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Palomar Holdings, Inc. Reports Third Quarter 2024 Results

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Palomar Holdings (NASDAQ:PLMR) reported strong Q3 2024 results with net income of $30.5 million ($1.15 per diluted share), up from $18.4 million in Q3 2023. Gross written premiums increased 32.2% to $415.0 million, while adjusted net income grew 39.3% to $32.4 million. The company achieved a combined ratio of 80.5% and an annualized return on equity of 19.7%. Despite heightened catastrophe activity, Palomar maintained strong performance with a 77.1% adjusted combined ratio. The company successfully raised $116 million in August to fund expansion into the surety market and support organic growth initiatives.

Palomar Holdings (NASDAQ:PLMR) ha riportato risultati solidi per il terzo trimestre del 2024, con un reddito netto di 30,5 milioni di dollari (1,15 dollari per azione diluita), in aumento rispetto ai 18,4 milioni di dollari del terzo trimestre del 2023. I premi lordi scritti sono aumentati del 32,2% a 415,0 milioni di dollari, mentre il reddito netto rettificato è cresciuto del 39,3% a 32,4 milioni di dollari. L'azienda ha ottenuto un rapporto combinato dell'80,5% e un rendimento annuo del capitale proprio del 19,7%. Nonostante l'aumento dell'attività catastrofica, Palomar ha mantenuto ottime performance con un rapporto combinato rettificato del 77,1%. L'azienda ha anche raccolto con successo 116 milioni di dollari ad agosto per finanziare l'espansione nel mercato delle garanzie e supportare le iniziative di crescita organica.

Palomar Holdings (NASDAQ:PLMR) reportó sólidos resultados para el tercer trimestre de 2024, con un ingreso neto de 30.5 millones de dólares (1.15 dólares por acción diluida), un aumento respecto a los 18.4 millones de dólares en el tercer trimestre de 2023. Las primas brutas escritas crecieron un 32.2% a 415.0 millones de dólares, mientras que el ingreso neto ajustado aumentó un 39.3% a 32.4 millones de dólares. La compañía logró una relación combinada del 80.5% y un rendimiento anualizado del capital del 19.7%. A pesar de la actividad catastrofista intensa, Palomar mantuvo un excelente rendimiento con una relación combinada ajustada del 77.1%. La empresa también recaudó con éxito 116 millones de dólares en agosto para financiar la expansión en el mercado de garantías y apoyar las iniciativas de crecimiento orgánico.

팔로마 홀딩스 (NASDAQ:PLMR)는 2024년 3분기 강력한 실적을 발표했으며, 순이익은 3,050만 달러(희석 주당 1.15달러)로, 2023년 3분기 1,840만 달러에서 증가했습니다. 총 인수된 보험료는 32.2% 증가한 4억 1,500만 달러에 달했으며, 조정된 순이익은 39.3% 증가해 3,240만 달러에 이르렀습니다. 이 회사는 80.5%의 결합 비율과 19.7%의 연환산 자기자본 수익률을 달성했습니다. 재해 활동이 증가했음에도 불구하고 팔로마는 77.1%의 조정된 결합 비율로 강력한 성과를 유지했습니다. 이 회사는 8월에 1억 1,600만 달러를 성공적으로 모집해 보증 시장으로의 확장을 자금 지원하고 유기적 성장 이니셔티브를 지원했습니다.

Palomar Holdings (NASDAQ:PLMR) a publié de solides résultats pour le troisième trimestre de 2024, avec un revenu net de 30,5 millions de dollars (1,15 dollar par action diluée), en hausse par rapport à 18,4 millions de dollars au troisième trimestre de 2023. Les primes brutes souscrites ont augmenté de 32,2 % pour atteindre 415,0 millions de dollars, tandis que le revenu net ajusté a crû de 39,3 % pour atteindre 32,4 millions de dollars. L'entreprise a réalisé un ratio combiné de 80,5 % et un rendement des capitaux propres annualisé de 19,7 %. Malgré une activité catastrophique accrue, Palomar a maintenu des performances solides avec un ratio combiné ajusté de 77,1 %. La société a également réussi à lever 116 millions de dollars en août pour financer son expansion sur le marché des cautions et soutenir ses initiatives de croissance organique.

