 are incorporated herein by reference from the Registrant’s Proxy Statement for its 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2021. 88 PART IV Item 15. Exhibits, Financ ial Statements Schedules (a) The following documents are filed as part of this report. (1) Financial Statements The following consolidated financial statements of the Company and the reports of independent auditors thereon are filed with this report: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations and Comprehensive Income Consolidated Statements of Changes in Stockholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (2) Financial Statement Schedules The following additional financial schedules are furnished herewith pursuant to requirements of Form 10-K. Schedules required to be filed under the provisions of Regulations S-X Article 7: Page Schedule II Condensed Financial Information of Registrant 93 Schedule V Valuation Allowance and Qualifying Accounts 96 Schedule VI Supplemental Information Concerning Consolidated Property-Casualty Insurance Operations 97 Report of Independent Registered Public Accounting Firm 45 (3) List of Exhibits The following is a list of exhibits filed or incorporated by reference as part of this Annual Report on Form 10-K Exhibit Number Description (File No. 001-36462) 3.1 Certificate of Incorporation of Heritage Insurance Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on August 6, 2014) 3.2 By-laws of Heritage Insurance Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed on August 6, 2014) 4.1 Form of Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1/A (File No. 333-195409) filed on May 13, 2014) 4.2 Form of 5.875% Convertible Senior Notes due 2037 (included in Exhibit 4.1), incorporated by reference to 1.1 to our Form 8-K filed on August 16, 2017 ) 4.3 Indenture, date as of August 16, 2017, by and among the Company. Heritage MGA, LLC as guarantor, and Wilmington Trust, National Association, as trustee, (incorporated by reference to Exhibit 4.1 to our Form 8-K filed on August 16, 2017 ) 4.4 Description of Capital Stock dated December 31, 2019 (incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 10-K filed on March 10, 2020) 10.1† Heritage Insurance Holdings, Inc. Omnibus Incentive Plan (incorporated by reference to Exhibit 10.28 of the Registration Statement filed on Form S-1 (File No. 333-195409) filed on April 21, 2014) 10.2† Employment Agreement dated January 5, 2021 between Heritage Insurance Holding, Inc. and Ernie Garateix, (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on January 6, 2021) 10.5† Separation Agreement dated December 1, 2020 between Heritage Insurance Holdings Inc. and Richard Widdicombe, (incorporated by reference to Exhibit 10.3 to our Form 8-K filed on December 4, 2020) 89 10.6† Employment agreement by and between Heritage Insurance Holdings, Inc and Kirk H. Lusk, dated January 30, 2018 (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on February 2, 2018) 10.7† Amendment to Employment agreement, dated October 7, 2019, by and between Heritage Insurance Holdings, Inc. and Kirk H. Lusk (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020) 10.8 Credit Agreement, dated December 14, 2018, among Heritage Insurance Holdings, Inc., certain subsidiaries of Heritage Insurance Holdings, Inc. from time to time party thereto as guarantors, the lenders from time to time party thereto, Regions Bank, as Administrative Agent and Collateral Agent, BMO Harris Bank N.A., as Syndication Agent, Hancock Whitney Bank and Canadian Imperial Bank of Commerce, as Co-Documentation Agents, and Regions Capital Markets and BMO Capital Markets Corp., as Joint Lead Arrangers and Joint Bookrunners (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K, filed on March 12, 2019) 10.9 First Amendment to Credit Agreement, dated as of May 17, 2019, by and between Heritage Insurance Holdings, Inc. and the Lenders party, the Guarantors and Regions Bank (incorporated by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020) 10.10 Second Amendment to Credit Agreement, dated April 27, 2020, among Heritage Insurance Holdings, Inc., certain subsidiaries of Heritage Insurance Holdings, Inc. from time to time party as guarantors, the lenders from time to time party, and Regions Bank, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 30, 2020) 10.11 Third Amendment