Palomar(PLMR) - 2022 Q4 - Annual Report

PART I Item 1. Business Palomar Holdings is a specialty property and casualty insurer focusing on underserved markets with significant growth driven by a multi-channel distribution model and advanced data analytics - Palomar Holdings, Inc. is a specialty insurance company providing property and casualty insurance products, particularly in underserved markets like earthquake insurance, utilizing proprietary data analytics and a modern technology platform[12] - The company has diversified its product portfolio since 2021, introducing General Casualty, Fronting, Excess Liability, and Excess Property to capitalize on market opportunities and reduce reliance on earthquake insurance, which now accounts for 39% of gross written premiums (down from 100% in 2014)[16][22] Gross Written Premiums and Net Income Growth (2014-2022) | Metric | 2014 (Initial) | 2022 | CAGR (since 2014/2016) | | :----- | :------------- | :--- | :---------------------- | | Gross Written Premiums | $16.6 million | $881.9 million | ~64% | | Net Income (since 2016) | N/A | N/A | 41% | Who We Are The company operates as a specialty property insurer with highly-rated subsidiaries, using a multi-channel distribution and robust reinsurance program - Palomar Holdings, Inc. is a specialty property and casualty insurance company, providing products for underserved markets, notably earthquake insurance, through proprietary data analytics and a modern technology platform[12] - The company operates through two insurance subsidiaries: Palomar Specialty Insurance Company (PSIC) for admitted products and Palomar Excess and Surplus Insurance Company (PESIC) for E&S products, both holding an 'A-' rating from A.M. Best[13] - Products are distributed via retail agents, program administrators, wholesale brokers, and partnerships with other insurance companies, supported by a comprehensive reinsurance program to manage risk[14] Our Business The company targets unmet needs in specialty insurance, achieving significant market share in earthquake insurance through superior risk-adjusted return strategies - The company addresses unmet needs in specialty insurance markets, offering both admitted products (state-approved rates, backed by guaranty funds) for personal lines and surplus lines products (less regulation, quicker market reaction) primarily for commercial business[17] - Palomar aims for superior risk-adjusted returns through granular pricing and underwriting, becoming the 4th largest earthquake insurer in California and 5th largest in the U.S.[18] Gross Written Premiums Diversification | Metric | 2014 | 2022 | | :----- | :--- | :--- | | Earthquake Premiums (% of GWP) | 100% | 39% | | Non-Earthquake Premiums Growth (YoY 2022) | N/A | 96% | | Earthquake Premiums Growth (YoY 2022) | N/A | 32% | Our Competitive Strengths Competitive advantages are derived from a focus on underserved markets, differentiated products, proprietary technology, and an experienced management team - The company's competitive strengths include a focus on underserved specialty markets, differentiated products with flexible features, offerings in both admitted and E&S markets, analytically driven underwriting, a multi-channel distribution model, and a sophisticated risk transfer program[26][27][28][29][30][32] - Proprietary technology and analytics, including the Palomar Automated Submission System (PASS), enable automated pricing, real-time data access, and efficient risk management[33] - An entrepreneurial and experienced management team, with an average of over twenty years of industry experience, and a board of accomplished industry veterans, further bolster competitive advantage[34] Our Strategy The company's strategy centers on market expansion, product diversification, conservative reinsurance, and continuous technology investment to drive profitable growth - The company's strategy focuses on expanding its presence in existing markets by gaining market share, growing its distribution network, and increasing the total addressable market with attractive products[35] - Key strategic pillars include maintaining a diversified book of business, leveraging underwriting and analytics for fee income (e.g., fronting business), purchasing conservative reinsurance, and continuously investing in proprietary technology[38][39][40][41] Return on Equity (ROE) Trends | Metric | 2022 | 2021 | | :----- | :--- | :--- | | ROE | 13.4% | 12.1% | | Adjusted ROE | 18.3% | 13.8% | History Founded in 2013, the company has established key operating, reinsurance, and surplus lines subsidiaries to support its growth and market presence - Palomar Holdings, Inc. was incorporated in the Cayman Islands in October 2013, domesticated to Delaware in March 2019, and its primary operating subsidiary, PSIC, was formed in February 2014[42] - Key milestones include the incorporation of Bermuda-based reinsurance subsidiary PSRE in August 2014, Palomar Insurance Agency (PIA) in August 2015, and the capitalization of Arizona-domiciled surplus lines insurer PESIC in 2020[44] Our Products The company offers a diversified portfolio of personal and commercial specialty insurance products with a geographic focus in catastrophe-prone states - Palomar offers personal and commercial specialty insurance products, including Residential and Commercial Earthquake, Fronting, and Inland Marine, expanding its portfolio to cover multiple specialty risks across the U.S. and licensed in 37 states as an admitted insurer[45][46] Gross Written Premiums by State (2020-2022) | State | 2022 Amount ($ thousands) | 2022 % of GWP | 2021 Amount ($ thousands) | 2021 % of GWP | 2020 Amount ($ thousands) | 2020 % of GWP | | :------------ | :------------------------ | :------------ | :------------------------ | :------------ | :------------------------ | :------------ | | California | $418,809 | 47.5% | $244,416 | 45.6% | $172,765 | 48.8% | | Texas | 90,459 | 10.3% | 62,893 | 11.8% | 67,974 | 19.2% | | Washington | 41,827 | 4.7% | 23,608 | 4.4% | 14,328 | 4.0% | | Hawaii | 40,157 | 4.5% | 34,993 | 6.5% | 16,398 | 4.6% | | Florida | 38,715 | 4.4% | 27,386 | 5.1% | 5,795 | 1.7% | | Oregon | 24,108 | 2.7% | 13,677 | 2.6% | 10,038 | 2.8% | | Illinois | 17,368 | 2.0% | 12,133 | 2.3% | 6,133 | 1.7% | | North Carolina | 12,776 | 1.5% | 15,271 | 2.9% | 11,143 | 3.1% | | Other | 197,649 | 22.4% | 100,798 | 18.8% | 49,786 | 14.1% | | Total GWP | $881,868 | 100.0% | $535,175 | 100.0% | $354,360 | 100.0% | Gross Written Premiums by Product Line (2020-2022) | Product | 2022 Amount ($ thousands) | 2022 % of GWP | 2021 Amount ($ thousands) | 2021 % of GWP | 2020 Amount ($ thousands) | 2020 % of GWP | | :-------------------- | :------------------------ | :------------ | :------------------------ | :------------ | :------------------------ | :------------ | | Fronting | $223,249 | 25.3% | $11,459 | 2.2% | — | NM | | Residential Earthquake | 213,803 | 24.2% | 171,048 | 32.0% | 140,934 | 39.8% | | Commercial Earthquake | 131,677 | 14.9% | 90,552 | 16.9% | 58,890 | 16.6% | | Inland Marine | 105,068 | 11.9% | 57,124 | 10.7% | 15,423 | 4.3% | | Commercial All Risk | 51,671 | 5.9% | 38,640 | 7.2% | 53,933 | 15.2% | | Casualty | 35,791 | 4.1% | 9,584 | 1.9% | — | NM | | Hawaii Hurricane | 32,967 | 3.7% | 30,298 | 5.6% | 13,824 | 3.9% | | Specialty Homeowners | 29,959 | 3.4% | 67,894 | 12.7% | 49,849 | 14.1% | | Residential Flood | 14,539 | 1.7% | 11,652 | 2.2% | 8,176 | 2.3% | | Other | 43,144 | 4.9% | 46,924 | 8.6% | 13,331 | 3.8% | | Total GWP | $881,868 | 100.0% | $535,175 | 100.0% | $341,029 | 100.0% | Marketing and Distribution A multi-channel distribution model leverages retail agents, wholesale brokers, program administrators, and carrier partnerships to drive growth and market penetration - Palomar employs a multi-channel distribution model, including retail agents (primarily for personal lines, high retention), wholesale brokers (primarily for commercial lines), program administrators (leveraging existing infrastructure), and carrier partnerships (specialty partner, fronting, reinsurance)[62][63][64][65][66] - The Value Select Residential Earthquake program, administered through Arrowhead, accounted for $173.1 million of written premiums in 2022[65] - Carrier partnerships, totaling over 25 as of December 31, 2022, are a scalable distribution model, allowing Palomar to provide companion offers, direct agents to its system, or offer assumed reinsurance arrangements[66] Underwriting The underwriting process combines data analysis with experienced techniques, utilizing automated systems for personal lines and robust analysis for commercial lines - Palomar's underwriting combines data analysis with experienced techniques to build a profitable and diversified book of business, focusing on 'writing what we know' and collaborating with actuarial teams for pricing and risk exposure[68][69] - Personal lines policies (37% of 2022 GWP) are issued via automated underwriting for efficiency, while commercial lines involve robust risk analysis and underwriter expertise due to complexity[70][71] - Ongoing risk management includes using third-party catastrophe modeling software to evaluate geographic risk spread, average annual loss (AAL), and probable maximum loss (PML) to optimize reinsurance[73] Claims Management Claims handling is primarily outsourced to third-party administrators to manage costs and leverage specialized expertise, with a focus on rapid catastrophe response - Claims handling is primarily outsourced to multiple third-party administrators (TPAs) to manage costs and leverage specialized expertise, with Palomar's management overseeing loss reserves and event preparation[74] - For catastrophe events, technology and data analytics enable immediate identification of affected policies and rapid mobilization of claims adjusters through the TPA network, mitigating 'demand surge'[76] Reinsurance A comprehensive reinsurance program utilizing traditional and insurance-linked securities is central to managing catastrophe exposure and limiting earnings volatility - Palomar purchases significant reinsurance (catastrophe excess of loss, quota share, property per risk, facultative) to reduce exposure to catastrophe and attritional losses, limit earnings volatility, and enhance earnings visibility[78][79] - The reinsurance program includes traditional reinsurers and insurance-linked securities (e.g., catastrophe bonds), with over 100 reinsurers rated 'A-' or better by A.M. Best or posting collateral[80][82] Catastrophe XOL Reinsurance Coverage (as of Dec 31, 2022) | Peril | Coverage Limit | | :-------------------- | :------------- | | Earthquake Events | $2.11 billion | | Hawaii Hurricane Events | $1.01 billion | | Continental U.S. Hurricane Events | $250 million | | Company Retention (all perils) | $12.5 million | Technology A proprietary, modern technology platform integrates pricing, quoting, and analytics to enable efficient operations and sophisticated risk management - Palomar's proprietary operating platform, built without legacy technology, integrates pricing models, quoting tools, policy administration, and portfolio analytics, emphasizing automated processes and granular data[91] - The Palomar Automated Submission System (PASS) provides direct access for producers to retail and wholesale products, enabling rapid quoting and binding, and real-time transparency in underwriting and aggregate management[91] - Technology is also central to analytics and Enterprise Risk Management (ERM), with the analytics team using multiple catastrophe modeling software applications for ongoing risk exposure evaluation and real-time reporting[93] Reserves Loss reserves are established based on actuarial projections to cover ultimate losses and are subject to regular review and adjustment - Loss reserves are established to cover estimated ultimate losses and loss adjustment expenses, including reported claims (case reserves) and incurred but not yet reported (IBNR) claims, net of reinsurance recoveries[94] - Estimates are based on actuarial projections, past loss experience, current trends, and economic/legal/social conditions, and are subject to significant uncertainty and regular review and adjustment[94][97] Net Ultimate Loss and LAE Development (2019-2022) | Accident Year | 2019 (in thousands) | 2020 (in thousands) | 2021 (in thousands) | 2022 (in thousands) | Development- (Favorable) Unfavorable 2019 to 2020 (in thousands) | Development- (Favorable) Unfavorable 2020 to 2021 (in thousands) | Development- (Favorable) Unfavorable 2021 to 2022 (in thousands) | | :------------ | :------------------ | :------------------ | :------------------ | :------------------ | :---------------------------------------------------------------- | :---------------------------------------------------------------- | :---------------------------------------------------------------- | | Prior | $33,958 | $33,894 | $33,487 | $33,870 | $(64) | $(407) | $383 | | 2020 | — | 64,179 | 61,001 | 64,171 | — | (3,178) | 3,170 | | 2021 | — | — | 45,042 | 43,872 | — | — | (1,170) | | 2022 | — | — | — | 76,289 | — | — | — | | Total | | | | | $(64) | $(3,585) | $2,383 | Investments The investment strategy prioritizes capital preservation through a portfolio of high-quality fixed maturity securities, with a secondary focus on risk-adjusted returns - Investment income is a crucial component of earnings, with reserves primarily invested in fixed maturity investments managed by Conning, Inc. under Board-approved guidelines[100] - The investment policy prioritizes capital