Palomar Holdings (NASDAQ:PLMR) hat starke Ergebnisse für das dritte Quartal 2024 veröffentlicht, mit einem Nettogewinn von 30,5 Millionen Dollar (1,15 Dollar pro verwässerter Aktie), ein Anstieg von 18,4 Millionen Dollar im dritten Quartal 2023. Die brutto geschriebenen Prämien stiegen um 32,2% auf 415,0 Millionen Dollar, während der bereinigte Nettogewinn um 39,3% auf 32,4 Millionen Dollar zunahm. Das Unternehmen erzielte eine kombinierte Quote von 80,5% und eine annualisierte Eigenkapitalrendite von 19,7%. Trotz einer erhöhten Katastrophenaktivität konnte Palomar eine starke Leistung mit einer bereinigten kombinierte Quote von 77,1% aufrechterhalten. Das Unternehmen hat im August erfolgreich 116 Millionen Dollar gesammelt, um die Expansion in den Garantie-Markt zu finanzieren und organische Wachstumsinitiativen zu unterstützen.

Positive
  • Net income increased 65.8% YoY to $30.5 million
  • Gross written premiums grew 32.2% to $415.0 million
  • Adjusted net income rose 39.3% to $32.4 million
  • Net investment income increased 56.0% to $9.4 million
  • Same-store premium growth rate of 38%
  • Successfully raised $116 million for expansion
Negative
  • Total loss ratio increased to 29.7% from 18.8% YoY
  • Catastrophe loss ratio rose to 9.5% from -0.6% YoY
  • Combined ratio deteriorated to 80.5% from 75.8% YoY
  • Additional Q4 catastrophe losses of $8 million expected from Hurricane Milton

Insights

This earnings report shows strong performance with several key positive indicators. Gross written premiums surged 32.2% to $415.0 million, while adjusted net income grew 39.3% to $32.4 million. The company maintained solid profitability with an adjusted combined ratio of 77.1%, despite increased catastrophe losses.

The company's strategic diversification into Crop and Surety insurance, backed by a recent $116 million capital raise, positions it well for sustained growth. The 38% same-store premium growth demonstrates strong core business momentum. With an impressive 21% adjusted ROE and expanded investment income, Palomar shows robust financial health and execution of its growth strategy.

The results demonstrate excellent underwriting discipline despite challenging market conditions. The 29.7% total loss ratio, including a 9.5% catastrophe loss ratio, remains well-managed considering the active hurricane season. The company's expansion into less cyclical lines like Crop and Surety shows strategic foresight in portfolio diversification.

The acquisition of First Indemnity and increased risk participation in Crop and Earthquake segments indicate confident market positioning. With $1.02 billion in invested assets and strong operational metrics, Palomar is well-capitalized to pursue its growth initiatives while maintaining underwriting discipline.

LA JOLLA, Calif., Nov. 04, 2024 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported net income of $30.5 million, or $1.15 per diluted share, for the third quarter of 2024 compared to net income of $18.4 million, or $0.73 per diluted share, for the third quarter of 2023. Adjusted net income(1) was $32.4 million, or $1.23 per diluted share, for the third quarter of 2024 as compared to $23.3 million, or $0.92 per diluted share, for the third quarter of 2023.

Third Quarter 2024 Highlights

  • Gross written premiums increased by 32.2% to $415.0 million compared to $314.0 million in the third quarter of 2023
  • Net income of $30.5 million compared to $18.4 million in the third quarter of 2023
  • Adjusted net income(1) increased 39.3% to $32.4 million compared to $23.3 million in the third quarter of 2023
  • Total loss ratio of 29.7% compared to 18.8% in the third quarter of 2023
  • Catastrophe loss ratio(1) of 9.5% compared to -0.6% in the third quarter of 2023
  • Combined ratio of 80.5% compared to 75.8% in the third quarter of 2023
  • Adjusted combined ratio(1) of 77.1% compared to 70.9%, in the third quarter of 2023
  • Adjusted combined ratio excluding catastrophe losses(1) of 67.6% compared to 71.5%, in the third quarter of 2023
  • Annualized return on equity of 19.7% compared to 17.7% in the third quarter of 2023
  • Annualized adjusted return on equity(1) of 21.0% compared to 22.3% in the third quarter of 2023

(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 third quarter results as they clearly demonstrate our successful efforts to deliver consistent earnings and returns. In a quarter that experienced a heightened level of cat activity, we delivered 39% adjusted net income growth, a 77% adjusted combined ratio, and a 21% adjusted ROE. Our results further validate the concerted efforts that we have undertaken to diversify the business, reduce the volatility in our earnings base and profitably grow. We continued to generate robust top line growth achieving 32% gross written premium growth, driven by strength in our Earthquake and Casualty products as well as strong growth from our burgeoning Crop business. Importantly, our same-store(2) premium growth rate was 38%, demonstrating the strong underlying momentum that exists across our portfolio of specialty insurance products.

