• Palomar Holdings, Inc. Reports Third Quarter 2023 Results

    ソース: Nasdaq GlobeNewswire / 01 11 2023 15:15:12   America/Chicago

    LA JOLLA, Calif., Nov. 01, 2023 (GLOBE NEWSWIRE) --  Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported net income of $18.4 million, or $0.73 per diluted share, for the third quarter of 2023 compared to net income of $4.3 million, or $0.17 per diluted share, for the third quarter of 2022. Adjusted net income(1) was $23.3 million, or $0.92 per diluted share, for the third quarter of 2023 as compared to $9.2 million, or $0.36 per diluted share, for the third quarter of 2022. Effective December 31, 2022, the Company adjusts for net realized and unrealized gains and losses when calculating and presenting adjusted net income, diluted adjusted earnings per share, and adjusted return on equity. All prior period amounts have been adjusted accordingly.

    Third Quarter 2023 Highlights

    • Gross written premiums increased by 24.0% to $314.0 million compared to $253.1 million in the third quarter of 2022
    • Net income of $18.4 million, compared to $4.3 million in the third quarter of 2022
    • Adjusted net income(1) of $23.3 million, compared to $9.2 million in the third quarter of 2022
    • Total loss ratio of 18.8% compared to 39.6% in the third quarter of 2022
    • Combined ratio of 75.8% compared to 94.8% in the third quarter of 2022
    • Adjusted combined ratio(1) of 70.9%, compared to 90.3%, in the third quarter of 2022
    • Annualized return on equity of 17.7%, compared to 4.6% in the third quarter of 2022
    • Annualized adjusted return on equity(1) of 22.3%, compared to 9.9% in the third quarter of 2022

    (1) See discussion of “Non-GAAP and Key Performance Indicators” below.

    Mac Armstrong, Chairman and Chief Executive Officer, commented, “We are very pleased with our strong third quarter. The results included record quarterly gross written premium, adjusted net income growth of 153%, and an adjusted return on equity of 22.3%. Our concerted effort over the last several years to reduce the volatility in our book of business and earnings base was also on full display in the third quarter as we incurred negligible loss from catastrophes despite elevated activity across the industry. The execution of our Palomar 2X strategic plan during the quarter instills a high level of confidence that Palomar will produce consistent profitable growth in the quarters and years ahead."

    Mr. Armstrong continued, “In addition to the strong underwriting results, we also continued to invest in growth across the organization. Beyond growing gross written premium 24% year-over-year, during the quarter we hired an experienced leader to build an Environmental practice, wrote our first Crop premium, and established new fronting partnerships. Overall, we continue to dedicate our capital and resources towards targeted segments of our book of business that maximize our risk-adjusted returns.”

    Underwriting Results

    Gross written premiums increased 24.0% to $314.0 million compared to $253.1 million in the third quarter of 2022, while net earned premiums increased 10.1% compared to the prior year’s third quarter. Excluding de-emphasized lines of business, gross written premiums increased 30.6% in the third quarter.

    Losses and loss adjustment expenses for the third quarter were $16.1 million, comprised of $16.7 million of non-catastrophe attritional losses, offset by $0.5 million of favorable catastrophe development from prior periods. The loss ratio for the quarter was 18.8%, comprised of a catastrophe loss ratio(1) of -0.6% and an attritional loss ratio of 19.4%, compared to a loss ratio of 39.6% during the same period last year comprised of a catastrophe loss ratio(1) of 16.0% and attritional loss ratio of 23.6%.

    Underwriting income(1) for the third quarter was $20.7 million resulting in a combined ratio of 75.8% compared to underwriting income of $4.1 million resulting in a combined ratio of 94.8% during the same period last year. The Company’s adjusted underwriting income(1) was $25.0 million resulting in an adjusted combined ratio(1) of 70.9% in the third quarter compared to adjusted underwriting income(1) of $7.5 million and an adjusted combined ratio(1) of 90.3% during the same period last year.

