Hippo (NYSE:HIPO) Q4 2025 Earnings call February 25, 2026 08:00 AM ET Company ParticipantsCharles Sebaski - Head of Investor RelationsGuy Zeltser - CFORichard McCathron - President and CEOConference Call ParticipantsTommy McJoynt - AnalystNone - AnalystOperatorGood morning, all. Good afternoon, all, and welcome to the Hippo fourth quarter 2025 earnings call. My name is Adam, and I'll be your operator today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing sta ...

Financial Data and Key Metrics Changes - Bowhead achieved disciplined premium growth of 24% for the year, surpassing the original expectation of 20% [5] - Adjusted net income grew over 30% for the year, with an adjusted return on equity of 13.6% and diluted adjusted earnings per share of $1.65 [5][20] - Gross written premiums (GWP) increased 21% in Q4 to $224 million, and 24% for the full year to approximately $863 million [6][20] Business Line Data and Key Metrics Changes - Casualty division drove GWP growth, increasing approximately 26% in Q4 to $133 million and 28% for the full year to $551 million [7] - Professional liability division GWP increased approximately 4% in Q4 to $48 million and 9% for the full year to $174 million, primarily driven by the cyber liability portfolio [8] - Healthcare liability division GWP increased approximately 8% in Q4 to $34 million and 14% for the full year to $116 million [8] Market Data and Key Metrics Changes - The casualty market is experiencing a positive rate environment, with Bowhead benefiting from disciplined risk selection and limit management [17] - The company noted a mix of responses in the market, with some deals still facing adverse development while others show strong loss experience [46] Company Strategy and Development Direction - Bowhead aims for sustainable and profitable growth across market cycles through two underwriting models: craft underwriting and digital underwriting [9][10] - The company plans to continue focusing on profitable premium growth of around 20% for 2026, primarily driven by the casualty division and digital capabilities [12][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to grow profitably despite a competitive market, highlighting the importance of disciplined underwriting [18] - The company anticipates a loss ratio in the mid to high 60s for 2026, with an expense ratio below 30% due to scaling and technology initiatives [30] Other Important Information - Bowhead's investment portfolio saw a pre-tax net investment income increase of approximately 36% to $16.6 million for Q4 and 44% for the year to $57.8 million [28] - Total equity reached $449 million, resulting in a diluted book value per share of $13.45, an increase of 22% from year-end 2024 [29] Q&A Session Summary Question: What does the prior year reserve development imply for price adequacy for 2026? - Management believes pricing is above trend and does not expect significant pricing impact from prior year reserve adjustments [33] Question: How should we think of a mature Baleen in terms of loss ratio characteristics? - Management expects Baleen's loss ratio to be superior to the general large casualty business due to its restricted nature [36] Question: How do you translate industry data into loss ratio picks? - The company utilizes proprietary information from a third-party actuary to tailor industry benchmarks to its portfolio [39][40] Question: What is the long-term target for the expense ratio? - Management aims to maintain a low 30s expense ratio, leveraging technology initiatives for further improvements [41] Question: Is there a risk of disintermediating brokers with automated underwriting? - Management does not foresee disintermediation of brokers due to the complexity of specialty insurance [48] Question: How much did mix contribute to the actual loss ratio uptick in 2025? - Management indicated that mix impacts are becoming less significant as the casualty portfolio grows [52] Question: Will the company fully offset potential increases in loss ratio with a lower expense ratio? - Management aims to minimize the expense ratio regardless of loss ratio trends, leveraging older accident years with lower loss picks [56]

