LA JOLLA, Calif., Feb. 12, 2025 (GLOBE NEWSWIRE) — Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported net income of $35.0 million, or $1.29 per diluted share, for the fourth quarter of 2024 compared to net income of $25.9 million, or $1.02 per diluted share, for the fourth quarter of 2023. Adjusted net income(1) was $41.3 million, or $1.52 per diluted share, for the fourth quarter of 2024 as compared to $28.0 million, or $1.11 per diluted share, for the fourth quarter of 2023.
Fourth Quarter 2024 Highlights
- Gross written premiums increased by 23.3% to $373.7 million compared to $303.2 million in the fourth quarter of 2023
- Net income increased 35.0% to $35.0 million compared to $25.9 million in the fourth quarter of 2023
- Adjusted net income(1) increased 47.5% to $41.3 million compared to $28.0 million in the fourth quarter of 2023
- Total loss ratio of 25.7% compared to 19.1% in the fourth quarter of 2023
- Combined ratio of 75.9% compared to 74.2% in the fourth quarter of 2023
- Adjusted combined ratio(1) of 71.7% compared to 68.8%, in the fourth quarter of 2023
- Annualized return on equity of 19.5% compared to 23.2% in the fourth quarter of 2023
- Annualized adjusted return on equity(1) of 23.1% compared to 25.1% in the fourth quarter of 2023
Full Year 2024 Highlights
- Gross written premiums increased by 35.1% to $1.5 billion compared to $1.1 billion in 2023
- Net income increased 48.4% to $117.6 million compared to $79.2 million in 2023
- Adjusted net income(1) increased 42.8% to $133.5 million compared to $93.5 million in 2023
- Total loss ratio of 26.4% compared to 21.0% in 2023
- Combined ratio of 78.1% compared to 76.6% in 2023
- Adjusted combined ratio(1) of 73.7% compared to 71.2% in 2023
- Return on equity of 19.6% compared to 18.5% in 2023
- Adjusted return on equity(1) of 22.2% compared to 21.9% in 2023
(1) See discussion of “Non-GAAP and Key Performance Indicators” below.
Mac Armstrong, Chairman and Chief Executive Officer, commented, “Palomar’s stellar 2024 was capped off by an exceptional fourth quarter. During the quarter, we generated gross written premiums growth of 23%, 39% when excluding run-off business from our results, adjusted net income growth of 48%, inclusive of $8.1 million of catastrophe losses, and, importantly, an adjusted return on equity of 23%. When looking at the full year we not only generated record gross written premiums and adjusted net income, but we grew our top and bottom-line 35% and 43%, respectively. Additionally, throughout 2024 we made significant investments across the organization that we believe will sustain our earnings base and profitable growth trajectory.”
Mr. Armstrong continued, “Beyond the strong financial results of the fourth quarter and 2024, Palomar’s accomplishments were several and notable, highlighted by our AM Best upgrade and the acquisition of First Indemnity of America, our surety operation. Furthermore, we accomplished a Palomar 2X fundamental strategic objective by doubling our adjusted underwriting income for the 2021 period in a three-year timeframe. We are energized by our prospects to continue this profitable growth in 2025 and thereafter.”
Underwriting Results
Gross written premiums increased 23.3% to $373.7 million compared to $303.2 million in the fourth quarter of 2023, additionally net earned premiums increased 54.6% compared to the prior year’s fourth quarter.
Losses and loss adjustment expenses for the fourth quarter were $37.2 million, comprised of $29.1 million of attritional losses and $8.1 million of catastrophe losses primarily related to Hurricane Milton. The loss ratio for the quarter was 25.7%, comprised of an attritional loss ratio of 20.1% and a catastrophe loss ratio of 5.6%, compared to a loss ratio of 19.1% during the same period last year, all comprised of attritional losses.
Underwriting income(1) for the fourth quarter was $34.9 million resulting in a combined ratio of 75.9% compared to underwriting income of $24.2 million resulting in a combined ratio of 74.2% during the same period last year. The Company’s adjusted underwriting income(1) was $41.0 million resulting in an adjusted combined ratio(1) of 71.7% in the fourth quarter compared to adjusted underwriting income(1) of $29.3 million and an adjusted combined ratio(1) of 68.8% during the same period last year.
Investment Results
Net investment income increased by 61.3% to $11.3 million compared to $7.0 million in the prior year’s fourth 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 December 31, 2024 due to cash generated from operations and proceeds from our August 2024 stock offering. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 4.04 years at December 31, 2024. Cash and invested assets totaled $1.1 billion at December 31, 2024. During the fourth quarter, the Company recorded net realized and unrealized losses of $1.2 million related to its investment portfolio as compared to net realized and unrealized gains of $3.0 million in last year’s fourth quarter.