    Investment Results
    Net investment income increased by 61.0% to $6.0 million compared to $3.7 million in the prior year’s third 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 September 30, 2023 due to cash generated from operations. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.61 years at September 30, 2023. Cash and invested assets totaled $688.0 million at September 30, 2023. During the third quarter, the Company recorded net realized and unrealized losses of $1.4 million related to its investment portfolio as compared to net realized and unrealized losses of $2.4 million in last year’s third quarter.

    Tax Rate
    The effective tax rate for the three months ended September 30, 2023 was 24.9% compared to 17.5% for the three months ended September 30, 2022. For the current quarter, the Company’s income tax rate differed from the statutory rate due primarily to the non-deductible executive compensation expense.

    Stockholders’ Equity and Returns
    Stockholders' equity was $421.3 million at September 30, 2023, compared to $367.8 million at September 30, 2022. For the three months ended September 30, 2023, the Company’s annualized return on equity was 17.7% compared to 4.6% for the same period in the prior year while adjusted return on equity(1) was 22.3% compared to 9.9% for the same period in the prior year. During the current quarter, the Company repurchased 117,739 shares for $6.6 million pursuant to the Company’s previously announced $100 million share repurchase authorization. As of September 30, 2023, $43.5 million remains available for future repurchases.

    Full Year 2023 Outlook
    For the full year 2023, the Company expects to achieve adjusted net income of $90 million to $93 million. This includes $3.4 million of catastrophe losses incurred during the nine months ended September 30, 2023.

    Conference Call
    As previously announced, Palomar will host a conference call Thursday November 2, 2023, to discuss its third quarter 2023 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 Third Quarter 2023 Earnings Conference Call. A replay will be available starting at 4:00 p.m. (Eastern Time) on November 2, 2023, and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13737957. The replay will be available until 11:59 p.m. (Eastern Time) on November 9, 2023.

    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., Palomar Insurance Agency, Inc., Palomar Excess and Surplus Insurance Company (“PESIC”), and Palomar Underwriters Exchange Organization, Inc. Palomar is an innovative insurer serving residential and commercial clients in specialty markets including the market for earthquake insurance. 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. 
    To learn more, visit PLMR.com.

    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. Palomar calculates the tax impact only on adjustments which would be included in calculating the Company’s 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 Statement
    Palomar 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.

    Contact
    Media Inquiries 
    Lindsay Conner 
    1-551-206-6217 
    lconner@plmr.com

    Investor Relations
    Jamie Lillis
    1-203-428-3223
    investors@plmr.com
    Source: Palomar Holdings, Inc.


    Summary of Operating Results:

    The following tables summarize the Company’s results for the three and nine months ended September 30, 2023 and 2022:

     Three Months Ended         
     September 30,         
     2023  2022  Change  % Change 
     ($ in thousands, except per share data) 
    Gross written premiums$313,998  $253,128  $60,870   24.0%
    Ceded written premiums (203,336)  (161,930)  (41,406)  25.6%
    Net written premiums 110,662   91,198   19,464   21.3%
    Net earned premiums 85,817   77,942   7,875   10.1%
    Commission and other income 465   1,362   (897)  (65.9)%
    Total underwriting revenue(1) 86,282   79,304   6,978   8.8%
    Losses and loss adjustment expenses 16,139   30,900   (14,761)  (47.8)%
    Acquisition expenses, net of ceding commissions and fronting fees 27,004   27,210   (206)  (0.8)%
    Other underwriting expenses 22,390   17,114   5,276   30.8%
    Underwriting income(1) 20,749   4,080   16,669   NM 
    Interest expense (867)  (270)  (597)  221.1%
    Net investment income 6,029   3,744   2,285   61.0%
    Net realized and unrealized losses on investments (1,376)  (2,356)  980   (41.6)%
    Income before income taxes 24,535   5,198   19,337   NM 
    Income tax expense 6,103   912   5,191   NM 
    Net income$18,432  $4,286  $14,146   NM 
    Adjustments:               
    Net realized and unrealized losses on investments(2) 1,376   2,356   (980)  (41.6)%
    Expenses associated with transactions 229   45   184   NM 
    Stock-based compensation expense 3,589   3,092   497   16.1%
    Amortization of intangibles 390   313   77   24.6%
    Tax impact (725)  (871)  146   (16.8)%
    Adjusted net income(1)(2)$23,291  $9,221  $14,070   152.6%
    Key Financial and Operating Metrics               
    Annualized return on equity 17.7%  4.6%        
    Annualized adjusted return on equity(1) 22.3%  9.9%        
    Loss ratio 18.8%  39.6%        
    Expense ratio 57.0%  55.1%        
    Combined ratio 75.8%  94.8%        
    Adjusted combined ratio(1) 70.9%  90.3%        
    Diluted earnings per share$0.73  $0.17         
    Diluted adjusted earnings per share(1)$0.92  $0.36         
    Catastrophe losses$(533) $12,500         
    Catastrophe loss ratio(1) (0.6)%  16.0%        
    Adjusted combined ratio excluding catastrophe losses(1) 71.5%  74.3%        
    Adjusted underwriting income(1)$24,957  $7,530  $17,427   231.4%