Mr. Armstrong continued, “We have numerous energizing opportunities and initiatives associated with our Palomar 2X strategy. To capitalize on them, we successfully raised $116 million in August. A portion of the proceeds will fund our acquisition of First Indemnity of America Insurance Company and our entry into the surety market. We will use the remaining proceeds for organic growth and selected increases in risk participation in product categories including Crop and Earthquake. Our diversification into attractive lines with limited correlation to the P&C cycle such as Crop and Surety will further position Palomar to deliver consistent earnings growth over time.”

(2) Excludes the impact of lines of business exited or discontinued during the quarter.

Underwriting Results
Gross written premiums increased 32.2% to $415.0 million compared to $314.0 million in the third quarter of 2023, while net earned premiums increased 58.1% compared to the prior year’s third quarter. 

Losses and loss adjustment expenses for the third quarter were $40.3 million, comprised of $27.4 million of attritional losses and $12.9 million of catastrophe losses from Hurricanes Beryl, Debby, and Helene. The loss ratio for the quarter was 29.7%, comprised of an attritional loss ratio of 20.2% and a catastrophe loss ratio(1) of 9.5% compared to a loss ratio of 18.8% during the same period last year comprised of an attritional loss ratio of 19.4% and a catastrophe loss ratio(1) of -0.6%.

Underwriting income(1) for the third quarter was $26.4 million resulting in a combined ratio of 80.5% compared to underwriting income of $20.7 million resulting in a combined ratio of 75.8% during the same period last year. The Company’s adjusted underwriting income(1) was $31.0 million resulting in an adjusted combined ratio(1) of 77.1% in the third quarter compared to adjusted underwriting income(1) of $25.0 million and an adjusted combined ratio(1) of 70.9% during the same period last year. The Company's adjusted combined ratio excluding catastrophe losses(1) was 67.6% compared to 71.5% during the same period last year.

Investment Results
Net investment income increased by 56.0% to $9.4 million compared to $6.0 million in the prior year’s third 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 September 30, 2024 due to proceeds from our August 2024 secondary offering and cash generated from operations. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.86 years at September 30, 2024. Cash and invested assets totaled $1,017.5 million at September 30, 2024. During the third quarter, the Company recorded $2.7 net realized and unrealized gains related to its investment portfolio as compared to net realized and unrealized losses of $1.4 million during the same period last year.

Tax Rate
The effective tax rate for the three months ended September 30, 2024 was 20.8% compared to 24.9% for the three months ended September 30, 2023. For the current quarter, the Company’s income tax rate differed from the statutory rate due primarily to the tax impact of the permanent component of employee stock options.

Stockholders Equity and Returns
Stockholders' equity was $703.3 million at September 30, 2024, compared to $421.3 million at September 30, 2023. For the three months ended September 30, 2024, the Company’s annualized return on equity was 19.7% compared to 17.7% for the same period in the prior year while adjusted return on equity(1) was 21.0% compared to 22.3% for the same period in the prior year. There were no share repurchases during the three months ended September 30, 2024.

Full Year 2024 Outlook
For the full year 2024, the Company expects to achieve adjusted net income of $124 million to $128 million. This range includes additional catastrophe losses incurred during the fourth quarter of 2024 of approximately $8 million related to Hurricane Milton. 

Conference Call
As previously announced, Palomar will host a conference call Tuesday, November 5, 2024, to discuss its third quarter 2024 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 Third Quarter 2024 Earnings Conference Call. A replay will be available starting at 4:00 p.m. (Eastern Time) on November 5, 2024, and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13747528. The replay will be available until 11:59 p.m. (Eastern Time) on November 12, 2024.

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.,  Palomar Excess and Surplus Insurance Company (“PESIC”), and Palomar Underwriters Exchange Organization, Inc. Palomar's consolidated results also include Laulima Reciprocal Exchange, a variable interest entity for which the Company is the primary beneficiary. Palomar is an innovative specialty insurer serving residential and commercial clients in five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop. 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 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.


