8-K
Palomar Holdings, Inc. (PLMR)
8-K
2022-12-16
For: 2022-12-16
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April 04, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 16, 2022
Palomar Holdings, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 001-38873
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|---|---|---|
| Delaware | | 83-3972551 |
| (State or other jurisdiction<br><br>of incorporation) | | (I.R.S. Employer<br><br>Identification No.) |
7979 Ivanhoe Avenue , Suite 500
La Jolla , California **** 92037
(Address of principal executive offices, including zip code)
( 619 ) 567-5290
(Registrant’s telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| |
|---|
| ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.0001 per share | PLMR | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Selection 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure
On December 16, 2022, Palomar Holdings, Inc. (the “Company”) updated its corporate presentation that it uses for presentations at conferences and to analysts, current stockholders, and others. A copy of the Company’s presentation that it intends to use at such events is attached as Exhibit 99.1 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d)Exhibits
| 9 | |
|---|---|
| Exhibit No. | Description |
| 99.1 | Corporate Presentation |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | PALOMAR HOLDINGS, INC. |
| | | |
| Date: | December 16, 2022 | /s/ T. Christopher Uchida |
| | | T. Christopher Uchida |
| | | Chief Financial Officer |
| | | (Principal Financial and Accounting Officer) |
Exhibit 99.1
| Investor Presentation<br>December 2022 | |||||||||||||||||||||||||||
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| Disclaimer<br>This<br>presentation<br>contains<br>forward<br>-<br>looking<br>statements<br>about<br>Palomar<br>Holdings,<br>Inc<br>..<br>(the<br>“Company”)<br>..<br>These<br>statements<br>involve<br>known<br>and<br>unknown<br>risks<br>that<br>relate<br>to<br>the<br>Company’s<br>future<br>events<br>or<br>future<br>financial<br>performance<br>and<br>the<br>actual<br>results<br>could<br>differ<br>materially<br>from<br>those<br>discussed<br>in<br>this<br>presentation<br>..<br>This<br>presentation<br>also<br>includes<br>financial<br>measures<br>which<br>are<br>not<br>prepared<br>in<br>accordance<br>with<br>generally<br>accepted<br>accounting<br>principles<br>(“GAAP”)<br>..<br>For<br>a<br>description<br>of<br>these<br>non<br>-<br>GAAP<br>financial<br>measures<br>and<br>reconciliations<br>of<br>these<br>non<br>-<br>GAAP<br>financial<br>measures<br>to<br>the<br>most<br>directly<br>comparable<br>financial<br>measures<br>prepared<br>in<br>accordance<br>with<br>GAAP,<br>please<br>see<br>the<br>appendix<br>to<br>this<br>present<br>..<br>Forward<br>-<br>looking<br>statements<br>generally<br>relate<br>to<br>future<br>events<br>or<br>the<br>Company’s<br>future<br>financial<br>or<br>operating<br>performance<br>..<br>In<br>some<br>cases,<br>you<br>can<br>identify<br>forward<br>-<br>looking<br>statements<br>because<br>they<br>contain<br>words<br>such<br>as<br>‘‘may’’,<br>‘‘will’’,<br>‘‘should’’,<br>‘‘expects’’,<br>‘‘plans’’,<br>‘‘anticipates’’,<br>‘‘could’’,<br>‘‘intends’’,<br>‘‘target’’,<br>‘‘projects’’,<br>‘‘contemplates’’,<br>‘‘believes’’,<br>‘‘estimates’’,<br>‘‘predicts’’,<br>‘‘would’’,<br>‘‘potential’’<br>or<br>‘‘continue’’<br>or<br>the<br>negative<br>of<br>these<br>words<br>or<br>other<br>similar<br>terms<br>or<br>expressions<br>that<br>concern<br>the<br>Company’s<br>expectations,<br>strategy,<br>plans<br>or<br>intentions<br>..