Palomar Holdings, Inc. Reports Fourth Quarter & Full Year 2024 Results

LA JOLLA, Calif., Feb. 12, 2025 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported net income of $35.0 million, or $1.29 per diluted share, for the fourth quarter of 2024 compared to net income of $25.9 million, or $1.02 per diluted share, for the fourth quarter of 2023. Adjusted net income(1) was $41.3 million, or $1.52 per diluted share, for the fourth quarter of 2024 as compared to $28.0 million, or $1.11 per diluted share, for the fourth quarter of 2023. Fourth Quarter 2024 Highlights Gross written premiums increased by 23.3% to $373.7 million compared to $303.2 million in the fourth quarter of 2023Net income increased 35.0% to $35.0 million compared to $25.9 million in the fourth quarter of 2023Adjusted net income(1) increased 47.5% to $41.3 million compared to $28.0 million in the fourth quarter of 2023Total loss ratio of 25.7% compared to 19.1% in the fourth quarter of 2023Combined ratio of 75.9% compared to 74.2% in the fourth quarter of 2023Adjusted combined ratio(1) of 71.7% compared to 68.8%, in the fourth quarter of 2023Annualized return on equity of 19.5% compared to 23.2% in the fourth quarter of 2023Annualized adjusted return on equity(1) of 23.1% compared to 25.1% in the fourth quarter of 2023 Full Year 2024 Highlights Gross written premiums increased by 35.1% to $1.5 billion compared to $1.1 billion in 2023Net income increased 48.4% to $117.6 million compared to $79.2 million in 2023Adjusted net income(1) increased 42.8% to $133.5 million compared to $93.5 million in 2023Total loss ratio of 26.4% compared to 21.0% in 2023Combined ratio of 78.1% compared to 76.6% in 2023Adjusted combined ratio(1) of 73.7% compared to 71.2% in 2023Return on equity of 19.6% compared to 18.5% in 2023Adjusted return on equity(1) of 22.2% compared to 21.9% in 2023 (1) See discussion of “Non-GAAP and Key Performance Indicators” below. Mac Armstrong, Chairman and Chief Executive Officer, commented, "Palomar’s stellar 2024 was capped off by an exceptional fourth quarter. During the quarter, we generated gross written premiums growth of 23%, 39% when excluding run-off business from our results, adjusted net income growth of 48%, inclusive of $8.1 million of catastrophe losses, and, importantly, an adjusted return on equity of 23%. When looking at the full year we not only generated record gross written premiums and adjusted net income, but we grew our top and bottom-line 35% and 43%, respectively. Additionally, throughout 2024 we made significant investments across the organization that we believe will sustain our earnings base and profitable growth trajectory.”  Mr. Armstrong continued, “Beyond the strong financial results of the fourth quarter and 2024, Palomar’s accomplishments were several and notable, highlighted by our AM Best upgrade and the acquisition of First Indemnity of America, our surety operation. Furthermore, we accomplished a Palomar 2X fundamental strategic objective by doubling our adjusted underwriting income for the 2021 period in a three-year timeframe. We are energized by our prospects to continue this profitable growth in 2025 and thereafter.”  Underwriting Results Gross written premiums increased 23.3% to $373.7 million compared to $303.2 million in the fourth quarter of 2023, additionally net earned premiums increased 54.6% compared to the prior year’s fourth quarter. Losses and loss adjustment expenses for the fourth quarter were $37.2 million, comprised of $29.1 million of attritional losses and $8.1 million of catastrophe losses primarily related to Hurricane Milton. The loss ratio for the quarter was 25.7%, comprised of an attritional loss ratio of 20.1% and a catastrophe loss ratio of 5.6%, compared to a loss ratio of 19.1% during the same period last year, all comprised of