Palomar Holdings, Inc. Announces Successful Placement of Additional Earthquake Reinsurance Limit

Rhea-AI Summary

Palomar Holdings (NASDAQ: PLMR) announced the successful placement of approximately $187.5 million in excess of loss (XOL) reinsurance treaties, supporting its earthquake line of business. The coverage runs from April 1, 2023 to June 1, 2024, enhancing the company’s capacity for growth in this segment. CEO Mac Armstrong noted the orderly market conditions and favorable pricing during the placement. Palomar is also pursuing alternative risk transfer methods and will not renew its current aggregate XOL treaty, aiming to improve its risk profile by reducing exposure to U.S. hurricane risks.

Positive

• Successfully secured approximately $187.5 million in incremental XOL reinsurance limit.
• Expanded coverage supports sustained growth of Palomar's profitable earthquake business.
• Market for reinsurance was orderly with pricing aligned with previous expectations.

Negative

• Opted not to renew the current aggregate XOL treaty, which may indicate potential volatility in risk management.

LA JOLLA, Calif., April 04, 2023 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ: PLMR) (“Palomar” or the “Company”) today announced the successful placement of certain excess of loss (“XOL”) reinsurance treaties that support and provide incremental limit for its earthquake line of business.

In total, Palomar has secured approximately $187.5 million of incremental XOL limit from a syndicated panel of long-term trading partners which will incept between April 1, 2023 and June 1, 2023 and provide coverage through June 1, 2024. The Company’s expanded XOL coverage further enables the sustained growth of Palomar’s profitable earthquake business.

“We are pleased with the continued and incremental support from our long-time reinsurance partners as we successfully secured approximately $187.5 million of additional XOL limit to support our growth in what remains a very attractive market for earthquake insurance,” commented Mac Armstrong, Chairman and Chief Executive Officer of Palomar. “Importantly, the market for our reinsurance was orderly and the pricing was in-line with the expectations that we outlined on our fourth quarter earnings call. This limit affords us the ability to both grow and optimize our earthquake book of business and execute on our Palomar 2X strategic plan.”

Mr. Armstrong continued, “Delivering predictable earnings remains a strategic priority for our team. To achieve this, we have been executing a multi-year strategic plan designed to reduce volatility in our book of business and most notably contract our exposure to continental U.S. hurricane risk. The reduction in our continental hurricane exposure not only makes a positive impact on our risk profile but also diminishes the utility of our current aggregate XOL reinsurance treaty. As such, we opted to non-renew our aggregate cover. While there were compelling coverage offers from existing reinsurers, we will pursue alternative forms of risk transfer that provide protection from multiple severe events. I would like to personally thank all our reinsurance partners for their support as we continue to build Palomar into a premier specialty insurance company.”

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.

Follow Palomar on Facebook, LinkedIn and Twitter: @PLMRInsurance

Safe Harbor Statement
Palomar 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.

Contact
Media Inquiries
Lindsay Conner
1-551-206-6217
lconner@plmr.com

Investor Relations
Jamie Lillis
1-203-428-3223
investors@plmr.com

Source: Palomar Holdings, Inc. 

FAQ

What is the significance of Palomar's $187.5 million reinsurance treaty announced on April 4, 2023?

The reinsurance treaty enhances Palomar's capacity to grow its earthquake insurance business.

How long will the new XOL reinsurance coverage last for Palomar?

The coverage will be effective from April 1, 2023, to June 1, 2024.

What strategic changes is Palomar making regarding its hurricane risk exposure?

Palomar is reducing its exposure to continental U.S. hurricane risks to improve its risk profile.

Why did Palomar decide not to renew its aggregate XOL reinsurance treaty?

Palomar's non-renewal decision was influenced by a strategy to optimize its risk management as it reduces hurricane exposure.