LA JOLLA, Calif., Nov. 02, 2022 (GLOBE NEWSWIRE) — Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported web revenue of $4.3 million, or $0.17 per diluted share, for the third quarter of 2022 in comparison with $0.2 million, or $0.01 per diluted share, for the third quarter of 2021. Adjusted web revenue(1) was $7.4 million, or $0.29 per diluted share, for the third quarter of 2022 as in comparison with $1.7 million, or $0.07 per diluted share, for the third quarter of 2021.
Third Quarter 2022 Highlights
- Gross written premiums elevated by 66.2% to $253.1 million in comparison with $152.3 million within the third quarter of 2021
- Net revenue of $4.3 million, in comparison with $0.2 million within the third quarter of 2021
- Adjusted web revenue(1) of $7.4 million, in comparison with $1.7 million within the third quarter of 2021
- Total loss ratio of 39.6% in comparison with 44.0% within the third quarter of 2021
- Combined ratio of 94.8% in comparison with 102.8% within the third quarter of 2021
- Adjusted mixed ratio(1) of 90.3%, in comparison with 100.2% within the third quarter of 2021
- Annualized return on fairness of 4.6%, in comparison with 0.3% within the third quarter of 2021
- Annualized adjusted return on fairness(1) of seven.9%, in comparison with 1.8% within the third quarter of 2021
(1) See dialogue of “Non-GAAP and Key Performance Indicators” beneath.
Mac Armstrong, Chairman and Chief Executive Officer, commented, “I am very proud of our third quarter results as they are a further testament to our commitment to profitable growth and our execution of Palomar 2X – our intermediate term strategic plan of doubling our adjusted underwriting income while achieving a 20% adjusted return on equity. We grew the gross written premium of the business by 66%, and despite incurring a full retention loss from Hurricane Ian, we generated an adjusted ROE of 10% when adding back realized and unrealized gains and losses from our investment portfolio. The quarter’s results validate the resilience of our model as the business grew adjusted net income by 328% from the prior year.”
“Ian will go down as a historic storm and our thoughts and prayers are with all of those impacted by the storm. From a business perspective, we are pleased that our losses should under index the industry due to the underwriting actions we’ve implemented over the last few years that have meaningfully reduced our continental hurricane exposure.”
“The growing contributions in the quarter of our newer business lines such as inland marine and casualty have further catalyzed Palomar 2X. While our results led to a modestly higher attritional loss ratio than plan, it is worth noting that 29% of these attritional losses were from lines of business that we have exited or restructured. As such, we at Palomar strongly feel that our third quarter performance demonstrates our sustained execution of Palomar 2X and we believe we are well-positioned for further profitable growth over the remainder of 2022 and into 2023,” concluded Mr. Armstrong.
Underwriting Results
Gross written premiums elevated 66.2% to $253.1 million in comparison with $152.3 million within the third quarter of 2021, whereas web earned premiums elevated 20.4% in comparison with the prior yr’s third quarter.
Losses and loss adjustment bills for the third quarter had been $30.9 million together with $18.4 million of non-catastrophe attritional losses, and $12.5 million of disaster losses from Hurricane Ian. The loss ratio for the quarter was 39.6%, comprised of a disaster loss ratio(1) of 16.0% and an attritional loss ratio of 23.6%, in comparison with a loss ratio of 44.0% throughout the identical interval final yr comprised of a disaster loss ratio(1) of 27.0% and an attritional loss ratio of 17.0%.
The third quarter disaster loss outcomes embody a full retention loss from Hurricane Ian. The anticipated losses from Hurricane Ian additionally lead to further ceded reinsurance premium of $3.1 million, with $1.3 million acknowledged within the third quarter of 2022 and the remaining $1.8 million acknowledged over the remaining time period of the June 1, 2022 reinsurance treaty.
Non-catastrophe losses and loss ratio elevated primarily as a result of development of strains of business topic to attritional losses, resembling Inland Marine, Casualty, and Commercial All Risk. The attritional loss ratio for the quarter was modestly increased than the annualized loss ratio beforehand focused. Higher than projected premium from new strains of business central to the success of Palomar 2X contributed to the loss totals. Additionally, roughly $5.3 million or 29% of the of the losses for the quarter had been from strains of business in runoff or restructured.
Underwriting revenue(1) was $4.1 million leading to a mixed ratio of 94.8% in comparison with an underwriting lack of $1.8 million and a mixed ratio of 102.8% throughout the identical interval final yr. Excluding bills associated to transactions, stock-based compensation, and amortization of intangibles, the Company’s adjusted underwriting revenue(1) was $7.5 million leading to an adjusted mixed ratio(1) of 90.3% within the third quarter in comparison with an adjusted underwriting loss(1) of $0.2 million and an adjusted mixed ratio(1) of 100.2% throughout the identical interval final yr. The adjusted underwriting revenue(1) elevated and the adjusted mixed ratio(1) decreased primarily as a result of mixture of upper underwriting income(1) and decrease expense ratio and loss ratio in comparison with the prior yr’s third quarter.
