Financial Data and Key Metrics Changes - The company reported a 44% increase in gross written premiums, reaching $597.2 million for the third quarter of 2025 compared to the same period in 2024 [19] - Adjusted net income grew 70% to $55.2 million or $2.01 per share, up from $32.4 million or $1.23 per share year-over-year [18] - The adjusted combined ratio improved to 74.8% from 77.1% in the previous year, indicating better underwriting performance [18] - Annualized adjusted return on equity was 25.6%, compared to 21% for the same period last year [18] Business Line Data and Key Metrics Changes - The earthquake franchise grew 11% year-over-year, driven by strong performance in the residential earthquake market with an 88% policy retention rate [7] - Inland marine and other property categories saw a 50% year-over-year growth, significantly up from 28% in the second quarter [10] - The casualty business experienced a remarkable 170% year-over-year growth in gross written premiums [12] - The Crop franchise doubled its gross written premium to $120 million, exceeding the previous year's $60 million [14] Market Data and Key Metrics Changes - The commercial earthquake business faced rate pressure, with average risk prices decreasing approximately 18% on a risk-adjusted basis [8] - The company expects single-digit growth in the earthquake book for the fourth quarter, influenced by a one-time under premium transfer from the previous year [9] - The partnership with Neptune Flood is anticipated to accelerate growth in the residential flood product over the next three years [10] Company Strategy and Development Direction - The company is focused on profitable growth and has entered select specialty markets that offer compelling, risk-adjusted returns [5] - The acquisition of Gray Casualty and Surety Company is expected to enhance the company's surety platform and market position [5] - The company aims to double adjusted net income over a three to five-year timeframe as part of its Palomar 2X initiative [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term ability to profitably grow the earthquake business despite market challenges [9] - The company anticipates favorable conditions in the Crop market, with expectations to exceed the 15-year average industry loss ratio [15] - Management remains optimistic about achieving the revised full-year adjusted net income guidance of $210 million to $215 million [27] Other Important Information - The company placed seven reinsurance treaties during the third quarter, all renewing on favorable terms [15] - Investment income for the third quarter increased by 55% year-over-year, driven by higher yields on invested assets [25] - The acquisition of Gray Surety is expected to close in the first quarter of 2026 and should be accretive to earnings in its first year [16] Q&A Session Summary Question: Market opportunity in surety and competition - Management highlighted the complementary nature of Gray Surety to existing operations and the potential to become a top 20 surety carrier [29][30] Question: Future of the Crop business - Management expressed confidence in growing the Crop business to $500 million in the near term, emphasizing service and technology investments [33] Question: Net income guidance and catastrophe losses - Management confirmed that the updated guidance includes expectations for catastrophe losses, with a favorable outlook for the loss ratio [34] Question: Rate pressure in commercial earthquake - Management acknowledged ongoing rate pressure but indicated that the residential earthquake book's strength would support growth [36] Question: Net earned premium ratio expectations - Management expects the net earned premium ratio to increase in the fourth quarter and into the first half of the following year [37] Question: Healthcare liability book specifics - Management provided details on the healthcare liability book, including targeted segments and the current market conditions [45] Question: Stickiness of flood policies - Management noted strong policy renewal rates and increased interest in new business due to the federal program's shutdown [46] Question: Growth trajectory and future hiring - Management indicated plans for continued organic growth and potential opportunistic hiring to sustain growth momentum [51]