Summary of Operating Results:

The following tables summarize the Company’s results for the three and nine months ended September 30, 2024 and 2023:

 Three Months Ended
        
 September 30,
        
 2024
 2023
 Change
 % Change
 ($ in thousands, except per share data)
Gross written premiums$414,977  $313,998  $100,979   32.2%
Ceded written premiums (255,267)  (203,336)  (51,931)  25.5%
Net written premiums 159,710   110,662   49,048   44.3%
Net earned premiums 135,646   85,817   49,829   58.1%
Commission and other income 715   465   250   53.8%
Total underwriting revenue (1) 136,361   86,282   50,079   58.0%
Losses and loss adjustment expenses 40,315   16,139   24,176   149.8%
Acquisition expenses, net of ceding commissions and fronting fees 41,469   27,004   14,465   53.6%
Other underwriting expenses 28,129   22,390   5,739   25.6%
Underwriting income (1) 26,448   20,749   5,699   27.5%
Interest expense (87)  (867)  780   (90.0)%
Net investment income 9,408   6,029   3,379   56.0%
Net realized and unrealized gains (losses) on investments 2,734   (1,376)  4,110   (298.7)%
Income before income taxes 38,503   24,535   13,968   56.9%
Income tax expense 8,006   6,103   1,903   31.2%
Net income$30,497  $18,432  $12,065   65.5%
Adjustments:               
Net realized and unrealized (gains) losses on investments (2,734)  1,376   (4,110)  (298.7)%
Expenses associated with transactions 84   229   (145)  (63.3)%
Stock-based compensation expense 4,117   3,589   528   14.7%
Amortization of intangibles 389   390   (1)  (0.3)%
Tax impact 91   (725)  816   (112.6)%
Adjusted net income (1)$32,444  $23,291  $9,153   39.3%
Key Financial and Operating Metrics               
Annualized return on equity 19.7%  17.7%        
Annualized adjusted return on equity (1) 21.0%  22.3%        
Loss ratio 29.7%  18.8%        
Expense ratio 50.8%  57.0%        
Combined ratio 80.5%  75.8%        
Adjusted combined ratio (1) 77.1%  70.9%        
Diluted earnings per share$1.15  $0.73         
Diluted adjusted earnings per share (1)$1.23  $0.92         
Catastrophe losses$12,924  $(533)        
Catastrophe loss ratio (1) 9.5%  (0.6)%        
Adjusted combined ratio excluding catastrophe losses (1) 67.6%  71.5%        
Adjusted underwriting income (1)$31,038  $24,957  $6,081   24.4%

(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.

 Nine Months Ended        
 September 30,        
 2024 2023 Change % Change
 ($ in thousands, except per share data) 
Gross written premiums$1,168,239  $838,406  $329,833   39.3%
Ceded written premiums (692,620)  (542,789)  (149,831)  27.6%
Net written premiums 475,619   295,617   180,002   60.9%
Net earned premiums 365,796   252,164   113,632   45.1%
Commission and other income 2,035   1,781   254   14.3%
Total underwriting revenue (1) 367,831   253,945   113,886   44.8%
Losses and loss adjustment expenses 97,583   54,696   42,887   78.4%
Acquisition expenses, net of ceding commissions and fronting fees 109,072   78,740   30,332   38.5%
Other underwriting expenses 84,165   63,962   20,203   31.6%
Underwriting income (1) 77,011   56,547   20,464   36.2%
Interest expense (1,052)  (2,952)  1,900   (64.4)%
Net investment income 24,506   16,690   7,816   46.8%
Net realized and unrealized gains (losses) on investments 5,768   (103)  5,871   NM 
Income before income taxes 106,233   70,182   36,051   51.4%
Income tax expense 23,625   16,877   6,748   40.0%
Net income$82,608  $53,305  $29,303   55.0%
Adjustments:               
Net realized and unrealized (gains) losses on investments (5,768)  103   (5,871)  NM 
Expenses associated with transactions 557   229   328   143.2%
Stock-based compensation expense 11,905   10,737   1,168   10.9%
Amortization of intangibles 1,168   1,092   76   7.0%
Expenses associated with catastrophe bond 2,483   1,640   843   51.4%
Tax impact (734)  (1,582)  848   (53.6)%
Adjusted net income (1)$92,219  $65,524  $26,695   40.7%
Key Financial and Operating Metrics               
Annualized return on equity 18.8%  17.6%        
Annualized adjusted return on equity (1) 20.9%  21.7%        
Loss ratio 26.7%  21.7%        
Expense ratio 52.3%  55.9%        
Combined ratio 78.9%  77.6%        
Adjusted combined ratio (1) 74.5%  72.1%        
Diluted earnings per share$3.19  $2.10         
Diluted adjusted earnings per share (1)$3.56  $2.59         
Catastrophe losses$19,724  $3,432         
Catastrophe loss ratio (1) 5.4%  1.4%        
Adjusted combined ratio excluding catastrophe losses (1) 69.2%  70.8%        
Adjusted underwriting income (1)$93,124  $70,245  $22,879   32.6%
NM - not meaningful               