Investment Results
Net funding revenue elevated by 67.4% to $3.7 million in comparison with $2.2 million within the prior yr’s third quarter. The yr over yr enhance was a outcome of a better common stability of investments held through the three months ended September 30, 2022 attributable to money generated from operations and better yields on mounted revenue investments. Funds are typically invested conservatively in prime quality securities, together with authorities company, asset and mortgage-backed securities, municipal and company bonds with a mean credit score high quality of “A1/A” with a small portion of our portfolio invested in fairness securities. The weighted common length of the fixed-maturity funding portfolio, together with money equivalents, was 4.03 years at September 30, 2022. Cash and invested belongings totaled $541.8 million at September 30, 2022. During the third quarter, the Company recorded realized and unrealized losses of $2.4 million as in comparison with realized and unrealized losses of $0.3 million in final yr’s third quarter due primarily to increased mark-to-market losses on fairness securities.
Tax Rate
The efficient tax fee for the three months ended September 30, 2022 was 17.5% in comparison with detrimental 101.6% for the three months ended September 30, 2021. For the present quarter and prior yr quarter, the Company’s revenue tax fee was decrease than the statutory fee of 21% due primarily to the tax affect of the everlasting part of worker inventory choice workouts.
Stockholders’ Equity and Returns
Stockholders’ fairness was $367.8 million at September 30, 2022, in comparison with $377.8 million at September 30, 2021. For the three months ended September 30, 2022, the Company’s annualized return on fairness was 4.6% in comparison with 0.3% for a similar interval within the prior yr whereas adjusted return on fairness(1) was 7.9% in comparison with 1.8% for a similar interval within the prior yr. During the present quarter, the Company repurchased 52,185 shares for $3.0 million of the Company’s beforehand introduced $100 million share repurchase authorization. As of September 30, 2022, $76.7 million stays out there for future repurchases.
2022 Outlook
For 2022 the Company expects to realize full yr adjusted web revenue of $82 million to $85 million. The vary contains further reinsurance expense ensuing from Hurricane Ian and excludes catastrophes and realized and unrealized beneficial properties and losses.
Conference Call
As beforehand introduced, Palomar will host a convention name Thursday November 3, 2022, to debate its third quarter 2022 outcomes at 12:00 p.m. (Eastern Time). The convention name might be accessed stay by dialing 1-877-423-9813 or for worldwide callers, 1-201-689-8573, and requesting to be joined to the Palomar Third Quarter 2022 Earnings Conference Call. A replay can be out there beginning at 3:00 p.m. (Eastern Time) on November 3, 2022, and might be accessed by dialing 1-844-512-2921, or for worldwide callers, 1-412-317-6671. The passcode for the replay is 13732950. The replay can be out there till 11:59 p.m. (Eastern Time) on November 10, 2022.
Interested buyers and different events may hearken to a simultaneous webcast of the convention name by logging onto the investor relations part of the Company’s web site at http://ir.palomarspecialty.com/. The on-line replay will stay out there for a restricted time starting instantly following the decision.
About Palomar Holdings, Inc.
Palomar Holdings, Inc. is the holding firm 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 progressive insurer serving residential and industrial purchasers in specialty markets together with the marketplace 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 monetary energy ranking of “A-” (Excellent) from A.M. Best.
To be taught extra, go to PLMR.com.
Follow Palomar on Facebook, LinkedIn and Twitter: @PLMRInsurance
Non-GAAP and Key Performance Indicators
Palomar discusses sure key efficiency indicators, described beneath, which offer helpful details about the Company’s business and the operational components underlying the Company’s monetary efficiency.
Underwriting income is a non-GAAP monetary measure outlined as complete income, excluding web funding revenue and web realized and unrealized beneficial properties and losses on investments. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of complete income calculated in accordance with GAAP to underwriting income.
Underwriting revenue is a non-GAAP monetary measure outlined as revenue earlier than revenue taxes excluding web funding revenue, web realized and unrealized beneficial properties and losses on investments, and curiosity expense. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of revenue earlier than revenue taxes calculated in accordance with GAAP to underwriting revenue.
Adjusted web revenue is a non-GAAP monetary measure outlined as web revenue excluding the affect of sure gadgets that will not be indicative of underlying business traits, working outcomes, or future outlook, web of tax affect. Palomar calculates the tax affect solely on changes which might be included in calculating the Company’s revenue tax expense utilizing the estimated tax fee at which the corporate acquired a deduction for these changes. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of web revenue calculated in accordance with GAAP to adjusted web revenue.
Annualized Return on fairness is web revenue expressed on an annualized foundation as a share of common starting and ending stockholders’ fairness through the interval.
Annualized adjusted return on fairness is a non-GAAP monetary measure outlined as adjusted web revenue expressed on an annualized foundation as a share of common starting and ending stockholders’ fairness through the interval. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of return on fairness calculated utilizing unadjusted GAAP numbers to adjusted return on fairness.
Loss ratio, expressed as a share, is the ratio of losses and loss adjustment bills, to web earned premiums.
Expense ratio, expressed as a share, is the ratio of acquisition and different underwriting bills, web of fee and different revenue to web earned premiums.
Combined ratio is outlined because the sum of the loss ratio and the expense ratio. A mixed ratio below 100% typically signifies an underwriting revenue. A mixed ratio over 100% typically signifies an underwriting loss.
Adjusted mixed ratio is a non-GAAP monetary measure outlined because the sum of the loss ratio and the expense ratio calculated excluding the affect of sure gadgets that will not be indicative of underlying business traits, working outcomes, or future outlook. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of mixed ratio calculated utilizing unadjusted GAAP numbers to adjusted mixed ratio.
Diluted adjusted earnings per share is a non-GAAP monetary measure outlined as adjusted web revenue divided by the weighted-average frequent shares excellent for the interval, reflecting the dilution which might happen if equity-based awards are transformed into frequent share equivalents as calculated utilizing the treasury inventory technique. 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 monetary measure outlined because the ratio of disaster losses to web earned premiums. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of loss ratio calculated utilizing unadjusted GAAP numbers to disaster loss ratio.