Tax Rate
The effective tax rate for the three months ended December 31, 2024 was 22.2% compared to 22.6% for the three months ended December 31, 2023. For the current quarter, the Company’s income tax rate differed from the statutory rate due primarily to the non-deductible executive compensation expense, offset by the permanent component of employee stock option exercises.
Stockholders’ Equity and Returns
Stockholders’ equity was $729.0 million at December 31, 2024, compared to $471.3 million at December 31, 2023. For the three months ended December 31, 2024, the Company’s annualized return on equity was 19.5% compared to 23.2% for the same period in the prior year while adjusted return on equity(1) was 23.1% compared to 25.1% for the same period in the prior year.
Full Year 2025 Outlook
For the full year 2025, the Company expects to achieve adjusted net income of $180 million to $192 million. This includes an estimate of $8 million to $12 million of catastrophe losses for the year.
Conference Call
As previously announced, Palomar will host a conference call Thursday, February 13, 2025, to discuss its fourth 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 Fourth Quarter 2024 Earnings Conference Call. A replay will be available starting at 4:00 p.m. (Eastern Time) on February 13, 2025, and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13743970. The replay will be available until 11:59 p.m. (Eastern Time) on February 20, 2025.
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. (“PSRE”), Palomar Insurance Agency, Inc. (“PIA”), Palomar Excess and Surplus Insurance Company (“PESIC”), Palomar Underwriters Exchange Organization, Inc (“PUEO”), Palomar Crop Insurance Services, Inc, and First Indemnity of America Insurance Company (acquired 1/1/2025). 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.
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. The Company calculates the tax impact only on adjustments which would be included in calculating its 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
[email protected]
Investor Relations
Jamie Lillis
1-203-428-3223
[email protected]
Source: Palomar Holdings, Inc.
Summary of Operating Results:
The following tables summarize the Company’s results for the three months and year ended December 31, 2024 and 2023:
| Three Months Ended | |||||||||||||||
| December 31, | |||||||||||||||
| 2024 | 2023 | Change | % Change | ||||||||||||
| ($ in thousands, except per share data) | |||||||||||||||
| Gross written premiums | $ | 373,723 | $ | 303,152 | $ | 70,571 | 23.3 | % | |||||||
| Ceded written premiums | (204,492 | ) | (188,742 | ) | (15,750 | ) | 8.3 | % | |||||||
| Net written premiums | 169,231 | 114,410 | 54,821 | 47.9 | % | ||||||||||
| Net earned premiums | 144,890 | 93,748 | 51,142 | 54.6 | % | ||||||||||
| Commission and other income | 750 | 1,586 | (836 | ) | (52.7 | )% | |||||||||
| Total underwriting revenue (1) | 145,640 | 95,334 | 50,306 | 52.8 | % | ||||||||||
| Losses and loss adjustment expenses | 37,176 | 17,896 | 19,280 | 107.7 | % | ||||||||||
| Acquisition expenses, net of ceding commissions and fronting fees | 40,585 | 29,005 | 11,580 | 39.9 | % | ||||||||||
| Other underwriting expenses | 32,947 | 24,210 | 8,737 | 36.1 | % | ||||||||||
| Underwriting income (1) | 34,932 | 24,223 | 10,709 | 44.2 | % | ||||||||||
| Interest expense | (87 | ) | (824 | ) | 737 | (89.4 | )% | ||||||||
| Net investment income | 11,318 | 7,015 | 4,303 | 61.3 | % | ||||||||||
| Net realized and unrealized (losses) gains on investments | (1,201 | ) | 3,044 | (4,245 | ) | (139.5 | )% | ||||||||
| Income before income taxes | 44,962 | 33,458 | 11,504 | 34.4 | % | ||||||||||
| Income tax expense | 9,997 | 7,564 | 2,433 | 32.2 | % | ||||||||||
| Net income | $ | 34,965 | $ | 25,894 | $ | 9,071 | 35.0 | % | |||||||
| Adjustments: | |||||||||||||||
| Net realized and unrealized losses (gains) on investments | 1,201 | (3,044 | ) | 4,245 | (139.5 | )% | |||||||||
| Expenses associated with transactions | 922 | 478 | 444 | 92.9 | % | ||||||||||
| Stock-based compensation expense | 4,779 | 4,176 | 603 | 14.4 | % | ||||||||||
| Amortization of intangibles | 389 | 389 | — | — | % | ||||||||||
| Tax impact | (964 | ) | 103 | (1,067 | ) | NM | |||||||||
| Adjusted net income (1) | $ | 41,292 | $ | 27,996 | $ | 13,296 | 47.5 | % | |||||||
| Key Financial and Operating Metrics | |||||||||||||||
| Annualized return on equity | 19.5 | % | 23.2 | % | |||||||||||
| Annualized adjusted return on equity (1) | 23.1 | % | 25.1 | % | |||||||||||
| Loss ratio | 25.7 | % | 19.1 | % | |||||||||||
| Expense ratio | 50.2 | % | 55.1 | % | |||||||||||
| Combined ratio | 75.9 | % | 74.2 | % | |||||||||||
| Adjusted combined ratio (1) | 71.7 | % | 68.8 | % | |||||||||||
| Diluted earnings per share | $ | 1.29 | $ | 1.02 | |||||||||||
| Diluted adjusted earnings per share (1) | $ | 1.52 | $ | 1.11 | |||||||||||
| Catastrophe losses | $ | 8,122 | $ | 10 | |||||||||||
| Catastrophe loss ratio (1) | 5.6 | % | — | % | |||||||||||
| Adjusted combined ratio excluding catastrophe losses (1) | 66.1 | % | 68.8 | % | |||||||||||
| Adjusted underwriting income (1) | $ | 41,022 | $ | 29,266 | $ | 11,756 | 40.2 | % | |||||||
| 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.