<br>These<br>forward<br>-<br>looking<br>statements<br>include,<br>among<br>others,<br>statements<br>relating<br>to<br>our<br>future<br>financial<br>performance,<br>our<br>business<br>prospects<br>and<br>strategy,<br>anticipated<br>financial<br>position,<br>liquidity<br>and<br>capital<br>needs<br>and<br>other<br>similar<br>matters<br>..<br>These<br>forward<br>-<br>looking<br>statements<br>are<br>based<br>on<br>management’s<br>current<br>expectations<br>and<br>assumptions<br>about<br>future<br>events,<br>which<br>are<br>inherently<br>subject<br>to<br>uncertainties,<br>risks<br>and<br>changes<br>in<br>circumstances<br>that<br>are<br>difficult<br>to<br>predict<br>..<br>Such<br>risks<br>and<br>uncertainties<br>include,<br>among<br>others,<br>future<br>results<br>of<br>operations<br>;<br>financial<br>position<br>;<br>the<br>impact<br>of<br>the<br>ongoing<br>and<br>global<br>COVID<br>-<br>19<br>pandemic<br>;<br>general<br>economic,<br>political<br>and<br>other<br>risks,<br>including<br>currency<br>and<br>stock<br>market<br>fluctuations<br>and<br>uncertain<br>economic<br>environment<br>;<br>the<br>volatility<br>of<br>the<br>trading<br>price<br>of<br>our<br>common<br>stock<br>;<br>and<br>our<br>expectations<br>about<br>market<br>trends<br>..<br>The<br>Company<br>may<br>not<br>actually<br>achieve<br>the<br>plans,<br>intentions<br>or<br>expectations<br>disclosed<br>in<br>its<br>forward<br>-<br>looking<br>statements,<br>and<br>you<br>should<br>not<br>place<br>undue<br>reliance<br>on<br>the<br>Company’s<br>forward<br>-<br>looking<br>statements<br>..<br>Actual<br>results<br>or<br>events<br>could<br>differ<br>materially<br>from<br>the<br>plans,<br>intentions<br>and<br>expectations<br>disclosed<br>in<br>the<br>forward<br>-<br>looking<br>statements<br>the<br>Company<br>makes<br>..<br>While<br>the<br>Company<br>may<br>elect<br>to<br>update<br>these<br>forward<br>-<br>looking<br>statements<br>at<br>some<br>point<br>in<br>the<br>future,<br>the<br>Company<br>has<br>no<br>current<br>intention<br>of<br>doing<br>so<br>except<br>to<br>the<br>extent<br>required<br>by<br>applicable<br>law<br>..<br>You<br>should,<br>therefore,<br>not<br>rely<br>on<br>these<br>forward<br>-<br>looking<br>statements<br>as<br>representing<br>the<br>Company’s<br>views<br>as<br>of<br>any<br>date<br>subsequent<br>to<br>the<br>date<br>of<br>this<br>presentation<br>..<br>Additional<br>risks<br>and<br>uncertainties<br>relating<br>to<br>the<br>Company<br>and<br>its<br>business<br>can<br>be<br>found<br>in<br>the<br>"Risk<br>Factors"<br>section<br>of<br>Palomar<br>Holdings,<br>Inc<br>..<br>’s<br>most<br>recent<br>Annual<br>Report<br>on<br>Form<br>10<br>-<br>K,<br>Quarterly<br>Report<br>on<br>Form<br>10<br>-<br>Q,<br>and<br>other<br>filings<br>with<br>the<br>United<br>States<br>Securities<br>and<br>Exchange<br>Commission<br>..<br>2 | |||||||||||||||||||||||||||
