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]

Financial Data and Key Metrics Changes - AFG's core net operating earnings were $10.29 per share for the full year 2025, with a core operating return on equity of 18.2% [5] - For Q4 2025, core net operating earnings per share were $3.65, resulting in an annualized core return on equity of 25.2% [5] - The company returned over $700 million to shareholders in 2025, including $334 million in special dividends and $274 million in regular dividends [6][10] - AFG's leverage ratio is less than 28%, with no debt maturities until 2030 [10] Business Line Data and Key Metrics Changes - Underwriting profits in specialty property and casualty businesses grew 41% in Q4 2025, with a combined ratio of 84.1% [12][14] - Gross written premiums for Q4 2025 were up 2%, while net written premiums were down 1% compared to Q4 2024 [14] - The property and transportation group achieved a combined ratio of 70.6% in Q4 2025, an improvement of nearly 19 points from the prior year [16] - The specialty casualty group reported a combined ratio of 96.7% in Q4 2025, 5.3 points higher than the previous year [18] Market Data and Key Metrics Changes - The annualized return on alternative investments in the P&C portfolio was 0.9% for Q4 2025, down from 4.9% in the prior year [8] - AFG's investment portfolio totaled $17.2 billion, with approximately 65% invested in fixed maturities yielding about 5.25% [7][10] - The company expects a growth in net written premiums of 3%-5% for 2026, with a combined ratio target of approximately 92.5% [23] Company Strategy and Development Direction - AFG aims to maintain a disciplined operating philosophy and capitalize on its diversified portfolio to navigate economic conditions [12][13] - The company is optimistic about several startup businesses and expects to see growth opportunities in 2026 [24] - AFG's strategy includes a focus on capital management, with plans for acquisitions, special dividends, or share repurchases [10][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of reserves and the ability to achieve favorable development in the future [27] - The company is cautious about pockets of softening rates and competitive conditions but remains focused on profitable growth [24] - Management highlighted the potential for improved returns from the alternative investment portfolio as market conditions stabilize [63] Other Important Information - AFG declared a special dividend of $1.50 per share, payable on February 25, 2026 [9] - The company has returned $4.7 billion in special dividends since 2021 [10] Q&A Session Summary Question: What does the 2026 business plan assume in terms of rates? - Management indicated that they expect to continue achieving good price increases where needed, with no specific amount identified for prior development in the combined ratio [27][29] Question: Was there a change in loss picks for the casualty underlying loss ratio? - Management noted continued caution around social inflation-exposed businesses and adjustments in loss picks, particularly in California workers' compensation [30][32] Question: What drove the inflection in pricing in the lender-placed business? - Management expressed no concerns about political risks and noted that pricing can vary based on client property types, with expectations of low single-digit growth in the business [53][56] Question: Are the social inflation-related businesses stabilized? - Management indicated that corrective steps have been taken, and there is potential for mid-single-digit growth in these businesses moving forward [60] Question: What are the expectations for the alternative investment portfolio? - Management expects a return to historical levels of returns on alternatives, contingent on improved market conditions for multifamily properties [63]

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]

Core Insights - Palomar Holdings reported Q3 CY2025 revenue of $244.7 million, exceeding analyst expectations by 10.2% and reflecting a year-on-year growth of 64.8% [1][6] - The company's non-GAAP profit was $2.01 per share, which was 24.8% above consensus estimates [1][6] Financial Performance - Adjusted operating income reached $67.14 million, representing a 27.4% margin and a year-on-year growth of 74.4% [6] - Operating margin improved to 27.4%, up from 25.9% in the same quarter last year [6] - Market capitalization stands at $3.39 billion [6] Business Strategy and Growth - Management attributed strong performance to product diversification, disciplined underwriting, and robust premium growth across various product lines [3][5] - The company plans to integrate the Gray Casualty and Surety Company acquisition and expand specialty lines, with a focus on strategic partnerships and technology investments [4] - The goal is to double adjusted net income every 3 to 5 years, maintaining a strong return on equity [4] Product Diversification - All major product groups, except for fronting, experienced double-digit premium growth, with new lines like crop and surety contributing significantly [7] - The residential earthquake franchise grew by 11% year-on-year, supported by new business production and high policy retention [7] - Crop insurance premiums doubled year-on-year due to favorable market conditions and new talent, while builders risk products also saw strong expansion [7] Risk Management - The company maintains a conservative reserving approach, particularly in its casualty business, with over 80% of reserves held as incurred but not reported (IBNR) [8]