preservation, primarily in high-quality fixed maturity securities (minimum 'A' rating), with a secondary focus on maximizing risk-adjusted returns, and includes a commitment to green bonds[105] Investment Securities Available (Fair Value) (2021-2022) | Category | Dec 31, 2022 Value ($ thousands) | Dec 31, 2022 % of Total | Dec 31, 2021 Value ($ thousands) | Dec 31, 2021 % of Total | | :-------------------------------------- | :------------------------------- | :--------------------- | :------------------------------- | :--------------------- | | Fixed maturities | $515,064 | 93.9% | $432,682 | 92.9% | | Equity securities | 38,576 | 6.1% | 33,261 | 7.1% | | Total Investments | $553,640 | 100.0% | $465,943 | 100.0% | Enterprise Risk Management ("ERM") A dedicated ERM function analyzes and monitors risks within established tolerances, supported by a comprehensive business continuity plan - Palomar maintains a dedicated ERM function to analyze, report, and monitor risks within established tolerances, guided by the NAIC's ORSA model and NIST cybersecurity framework[106] - ERM includes a business continuity plan with an executive management team, offsite data storage, geographically diverse data centers, and a redundant office location to ensure operational resilience during disruptions[108] Environmental, Social and Governance Matters The company integrates ESG considerations into its strategy and operations, overseen by a dedicated Board committee - The Board of Directors established an ESG Committee in 2021 to oversee and guide strategies related to environmental, social, corporate responsibility, governance, sustainability, and public policy matters[109] - The company acknowledges climate change impacts on natural disasters and incorporates scenarios into catastrophe modeling, undertakes carbon footprint audits, and integrates ESG factors into its investment strategy[111][112][113] Competition The company operates in a highly competitive specialty insurance market, competing against larger national carriers, E&S markets, and state-managed entities - The specialty insurance industry is highly competitive, with Palomar competing against larger national insurance companies (e.g., AIG, Chubb), the E&S market (Lloyd's), and state-managed entities (e.g., California Earthquake Authority, NFIP)[116] - Competition is based on factors such as insurer reputation, coverage, pricing, customer service, broker relationships, financial strength ratings, and management experience[116] Ratings The company's insurance subsidiaries maintain an 'A-' (Excellent) rating from A.M. Best, reflecting strong financial health - Both PSIC and PESIC hold an 'A-' (Excellent) (Outlook Stable) rating from A.M. Best, which is the fourth highest rating and reflects financial strength, operating performance, and ability to meet policyholder obligations[117] Intellectual Property The company protects its brand through trademark registration and will pursue additional intellectual property protection as needed - Palomar has registered its logo as a trademark in the U.S. and plans to pursue additional intellectual property protection as beneficial and cost-effective[118] Human Capital The company focuses on attracting and retaining talent through competitive compensation, comprehensive benefits, and a commitment to diversity and inclusion - As of December 31, 2022, Palomar employed 191 team members, representing a 26% increase from the prior year, with a turnover rate of approximately 14%[119] - The company is committed to diversity and inclusion, with 40% of team members identifying as ethnic minorities in 2022 (up from 39% in 2021) and 50% of senior executive team members identifying as ethnic minorities[121] - Palomar offers competitive compensation, comprehensive benefits, health and wellness programs, and talent development opportunities, including 2,903 hours of training in 2022 and a $3,000 tuition/certification reimbursement[126][129] Item 1A. Risk Factors Palomar Holdings faces numerous risks across its business, industry, technology, and regulations, with key concerns in catastrophe events, reinsurance, and market concentration - The company is exposed to claims from unpredictable and severe catastrophe events (e.g., earthquakes, hurricanes), which could significantly reduce earnings and stockholders' equity, and limit underwriting capacity[139] - Risks include reinsurers failing to pay claims, inadequate loss reserves based on estimates, inability to purchase sufficient reinsurance on acceptable terms, and the failure of risk management models to adequately manage catastrophe exposure[145][147][153][162] - Business concentration in California and Texas (47% and 10% of 2022 GWP, respectively) exposes the company to higher loss activity and specific regulatory environments in these states[175] - Technology risks include potential failure of IT and telecommunications systems, security breaches, cyber-attacks, and reliance on third-party licensed software, which could disrupt operations and damage reputation[226][228][232] - Extensive regulation in multiple states (Oregon, Arizona, California) and Bermuda, including capital requirements and dividend restrictions, may limit business objectives and incur penalties for non-compliance[237][238][241][242][243] Summary Risk Factors Key risks include catastrophe events, reinsurance dependency, reserve adequacy, market concentration, and technology vulnerabilities - Key risks include adverse economic factors, severe catastrophe events, reinsurer non-payment, inadequate loss reserves, difficulty in expanding catastrophe coverage, and concentration in California and Texas[135] - Additional risks involve reliance on a select group of brokers, intense industry competition, technology failures, security breaches, extensive regulation, and potential volatility in the company's stock price[135][136][137] Risks Related to Our Business and Industry The business faces significant risks from catastrophe events, reinsurance counterparty credit, reserve adequacy, market concentration, and intense competition - Catastrophe events, potentially exacerbated by climate change, pose significant risks, with the company's net loss retention at $12.5 million for all perils, and reinsurance coverage exhausting at $2.11 billion for earthquake, $1.01 billion for Hawaii hurricane, and $250 million for continental U.S. hurricane events[139][144] - The company faces risks from reinsurers defaulting on claims, inadequate loss reserves (totaling $231.4 million gross at Dec 31, 2022), and the inability to secure reinsurance on commercially acceptable terms, especially in a hard market cycle[145][147][155] - Business is concentrated in California and Texas (47% and 10% of 2022 GWP, respectively), increasing exposure