Core Insights - Palomar Holdings, Inc. reported a significant increase in net income for Q3 2025, reaching $51.5 million or $1.87 per diluted share, compared to $30.5 million or $1.15 per diluted share in Q3 2024, marking a 68.7% increase [1][8] - Adjusted net income also saw a substantial rise of 70% to $55.2 million or $2.01 per diluted share, up from $32.4 million or $1.23 per diluted share in the same quarter last year [1][8] - The company achieved record gross written premiums of $597.2 million, a 43.9% increase from $415.0 million in Q3 2024, indicating strong growth in its insurance portfolio [4][8] Financial Performance - Gross written premiums increased by 43.9% to $597.2 million compared to $415.0 million in Q3 2024 [4][8] - Net earned premiums rose by 66.0% to $225.1 million from $135.6 million in the prior year [4][8] - The total loss ratio for the quarter was 32.3%, up from 29.7% in Q3 2024, while the catastrophe loss ratio significantly decreased to 0.8% from 9.5% [5][8] - The combined ratio improved to 78.1% from 80.5% year-over-year, indicating better underwriting performance [6][8] Underwriting and Investment Results - Underwriting income for Q3 was $49.2 million, with an adjusted underwriting income of $56.7 million, reflecting an adjusted combined ratio of 74.8% compared to 77.1% in the previous year [6][8] - Net investment income increased by 54.9% to $14.6 million, driven by higher yields on invested assets [7][8] - The company recorded $3.5 million in net realized and unrealized gains on investments, compared to $2.7 million in the same period last year [9][8] Strategic Initiatives - The company is focused on its "Palomar 2X" strategic imperatives, with notable growth in its crop insurance segment and the recent acquisition of The Gray Casualty and Surety Company [3][8] - Investments in Crop and Surety are expected to drive long-term profitable growth and enhance portfolio differentiation [3][8] Stockholder Equity and Returns - Stockholders' equity increased to $878.1 million as of September 30, 2025, compared to $703.3 million a year earlier [11][8] - The annualized return on equity was reported at 23.9%, up from 19.7% in Q3 2024, while the annualized adjusted return on equity reached 25.6%, compared to 21.0% in the prior year [11][8] Full Year Outlook - For the full year 2025, the company expects adjusted net income to be in the range of $210 million to $215 million, an increase from the previously announced range of $198 million to $208 million [12][8]

Core Viewpoint - Palomar Holdings, Inc. is set to release its third quarter 2025 results on November 6, 2025, followed by a conference call on November 7, 2025, to discuss the results [1] Group 1: Earnings Release and Conference Call - The third quarter 2025 results will be announced after market close on November 6, 2025 [1] - A conference call will take place at 12:00 p.m. (Eastern Time) on November 7, 2025, to discuss the earnings [1] - The conference call can be accessed by dialing 1-877-423-9813 for domestic callers and 1-201-689-8573 for international callers [2] Group 2: Replay and Webcast Information - A replay of the conference call will be available starting at 4:00 p.m. (Eastern Time) on November 7, 2025, accessible via specific dialing numbers [2] - The online replay will be available immediately after the call on the investor relations section of the Company's website [3] Group 3: Company Overview - Palomar Holdings, Inc. operates several subsidiaries, including Palomar Specialty Insurance Company and Palomar Specialty Reinsurance Company Bermuda Ltd. [4] - The company provides innovative specialty insurance across five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop [4] - Palomar's insurance subsidiaries have received strong financial strength ratings from A.M. Best, with PSIC, PSRE, and PESIC rated "A" (Excellent) and FIA rated "A-" (Stable) [4]

Company Overview - Palomar Holdings, Inc. is a holding company with subsidiaries including Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., and others, providing innovative specialty insurance in five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop [3] - The insurance subsidiaries of Palomar, including PSIC, PSRE, and PESIC, have received an "A" (Excellent) financial strength rating from A.M. Best, while FIA holds an "A-" (Stable) rating [3] Upcoming Events - Mac Armstrong, Chairman and CEO, along with Chris Uchida, CFO, will participate in a fireside chat at the KBW Insurance Conference on September 4, 2025, at 10:35 am ET [1] - Investors can access a live webcast of the presentation through the Investor Relations section of Palomar's website, with an online replay available afterward [2]