(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.

Condensed Consolidated Balance sheets

Palomar Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in thousands, except shares and par value data)
      
 September 30, December 31,
 2024 2023
 (Unaudited)    
Assets       
Investments:       
Fixed maturity securities available for sale, at fair value (amortized cost: $896,775 in 2024; $675,130 in 2023)$882,980  $643,799 
Equity securities, at fair value (cost: $32,987 in 2024; $43,003 in 2023) 40,196   43,160 
Equity method investment 2,499   2,617 
Other investments 5,207    
Total investments 930,882   689,576 
Cash and cash equivalents 86,479   51,546 
Restricted cash 105   306 
Accrued investment income 7,495   5,282 
Premiums receivable 326,674   261,972 
Deferred policy acquisition costs, net of ceding commissions and fronting fees 86,408   60,990 
Reinsurance recoverable on paid losses and loss adjustment expenses 58,889   32,172 
Reinsurance recoverable on unpaid losses and loss adjustment expenses 360,164   244,622 
Ceded unearned premiums 298,509   265,808 
Prepaid expenses and other assets 104,831   72,941 
Deferred tax assets, net 4,019   10,119 
Property and equipment, net 409   373 
Goodwill and intangible assets, net 11,147   12,315 
Total assets$2,276,011  $1,708,022 
Liabilities and stockholders' equity       
Liabilities:       
Accounts payable and other accrued liabilities$75,424  $42,376 
Reserve for losses and loss adjustment expenses 497,438   342,275 
Unearned premiums 739,623   597,103 
Ceded premium payable 235,157   181,742 
Funds held under reinsurance treaty 25,056   13,419 
Income taxes payable    7,255 
Borrowings from credit agreements    52,600 
Total liabilities 1,572,698   1,236,770 
Stockholders' equity:       
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023     
Common stock, $0.0001 par value, 500,000,000 shares authorized, 26,452,242 and 24,772,987 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively 3   3 
Additional paid-in capital 486,198   350,597 
Accumulated other comprehensive loss (10,139)  (23,991)
Retained earnings 227,251   144,643 
Total stockholders' equity 703,313   471,252 
Total liabilities and stockholders' equity$2,276,011  $1,708,022 
        

Condensed Consolidated Income Statement

Palomar Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income (loss) (Unaudited)
(in thousands, except shares and per share data)
    
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2024 2023 2024 2023
Revenues:               
Gross written premiums$414,977  $313,998  $1,168,239  $838,406 
Ceded written premiums (255,267)  (203,336)  (692,620)  (542,789)
Net written premiums 159,710   110,662   475,619   295,617 
Change in unearned premiums (24,064)  (24,845)  (109,823)  (43,453)
Net earned premiums 135,646   85,817   365,796   252,164 
Net investment income 9,408   6,029   24,506   16,690 
Net realized and unrealized gains (losses) on investments 2,734   (1,376)  5,768   (103)
Commission and other income 715   465   2,035   1,781 
Total revenues 148,503   90,935   398,105   270,532 
Expenses:               
Losses and loss adjustment expenses 40,315   16,139   97,583   54,696 
Acquisition expenses, net of ceding commissions and fronting fees 41,469   27,004   109,072   78,740 
Other underwriting expenses 28,129   22,390   84,165   63,962 
Interest expense 87   867   1,052   2,952 
Total expenses 110,000   66,400   291,872   200,350 
Income before income taxes 38,503   24,535   106,233   70,182 
Income tax expense 8,006   6,103   23,625   16,877 
Net income$30,497  $18,432  $82,608  $53,305 
Other comprehensive income, net:               
Net unrealized gains (losses) on securities available for sale 17,917   (8,494)  13,852   (6,706)
Net comprehensive income$48,414  $9,938  $96,460  $46,599 
Per Share Data:               
Basic earnings per share$1.18  $0.75  $3.28  $2.15 
Diluted earnings per share$1.15  $0.73  $3.19  $2.10 
                