to regional loss activity and regulatory changes[175] - Reliance on a select group of brokers and program administrators (two account for 47% of 2022 GWP) creates risk if these relationships are discontinued or if administrators fail to comply with underwriting guidelines[181][183] - Intense competition, potential for inaccurate claim evaluation, and the need for additional capital in the future are ongoing business risks[188][195][200] Risks Related to the Economic Environment Adverse economic conditions and market volatility pose risks to premium levels, profitability, and the investment portfolio's value - Adverse economic factors (recession, inflation, high unemployment) could reduce policy sales, increase claim frequency/defaults, and negatively impact premium levels and profitability[212][213] - The investment portfolio is subject to market risks, including interest rate changes and credit quality deterioration, which could reduce net investment income and result in realized losses[215][216][217] - The company may be forced to sell investments to meet liquidity requirements, potentially at unfavorable prices, leading to significant realized losses[224] Risks Related to Technology The company is exposed to operational disruptions and reputational damage from IT system failures, cyber-attacks, and reliance on third-party software - Failure of information technology and telecommunications systems, including third-party systems, could severely limit the ability to write business, provide customer service, or process claims[226] - Security breaches or cyber-attacks pose risks of operational disruptions, unauthorized data access, legal claims, regulatory scrutiny, and reputational damage, with insurance coverage potentially insufficient for all losses[228][230] - Reliance on third-party licensed software and cloud-based services introduces risks related to license maintenance, software functionality, integration issues, and service failures, which could adversely affect operations[232][235] Risks Related to Laws and Regulations Extensive state and international regulations impose constraints on business objectives, with risks from changing interpretations and dividend restrictions - Palomar is subject to extensive regulation in Oregon, Arizona, California, and Bermuda, with regulations primarily protecting policyholders and potentially imposing timing/expense constraints on business objectives[237][238] - Unexpected changes in interpretation of policy coverage, loss limitations, or exclusions could broaden coverage or increase claim frequency/severity, materially affecting financial condition[244] - The company faces risks from increased state assessments (PSIC paid $0.6 million in 2022), changes in tax laws, and new cybersecurity regulations (e.g., NAIC's Insurance Data Security Model Law)[250][253][254] - As a holding company, dividend payments depend on distributions from subsidiaries, which are restricted by state and Bermuda insurance laws based on solvency, surplus, and capital requirements[258][259] Risks Related to Ownership of Our Common Stock Stock ownership risks include potential price volatility from operational results and market conditions, dilution from future capital raises, and anti-takeover provisions - Future capital-raising transactions, such as sales of common stock under shelf registration statements, could lower the market price of the stock and impair the ability to raise capital[282] - The company's operating results and stock price may be volatile due to various factors, including economic conditions, catastrophe events, interest rates, competition, and investment performance[283] - Anti-takeover provisions in organizational documents (e.g., classified board, super-majority voting, blank-check preferred stock) could delay or prevent a change of control, potentially limiting share price[287][288] SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The report contains forward-looking statements that are subject to substantial risks and uncertainties, and actual results may differ materially - The report contains forward-looking statements subject to substantial risks and uncertainties, including those related to catastrophe events, reinsurance, economic factors, and regulatory changes[295][296][299] - Actual results may differ materially from expectations due to various factors, and the company undertakes no obligation to update these statements except as required by law[296][304] Item 1B. Unresolved Staff Comments There are no unresolved staff comments from the SEC regarding the company's filings - No unresolved staff comments were reported[305] PART II Item 2. Properties The company leases its primary executive offices in California and an additional office in Minnesota, owning no real property - Primary executive offices are in La Jolla, California (14,700 sq ft, $0.7 million annual rent, lease expires 2024)[308] - An additional office is located in Edina, Minnesota (7,457 sq ft, $0.2 million annual rent, lease expires 2027)[308] - The company does not own any real property and considers its current facilities sufficient for its needs[309] Item 3. Legal Proceedings The company is involved in routine legal proceedings but none are expected to have a material adverse effect on its business - The company is subject to routine legal proceedings in the normal course of its insurance business[310] - No legal proceedings are expected to have a material adverse effect on the company's business, results of operations, or financial condition[310] Item 4. Mine Safety Disclosures This item is not applicable to Palomar Holdings, Inc - Not applicable[311] Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's stock trades on NASDAQ, no dividends are planned, and a share repurchase program is active - Common shares began trading on the NASDAQ Global Select Market under 'PLMR' on April 17, 2019[313] - The company does not intend to declare and pay cash dividends in the foreseeable future, as dividend payments from its insurance subsidiaries (PSIC, PESIC, PSRE) are restricted by state and Bermuda insurance laws[314][315] Share Repurchase Program Activity | Program | Authorization | Period | 2022 Repurchases | Remaining | | :------ | :------------ | :----- | :--------------- | :-------- | | Current | $100 million | Through March 31, 2024 | 621,415 shares for $34.4 million | $65.6 million | Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported strong growth in premiums and net income for 2022, driven by new business and expansion, while maintaining a solid liquidity position - Gross written premiums increased significantly due to new business with existing partners, strong premium retention, expanded distribution, and substantial rate increases for commercial products[363] - Ceded