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| Company Profile<br>PLMR Q4 2022 Business Update<br><br>Strong fourth quarter gross written premium growth via Earthquake and Fronting<br><br>Attritional loss results for the fourth quarter will be closer to the high end of the previously guided annual loss ratio<br>range resulting in a full year 2022 loss ratio closer to 21%<br>Reinsurance Update<br><br>Palomar is closely monitoring the property catastrophe reinsurance market and feels well positioned to navigate<br>choppiness<br><br>Palomar’s third quarter ceded earned premium for its catastrophe reinsurance program was 24% of gross earned<br>premiums for the quarter<br><br>Palomar 2X model assumed risk adjusted rate increases on catastrophe XOL reinsurance<br><br>$675 million of the catastrophe XOL reinsurance tower is multi<br>-<br>year limit via Torrey Pines Re. catastrophe bonds and<br>does not renew in 2023<br><br>Reducing continental wind PML from $250 million to $100 million<br>–<br>most expensive coverage in the North American<br>reinsurance market<br>o<br>Single peril nature of the remainder of the tower is the preferred structure of the reinsurance market<br><br>Executed Hawaii Hurricane quota share<br><br>Palomar will continue to optimize its primary book to recoup escalating loss costs including rate, inflation, terms and<br>conditions and utilization of E&S company<br><br>Palomar has identified several areas to participate in the reinsurance market within uncorrelated exposures at<br>compelling economics<br>o<br>In discussions with key trading partners regarding incremental support and participation in outbound<br>reinsurance<br><br>Palomar is confident in the placement of its catastrophe XOL program and execution of its risk transfer strategy<br>broadly<br>3<br>TRACK RECORD OF DELIVERING STRONG GROWTH AND CONTINUED PROFITABILITY<br>Specialty insurer using data analytics and underwriting<br>acumen to capitalize on market dislocations and provide<br>disruptive products that resonate with producers, other<br>insurers and reinsurers<br>Leading earthquake insurer in the United States<br>Admitted and E&S offerings with nationwide scope<br>A.M. Best “A<br>-<br>(Excellent)” FSC group rating<br>Risk transfer strategy limits exposure to<br>major events and reduces earnings volatility<br>Multi<br>-<br>channel distribution serving residential and<br>commercial clients<br>Committed to environmental, social, governance, diversity<br>and inclusion initiatives | |||||||||||||||||||||||||||
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| Q3 Update: 2022 Strategic Initiatives<br>SCALE THE<br>ORGANIZATION<br>4<br>SUSTAIN STRONG<br>GROWTH<br>MONETIZE RECENT<br>INVESTMENTS<br>•<br>Generated exceptional GWP growth<br>of 66% year<br>-<br>over<br>-<br>year<br>•<br>30%<br>same<br>-<br>store growth<br>excluding Fronting<br>•<br>Residential Earthquake and<br>Commercial Earthquake each grew<br>by<br>19%<br>•<br>Record new business sales for<br>Residential Earthquake in Q3<br>•<br>Commercial Earthquake achieved intra<br>-<br>quarter rate increases above 10%;<br>•<br>Additional product growth: Inland<br>Marine 58%, Casualty 350%,<br>Commercial All Risk 34% and<br>Residential Flood 20%<br>•<br>PESIC increased 181%; 46% of total<br>GWP<br>•<br>PLMR<br>-<br>FRONT recorded $82 million<br>of GWP; 33% of total GWP<br>•<br>Increased the YE 2022 targeted<br>Fronting GWP range: $180 to $200<br>million<br>(inclusive of Texas Specialty<br>Homeowners business)<br>•<br>Recent approval of CA General Liability<br>filings should further catalyze Casualty<br>growth<br>•<br>Strong