Financial Data and Key Metrics Changes - Bowhead achieved disciplined premium growth of 24% for the year, surpassing the original expectation of 20% [5] - The expense ratio improved to below 30% for the year, better than the low 30s range initially expected [5] - Adjusted net income grew over 30% for the year, with an adjusted return on equity of 13.6% and diluted adjusted earnings per share of $1.65 [5][20] - Gross written premiums (GWP) increased 21% in Q4 to $224 million, and 24% for the full year to approximately $863 million [6][20] Business Line Data and Key Metrics Changes - In the casualty division, GWP increased approximately 26% in Q4 to $133 million, and 28% for the full year to $551 million, primarily driven by the excess casualty portfolio [7] - Professional liability GWP increased approximately 4% in Q4 to $48 million and 9% for the full year to $174 million, driven by the cyber liability portfolio [8] - Healthcare liability GWP increased approximately 8% in Q4 to $34 million and 14% for the full year to $116 million, with growth from healthcare management liability and senior care portfolios [8] - Baleen generated over $21 million for the year, with a 47% increase from Q3 to over $9.1 million in Q4 [9] Market Data and Key Metrics Changes - The casualty market is experiencing a positive rate environment, with limit discipline holding well [18] - There is a mix of responses in the market, with some deals still facing adverse development while others show compounded double-digit rates and good loss experience [46] Company Strategy and Development Direction - Bowhead aims for sustainable and profitable growth across market cycles through two underwriting models: craft underwriting and digital underwriting [10] - The digital underwriting model, including Baleen and Express, is designed for speed, consistency, and disciplined decision-making [11] - The company expects profitable premium growth of around 20% for 2026, primarily driven by the casualty division and digital capabilities [12][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to grow profitably despite a competitive market, with a healthy balance of rate and limit management [18] - The company anticipates a loss ratio in the mid to high 60s for 2026, with an expense ratio below 30% due to scaling and technology initiatives [30] - The investment portfolio is expected to maintain a conservative risk profile while extending duration from three to four years [31] Other Important Information - The effective tax rate for the year was 20.1%, and total equity reached $449 million, resulting in a diluted book value per share of $13.45, a 22% increase from year-end 2024 [28][29] Q&A Session Summary Question: What does the prior year reserve development imply for price adequacy for 2026 for professional and healthcare? - Management believes pricing is above trend, with small changes not significantly impacting pricing [33] Question: How should we think of a mature Baleen in terms of loss ratio characteristics? - Baleen is expected to have a superior loss ratio compared to the general large casualty business [36] Question: How do you translate industry data into the loss ratio picks? - The company uses proprietary information from a third-party actuary to tailor industry benchmarks to its portfolio [39] Question: What is the long-term target for the expense ratio? - The company aims to maintain a low expense ratio, leveraging technology initiatives for efficiency [41] Question: Is the pricing environment for excess casualty beginning to plateau? - There is a moderation in the market, but overall, rates are exceeding loss trends [46] Question: Will technology allow for disintermediation of brokers? - Management does not foresee disintermediation due to the complexity of specialty insurance requiring broker expertise [48] Question: How much did mix contribute to the actual loss ratio uptick in 2025? - The impact of mix on the loss ratio is still being assessed, with a focus on how it plays out in 2026 [52] Question: How much of the lower expense ratio guide for 2026 is attributable to scale versus mix? - The improvement is primarily due to technology initiatives rather than just scale [66]

Investor Presentation February 2026 plmr.com Disclaimer This presentation contains forward-looking statements about Palomar Holdings, Inc. (the "Company"). These statements involve known and unknown risks that relate to the Company's future events or future financial performance and the actual results could differ materially from those discussed in this presentation. This presentation also includes financial measures which are not prepared in accordance with generally accepted accounting principles ("GAAP") ...