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][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] - Net earned premiums increased by 47% to $180 million [28] 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%, 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 [15] - Crop insurance 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 accounts, which saw average rate decreases above 20% [11] - The residential earthquake book maintained a high policy retention rate of 87% and a 10% inflation guard [10] - The Hawaii hurricane line grew by 39%, reflecting rate increases on the held book [12] Company Strategy and Development Direction - The company is focused on maintaining a balanced portfolio across residential and commercial products, allowing it to adapt to market conditions [6][40] - A strategic partnership with Neptune Flood was announced to enhance the residential flood offering, expanding exposure to a nationwide portfolio [13][95] - The company is committed to disciplined underwriting and reserving practices, with a conservative approach to gross and net line sizes [7][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 [10][40] - The company raised its 2025 adjusted net income guidance to $198 million to $208 million, reflecting strong operating results [24][37] - Management highlighted the importance of a diversified product suite to provide stability amid macroeconomic cyclicality [7][12] 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] Q&A Session Summary Question: Concerns about competition in the property market - Management reassured that they are still forecasting growth in the earthquake segment despite rate pressures in commercial accounts [39][40] Question: Growth in residential vs. 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] Question: Drivers of elevated accident year loss ratio - Management attributed the elevated loss ratio primarily to mix-driven factors, particularly in the crop business, but expects favorable developments in the second half of the year [53][55] Question: Outlook for casualty pricing - Management noted that casualty pricing remains strong, particularly in excess liability and E and S casualty, while professional liability has softened [62][64] Question: Impact of reinsurance retentions on underwriting income - Management explained that casualty lines have less immediate impact on underwriting income due to their nascent nature, while property lines are more mature [82][84]

Core Viewpoint - Palomar Holdings, Inc. reported significant growth in net income and adjusted net income for the second quarter of 2025, highlighting the effectiveness of its strategic initiatives and strong performance across its insurance portfolio [1][3][4]. Financial Performance - Net income for Q2 2025 was $46.5 million, or $1.68 per diluted share, compared to $25.7 million, or $1.00 per diluted share, in Q2 2024, representing an increase of 80.8% [1][33]. - Adjusted net income increased by 51.8% to $48.5 million, or $1.76 per diluted share, from $32.0 million, or $1.25 per diluted share, in the same quarter last year [1][33]. - Gross written premiums rose by 28.8% to $496.3 million from $385.2 million in Q2 2024, while net earned premiums increased by 47.2% [4][7]. Underwriting Results - The underwriting income for Q2 2025 was $38.3 million, with a combined ratio of 78.8%, compared to $25.6 million and a combined ratio of 79.1% in Q2 2024 [6][33]. - The total loss ratio for the quarter was 25.7%, slightly higher than 24.9% in the same period last year, with a catastrophe loss ratio of 0.0% compared to 2.8% [5][7]. Investment Results - Net investment income increased by 68.0% to $13.4 million from $8.0 million in Q2 2024, driven by higher yields on invested assets [7][33]. - The company recorded $8.3 million in net realized and unrealized gains related to its investment portfolio, a significant increase from an immaterial amount in the same period last year [8][33]. Strategic Initiatives - The company is focused on achieving its 2025 strategic imperatives, including a successful reinsurance program executed at an adjusted rate decrease of approximately 10% year-over-year [3][4]. - Investments are being made to enhance talent and operational scale, which are expected to strengthen both near-term and long-term prospects [3][4]. Shareholder Returns - The Board of Directors approved a share repurchase program authorizing the repurchase of up to $150 million of outstanding shares, effective July 31, 2025 [11][12]. - Stockholders' equity increased to $847.2 million at June 30, 2025, compared to $532.6 million at the same time last year [10][33]. Full Year Outlook - For the full year 2025, the company expects adjusted net income to be in the range of $198 million to $208 million, an increase from the previously announced range of $195 million to $205 million [13][33].

Company Announcement - Palomar Holdings, Inc. will release its second quarter 2025 results after market close on August 4, 2025, and will host a conference call on August 5, 2025, at 12:00 p.m. Eastern Time [1] - The conference call can be accessed live by dialing 1-877-423-9813 for domestic callers and 1-201-689-8573 for international callers [2] - A replay of the conference call will be available starting at 4:00 p.m. Eastern Time on August 5, 2025, and can be accessed until 11:59 p.m. on August 12, 2025 [2] Company Overview - Palomar Holdings, Inc. is the holding company for several subsidiaries, including Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., and others [4] - The company operates in five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop [4] - Palomar's insurance subsidiaries have received strong financial strength ratings, with PSIC, PSRE, and PESIC rated "A" (Excellent) and FIA rated "A-" (Stable) by A.M. Best [4]