    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.

    (2)- We now include the impact of net realized and unrealized losses and gains on investments as an adjustment to our net income. As this line is primarily driven by equity market fluctuations rather than our underlying business performance, we believe adding this adjustment provides a more meaningful comparison of our performance. We have also changed the prior year adjusted net income to conform to this presentation.


     Nine Months Ended         
     September 30,         
     2023  2022  Change  % Change 
     ($ in thousands, except per share data) 
    Gross written premiums$838,406  $642,751  $195,655   30.4%
    Ceded written premiums (542,789)  (374,109)  (168,680)  45.1%
    Net written premiums 295,617   268,642   26,975   10.0%
    Net earned premiums 252,164   234,239   17,925   7.7%
    Commission and other income 1,781   3,129   (1,348)  (43.1)%
    Total underwriting revenue(1) 253,945   237,368   16,577   7.0%
    Losses and loss adjustment expenses 54,696   60,251   (5,555)  (9.2)%
    Acquisition expenses, net of ceding commissions and fronting fees 78,740   83,928   (5,188)  (6.2)%
    Other underwriting expenses 63,962   51,233   12,729   24.8%
    Underwriting income(1) 56,547   41,956   14,591   34.8%
    Interest expense (2,952)  (475)  (2,477)  NM 
    Net investment income 16,690   9,462   7,228   76.4%
    Net realized and unrealized losses on investments (103)  (8,369)  8,266   (98.8)%
    Income before income taxes 70,182   42,574   27,608   64.8%
    Income tax expense 16,877   9,163   7,714   84.2%
    Net income$53,305  $33,411  $19,894   59.5%
    Adjustments:               
    Net realized and unrealized losses on investments(2) 103   8,369   (8,266)  (98.8)%
    Expenses associated with transactions 229   130   99   76.2%
    Stock-based compensation expense 10,737   8,556   2,181   25.5%
    Amortization of intangibles 1,092   942   150   15.9%
    Expenses associated with catastrophe bond 1,640   1,992   (352)  (17.7)%
    Tax impact (1,582)  (3,153)  1,571   (49.8)%
    Adjusted net income(1)(2)$65,524  $50,247  $15,277   30.4%
    Key Financial and Operating Metrics               
    Annualized return on equity 17.6%  11.7%        
    Annualized adjusted return on equity(1) 21.7%  17.6%        
    Loss ratio 21.7%  25.7%        
    Expense ratio 55.9%  56.4%        
    Combined ratio 77.6%  82.1%        
    Adjusted combined ratio(1) 72.1%  77.1%        
    Diluted earnings per share$2.10  $1.29         
    Diluted adjusted earnings per share(1)$2.59  $1.95         
    Catastrophe losses$3,432  $13,529         
    Catastrophe loss ratio(1) 1.4%  5.8%        
    Adjusted combined ratio excluding catastrophe losses(1) 70.8%  71.4%        
    Adjusted underwriting income(1)$70,245  $53,576  $16,670   31.1%


    Condensed Consolidated Balance sheets

    Palomar Holdings,Inc. and Subsidiaries
    Condensed Consolidated Balance Sheets (unaudited)
    (in thousands, except shares and par value data)
          