| Year Ended | |||||||||||||||
| December 31, | |||||||||||||||
| 2024 | 2023 | Change | % Change | ||||||||||||
| ($ in thousands, except per share data) | |||||||||||||||
| Gross written premiums | $ | 1,541,962 | $ | 1,141,558 | $ | 400,404 | 35.1 | % | |||||||
| Ceded written premiums | (897,111 | ) | (731,531 | ) | (165,580 | ) | 22.6 | % | |||||||
| Net written premiums | 644,851 | 410,027 | 234,824 | 57.3 | % | ||||||||||
| Net earned premiums | 510,687 | 345,913 | 164,774 | 47.6 | % | ||||||||||
| Commission and other income | 2,784 | 3,367 | (583 | ) | (17.3 | )% | |||||||||
| Total underwriting revenue (1) | 513,471 | 349,280 | 164,191 | 47.0 | % | ||||||||||
| Losses and loss adjustment expenses | 134,759 | 72,592 | 62,167 | 85.6 | % | ||||||||||
| Acquisition expenses, net of ceding commissions and fronting fees | 149,657 | 107,745 | 41,912 | 38.9 | % | ||||||||||
| Other underwriting expenses | 117,113 | 88,172 | 28,941 | 32.8 | % | ||||||||||
| Underwriting income (1) | 111,942 | 80,771 | 31,171 | 38.6 | % | ||||||||||
| Interest expense | (1,138 | ) | (3,775 | ) | 2,637 | (69.9 | )% | ||||||||
| Net investment income | 35,824 | 23,705 | 12,119 | 51.1 | % | ||||||||||
| Net realized and unrealized gains on investments | 4,568 | 2,941 | 1,627 | 55.3 | % | ||||||||||
| Income before income taxes | 151,196 | 103,642 | 47,554 | 45.9 | % | ||||||||||
| Income tax expense | 33,623 | 24,441 | 9,182 | 37.6 | % | ||||||||||
| Net income | $ | 117,573 | $ | 79,201 | $ | 38,372 | 48.4 | % | |||||||
| Adjustments: | |||||||||||||||
| Net realized and unrealized gains on investments | (4,568 | ) | (2,941 | ) | (1,627 | ) | 55.3 | % | |||||||
| Expenses associated with transactions | 1,479 | 706 | 773 | 109.5 | % | ||||||||||
| Stock-based compensation expense | 16,685 | 14,913 | 1,772 | 11.9 | % | ||||||||||
| Amortization of intangibles | 1,558 | 1,481 | 77 | 5.2 | % | ||||||||||
| Expenses associated with catastrophe bond | 2,483 | 1,640 | 843 | 51.4 | % | ||||||||||
| Tax impact | (1,699 | ) | (1,480 | ) | (219 | ) | 14.8 | % | |||||||
| Adjusted net income (1) | $ | 133,511 | $ | 93,520 | $ | 39,991 | 42.8 | % | |||||||
| Key Financial and Operating Metrics | |||||||||||||||
| Annualized return on equity | 19.6 | % | 18.5 | % | |||||||||||
| Annualized adjusted return on equity (1) | 22.2 | % | 21.9 | % | |||||||||||
| Loss ratio | 26.4 | % | 21.0 | % | |||||||||||
| Expense ratio | 51.7 | % | 55.7 | % | |||||||||||
| Combined ratio | 78.1 | % | 76.6 | % | |||||||||||
| Adjusted combined ratio (1) | 73.7 | % | 71.2 | % | |||||||||||
| Diluted earnings per share | $ | 4.48 | $ | 3.13 | |||||||||||
| Diluted adjusted earnings per share (1) | $ | 5.09 | $ | 3.69 | |||||||||||
| Catastrophe losses | $ | 27,846 | $ | 3,442 | |||||||||||
| Catastrophe loss ratio (1) | 5.5 | % | 1.0 | % | |||||||||||
| Adjusted combined ratio excluding catastrophe losses (1) | 68.3 | % | 70.2 | % | |||||||||||
| Adjusted underwriting income (1) | $ | 134,147 | $ | 99,511 | $ | 34,636 | 34.8 | % | |||||||
Condensed Consolidated Balance sheets
| Palomar Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited) (in thousands, except shares and par value data) |
|||||||
| | December 31, 2024 |
December 31, 2023 |
|||||
| Assets | | | |||||
| Investments: | | | |||||
| Fixed maturity securities available for sale, at fair value (amortized cost: $973,330 in 2024; $675,130 in 2023) | $ | 939,046 | $ | 643,799 | |||
| Equity securities, at fair value (cost: $32,987 in 2024; $43,003 in 2023) | 40,529 | 43,160 | |||||