attritional losses. Underwriting income(1) for the fourth quarter was $34.9 million resulting in a combined ratio of 75.9% compared to underwriting income of $24.2 million resulting in a combined ratio of 74.2% during the same period last year. The Company’s adjusted underwriting income(1) was $41.0 million resulting in an adjusted combined ratio(1) of 71.7% in the fourth quarter compared to adjusted underwriting income(1) of $29.3 million and an adjusted combined ratio(1) of 68.8% during the same period last year. Investment ResultsNet investment income increased by 61.3% to $11.3 million compared to $7.0 million in the prior year’s fourth quarter. The increase was primarily due to higher yields on invested assets and a higher average balance of investments held during the three months ended December 31, 2024 due to cash generated from operations and proceeds from our August 2024 stock offering. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 4.04 years at December 31, 2024. Cash and invested assets totaled $1.1 billion at December 31, 2024. During the fourth quarter, the Company recorded net realized and unrealized losses of $1.2 million related to its investment portfolio as compared to net realized and unrealized gains of $3.0 million in last year’s fourth quarter. Tax RateThe effective tax rate for the three months ended December 31, 2024 was 22.2% compared to 22.6% for the three months ended December 31, 2023. For the current quarter, the Company’s income tax rate differed from the statutory rate due primarily to the non-deductible executive compensation expense, offset by the permanent component of employee stock option exercises. Stockholders’ Equity and ReturnsStockholders' equity was $729.0 million at December 31, 2024, compared to $471.3 million at December 31, 2023. For the three months ended December 31, 2024, the Company’s annualized return on equity was 19.5% compared to 23.2% for the same period in the prior year while adjusted return on equity(1) was 23.1% compared to 25.1% for the same period in the prior year. Full Year 2025 OutlookFor the full year 2025, the Company expects to achieve adjusted net income of $180 million to $192 million. This includes an estimate of $8 million to $12 million of catastrophe losses for the year. Conference CallAs previously announced, Palomar will host a conference call Thursday, February 13, 2025, to discuss its fourth quarter 2024 results at 12:00 p.m. (Eastern Time). The conference call can be accessed live by dialing 1-877-423-9813 or for international callers, 1-201-689-8573, and requesting to be joined to the Palomar Fourth Quarter 2024 Earnings Conference Call. A replay will be available starting at 4:00 p.m. (Eastern Time) on February 13, 2025, and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13743970. The replay will be available until 11:59 p.m. (Eastern Time) on February 20, 2025. Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of the Company’s website at http://ir.palomarspecialty.com/. The online replay will remain available for a limited time beginning immediately following the call. About Palomar Holdings, Inc.Palomar Holdings, Inc. is the holding company of subsidiaries Palomar Specialty Insurance Company (“PSIC”), Palomar Specialty Reinsurance Company Bermuda Ltd. ("PSRE"), Palomar Insurance Agency, Inc. ("PIA"), Palomar Excess and Surplus Insurance Company (“PESIC”), Palomar Underwriters Exchange Organization, Inc ("PUEO"), Palomar Crop Insurance Services, Inc, and First Indemnity of America Insurance Company (acquired 1/1/2025). Palomar's consolidated results also include Laulima Reciprocal Exchange, a variable interest entity for which the Company is the primary beneficiary. Palomar is an innovative specialty insurer serving residential and commercial clients in five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop. Palomar’s