Palomar(US:PLMR)2025-05-06 17:02Financial Data and Key Metrics Changes - The company reported an 85% growth in adjusted net income, reaching $51.3 million or $1.87 per share compared to $27.8 million or $1.09 per share in the same quarter of 2024 [31] - The adjusted combined ratio improved to 68.5% from 73% year-over-year, indicating better operational efficiency [32] - Gross written premiums increased by 20% year-over-year to $442.2 million, with a 37% growth when excluding runoff business [33] Business Line Data and Key Metrics Changes - The casualty gross written premium grew by 113% year-over-year, driven by strong performance across various segments [20] - The crop franchise generated $48 million in written premium, a 25% increase year-over-year, despite seasonal limitations [23] - The earthquake franchise saw a 23% year-over-year growth in gross written premium, with strong contributions from both residential and commercial segments [14] Market Data and Key Metrics Changes - The company noted pressure in the commercial accounts market, with rate decreases of approximately 5% in small commercial accounts and 7.5% in large commercial accounts [17] - The Hawaii hurricane segment experienced an 82% growth, with new business written at rates 26% higher than the previous year [18] - The company is facing increased competition in the commercial all-risk market, leading to significant pricing pressure [19] Company Strategy and Development Direction - The company is focused on executing its "Palomar 2X" strategic imperative, aiming to double adjusted net income within three to five years while maintaining an ROE above 20% [30] - The strategy includes diversifying its portfolio and increasing resource allocation to specific products like residential earthquake and Hawaii hurricane [10] - The company is also integrating new acquisitions, such as Advanced Ag Protection, to enhance its crop business capabilities [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties, noting that the insurance sector is less impacted by tariffs compared to other industries [11] - The company raised its full-year 2025 adjusted net income guidance to a range of $186 million to $200 million, reflecting optimism about growth despite market challenges [41] - Management acknowledged that a recession could impact premium retention and loss severity but emphasized the strength of their diversified portfolio [13] Other Important Information - The company secured $525 million of earthquake limit through a catastrophe bond issuance, exceeding its target [27] - The acquisition of Advanced Ag Protection is expected to significantly enhance the crop market opportunity and scale the business [25] - The company is committed to investing in talent across various departments to support its growth strategy [29] Q&A Session Summary Question: Can you help us think through the flat to down five that you're assuming in your outlook? - Management indicated that all placements have come in better than forecasted, with a conservative approach to future placements [46] Question: Could you talk about the thought process around splitting out Laulima separately? - The intention is to establish Laulima as a standalone entity, allowing for independent management and fee generation [49] Question: Can you elaborate on the growth seen in the residential and commercial sides of the earthquake business? - Management noted strong growth in both segments, with residential benefiting from heightened awareness and new partnerships [54] Question: How much of the inland marine and property book has excess national marine? - The most pricing pressure is seen in the large commercial segment, but the overall exposure is balanced across various lines [95]