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 - 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]