     September 30,  December 31, 
     2023  2022 
     (Unaudited)     
    Assets       
    Investments:       
    Fixed maturity securities available for sale, at fair value (amortized cost: $647,579 in 2023; $561,580 in 2022)$591,907  $515,064 
    Equity securities, at fair value (cost: $43,002 in 2023; $42,352 in 2022) 39,835   38,576 
    Equity method investment 2,923   — 
    Total investments 634,665   553,640 
    Cash and cash equivalents 53,026   68,108 
    Restricted cash 262   56 
    Accrued investment income 4,864   3,777 
    Premiums receivable 242,082   162,858 
    Deferred policy acquisition costs, net of ceding commissions and fronting fees 58,967   56,740 
    Reinsurance recoverable on paid losses and loss adjustment expenses 48,004   39,718 
    Reinsurance recoverable on unpaid losses and loss adjustment expenses 232,170   153,895 
    Ceded unearned premiums 259,760   204,084 
    Prepaid expenses and other assets 65,753   44,088 
    Deferred tax assets, net 13,643   10,622 
    Property and equipment, net 433   603 
    Goodwill and intangible assets, net 12,705   8,261 
    Total assets$1,626,334  $1,306,450 
    Liabilities and stockholders' equity       
    Liabilities:       
    Accounts payable and other accrued liabilities$32,532  $25,760 
    Reserve for losses and loss adjustment expenses 324,348   231,415 
    Unearned premiums 570,453   471,314 
    Ceded premium payable 211,025   146,127 
    Funds held under reinsurance treaty 14,042   10,680 
    Borrowings from credit agreements 52,600   36,400 
    Total liabilities 1,205,000   921,696 
    Stockholders' equity:       
    Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022 —   — 
    Common stock, $0.0001 par value, 500,000,000 shares authorized, 24,730,885 and 25,027,467 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 3   3 
    Additional paid-in capital 345,673   333,558 
    Accumulated other comprehensive loss (43,221)  (36,515)
    Retained earnings 118,879   87,708 
    Total stockholders' equity 421,334   384,754 
    Total liabilities and stockholders' equity$1,626,334  $1,306,450 


    Condensed Consolidated Income Statement

    Palomar Holdings,Inc. and Subsidiaries
    Condensed Consolidated Statements ofIncome and Comprehensive Income (loss) (Unaudited)
    (in thousands, except shares and per share data)
     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
     2023  2022  2023  2022 
    Revenues:               
    Gross written premiums$313,998  $253,128  $838,406  $642,751 
    Ceded written premiums (203,336)  (161,930)  (542,789)  (374,109)
    Net written premiums 110,662   91,198   295,617   268,642 
    Change in unearned premiums (24,845)  (13,256)  (43,453)  (34,403)
    Net earned premiums 85,817   77,942   252,164   234,239 
    Net investment income 6,029   3,744   16,690   9,462 
    Net realized and unrealized losses on investments (1,376)  (2,356)  (103)  (8,369)
    Commission and other income 465   1,362   1,781   3,129 
    Total revenues 90,935   80,692   270,532   238,461 
    Expenses:               
    Losses and loss adjustment expenses 16,139   30,900   54,696   60,251 
    Acquisition expenses, net of ceding commissions and fronting fees 27,004   27,210   78,740   83,928 
    Other underwriting expenses 22,390   17,114   63,962   51,233 
    Interest expense 867   270   2,952   475 
    Total expenses 66,400   75,494   200,350   195,887 
    Income before income taxes 24,535   5,198   70,182   42,574 
    Income tax expense 6,103   912   16,877   9,163 
    Net income 18,432   4,286   53,305   33,411 
    Other comprehensive income (loss), net:               
    Net unrealized losses on securities available for sale (8,494)  (15,412)  (6,706)  (47,941)
    Net comprehensive income (loss)$9,938  $(11,126) $46,599  $(14,530)
    Per Share Data:               
    Basic earnings per share$0.75  $0.17  $2.15  $1.32 
    Diluted earnings per share$0.73  $0.17  $2.10  $1.29 
                    