to Credit Agreement, dated June 1, 2020, among Heritage Insurance Holdings, Inc., certain subsidiaries of Heritage Insurance Holdings, Inc. from time to time party as guarantors, the lenders from time to time party, and Regions Bank, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 4, 2020) 10.12 Fourth Amendment of Credit Agreement, data March 24, 2021, among Heritage Insurance Holdings, Inc., certain subsidiaries of Heritage Insurance Holdings, Inc., from time to time party as guarantors, the lenders from time to time party, and Regions Bank, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.23 to our Form 10-Q filed on, May 7, 2021) 10.13 Fifth Amendment to Credit Agreement, dated July 28, 2021, among Heritage Insurance Holdings, Inc., certain subsidiaries of Heritage Insurance Holdings, Inc. from time to time party as guarantors, the lenders from time to time party and Regions Bank, as Administrative Agent and Collateral Agent (incorporated by reference to our Form 8-K filed on August 3, 2021). 10.14† Employment Agreement, dated February 3, 2014, by and between NBIC Service Company, Inc. and Timothy M. Moura (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020) 10.15† First Amendment to Employment Agreement, dated January 1, 2018, by and between NBIC Service Company, Inc. and Timothy M. Moura (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020) 10.16† Restricted Stock Award Agreement, dated November 4, 2015, by and between Heritage Insurance Holdings, Inc. and Ernie Garateix (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020) 10.17† Restricted Stock Award Agreement, dated February 12, 2018, by and between Heritage Insurance Holdings, Inc. and Kirk Lusk (incorporated by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020) 10.18† Restricted Stock Award Agreement, dated November 4, 2015, by and between Heritage Insurance Holdings, Inc. and Rich Widdicombe (incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020) 10.19† Restricted Stock Award Agreement, dated February 12, 2018, by and between Heritage Insurance Holdings, Inc. and Timothy Moura (incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020) 10.20† Employment Agreement dated January 5, 2021 between Heritage Insurance Holdings, Inc. and Ernie Garateix (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on January 6, 2021) 90 10.21† Employment Agreement dated April 13, 2021 between Heritage Insurance Holdings, Inc., and Kirk Lusk (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on April 14, 2021) 10.22† Employee Agreement dated January 1, 2015 between Heritage Insurance Holdings, Inc. and Sharon Binnun (incorporated by reference to Exhibit 10.20 to our Form 10-Q filed on May 7, 2021) 10.23† Employment Agreement dated April 2, 2018 between Zephyr Insurance Company, Inc., and Tim Johns (incorporated by reference to Exhibit 10.21 to our Form 10-Q filed on May 7, 2021) 10.24† Form of Restricted Stock Award Agreement (Time-Based and Performance-Based Vesting) (incorporated by reference to Exhibit 10.22 to our Form 10-Q filed on May 7, 2021) 10.25† Employment Agreement dated September 1, 2021 between Heritage Insurance Holdings, Inc., and Sharon Binnun (incorporated by reference to Exhibit 10.24 to our Form 10-Q filed on November 8, 2021) 10.26† Employment Agreement dated September 1, 2021 between Heritage Insurance Holdings, Inc., and Tim Moura (incorporated by reference to Exhibit 10.25 to our Form 10-Q filed on November 8, 2021) 21 Subsidiaries of the Registrant * 23.1 Consent of Plante Moran, PLLC * 24.1 Power of Attorney (included on signature page) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.SC. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** 101.INS* Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 * Filed herewith ** Furnished herewith + Management contract or compensatory plan or arrangement Item 16. FORM 10-K SUMMARY None 91 SIGNAT URES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HERITAGE INSURANCE HOLDINGS, INC. (Registrant) Date: March 14, 2022 By: /s/ ERNESTO GARATEIX Chief Executive Officer (on behalf of the Registrant and as Principal Executive Officer) By: /s/ KIRK LUSK Chief Financial Officer (on behalf of the Registrant and as Principal Financial Officer) POW ERS OF ATTORNEY KNOW ALL BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Ernesto