insurance subsidiaries, Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., and Palomar Excess and Surplus Insurance Company, have a financial strength rating of “A” (Excellent) from A.M. Best. Non-GAAP and Key Performance Indicators Palomar discusses certain key performance indicators, described below, which provide useful information about the Company’s business and the operational factors underlying the Company’s financial performance. Underwriting revenue is a non-GAAP financial measure defined as total revenue, excluding net investment income and net realized and unrealized gains and losses on investments. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of total revenue calculated in accordance with GAAP to underwriting revenue. Underwriting income is a non-GAAP financial measure defined as income before income taxes excluding net investment income, net realized and unrealized gains and losses on investments, and interest expense. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of income before income taxes calculated in accordance with GAAP to underwriting income. Adjusted net income is a non-GAAP financial measure defined as net income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. The Company calculates the tax impact only on adjustments which would be included in calculating its income tax expense using the estimated tax rate at which the company received a deduction for these adjustments. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of net income calculated in accordance with GAAP to adjusted net income. Annualized Return on equity is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period. Annualized adjusted return on equity is a non-GAAP financial measure defined as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of return on equity calculated using unadjusted GAAP numbers to adjusted return on equity. Loss ratio, expressed as a percentage, is the ratio of losses and loss adjustment expenses, to net earned premiums. Expense ratio, expressed as a percentage, is the ratio of acquisition and other underwriting expenses, net of commission and other income to net earned premiums. Combined ratio is defined as the sum of the loss ratio and the expense ratio. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss. Adjusted combined ratio is a non-GAAP financial measure defined as the sum of the loss ratio and the expense ratio calculated excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of combined ratio calculated using unadjusted GAAP numbers to adjusted combined ratio. Diluted adjusted earnings per share is a non-GAAP financial measure defined as adjusted net income divided by the weighted-average common shares outstanding for the period, reflecting the dilution which could occur if equity-based awards are converted into common share equivalents as calculated using the treasury stock method. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of diluted earnings per share calculated in accordance with GAAP to diluted adjusted earnings per share. Catastrophe loss ratio is a non-GAAP financial measure defined as the ratio of catastrophe losses to net earned premiums. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of loss ratio calculated using unadjusted GAAP numbers to catastrophe loss ratio. Adjusted combined ratio excluding catastrophe losses is a non-GAAP financial measure defined as adjusted combined ratio excluding the impact of catastrophe losses. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of combined ratio calculated using unadjusted GAAP numbers to adjusted combined ratio excluding catastrophe losses. Adjusted underwriting income is a non-GAAP financial measure defined as underwriting income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of income before income taxes calculated in accordance with GAAP to adjusted underwriting income. Tangible stockholders’ equity is a non-GAAP financial measure defined as stockholders’ equity less goodwill and intangible assets. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of stockholders’ equity calculated in accordance with GAAP to tangible stockholders’ equity. Safe Harbor StatementPalomar cautions you that statements contained in this press release may regard matters that are not historical facts but are forward-looking statements. These statements are based on the company’s current beliefs and expectations. The inclusion of forward-looking statements should not be regarded as a representation by Palomar that any of its plans will be achieved. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in the Company’s business. The forward-looking statements are typically, but not always, identified through use of the words "believe," "expect," "enable," "may," "will," "could," "intends," "estimate," "anticipate," "plan," "predict," "probable," "potential," "possible," "should," "continue," and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including unexpected expenditures and costs, unexpected results or delays in development and regulatory review, regulatory approval requirements, the frequency and severity of adverse events and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the Company's filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. ContactMedia Inquiries Lindsay Conner 1-551-206-6217 lconner@plmr.com Investor RelationsJamie Lillis1-203-428-3223investors@plmr.comSource: Palomar Holdings, Inc. Summary of Operating Results: The following tables summarize the Company’s results for the three months and year ended December 31, 2024 and 2023: Three Months Ended December 31, 2024 2023 Change % Change ($ in thousands, except per share data)Gross written premiums$373,723 $303,152 $70,571 23.3%Ceded written premiums (204,492) (188,742) (15,750) 8.3%Net written premiums 169,231 114,410 54,821 47.9%Net earned premiums 144,890 93,748 51,142 54.6%Commission and other income 750 1,586 (836) (52.7)%Total underwriting revenue (1) 145,640 95,334 50,306 52.8%Losses and loss adjustment expenses 37,176 17,896 19,280 107.7%Acquisition expenses, net of ceding commissions and fronting fees 40,585 29,005 11,580 39.9%Other underwriting expenses 32,947 24,210 8,737 36.1%Underwriting income (1) 34,932 24,223 10,709 44.2%Interest expense (87) (824) 737 (89.4)%Net investment income 11,318 7,015 4,303 61.3%Net realized and unrealized (losses) gains on investments (1,201) 3,044 (4,245) (139.5)%Income before income taxes 44,962 33,458 11,504 34.4%Income tax expense 9,997 7,564 2,433 32.2%Net income$34,965 $25,894 $9,071 35.0%Adjustments: Net realized and unrealized losses (gains) on investments 1,201 (3,044) 4,245 (139.5)%Expenses associated with transactions 922 478 444 92.9%Stock-based compensation expense 4,779 4,176 603 14.4%Amortization of intangibles 389 389 — —%Tax impact (964) 103 (1,067) NM Adjusted net income (1)$41,292 $27,996 $13,296 47.5%Key Financial and Operating Metrics Annualized return on equity 19.5% 23.2% Annualized adjusted return on equity (1) 23.1% 25.1% Loss ratio 25.7% 19.1% Expense ratio 50.2% 55.1% Combined ratio 75.9% 74.2% Adjusted combined ratio (1) 71.7% 68.8% Diluted earnings per share$1.29 $1.02 Diluted adjusted earnings per share (1)$1.52 $1.11 Catastrophe losses$8,122 $10 Catastrophe loss ratio (1) 5.6% —% Adjusted combined ratio excluding catastrophe losses (1) 66.1% 68.8% Adjusted underwriting income (1)$41,022 $29,266 $11,756 40.2%NM - not meaningful (1)- Indicates Non-GAAP financial measure- see above for definition of Non-GAAP financial measures and see below for reconciliation of Non-GAAP financial measures to their most directly comparable measures prepared in accordance with