Weighted-average common shares outstanding:               
Basic 25,766,697   24,740,455   25,194,114   24,847,164 
Diluted 26,479,566   25,244,828   25,877,257   25,340,602 
                

Underwriting Segment Data

The Company has a single reportable segment and offers specialty insurance products. Gross written premiums (GWP) by product, location and company are presented below:

 Three Months Ended September 30,
        
 2024
 2023
        
 ($ in thousands)
        
   % of
   % of
   %
 Amount
 GWP
 Amount
 GWP
 Change
 Change
Product (1)                       
Earthquake$135,329   32.6% $113,386   36.1% $21,943   19.4%
Fronting 84,945   20.5%  94,954   30.2%  (10,009)  (10.5)%
Inland Marine and Other Property 78,734   19.0%  64,499   20.5%  14,235   22.1%
Crop 59,662   14.4%  11,627   3.7%  48,035   NM 
Casualty 56,307   13.5%  29,532   9.5%  26,775   90.7%
Total Gross Written Premiums$414,977   100.0% $313,998   100.0% $100,979   32.2%
NM - not meaningful                       
                        


 Nine Months Ended September 30,        
 2024 2023        
 ($ in thousands)
      
   % of   % of    %
 Amount GWP Amount GWP Change Change
Product (1)                       
Earthquake$376,088   32.2% $314,810   37.6% $61,278   19.5%
Fronting 275,671   23.6%  266,433   31.8%  9,238   3.5%
Inland Marine and Other Property 249,147   21.3%  186,983   22.3%  62,164   33.2%
Casualty 166,762   14.3%  58,065   6.9%  108,697   187.2%
Crop 100,571   8.6%  12,115   1.4%  88,456   NM 
Total Gross Written Premiums$1,168,239   100.0% $838,406   100.0% $329,833   39.3%
NM - not meaningful                       

(1) - Beginning in 2024, the Company has updated the categorization of its products to align with management's current strategy and view of the business. Prior year amounts have been reclassified for comparability purposes. The recategorization is for presentation purposes only and does not impact overall gross written premiums.

 Three Months Ended September 30, Nine Months Ended September 30,
 2024 2023 2024 2023
 ($ in thousands) ($ in thousands) 
   % of   % of   % of   % of
 Amount GWP Amount GWP Amount GWP Amount GWP
State                               
California$170,265   41.0% $163,806   52.2% $510,879   43.7% $450,752   53.8%
Texas 27,019   6.5%  24,336   7.7%  96,414   8.3%  72,777   8.7%
Hawaii 23,171   5.6%  13,490   4.3%  53,922   4.6%  35,824   4.3%
North Dakota 18,716   4.5%  2,898   0.9%  19,893   1.7%  3,326   0.4%
Washington 16,828   4.1%  17,792   5.7%  41,893   3.6%  43,409   5.2%
Wisconsin 15,519   3.7%  1,211   0.4%  17,374   1.5%  3,095   0.4%
Florida 14,433   3.5%  11,549   3.7%  58,153   5.0%  36,309   4.3%
Oregon 8,402   2.0%  8,536   2.7%  21,253   1.8%  21,223   2.5%
Other 120,624   29.1%  70,380   22.4%  348,458   29.8%  171,691   20.4%
Total Gross Written Premiums$414,977   100.0% $313,998   100.0% $1,168,239   100.0% $838,406   100.0%
                                