Adjusted mixed ratio excluding disaster losses is a non-GAAP monetary measure outlined as adjusted mixed ratio excluding the affect of disaster losses. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of mixed ratio calculated utilizing unadjusted GAAP numbers to adjusted mixed ratio excluding disaster losses.
Adjusted underwriting revenue is a non-GAAP monetary measure outlined as underwriting revenue excluding the affect of sure gadgets that will not be indicative of underlying business traits, working outcomes, or future outlook. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of revenue earlier than revenue taxes calculated in accordance with GAAP to adjusted underwriting revenue.
Tangible stockholders’ fairness is a non-GAAP monetary measure outlined as stockholders’ fairness much less intangible belongings. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of stockholders’ fairness calculated in accordance with GAAP to tangible stockholders’ fairness.
Safe Harbor Statement
Palomar cautions you that statements contained on this press launch could regard issues that aren’t historic information however are forward-looking statements. These statements are based mostly on the corporate’s present beliefs and expectations. The inclusion of forward-looking statements shouldn’t be considered a illustration by Palomar that any of its plans can be achieved. Actual outcomes could differ from these set forth on this press launch as a result of dangers and uncertainties inherent within the Company’s business. The forward-looking statements are sometimes, however not at all times, recognized via use of the phrases “believe,” “expect,” “enable,” “may,” “will,” “could,” “intends,” “estimate,” “anticipate,” “plan,” “predict,” “probable,” “potential,” “possible,” “should,” “continue,” and different phrases of comparable which means. Actual outcomes might differ materially from the expectations contained in forward-looking statements on account of a number of components, together with surprising expenditures and prices, surprising outcomes or delays in improvement and regulatory evaluation, regulatory approval necessities, the frequency and severity of opposed occasions and aggressive situations. These and different components that will lead to variations are mentioned in higher element within the Company’s filings with the Securities and Exchange Commission. You are cautioned to not place undue reliance on these forward-looking statements, which converse solely as of the date hereof, and the Company undertakes no obligation to replace such statements to mirror occasions that happen or circumstances that exist after the date hereof. All forward-looking statements are certified of their entirety by this cautionary assertion, which is made below the protected 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 desk summarizes the Company’s outcomes for the three months ended September 30, 2022 and 2021:
| Three months ended | ||||||||||||
| September 30, | ||||||||||||
| 2022 | 2021 | Change | % Change | |||||||||
| ($ in hundreds, besides per share knowledge) | ||||||||||||
| Gross written premiums | $ | 253,128 | $ | 152,332 | $ | 100,796 | 66.2 | % | ||||
| Ceded written premiums | (161,930 | ) | (58,073 | ) | (103,857 | ) | 178.8 | % | ||||
| Net written premiums | 91,198 | 94,259 | (3,061 | ) | (3.2 | )% | ||||||
| Net earned premiums | 77,942 | 64,720 | 13,222 | 20.4 | % | |||||||
| Commission and different revenue | 1,362 | 1,018 | 344 | 33.8 | % | |||||||
| Total underwriting income (1) | 79,304 | 65,738 | 13,566 | 20.6 | % | |||||||
| Losses and loss adjustment bills | 30,900 | 28,475 | 2,425 | 8.5 | % | |||||||
| Acquisition bills | 27,210 | 26,412 | 798 | 3.0 | % | |||||||
| Other underwriting bills | 17,114 | 12,652 | 4,462 | 35.3 | % | |||||||
| Underwriting revenue (loss) (1) | 4,080 | (1,801 | ) | 5,881 | NM | |||||||
| Interest expense | (270 | ) | — | (270 | ) | NM | ||||||
| Net funding revenue | 3,744 | 2,236 | 1,508 | 67.4 | % | |||||||
| Net realized and unrealized losses on investments | (2,356 | ) | (313 | ) | (2,043 | ) | NM | |||||
| Income earlier than revenue taxes | 5,198 | 122 | 5,076 | NM | ||||||||
| Income tax expense (profit) | 912 | (124 | ) | 1,036 | NM | |||||||
| Net revenue | $ | 4,286 | $ | 246 | $ | 4,040 | NM | |||||
| Adjustments: | ||||||||||||
| Expenses related to transactions | 45 | — | 45 | NM | ||||||||
| Stock-based compensation expense | 3,092 | 1,525 | 1,567 | 102.8 | % | |||||||
| Amortization of intangibles | 313 | 115 | 198 | 172.4 | % | |||||||
| Tax affect | (376 | ) | (166 | ) | (210 | ) | 126.5 | % | ||||
| Adjusted web revenue (1) | $ | 7,360 | $ | 1,720 | $ | 5,640 | NM | |||||
| Key Financial and Operating Metrics | ||||||||||||
| Annualized return on fairness | 4.6 | % | 0.3 | % | ||||||||
| Annualized adjusted return on fairness (1) | 7.9 | % | 1.8 | % | ||||||||
| Loss ratio | 39.6 | % | 44.0 | % | ||||||||
| Expense ratio | 55.1 | % | 58.8 | % | ||||||||
| Combined ratio | 94.8 | % | 102.8 | % | ||||||||
| Adjusted mixed ratio (1) | 90.3 | % | 100.2 | % | ||||||||
| Diluted earnings per share | $ | 0.17 | $ | 0.01 | ||||||||
| Diluted adjusted earnings per share (1) | $ | 0.29 | $ | 0.07 | ||||||||
| Catastrophe losses | $ | 12,500 | $ | 17,487 | ||||||||
| Catastrophe loss ratio (1) | 16.0 | % | 27.0 | % | ||||||||
| Adjusted mixed ratio excluding disaster losses (1) | 74.3 | % | 73.2 | % | ||||||||
| Adjusted underwriting revenue (loss) (1) | $ | 7,530 | $ | (161 | ) | $ | 7,691 | NM | ||||
| NM – not significant | ||||||||||||
(1)- Indicates Non-GAAP monetary measure- see above for definition of Non-GAAP monetary measures and see beneath for reconciliation of Non-GAAP monetary measures to their most immediately comparable measures ready in accordance with GAAP.
