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Palomar Holdings, Inc. Reports First Quarter听2025 Results

LA JOLLA, Calif., May 05, 2025 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ:PLMR) (鈥淧alomar鈥� or 鈥淐ompany鈥�) reported net income of $42.9听尘颈濒濒颈辞苍, or $1.57听per diluted share, for the听first quarter of 2025 compared to net income of听$26.4 million, or $1.04听per diluted share, for the听first quarter of听2024. Adjusted net income⁽¹⁾ 飞补蝉听$51.3 million, or听$1.87听per diluted share, for the听first quarter of 2025 as compared 迟辞听$27.8 million, or听$1.09听per diluted share, for the听first quarter of听2024.

First Quarter听2025 Highlights

• Gross written premiums increased by听20.1% 迟辞听$442.2 million compared 迟辞听$368.1 million in the听first quarter of听2024
• Net income of听$42.9 million听compared 迟辞听$26.4 million in the听first quarter of听2024
• Adjusted net income⁽¹⁾听颈苍肠谤别补蝉别诲 84.6%听迟辞听$51.3 million听compared 迟辞听$27.8 million in the听first quarter of听2024
• Total loss ratio of 23.6%听compared 迟辞听24.9% in the听first quarter of听2024
• Catastrophe loss ratio⁽¹⁾ of -0.3%听compared 迟辞听3.1%听in the听first quarter of听2024
• Combined ratio of 73.1%听compared 迟辞听76.9% in the听first quarter of听2024
• Adjusted combined ratio⁽¹⁾听辞蹿 68.5%听compared to 73.0%, in the听first quarter of听2024
• Adjusted combined ratio excluding catastrophe losses⁽¹⁾听辞蹿 68.9%听compared to 69.8%, in the听first quarter of听2024
• Annualized return on equity of 22.6%听compared 迟辞听21.7% in the听first quarter of听2024
• Annualized adjusted return on equity⁽¹⁾听辞蹿 27.0%听compared 迟辞听22.9% in the听first quarter of听2024

听

^{(1)听听See discussion of 鈥�Non-GAAP and Key Performance Indicators鈥� below.}

Mac Armstrong, Chairman鈥痑nd Chief Executive Officer, commented, 鈥淚 am very pleased with our strong start to 2025, as our first quarter saw sustained gross written premium growth and record adjusted net income. The quarter featured 85% adjusted net income growth, a 69% adjusted combined ratio, and a 27% adjusted ROE.鈥疧ur results demonstrate our continued execution of the Palomar 2X strategic imperative as well as concerted efforts to build a leading specialty insurance franchise with a resilient and diversified portfolio.鈥� Our 20% gross written premium growth was driven by both new products like Crop and Casualty听as well as our balanced mix of residential and commercial property products.鈥疘mportantly, our same-store premium growth rate was 37%⁽²⁾, demonstrating the strong underlying momentum that exists across our portfolio of specialty products.鈥濃��鈥���

Mr. Armstrong continued, 鈥淏eyond our financial performance, we remain focused on executing all our 2025 strategic imperatives. We continue to make investments across our organization, including the successful acquisition of Advanced AgProtection. This acquisition enhances the talent and operational scale of our Crop franchise and is expected to strengthen the near-term and long-term prospects of Palomar.鈥濃����

^{(2)听Excludes the impact of lines of business exited or discontinued since prior year.}

Underwriting Results

Gross written premiums increased听20.1% 迟辞听$442.2 million compared 迟辞听$368.1听million in the听first听quarter of 2024, while net earned premiums increased听52.1% compared to the prior year鈥檚 first听quarter.听

Losses and loss adjustment expenses for the first听quarter were听$38.7 million, comprised of听$39.2 million of听attritional losses, offset by听$0.5听million of favorable development on prior year catastrophe events.听The loss ratio for the quarter was 23.6%, comprised of an attritional loss ratio of听23.9% and a catastrophe loss ratio⁽¹⁾ of -0.3%听compared to a loss ratio of听24.9% during the same period last year comprised of an attritional loss ratio of听21.8% and a catastrophe loss ratio⁽¹⁾ of听3.1%.

