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]