momentum within Excess<br>Property line of business<br>–<br>portfolio<br>focused on non<br>-<br>catastrophe exposed<br>regions<br>ENHANCE EARNINGS<br>PREDICTABILITY<br>•<br>Fee income continued to stabilize<br>and generate predictable earnings<br>•<br>Achieved an adjusted return on equity<br>of 10% excluding realized and<br>unrealized gains and losses (inclusive<br>of $12.5 million full retention loss)<br>•<br>Binary products (Residential<br>Earthquake, Commercial Earthquake<br>and Hawaii Hurricane) excluding<br>Fronting represented 40% of total<br>GWP; strong premium retention of 88%<br>for binary products enhances visibility<br>into future results<br>•<br>Aggregate reinsurance protects against<br>event frequency and<br>establishes an<br>adjusted ROE floor of approximately<br>14%<br>•<br>Continued reduction of continental US<br>wind exposure<br>•<br>Using technology and process<br>optimization to reduce<br>organizational costs enabling future<br>scale and margin expansion<br>•<br>Hired talent and expertise within<br>underwriting department to support<br>newer lines of business<br>•<br>Continued investment within analytics,<br>actuarial, technology and operations<br>departments to support growth<br>•<br>New hires leverage existing technology<br>and infrastructure platforms to scale<br>new initiatives efficiently | |||||||||||||||||||||||||||
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| PLMR 2X<br>FUNDAMENTAL PRINCIPLES<br>KEY COMPONENTS<br>•<br>Organic growth<br>•<br>A<br>nchored by non<br>-<br>attritional loss<br>business (<br>Earthquake<br>and<br>Hawaii<br>Hurricane<br>)<br>•<br>Entry into new markets driven by<br>replicable, analytics<br>-<br>driven process<br>•<br>Continued reduction in non<br>-<br>earthquake<br>catastrophic exposure<br>•<br>Conservative and comprehensive risk<br>transfer strategy<br>•<br>Fee income as a complementary and<br>diversifying income stream<br>•<br>Investments in people, processes<br>and<br>systems to effectively scale the business<br>•<br>Commitment to ESG<br>•<br>Earthquake<br>•<br>Fronting<br>•<br>Inland Marine: Builders Risk<br>•<br>General Casualty<br>•<br>Excess Property<br>•<br>Professional Liability<br>•<br>Flood<br>FINANCIAL OBJECTIVES<br>•<br>Continually doubling<br>Underwriting<br>Income over<br>an intermediate timeframe<br>through organic growth<br>•<br>Adjusted ROE greater than 20%<br>•<br>Maintain<br>industry leading<br>profit margins<br>5<br>PHILOSOPHY<br>: AN ORGANIC BUSINESS STRATEGY DESIGNED TO DOUBLE ADJUSTED UNDERWRITING INCOME<br>IN A PREDICTABLE MANNER OVER AN INTERMEDIATE TIMEFRAME<br>Q3 DEMONSTRATED FURTHER EXECUTION OF THE PALOMAR 2X STRATEGIC PLAN | |||||||||||||||||||||||||||
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| LEARNING<br>IDENTIFY<br>MARKETS<br>LEVERAGE<br>TALENT<br>SYSTEMS &<br>ANALYTICS<br>RISK TRANSFER<br>DISTRIBUTION<br>DIVERSIFY<br>GROWTH<br>The Palomar Approach<br>6<br>PREDICTABLE<br>EARNINGS<br>CASUALTY<br>EXCESS PROPERTY<br>FRONTING<br>TX SPECIALTY<br>HOMEOWNERS<br>RESIDENTIAL FLOOD<br>E&S COMMERCIAL ALL<br>RISK<br>RESIDENTIAL<br>EARTHQUAKE<br>ADMITTED COMMERCIAL<br>ALL RISK<br>HAWAII HURRICANE<br>COMMERCIAL<br>EARTHQUAKE<br>INLAND MARINE<br>NON<br>-<br>TX SPECIALTY<br>HOMEOWNERS<br>ESTABLISHED<br>EMERGING<br>RUN<br>-<br>OFF / EXITED<br>TRANSITIONED<br>A REPLICABLE AND MATURE OPERATIONAL PROCESS THAT CONSISTENTLY ASSESSES OUR PRODUCT SUITE TO<br>ENSURE OUR OVERARCHING FINANCIAL OBJECTIVE: PREDICTABLE EARNINGS | |||||||||||||||||||||||||||