 Three Months Ended September 30, Nine Months Ended September 30,
 2024 2023 2024 2023
 ($ in thousands) ($ in thousands)
   % of   % of   % of   % of
 Amount GWP Amount GWP Amount GWP Amount GWP
Subsidiary                               
PSIC$236,624   57.0% $186,693   59.5% $652,988   55.9% $497,216   59.3%
PESIC 159,305   38.4%  127,305   40.5%  472,909   40.5%  341,190   40.7%
Laulima 19,048   4.6%     %  42,342   3.6%     %
Total Gross Written Premiums$414,977   100.0% $313,998   100.0% $1,168,239   100.0% $838,406   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         Nine Months Ended        
 September 30,         September 30,        
 2024 2023 Change %
Change
 2024 2023 Change %
Change
 ($ in thousands)  ($ in thousands) 
Gross earned premiums$395,881  $271,786  $124,095   45.7% $1,025,716  $739,219  $286,497   38.8%
Ceded earned premiums (260,235)  (185,969)  (74,266)  39.9%  (659,920)  (487,055)  (172,865)  35.5%
Net earned premiums$135,646  $85,817  $49,829   58.1% $365,796  $252,164  $113,632   45.1%
                                
Net earned premium ratio 34.3%  31.6%          35.7%  34.1%        
                                

Loss detail

 Three Months Ended         Nine Months Ended        
 September 30,         September 30,        
 2024 2023 Change %
Change
 2024 2023 Change %
Change
 ($ in thousands) ($ in thousands)
Catastrophe losses$12,924  $(533) $13,457   NM  $19,724  $3,432  $16,292   NM 
Non-catastrophe losses 27,391   16,672   10,719   64.3%  77,859   51,264   26,595   51.9%
Total losses and loss adjustment expenses$40,315  $16,139  $24,176   149.8% $97,583  $54,696  $42,887   78.4%
                                
Catastrophe loss ratio 9.5%  (0.6)%          5.4%  1.4%        
Non-catastrophe loss ratio 20.2%  19.4%          21.3%  20.3%        
Total loss ratio 29.7%  18.8%          26.7%  21.7%        
NM - not meaningful                               
                                

The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses:

 Three Months Ended September 30, Nine Months Ended September 30,
 2024 2023 2024 2023
 (in thousands)  (in thousands) 
Reserve for losses and LAE net of reinsurance recoverables at beginning of period$118,761  $81,300  $97,653  $77,520 
Add: Incurred losses and LAE, net of reinsurance, related to:               
Current year 40,536   15,116   100,225   50,954 
Prior years (221)  1,023   (2,642)  3,742 
Total incurred 40,315   16,139   97,583   54,696 
Deduct: Loss and LAE payments, net of reinsurance, related to:               
Current year 16,153   6,646   27,909   14,215 
Prior years 5,649   (1,385)  30,053   25,823 
Total payments 21,802   5,261   57,962   40,038 
Reserve for losses and LAE net of reinsurance recoverables at end of period 137,274   92,178   137,274   92,178 
Add: Reinsurance recoverables on unpaid losses and LAE at end of period 360,164   232,170   360,164   232,170 
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period$497,438  $324,348  $497,438  $324,348 
                

Reconciliation of Non-GAAP Financial Measures

For the three and nine months ended September 30, 2024 and 2023, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows:

Underwriting revenue

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2024 2023 2024 2023
 (in thousands) (in thousands)
Total revenue$148,503  $90,935  $398,105  $270,532 
Net investment income (9,408)  (6,029)  (24,506)  (16,690)
Net realized and unrealized (gains) losses on investments (2,734)  1,376   (5,768)  103 
Underwriting revenue$136,361  $86,282  $367,831  $253,945 
                

Underwriting income and adjusted underwriting income

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2024 2023 2024 2023
 (in thousands) (in thousands)
Income before income taxes$38,503  $24,535  $106,233  $70,182 
Net investment income (9,408)  (6,029)  (24,506)  (16,690)
Net realized and unrealized (gains) losses on investments (2,734)  1,376   (5,768)  103 
Interest expense 87   867   1,052   2,952 
Underwriting income$26,448  $20,749  $77,011  $56,547 
Expenses associated with transactions 84   229   557   229 
Stock-based compensation expense 4,117   3,589   11,905   10,737 
Amortization of intangibles 389   390   1,168   1,092 
Expenses associated with catastrophe bond       2,483   1,640 
Adjusted underwriting income$31,038  $24,957  $93,124  $70,245 
                

Adjusted net income

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2024 2023 2024 2023
 (in thousands) (in thousands)
Net income$30,497  $18,432  $82,608  $53,305 
Adjustments:               
Net realized and unrealized (gains) losses on investments (2,734)  1,376   (5,768)  103 
Expenses associated with transactions 84   229   557   229 
Stock-based compensation expense 4,117   3,589   11,905   10,737 
Amortization of intangibles 389   390   1,168   1,092 
Expenses associated with catastrophe bond       2,483   1,640 
Tax impact 91   (725)  (734)  (1,582)
Adjusted net income$32,444  $23,291  $92,219  $65,524 
                