The following desk summarizes the Company’s outcomes for the 9 months ended September 30, 2022 and 2021:
| Nine months ended | ||||||||||||
| September 30, | ||||||||||||
| 2022 | 2021 | Change | % Change | |||||||||
| ($ in hundreds, besides per share knowledge) | ||||||||||||
| Gross written premiums | $ | 642,751 | $ | 385,267 | $ | 257,484 | 66.8 | % | ||||
| Ceded written premiums | (374,109 | ) | (153,005 | ) | (221,104 | ) | 144.5 | % | ||||
| Net written premiums | 268,642 | 232,262 | 36,380 | 15.7 | % | |||||||
| Net earned premiums | 234,239 | 165,988 | 68,251 | 41.1 | % | |||||||
| Commission and different revenue | 3,129 | 2,735 | 394 | 14.4 | % | |||||||
| Total underwriting income (1) | 237,368 | 168,723 | 68,645 | 40.7 | % | |||||||
| Losses and loss adjustment bills | 60,251 | 31,288 | 28,963 | 92.6 | % | |||||||
| Acquisition bills | 83,928 | 68,150 | 15,778 | 23.2 | % | |||||||
| Other underwriting bills | 51,233 | 39,438 | 11,795 | 29.9 | % | |||||||
| Underwriting revenue (1) | 41,956 | 29,847 | 12,109 | 40.6 | % | |||||||
| Interest expense | (475 | ) | — | (475 | ) | NM | ||||||
| Net funding revenue | 9,462 | 6,649 | 2,813 | 42.3 | % | |||||||
| Net realized and unrealized losses on investments | (8,369 | ) | (752 | ) | (7,617 | ) | NM | |||||
| Income earlier than revenue taxes | 42,574 | 35,744 | 6,830 | 19.1 | % | |||||||
| Income tax expense | 9,163 | 6,529 | 2,634 | 40.3 | % | |||||||
| Net revenue | $ | 33,411 | $ | 29,215 | $ | 4,196 | 14.4 | % | ||||
| Adjustments: | ||||||||||||
| Expenses related to transactions | 130 | 411 | (281 | ) | (68.4 | )% | ||||||
| Stock-based compensation expense | 8,556 | 3,370 | 5,186 | 153.9 | % | |||||||
| Amortization of intangibles | 942 | 704 | 238 | 33.8 | % | |||||||
| Expenses related to disaster bond, web of rebate | 1,992 | 1,698 | 294 | 17.3 | % | |||||||
| Tax affect | (1,395 | ) | (1,156 | ) | (239 | ) | 20.7 | % | ||||
| Adjusted web revenue (1) | $ | 43,636 | $ | 34,242 | $ | 9,394 | 27.4 | % | ||||
| Key Financial and Operating Metrics | ||||||||||||
| Annualized return on fairness | 11.7 | % | 10.5 | % | ||||||||
| Annualized adjusted return on fairness (1) | 15.3 | % | 12.3 | % | ||||||||
| Loss ratio | 25.7 | % | 18.8 | % | ||||||||
| Expense ratio | 56.4 | % | 63.2 | % | ||||||||
| Combined ratio | 82.1 | % | 82.0 | % | ||||||||
| Adjusted mixed ratio (1) | 77.1 | % | 78.3 | % | ||||||||
| Diluted earnings per share | $ | 1.29 | $ | 1.12 | ||||||||
| Diluted adjusted earnings per share (1) | $ | 1.69 | $ | 1.31 | ||||||||
| Catastrophe losses | $ | 13,529 | $ | 6,719 | ||||||||
| Catastrophe loss ratio (1) | 5.8 | % | 4.0 | % | ||||||||
| Adjusted mixed ratio excluding disaster losses (1) | 71.4 | % | 74.2 | % | ||||||||
| Adjusted underwriting revenue (1) | $ | 53,576 | $ | 36,030 | $ | 17,546 | 48.7 | % | ||||
| NM- not significant | ||||||||||||
Condensed Consolidated Balance sheets
Palomar Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in hundreds, besides shares and par worth knowledge)
| September 30, | December 31, | |||||
| 2022 | 2021 | |||||
| (Unaudited) | ||||||
| Assets | ||||||
| Investments: | ||||||
| Fixed maturity securities out there on the market, at truthful worth (amortized price: $530,992 in 2022; $426,122 in 2021) | $ | 476,794 | $ | 432,682 | ||
| Equity securities, at truthful worth (price: $42,111 in 2022; $31,834 in 2021) | 35,468 | 33,261 | ||||
| Total investments | 512,262 | 465,943 | ||||
| Cash and money equivalents | 29,471 | 50,284 | ||||
| Restricted money | 73 | 87 | ||||
| Accrued funding revenue | 3,333 | 2,725 | ||||
| Premiums receivable, web | 186,850 | 88,012 | ||||
| Deferred coverage acquisition prices, web of ceding commissions | 57,000 | 55,953 | ||||
| Reinsurance recoverable on unpaid losses and loss adjustment bills | 131,575 | 127,947 | ||||
| Reinsurance recoverable on paid losses and loss adjustment bills | 45,393 | 29,368 | ||||
| Ceded unearned premiums | 182,657 | 58,315 | ||||
| Prepaid bills and different belongings | 46,414 | 37,072 | ||||
| Deferred tax belongings, web | 12,200 | — | ||||
| Property and gear, web | 663 | 527 | ||||