    Weighted-average common shares outstanding:               
    Basic 24,740,455   25,209,368   24,847,164   25,258,333 
    Diluted 25,244,828   25,787,625   25,340,602   25,808,387 


    Underwriting Segment Data

    The Company has a single reportable segment and offers primarily property and casualty insurance products. Gross written premiums (GWP) by product, location and company are presented below:

     Three Months Ended September 30,         
     2023  2022         
     ($ in thousands)     
         % of      % of      % 
     Amount  GWP  Amount  GWP  Change  Change 
    Product                       
    Fronting Premiums$106,581   33.9% $82,232   32.5% $24,349   29.6%
    Residential Earthquake 69,220   22.0%  59,569   23.5%  9,651   16.2%
    Commercial Earthquake 44,166   14.1%  32,647   12.9%  11,519   35.3%
    Inland Marine 37,252   11.9%  30,842   12.2%  6,410   20.8%
    Casualty 20,165   6.4%  12,888   5.1%  7,277   56.5%
    Hawaii Hurricane 11,051   3.5%  9,425   3.7%  1,626   17.3%
    Commercial All Risk 6,624   2.1%  9,224   3.6%  (2,600)  (28.2)%
    Residential Flood 5,259   1.7%  3,871   1.5%  1,388   35.9%
    Other 13,680   4.4%  12,430   5.0%  1,250   10.1%
    Total Gross Written Premiums$313,998   100.0% $253,128   100.0% $60,870   24.0%


     Nine Months Ended September 30,         
     2023  2022         
     ($ in thousands)     
         % of      % of        
     Amount  GWP  Amount  GWP  Change  Change 
    Product                       
    Fronting Premiums$278,548   33.2% $154,232   24.0% $124,316   80.6%
    Residential Earthquake 190,048   22.7%  159,995   24.9%  30,053   18.8%
    Commercial Earthquake 124,763   14.9%  90,894   14.1%  33,869   37.3%
    Inland Marine 103,841   12.4%  72,214   11.2%  31,627   43.8%
    Casualty 50,144   6.0%  25,697   4.0%  24,447   95.1%
    Hawaii Hurricane 28,718   3.4%  24,579   3.8%  4,139   16.8%
    Commercial All Risk 26,769   3.2%  41,647   6.5%  (14,878)  (35.7)%
    Residential Flood 14,964   1.8%  10,448   1.6%  4,516   43.2%
    Specialty Homeowners (99)  (0.0)%  30,082   4.7%  (30,181)  (100.3)%
    Other 20,710   2.4%  32,963   5.2%  (12,253)  (37.2)%
    Total Gross Written Premiums$838,406   100.0% $642,751   100.0% $195,655   30.4%


     Three Months Ended September 30,  Nine Months Ended September 30, 
     2023  2022  2023  2022 
     ($ in thousands)  ($ in thousands) 
         % of      % of      % of      % of 
     Amount  GWP  Amount  GWP  Amount  GWP  Amount  GWP 
    State                               
    California$163,806   52.2% $131,016   51.8% $450,752   53.8% $292,865   45.6%
    Texas 24,336   7.7%  26,234   10.4%  72,777   8.7%  71,499   11.1%
    Washington 17,792   5.7%  13,573   5.4%  43,409   5.2%  29,391   4.6%
    Hawaii 13,490   4.3%  10,998   4.3%  35,824   4.3%  29,729   4.6%
    Florida 11,549   3.7%  7,445   2.9%  36,309   4.3%  27,216   4.2%
    Oregon 8,536   2.7%  7,738   3.1%  21,223   2.5%  16,483   2.6%
    Illinois 6,502   2.1%  4,204   1.7%  15,675   1.9%  13,153   2.0%
    Tennessee 5,562   1.8%  1,810   0.7%  9,233   1.1%  4,247   0.7%
    Other 62,425   19.8%  50,110   19.8%  153,204   18.2%  158,168   24.6%
    Total Gross Written Premiums$313,998   100.0% $253,128   100.0% $838,406   100.0% $642,751   100.0%