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| 7<br>MARKETS<br>•<br>Markets with attractive long term returns but fragmented competition<br>•<br>Straightforward risks, legal environments and claims processes<br>•<br>Willingness to enter dislocated markets<br>•<br>Scalable underwriting approach combining data analysis with human expertise<br>•<br>Lines of business that can leverage automation and improved risk selection at scale<br>•<br>Straightforward risks that can be quoted efficiently and perform homogenously<br>•<br>Open architecture model that leverages multiple distribution channels<br>•<br>Opportunities to solve a clear market need for producers<br>•<br>Internal Inside Sales team extends agency reach and offers personalized service<br>•<br>Comprehensive risk transfer program utilizing excess of loss, quota share and property per risk coverages<br>•<br>Accumulate risks with attractive returns that are hard for reinsurers to access or aggregate<br>•<br>Flexibility to modify risk appetite and strategy to suit market conditions and maturity of programs<br>•<br>Products that are A.M. Best rated and clearly differentiated from alternatives<br>•<br>Flexible coverages compared to alternatives with rigid forms or limited options<br>•<br>Personal and commercial products available on an admitted and E&S basis<br>PRODUCTS<br>DISTRIBUTION<br>UNDERWRITING<br>RISK TRANSFER<br>Combining data analytics, underwriting acumen and technology to create flexible products that deliver<br>value for policy holders, producers, reinsurers and insurance company partners<br>Our Strategy | |||||||||||||||||||||||||||
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| Comprehensive Risk<br>Transfer Program<br>8<br>$900M HAWAII HURRICANE<br>*INURES TO BENEFIT OF CORE XOL TOWER<br>$25M LIMIT<br>$30M<br>RETENTION<br>EARTHQUAKE ONLY<br>$12.5M RETENTION<br>ALL PERILS<br>$250M<br>RETENTION<br>EARTHQUAKE<br>-<br>ONLY LAYERS*<br>($875Mx250M, No<br>Reinstatement)<br>CAT AGG<br>CORE CAT XOL TOWER<br>80%<br>RETENTION<br>20% CESSION<br>CA COMMERCIAL<br>EARTHQUAKE<br>QUOTA SHARE*<br>$1.07B EARTHQUAKE<br>$250M ALL PERILS<br>EARTHQUAKE + HAWAII<br>HURRICANE<br>$17.5x12.5M SPLIT EQ<br>-<br>ONLY & AOP<br>TRADITIONAL<br>CAT BOND<br>CAT BOND<br>CAT BOND<br>TRADITIONAL<br>CAT BOND<br>•<br>XOL reinsurance coverage up to $2.08 billion for earthquake<br>events and $900 million for hurricane events<br>•<br>Panel includes over 100 highly rated reinsurers and cat<br>bond investors<br>•<br>Event retention of $12.5 million represents 3% of<br>stockholders’ equity as of 9/30/22<br>•<br>$25 million excess $30 million of catastrophe aggregate limit<br>effective 4/1/2022<br>•<br>Established<br>an<br>adjusted ROE floor of approximately 14%<br>for full year 2022 based on the mid<br>-<br>point of the updated<br>adjusted net income range of $82<br>-<br>$<br>8<br>5 million<br>(1)<br>•<br>Covered<br>perils<br>include<br>but<br>are not<br>limited to earthquake,<br>hurricane, convective storms and floods above a<br>qualifying level of $2 million in ultimate gross loss<br>•<br>Quota share reinsurance used to further mitigate the impact of<br>losses<br>•<br>Cede majority of exposure for attritional lines of business<br>and earn attractive ceding commission<br>•<br>Utilize quota share and per risk<br>coverage<br>to manage net<br>exposure to any single risk<br>1.<br>Full year 2022 adjusted net income guidance range. The range includes additional reinsurance expense resulting from<br>Hurricane Ian and excludes catastrophes and realized and unrealized gains and losses. | |||||||||||||||||||||||||||
