Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”)
reported net income of $17.6 million, or $0.69 per
diluted share, for the second quarter of 2023 compared to net
income of $14.6 million, or $0.57 per diluted share, for
the second quarter of 2022. Adjusted net income(1)
was $21.8 million, or $0.86 per diluted share, for
the second quarter of 2023 as compared to $22.4 million,
or $0.87 per diluted share, for the second quarter
of 2022. Effective December 31, 2022, the Company adjusts for net
realized and unrealized gains and losses when calculating and
presenting adjusted net income, diluted adjusted earnings per
share, and adjusted return on equity. All prior period amounts have
been adjusted accordingly.
Second Quarter 2023
Highlights
- Gross written premiums increased by 25.4% to $274.3 million
compared to $218.7 million in the second quarter of 2022
- Net income of $17.6 million, compared to $14.6 million in the
second quarter of 2022
- Adjusted net income(1) of $21.8 million, compared to $22.4
million in the second quarter of 2022
- Total loss ratio of 21.5% compared to 17.9% in the second
quarter of 2022
- Combined ratio of 79.0% compared to 75.1% in the second quarter
of 2022
- Adjusted combined ratio(1) of 72.2%, compared to 69.1%, in the
second quarter of 2022
- Annualized return on equity of 17.2%, compared to 15.4% in the
second quarter of 2022
- Annualized adjusted return on equity(1) of 21.3%, compared to
23.7% in the second quarter of 2022
(1) See
discussion of “Non-GAAP and Key Performance Indicators” below.
Mac Armstrong, Chairman and Chief Executive
Officer, commented, “I am very pleased with our strong second
quarter results. Our team successfully executed our Palomar 2X
strategy of profitable growth despite the elevated catastrophe
activity and the historically hard reinsurance market that has
significantly impacted the insurance industry. In the quarter,
we focused our capital and resources towards targeted segments of
our book of business, such as earthquake, inland marine,
and casualty to maximize our risk-adjusted returns while we
continued to reduce exposure to segments of our book that add
volatility to our results. This prudent approach resulted in
gross written premium growth of 25% and, importantly, an adjusted
return on equity of 21.3%.”
Mr. Armstrong continued, “Beyond the strong
financial results, the quarter featured several noteworthy
accomplishments that position us well for near and long-term
success. We effectively placed our June 1 reinsurance
program in line with our expectations and subsequently raised
our adjusted net income guidance for the full year. We also hired a
team of professional liability underwriters to expand the expertise
within our casualty franchise, and, in July, we received a
“positive outlook” from A.M Best. On the heels of this
quarter, we are further raising our adjusted net income guidance
range to $89 million to $93 million for 2023.”
Underwriting ResultsGross written premiums
increased 25.4% to $274.3 million compared
to $218.7 million in the second quarter of
2022, while net earned premiums increased 3.5% compared to the
prior year’s second quarter.
Losses and loss adjustment expenses for the
second quarter were $17.9 million including $15.7 million
of non-catastrophe attritional losses, and $2.2 million of
catastrophe losses from severe convective storms during
the second quarter offset slightly by favorable prior period
development of catastrophe losses. The loss ratio for the quarter
was 21.5%, comprised of a catastrophe loss ratio(1) of
2.6% and an attritional loss ratio of 18.9%, compared to a
loss ratio of 17.9% during the same period last year comprised
of a catastrophe loss ratio(1) of 0.7% and attritional loss
ratio of 17.2%.
Underwriting income(1) for the second quarter
was $17.4 million resulting in a combined ratio of 79.0%
compared to underwriting income of $20.0 million resulting in
a combined ratio of 75.1% during the same period last year.
The Company’s adjusted underwriting income(1) was $23.1
million resulting in an adjusted combined ratio(1) of 72.2% in
the second quarter compared to adjusted underwriting income(1)
of $24.8 million and an adjusted combined ratio(1)
of 69.1% during the same period last year.
Investment ResultsNet
investment income increased by 76.5% to $5.5 million
compared to $3.1 million in the prior year’s second quarter.
The increase was primarily due to higher yields on invested assets
and a higher average balance of investments held during the three
months ended June 30, 2023 due to cash generated from operations.
The weighted average duration of the fixed-maturity investment
portfolio, including cash equivalents, was 3.86 years at June
30, 2023. Cash and invested assets totaled $660.2 million at
June 30, 2023. During the second quarter, the Company recorded net
realized and unrealized gains of $1.1 million related to its
investment portfolio as compared to net realized and unrealized
losses of $4.7 million in last year’s second quarter.
Tax RateThe effective tax rate
for the three months ended June 30, 2023 was 23.7% compared
to 20.2% for the three months ended June 30, 2022. For the
current quarter, the Company’s income tax rate differed from the
statutory rate due primarily to the non-deductible executive
compensation expense.
Stockholders’ Equity
and ReturnsStockholders' equity was $413.7 million at
June 30, 2023, compared to $378.1 million at June 30, 2022. For the
three months ended June 30, 2023, the Company’s annualized return
on equity was 17.2% compared to 15.4% for the same period
in the prior year while adjusted return on equity(1) was
21.3% compared to 23.7% for the same period in the prior
year. During the current quarter, the Company
repurchased 166,482 shares for $8.7 million pursuant to
the Company’s previously announced $100 million share repurchase
authorization. As of June 30, 2023, $50.0 million remains
available for future repurchases.
Full Year 2023 OutlookFor the
full year 2023, the Company expects to achieve adjusted net
income of $89 million to $93 million. This includes catastrophe
losses incurred in the first and second quarters of
approximately $4.0 million. The expected results do not
include any additional catastrophe losses for the remainder of the
year.
Conference CallAs previously
announced, Palomar will host a conference call Thursday August 3,
2023, to discuss its second quarter 2023 results at 12:00 p.m.
(Eastern Time). The conference call can be accessed live by dialing
1-877-423-9813 or for international callers, 1-201-689-8573, and
requesting to be joined to the Palomar Second Quarter 2023
Earnings Conference Call. A replay will be available starting at
4:00 p.m. (Eastern Time) on August 3, 2023, and can be accessed by
dialing 1-844-512-2921, or for international callers,
1-412-317-6671. The passcode for the replay is 13737957. The replay
will be available until 11:59 p.m. (Eastern Time) on August 10,
2023.
Interested investors and other parties may also
listen to a simultaneous webcast of the conference call by logging
onto the investor relations section of the Company’s website at
http://ir.palomarspecialty.com/. The online replay will remain
available for a limited time beginning immediately following the
call.