Underwriting income⁽¹⁾ for the first听quarter 飞补蝉听$44.1 million resulting in a combined ratio of听73.1% compared to underwriting income of听$25.0 million resulting in a combined ratio of 76.9%听during the same period last year. The Company鈥檚 adjusted underwriting income⁽¹⁾ 飞补蝉听$51.6 million resulting in an adjusted combined ratio⁽¹⁾ of 68.5%听in the first quarter compared to adjusted underwriting income⁽¹⁾ of听$29.2 million and an adjusted combined ratio⁽¹⁾ of听73.0% during the same period last year. The Company's听adjusted combined ratio excluding catastrophe losses⁽¹⁾ 飞补蝉听68.9%听compared 迟辞听69.8%听during the same period last year.

Investment Results
Net investment income increased by听69.1% 迟辞听$12.1 million compared 迟辞听$7.1 million in the prior year鈥檚 first听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 March 31, 2025听due to cash generated from operations and proceeds from the August 2024 public offering. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, 飞补蝉听4.09 years at March 31, 2025. Cash and invested assets totaled $1.2 billion听at March 31, 2025. During the听first quarter, the Company recorded听$2.3听million net realized and unrealized losses听related to its investment portfolio as compared to net realized and unrealized gains听辞蹿听$3.0听million during the same period last year.

Tax Rate
The effective tax rate for the three听months ended March 31, 2025 飞补蝉听20.1% compared 迟辞听23.2% for the three听months ended March 31, 2024. For the current quarter, the Company鈥檚 income tax rate differed from the statutory rate due primarily to the tax impact of the permanent component of employee stock options offset by non-deductible executive compensation expense.

Stockholders鈥� Equity and Returns
Stockholders' equity 飞补蝉听$790.4 million at March 31, 2025, compared to $501.7 million at March 31, 2024. For the three听months ended March 31, 2025, the Company鈥檚 annualized return on equity 飞补蝉听22.6% compared to 21.7%听for the same period in the prior year while adjusted return on equity⁽¹⁾ was 27.0%听compared 迟辞听22.9% for the same period in the prior year.听

Full Year 2025听Outlook
For the full year听2025, the Company expects to achieve adjusted net income of $186听million to $200 million, an increase from the Company鈥檚 initial outlook of adjusted net income of $180 million to $192 million. This range includes an estimate of $8 million to $12 million of catastrophe losses for the remainder of the听year.

Conference Call
As previously announced, Palomar will host a conference call Tuesday, May 6, 2025, to discuss its first quarter听2025 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听First Quarter 2025听Earnings Conference Call. A replay will be available starting at 4:00 p.m. (Eastern Time) on May 6, 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 13752911.听The replay will be available until 11:59 p.m. (Eastern Time) on May 13, 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鈥檚 website at . 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 (鈥淧SIC鈥�), Palomar Specialty Reinsurance Company Bermuda Ltd. (鈥淧SRE鈥�), Palomar Insurance Agency, Inc.,听Palomar Excess and Surplus Insurance Company (鈥淧ESIC鈥�), Palomar Underwriters Exchange Organization, Inc. ("PUEO"), First Indemnity of America Insurance听Co. ("FIA"), and Palomar Crop Insurance Services, Inc. ("PCIS"). Palomar's consolidated results also include听Laulima Exchange ("Laulima"), a variable interest entity for which the Company is the primary beneficiary. Palomar is an innovative specialty听insurer serving residential and commercial clients in five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop. Palomar鈥檚 insurance subsidiaries, PSIC, PSRE, and PESIC, have a financial strength rating of 鈥淎鈥� (Excellent) from A.M. Best.听FIA carries听an 鈥淎-鈥� (Stable) rating from A.M. Best.听

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鈥檚 business and the operational factors underlying the Company鈥檚 financial performance.

Underwriting revenue听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 鈥淩econciliation of Non-GAAP Financial Measures鈥� for a reconciliation of total revenue calculated in accordance with GAAP to underwriting revenue.