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| •<br>In<br>-<br>depth portfolio analytics conducted<br>on a monthly basis utilizing multiple catastrophe models, deterministic loss scenarios an<br>d exposure profiles to<br>assess risk to catastrophe losses and evaluate reinsurance coverage needs<br>•<br>The current program, effective June 1, 2022, provides ground up coverage to $2.08 billion for earthquake events and $900 mill<br>ion<br>for Hawaii<br>hurricane<br>events, substantially in excess of the modeled loss anticipated with the recurrence of the most severe historically significa<br>nt<br>catastrophes<br>Reinsurance Program Designed to Minimize Earnings Volatility<br>1.<br>Based on exposure as of 6/30/2022<br>9<br>REINSURANCE COVERAGE WELL IN EXCESS OF MODELED HISTORICAL EVENTS ($M)<br>$2,080<br>$1,582<br>$1,126<br>$573<br>$518<br>$496<br>$319<br>$313<br>$291<br>$424<br>$900<br>Total PLMR<br>EQ Limit<br>CA 1906 San<br>Francisco M<br>7.8<br>CA 1994<br>Northridge M<br>6.7<br>CA 1971 San<br>Fernado M 6.7<br>NM 1811-12<br>Sequence M<br>7.8<br>CA 1868<br>Hayward M 7.0<br>NW 1949<br>Puget Sound<br>M 6.5<br>CA 1857 Fort<br>Tejon M 7.9<br>CA 1933 Long<br>Beach M 6.4<br>HI 1992 HU<br>Iniki<br>Total PLMR HI<br>HU Limit<br>HISTORICAL EVENTS<br>(1) | |||||||||||||||||||||||||||
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| Entrepreneurial and Experienced Management Team<br>10<br>NAME<br>EXPERIENCE<br>(YRS)<br>PRIOR PROFESSIONAL EXPERIENCE<br>Mac Armstrong<br> | <br>Chairman & Chief Executive Officer<br>25+<br>Arrowhead General Insurance Agency<br> | <br>Spectrum Equity<br> | <br>Alex. Brown & Sons<br>Jon Christianson<br> | <br>President<br>20+<br>Holborn Corporation<br> | <br>John B. Collins Associates<br> | <br>Guy Carpenter<br>Chris Uchida<br> | <br>Chief Financial Officer<br>25+<br>Arrowhead General Insurance Agency<br> | <br>PwC<br>Jon Knutzen<br> | <br>Chief Risk Officer<br>25+<br>TigerRisk Partners<br> | <br>Holborn Corporation<br> | <br>Guy Carpenter<br>Michelle Johnson<br> | <br>Chief Talent & Diversity Officer<br>20+<br>Option One Mortgage<br> | <br>AMN Healthcare<br> | <br>Panasonic Avionics Corporation<br>Angela Grant<br> | <br>Chief Legal Officer<br>30+<br>CSE Insurance Group<br> | <br>Hippo<br> | <br>Esurance<br> | <br>Kemper<br> | <br>GEICO<br>Robert<br>Beyerle<br> | <br>Chief Underwriting Officer<br>20+<br>Great American Insurance Company | Acordia Southeast<br>Mark Brose<br> | <br>Chief Technology Officer<br>25+<br>Agosto Inc. | <br>Gravie<br> | Best Buy<br>Greg Tupper<br> | <br>Chief Information Security Officer<br>25+<br>UnitedHealth Group | <br>Mocon<br> | <br>WellBeats<br>LEADING SPECIALTY INSURANCE TALENT CONTINUES TO EXECUTE AND ADD DEPTH TO THE ORGANIZATION |