| Equity method investment | 2,277 | 2,617 | |||||
| Other investments | 5,863 | — | |||||
| Total investments | 987,715 | 689,576 | |||||
| Cash and cash equivalents | 80,438 | 51,546 | |||||
| Restricted cash | 101 | 306 | |||||
| Accrued investment income | 8,440 | 5,282 | |||||
| Premium receivable | 305,724 | 261,972 | |||||
| Deferred policy acquisition costs, net of ceding commissions and fronting fees | 94,881 | 60,990 | |||||
| Reinsurance recoverable on paid losses and loss adjustment expenses | 47,076 | 32,172 | |||||
| Reinsurance recoverable on unpaid losses and loss adjustment expenses | 348,083 | 244,622 | |||||
| Ceded unearned premiums | 276,237 | 265,808 | |||||
| Prepaid expenses and other assets | 91,086 | 72,941 | |||||
| Deferred tax assets, net | 8,768 | 10,119 | |||||
| Property and equipment, net | 429 | 373 | |||||
| Goodwill and intangible assets, net | 13,242 | 12,315 | |||||
| Total assets | $ | 2,262,220 | $ | 1,708,022 | |||
| Liabilities and stockholders’ equity | |||||||
| Liabilities: | |||||||
| Accounts payable and other accrued liabilities | $ | 70,079 | $ | 42,376 | |||
| Reserve for losses and loss adjustment expenses | 503,382 | 342,275 | |||||
| Unearned premiums | 741,692 | 597,103 | |||||
| Ceded premium payable | 190,168 | 181,742 | |||||
| Funds held under reinsurance treaty | 27,869 | 13,419 | |||||
| Income taxes payable | — | 7,255 | |||||
| Borrowings from credit agreements | — | 52,600 | |||||
| Total liabilities | 1,533,190 | 1,236,770 | |||||
| Stockholders’ equity: | |||||||
| Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2024 and December 31, 2023, 0 shares issued and outstanding as of December 31, 2024 and December 31, 2023 | — | — | |||||
| Common stock, $0.0001 par value, 500,000,000 shares authorized, 26,529,402 and 24,772,987 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively | 3 | 3 | |||||
| Additional paid-in capital | 493,656 | 350,597 | |||||
| Accumulated other comprehensive loss | (26,845 | ) | (23,991 | ) | |||
| Retained earnings | 262,216 | 144,643 | |||||
| Total stockholders’ equity | 729,030 | 471,252 | |||||
| Total liabilities and stockholders’ equity | $ | 2,262,220 | $ | 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) |
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| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenues: | |||||||||||||||
| Gross written premiums | $ | 373,723 | $ | 303,152 | $ | 1,541,962 | $ | 1,141,558 | |||||||
| Ceded written premiums | (204,492 | ) | (188,742 | ) | (897,111 | ) | (731,531 | ) | |||||||
| Net written premiums | 169,231 | 114,410 | 644,851 | 410,027 | |||||||||||
| Change in unearned premiums | (24,341 | ) | (20,662 | ) | (134,164 | ) | (64,114 | ) | |||||||
| Net earned premiums | 144,890 | 93,748 | 510,687 | 345,913 | |||||||||||
| Net investment income | 11,318 | 7,015 | 35,824 | 23,705 | |||||||||||
| Net realized and unrealized (losses) gains on investments | (1,201 | ) | 3,044 | 4,568 | 2,941 | ||||||||||
| Commission and other income | 750 | 1,586 | 2,784 | 3,367 | |||||||||||
| Total revenues | 155,757 | 105,393 | 553,863 | 375,926 | |||||||||||
| Expenses: | |||||||||||||||
| Losses and loss adjustment expenses | 37,176 | 17,896 | 134,759 | 72,592 | |||||||||||
| Acquisition expenses, net of ceding commissions and fronting fees | 40,585 | 29,005 | 149,657 | 107,745 | |||||||||||
| Other underwriting expenses | 32,947 | 24,210 | 117,113 | 88,172 | |||||||||||