     Three Months Ended September 30,  Nine Months Ended September 30, 
     2023  2022  2023  2022 
     ($ in thousands)  ($ in thousands) 
         % of      % of      % of      % of 
     Amount  GWP  Amount  GWP  Amount  GWP  Amount  GWP 
    Subsidiary                               
    PSIC$186,693   59.5% $136,814   54.0% $497,216   59.3% $357,156   55.6%
    PESIC 127,305   40.5%  116,314   46.0%  341,190   40.7%  285,595   44.4%
    Total Gross Written Premiums$313,998   100.0% $253,128   100.0% $838,406   100.0% $642,751   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          Nine Months Ended         
     September 30,          September 30,         
     2023  2022  Change  % Change  2023  2022  Change  % Change 
     ($ in thousands)  ($ in thousands) 
    Gross earned premiums$271,786  $186,938  $84,848   45.4% $739,219  $484,005  $255,214   52.7%
    Ceded earned premiums (185,969)  (108,996)  (76,973)  70.6%  (487,055)  (249,766)  (237,289)  95.0%
    Net earned premiums$85,817  $77,942  $7,875   10.1% $252,164  $234,239  $17,925   7.7%
                                    
    Net earned premium ratio 31.6%  41.7%          34.1%  48.4%        


    Loss detail

     Three Months Ended          Nine Months Ended         
     September 30,          September 30,         
     2023  2022  Change  % Change  2023  2022  Change  % Change 
     ($ in thousands)  ($ in thousands) 
    Catastrophe losses$(533) $12,500  $(13,033)  (104.3)% $3,432  $13,529  $(10,097)  (74.6)%
    Non-catastrophe losses 16,672   18,400   (1,728)  (9.4)%  51,264   46,722   4,542   9.7%
    Total losses and loss adjustment expenses$16,139  $30,900  $(14,761)  (47.8)% $54,696  $60,251  $(5,555)  (9.2)%


    The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses:

     Three Months Ended September 30,  Nine Months Ended September 30, 
     2023  2022  2023  2022 
     (in thousands)  (in thousands) 
    Reserve for losses and LAE net of reinsurance recoverables at beginning of period$81,300  $55,769  $77,520  $45,419 
    Add: Incurred losses and LAE, net of reinsurance, related to:               
    Current year 15,116   30,904   50,954   58,703 
    Prior years 1,023   (4)  3,742   1,548 
    Total incurred 16,139   30,900   54,696   60,251 
    Deduct: Loss and LAE payments, net of reinsurance, related to:               
    Current year 6,646   7,873   14,215   13,762 
    Prior years (1,385)  4,548   25,823   17,660 
    Total payments 5,261   12,421   40,038   31,422 
    Reserve for losses and LAE net of reinsurance recoverables at end of period 92,178   74,248   92,178   74,248 
    Add: Reinsurance recoverables on unpaid losses and LAE at end of period 232,170   131,575   232,170   131,575 
    Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period$324,348  $205,823  $324,348  $205,823 


    Reconciliation of Non-GAAP Financial Measures

    For the three and nine months ended September 30, 2023 and 2022, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows:

    Underwriting revenue

     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
     2023  2022  2023  2022 
     (in thousands)  (in thousands) 
    Total revenue$90,935  $80,692  $270,532  $238,461 
    Net investment income (6,029)  (3,744)  (16,690)  (9,462)
    Net realized and unrealized losses on investments 1,376   2,356   103   8,369 
    Underwriting revenue$86,282  $79,304  $253,945  $237,368 


    Underwriting income and adjusted underwriting income

     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
     2023  2022  2023  2022 
     (in thousands)  (in thousands) 
    Income before income taxes$24,535  $5,198  $70,182  $42,574 
    Net investment income (6,029)  (3,744)  (16,690)  (9,462)
    Net realized and unrealized losses on investments 1,376   2,356   103   8,369 
    Interest expense 867   270   2,952   475 
    Underwriting income$20,749  $4,080  $56,547  $41,956 
    Expenses associated with transactions 229   45   229   130 
    Stock-based compensation expense 3,589   3,092   10,737   8,556 
    Amortization of intangibles 390   313   1,092   942 
    Expenses associated with catastrophe bond —   —   1,640   1,992 
    Adjusted underwriting income$24,957  $7,530  $70,245  $53,576 