| Intangible belongings, web | 8,575 | 9,501 | ||||
| Total belongings | $ | 1,216,466 | $ | 925,734 | ||
| Liabilities and stockholders’ fairness | ||||||
| Liabilities: | ||||||
| Accounts payable and different accrued liabilities | $ | 20,655 | $ | 21,284 | ||
| Reserve for losses and loss adjustment bills | 205,823 | 173,366 | ||||
| Unearned premiums | 443,463 | 284,665 | ||||
| Ceded premium payable | 145,918 | 37,460 | ||||
| Funds held below reinsurance treaty | 6,362 | 10,882 | ||||
| Deferred tax liabilities, web | — | 3,908 | ||||
| Borrowings from credit score agreements | 26,400 | — | ||||
| Total liabilities | 848,621 | 531,565 | ||||
| Stockholders’ fairness: | ||||||
| Preferred inventory, $0.0001 par worth, 5,000,000 shares approved, 0 shares issued and excellent as of September 30, 2022 and December 31, 2021 | — | — | ||||
| Common inventory, $0.0001 par worth, 500,000,000 shares approved, 25,229,486 and 25,428,929 shares issued and excellent as of September 30, 2022 and December 31, 2021, respectively | 3 | 3 | ||||
| Additional paid-in capital | 330,381 | 318,902 | ||||
| Accumulated different complete revenue (loss) | (42,629 | ) | 5,312 | |||
| Retained earnings | 80,090 | 69,952 | ||||
| Total stockholders’ fairness | 367,845 | 394,169 | ||||
| Total liabilities and stockholders’ fairness | $ | 1,216,466 | $ | 925,734 | ||
Condensed Consolidated Income Statement
Palomar Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)
(in hundreds, besides shares and per share knowledge)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues: | ||||||||||||||||
| Gross written premiums | $ | 253,128 | $ | 152,332 | $ | 642,751 | $ | 385,267 | ||||||||
| Ceded written premiums | (161,930 | ) | (58,073 | ) | (374,109 | ) | (153,005 | ) | ||||||||
| Net written premiums | 91,198 | 94,259 | 268,642 | 232,262 | ||||||||||||
| Change in unearned premiums | (13,256 | ) | (29,539 | ) | (34,403 | ) | (66,274 | ) | ||||||||
| Net earned premiums | 77,942 | 64,720 | 234,239 | 165,988 | ||||||||||||
| Net funding revenue | 3,744 | 2,236 | 9,462 | 6,649 | ||||||||||||
| Net realized and unrealized losses on investments | (2,356 | ) | (313 | ) | (8,369 | ) | (752 | ) | ||||||||
| Commission and different revenue | 1,362 | 1,018 | 3,129 | 2,735 | ||||||||||||
| Total revenues | 80,692 | 67,661 | 238,461 | 174,620 | ||||||||||||
| Expenses: | ||||||||||||||||
| Losses and loss adjustment bills | 30,900 | 28,475 | 60,251 | 31,288 | ||||||||||||
| Acquisition bills | 27,210 | 26,412 | 83,928 | 68,150 | ||||||||||||
| Other underwriting bills | 17,114 | 12,652 | 51,233 | 39,438 | ||||||||||||
| Interest expense | 270 | — | 475 | — | ||||||||||||
| Total bills | 75,494 | 67,539 | 195,887 | 138,876 | ||||||||||||
| Income earlier than revenue taxes | 5,198 | 122 | 42,574 | 35,744 | ||||||||||||
| Income tax expense (profit) | 912 | (124 | ) | 9,163 | 6,529 | |||||||||||
| Net revenue | 4,286 | 246 | 33,411 | 29,215 | ||||||||||||
| Other complete revenue (loss), web: | ||||||||||||||||
| Net unrealized losses on securities out there on the market for the three and 9 months ended September 30, 2022 and 2021, respectively | (15,412 | ) | (1,655 | ) | (47,941 | ) | (5,144 | ) | ||||||||
| Net complete revenue (loss) | $ | (11,126 | ) | $ | (1,409 | ) | $ | (14,530 | ) | $ | 24,071 | |||||
| Per Share Data: | ||||||||||||||||
| Basic earnings per share | $ | 0.17 | $ | 0.01 | $ | 1.32 | $ | 1.15 | ||||||||
| Diluted earnings per share | $ | 0.17 | $ | 0.01 | $ | 1.29 | $ | 1.12 | ||||||||
| Weighted-average frequent shares excellent: | ||||||||||||||||
| Basic | 25,209,368 | 25,388,630 | 25,258,333 | 25,473,006 | ||||||||||||
| Diluted | 25,787,625 | 26,043,680 | 25,808,387 | 26,133,664 | ||||||||||||
Underwriting Segment Data
The Company has a single reportable phase and affords primarily property and casualty insurance merchandise. Gross written premiums (GWP) by product, location and firm are introduced beneath:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| ($ in hundreds) | ($ in hundreds) | |||||||||||||||||||||
| % of | % of | % of | % of | |||||||||||||||||||