| Interest expense | 87 | 824 | 1,138 | 3,775 | |||||||||||
| Total expenses | 110,795 | 71,935 | 402,667 | 272,284 | |||||||||||
| Income before income taxes | 44,962 | 33,458 | 151,196 | 103,642 | |||||||||||
| Income tax expense | 9,997 | 7,564 | 33,623 | 24,441 | |||||||||||
| Net income | $ | 34,965 | $ | 25,894 | $ | 117,573 | $ | 79,201 | |||||||
| Other comprehensive income, net: | |||||||||||||||
| Net unrealized (losses) gains on securities available for sale | (16,707 | ) | 19,229 | (2,854 | ) | 12,524 | |||||||||
| Net comprehensive income | $ | 18,258 | $ | 45,123 | $ | 114,719 | $ | 91,725 | |||||||
| Per Share Data: | |||||||||||||||
| Basic earnings per share | $ | 1.32 | $ | 1.05 | $ | 4.61 | $ | 3.19 | |||||||
| Diluted earnings per share | $ | 1.29 | $ | 1.02 | $ | 4.48 | $ | 3.13 | |||||||
| Weighted-average common shares outstanding: | |||||||||||||||
| Basic | 26,491,939 | 24,747,347 | 25,520,343 | 24,822,004 | |||||||||||
| Diluted | 27,206,225 | 25,272,149 | 26,223,842 | 25,327,091 | |||||||||||
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 December 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||
| % of | % of | % | |||||||||||||||||||||
| Amount | GWP | Amount | GWP | Change | Change | ||||||||||||||||||
| Product (1) | |||||||||||||||||||||||
| Earthquake | $ | 146,757 | 39.3 | % | $ | 122,087 | 40.3 | % | $ | 24,670 | 20.2 | % | |||||||||||
| Inland Marine and other Property | 85,396 | 22.9 | % | 63,039 | 20.8 | % | 22,357 | 35.5 | % | ||||||||||||||
| Casualty | 68,484 | 18.3 | % | 32,323 | 10.7 | % | 36,161 | 111.9 | % | ||||||||||||||
| Fronting | 57,418 | 15.4 | % | 85,708 | 28.3 | % | (28,290 | ) | (33.0 | )% | |||||||||||||
| Crop | 15,668 | 4.2 | % | (5 | ) | (0.0 | )% | 15,673 | NM | ||||||||||||||
| Total Gross Written Premiums | $ | 373,723 | 100.0 | % | $ | 303,152 | 100.0 | % | $ | 70,571 | 23.3 | % | |||||||||||
NM- Not meaningful
| Year Ended December 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||
| % of | % of | % | |||||||||||||||||||||
| Amount | GWP | Amount | GWP | Change | Change | ||||||||||||||||||
| Product (1) | |||||||||||||||||||||||
| Earthquake | $ | 522,864 | 33.9 | % | $ | 436,896 | 38.3 | % | $ | 85,968 | 19.7 | % | |||||||||||
| Inland Marine and Other Property | 334,079 | 21.7 | % | 250,023 | 21.9 | % | 84,056 | 33.6 | % | ||||||||||||||
| Fronting | 333,188 | 21.6 | % | 352,141 | 30.8 | % | (18,953 | ) | (5.4 | )% | |||||||||||||
| Casualty | 235,592 | 15.3 | % | 90,388 | 7.9 | % | 145,204 | 160.6 | % | ||||||||||||||
| Crop | 116,239 | 7.5 | % | 12,110 | 1.1 | % | 104,129 | 859.9 | % | ||||||||||||||
| Total Gross Written Premiums | $ | 1,541,962 | 100.0 | % | $ | 1,141,558 | 100.0 | % | $ | 400,404 | 35.1 | % | |||||||||||
(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 December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
| ($ in thousands) | ($ in thousands) | ||||||||||||||||||||||||||||||
| % of | % of | % of | % of | ||||||||||||||||||||||||||||
| Amount | GWP | Amount | GWP | Amount | GWP | Amount | GWP | ||||||||||||||||||||||||
| State | |||||||||||||||||||||||||||||||
| California | $ | 157,786 | 42.2 | % | $ | 165,342 | 54.5 | % | $ | 668,635 | 43.4 | % | $ | 600,791 | 52.6 | % | |||||||||||||||
| Texas | 28,002 | 7.5 | % | 22,740 | 7.5 | % | 124,416 | 8.1 | % | 95,517 | 8.4 | % | |||||||||||||||||||
| Hawaii | 18,636 | 5.0 | % | 11,562 | 3.8 | % | 72,558 | 4.7 | % | 47,388 | 4.2 | % | |||||||||||||||||||
| Washington | 16,007 | 4.3 | % | 14,124 | 4.7 | % | 57,900 | 3.8 | % | 49,494 | 4.3 | % | |||||||||||||||||||