About Palomar Holdings,
Inc.Palomar Holdings, Inc. is the holding company of
subsidiaries Palomar Specialty Insurance Company (“PSIC”), Palomar
Specialty Reinsurance Company Bermuda Ltd., Palomar Insurance
Agency, Inc. and Palomar Excess and Surplus Insurance Company
(“PESIC”). Palomar is an innovative insurer serving residential and
commercial clients in specialty markets including the market for
earthquake insurance. Palomar’s insurance subsidiaries, Palomar
Specialty Insurance Company, Palomar Specialty Reinsurance Company
Bermuda Ltd., and Palomar Excess and Surplus Insurance Company,
have a financial strength rating of “A-” (Excellent) from A.M.
Best. To learn more, visit PLMR.com.
Non-GAAP and Key Performance
Indicators
Palomar discusses certain key performance
indicators, described below, which provide useful information about
the Company’s business and the operational factors underlying the
Company’s financial performance.
Underwriting revenue is a non-GAAP
financial measure defined as total revenue, excluding net
investment income and net realized and unrealized gains and losses
on investments. See “Reconciliation of Non-GAAP Financial Measures”
for a reconciliation of total revenue calculated in accordance with
GAAP to underwriting revenue.
Underwriting income is a non-GAAP financial
measure defined as income before income taxes excluding net
investment income, net realized and unrealized gains and losses on
investments, and interest expense. See “Reconciliation of Non-GAAP
Financial Measures” for a reconciliation of income before income
taxes calculated in accordance with GAAP to underwriting
income.
Adjusted net income is a non-GAAP financial
measure defined as net income excluding the impact of certain items
that may not be indicative of underlying business trends, operating
results, or future outlook, net of tax impact. Palomar calculates
the tax impact only on adjustments which would be included in
calculating the Company’s income tax expense using the estimated
tax rate at which the company received a deduction for these
adjustments. See “Reconciliation of Non-GAAP Financial Measures”
for a reconciliation of net income calculated in accordance with
GAAP to adjusted net income.
Annualized Return on equity is net income
expressed on an annualized basis as a percentage of average
beginning and ending stockholders’ equity during the period.
Annualized adjusted return on equity is a
non-GAAP financial measure defined as adjusted net income expressed
on an annualized basis as a percentage of average beginning
and ending stockholders’ equity during the period. See
“Reconciliation of Non-GAAP Financial Measures” for a
reconciliation of return on equity calculated using unadjusted GAAP
numbers to adjusted return on equity.
Loss ratio, expressed as a percentage, is
the ratio of losses and loss adjustment expenses, to net earned
premiums.
Expense ratio, expressed as
a percentage, is the ratio of acquisition and other
underwriting expenses, net of commission and other income to net
earned premiums.
Combined ratio is defined as the sum of the
loss ratio and the expense ratio. A combined ratio under 100%
generally indicates an underwriting profit. A combined ratio over
100% generally indicates an underwriting loss.
Adjusted combined ratio is a non-GAAP
financial measure defined as the sum of the loss ratio and the
expense ratio calculated excluding the impact of certain items that
may not be indicative of underlying business trends, operating
results, or future outlook. See “Reconciliation of Non-GAAP
Financial Measures” for a reconciliation of combined ratio
calculated using unadjusted GAAP numbers to adjusted combined
ratio.
Diluted adjusted earnings per share is a
non-GAAP financial measure defined as adjusted net income divided
by the weighted-average common shares outstanding for the period,
reflecting the dilution which could occur if equity-based awards
are converted into common share equivalents as calculated using the
treasury stock method. See “Reconciliation of Non-GAAP
Financial Measures” for a reconciliation of diluted earnings per
share calculated in accordance with GAAP to diluted adjusted
earnings per share.
Catastrophe loss ratio is a non-GAAP
financial measure defined as the ratio of catastrophe losses to net
earned premiums. See “Reconciliation of Non-GAAP Financial
Measures” for a reconciliation of loss ratio calculated using
unadjusted GAAP numbers to catastrophe loss ratio.
Adjusted combined ratio excluding catastrophe
losses is a non-GAAP financial measure defined as adjusted
combined ratio excluding the impact of catastrophe losses.
See “Reconciliation of Non-GAAP Financial Measures” for a
reconciliation of combined ratio calculated using unadjusted GAAP
numbers to adjusted combined ratio excluding catastrophe
losses.
Adjusted underwriting income is a non-GAAP
financial measure defined as underwriting income excluding the
impact of certain items that may not be indicative of underlying
business trends, operating results, or future outlook. See
“Reconciliation of Non-GAAP Financial Measures” for a
reconciliation of income before income taxes calculated in
accordance with GAAP to adjusted underwriting income.
Tangible stockholders’ equity is a non-GAAP
financial measure defined as stockholders’ equity less goodwill and
intangible assets. See “Reconciliation of Non-GAAP Financial
Measures” for a reconciliation of stockholders’ equity calculated
in accordance with GAAP to tangible stockholders’ equity.
Safe Harbor StatementPalomar
cautions you that statements contained in this press release may
regard matters that are not historical facts but are
forward-looking statements. These statements are based on the
company’s current beliefs and expectations. The inclusion of
forward-looking statements should not be regarded as a
representation by Palomar that any of its plans will be achieved.
Actual results may differ from those set forth in this press
release due to the risks and uncertainties inherent in the
Company’s business. The forward-looking statements are typically,
but not always, identified through use of the words "believe,"
"expect," "enable," "may," "will," "could," "intends," "estimate,"
"anticipate," "plan," "predict," "probable," "potential,"
"possible," "should," "continue," and other words of similar
meaning. Actual results could differ materially from the
expectations contained in forward-looking statements as a result of
several factors, including unexpected expenditures and costs,
unexpected results or delays in development and regulatory review,
regulatory approval requirements, the frequency and severity of
adverse events and competitive conditions. These and other factors
that may result in differences are discussed in greater detail in
the Company's filings with the Securities and Exchange Commission.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof,
and the Company undertakes no obligation to update such statements
to reflect events that occur or circumstances that exist after the
date hereof. All forward-looking statements are qualified in their
entirety by this cautionary statement, which is made under the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995.
ContactMedia Inquiries Lindsay
Conner 1-551-206-6217 lconner@plmr.com
Investor RelationsJamie
Lillis1-203-428-3223investors@plmr.com Source: Palomar
Holdings, Inc.
