Financial Data and Key Metrics Changes - The company achieved exceptional top-line growth of 29%, with a 45% increase on a same-store basis, and adjusted net income increased by 52% year-over-year [5][25][26] - The adjusted combined ratio was 73%, with an adjusted return on equity of 24% [5][27] - Gross written premiums for the second quarter were $496.3 million, a 29% increase compared to the prior year [27] Business Line Data and Key Metrics Changes - The earthquake franchise saw gross written premium growth of 9% year-over-year, with a focus on residential earthquake insurance [9][10] - Inland marine and other property categories grew by 28% year-over-year, driven by a diversified mix of residential and commercial lines [12] - Casualty gross written premium increased by 119% year-over-year, with strong performance in E and S casualty business [16][17] - Crop franchise generated $39 million in written premium, significantly up from $2.2 million in the prior year [19] Market Data and Key Metrics Changes - The company noted increased competition in the commercial earthquake market, particularly in large commercial accounts, which saw average rate decreases above 20% [11] - The residential earthquake book maintained a high retention rate of 87% and a 10% inflation guard [10][41] - The Hawaii hurricane line grew by 39%, with continued rate increases on the held book [12][13] Company Strategy and Development Direction - The company is focused on its Palomar 2x strategic imperative, aiming to double adjusted net income within three to five years while maintaining an ROE above 20% [5][25] - A strategic partnership with Neptune Flood was announced to enhance residential flood offerings, expanding exposure from inland flood risk to a nationwide portfolio [13][95] - The company is committed to disciplined underwriting and reserving, building reserves across the book while releasing redundancies in mature lines [8][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high single-digit growth in the earthquake franchise for the remainder of the year, driven by residential earthquake strength [10][41] - The company raised its 2025 adjusted net income guidance to $198 million to $208 million, reflecting strong operating results [25][37] - Management highlighted the importance of maintaining a balanced portfolio to navigate market cyclicality and sustain growth [41][44] Other Important Information - The company completed the placement of its June 1 core excess of loss treaty, achieving a 10% risk-adjusted rate decrease [21] - A two-year $150 million share repurchase program was authorized to opportunistically buy back shares [23][24] - The company expects the third quarter to be the low point for net earned premium ratio, with growth expected throughout the remainder of the year [28][36] Q&A Session Summary Question: Concerns about property-related competition and its impact on growth - Management reassured that they are still forecasting growth in earthquake and other segments, despite rate pressure in commercial earthquake [39][40][41] Question: Growth rates between residential and commercial earthquake - Management indicated that residential earthquake constitutes about 55% of the book and is growing at a healthy rate, while commercial earthquake is under more pressure [51][52] Question: Drivers of elevated accident year loss ratio - Management attributed the elevated ratio primarily to mix-driven factors, particularly related to the crop business [54][56] Question: Outlook for casualty pricing and growth - Management noted that casualty pricing remains strong, with mid to high teens rate increases in excess liability and E and S casualty [63][64] Question: Impact of reinsurance retentions on underwriting income - Management explained that casualty lines are earning less premium currently compared to more mature property lines, but expect leverage to improve over time [82][84] Question: Growth outlook for marine and other property - Management expressed confidence in sustaining growth in marine and other properties through geographic expansion and new underwriting talent [90][92]

Financial Data and Key Metrics Changes - The company reported an 85% growth in adjusted net income, reaching $51.3 million or $1.87 per share compared to $27.8 million or $1.09 per share in the same quarter of 2024 [31] - The adjusted combined ratio improved to 68.5% from 73% year-over-year, indicating better operational efficiency [32] - Gross written premiums increased by 20% to $442.2 million, with a 37% growth rate when excluding runoff business [34] Business Line Data and Key Metrics Changes - The casualty gross written premium grew by 113% year-over-year, driven by strong performance across various segments [20] - The earthquake franchise saw a 23% year-over-year growth in gross written premium, with record new business in the residential segment [15] - The crop franchise generated $48 million in written premium, a 25% increase year-over-year, despite seasonal limitations [23] Market Data and Key Metrics Changes - The company noted pressure in the commercial accounts market, with rate decreases of approximately 5% in small commercial accounts and 7.5% in large commercial accounts [17] - The Hawaii hurricane segment experienced an 82% growth, with new business written at rates 26% higher than the previous year [18] - The company is monitoring the impact of tariffs on its portfolio, particularly in relation to crop prices and potential increases in loss severity [12] Company Strategy and Development Direction - The company is focused on executing its "Palomar 2X" strategic imperative, aiming to double adjusted net income within three to five years while maintaining an ROE above 20% [30] - The strategy includes integrating and operating new acquisitions, such as Advanced Ag Protection, to enhance market presence and operational scale [25] - The company is committed to a conservative risk appetite, avoiding volatile property segments while increasing resources in more stable areas like residential earthquake and builders' risk products [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid to high teens growth in earthquake premiums for 2025, despite competitive pressures in the commercial market [17] - The company raised its full-year 2025 adjusted net income guidance to a range of $186 million to $200 million, reflecting optimism about growth vectors despite economic uncertainties [30][41] - Management acknowledged that a recession could impact premium retention and loss severity, but emphasized the diversity of the portfolio as a buffer against economic downturns [13] Other Important Information - The company successfully secured $525 million in earthquake limit through a catastrophe bond issuance, exceeding its target [27] - The acquisition of Advanced Ag Protection is expected to enhance the crop business, aiming for significant premium growth in the future [25][26] - The company is investing in talent across various departments to support its growth strategy and operational efficiency [29] Q&A Session Summary Question: Can you help us think through the flat to down five that you're assuming in your outlook? - Management indicated that all placements have come in better than the forecast of flat to down 5%, with a conservative approach to future placements [46][47] Question: Could you talk about the thought process around splitting out Laulima separately? - The decision to separate Laulima is part of a long-term strategy to establish it as an independent entity, allowing for better management and fee generation [50] Question: Can you elaborate on the growth seen in the residential and commercial sides of the earthquake business? - Management noted strong growth in both segments, with residential benefiting from heightened awareness and new partnerships, while commercial faces more pressure [54][57] Question: How much of the acceleration in the casualty book is due to market growth versus internal ramp-up? - Management stated that both factors contributed, with new underwriters and market dislocation driving growth [62] Question: What is the expected trend for the attritional loss ratio? - The attritional loss ratio is expected to increase in Q2 and Q3 due to the seasonal nature of the crop business, but management remains confident in their conservative reserving practices [88][90]