| New York | 14,756 | 3.9 | % | 6,775 | 2.2 | % | 38,919 | 2.5 | % | 18,424 | 1.6 | % | |||||||||||||||||||
| Florida | 8,855 | 2.4 | % | 11,286 | 3.7 | % | 67,008 | 4.3 | % | 47,595 | 4.2 | % | |||||||||||||||||||
| Oregon | 8,298 | 2.2 | % | 6,307 | 2.1 | % | 29,550 | 1.9 | % | 23,220 | 2.0 | % | |||||||||||||||||||
| Illinois | 7,176 | 1.9 | % | 6,697 | 2.2 | % | 20,901 | 1.4 | % | 22,340 | 2.0 | % | |||||||||||||||||||
| Other | 114,207 | 30.6 | % | 58,319 | 19.2 | % | 462,075 | 30.0 | % | 236,789 | 20.7 | % | |||||||||||||||||||
| Total Gross Written Premiums | $ | 373,723 | 100.0 | % | $ | 303,152 | 100.0 | % | $ | 1,541,962 | 100.0 | % | $ | 1,141,558 | 100.0 | % | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
| ($ in thousands) | ($ in thousands) | ||||||||||||||||||||||||||||||
| % of | % of | % of | % of | ||||||||||||||||||||||||||||
| Amount | GWP | Amount | GWP | Amount | GWP | Amount | GWP | ||||||||||||||||||||||||
| Subsidiary | |||||||||||||||||||||||||||||||
| PSIC | $ | 170,275 | 45.6 | % | $ | 156,590 | 51.7 | % | $ | 823,263 | 53.4 | % | $ | 653,809 | 57.3 | % | |||||||||||||||
| PESIC | 188,496 | 50.4 | % | 146,562 | 48.3 | % | 661,404 | 42.9 | % | 487,749 | 42.7 | % | |||||||||||||||||||
| Laulima | 14,952 | 4.0 | % | — | — | % | 57,295 | 3.7 | % | — | — | % | |||||||||||||||||||
| Total Gross Written Premiums | $ | 373,723 | 100.0 | % | $ | 303,152 | 100.0 | % | $ | 1,541,962 | 100.0 | % | $ | 1,141,558 | 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 | Year Ended | ||||||||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||||||||
| 2024 | 2023 | Change | % Change | 2024 | 2023 | Change | % Change | ||||||||||||||||||||||||
| ($ in thousands) | ($ in thousands) | ||||||||||||||||||||||||||||||
| Gross earned premiums | $ | 371,654 | $ | 276,502 | $ | 95,152 | 34.4 | % | $ | 1,397,369 | $ | 1,015,722 | $ | 381,647 | 37.6 | % | |||||||||||||||
| Ceded earned premiums | (226,764 | ) | (182,754 | ) | (44,010 | ) | 24.1 | % | (886,682 | ) | (669,809 | ) | (216,873 | ) | 32.4 | % | |||||||||||||||
| Net earned premiums | $ | 144,890 | $ | 93,748 | $ | 51,142 | 54.6 | % | $ | 510,687 | $ | 345,913 | $ | 164,774 | 47.6 | % | |||||||||||||||
| Net earned premium ratio | 39.0 | % | 33.9 | % | 36.5 | % | 34.1 | % | |||||||||||||||||||||||
Loss detail
| Three Months Ended | Year Ended | ||||||||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||||||||
| 2024 | 2023 | Change | % Change | 2024 | 2023 | Change | % Change | ||||||||||||||||||||||||
| ($ in thousands) | ($ in thousands) | ||||||||||||||||||||||||||||||
| Catastrophe losses | $ | 8,122 | $ | 10 | $ | 8,112 | NM | $ | 27,846 | $ | 3,442 | $ | 24,404 | NM | |||||||||||||||||
| Non-catastrophe losses | 29,054 | 17,886 | 11,168 | 62.4 | % | 106,913 | 69,150 | 37,763 | 54.6 | % | |||||||||||||||||||||
| Total losses and loss adjustment expenses | $ | 37,176 | $ | 17,896 | $ | 19,280 | 107.7 | % | $ | 134,759 | $ | 72,592 | $ | 62,167 | 85.6 | % | |||||||||||||||
| Catastrophe loss ratio | 5.6 | % | 0.0 | % | 5.5 | % | 1.0 | % | |||||||||||||||||||||||
| Non-catastrophe loss ratio | 20.1 | % | 19.1 | % | 20.9 | % | 20.0 | % | |||||||||||||||||||||||
| Total loss ratio | 25.7 | % | 19.1 | % | 26.4 | % | 21.0 | % | |||||||||||||||||||||||
| 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 December 31, |
Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||
| Reserve for losses and LAE net of reinsurance recoverables at beginning of period | $ | 137,274 | $ | 92,178 | $ | 97,653 | $ | 77,520 | |||||||