Summary of Operating Results:
The following table summarizes the Company’s results for the
three and six months ended June 30, 2023 and 2022:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
|
($ in thousands, except per share data) |
|
Gross written premiums |
|
$ |
274,296 |
|
|
$ |
218,689 |
|
|
$ |
55,607 |
|
|
|
25.4 |
% |
Ceded written premiums |
|
|
(169,109 |
) |
|
|
(122,627 |
) |
|
|
(46,482 |
) |
|
|
37.9 |
% |
Net written premiums |
|
|
105,187 |
|
|
|
96,062 |
|
|
|
9,125 |
|
|
|
9.5 |
% |
Net earned premiums |
|
|
83,107 |
|
|
|
80,265 |
|
|
|
2,842 |
|
|
|
3.5 |
% |
Commission and other income |
|
|
621 |
|
|
|
990 |
|
|
|
(369 |
) |
|
|
(37.3 |
)% |
Total underwriting revenue (1) |
|
|
83,728 |
|
|
|
81,255 |
|
|
|
2,473 |
|
|
|
3.0 |
% |
Losses and loss adjustment expenses |
|
|
17,905 |
|
|
|
14,398 |
|
|
|
3,507 |
|
|
|
24.4 |
% |
Acquisition expenses, net of ceding commissions and fronting
fees |
|
|
26,057 |
|
|
|
28,663 |
|
|
|
(2,606 |
) |
|
|
(9.1 |
)% |
Other underwriting expenses |
|
|
22,350 |
|
|
|
18,195 |
|
|
|
4,155 |
|
|
|
22.8 |
% |
Underwriting income (1) |
|
|
17,416 |
|
|
|
19,999 |
|
|
|
(2,583 |
) |
|
|
(12.9 |
)% |
Interest expense |
|
|
(1,064 |
) |
|
|
(111 |
) |
|
|
(953 |
) |
|
|
NM |
|
Net investment income |
|
|
5,541 |
|
|
|
3,140 |
|
|
|
2,401 |
|
|
|
76.5 |
% |
Net realized and unrealized gains (losses) on investments |
|
|
1,127 |
|
|
|
(4,735 |
) |
|
|
5,862 |
|
|
|
(123.8 |
)% |
Income before income taxes |
|
|
23,020 |
|
|
|
18,293 |
|
|
|
4,727 |
|
|
|
25.8 |
% |
Income tax expense |
|
|
5,458 |
|
|
|
3,704 |
|
|
|
1,754 |
|
|
|
47.4 |
% |
Net income |
|
$ |
17,562 |
|
|
$ |
14,589 |
|
|
$ |
2,973 |
|
|
|
20.4 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized and unrealized (gains) losses on investments(2) |
|
|
(1,127 |
) |
|
|
4,735 |
|
|
|
(5,862 |
) |
|
|
(123.8 |
)% |
Stock-based compensation expense |
|
|
3,697 |
|
|
|
2,704 |
|
|
|
993 |
|
|
|
36.7 |
% |
Amortization of intangibles |
|
|
389 |
|
|
|
313 |
|
|
|
76 |
|
|
|
24.3 |
% |
Expenses associated with catastrophe bond |
|
|
1,590 |
|
|
|
1,792 |
|
|
|
(202 |
) |
|
|
(11.3 |
)% |
Tax impact |
|
|
(317 |
) |
|
|
(1,689 |
) |
|
|
1,372 |
|
|
|
(81.2 |
)% |
Adjusted net income (1)(2) |
|
$ |
21,794 |
|
|
$ |
22,444 |
|
|
$ |
(650 |
) |
|
|
(2.9 |
)% |
Key Financial and Operating Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on equity |
|
|
17.2 |
% |
|
|
15.4 |
% |
|
|
|
|
|
|
|
|
Annualized adjusted return on equity (1) |
|
|
21.3 |
% |
|
|
23.7 |
% |
|
|
|
|
|
|
|
|
Loss ratio |
|
|
21.5 |
% |
|
|
17.9 |
% |
|
|
|
|
|
|
|
|
Expense ratio |
|
|
57.5 |
% |
|
|
57.1 |
% |
|
|
|
|
|
|
|
|
Combined ratio |
|
|
79.0 |
% |
|
|
75.1 |
% |
|
|
|
|
|
|
|
|
Adjusted combined ratio (1) |
|
|
72.2 |
% |
|
|
69.1 |
% |
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.69 |
|
|
$ |
0.57 |
|
|
|
|
|
|
|
|
|
Diluted adjusted earnings per share (1) |
|
$ |
0.86 |
|
|
$ |
0.87 |
|
|
|
|
|
|
|
|
|
Catastrophe losses |
|
$ |
2,159 |
|
|
$ |
548 |
|
|
|
|
|
|
|
|
|
Catastrophe loss ratio (1) |
|
|
2.6 |
% |
|
|
0.7 |
% |
|
|
|
|
|
|
|
|
Adjusted combined ratio excluding catastrophe losses (1) |
|
|
69.6 |
% |
|
|
68.4 |
% |
|
|
|
|
|
|
|
|
Adjusted underwriting income (1) |
|
$ |
23,092 |
|
|
$ |
24,808 |
|
|
$ |
(1,716 |
) |
|
|
(6.9 |
)% |
(1)- Indicates Non-GAAP financial measure- see above for
definition of Non-GAAP financial measures and see below for
reconciliation of Non-GAAP financial measures to their most
directly comparable measures prepared in accordance with GAAP.
(2)- We now include the impact of net realized and unrealized
losses and gains on investments as an adjustment to our net income.
As this line is primarily driven by equity market fluctuations
rather than our underlying business performance, we believe adding
this adjustment provides a more meaningful comparison of our
performance. We have also changed the prior year adjusted net
income to conform to this presentation.