written premiums rose by 134.8% to $524.6 million, primarily due to increased cessions under quota share and fronting agreements, and higher excess of loss (XOL) reinsurance expense[368] Key Financial Highlights (Year Ended December 31, 2022 vs. 2021) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | Change ($ thousands) | % Change | | :-------------------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Gross written premiums | $881,868 | $535,175 | $346,693 | 64.8% | | Net earned premiums | $316,466 | $233,826 | $82,640 | 35.3% | | Underwriting income | $62,076 | $46,821 | $15,255 | 32.6% | | Net income | $52,170 | $45,847 | $6,323 | 13.8% | | Adjusted net income | $71,334 | $52,434 | $18,900 | 36.0% | | Net investment income | $13,877 | $9,080 | $4,797 | 52.8% | | Net realized & unrealized (losses) gains on investments | $(7,529) | $1,277 | $(8,806) | NM | | Combined ratio | 80.4% | 80.0% | N/A | N/A | | Adjusted combined ratio | 75.6% | 76.1% | N/A | N/A | Overview The company is a specialty property and casualty insurer leveraging data analytics and a modern technology platform to serve underserved markets - Palomar Holdings, Inc. is a specialty property and casualty insurer focusing on underserved markets, leveraging proprietary data analytics and a modern technology platform for flexible, granular pricing[323] - The company's subsidiaries, PSIC (admitted) and PESIC (E&S), both hold an 'A-' rating from A.M. Best, distributing products through multiple channels and supported by a comprehensive reinsurance program[324][325] Growth Metrics (2014-2022) | Metric | 2014 (Initial) | 2022 | CAGR | | :-------------------- | :------------- | :--- | :--- | | Gross Written Premiums | $16.6 million | $881.9 million | ~64% | | Net Income (since 2016) | N/A | N/A | 41% | Components of Our Results of Operations Operational results are driven by premium growth, reinsurance costs, loss expenses, and investment performance - Gross written premiums are influenced by new business, renewal rates, product offerings, and new/exited partnerships[328] - Ceded written premiums are affected by gross written premiums, changes in XOL limits/retention, quota share co-participation, and fronting agreements[329] - Losses and loss adjustment expenses are driven by catastrophe and non-catastrophe losses, business mix, reinsurance agreements, geographic exposure, and legal/regulatory changes[335] - Net investment income depends on the size and yield of the investment portfolio, while net realized and unrealized gains/losses reflect market fluctuations and credit losses[341][342] Key Financial and Operating Metrics The company utilizes several non-GAAP metrics to provide insight into underlying business performance by excluding non-recurring or volatile items - Key non-GAAP metrics include underwriting revenue, 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, and tangible stockholders' equity[346][347][348][350][352][353][354][356][358] - These metrics provide insight into underlying business performance by excluding non-recurring items or investment income volatility[346][347][348][350][352][353][354][356][358] Results of Operations The company achieved significant premium growth in 2022, driven by fronting and core product lines, though net income growth was tempered by higher loss expenses and investment losses - Fronting business, launched in Q4 2021, was a significant growth driver in 2022, while Specialty Homeowners premiums declined due to cessation of writing outside Texas and conversion to a fronting arrangement[365][366] - Net investment income increased by 52.8% to $13.9 million due to a higher average investment balance and higher yields, but net realized and unrealized losses on investments totaled $7.5 million in 2022[382][383] Consolidated Results of Operations (2022 vs. 2021) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | Change ($ thousands) | % Change | | :-------------------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Gross written premiums | $881,868 | $535,175 | $346,693 | 64.8% | | Ceded written premiums | $(524,575) | $(223,443) | $(301,132) | 134.8% | | Net written premiums | $357,293 | $311,732 | $45,561 | 14.6% | | Net earned premiums | $316,466 | $233,826 | $82,640 | 35.3% | | Commission and other income | $4,272 | $3,608 | $664 | 18.4% | | Total underwriting revenue | $320,738 | $237,434 | $83,304 | 35.1% | | Losses and loss adjustment expenses | $78,672 | $41,457 | $37,215 | 89.8% | | Acquisition expenses | $110,771 | $95,433 | $15,338 | 16.1% | | Other underwriting expenses | $69,219 | $53,723 | $15,496 | 28.8% | | Underwriting income | $62,076 | $46,821 | $15,255 | 32.6% | | Interest expense | $(873) | $(40) | $(833) | NM | | Net investment income | $13,877 | $9,080 | $4,797 | 52.8% | | Net realized and unrealized (losses) gains on investments | $(7,529) | $1,277 | $(8,806) | NM | | Income before income taxes | $67,551 | $57,138 | $10,413 | 18.2% | | Income tax expense | $15,381 | $11,291 | $4,090 | 36.2% | | Net income | $52,170 | $45,847 | $6,323 | 13.8% | Gross Written Premiums by Product Line (2022 vs. 2021) | Product | 2022 Amount ($ thousands) | 2022 % of GWP | 2021 Amount ($ thousands) | 2021 % of GWP | Change ($ thousands) | % Change | | :-------------------- | :------------------------ | :------------ | :------------------------ | :------------ | :------------------- | :------- | | Fronting | $223,249 | 25.3% | $11,459 | 2.2% | $211,790 | NM | | Residential Earthquake | 213,803 | 24.2% | 171,048 | 32.0% | 42,755 | 25.0% | | Commercial Earthquake | 131,677 | 14.9% | 90,552 | 16.9% | 41,125 | 45.4% | | Inland Marine | 105,068 | 11.9% | 57,124 | 10.7% | 47,944 | 83.9% | | Commercial All Risk | 51,671 | 5.9% | 38,640 | 7.2% | 13,031 | 33.7% | | Casualty | 35,791 | 4.1% | 9,584 | 1.9% | 26,207 | 273.4% | | Hawaii Hurricane | 32,967 | 3.7% | 30,298 | 5.6% | 2,669 | 8.8% | | Specialty Homeowners | 29,959 | 3.4% | 67,894 | 12.7% | $(37,935) | (55.9)% | | Residential Flood | 14,539 | 1.7% | 11,652 | 2.2% | 2,887 | 24.8% | | Other | 43,144 | 4.9% | 46,924 | 8.6% | $(3,780) | (8.1)% | | Total GWP | $881,868 | 100.0% | $535,175 | 100.0% | $346,693 | 64.8% | Losses and Loss Adjustment Expenses (2022 vs. 2021) | Category | 2022 ($ thousands) | 2021 ($ thousands) | Change ($ thousands) | % Change | | :-------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Catastrophe losses | $15,394 | $5,015 | $10,379 | 207.0% | | Non-catastrophe losses | $63,278 | $36,442 | $26,836 | 73.6% | | Total LLAE | $78,672 | $41,457 | $37,215 | 89.8% | | Catastrophe loss ratio | 4.9% | 2.1% | N/A | N/A | | Non-catastrophe loss ratio | 20.0% | 15.6% | N/A | N/A | Reconciliation of Non-GAAP Financial Measures This section provides reconciliations of non-GAAP measures like adjusted net income