Annualized adjusted return on equity

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2024 2023 2024 2023
 (in thousands) (in thousands)
                
Annualized adjusted net income$129,776  $93,164  $122,959  $87,365 
Average stockholders' equity$617,959  $417,521  $587,282  $403,044 
Annualized adjusted return on equity 21.0%  22.3%  20.9%  21.7%
                

Adjusted combined ratio

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2024 2023 2024 2023
 (in thousands) (in thousands)
Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income$109,198  $65,068  $288,785  $195,617 
Denominator: Net earned premiums$135,646  $85,817  $365,796  $252,164 
Combined ratio 80.5%  75.8%  78.9%  77.6%
Adjustments to numerator:               
Expenses associated with transactions$(84) $(229) $(557) $(229)
Stock-based compensation expense (4,117)  (3,589)  (11,905)  (10,737)
Amortization of intangibles (389)  (390)  (1,168)  (1,092)
Expenses associated with catastrophe bond       (2,483)  (1,640)
Adjusted combined ratio 77.1%  70.9%  74.5%  72.1%
                

Diluted adjusted earnings per share

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2024 2023 2024 2023
 (in thousands, except per share data) (in thousands, except per share data)
                
Adjusted net income$32,444  $23,291  $92,219  $65,524 
Weighted-average common shares outstanding, diluted 26,479,566   25,244,828   25,877,257   25,340,602 
Diluted adjusted earnings per share$1.23  $0.92  $3.56  $2.59 
                

Catastrophe loss ratio

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2024 2023 2024 2023
 (in thousands) (in thousands)
Numerator: Losses and loss adjustment expenses$40,315  $16,139  $97,583  $54,696 
Denominator: Net earned premiums$135,646  $85,817  $365,796  $252,164 
Loss ratio 29.7%  18.8%  26.7%  21.7%
                
Numerator: Catastrophe losses$12,924  $(533) $19,724  $3,432 
Denominator: Net earned premiums$135,646  $85,817  $365,796  $252,164 
Catastrophe loss ratio 9.5%  (0.6)%  5.4%  1.4%
                

Adjusted combined ratio excluding catastrophe losses

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2024 2023 2024 2023
 (in thousands) (in thousands)
Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income$109,198  $65,068  $288,785  $195,617 
Denominator: Net earned premiums$135,646  $85,817  $365,796  $252,164 
Combined ratio 80.5%  75.8%  78.9%  77.6%
Adjustments to numerator:               
Expenses associated with transactions$(84) $(229) $(557) $(229)
Stock-based compensation expense (4,117)  (3,589)  (11,905)  (10,737)
Amortization of intangibles (389)  (390)  (1,168)  (1,092)
Expenses associated with catastrophe bond       (2,483)  (1,640)
Catastrophe losses (12,924)  533   (19,724)  (3,432)
Adjusted combined ratio excluding catastrophe losses 67.6%  71.5%  69.2%  70.8%
                

Tangible Stockholders equity

 September 30, December 31,
 2024 2023
 (in thousands)
Stockholders' equity$703,313  $471,252 
Goodwill and intangible assets (11,147)  (12,315)
Tangible stockholders' equity$692,166  $458,937 
        

FAQ

What was Palomar Holdings (PLMR) earnings per share in Q3 2024?

Palomar Holdings reported earnings of $1.15 per diluted share in Q3 2024, with adjusted earnings of $1.23 per diluted share.

How much did PLMR's gross written premiums grow in Q3 2024?

Palomar's gross written premiums increased by 32.2% to $415.0 million compared to $314.0 million in Q3 2023.

What was PLMR's combined ratio in Q3 2024?

Palomar's combined ratio was 80.5% in Q3 2024, compared to 75.8% in Q3 2023.

How much capital did PLMR raise in August 2024?

Palomar successfully raised $116 million in August 2024 for expansion into the surety market and organic growth initiatives.

Palomar Holdings, Inc.

NASDAQ:PLMR

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2.31B
26.21M
2.81%
90.65%
1.74%
Insurance - Property & Casualty
Fire, Marine & Casualty Insurance
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United States of America
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