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
|
($ in thousands, except per share data) |
|
Gross written premiums |
|
$ |
524,407 |
|
|
$ |
389,623 |
|
|
$ |
134,784 |
|
|
|
34.6 |
% |
Ceded written premiums |
|
|
(339,453 |
) |
|
|
(212,179 |
) |
|
|
(127,274 |
) |
|
|
60.0 |
% |
Net written premiums |
|
|
184,954 |
|
|
|
177,444 |
|
|
|
7,510 |
|
|
|
4.2 |
% |
Net earned premiums |
|
|
166,347 |
|
|
|
156,297 |
|
|
|
10,050 |
|
|
|
6.4 |
% |
Commission and other income |
|
|
1,316 |
|
|
|
1,767 |
|
|
|
(451 |
) |
|
|
(25.5 |
)% |
Total underwriting revenue (1) |
|
|
167,663 |
|
|
|
158,064 |
|
|
|
9,599 |
|
|
|
6.1 |
% |
Losses and loss adjustment expenses |
|
|
38,557 |
|
|
|
29,351 |
|
|
|
9,206 |
|
|
|
31.4 |
% |
Acquisition expenses, net of ceding commissions and fronting
fees |
|
|
51,736 |
|
|
|
56,718 |
|
|
|
(4,982 |
) |
|
|
(8.8 |
)% |
Other underwriting expenses |
|
|
41,572 |
|
|
|
34,119 |
|
|
|
7,453 |
|
|
|
21.8 |
% |
Underwriting income (1) |
|
|
35,798 |
|
|
|
37,876 |
|
|
|
(2,078 |
) |
|
|
(5.5 |
)% |
Interest expense |
|
|
(2,084 |
) |
|
|
(204 |
) |
|
|
(1,880 |
) |
|
|
NM |
|
Net investment income |
|
|
10,661 |
|
|
|
5,719 |
|
|
|
4,942 |
|
|
|
86.4 |
% |
Net realized and unrealized gains (losses) on investments |
|
|
1,273 |
|
|
|
(6,014 |
) |
|
|
7,287 |
|
|
|
(121.2 |
)% |
Income before income taxes |
|
|
45,648 |
|
|
|
37,377 |
|
|
|
8,271 |
|
|
|
22.1 |
% |
Income tax expense |
|
|
10,774 |
|
|
|
8,251 |
|
|
|
2,523 |
|
|
|
30.6 |
% |
Net income |
|
$ |
34,874 |
|
|
$ |
29,126 |
|
|
$ |
5,748 |
|
|
|
19.7 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized and unrealized (gains) losses on investments(2) |
|
|
(1,273 |
) |
|
|
6,014 |
|
|
|
(7,287 |
) |
|
|
(121.2 |
)% |
Expenses associated with transactions |
|
|
— |
|
|
|
85 |
|
|
|
(85 |
) |
|
|
(100.0 |
)% |
Stock-based compensation expense |
|
|
7,147 |
|
|
|
5,463 |
|
|
|
1,684 |
|
|
|
30.8 |
% |
Amortization of intangibles |
|
|
703 |
|
|
|
628 |
|
|
|
75 |
|
|
|
11.9 |
% |
Expenses associated with catastrophe bond |
|
|
1,640 |
|
|
|
1,992 |
|
|
|
(352 |
) |
|
|
(17.7 |
)% |
Tax impact |
|
|
(857 |
) |
|
|
(2,282 |
) |
|
|
1,425 |
|
|
|
(62.4 |
)% |
Adjusted net income (1)(2) |
|
$ |
42,234 |
|
|
$ |
41,026 |
|
|
$ |
1,208 |
|
|
|
2.9 |
% |
Key Financial and Operating Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on equity |
|
|
17.5 |
% |
|
|
15.1 |
% |
|
|
|
|
|
|
|
|
Annualized adjusted return on equity (1) |
|
|
21.2 |
% |
|
|
21.3 |
% |
|
|
|
|
|
|
|
|
Loss ratio |
|
|
23.2 |
% |
|
|
18.8 |
% |
|
|
|
|
|
|
|
|
Expense ratio |
|
|
55.3 |
% |
|
|
57.0 |
% |
|
|
|
|
|
|
|
|
Combined ratio |
|
|
78.5 |
% |
|
|
75.8 |
% |
|
|
|
|
|
|
|
|
Adjusted combined ratio (1) |
|
|
72.8 |
% |
|
|
70.5 |
% |
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
1.37 |
|
|
$ |
1.13 |
|
|
|
|
|
|
|
|
|
Diluted adjusted earnings per share (1) |
|
$ |
1.66 |
|
|
$ |
1.59 |
|
|
|
|
|
|
|
|
|
Catastrophe losses |
|
$ |
3,965 |
|
|
$ |
1,029 |
|
|
|
|
|
|
|
|
|
Catastrophe loss ratio (1) |
|
|
2.4 |
% |
|
|
0.7 |
% |
|
|
|
|
|
|
|
|
Adjusted combined ratio excluding catastrophe losses (1) |
|
|
70.4 |
% |
|
|
69.9 |
% |
|
|
|
|
|
|
|
|
Adjusted underwriting income (1) |
|
$ |
45,288 |
|
|
$ |
46,044 |
|
|
$ |
(756 |
) |
|
|
(1.6 |
)% |
|
Condensed Consolidated Balance sheets |
Palomar Holdings, Inc. and
SubsidiariesCondensed Consolidated Balance Sheets
(unaudited)(in thousands, except shares and par
value data) |
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Investments: |
|
|
|
|
|
|
|
|
Fixed maturity securities available for sale, at fair value
(amortized cost: $605,040 in 2023; $561,580 in 2022) |
|
$ |
560,121 |
|
|
$ |
515,064 |
|
Equity securities, at fair value (cost: $43,297 in 2023; $42,352 in
2022) |
|
|
41,428 |
|
|
|
38,576 |
|
Total investments |
|
|
601,549 |
|
|
|
553,640 |
|
Cash and cash equivalents |
|
|
58,310 |
|
|
|
68,108 |
|
Restricted cash |
|
|
294 |
|
|
|
56 |
|
Accrued investment income |
|
|
4,568 |
|
|
|
3,777 |
|
Premiums receivable |
|
|
243,002 |
|
|
|
162,858 |
|
Deferred policy acquisition costs, net of ceding commissions and
fronting fees |
|
|
55,913 |
|
|
|
56,740 |
|
Reinsurance recoverable on paid losses and loss adjustment
expenses |
|
|
39,101 |
|
|
|
39,718 |
|
Reinsurance recoverable on unpaid losses and loss adjustment
expenses |
|
|
216,783 |
|
|
|
153,895 |
|
Ceded unearned premiums |
|
|
242,452 |
|
|
|
204,084 |
|
Prepaid expenses and other assets |
|
|
60,125 |
|
|
|
44,088 |
|
Deferred tax assets, net |
|
|
10,617 |
|
|
|
10,622 |
|
Property and equipment, net |
|
|
498 |
|
|
|
603 |
|
Goodwill and intangible assets, net |
|
|
13,095 |
|
|
|
8,261 |
|
Total assets |
|
$ |