Financial Performance & Growth - Palomar's Gross Written Premium (GWP) has shown substantial growth, increasing from $252 million in 2019 to $1.616 billion LTM (Last Twelve Months)[10] - The company's Adjusted Net Income has also increased significantly, from $8 million in 2019 to $157 million LTM[10] - Palomar's Q1 2025 GWP reached $442.2 million, a 20% year-over-year increase, or 37% on a same-store basis[58] - Adjusted net income for Q1 2025 was $51.3 million, representing an 85% year-over-year increase[58] - The company's adjusted return on equity for Q1 2025 was 27%[58] Strategic Initiatives - Palomar is pursuing a "2X Strategy" to double adjusted net income and achieve an adjusted ROE above 20%[13] - The company has made strategic acquisitions, including First Indemnity of America (FIA) and Advanced AgProtection (AAP), to expand its addressable market and add scale and diversification[22] - Palomar employs a diverse suite of risk transfer products, including excess of loss (XOL), quota share, and insurance-linked securities (ILS), to manage risk and reduce earnings volatility[29] Reinsurance & Risk Management - Palomar has a comprehensive property catastrophe reinsurance program effective June 1, 2025, with total ground-up earthquake coverage increased to approximately $3.5 billion[35, 38] - The company's earthquake reinsurance program includes $1.15 billion of earthquake limit via the Torrey Pines Re catastrophe bond program[38] - Continental US Hurricane coverage to $100 million and all perils excluding earthquake coverage to $85 million[37, 38] Guidance - Palomar raised its 2025 adjusted net income guidance to $195 million - $205 million[58] - The company anticipates adjusted net income growth of 50% based upon the midpoint of guidance and an adjusted ROE above 20%[42]

Core Viewpoint - Palomar Holdings, Inc. has successfully completed reinsurance programs and increased its full-year 2025 adjusted net income guidance to a range of $195 million to $205 million, up from a previous range of $186 million to $200 million [1][6]. Reinsurance Program Highlights - The company has secured approximately $455 million of incremental limit to support the growth of its Earthquake franchise, bringing total reinsurance coverage to $3.53 billion for earthquake events and $100 million for hurricane events in the continental United States [2]. - Palomar's per occurrence event retention has been reduced to $11 million for hurricane events from $15.5 million and remains at $20 million for earthquake events, which is within management's guideposts [3]. - The reinsurance program provides ample capacity for growth and exceeds the company's 1:250-year peak zone Probable Maximum Loss, with $525 million of the earthquake limit sourced through the largest Torrey Pines Re catastrophe bond issuance [4]. New Treaty and Coverage Changes - Effective June 1, Palomar executed its first standalone excess of loss treaty covering Hawaii hurricane policies, which were previously included in the core reinsurance tower now consisting of over 95% earthquake-only coverage [5]. - The Laulima's XOL reinsurance program offers per occurrence coverage up to $735 million with a retention of $1.5 million [5]. Management Commentary - The CEO expressed satisfaction with the reinsurance placement outcomes, highlighting a risk-adjusted rate decrease of approximately 10% and the successful procurement of additional earthquake limits, which should enhance earnings prospects for the remainder of 2025 and the first half of 2026 [6]. - The Chief Risk Officer noted the strong support from the reinsurance market, emphasizing the stability and predictability of results, which positions the company for long-term value delivery to shareholders [7]. Financial Strength and Capacity - Palomar has $1.15 billion of multi-year ILS capacity providing diversifying collateralized reinsurance capital, supported by a panel of over 100 reinsurers and ILS investors, all rated "A-" or better [9]. - The company maintains prepaid reinstatements for most layers, limiting pre-tax net loss to $11 million for hurricane events and $20 million for earthquake events [9].

Company Participation - Palomar Holdings, Inc. will participate in the William Blair Growth Stock Conference on June 4, 2025, with CEO Mac Armstrong and CFO Chris Uchida presenting at 1:20 pm Central Time [1] - The management will also engage in one-on-one investor meetings during the conference [1] Webcast Information - Interested parties can access a live webcast of the presentation through the Investor Relations section of Palomar's website, with an online replay available afterward [2] Company Overview - Palomar Holdings, Inc. operates several subsidiaries, including Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., and Palomar Insurance Agency, among others [3] - The company specializes in innovative insurance solutions across five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop [3] - Palomar's insurance subsidiaries hold strong financial ratings, with PSIC, PSRE, and PESIC rated "A" (Excellent) and FIA rated "A-" (Stable) by A.M. Best [3]