Financial Data and Key Metrics Changes - In 2025, the company achieved record levels of gross written premium and adjusted net income, with gross written premium increasing by 32% and adjusted net income rising by 62% to $216 million, exceeding initial guidance of $180 million-$192 million [4][31] - The adjusted return on equity for the full year was 26%, with an adjusted combined ratio of 72.7%, an improvement from 73.7% in 2024 [30][31] - For Q4 2025, adjusted net income was $61.1 million, or $2.24 per share, representing a 48% increase from Q4 2024 [23][24] Business Line Data and Key Metrics Changes - The earthquake franchise saw a 2% decline year-over-year, attributed to a one-time headwind from a large unearned premium transfer in Q4 2024, while the residential earthquake book performed well with a premium retention rate of 97% [8][9] - The Inland Marine and other property group grew by 30% year-over-year, driven by strong performance in admitted and E&S Builders Risk products [10] - The casualty business experienced a 120% year-over-year growth in gross written premium, ending 2025 at 20% of total gross written premium [13][14] Market Data and Key Metrics Changes - The commercial earthquake book faced a 15% rate decrease due to elevated competition, while the residential earthquake book continued to grow, expected to achieve high single digits to double digits growth [9][48] - The crop franchise generated $248 million in gross written premium, exceeding expectations, with a projected growth of over 30% in 2026 [16][17] Company Strategy and Development Direction - The company executed four strategic imperatives in 2025: integrate and operate, build new market leaders, remember preferences, and generate consistent earnings [5] - For 2026, the company aims to leverage scale for profitable growth, curate a distinct portfolio, deepen market positions, and integrate AI for operational efficiency [21][22] - The acquisition of Gray Surety is expected to strengthen the surety franchise and provide diversification to the earnings base [19][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth momentum, with 2026 adjusted net income guidance set at $260 million-$275 million, implying a 24% growth [20][32] - The company anticipates modest premium growth and margin expansion in the earthquake book despite ongoing commercial pressure [10][49] - Management remains conservative in managing casualty exposure and reserves, with a focus on maintaining balance sheet strength [15] Other Important Information - The company reported a net investment income of $16 million for Q4 2025, a 41.3% increase year-over-year, driven by higher yields on invested assets [28][29] - The company plans to reconstitute product groups, with fronting no longer being a standalone category, and will report on five product categories going forward [18][35] Q&A Session Summary Question: Higher retention on crop and its contribution to earnings - Management indicated that retaining more in crop could add approximately $8 million of pre-tax income for every $100 million retained, with a combined ratio expected in the low 90s [38] Question: 10% reduction in reinsurance costs - The reduction is on a risk-adjusted basis, assuming like-for-like exposure [39] Question: Growth expectations from new underwriting hires - Management noted that growth contributions from new hires depend on the market they enter, with a focus on moderate growth and strong reinsurance support [42][44] Question: Breakdown of earthquake growth - The residential earthquake book is expected to grow while the commercial book faces pressure, with management anticipating high single digits to double digits growth for residential [48] Question: Loss ratio expectations - Management expects the loss ratio to be in the mid- to upper 30s for 2026, influenced by increased retention in crop and growth in that segment [50][54] Question: Capital deployment opportunities - Management indicated a focus on organic growth, increased retention, and opportunistic share buybacks, with a balanced approach to capital allocation [71][73]

Financial Data and Key Metrics Changes - In 2025, the company achieved record levels of gross written premium and adjusted net income, with gross written premium increasing by 32% and adjusted net income rising by 62% to $216 million, exceeding initial guidance of $180 million-$192 million [4][31] - The adjusted return on equity for the full year was 26%, with an adjusted combined ratio of 72.7%, compared to 73.7% in 2024 [30][31] - For Q4 2025, adjusted net income was $61.1 million, or $2.24 per share, representing a 48% increase from Q4 2024 [23][24] Business Line Data and Key Metrics Changes - The earthquake franchise saw a 2% decline year-over-year, attributed to a one-time headwind from a large unearned premium transfer in Q4 2024, while the residential earthquake book grew, maintaining a premium retention rate of 97% [8][9] - The Inland Marine and other property group grew by 30% year-over-year, driven by strong performance in admitted and E&S Builders Risk products [10] - The casualty business experienced a 120% year-over-year growth in gross written premium, ending 2025 at 20% of total gross written premium [13][14] Market Data and Key Metrics Changes - The commercial earthquake book faced a 15% rate decrease due to elevated competition, while the residential earthquake book showed strong retention and new business growth [9][10] - The crop franchise generated $248 million in gross written premium, exceeding expectations, with a projected growth of over 30% in 2026 [16][17] Company Strategy and Development Direction - The company executed four strategic imperatives in 2025: integrate and operate, build new market leaders, remember preferences, and generate consistent earnings [5][6] - For 2026, the company aims to leverage scale for profitable growth, curate a distinct portfolio, deepen market positions, and integrate AI for operational efficiency [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth and profitability, with a 2026 adjusted net income guidance of $260 million-$275 million, implying a 24% growth [20][32] - The company anticipates modest premium growth and margin expansion in the earthquake book despite ongoing commercial pressure [10][49] Other Important Information - The company closed the acquisition of Gray Surety, which is expected to strengthen its surety franchise and contribute to long-term growth [19][34] - The company plans to reconstitute product groups, with fronting no longer being a standalone category [18] Q&A Session Summary Question: Higher retention on crop and its contribution to earnings - Management indicated that retaining more in crop could add approximately $8 million of pre-tax income for every $100 million retained, with a combined ratio expected in the low 90s [38] Question: 10% reduction in reinsurance costs - The reduction is on a risk-adjusted basis, assuming like-for-like exposure [39] Question: New hires and their expected contribution to growth - Management noted that new hires are expected to contribute to growth, but the impact will depend on the market conditions they enter [42][43] Question: Breakdown of earthquake growth - The residential earthquake book is expected to grow in the high single digits to double digits, offsetting pressure in the commercial segment [48][49] Question: Loss ratio expectations - Management expects the loss ratio to be in the mid- to upper 30s for 2026, influenced by the growth in the crop business [50][52] Question: Capital deployment opportunities - Management indicated a focus on organic growth, increased retention, and opportunistic M&A, with share buybacks also being considered [69][70]