| Amount | GWP | Amount | GWP | Amount | GWP | Amount | GWP | |||||||||||||||
| Product | ||||||||||||||||||||||
| Fronting Premiums | $ | 82,232 | 32.5 | % | $ | — | 0.0 | % | $ | 154,232 | 24.0 | % | $ | — | 0.0 | % | ||||||
| Residential Earthquake | 59,569 | 23.5 | % | 50,075 | 32.9 | % | 159,995 | 24.9 | % | 128,165 | 33.3 | % | ||||||||||
| Commercial Earthquake | 32,647 | 12.9 | % | 27,433 | 18.0 | % | 90,894 | 14.1 | % | 66,052 | 17.1 | % | ||||||||||
| Inland Marine | 30,842 | 12.2 | % | 19,532 | 12.8 | % | 72,214 | 11.2 | % | 39,047 | 10.1 | % | ||||||||||
| Casualty | 12,888 | 5.1 | % | 2,868 | 1.9 | % | 25,697 | 4.0 | % | 5,504 | 1.4 | % | ||||||||||
| Hawaii Hurricane | 9,425 | 3.7 | % | 8,996 | 5.9 | % | 24,579 | 3.8 | % | 22,921 | 6.0 | % | ||||||||||
| Commercial All Risk | 9,224 | 3.6 | % | 6,867 | 4.5 | % | 41,647 | 6.5 | % | 30,032 | 7.8 | % | ||||||||||
| Residential Flood | 3,871 | 1.5 | % | 3,228 | 2.1 | % | 10,448 | 1.6 | % | 8,377 | 2.2 | % | ||||||||||
| Specialty Homeowners | (94) | (0.0) | % | 19,881 | 13.1 | % | 30,082 | 4.7 | % | 53,018 | 13.8 | % | ||||||||||
| Other | 12,524 | 5.0 | % | 13,452 | 8.8 | % | 32,963 | 5.1 | % | 32,151 | 8.4 | % | ||||||||||
| Total Gross Written Premiums | $ | 253,128 | 100.0 | % | $ | 152,332 | 100.0 | % | $ | 642,751 | 100.0 | % | $ | 385,267 | 100.0 | % | ||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| ($ in hundreds) | ($ in hundreds) | |||||||||||||||||||||
| % of | % of | % of | % of | |||||||||||||||||||
| Amount | GWP | Amount | GWP | Amount | GWP | Amount | GWP | |||||||||||||||
| State | ||||||||||||||||||||||
| California | $ | 131,016 | 51.8 | % | $ | 72,505 | 47.6 | % | $ | 292,865 | 45.6 | % | $ | 180,142 | 46.8 | % | ||||||
| Texas | 26,234 | 10.4 | % | 19,715 | 13.0 | % | 71,499 | 11.1 | % | 48,142 | 12.5 | % | ||||||||||
| Washington | 13,573 | 5.4 | % | 7,180 | 4.7 | % | 29,391 | 4.6 | % | 15,931 | 4.1 | % | ||||||||||
| Hawaii | 10,998 | 4.3 | % | 10,342 | 6.8 | % | 29,729 | 4.6 | % | 26,312 | 6.8 | % | ||||||||||
| Oregon | 7,738 | 3.1 | % | 3,964 | 2.6 | % | 16,483 | 2.6 | % | 9,686 | 2.5 | % | ||||||||||
| Florida | 7,445 | 2.9 | % | 7,203 | 4.7 | % | 27,216 | 4.2 | % | 24,958 | 6.5 | % | ||||||||||
| Illinois | 4,204 | 1.7 | % | 2,893 | 1.9 | % | 13,153 | 2.1 | % | 8,668 | 2.3 | % | ||||||||||
| New York | 3,738 | 1.5 | % | 618 | 0.4 | % | 8,401 | 1.3 | % | 1,273 | 0.3 | % | ||||||||||
| Other | 48,182 | 19.0 | % | 27,912 | 18.3 | % | 154,014 | 24.0 | % | 70,155 | 18.2 | % | ||||||||||
| Total Gross Written Premiums | $ | 253,128 | 100.0 | % | $ | 152,332 | 100.0 | % | $ | 642,751 | 100.0 | % | $ | 385,267 | 100.0 | % | ||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| ($ in hundreds) | ($ in hundreds) | |||||||||||||||||||||
| % of | % of | % of | % of | |||||||||||||||||||
| Amount | GWP | Amount | GWP | Amount | GWP | Amount | GWP | |||||||||||||||
| Subsidiary | ||||||||||||||||||||||
| PSIC | $ | 136,814 | 54.0 | % | $ | 110,875 | 72.8 | % | $ | 357,156 | 55.6 | % | $ | 285,991 | 74.2 | % | ||||||
| PESIC | 116,314 | 46.0 | % | 41,457 | 27.2 | % | 285,595 | 44.4 | % | 99,276 | 25.8 | % | ||||||||||
| Total Gross Written Premiums | $ | 253,128 | 100.0 | % | $ | 152,332 | 100.0 | % | $ | 642,751 | 100.0 | % | $ | 385,267 | 100.0 | % | ||||||
Gross and web earned premiums
The desk beneath reveals the quantity of premiums the Company earned on a gross and web foundation and the Company’s web earned premiums as a share of gross earned premiums for every interval introduced:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||
| 2022 | 2021 | Change | % Change | 2022 | 2021 | Change | % Change | ||||||||||||||||||
| ($ in hundreds) | ($ in hundreds) | ||||||||||||||||||||||||
| Gross earned premiums | $ | 186,938 | $ | 117,276 | $ | 69,662 | 59.4 | % | $ | 484,005 | $ | 311,088 | $ | 172,917 | 55.6 | % | |||||||||
| Ceded earned premiums | (108,996) | (52,556) | (56,440) | 107.4 | % | (249,766) | (145,100) | (104,666) | 72.1 | % | |||||||||||||||
| Net earned premiums | $ | 77,942 | $ | 64,720 | $ | 13,222 | 20.4 | % | $ | 234,239 | $ | 165,988 | $ | 68,251 | 41.1 | % | |||||||||