| Add: Incurred losses and LAE, net of reinsurance, related to: | |||||||||||||||
| Current year | 37,575 | 19,409 | 137,798 | 70,363 | |||||||||||
| Prior years | (399 | ) | (1,513 | ) | (3,039 | ) | 2,229 | ||||||||
| Total incurred | 37,176 | 17,896 | 134,759 | 72,592 | |||||||||||
| Deduct: Loss and LAE payments, net of reinsurance, related to: | |||||||||||||||
| Current year | 15,675 | 5,417 | 43,582 | 19,631 | |||||||||||
| Prior years | 3,476 | 7,004 | 33,531 | 32,828 | |||||||||||
| Total payments | 19,151 | 12,421 | 77,113 | 52,459 | |||||||||||
| Reserve for losses and LAE net of reinsurance recoverables at end of period | 155,299 | 97,653 | 155,299 | 97,653 | |||||||||||
| Add: Reinsurance recoverables on unpaid losses and LAE at end of period | 348,083 | 244,622 | 348,083 | 244,622 | |||||||||||
| Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period | $ | 503,382 | $ | 342,275 | $ | 503,382 | $ | 342,275 | |||||||
Reconciliation of Non-GAAP Financial Measures
For the three months and year ended December 31, 2024 and 2023, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows:
Underwriting revenue
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||
| Total revenue | $ | 155,757 | $ | 105,393 | $ | 553,863 | $ | 375,926 | |||||||
| Net investment income | (11,318 | ) | (7,015 | ) | (35,824 | ) | (23,705 | ) | |||||||
| Net realized and unrealized (gains) losses on investments | 1,201 | (3,044 | ) | (4,568 | ) | (2,941 | ) | ||||||||
| Underwriting revenue | $ | 145,640 | $ | 95,334 | $ | 513,471 | $ | 349,280 | |||||||
Underwriting income and adjusted underwriting income
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||
| Income before income taxes | $ | 44,962 | $ | 33,458 | $ | 151,196 | $ | 103,642 | |||||||
| Net investment income | (11,318 | ) | (7,015 | ) | (35,824 | ) | (23,705 | ) | |||||||
| Net realized and unrealized losses (gains) on investments | 1,201 | (3,044 | ) | (4,568 | ) | (2,941 | ) | ||||||||
| Interest expense | 87 | 824 | 1,138 | 3,775 | |||||||||||
| Underwriting income | $ | 34,932 | $ | 24,223 | $ | 111,942 | $ | 80,771 | |||||||
| Expenses associated with transactions | 922 | 478 | 1,479 | 706 | |||||||||||
| Stock-based compensation expense | 4,779 | 4,176 | 16,685 | 14,913 | |||||||||||
| Amortization of intangibles | 389 | 389 | 1,558 | 1,481 | |||||||||||
| Expenses associated with catastrophe bond | — | — | 2,483 | 1,640 | |||||||||||
| Adjusted underwriting income | $ | 41,022 | $ | 29,266 | $ | 134,147 | $ | 99,511 | |||||||
Adjusted net income
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||
| Net income | $ | 34,965 | $ | 25,894 | $ | 117,573 | $ | 79,201 | |||||||
| Adjustments: | |||||||||||||||
| Net realized and unrealized losses (gains) on investments | 1,201 | (3,044 | ) | (4,568 | ) | (2,941 | ) | ||||||||
| Expenses associated with transactions | 922 | 478 | 1,479 | 706 | |||||||||||
| Stock-based compensation expense | 4,779 | 4,176 | 16,685 | 14,913 | |||||||||||
| Amortization of intangibles | 389 | 389 | 1,558 | 1,481 | |||||||||||
| Expenses associated with catastrophe bond | — | — | 2,483 | 1,640 | |||||||||||
| Tax impact | (964 | ) | 103 | (1,699 | ) | (1,480 | ) | ||||||||
| Adjusted net income | $ | 41,292 | $ | 27,996 | $ | 133,511 | $ | 93,520 | |||||||
Annualized adjusted return on equity
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||
| Annualized adjusted net income | $ | 165,168 | $ | 111,984 | $ | 133,511 | $ | 93,520 | |||||||