Financial Data and Key Metrics Changes - In 2025, the company achieved record levels of gross written premium and adjusted net income, with gross written premium increasing by 32% to $2 billion and adjusted net income growing by 62% to $216 million [4][28][29] - The adjusted return on equity for the full year was 25.9%, compared to 22.2% in 2024, indicating strong profitability [29] - For Q4 2025, adjusted net income was $61.1 million, or $2.24 per share, representing a 48% increase from $41.3 million, or $1.52 per share, in Q4 2024 [22][24] Business Line Data and Key Metrics Changes - The earthquake franchise saw a 2% decline year-over-year, primarily due to a one-time headwind from a large unearned premium transfer in Q4 2024 [7] - The Inland Marine and other property group grew by 30% year-over-year in Q4, driven by strong performance in Builders Risk and flood products [9] - The casualty business experienced a 120% year-over-year growth in gross written premium in Q4, ending 2025 at 20% of total gross written premium [11][12] Market Data and Key Metrics Changes - The commercial earthquake book faced a 15% rate decrease, with competition remaining elevated, while the residential earthquake book maintained a healthy premium retention rate of 97% [8][9] - The crop franchise generated $248 million in gross written premium in 2025, exceeding expectations, with a projected growth of over 30% in 2026 [14][15] Company Strategy and Development Direction - The company executed four strategic imperatives in 2025: integrate and operate, build new market leaders, remember preferences, and generate consistent earnings [5] - For 2026, the company aims to leverage scale for profitable growth, curate a distinct portfolio, deepen market positions, and integrate AI for operational efficiency [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining the Palomar 2X target, with adjusted net income guidance for 2026 set at $260 million-$275 million, implying a 24% growth [18][30] - The company anticipates modest premium growth and margin expansion in the earthquake book despite ongoing commercial pressure [9][46] Other Important Information - The company successfully integrated two specialty franchises and closed the acquisition of Gray Casualty & Surety, which is expected to strengthen its surety franchise [5][17] - The adjusted combined ratio for the full year was 72.7%, with expectations for it to be in the mid-70s for 2026 [31] Q&A Session Summary Question: Higher retention on crop and its contribution to earnings - Management indicated that retaining more crop business will add approximately $8 million of pre-tax income for every $100 million retained, with a combined ratio expected in the low 90s [35][36] Question: 10% reduction in reinsurance costs - The 10% reduction is on a risk-adjusted basis, assuming like-for-like exposure [37] Question: Growth expectations from new underwriting hires - Management noted that growth contributions from new hires depend on the market they enter, with a focus on moderate growth and strong reinsurance support [40][42] Question: Breakdown of earthquake growth - The residential earthquake book is expected to grow in the high single digits to double digits, while commercial earthquake will face continued pressure [45][46] Question: Long-term returns on equity with changing business mix - Management believes it can maintain an ROE above 20% while achieving the Palomar 2X target, despite changes in the business mix [80]