| Net earned premium ratio | 41.7% | 55.2% | 48.4% | 53.4% | |||||||||||||||||||||
Loss element
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||
| 2022 | 2021 | Change | % Change | 2022 | 2021 | Change | % Change | ||||||||||||||||||
| ($ in hundreds) | ($ in hundreds) | ||||||||||||||||||||||||
| Catastrophe losses | $ | 12,500 | $ | 17,487 | $ | (4,987) | (28.5) | % | $ | 13,529 | $ | 6,719 | $ | 6,810 | 101.4 | % | |||||||||
| Non-catastrophe losses | 18,400 | 10,988 | 7,412 | 67.5 | % | 46,722 | 24,569 | 22,153 | 90.2 | % | |||||||||||||||
| Total losses and loss adjustment bills | $ | 30,900 | $ | 28,475 | $ | 2,425 | 8.5 | % | $ | 60,251 | $ | 31,288 | $ | 28,963 | 92.6 | % | |||||||||
The following desk represents a reconciliation of adjustments within the ending reserve balances for losses and loss adjustment bills:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| (in hundreds) | (in hundreds) | |||||||||||
| Reserve for losses and LAE web of reinsurance recoverables at starting of interval | $ | 55,769 | $ | 23,633 | $ | 45,419 | $ | 34,470 | ||||
| Add: Incurred losses and LAE, web of reinsurance, associated to: | ||||||||||||
| Current yr | 30,904 | 28,286 | 58,703 | 34,202 | ||||||||
| Prior years | (4) | 189 | 1,548 | (2,914) | ||||||||
| Total incurred | 30,900 | 28,475 | 60,251 | 31,288 | ||||||||
| Deduct: Loss and LAE funds, web of reinsurance, associated to: | ||||||||||||
| Current yr | 7,873 | 2,787 | 13,762 | 3,407 | ||||||||
| Prior years | 4,548 | 2,678 | 17,660 | 15,708 | ||||||||
| Total funds | 12,421 | 5,465 | 31,422 | 19,115 | ||||||||
| Reserve for losses and LAE web of reinsurance recoverables at finish of interval | 74,248 | 46,643 | 74,248 | 46,643 | ||||||||
| Add: Reinsurance recoverables on unpaid losses and LAE at finish of interval | 131,575 | 129,044 | 131,575 | 129,044 | ||||||||
| Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at finish of interval | $ | 205,823 | $ | 175,687 | $ | 205,823 | $ | 175,687 | ||||
Reconciliation of Non-GAAP Financial Measures
For the three and 9 months ended September 30, 2022 and 2021, the Non-GAAP monetary measures mentioned above reconcile to their most comparable GAAP measures as follows:
Underwriting income
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| (in hundreds) | (in hundreds) | ||||||||||||
| Total income | $ | 80,692 | $ | 67,661 | $ | 238,461 | $ | 174,620 | |||||
| Net funding revenue | (3,744) | (2,236) | (9,462) | (6,649) | |||||||||
| Net realized and unrealized (beneficial properties) losses on investments | 2,356 | 313 | 8,369 | 752 | |||||||||
| Underwriting income | $ | 79,304 | $ | 65,738 | $ | 237,368 | $ | 168,723 | |||||
Underwriting revenue and adjusted underwriting revenue
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| (in hundreds) | (in hundreds) | ||||||||||||
| Income earlier than revenue taxes | $ | 5,198 | $ | 122 | $ | 42,574 | $ | 35,744 | |||||
| Net funding revenue | (3,744) | (2,236) | (9,462) | (6,649) | |||||||||
| Net realized and unrealized (beneficial properties) losses on investments | 2,356 | 313 | 8,369 | 752 | |||||||||
| Interest expense | 270 | — | 475 | — | |||||||||
| Underwriting revenue | $ | 4,080 | $ | (1,801) | $ | 41,956 | $ | 29,847 | |||||
| Expenses related to transactions | 45 | — | 130 | 411 | |||||||||
| Stock-based compensation expense | 3,092 | 1,525 | 8,556 | 3,370 | |||||||||
| Amortization of intangibles | 313 | 115 | 942 | 704 | |||||||||
| Expenses related to disaster bond, web of rebate | — | — | 1,992 | 1,698 | |||||||||
| Adjusted underwriting revenue | $ | 7,530 | $ | (161) | $ | 53,576 | $ | 36,030 | |||||
Adjusted web revenue
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| (in hundreds) | (in hundreds) | ||||||||||||
| Net revenue | $ | 4,286 | $ | 246 | $ | 33,411 | $ | 29,215 | |||||
| Adjustments: | |||||||||||||
| Expenses related to transactions | 45 | — | 130 | 411 | |||||||||
| Stock-based compensation expense | 3,092 | 1,525 | 8,556 | 3,370 | |||||||||
| Amortization of intangibles | 313 | 115 | 942 | 704 | |||||||||