GAAP. Year Ended December 31, 2024 2023 Change % Change ($ in thousands, except per share data)Gross written premiums$1,541,962 $1,141,558 $400,404 35.1%Ceded written premiums (897,111) (731,531) (165,580) 22.6%Net written premiums 644,851 410,027 234,824 57.3%Net earned premiums 510,687 345,913 164,774 47.6%Commission and other income 2,784 3,367 (583) (17.3)%Total underwriting revenue (1) 513,471 349,280 164,191 47.0%Losses and loss adjustment expenses 134,759 72,592 62,167 85.6%Acquisition expenses, net of ceding commissions and fronting fees 149,657 107,745 41,912 38.9%Other underwriting expenses 117,113 88,172 28,941 32.8%Underwriting income (1) 111,942 80,771 31,171 38.6%Interest expense (1,138) (3,775) 2,637 (69.9)%Net investment income 35,824 23,705 12,119 51.1%Net realized and unrealized gains on investments 4,568 2,941 1,627 55.3%Income before income taxes 151,196 103,642 47,554 45.9%Income tax expense 33,623 24,441 9,182 37.6%Net income$117,573 $79,201 $38,372 48.4%Adjustments: Net realized and unrealized gains on investments (4,568) (2,941) (1,627) 55.3%Expenses associated with transactions 1,479 706 773 109.5%Stock-based compensation expense 16,685 14,913 1,772 11.9%Amortization of intangibles 1,558 1,481 77 5.2%Expenses associated with catastrophe bond 2,483 1,640 843 51.4%Tax impact (1,699) (1,480) (219) 14.8%Adjusted net income (1)$133,511 $93,520 $39,991 42.8%Key Financial and Operating Metrics Annualized return on equity 19.6% 18.5% Annualized adjusted return on equity (1) 22.2% 21.9% Loss ratio 26.4% 21.0% Expense ratio 51.7% 55.7% Combined ratio 78.1% 76.6% Adjusted combined ratio (1) 73.7% 71.2% Diluted earnings per share$4.48 $3.13 Diluted adjusted earnings per share (1)$5.09 $3.69 Catastrophe losses$27,846 $3,442 Catastrophe loss ratio (1) 5.5% 1.0% Adjusted combined ratio excluding catastrophe losses (1) 68.3% 70.2% Adjusted underwriting income (1)$134,147 $99,511 $34,636 34.8% Condensed Consolidated Balance sheets Palomar Holdings, Inc. and SubsidiariesCondensed Consolidated Balance Sheets (unaudited)(in thousands, except shares and par value data) December 31, 2024 December 31, 2023Assets Investments: Fixed maturity securities available for sale, at fair value (amortized cost: $973,330 in 2024; $675,130 in 2023)$939,046 $643,799 Equity securities, at fair value (cost: $32,987 in 2024; $43,003 in 2023) 40,529 43,160 Equity method investment 2,277 2,617 Other investments 5,863 — Total investments 987,715 689,576 Cash and cash equivalents 80,438 51,546 Restricted cash 101 306 Accrued investment income 8,440 5,282 Premium receivable 305,724 261,972 Deferred policy acquisition costs, net of ceding commissions and fronting fees 94,881 60,990 Reinsurance recoverable on paid losses and loss adjustment expenses 47,076 32,172 Reinsurance recoverable on unpaid losses and loss adjustment expenses 348,083 244,622 Ceded unearned premiums 276,237 265,808 Prepaid expenses and other assets 91,086 72,941 Deferred tax assets, net 8,768 10,119 Property and equipment, net 429 373 Goodwill and intangible assets, net 13,242 12,315 Total assets$2,262,220 $1,708,022 Liabilities and stockholders' equity Liabilities: Accounts payable and other accrued liabilities$70,079 $42,376 Reserve for losses and loss adjustment expenses 503,382 342,275 Unearned premiums 741,692 597,103 Ceded premium payable 190,168 181,742 Funds held under reinsurance treaty 27,869 13,419 Income taxes payable — 7,255 Borrowings from credit agreements — 52,600 Total liabilities 1,533,190 1,236,770 Stockholders' equity: Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2024 and December 31, 2023, 0 shares issued and outstanding as of December 31, 2024 and December 31, 2023 — — Common stock, $0.0001 par value, 500,000,000 shares authorized, 26,529,402 and 24,772,987 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively 3 3 Additional paid-in capital 493,656 350,597 Accumulated other comprehensive loss (26,845) (23,991)Retained earnings 262,216 144,643 Total stockholders' equity 729,030 471,252 Total liabilities and stockholders' equity$2,262,220 $1,708,022 Condensed Consolidated Income Statement Palomar Holdings, Inc. and SubsidiariesCondensed Consolidated Statements of Income and Comprehensive Income (loss) (Unaudited)(in thousands, except shares and per share data) Three Months Ended Year Ended December 31, December 31, 2024 2023 2024 2023Revenues: Gross written premiums$373,723 $303,152 $1,541,962 $1,141,558 Ceded written premiums (204,492) (188,742) (897,111) (731,531)Net written premiums 169,231 114,410 644,851 410,027 Change in unearned premiums (24,341) (20,662) (134,164) (64,114)Net earned premiums 144,890 93,748 510,687 345,913 Net investment income 11,318 7,015 35,824 23,705 Net realized and unrealized (losses) gains on investments (1,201) 3,044 4,568 2,941 Commission and other income 750 1,586 2,784 3,367 Total revenues 155,757 105,393 553,863 375,926 Expenses: Losses and loss adjustment expenses 37,176 17,896 134,759 72,592 Acquisition expenses, net of ceding commissions and fronting fees 40,585 29,005 149,657 107,745 Other underwriting expenses 32,947 24,210 117,113 88,172 Interest expense 87 824 1,138 3,775 Total expenses 110,795 71,935 402,667 272,284 Income before income taxes 44,962 33,458 151,196 103,642 Income tax expense 9,997 7,564 33,623 24,441 Net income$34,965 $25,894 $117,573 $79,201 Other comprehensive income, net: Net unrealized (losses) gains on securities available for sale (16,707) 19,229 (2,854) 12,524 Net comprehensive income$18,258 $45,123 $114,719 $91,725 Per Share Data: Basic earnings per share$1.32 $1.05 $4.61 $3.19 Diluted earnings per share$1.29 $1.02 $4.48 $3.13 Weighted-average common shares outstanding: Basic 26,491,939 24,747,347 25,520,343 24,822,004 Diluted 27,206,225 25,272,149 26,223,842 25,327,091 Underwriting Segment Data The Company has a single reportable segment and offers specialty insurance products. Gross written premiums (GWP) by product, location and company are presented below: Three Months Ended December 31, 2024 2023 ($ in thousands) % of % of % Amount GWP Amount GWP Change ChangeProduct (1) Earthquake$146,757 39.3% $122,087 40.3% $24,670 20.2%Inland Marine and other Property 85,396 22.9% 63,039 20.8% 22,357 35.5%Casualty 68,484 18.3% 32,323 10.7% 36,161 111.9%Fronting 57,418 15.4% 85,708 28.3% (28,290) (33.0)%Crop 15,668 4.2% (5) (0.0)% 15,673 NM Total Gross Written Premiums$373,723 100.0% $303,152 100.0% $70,571 23.3% NM- Not meaningful Year Ended December 31, 2024 2023 ($ in thousands) % of % of % Amount GWP Amount GWP Change ChangeProduct (1) Earthquake$522,864 33.9% $436,896 38.3% $85,968 19.7%Inland Marine and Other Property 334,079 21.7% 250,023 21.9% 84,056 33.6%Fronting 333,188 21.6% 352,141 30.8% (18,953) (5.4)%Casualty 235,592 15.3% 90,388 7.9% 145,204 160.6%Crop 116,239 7.5% 12,110 1.1% 104,129 859.9%Total Gross Written Premiums$1,541,962 100.0% $1,141,558 100.0% $400,404 35.1% (1) - Beginning in 2024, the Company has updated the categorization of its products to align with management's current strategy and view of the business. Prior year amounts have been reclassified for comparability purposes. The recategorization is for presentation purposes only and does not impact overall gross written premiums. Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 ($ in thousands) ($ in thousands) % of % of % of % of Amount GWP Amount GWP Amount GWP Amount GWPState California$157,786 42.2% $165,342 54.5% $668,635 43.4% $600,791 52.6%Texas 28,002 7.5% 22,740 7.5% 124,416 8.1% 95,517 8.4%Hawaii 18,636 5.0% 11,562 3.8% 72,558 4.7% 47,388 4.2%Washington 16,007 4.3% 14,124 4.7% 57,900 3.8% 49,494 4.3%New York 14,756 3.9% 6,775 2.2% 38,919 2.5% 18,424 1.6%Florida 8,855 2.4% 11,286 3.7% 67,008 4.3% 47,595 4.2%Oregon 8,298 2.2% 6,307 2.1% 29,550 1.9% 23,220 2.0%Illinois 7,176 1.9% 6,697 2.2% 20,901 1.4% 22,340 2.0%Other 114,207 30.6% 58,319 19.2% 462,075 30.0% 236,789 20.7%Total Gross Written Premiums$373,723 100.0% $303,152 100.0% $1,541,962 100.0% $1,141,558 100.0% Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 ($ in thousands) ($ in thousands) % of % of % of % of Amount GWP Amount GWP Amount GWP Amount GWPSubsidiary PSIC$170,275 45.6% $156,590 51.7% $823,263 53.4% $653,809 57.3%PESIC 188,496 50.4% 146,562 48.3% 661,404 42.9% 487,749 42.7%Laulima 14,952 4.0% — —% 57,295 3.7% — —%Total Gross Written Premiums$373,723 100.0% $303,152 100.0% $1,541,962 100.0% $1,141,558 100.0% Gross and net earned premiums The table below shows the amount of premiums the Company earned on a gross and net basis and the Company’s net earned premiums as a percentage of gross earned premiums for each period presented: Three Months Ended Year Ended December 31, December 31, 2024 2023 Change % Change 2024 2023 Change % Change ($ in thousands) ($ in thousands)Gross earned premiums$371,654 $276,502 $95,152 34.4% $1,397,369 $1,015,722 $381,647 37.6%Ceded earned premiums (226,764) (182,754) (44,010) 24.1% (886,682) (669,809) (216,873) 32.4%Net earned premiums$144,890 $93,748 $51,142 54.6% $510,687 $345,913 $164,774 47.6% Net earned premium ratio 39.0% 33.9% 36.5% 34.1% Loss detail Three Months Ended Year Ended December 31, December 31, 2024 2023 Change % Change 2024 2023 Change % Change ($ in thousands) ($ in thousands)Catastrophe losses$8,122 $10 $8,112 NM $27,846 $3,442 $24,404 NM Non-catastrophe losses 29,054 17,886 11,168 62.4% 106,913 69,150 37,763 54.6%Total losses and loss adjustment expenses$37,176 $17,896 $19,280 107.7% $134,759 $72,592 $62,167 85.6% Catastrophe loss ratio 5.6% 0.0% 5.5% 1.0% Non-catastrophe loss ratio 20.1% 19.1% 20.9% 20.0% Total loss ratio 25.7% 19.1% 26.4% 21.0% NM-Not meaningful The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses: Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 (in thousands) (in thousands)Reserve for losses and LAE net of reinsurance recoverables at beginning of period$137,274 $92,178 $97,653 $77,520 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 37,575 19,409 137,798 70,363 Prior years (399) (1,513) (3,039) 2,229 Total incurred 37,176 17,896 134,759 72,592 Deduct: Loss and LAE payments, net of reinsurance, related to: Current year 15,675 5,417 43,582 19,631 Prior years 3,476 7,004 33,531 32,828 Total payments 19,151 12,421 77,113 52,459 Reserve for losses and LAE net of reinsurance recoverables at end of period 155,299 97,653 155,299 97,653 Add: Reinsurance recoverables on unpaid losses and LAE at end of period 348,083 244,622 348,083 244,622 Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period$503,382 $342,275 $503,382 $342,275 Reconciliation of Non-GAAP Financial Measures For the three months and year ended December 31, 2024 and 2023, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows: Underwriting revenue Three Months Ended Year Ended December 31, December 31, 2024 2023 2024 2023 (in thousands) (in thousands)Total revenue$155,757 $105,393 $553,863 $375,926 Net investment income (11,318) (7,015) (35,824) (23,705)Net realized and unrealized (gains) losses on investments 1,201 (3,044) (4,568) (2,941)Underwriting revenue$145,640 $95,334 $513,471 $349,280 Underwriting income and adjusted underwriting income Three Months Ended Year Ended December 31, December 31, 2024 2023 2024 2023 (in thousands) (in thousands)Income before income taxes$44,962 $33,458 $151,196 $103,642 Net investment income (11,318) (7,015) (35,824) (23,705)Net realized and unrealized losses (gains) on investments 1,201 (3,044) (4,568) (2,941)Interest expense 87 824 1,138 3,775 Underwriting