Underwriting income听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 鈥淩econciliation of Non-GAAP Financial Measures鈥� for a reconciliation of income before income taxes calculated in accordance with GAAP to underwriting income.

Adjusted net income听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鈥檚 income tax expense using the estimated tax rate at which the company received a deduction for these adjustments. See 鈥淩econciliation of Non-GAAP Financial Measures鈥� for a reconciliation of net income calculated in accordance with GAAP to adjusted net income.

Annualized Return on equity听is net income expressed on an annualized basis as a听percentage of average beginning and ending stockholders鈥� equity during the period.

Annualized adjusted return on equity听is a non-GAAP financial measure defined as adjusted net income expressed on an annualized basis as a听percentage of average beginning and ending stockholders鈥� equity during the period. See 鈥淩econciliation of Non-GAAP Financial Measures鈥� for a reconciliation of return on equity calculated using unadjusted GAAP numbers to adjusted return on equity.

Loss ratio, expressed as a听percentage, is the ratio of losses and loss adjustment expenses, to net earned premiums.

Expense ratio,听expressed as a听percentage, is the ratio of acquisition and other underwriting expenses, net of commission and other income to net earned premiums.

Combined ratio听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听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 鈥淩econciliation of Non-GAAP Financial Measures鈥� for a reconciliation of combined ratio calculated using unadjusted GAAP numbers to adjusted combined ratio.

Diluted adjusted earnings per share听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.听See 鈥淩econciliation of Non-GAAP Financial Measures鈥� for a reconciliation of diluted earnings per share calculated in accordance with GAAP to diluted adjusted earnings per share.

Catastrophe loss ratio听is a non-GAAP financial measure defined as the ratio of catastrophe losses to net earned premiums. See 鈥淩econciliation of Non-GAAP Financial Measures鈥� for a reconciliation of loss ratio calculated using unadjusted GAAP numbers to catastrophe loss ratio.

Adjusted combined ratio excluding catastrophe losses听is a non-GAAP financial measure defined as adjusted combined ratio excluding the impact of catastrophe losses. 听See 鈥淩econciliation of Non-GAAP Financial Measures鈥� for a reconciliation of combined ratio calculated using unadjusted GAAP numbers to adjusted combined ratio excluding catastrophe losses.

Adjusted underwriting income听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 鈥淩econciliation of Non-GAAP Financial Measures鈥� for a reconciliation of income before income taxes calculated in accordance with GAAP to adjusted underwriting income.

Tangible stockholders鈥� equity听is a non-GAAP financial measure defined as stockholders鈥� equity less goodwill and intangible assets. See 鈥淩econciliation of Non-GAAP Financial Measures鈥� for a reconciliation of stockholders鈥� equity calculated in accordance with GAAP to tangible stockholders鈥� 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鈥檚 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鈥檚 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听
Lindsay Conner听
1-551-206-6217听
听

Investor Relations
Jamie Lillis
1-203-428-3223
听

Source: Palomar Holdings, Inc.

Summary of Operating Results:

The following tables听summarize听the Company鈥檚 results for the three months ended March 31, 2025 and 2024:

^{(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,听Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except shares and par value data)

Condensed Consolidated Income Statement

Palomar Holdings,听Inc. and Subsidiaries

Condensed Consolidated Statements of听Income and Comprehensive Income (loss) (Unaudited)

(in thousands, except shares and per share data)

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:

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鈥檚 net earned premiums as a percentage of gross earned premiums for each period presented:

Loss detail

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

^{(1) Represents amounts recognized in Reserve for losses and LAE net of reinsurance recoverables upon acquisition of FIA on 1/1/2025, in accordance with ASC 805, Business Combinations.}

Reconciliation of Non-GAAP Financial Measures

For the three months ended March 31, 2025 and 2024, the Non-GAAP financial measures discussed above reconcile to their听most comparable听GAAP measures as follows:

Underwriting revenue

Underwriting听income and adjusted underwriting income

Adjusted net income

Annualized adjusted return on equity

Adjusted combined ratio

Diluted adjusted earnings per share

Catastrophe loss ratio

Adjusted combined ratio excluding catastrophe losses

Tangible Stockholders鈥� equity