and adjusted combined ratio to their nearest GAAP equivalents Adjusted Net Income Reconciliation (2022 vs. 2021) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :------------------------------------------ | :----------------- | :----------------- | | Net income (GAAP) | $52,170 | $45,847 | | Adjustments: | | | | Net realized and unrealized losses (gains) on investments | 7,529 | (1,277) | | Expenses associated with transactions | 130 | 563 | | Stock-based compensation expense | 11,624 | 5,584 | | Amortization of intangibles | 1,255 | 1,251 | | Expenses associated with catastrophe bond, net of rebate | 1,992 | 1,704 | | Tax impact | (3,366) | (1,238) | | Adjusted net income (Non-GAAP) | $71,334 | $52,434 | Adjusted Combined Ratio Reconciliation (2022 vs. 2021) | Metric | 2022 | 2021 | | :------------------------------------------ | :--- | :--- | | Combined ratio (GAAP) | 80.4% | 80.0% | | Adjustments to numerator: | | | | Expenses associated with transactions | (130) | (563) | | Stock-based compensation expense | (11,624) | (5,584) | | Amortization of intangibles | (1,255) | (1,251) | | Expenses associated with catastrophe bond, net of rebate | (1,992) | (1,704) | | Adjusted combined ratio (Non-GAAP) | 75.6% | 76.1% | Tangible Stockholders' Equity Reconciliation (2022 vs. 2021) | Metric | Dec 31, 2022 ($ thousands) | Dec 31, 2021 ($ thousands) | | :-------------------------- | :------------------------- | :------------------------- | | Stockholders' equity (GAAP) | $384,754 | $394,169 | | Intangible assets | (8,261) | (9,501) | | Tangible stockholders' equity (Non-GAAP) | $376,493 | $384,668 | Liquidity and Capital Resources Liquidity is maintained through operating cash flows and a high-quality investment portfolio, while capital is managed under regulatory dividend restrictions - The company's ability to pay dividends relies on distributions from its subsidiaries (PSIC, PESIC, PSRE), which are subject to state and Bermuda regulatory restrictions on dividend amounts based on statutory surplus and net income[406][407][408][409][411][416][418] - Stockholders' equity decreased to $384.8 million at December 31, 2022 (from $394.2 million in 2021), primarily due to unrealized losses on fixed maturity securities and share repurchases, partially offset by net income[436] - The company has a $100 million revolving credit facility with U.S. Bank (no outstanding borrowings as of Dec 31, 2022) and $36.4 million in borrowings outstanding from the FHLB line of credit[431][435] Cash Flows (2022 vs. 2021) | Activity | 2022 ($ thousands) | 2021 ($ thousands) | | :-------------------- | :----------------- | :----------------- | | Operating activities | $169,584 | $87,814 | | Investing activities | $(156,808) | $(58,188) | | Financing activities | $5,017 | $(13,041) | | Change in cash, cash equivalents, and restricted cash | $17,793 | $16,585 | Investment Portfolio Composition (Fair Value) (2022 vs. 2021) | Category | Dec 31, 2022 ($ thousands) | Dec 31, 2022 % of Total | Dec 31, 2021 ($ thousands) | Dec 31, 2021 % of Total | | :-------------------------------------- | :------------------------- | :--------------------- | :------------------------- | :--------------------- | | Fixed maturity securities | $515,064 | 93.9% | $432,682 | 92.9% | | Equity securities | 38,576 | 6.1% | 33,261 | 7.1% | | Total Investments | $553,640 | 100.0% | $465,943 | 100.0% | Critical Accounting Policies and Estimates Key estimates include reserves for losses, investment valuation, and deferred income taxes, which involve significant management judgment - The reserve for losses and loss adjustment expenses is a critical estimate, representing the ultimate cost of reported and IBNR losses, determined through actuarial analysis and subject to significant judgment and variability[443][446][447] - Investment valuation and fair value measurements are critical, with fixed maturity securities classified as available-for-sale and equity securities carried at fair value, using a three-tier hierarchy (Level 1, 2, 3) based on input observability[465][466][467] - Deferred income taxes are accounted for using the asset and liability method, with deferred tax assets (e.g., NOLs, unrealized losses) and liabilities (e.g., deferred acquisition costs) recognized, and a valuation allowance established if realization is not more-likely-than-not[478][479][480] Gross and Net Reserves for Losses and LAE (2022 vs. 2021) | Category | Dec 31, 2022 Gross ($ thousands) | Dec 31, 2022 % of Total | Dec 31, 2022 Net ($ thousands) | Dec 31, 2022 % of Total | | :-------------------------------- | :----------------------------- | :-------------------- | :--------------------------- | :-------------------- | | Case reserves | $72,598 | 31.4% | $34,084 | 44.0% | | IBNR | $158,817 | 68.6% | $43,436 | 56.0% | | Total reserves | $231,415 | 100.0% | $77,520 | 100.0% | Recent Accounting Pronouncements No recently issued accounting pronouncements are expected to have a significant impact on the company's financial statements - The company has not adopted any new accounting guidance during the year ended December 31, 2022, and no recently issued pronouncements are expected to have significant impact[485][480] Off-Balance Sheet Arrangements The company has no off-balance sheet arrangements that are reasonably likely to have a material effect on its financial condition - The company has no off-balance sheet arrangements that are reasonably likely to have a material effect on its financial condition, results of operations, liquidity, capital expenditures, or capital resources[486] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company is primarily exposed to market risks from interest rate changes and equity price fluctuations in its investment portfolio - Primary market risks include equity price risk from equity securities and interest rate risk from fixed maturities, with no material exposure to foreign currency or commodity risk[487] - Credit risk in municipal and corporate bond portfolios is managed through investing in high-quality, diversified securities[488][489] - A 100-basis point increase in interest rates is estimated to cause a 3.7% decline in the fair value of fixed maturities, while a 100-basis point decrease would cause a 3.9% increase[491] - Inflation in excess of assumptions could lead to higher losses and loss adjustment expenses, and increased reinsurance costs. Seasonal weather events (June-November) can increase losses in Commercial All Risk and Hawaii Hurricane lines[492][494] Item 8. Financial Statements and Supplementary Data This section presents the audited consolidated financial statements, which received an unqualified opinion from the independent registered public accounting firm - Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[498][499][505][506] - The