Garateix or Kirk Lusk as his true and lawful attorney-in-fact and agent, he with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ RICHARD WIDDICOMBE Richard Widdicombe Chairman March 14, 2022 /s/ ERNESTO GARATEIX Ernesto Garateix Chief Executive Officer (Principal Executive Officer) March 14, 2022 /s/ KIRK LUSK Kirk Lusk Chief Financial Officer/Treasurer (Principal Financial Officer) March 14, 2022 /s/ PANAGIOTIS APOSTOLOU Panagiotis Apostolou Director March 14, 2022 /s/ IRINI BARLAS Irini Barlas Director March 14, 2022 /s/ MARK BERSET Mark Berset Director March 14, 2022 /s/ STEVEN MARTINDALE Steven Martindale Director March 14, 2022 /s/ NICHOLAS PAPPAS Nicholas Pappas Director March 14, 2022 /s/ JOSEPH VATTAMATTAM Joseph Vattamattam Director March 14, 2022 /s/ VIJAY WALVEKAR Vijay Walvekar Director March 14, 2022 92 SCHEDULE II – CONDENSED FINAN CIAL INFORMATION OF REGISTRANT Condensed Balance Sheet The following summarizes the major categorizes of Heritage Insurance Holdings, Inc.’s financial statements (in thousands): As of December 31, 2021 2020 (in thousands) ASSETS Cash and cash equivalents $ 6,404 $ 5,865 Investment in and advances to subsidiaries 484,096 574,548 Other assets 4,728 4,944 Total Assets $ 495,227 $ 585,357 LIABILITIES Other liabilities $ 152,177 $ 143,013 Total Liabilities $ 152,177 $ 143,013 STOCKHOLDERS' EQUITY Common stock $ 3 $ 3 Paid-in-capital 332,797 331,867 Treasury ( 123,557 ) ( 115,365 ) Accumulated other comprehensive income ( 4,573 ) 6,057 Retained earnings 138,381 219,782 Total Stockholders' Equity $ 343,051 $ 442,344 Total Liabilities and Stockholders' Equity $ 495,227 $ 585,357 Condensed Statement of Operations For the Years Ended December 31, 2021 2020 2019 (In thousands, except share and per share amounts) Revenue: Other revenue $ 1,511 $ 5,717 $ 6,180 Total revenue 1,511 5,717 6,180 Expenses: General and administrative expense 10,498 13,021 11,699 Amortization of debt issuance cost 2,500 2,128 2,190 Interest expense, net 5,895 7,769 7,609 Other non-operating expense, net — — 48 Total expenses $ 18,893 $ 22,918 $ 21,546 Loss before income taxes and equity in net income of subsidiaries ( 17,382 ) ( 17,201 ) ( 15,366 ) Benefit from income taxes ( 3,526 ) ( 3,425 ) ( 511 ) Loss before equity in net income of subsidiaries ( 13,856 ) ( 13,776 ) ( 14,855 ) Equity in net income of subsidiaries ( 60,871 ) 23,102 43,491 Consolidated net (loss) income $ ( 74,727 ) $ 9,326 $ 28,636 See notes to condensed financial statements. 93 SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT Condensed Statement of Cash Flows For the Years Ended December 31, Cash flows from operating activities: 2021 2020 2019 (in thousands) Net loss $ ( 13,856 ) $ ( 13,776 ) $ ( 14,855 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Stock-based compensation 1,161 4,683 5,379 Net realized gains — — 49 Amortization of debt issuance cost 1,657 — — Impairment on other investments 1,157 — — Deferred income taxes ( 69 ) ( 343 ) 334 Changes in operating assets and liabilities Prepaid 1,160 317 ( 659 ) Income taxes payable 10,764 ( 8,585 ) 351 Accrued interest on debt 306 400 444 Other assets ( 2,100 ) ( 2,448 ) 2,182 Dividends payable ( 36 ) ( 80 ) — Other liabilities ( 416 ) 460 ( 4,094 ) Net cash used in operating activities $ ( 271 ) $ ( 19,372 ) $ ( 10,869 ) Investing Activities: Dividends received from subsidiaries 41,138 47,256 70,590 Collection of principle note receivable — — 358 Investments and advances to subsidiaries ( 22,189 ) ( 5,872 ) ( 15,865 ) Net cash provided by investing activities 18,949 41,385 55,083 Financing Activities: Mortgage loan payments ( 613 ) ( 290 ) ( 277 ) Repurchase of convertible notes — — ( 2,869 ) Repayment of long-term debt ( 2,430 ) ( 9,375 ) ( 15,625 ) Shares tendered for income tax withholdings ( 231 ) ( 2,384 ) ( 3,521 ) Purchase of treasury stock ( 8,192 ) ( 9,997 ) ( 16,183 ) Dividends paid ( 6,673 ) ( 6,772 ) ( 6,959 ) Net cash used in financing activities ( 18,139 ) ( 28,818 ) ( 45,434 ) Increase (decrease) in cash and cash equivalents 539 ( 6,806 ) ( 1,221 ) Cash and cash equivalents, beginning of period 5,865 12,671 13,892 Cash and cash equivalents, end of year $ 6,404 $ 5,865 $ 12,671 See notes to condensed financial statements. 