Palomar (PLMR) FY Conference Transcript

Summary of Palomar (PLMR) FY Conference Call - June 04, 2025 Company Overview - Company: Palomar Holdings, Inc. (PLMR) - Industry: Specialty Insurance - Founding Year: 2014 - Key Executives: Mac Armstrong (CEO), Chris Uchida (CFO) Core Points and Arguments 1. Business Evolution: Palomar has transitioned from a single market focus on earthquake insurance to a broader specialty property focus, maintaining profitability and margins throughout this evolution [6][7][8] 2. Data-Driven Approach: The company integrates data analytics and technology with traditional underwriting practices to access markets that can yield compelling risk-adjusted returns [7][8][10] 3. Financial Growth: Palomar reported a 55% growth in surplus over the last twelve months, achieving financial size category 11 and maintaining an A rating from A.M. Best [8][12] 4. Product Portfolio: The company offers five distinct product categories: Earthquake, Marine, Other Property, Casualty, and Crop, allowing it to navigate market cycles effectively [8][9][27] 5. Consistent Earnings: Palomar has beaten earnings estimates for 10 consecutive quarters and raised guidance nine times since 2022, with adjusted net income targets now set between $195 million and $205 million for the year [13][43] 6. Strategic Framework: The Palomar 2x strategic framework aims to double adjusted net income within three to five years while maintaining a return on equity (ROE) over 20% [14][15] 7. Acquisitions: The company has made two strategic acquisitions: First Indemnity of America (FIA) and Advanced Ag Protection, which are expected to enhance its market presence and operational capabilities [18][32][34] Additional Important Insights 1. Market Position: Palomar is the third-largest rider of earthquake insurance in the U.S. and has a diversified portfolio that helps mitigate risks associated with market volatility [8][9][27] 2. Risk Management: The company employs a sophisticated reinsurance strategy to manage risk and reduce volatility, with a focus on maintaining low retention levels [10][35][36] 3. Growth in Crop Insurance: Palomar aims to write $200 million in premium for crop insurance this year, leveraging its position as one of 12 approved insurance providers in a $20 billion market [30][34] 4. Technology Integration: The company has developed its own scalable policy administration system, enhancing its ability to underwrite and manage risk effectively [49][51] 5. Market Strategy: Palomar is cautious about entering new markets, focusing on profitable growth rather than chasing premiums, and avoiding markets that could disrupt existing franchises [23][24] Conclusion Palomar Holdings, Inc. is positioned as a market leader in the specialty insurance sector, leveraging technology and data analytics to drive profitable growth. The company's strategic acquisitions and focus on consistent earnings, alongside a robust risk management framework, underscore its commitment to long-term success in a competitive landscape.