valuation of the reserve for losses and loss adjustment expenses is identified as a critical audit matter due to the highly judgmental nature of assumptions and their significant effect on IBNR reserves[509][511] Consolidated Balance Sheets (as of December 31, 2022 and 2021) | Asset/Liability | 2022 ($ thousands) | 2021 ($ thousands) | | :---------------------------------------------------- | :----------------- | :----------------- | | Total investments | $553,640 | $465,943 | | Cash and cash equivalents | $68,108 | $50,284 | | Premium receivable | $162,858 | $88,012 | | Reinsurance recoverable on unpaid losses and LAE | $153,895 | $127,947 | | Total assets | $1,306,450 | $925,734 | | Reserve for losses and loss adjustment expenses | $231,415 | $173,366 | | Unearned premiums | $471,314 | $284,665 | | Ceded premium payable | $146,127 | $37,460 | | Borrowings from credit agreements | $36,400 | — | | Total liabilities | $921,696 | $531,565 | | Total stockholders' equity | $384,754 | $394,169 | Consolidated Statements of Income and Comprehensive Income (Year Ended December 31, 2022, 2021, 2020) | Revenue/Expense | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :-------------------------------------- | :----------------- | :----------------- | :----------------- | | Gross written premiums | $881,868 | $535,175 | $354,360 | | Net earned premiums | $316,466 | $233,826 | $155,068 | | Net investment income | $13,877 | $9,080 | $8,612 | | Net realized and unrealized (losses) gains on investments | $(7,529) | $1,277 | $1,488 | | Total revenues | $327,086 | $247,791 | $168,463 | | Losses and loss adjustment expenses | $78,672 | $41,457 | $64,115 | | Acquisition expenses | $110,771 | $95,433 | $64,041 | | Other underwriting expenses | $69,219 | $53,723 | $34,084 | | Total expenses | $259,535 | $190,653 | $162,240 | | Net income | $52,170 | $45,847 | $6,257 | | Diluted earnings per share | $2.02 | $1.76 | $0.24 | Consolidated Statements of Cash Flows (Year Ended December 31, 2022, 2021, 2020) | Activity | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------------------------ | :----------------- | :----------------- | :----------------- | | Net cash provided by operating activities | $169,583 | $87,814 | $57,493 | | Net cash used in investing activities | $(156,807) | $(58,188) | $(185,385) | | Net cash provided by (used in) financing activities | $5,017 | $(13,041) | $128,329 | | Net increase in cash, cash equivalents and restricted cash | $17,793 | $16,585 | $437 | 1. Summary of Operations and Basis of Presentation The company is an insurance holding company with multiple subsidiaries focused on specialty property markets, preparing financial statements under U.S. GAAP - Palomar Holdings, Inc. is a Delaware-incorporated insurance holding company with subsidiaries PSIC (Oregon-domiciled, admitted insurer), PSRE (Bermuda-based reinsurer), PESIC (Arizona-domiciled, surplus lines insurer), and PGIA (California-domiciled insurance agency)[525][526][527][528] - The company's core focus is residential and commercial earthquake markets, with expanded offerings in Fronting, Inland Marine, Hawaii hurricane, Specialty Homeowners, Casualty, and Flood products[526] - Financial statements are prepared in accordance with U.S. GAAP, consolidating all wholly-owned subsidiaries, and involve significant management estimates and assumptions[531][533] 2. Significant Accounting Policies Key accounting policies cover investment classification, premium recognition, deferred acquisition costs, loss reserves, and stock-based compensation - Key accounting policies include classifying fixed maturity securities as available-for-sale (fair value, unrealized gains/losses in OCI) and equity securities at fair value (unrealized gains/losses in net income)[536][538] - Premiums are earned ratably over the policy term, and a premium deficiency is recognized if expected costs exceed unearned premiums. Acquisition costs (commissions, taxes) are deferred and amortized[555][556][557] - Loss reserves include case reserves and IBNR, estimated using actuarial techniques and reviewed regularly. Reinsurance recoverables are evaluated for credit risk, with reinsurers required to be highly rated or post collateral[565][567][571][572] - Stock-based compensation is recognized straight-line over vesting periods, and income taxes are accounted for under the asset and liability method, with deferred taxes and valuation allowances[573][574][576] 3. Investments The investment portfolio consists primarily of available-for-sale fixed maturity securities, with unrealized losses driven by interest rates rather than credit quality - As of December 31, 2022, the company held 543 fixed maturity securities with $46.9 million in gross unrealized losses, primarily due to interest rate environment, not credit quality. No credit loss allowance was material[583][586] Available-for-Sale Investments (Fair Value) (2022 vs. 2021) | Category | Dec 31, 2022 Fair Value ($ thousands) | Dec 31, 2021 Fair Value ($ thousands) | | :-------------------------------------- | :------------------------------------ | :------------------------------------ | | U.S. Governments | $48,551 | $16,870 | | States, territories, and possessions | $5,354 | $4,014 | | Political subdivisions | $4,298 | $6,380 | | Special revenue excluding mortgage/asset-backed securities | $32,799 | $44,498 | | Industrial and miscellaneous | $254,095 | $249,046 | | Mortgage/asset-backed securities | $169,967 | $111,874 | | Total available-for-sale investments | $515,064 | $432,682 | Net Investment Income Summary (2020-2022) | Component | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :-------------------------- | :----------------- | :----------------- | :----------------- | | Interest income | $13,631 | $9,119 | $8,554 | | Dividend income | $739 | $461 | $489 | | Investment management fees and expenses | $(493) | $(500) | $(431) | | Net investment income | $13,877 | $9,080 | $8,612 | Net Realized and Unrealized Investment Gains and Losses (2020-2022) | Category | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------------------------ | :----------------- | :----------------- | :----------------- | | Net realized investment gains (losses) | $(2,326) | $1,881 | $449 | | Net unrealized gains (losses) on equity securities | $(5,203) | $(604) | $1,039 | | Net realized and unrealized gains (losses) on investments | $(7,529) | $1,277 | $1,488 | 4. Fair value measurements Financial assets are measured at fair value using a three-tier hierarchy, with the vast majority classified as Level 1 or Level 2 - Fair value measurements for financial assets and liabilities are categorized into a three-tier hierarchy (Level 1, 2, 3) based on the observability of inputs[547][548] - As of December 