Core Insights - RLI Insurance Company has reduced its catastrophe reinsurance limit by $150 million for 2026, indicating lower exposure and a soft market environment described as a "buyer's market" for property [1][2] - The company achieved a 15%–20% rate reduction on its catastrophe program and modest pricing relief on property working layers during the January renewals [2] - The competitive environment has led to a modest premium growth for RLI, with casualty rates down around 5% [3] Financial Performance - RLI reported underwriting income of $70.9 million for Q4 2025, with a combined ratio (CoR) of 82.6%, an improvement from $22.2 million and 94.4% in Q4 2024 [5] - For the full year, RLI posted underwriting income of $264.2 million and a CoR of 83.6%, compared to $210.7 million and 86.2% in 2024 [6] - The favorable results for both periods were supported by prior-year loss reserve development, contributing a net $87.4 million to underwriting income in 2025 and $84.1 million in 2024 [6] Strategic Approach - The company remains open to midterm market opportunities, reflecting a cautious yet flexible approach to risk management [3][5] - RLI emphasizes the importance of sustainable growth over rapid expansion, focusing on long-term decision-making [4] - The firm maintains a diversified specialty portfolio and a strong balance sheet, providing confidence in navigating market conditions [5]

Core Insights - Riverwater Partners' Small Cap Strategy reported solid results in Q3 2025 but lagged behind the benchmark due to market preference for lower-quality companies [1] - The strategy focuses on higher-quality companies with strong fundamentals and a clear path to profitability, positioning itself well for future challenges [1] Company Performance - Palomar Holdings, Inc. (NASDAQ:PLMR) has a market capitalization of $3.362 billion, with a one-month return of -3.16% and a 52-week gain of 12.93% [2] - On December 15, 2025, Palomar's stock closed at $125.52 per share [2] Underperformance Analysis - Palomar's stock underperformance in Q3 2025 is attributed to weaker commercial market pricing, a shift away from defensive sectors, and concerns about underwriting margin compression [3] - Rate reductions in commercial earthquake and property markets have pressured premium renewal yields, impacting growth [3] - Despite challenges, Palomar has strong visibility into premium growth through multi-year rate plans and expansion into diversified lines like casualty and crop insurance [3] Financial Results - In Q3 2025, Palomar reported adjusted net income of $55.2 million or $2.01 per share, compared to $32.4 million or $1.23 per share in Q3 2024 [4] - The increase in adjusted net income indicates potential for growth, although some analysts suggest that certain AI stocks may offer greater upside potential [4]

Group 1: Investment Activity - Nuance Investments initiated a new equity position in Aspen Insurance Holdings Limited, acquiring approximately 1.2 million shares valued at nearly $44 million as of September 30, 2025 [1][2] - Aspen Insurance now ranks among the top ten holdings of Nuance Investments, representing 4.48% of its reportable assets under management (AUM) [3] - The firm reported a total of 46 holdings with $982.15 million in U.S. equity assets [3] Group 2: Company Overview - Aspen Insurance provides a range of reinsurance and insurance products, including property catastrophe, specialty, casualty, and financial lines [4] - The company operates as a diversified underwriter, generating income by managing risk for clients across global markets [4] - Aspen Insurance is based in Bermuda and has a significant international presence, serving clients in regions such as Australia, Asia, Europe, and North America, with a workforce exceeding 1,100 employees [5] Group 3: Portfolio Adjustments - Nuance Investments made significant changes to its portfolio, including a notable sale of nearly 1 million shares in Estee Lauder Companies, valued at approximately $87.94 million [6][8] - The firm reduced its holdings in three healthcare stocks, decreasing their combined representation from almost 17% to just 7% of its total holdings [9] - Nuance Investments also opened a new position in Kenvue, a company associated with various domestic health brands [9]