1,546,307 |
|
|
$ |
1,306,450 |
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and other accrued liabilities |
|
$ |
24,838 |
|
|
$ |
25,760 |
|
Reserve for losses and loss adjustment expenses |
|
|
298,083 |
|
|
|
231,415 |
|
Unearned premiums |
|
|
528,289 |
|
|
|
471,314 |
|
Ceded premium payable |
|
|
199,611 |
|
|
|
146,127 |
|
Funds held under reinsurance treaty |
|
|
10,378 |
|
|
|
10,680 |
|
Borrowings from credit agreements |
|
|
71,400 |
|
|
|
36,400 |
|
Total liabilities |
|
|
1,132,599 |
|
|
|
921,696 |
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0
shares issued and outstanding as of June 30, 2023 and December 31,
2022 |
|
|
— |
|
|
|
— |
|
Common stock, $0.0001 par value, 500,000,000 shares authorized,
24,794,269 and 25,027,467 shares issued and outstanding as of June
30, 2023 and December 31, 2022, respectively |
|
|
3 |
|
|
|
3 |
|
Additional paid-in capital |
|
|
341,413 |
|
|
|
333,558 |
|
Accumulated other comprehensive loss |
|
|
(34,726 |
) |
|
|
(36,515 |
) |
Retained earnings |
|
|
107,018 |
|
|
|
87,708 |
|
Total stockholders' equity |
|
|
413,708 |
|
|
|
384,754 |
|
Total liabilities and stockholders' equity |
|
$ |
1,546,307 |
|
|
$ |
1,306,450 |
|
|
Condensed Consolidated Income Statement |
Palomar Holdings, Inc. and
SubsidiariesCondensed Consolidated Statements
of Income and Comprehensive Income (loss)
(Unaudited)(in thousands, except shares and per
share data) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross written premiums |
|
$ |
274,296 |
|
|
$ |
218,689 |
|
|
$ |
524,407 |
|
|
$ |
389,623 |
|
Ceded written premiums |
|
|
(169,109 |
) |
|
|
(122,627 |
) |
|
|
(339,453 |
) |
|
|
(212,179 |
) |
Net written premiums |
|
|
105,187 |
|
|
|
96,062 |
|
|
|
184,954 |
|
|
|
177,444 |
|
Change in unearned premiums |
|
|
(22,080 |
) |
|
|
(15,797 |
) |
|
|
(18,607 |
) |
|
|
(21,147 |
) |
Net earned premiums |
|
|
83,107 |
|
|
|
80,265 |
|
|
|
166,347 |
|
|
|
156,297 |
|
Net investment income |
|
|
5,541 |
|
|
|
3,140 |
|
|
|
10,661 |
|
|
|
5,719 |
|
Net realized and unrealized gains (losses) on investments |
|
|
1,127 |
|
|
|
(4,735 |
) |
|
|
1,273 |
|
|
|
(6,014 |
) |
Commission and other income |
|
|
621 |
|
|
|
990 |
|
|
|
1,316 |
|
|
|
1,767 |
|
Total revenues |
|
|
90,396 |
|
|
|
79,660 |
|
|
|
179,597 |
|
|
|
157,769 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
|
17,905 |
|
|
|
14,398 |
|
|
|
38,557 |
|
|
|
29,351 |
|
Acquisition expenses, net of ceding commissions and fronting
fees |
|
|
26,057 |
|
|
|
28,663 |
|
|
|
51,736 |
|
|
|
56,718 |
|
Other underwriting expenses |
|
|
22,350 |
|
|
|
18,195 |
|
|
|
41,572 |
|
|
|
34,119 |
|
Interest expense |
|
|
1,064 |
|
|
|
111 |
|
|
|
2,084 |
|
|
|
204 |
|
Total expenses |
|
|
67,376 |
|
|
|
61,367 |
|
|
|
133,949 |
|
|
|
120,392 |
|
Income before income taxes |
|
|
23,020 |
|
|
|
18,293 |
|
|
|
45,648 |
|
|
|
37,377 |
|
Income tax expense |
|
|
5,458 |
|
|
|
3,704 |
|
|
|
10,774 |
|
|
|
8,251 |
|
Net income |
|
|
17,562 |
|
|
|
14,589 |
|
|
|
34,874 |
|
|
|
29,126 |
|
Other comprehensive income (loss), net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gains (losses) on securities available for sale |
|
|
(3,685 |
) |
|
|
(14,065 |
) |
|
|
1,789 |
|
|
|
(32,528 |
) |
Net comprehensive income (loss) |
|
$ |
13,877 |
|
|
$ |
524 |
|
|
$ |
36,663 |
|
|
$ |
(3,402 |
) |
Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.71 |
|
|
$ |
0.58 |
|
|
$ |
1.40 |
|
|
$ |
1.15 |
|
Diluted earnings per share |
|
$ |
0.69 |
|
|
$ |
0.57 |
|
|
$ |
1.37 |
|
|
$ |
1.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
24,833,852 |
|
|
|
25,211,924 |
|
|
|
24,901,403 |
|
|
|
25,283,222 |
|
Diluted |
|
|
25,309,526 |
|
|
|
25,746,780 |
|
|
|
25,384,409 |
|
|
|
25,817,442 |
|
|
Underwriting Segment Data
The Company has a single reportable segment and offers primarily
property and casualty insurance products. Gross written premiums
(GWP) by product, location and company are presented below:
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% |
|
|
|
Amount |
|
|
GWP |
|
|
Amount |
|
|
GWP |
|
|
Change |
|
|
Change |
|
Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fronting Premiums |
|
$ |
80,211 |
|
|
|
29.2 |
% |
|
$ |
42,154 |
|
|
|
19.3 |
% |
|
$ |
38,057 |
|
|
|
90.3 |
% |
Residential Earthquake |
|
|
65,102 |
|
|
|
23.7 |
% |
|
|
54,090 |
|
|
|
24.7 |
% |
|
|
11,012 |
|
|
|
20.4 |
% |
Commercial Earthquake |
|
|
42,826 |
|
|
|
15.6 |
% |
|
|
33,103 |
|
|
|
15.1 |
% |
|
|
9,723 |
|
|
|
29.4 |
% |
Inland Marine |
|
|
35,539 |
|
|
|
13.0 |
% |
|
|
23,134 |
|
|
|
10.6 |
% |
|
|
12,405 |
|
|
|
53.6 |
% |
Casualty |
|
|
14,988 |
|
|
|
5.5 |
% |
|
|
7,804 |
|
|
|
3.6 |
% |
|
|
7,184 |
|
|
|
92.1 |
% |
Commercial All Risk |