income$34,932 $24,223 $111,942 $80,771 Expenses associated with transactions 922 478 1,479 706 Stock-based compensation expense 4,779 4,176 16,685 14,913 Amortization of intangibles 389 389 1,558 1,481 Expenses associated with catastrophe bond — — 2,483 1,640 Adjusted underwriting income$41,022 $29,266 $134,147 $99,511 Adjusted net income Three Months Ended Year Ended December 31, December 31, 2024 2023 2024 2023 (in thousands) (in thousands)Net income$34,965 $25,894 $117,573 $79,201 Adjustments: Net realized and unrealized losses (gains) on investments 1,201 (3,044) (4,568) (2,941)Expenses associated with transactions 922 478 1,479 706 Stock-based compensation expense 4,779 4,176 16,685 14,913 Amortization of intangibles 389 389 1,558 1,481 Expenses associated with catastrophe bond — — 2,483 1,640 Tax impact (964) 103 (1,699) (1,480)Adjusted net income$41,292 $27,996 $133,511 $93,520 Annualized adjusted return on equity Three Months Ended Year Ended December 31, December 31, 2024 2023 2024 2023 (in thousands) (in thousands) Annualized adjusted net income$165,168 $111,984 $133,511 $93,520 Average stockholders' equity$716,171 $446,293 $600,140 $428,002 Annualized adjusted return on equity 23.1% 25.1% 22.2% 21.9% Adjusted combined ratio Three Months Ended Year Ended December 31, December 31, 2024 2023 2024 2023 (in thousands) (in thousands)Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income$109,958 $69,525 $398,745 $265,142 Denominator: Net earned premiums$144,890 $93,748 $510,687 $345,913 Combined ratio 75.9% 74.2% 78.1% 76.6%Adjustments to numerator: Expenses associated with transactions$(922) $(478) $(1,479) $(706)Stock-based compensation expense (4,779) (4,176) (16,685) (14,913)Amortization of intangibles (389) (389) (1,558) (1,481)Expenses associated with catastrophe bond — — (2,483) (1,640)Adjusted combined ratio 71.7% 68.8% 73.7% 71.2% Diluted adjusted earnings per share Three Months Ended Year Ended December 31, December 31, 2024 2023 2024 2023 (in thousands, except per share data) (in thousands, except per share data) Adjusted net income$41,292 $27,996 $133,511 $93,520 Weighted-average common shares outstanding, diluted 27,206,225 25,272,149 26,223,842 25,327,091 Diluted adjusted earnings per share$1.52 $1.11 $5.09 $3.69 Catastrophe loss ratio Three Months Ended Year Ended December 31, December 31, 2024 2023 2024 2023 (in thousands) (in thousands)Numerator: Losses and loss adjustment expenses$37,176 $17,896 $134,759 $72,592 Denominator: Net earned premiums$144,890 $93,748 $510,687 $345,913 Loss ratio 25.7% 19.1% 26.4% 21.0% Numerator: Catastrophe losses$8,122 $10 $27,846 $3,442 Denominator: Net earned premiums$144,890 $93,748 $510,687 $345,913 Catastrophe loss ratio 5.6% 0.0% 5.5% 1.0% Adjusted combined ratio excluding catastrophe losses Three Months Ended Year Ended December 31, December 31, 2024 2023 2024 2023 (in thousands) (in thousands)Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income$109,958 $69,525 $398,745 $265,142 Denominator: Net earned premiums$144,890 $93,748 $510,687 $345,913 Combined ratio 75.9% 74.2% 78.1% 76.6%Adjustments to numerator: Expenses associated with transactions$(922) $(478) $(1,479) $(706)Stock-based compensation expense (4,779) (4,176) (16,685) (14,913)Amortization of intangibles (389) (389) (1,558) (1,481)Expenses associated with catastrophe bond — — (2,483) (1,640)Catastrophe losses (8,122) (10) (27,846) (3,442)Adjusted combined ratio excluding catastrophe losses 66.1% 68.8% 68.3% 70.2% Tangible Stockholders’ equity December 31, December 31, 2024 2023 (in thousands)Stockholders' equity$729,030 $471,252 Goodwill and intangible assets (13,242) (12,315)Tangible stockholders' equity$715,788 $458,937

Palomar Holdings, Inc. Reports Fourth Quarter & Full Year 2024 Results

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