| Average stockholders’ equity | $ | 716,171 | $ | 446,293 | $ | 600,140 | $ | 428,002 | |||||||
| Annualized adjusted return on equity | 23.1 | % | 25.1 | % | 22.2 | % | 21.9 | % | |||||||
Adjusted combined ratio
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 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 | $ | 109,958 | $ | 69,525 | $ | 398,745 | $ | 265,142 | |||||||
| Denominator: Net earned premiums | $ | 144,890 | $ | 93,748 | $ | 510,687 | $ | 345,913 | |||||||
| Combined ratio | 75.9 | % | 74.2 | % | 78.1 | % | 76.6 | % | |||||||
| Adjustments to numerator: | |||||||||||||||
| Expenses associated with transactions | $ | (922 | ) | $ | (478 | ) | $ | (1,479 | ) | $ | (706 | ) | |||
| Stock-based compensation expense | (4,779 | ) | (4,176 | ) | (16,685 | ) | (14,913 | ) | |||||||
| Amortization of intangibles | (389 | ) | (389 | ) | (1,558 | ) | (1,481 | ) | |||||||
| Expenses associated with catastrophe bond | — | — | (2,483 | ) | (1,640 | ) | |||||||||
| Adjusted combined ratio | 71.7 | % | 68.8 | % | 73.7 | % | 71.2 | % | |||||||
Diluted adjusted earnings per share
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (in thousands, except per share data) | (in thousands, except per share data) | ||||||||||||||
| Adjusted net income | $ | 41,292 | $ | 27,996 | $ | 133,511 | $ | 93,520 | |||||||
| Weighted-average common shares outstanding, diluted | 27,206,225 | 25,272,149 | 26,223,842 | 25,327,091 | |||||||||||
| Diluted adjusted earnings per share | $ | 1.52 | $ | 1.11 | $ | 5.09 | $ | 3.69 | |||||||
Catastrophe loss ratio
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||
| Numerator: Losses and loss adjustment expenses | $ | 37,176 | $ | 17,896 | $ | 134,759 | $ | 72,592 | |||||||
| Denominator: Net earned premiums | $ | 144,890 | $ | 93,748 | $ | 510,687 | $ | 345,913 | |||||||
| Loss ratio | 25.7 | % | 19.1 | % | 26.4 | % | 21.0 | % | |||||||
| Numerator: Catastrophe losses | $ | 8,122 | $ | 10 | $ | 27,846 | $ | 3,442 | |||||||
| Denominator: Net earned premiums | $ | 144,890 | $ | 93,748 | $ | 510,687 | $ | 345,913 | |||||||
| Catastrophe loss ratio | 5.6 | % | 0.0 | % | 5.5 | % | 1.0 | % | |||||||
Adjusted combined ratio excluding catastrophe losses
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 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 | $ | 109,958 | $ | 69,525 | $ | 398,745 | $ | 265,142 | |||||||
| Denominator: Net earned premiums | $ | 144,890 | $ | 93,748 | $ | 510,687 | $ | 345,913 | |||||||
| Combined ratio | 75.9 | % | 74.2 | % | 78.1 | % | 76.6 | % | |||||||
| Adjustments to numerator: | |||||||||||||||
| Expenses associated with transactions | $ | (922 | ) | $ | (478 | ) | $ | (1,479 | ) | $ | (706 | ) | |||
| Stock-based compensation expense | (4,779 | ) | (4,176 | ) | (16,685 | ) | (14,913 | ) | |||||||
| Amortization of intangibles | (389 | ) | (389 | ) | (1,558 | ) | (1,481 | ) | |||||||
| Expenses associated with catastrophe bond | — | — | (2,483 | ) | (1,640 | ) | |||||||||
| Catastrophe losses | (8,122 | ) | (10 | ) | (27,846 | ) | (3,442 | ) | |||||||
| Adjusted combined ratio excluding catastrophe losses | 66.1 | % | 68.8 | % | 68.3 | % | 70.2 | % | |||||||
Tangible Stockholders’ equity
| December 31, | December 31, | ||||||
| 2024 | 2023 | ||||||
| (in thousands) | |||||||
| Stockholders’ equity | $ | 729,030 | $ | 471,252 | |||
| Goodwill and intangible assets | (13,242 | ) | (12,315 | ) | |||
| Tangible stockholders’ equity | $ | 715,788 | $ | 458,937 | |||