Financial Data and Key Metrics Changes - The company reported core net operating earnings of $2.69 per share, a 16% increase from $2.31 per share in the prior year period [7] - The annualized core operating return on equity for the third quarter was 19% [4] - Net investment income increased by 5% year-over-year, attributed to higher interest rates and increased balances of invested assets [7][8] Business Line Data and Key Metrics Changes - Underwriting profit in specialty property and casualty insurance businesses grew 19%, with a combined ratio of 93, improving by 1.3 points from the prior year [15] - Gross and net written premiums in specialty property and casualty businesses decreased by 2% and 4% respectively compared to the previous year [15] - In the specialty financial group, the combined ratio was 81.1, which is 11.2 percentage points better than the comparable period in 2024 [22] Market Data and Key Metrics Changes - Average renewal pricing across the property and casualty group increased by approximately 5% in the third quarter [15] - The property and transportation group achieved a combined ratio of 94.1, improving by 2.7 points from the comparable 2024 period [16] - The specialty casualty group reported a combined ratio of 95.8, which is 3.7 percentage points higher than the 92.1 reported in the comparable period in 2024 [19] Company Strategy and Development Direction - The company aims to maintain a disciplined underwriting approach while seeking growth opportunities in specialty property and casualty businesses [12] - There is a focus on evaluating acquisitions and maintaining a pipeline of startups that could become new business units [13] - The company expects to generate significant excess capital throughout 2025 and into 2026, allowing for potential acquisitions, special dividends, or share repurchases [10] Management Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the recovery in multifamily investments and expects higher rental and occupancy rates by the end of 2026 [9] - The company anticipates premium growth to rebound in 2026, driven by startups and underwriting actions taken in specialty casualty businesses [14] - Management noted that while some loss ratio trends have improved, others, particularly in social inflation-exposed businesses, remain stable [30] Other Important Information - The company returned $66 million to shareholders through regular quarterly dividends and announced a special dividend of $2 per share [10] - The company has declared $54 per share or $4.6 billion in special dividends since the beginning of 2021 [10] Q&A Session Summary Question: Why were there no buybacks in the quarter? - Management indicated that they become active in buybacks when the stock is trading at a significant discount to its value and have retained capital for future opportunities [25] Question: Can you elaborate on pricing trends in the P&C side? - Management stated that a 5% price increase is still exceeding prospective loss ratio trends, with a diverse portfolio mitigating risks [28] Question: What is the outlook for crop premium and pricing? - Management suggested that trade aspects are reflected in futures prices, leading to stable or potentially increasing premiums for crops [39] Question: Is there an impact from new participating insurance companies on crop premiums? - Management believes the impact is marginal, with new entrants likely taking on less desirable business [47]

Core Insights - AM Best has commented that the Credit Ratings of Palomar Holdings, Inc. and its member companies remain unchanged following the announcement of Palomar's acquisition of The Gray Casualty & Surety Company, expected to close in the first half of 2026 [1][12] Credit Ratings - Palomar has a Long-Term Issuer Credit Rating of "bbb†(Good), while its subsidiaries, PSIC, PESIC, and Palomar Re, have a Financial Strength Rating of A (Excellent) and Long-Term ICRs of "aâ€(Excellent) with a stable outlook [2] - FIA has an FSR of A- (Excellent) and a Long-Term ICR of "a-†(Excellent) with a positive outlook [2] - Gray has an FSR of A- (Excellent) and a Long-Term ICR of "a-†(Excellent), which have been placed under review with positive implications following the acquisition announcement [3] Acquisition Details - Post-acquisition, Gray will operate independently under new management and is expected to benefit from synergies with Palomar [4] - The acquisition will be funded through cash on hand and a bank loan, with expected financial leverage having a neutral impact on the ratings [4] Business Operations - Palomar writes various risks, with earthquake coverage being a significant part of its portfolio, alongside inland marine/other property, casualty, fronting, and crop businesses [5] - The group consistently reports profitable results due to diligent underwriting strategies and is expanding into the surety space, particularly through the acquisition of Gray, which has a larger footprint in the contract surety segment across the U.S. [5]

Core Insights - Palomar reported better-than-expected Q2 2025 results, with non-GAAP earnings per share at $1.76, surpassing the $1.67 estimate, and GAAP revenue of $203.3 million, reflecting a 55.1% year-over-year increase [1][2] - The company raised its full-year adjusted net income guidance to $198–208 million for 2025, up from a previous estimate of $186–200 million [13] Financial Performance - Non-GAAP EPS increased by 40.8% year-over-year from $1.25 in Q2 2024 [2] - Net earned premiums rose to $180.0 million, a 47.2% increase from $122.3 million in Q2 2024 [2][5] - The adjusted combined ratio remained stable at 73.1%, while the annualized adjusted return on equity was reported at 23.7% [2][9] Business Segments and Growth - The casualty segment saw significant growth, with gross written premiums increasing by 113% year-over-year, now comprising over a quarter of total gross written premiums [3][5] - Crop insurance gross written premiums surged from $2.2 million to $39.5 million year-over-year, indicating strong expansion [5] - Earthquake insurance, while slower in growth, is expected to see mid- to high-teens growth for FY2025 [8] Diversification Strategy - Palomar is diversifying its offerings beyond earthquake coverage, focusing on product expansion and geographic reach [4][10] - The earthquake segment's contribution to gross written premiums decreased to 29.8% from 35.1% in Q2 2024, reflecting a broader portfolio [6] Strategic Initiatives - The acquisition of Advanced AgProtection has expanded the crop business's geographic reach [10] - The company successfully renewed its reinsurance program with an adjusted rate decrease of approximately 10% year-over-year, reducing exposure to large events [11] Technology and Operational Efficiency - Investments in technology and analytics are enhancing underwriting and operational scale, although they incur additional costs [12]