|
|
11,770 |
|
|
|
4.3 |
% |
|
|
21,213 |
|
|
|
9.7 |
% |
|
|
(9,443 |
) |
|
|
(44.5 |
)% |
Hawaii Hurricane |
|
|
9,595 |
|
|
|
3.5 |
% |
|
|
8,240 |
|
|
|
3.8 |
% |
|
|
1,355 |
|
|
|
16.4 |
% |
Residential Flood |
|
|
5,469 |
|
|
|
2.0 |
% |
|
|
3,583 |
|
|
|
1.6 |
% |
|
|
1,886 |
|
|
|
52.6 |
% |
Specialty Homeowners |
|
|
(38 |
) |
|
|
(0.0 |
)% |
|
|
13,891 |
|
|
|
6.4 |
% |
|
|
(13,929 |
) |
|
|
(100.3 |
)% |
Other |
|
|
8,834 |
|
|
|
3.2 |
% |
|
|
11,477 |
|
|
|
5.2 |
% |
|
|
(2,643 |
) |
|
|
(23.0 |
)% |
Total Gross Written Premiums |
|
$ |
274,296 |
|
|
|
100.0 |
% |
|
$ |
218,689 |
|
|
|
100.0 |
% |
|
$ |
55,607 |
|
|
|
25.4 |
% |
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
|
|
|
|
|
|
|
|
Amount |
|
|
GWP |
|
|
Amount |
|
|
GWP |
|
|
Change |
|
|
Change |
|
Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fronting Premiums |
|
$ |
171,967 |
|
|
|
32.8 |
% |
|
$ |
71,999 |
|
|
|
18.5 |
% |
|
$ |
99,968 |
|
|
|
138.8 |
% |
Residential Earthquake |
|
|
120,827 |
|
|
|
23.0 |
% |
|
|
100,426 |
|
|
|
25.8 |
% |
|
|
20,401 |
|
|
|
20.3 |
% |
Commercial Earthquake |
|
|
80,597 |
|
|
|
15.4 |
% |
|
|
58,247 |
|
|
|
14.9 |
% |
|
|
22,350 |
|
|
|
38.4 |
% |
Inland Marine |
|
|
66,588 |
|
|
|
12.7 |
% |
|
|
41,371 |
|
|
|
10.6 |
% |
|
|
25,217 |
|
|
|
61.0 |
% |
Casualty |
|
|
26,722 |
|
|
|
5.1 |
% |
|
|
12,804 |
|
|
|
3.3 |
% |
|
|
13,918 |
|
|
|
108.7 |
% |
Commercial All Risk |
|
|
20,146 |
|
|
|
3.8 |
% |
|
|
31,791 |
|
|
|
8.2 |
% |
|
|
(11,645 |
) |
|
|
(36.6 |
)% |
Hawaii Hurricane |
|
|
17,667 |
|
|
|
3.4 |
% |
|
|
15,154 |
|
|
|
3.9 |
% |
|
|
2,513 |
|
|
|
16.6 |
% |
Residential Flood |
|
|
9,705 |
|
|
|
1.9 |
% |
|
|
6,577 |
|
|
|
1.7 |
% |
|
|
3,128 |
|
|
|
47.6 |
% |
Specialty Homeowners |
|
|
(97 |
) |
|
|
(0.0 |
)% |
|
|
30,176 |
|
|
|
7.7 |
% |
|
|
(30,273 |
) |
|
|
(100.3 |
)% |
Other |
|
|
10,285 |
|
|
|
1.9 |
% |
|
|
21,078 |
|
|
|
5.4 |
% |
|
|
(10,793 |
) |
|
|
(51.2 |
)% |
Total Gross Written Premiums |
|
$ |
524,407 |
|
|
|
100.0 |
% |
|
$ |
389,623 |
|
|
|
100.0 |
% |
|
$ |
134,784 |
|
|
|
34.6 |
% |
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
($ in thousands) |
|
|
($ in thousands) |
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
Amount |
|
|
GWP |
|
|
Amount |
|
|
GWP |
|
|
Amount |
|
|
GWP |
|
|
Amount |
|
|
GWP |
|
State |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California |
|
$ |
157,057 |
|
|
|
57.3 |
% |
|
$ |
93,130 |
|
|
|
42.6 |
% |
|
$ |
288,946 |
|
|
|
55.1 |
% |
|
$ |
161,848 |
|
|
|
41.5 |
% |
Texas |
|
|
25,231 |
|
|
|
9.2 |
% |
|
|
26,286 |
|
|
|
12.0 |
% |
|
|
48,441 |
|
|
|
9.2 |
% |
|
|
45,265 |
|
|
|
11.6 |
% |
Washington |
|
|
13,645 |
|
|
|
5.0 |
% |
|
|
8,937 |
|
|
|
4.1 |
% |
|
|
25,617 |
|
|
|
4.9 |
% |
|
|
15,818 |
|
|
|
4.1 |
% |
Florida |
|
|
12,664 |
|
|
|
4.6 |
% |
|
|
14,809 |
|
|
|
6.8 |
% |
|
|
24,760 |
|
|
|
4.7 |
% |
|
|
19,771 |
|
|
|
5.1 |
% |
Hawaii |
|
|
12,228 |
|
|
|
4.5 |
% |
|
|
10,191 |
|
|
|
4.7 |
% |
|
|
22,333 |
|
|
|
4.3 |
% |
|
|
18,731 |
|
|
|
4.8 |
% |
Oregon |
|
|
5,907 |
|
|
|
2.2 |
% |
|
|
4,371 |
|
|
|
2.0 |
% |
|
|
12,687 |
|
|
|
2.4 |
% |
|
|
8,745 |
|
|
|
2.2 |
% |
Illinois |
|
|
4,471 |
|
|
|
1.6 |
% |
|
|
4,676 |
|
|
|
2.1 |
% |
|
|
9,173 |
|
|
|
1.7 |
% |
|
|
8,949 |
|
|
|
2.3 |
% |
Utah |
|
|
3,938 |
|
|
|
1.4 |
% |
|
|
2,316 |
|
|
|
1.1 |
% |
|
|
7,053 |
|
|
|
1.3 |
% |
|
|
4,191 |
|
|
|
1.1 |
% |
Other |
|
|
39,155 |
|
|
|
14.3 |
% |
|
|
53,973 |
|
|
|
24.7 |
% |
|
|
85,397 |
|
|
|
16.4 |
% |
|
|
106,305 |
|
|
|
27.3 |
% |
Total Gross Written Premiums |
|
$ |
274,296 |
|
|
|
100.0 |
% |
|
$ |
218,689 |
|
|
|
100.0 |
% |
|
$ |
524,407 |
|
|
|
100.0 |
% |
|
$ |
389,623 |
|
|
|
100.0 |
% |
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
($ in thousands) |
|
|
($ in thousands) |
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
Amount |
|
|
GWP |
|
|
Amount |
|
|
GWP |
|
|
Amount |
|
|
GWP |
|
|
Amount |
|
|
GWP |
|
Subsidiary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSIC |
|
$ |
159,846 |
|
|
|
58.3 |
% |
|
$ |
116,338 |
|
|
|
53.2 |
% |
|
$ |
310,550 |
|
|
|
59.2 |
% |
|
$ |
220,342 |
|
|
|
56.6 |
% |
PESIC |
|
|
114,450 |
|
|
|
41.7 |
% |
|
|
102,351 |
|
|
|
46.8 |
% |
|
|
213,857 |
|
|
|
40.8 |
% |
|
|
169,281 |
|
|
|
43.4 |
% |
Total Gross Written Premiums |
|
$ |
274,296 |
|
|
|
100.0 |
% |
|
$ |
218,689 |
|
|
|
100.0 |
% |
|
$ |
524,407 |
|
|
|
100.0 |
% |
|
$ |
389,623 |
|
|
|
100.0 |
% |
|
Gross and net earned premiums
The table below shows the amount of premiums the Company earned
on a gross and net basis and the Company’s net earned premiums as a
percentage of gross earned premiums for each period presented:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
|