    Adjusted net income

     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
     2023  2022  2023  2022 
     (in thousands)  (in thousands) 
    Net income$18,432  $4,286  $53,305  $33,411 
    Adjustments:               
    Net realized and unrealized losses on investments 1,376   2,356   103   8,369 
    Expenses associated with transactions 229   45   229   130 
    Stock-based compensation expense 3,589   3,092   10,737   8,556 
    Amortization of intangibles 390   313   1,092   942 
    Expenses associated with catastrophe bond —   —   1,640   1,992 
    Tax impact (725)  (871)  (1,582)  (3,153)
    Adjusted net income$23,291  $9,221  $65,524  $50,247 


    Annualized adjusted return on equity

     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
     2023  2022  2023  2022 
     (in thousands)  (in thousands) 
                    
    Annualized adjusted net income$93,164  $36,884  $87,365  $66,996 
    Average stockholders' equity$417,521  $372,955  $403,044  $381,007 
    Annualized adjusted return on equity 22.3%  9.9%  21.7%  17.6%


    Adjusted combined ratio

     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
     2023  2022  2023  2022 
     (in thousands)  (in thousands) 
    Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income$65,068  $73,862  $195,617  $192,283 
    Denominator: Net earned premiums$85,817  $77,942  $252,164  $234,239 
    Combined ratio 75.8%  94.8%  77.6%  82.1%
    Adjustments to numerator:               
    Expenses associated with transactions$(229) $(45) $(229) $(130)
    Stock-based compensation expense (3,589)  (3,092)  (10,737)  (8,556)
    Amortization of intangibles (390)  (313)  (1,092)  (942)
    Expenses associated with catastrophe bond —   —   (1,640)  (1,992)
    Adjusted combined ratio 70.9%  90.3%  72.1%  77.1%


    Diluted adjusted earnings per share

     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
     2023  2022  2023  2022 
     (in thousands, except per share data)  (in thousands, except per share data) 
                    
    Adjusted net income$23,291  $9,221  $65,524  $50,247 
    Weighted-average common shares outstanding, diluted 25,244,828   25,787,625   25,340,602   25,808,387 
    Diluted adjusted earnings per share$0.92  $0.36  $2.59  $1.95 


    Catastrophe loss ratio

     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
      2023   2022   2023   2022 
     (in thousands)  (in thousands) 
    Numerator: Losses and loss adjustment expenses$16,139  $30,900  $54,696  $60,251 
    Denominator: Net earned premiums$85,817  $77,942  $252,164  $234,239 
    Loss ratio 18.8%  39.6%  21.7%  25.7%
                    
    Numerator: Catastrophe losses$(533) $12,500  $3,432  $13,529 
    Denominator: Net earned premiums$85,817  $77,942  $252,164  $234,239 
    Catastrophe loss ratio (0.6)%  16.0%  1.4%  5.8%


    Adjusted combined ratio excluding catastrophe losses

     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
     2023  2022  2023  2022 
     (in thousands)  (in thousands) 
    Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income$65,068  $73,862  $195,617  $192,283 
    Denominator: Net earned premiums$85,817  $77,942  $252,164  $234,239 
    Combined ratio 75.8%  94.8%  77.6%  82.1%
    Adjustments to numerator:               
    Expenses associated with transactions$(229) $(45) $(229) $(130)
    Stock-based compensation expense (3,589)  (3,092)  (10,737)  (8,556)
    Amortization of intangibles (390)  (313)  (1,092)  (942)
    Expenses associated with catastrophe bond —   —   (1,640)  (1,992)
    Catastrophe losses 533   (12,500)  (3,432)  (13,529)
    Adjusted combined ratio excluding catastrophe losses 71.5%  74.3%  70.8%  71.4%


    Tangible Stockholders’ equity

     September 30,  December 31, 
     2023  2022 
     (in thousands) 
    Stockholders' equity$421,334  $384,754 
    Goodwill and intangible assets (12,705)  (8,261)
    Tangible stockholders' equity$408,629  $376,493 

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