31, 2022, there were no fixed income securities classified as Level 3, indicating increased observability of market inputs compared to 2021[595] Fair Value Hierarchy of Financial Assets (Dec 31, 2022) | Asset Category | Level 1 ($ thousands) | Level 2 ($ thousands) | Level 3 ($ thousands) | Total ($ thousands) | | :-------------------------------------- | :-------------------- | :-------------------- | :-------------------- | :------------------ | | Fixed maturity securities | — | $515,064 | — | $515,064 | | Equity securities | $38,576 | — | — | $38,576 | | Cash, cash equivalents, and restricted cash | $68,164 | — | — | $68,164 | | Total assets | $106,740 | $515,064 | — | $621,804 | 5. Policy Acquisition Costs Policy acquisition costs are deferred and amortized over the policy term, with the balance reflecting the growth in written premiums Deferred Policy Acquisition Costs (2020-2022) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :-------------------------------- | :----------------- | :----------------- | :----------------- | | Balance, beginning of year | $55,953 | $35,481 | $25,201 | | Total net additions | $109,925 | $109,202 | $70,439 | | Amortization of net policy acquisition costs | $(109,138) | $(88,730) | $(60,159) | | Balance, end of year | $56,740 | $55,953 | $35,481 | Acquisition Expenses (2020-2022) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :-------------------------------- | :----------------- | :----------------- | :----------------- | | Amortization of net policy acquisition costs | $109,138 | $88,730 | $60,159 | | Period costs | $1,633 | $6,703 | $3,882 | | Total Acquisition expenses | $110,771 | $95,433 | $64,041 | 6. Intangible Assets Intangible assets consist of state insurance licenses and amortizing customer relationships, with no impairments recognized - Customer relationships, representing acquired policy renewal rights, are amortized over 8 years, with $1.3 million amortization expense in both 2022 and 2021[598] - No impairments of intangible assets were recognized for the years ended December 31, 2022, 2021, or 2020[563] Intangible Assets (2022 vs. 2021) | Category | Dec 31, 2022 ($ thousands) | Dec 31, 2021 ($ thousands) | | :------------------------------------------ | :------------------------- | :------------------------- | | State insurance licenses (indefinite-lived) | $744 | $744 | | Customer relationships (finite-lived) | $10,023 | $10,008 | | Accumulated amortization on finite-lived intangibles | $(2,506) | $(1,251) | | Total intangible assets | $8,261 | $9,501 | 7. Capitalized Assets Capitalized assets primarily consist of software, which is amortized, and property and equipment, which is depreciated - Depreciation expense for property and equipment was $0.2 million for each of the years ended December 31, 2022, 2021, and 2020[601] Capitalized Software (Net Book Value) (2022 vs. 2021) | Metric | Dec 31, 2022 ($ thousands) | Dec 31, 2021 ($ thousands) | | :-------------------- | :------------------------- | :------------------------- | | Capitalized Software | $12,319 | $9,374 | | Amortization expense | $2,600 (2022) | $2,100 (2021) | Property and Equipment (Net Book Value) (2022 vs. 2021) | Category | Dec 31, 2022 ($ thousands) | Dec 31, 2021 ($ thousands) | | :-------------------------- | :------------------------- | :------------------------- | | Leasehold improvements | $185 | $303 | | Computer hardware | $197 | $146 | | Office equipment and furniture | $221 | $78 | | Total | $603 | $527 | 8. Leases The company recognizes right-of-use assets and liabilities for its operating leases for office space - The company has operating leases for office space, with ROU assets and liabilities recognized based on the present value of lease payments using the incremental borrowing rate[602][603] - Operating lease costs were $0.8 million in 2022 and $0.7 million in both 2021 and 2020, recognized straight-line as other underwriting expenses[604] Operating Lease Information (Dec 31, 2022) | Metric | Amount/Value | | :------------------------------------------ | :------------- | | Operating cash outflows from operating leases | $922 thousand | | Operating lease ROU assets | $1,688 thousand | | Operating lease liabilities | $2,066 thousand | | Weighted-average remaining lease term | 2.7 years | | Weighted-average discount rate | 1.4% | 9. Reserve for Losses and Loss Adjustment Expenses Loss reserves represent management's best estimate of ultimate claim costs, with 2022 showing unfavorable development from prior accident years - Loss and loss adjustment expense reserves represent management's best estimate of ultimate costs for reported and IBNR losses, not discounted, and are subject to trends in loss severity and frequency[606][607] - In 2022, net incurred losses for prior accident years developed unfavorably by $2.4 million, primarily due to higher-than-expected severity from certain 2020 Hurricanes, partially offset by favorable development in 2021 attritional and catastrophe losses[611] Reconciliation of Net Reserve for Losses and LAE (2020-2022) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :---------------------------------------------------- | :----------------- | :----------------- | :----------------- | | Reserve for losses and LAE net of reinsurance at beginning of period | $45,419 | $34,470 | $3,869 | | Total incurred (net of reinsurance) | $78,672 | $41,457 | $64,115 | | Total payments (net of reinsurance) | $46,571 | $30,508 | $33,514 | | Reserve for losses and LAE net of reinsurance at end of period | $77,520 | $45,419 | $34,470 | 10. Reinsurance The company utilizes extensive reinsurance, including XOL and quota share, to manage loss exposure, with a significant portion of ceded premiums from fronting arrangements - Palomar uses XOL and quota share reinsurance to limit loss exposure and writes premiums under fronting agreements, ceding most risk for a fronting fee[627][629] - The company's catastrophe event retention is $12.5 million for all perils, with XOL protection up to $2.11 billion for earthquake, $1.01 billion for Hawaii hurricane, and $250 million for continental U.S. hurricane events[628] - Reinsurance recoverables are managed by evaluating reinsurer financial condition, requiring 'A-' or better A.M. Best ratings or collateral, and including special termination provisions in contracts[572] Ceded Written Premiums by Arrangement (2020-2022) | Line of Business | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :-------------------- | :----------------- | :----------------- | :----------------- | | Fronting | $237,285 | $11,001 | — | | Inland Marine | $63,627 | $28,389 | $5,339 | | Specialty Homeowners | $4,946 | $27,394 | $22,295 | | Commercial Earthquake | $20,467 | $14,447 | $6,929 | | Commercial All Risk | $6,260 | $3,948