94 SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT Notes to Condensed Financial Statements (1) Organization and Basis of Presentation Heritage Insurance Holdings, Inc., (“we”, “our”, “us” and “Heritage Insurance”), established in 2012 and incorporated in the state of Delaware in 2014, is a property and casualty insurance holding company that provides personal and commercial residential property insurance. We are headquartered in Clearwater, Florida and, through our insurance company subsidiaries, Heritage Property & Casualty Insurance Company (“Heritage P&C”), Narragansett Bay Insurance Company (“NBIC”) and Zephyr Insurance Company (“Zephyr”), we write personal residential property insurance for single-family homeowners and condominium owners, and rental property insurance in the states of Alabama, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, and Virginia. We also provide commercial residential insurance for properties in Florida, New Jersey, and New York and are also licensed in the state of Pennsylvania. In order to limit our potential exposure to catastrophic events, we purchase significant reinsurance from third party reinsurers and may sponsor catastrophe bonds issued by Citrus Re. The accompanying condensed financial statements included the activity of Heritage Insurance and the equity basis of its consolidated subsidiaries. Accordingly, these condensed financial statements have been presented for the parent company only. These condensed financial statements should be read in conjunction with the consolidated financial statements and related notes of Heritage Insurance and subsidiaries set forth in Part II, Item 8 Financial Statements and Supplemental Data of this Annual Report. In applying the equity method to our consolidated subsidiaries, we record the investment at cost and subsequently adjust for additional capital contributions, distributions and proportionate share of earnings or losses. 95 SCHEDULE V – VALUATION ALLOW ANCES AND QUALIFYING ACCOUNTS The following table summarizes activity in the Company’s allowance for doubtful accounts for the year ended December 31, 2021 and 2020. Description Beginning balance Charges in earnings Charges to other accounts Deductions Ending balance (in thousands) Year ended December 31, 2021 Allowance for doubtful accounts $ 451 — — — $ 451 Year ended December 31, 2020 Allowance for doubtful accounts $ 290 161 — — $ 451 96 SCHEDULE VI – SUPPLEMENTAL INFORMATION CONCERNING CO NSOLIDATED PROPERTY AND CASUALTY INSURANCE OPERATIONS The following table provides certain information related to the Company’s property and casualty operations as of, and for the periods presented (in thousands): As of December 31, For the Year Ended December 31, Year Reserves for Unpaid Losses and LAE Incurred Losses and LAE Current Year Incurred Losses and LAE Prior Years Paid losses and LAE Net Investment Income (in thousands) 2021 $ 590,166 $ 430,907 $ ( 3,537 ) $ 400,614 $ 5,652 2020 $ 659,341 $ 392,976 $ ( 19,589 ) $ 331,637 $ 12,302 2019 $ 613,533 $ 276,985 $ ( 3,696 ) $ 235,238 $ 14,432 As of December 31, For the Year Ended December 31, Year Deferred Policy Acquisition Costs ("DPAC") Amortization of DPAC, Net Net Premiums Written Net Premiums Earned Unearned Premiums (in thousands) 2021 $ 93,881 $ 188,490 $ 611,732 $ 611,071 $ 590,419 2020 $ 89,265 $ 159,220 $ 606,264 $ 544,722 $ 569,618 2019 $ 77,211 $ 144,939 $ 501,373 $ 478,713 $ 486,220 97 Report of Independent Registered Public Accounting Firm on Supplemental Information To the Board of Directors and Stockholders Heritage Insurance Holdings, Inc. We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of Heritage Insurance Holdings, Inc. (the “Company”) as of and for the year ended December 31, 2021, and issued our report thereon dated March 14, 2022, which expressed an unqualified opinion on those consolidated financial statements and is included at Item 8 in this Form 10-K. The supplemental information contained in the consolidated financial statement schedules of the Company in the accompanying index at Item 15 in this Form 10-K has been subjected to audit procedures performed in conjunction with the audit of the Company's consolidated financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the supplemental information reconciles to the consolidated financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the consolidated financial statements as a whole. East Lansing, Michigan March 14, 2022 98