| Expenses related to disaster bond, web of rebate | — | — | 1,992 | 1,698 | |||||||||
| Tax affect | (376) | (166) | (1,395) | (1,156) | |||||||||
| Adjusted web revenue | $ | 7,360 | $ | 1,720 | $ | 43,636 | $ | 34,242 | |||||
Annualized adjusted return on fairness
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| ($ in hundreds) | ($ in hundreds) | |||||||||||||
| Annualized adjusted web revenue | $ | 29,441 | $ | 6,880 | $ | 58,181 | $ | 45,656 | ||||||
| Average stockholders’ fairness | $ | 372,955 | $ | 377,260 | $ | 381,007 | $ | 370,745 | ||||||
| Annualized adjusted return on fairness | 7.9 | % | 1.8 | % | 15.3 | % | 12.3 | % | ||||||
Adjusted mixed ratio
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| ($ in hundreds) | ($ in hundreds) | |||||||||||||
| Numerator: Sum of losses and loss adjustment bills, acquisition bills, and different underwriting bills, web of fee and different revenue | $ | 73,862 | $ | 66,521 | $ | 192,283 | $ | 136,141 | ||||||
| Denominator: Net earned premiums | $ | 77,942 | $ | 64,720 | $ | 234,239 | $ | 165,988 | ||||||
| Combined ratio | 94.8 | % | 102.8 | % | 82.1 | % | 82.0 | % | ||||||
| Adjustments to numerator: | ||||||||||||||
| Expenses related to transactions | $ | (45) | $ | — | $ | (130) | $ | (411) | ||||||
| Stock-based compensation expense | (3,092) | (1,525) | (8,556) | (3,370) | ||||||||||
| Amortization of intangibles | (313) | (115) | (942) | (704) | ||||||||||
| Expenses related to disaster bond, web of rebate | — | — | (1,992) | (1,698) | ||||||||||
| Adjusted mixed ratio | 90.3 | % | 100.2 | % | 77.1 | % | 78.3 | % | ||||||
Diluted adjusted earnings per share
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| (in hundreds, besides per share knowledge) | (in hundreds, besides per share knowledge) | ||||||||||||
| Adjusted web revenue | $ | 7,360 | $ | 1,720 | $ | 43,636 | $ | 34,242 | |||||
| Weighted-average frequent shares excellent, diluted | 25,787,625 | 26,043,680 | 25,808,387 | 26,133,664 | |||||||||
| Diluted adjusted earnings per share | $ | 0.29 | $ | 0.07 | $ | 1.69 | $ | 1.31 | |||||
Catastrophe loss ratio
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| ($ in hundreds) | ($ in hundreds) | |||||||||||||
| Numerator: Losses and loss adjustment bills | $ | 30,900 | $ | 28,475 | $ | 60,251 | $ | 31,288 | ||||||
| Denominator: Net earned premiums | $ | 77,942 | $ | 64,720 | $ | 234,239 | $ | 165,988 | ||||||
| Loss ratio | 39.6 | % | 44.0 | % | 25.7 | % | 18.8 | % | ||||||
| Numerator: Catastrophe losses | $ | 12,500 | $ | 17,487 | $ | 13,529 | $ | 6,719 | ||||||
| Denominator: Net earned premiums | $ | 77,942 | $ | 64,720 | $ | 234,239 | $ | 165,988 | ||||||
| Catastrophe loss ratio | 16.0 | % | 27.0 | % | 5.8 | % | 4.0 | % | ||||||
Adjusted mixed ratio excluding disaster losses
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| ($ in hundreds) | ($ in hundreds) | |||||||||||||
| Numerator: Sum of losses and loss adjustment bills, acquisition bills, and different underwriting bills, web of fee and different revenue | $ | 73,862 | $ | 66,521 | $ | 192,283 | $ | 136,141 | ||||||
| Denominator: Net earned premiums | $ | 77,942 | $ | 64,720 | $ | 234,239 | $ | 165,988 | ||||||
| Combined ratio | 94.8 | % | 102.8 | % | 82.1 | % | 82.0 | % | ||||||
| Adjustments to numerator: | ||||||||||||||
| Expenses related to transactions | $ | (45) | $ | — | $ | (130) | $ | (411) | ||||||
| Stock-based compensation expense | (3,092) | (1,525) | (8,556) | (3,370) | ||||||||||
| Amortization of intangibles | (313) | (115) | (942) | (704) | ||||||||||
| Expenses related to disaster bond, web of rebate | — | — | (1,992) | (1,698) | ||||||||||
| Catastrophe losses | (12,500) | (17,487) | (13,529) | (6,719) | ||||||||||
| Adjusted mixed ratio excluding disaster losses | 74.3 | % | 73.2 | % | 71.4 | % | 74.2 | % | ||||||
Tangible Stockholders’ fairness
| September 30, | December 31, | |||||
| 2022 | 2021 | |||||
| (in hundreds) | ||||||
| Stockholders’ fairness | $ | 367,845 | $ | 394,169 | ||
| Intangible belongings | (8,575) | (9,501) | ||||
| Tangible stockholders’ fairness | $ | 359,270 | $ | 384,668 | ||