($ in thousands) |
|
|
($ in thousands) |
|
Gross earned premiums |
|
$ |
242,189 |
|
|
$ |
158,142 |
|
|
$ |
84,047 |
|
|
|
53.1 |
% |
|
$ |
467,432 |
|
|
$ |
297,067 |
|
|
$ |
170,365 |
|
|
|
57.3 |
% |
Ceded earned premiums |
|
|
(159,082 |
) |
|
|
(77,877 |
) |
|
|
(81,205 |
) |
|
|
104.3 |
% |
|
|
(301,085 |
) |
|
|
(140,770 |
) |
|
|
(160,315 |
) |
|
|
113.9 |
% |
Net earned premiums |
|
$ |
83,107 |
|
|
$ |
80,265 |
|
|
$ |
2,842 |
|
|
|
3.5 |
% |
|
$ |
166,347 |
|
|
$ |
156,297 |
|
|
$ |
10,050 |
|
|
|
6.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earned premium ratio |
|
|
34.3 |
% |
|
|
50.8 |
% |
|
|
|
|
|
|
|
|
|
|
35.6 |
% |
|
|
52.6 |
% |
|
|
|
|
|
|
|
|
|
Loss detail
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
|
($ in thousands) |
|
|
($ in thousands) |
|
Catastrophe losses |
|
$ |
2,159 |
|
|
$ |
548 |
|
|
$ |
1,611 |
|
|
|
294.0 |
% |
|
$ |
3,965 |
|
|
$ |
1,029 |
|
|
$ |
2,936 |
|
|
|
285.3 |
% |
Non-catastrophe losses |
|
|
15,746 |
|
|
|
13,850 |
|
|
|
1,896 |
|
|
|
13.7 |
% |
|
|
34,592 |
|
|
|
28,322 |
|
|
|
6,270 |
|
|
|
22.1 |
% |
Total losses and loss
adjustment expenses |
|
$ |
17,905 |
|
|
$ |
14,398 |
|
|
$ |
3,507 |
|
|
|
24.4 |
% |
|
$ |
38,557 |
|
|
$ |
29,351 |
|
|
$ |
9,206 |
|
|
|
31.4 |
% |
|
The following table represents a reconciliation of changes in
the ending reserve balances for losses and loss adjustment
expenses:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Reserve for losses and LAE net of reinsurance recoverables at
beginning of period |
|
$ |
81,366 |
|
|
$ |
51,386 |
|
|
$ |
77,520 |
|
|
$ |
45,419 |
|
Add: Incurred losses and LAE, net of reinsurance, related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year |
|
|
18,539 |
|
|
|
14,350 |
|
|
|
35,839 |
|
|
|
27,799 |
|
Prior years |
|
|
(634 |
) |
|
|
48 |
|
|
|
2,718 |
|
|
|
1,552 |
|
Total incurred |
|
|
17,905 |
|
|
|
14,398 |
|
|
|
38,557 |
|
|
|
29,351 |
|
Deduct: Loss and LAE payments, net of reinsurance, related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year |
|
|
6,176 |
|
|
|
4,399 |
|
|
|
7,569 |
|
|
|
5,889 |
|
Prior years |
|
|
11,795 |
|
|
|
5,615 |
|
|
|
27,208 |
|
|
|
13,112 |
|
Total payments |
|
|
17,971 |
|
|
|
10,014 |
|
|
|
34,777 |
|
|
|
19,001 |
|
Reserve for losses and LAE net of reinsurance recoverables at end
of period |
|
|
81,300 |
|
|
|
55,769 |
|
|
|
81,300 |
|
|
|
55,769 |
|
Add: Reinsurance recoverables on unpaid losses and LAE at end of
period |
|
|
216,783 |
|
|
|
107,898 |
|
|
|
216,783 |
|
|
|
107,898 |
|
Reserve for losses and LAE gross of reinsurance recoverables on
unpaid losses and LAE at end of period |
|
$ |
298,083 |
|
|
$ |
163,667 |
|
|
$ |
298,083 |
|
|
$ |
163,667 |
|
|
Reconciliation of Non-GAAP Financial Measures
For the three and six months ended June 30, 2023 and 2022, the
Non-GAAP financial measures discussed above reconcile to
their most comparable GAAP measures as follows:
Underwriting revenue
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Total revenue |
|
$ |
90,396 |
|
|
$ |
79,660 |
|
|
$ |
179,597 |
|
|
$ |
157,769 |
|
Net investment income |
|
|
(5,541 |
) |
|
|
(3,140 |
) |
|
|
(10,661 |
) |
|
|
(5,719 |
) |
Net realized and unrealized (gains) losses on investments |
|
|
(1,127 |
) |
|
|
4,735 |
|
|
|
(1,273 |
) |
|
|
6,014 |
|
Underwriting revenue |
|
$ |
83,728 |
|
|
$ |
81,255 |
|
|
$ |
167,663 |
|
|
$ |
158,064 |
|
|
Underwriting income and adjusted underwriting income
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Income before income taxes |
|
$ |
23,020 |
|
|
$ |
18,293 |
|
|
$ |
45,648 |
|
|
$ |
37,377 |
|
Net investment income |
|
|
(5,541 |
) |
|
|
(3,140 |
) |
|
|
(10,661 |
) |
|
|
(5,719 |
) |
Net realized and unrealized (gains) losses on investments |
|
|
(1,127 |
) |
|
|
4,735 |
|
|
|
(1,273 |
) |
|
|
6,014 |
|
Interest expense |
|
|
1,064 |
|
|
|
111 |
|
|
|
2,084 |
|
|
|
204 |
|
Underwriting income |
|
$ |
17,416 |
|
|
$ |
19,999 |
|
|
$ |
35,798 |
|
|
$ |
37,876 |
|
Expenses associated with transactions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
85 |
|
Stock-based compensation expense |
|
|
3,697 |
|
|
|
2,704 |
|
|
|
7,147 |
|
|
|
5,463 |
|
Amortization of intangibles |
|
|
389 |
|
|
|
313 |
|
|
|
703 |
|
|
|
628 |
|
Expenses associated with catastrophe bond |
|
|
1,590 |
|
|
|
1,792 |
|
|
|
1,640 |
|
|
|
1,992 |
|
Adjusted underwriting income |
|
$ |
23,092 |
|
|
$ |
24,808 |
|
|
$ |
45,288 |
|
|
$ |
46,044 |
|
|
Adjusted net income
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Net income |
|
$ |
17,562 |
|
|
$ |
14,589 |
|
|
$ |
34,874 |
|
|
$ |
29,126 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized and unrealized (gains) losses on investments |
|
|
(1,127 |
) |
|
|
4,735 |
|
|
|
(1,273 |
) |
|
|
6,014 |
|
Expenses associated with transactions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
85 |
|
Stock-based compensation expense |
|
|
3,697 |
|
|
|
2,704 |
|
|
|
7,147 |
|
|
|
5,463 |
|
Amortization of intangibles |
|
|
389 |
|
|
|
313 |
|
|
|
703 |
|
|
|
628 |
|
Expenses associated with catastrophe bond |
|
|
1,590 |
|
|
|
1,792 |
|
|
|
1,640 |
|
|
|
1,992 |
|
Tax impact |
|
|
(317 |
) |
|
|
(1,689 |
) |
|
|
(857 |
) |
|
|
(2,282 |
) |
Adjusted net income |
|
$ |
21,794 |
|
|
$ |
22,444 |
|
|
$ |
42,234 |
|
|
$ |
41,026 |
|
|
Annualized adjusted return on equity
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized adjusted net income |
|
$ |
87,176 |
|
|
$ |
89,776 |
|
|
$ |
84,468 |
|
|
$ |
82,052 |
|
Average stockholders' equity |
|
$ |
409,178 |
|
|
$ |
379,232 |
|
|
$ |
399,230 |
|
|
$ |
386,117 |
|
Annualized adjusted return on equity |
|
|
21.3 |
% |
|
|
23.7 |
% |
|
|
21.2 |
% |
|
|
21.3 |
% |
|
Adjusted combined ratio
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Numerator: Sum of losses and loss adjustment expenses, acquisition
expenses, and other underwriting expenses, net of commission and
other income |
|
$ |
65,691 |
|
|
$ |
60,266 |
|
|
$ |
130,549 |
|
|
$ |
118,421 |
|
Denominator: Net earned premiums |
|
$ |
83,107 |
|
|
$ |
80,265 |
|
|
$ |
166,347 |
|
|
$ |
156,297 |
|
Combined ratio |
|
|
79.0 |
% |
|
|
75.1 |
% |
|
|
78.5 |
% |
|
|
75.8 |
% |
Adjustments to numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses associated with transactions |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(85 |
) |
Stock-based compensation expense |
|
|
(3,697 |
) |
|
|
(2,704 |
) |
|
|
(7,147 |
) |
|
|
(5,463 |
) |
Amortization of intangibles |
|
|
(389 |
) |
|
|
(313 |
) |
|
|
(703 |
) |
|
|
(628 |
) |
Expenses associated with catastrophe bond |
|
|
(1,590 |
) |
|
|
(1,792 |
) |
|
|
(1,640 |
) |
|
|
(1,992 |
) |
Adjusted combined ratio |
|
|
72.2 |
% |
|
|
69.1 |
% |
|
|
72.8 |
% |
|
|
70.5 |
% |
|
Diluted adjusted earnings per share
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands, except per share data) |
|
|
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income |
|
$ |
21,794 |
|
|
$ |
22,444 |
|
|
$ |
42,234 |
|
|
$ |
41,026 |
|
Weighted-average common shares outstanding, diluted |
|
|
25,309,526 |
|
|
|
25,746,780 |
|
|
|
25,384,409 |
|
|
|
25,817,442 |
|
Diluted adjusted earnings per share |
|
$ |
0.86 |
|
|
$ |
0.87 |
|
|
$ |
1.66 |
|
|
$ |
1.59 |
|
|
Catastrophe loss ratio
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Numerator: Losses and loss adjustment expenses |
|
$ |
17,905 |
|
|
$ |
14,398 |
|
|
$ |
38,557 |
|
|
$ |
29,351 |
|
Denominator: Net earned premiums |
|
$ |
83,107 |
|
|
$ |
80,265 |
|
|
$ |
166,347 |
|
|
$ |
156,297 |
|
Loss ratio |
|
|
21.5 |
% |
|
|
17.9 |
% |
|
|
23.2 |
% |
|
|
18.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator: Catastrophe losses |
|
$ |
2,159 |
|
|
$ |
548 |
|
|
$ |
3,965 |
|
|
$ |
1,029 |
|
Denominator: Net earned premiums |
|
$ |
83,107 |
|
|
$ |
80,265 |
|
|
$ |
166,347 |
|
|
$ |
156,297 |
|
Catastrophe loss ratio |
|
|
2.6 |
% |
|
|
0.7 |
% |
|
|
2.4 |
% |
|
|
0.7 |
% |
|
Adjusted combined ratio excluding catastrophe losses
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Numerator: Sum of losses and loss adjustment expenses, acquisition
expenses, and other underwriting expenses, net of commission and
other income |
|
$ |
65,691 |
|
|
$ |
60,266 |
|
|
$ |
130,549 |
|
|
$ |
118,421 |
|
Denominator: Net earned premiums |
|
$ |
83,107 |
|
|
$ |
80,265 |
|
|
$ |
166,347 |
|
|
$ |
156,297 |
|
Combined ratio |
|
|
79.0 |
% |
|
|
75.1 |
% |
|
|
78.5 |
% |
|
|
75.8 |
% |
Adjustments to numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses associated with transactions |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(85 |
) |
Stock-based compensation expense |
|
|
(3,697 |
) |
|
|
(2,704 |
) |
|
|
(7,147 |
) |
|
|
(5,463 |
) |
Amortization of intangibles |
|
|
(389 |
) |
|
|
(313 |
) |
|
|
(703 |
) |
|
|
(628 |
) |
Expenses associated with catastrophe bond |
|
|
(1,590 |
) |
|
|
(1,792 |
) |
|
|
(1,640 |
) |
|
|
(1,992 |
) |
Catastrophe losses |
|
|
(2,159 |
) |
|
|
(548 |
) |
|
|
(3,965 |
) |
|
|
(1,029 |
) |
Adjusted combined ratio excluding catastrophe losses |
|
|
69.6 |
% |
|
|
68.4 |
% |
|
|
70.4 |
% |
|
|
69.9 |
% |
|
Tangible Stockholders’ equity
|
|
June 30, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
Stockholders' equity |
|
$ |
413,708 |
|
|
$ |
384,754 |
|
Goodwill and intangible assets |
|
|
(13,095 |
) |
|
|
(8,261 |
) |
Tangible stockholders' equity |
|
$ |
400,613 |
|
|
$ |
376,493 |
|
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