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| Commitment To ESG<br>11<br>•<br>Commitment to Environmental, Social<br>and Governance (“ESG”) matters are<br>fundamental to the business strategy<br>and mission<br>•<br>Values<br>-<br>driven workplace<br>that<br>integrates<br>ESG considerations into<br>strategy, operations, capital allocation<br>and investment<br>decisions<br>•<br>Continue to take steps to reduce overall<br>carbon footprint<br>OVERVIEW<br>TRANSPARENCY<br>ESG PRIORITIES<br>Access the ESG Portal and 2022 Sustainability & Citizenship Report Here:<br>https://plmr.com/esg/<br>Reporting Aligned with Following<br>Frameworks<br>Climate<br>Strategy<br>Safety &<br>Health<br>Disaster Preparedness &<br>Response<br>Human<br>Rights<br>Diversity &<br>Inclusion<br>Community & Team<br>Member Well<br>-<br>being<br>Investment<br>Management<br>Governance<br>Practices<br>Data Privacy &<br>Cybersecurity<br>ENVIRONMENTAL<br>1<br>SOCIAL<br>2<br>GOVERNANCE<br>3<br>Human Capital<br>Management<br>As Asset Owners, Public Commitments /<br>Signatories to Responsible Investment<br>Initiatives | |||||||||||||||||||||||||||
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| 23%<br>24%<br>3%<br>14%<br>12%<br>15%<br>2018<br>2019<br>2020<br>2021<br> YTD'21<br>YTD'22<br>+3%<br>Proven Business Model<br>12<br>GROWTH<br>PROFITABILITY<br>SHAREHOLDER RETURNS<br>$20<br>$38<br>$9<br>$53<br>$34<br>$44<br>2018<br>2019<br>2020<br>2021<br>YTD'21<br>YTD'22<br>Gross Written Premium ($M)<br>Adjusted Return on Equity<br>Adjusted Net Income<br>$155<br>$252<br>$354<br>$535<br>$385<br>$643<br>2018<br>2019<br>2020<br>2021<br>YTD'21<br>YTD'22<br>+67%<br>1.<br>This slide contains non<br>-<br>GAAP metrics. See GAAP reconciliation in the Appendix.<br>+29% | |||||||||||||||||||||||||||
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| 2022 Guidance<br>13<br>FULL YEAR 2022 CURRENT OUTLOOK<br>Adjusted net income<br>$82 to $85 million<br>•<br>Updated full year 2022 adjusted net income guidance of<br>$82 to $85 million<br>•<br>Includes additional reinsurance expense resulting from Hurricane Ian<br>•<br>Excludes catastrophe losses and realized and unrealized gains and losses<br>•<br>Adjusted net income growth of 48% at the midpoint of the guidance range<br>•<br>Full year adjusted return on equity floor of approximately 14% with renewed aggregate program effective 4/1/2022<br>1.<br>This slide contains non<br>-<br>GAAP metrics. See GAAP reconciliation in the Appendix. | |||||||||||||||||||||||||||
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| Appendix<br>14 | |||||||||||||||||||||||||||
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| 15<br>Third Quarter & YTD 2022 Financial Highlights<br>In Thousands<br>Three Months Ended<br>September 30<br>Nine Months Ended<br>September 30<br>2022<br>2021<br>2022<br>2021<br>Gross<br>written premiums<br>$<br>253,128<br>$<br>152,332<br>$<br>642,751<br>$<br>385,267<br>Ceded written premium<br>(161,930)<br>(58,073)<br>(374,109)<br>(153,005)<br>Net written premiums<br>91,198<br>94,259<br>268,642<br>232,262<br>Net earned premiums<br>77,942<br>64,720<br>234,239<br>165,988<br>Commission and other income<br>1,362<br>1,018<br>3,129<br>2,735<br>Total underwriting revenues<br>(1)<br>79,304<br>65,738<br>237,368<br>168,723<br>Losses and loss adjustment expenses<br>30,900<br>28,475<br>60,251<br>31,288<br>Acquisition expenses<br>27,210<br>26,412<br>83,928<br>68,150<br>Other underwriting expenses<br>17,114<br>12,652<br>51,233<br>39,438<br>Underwriting income<br>(1)<br>4,080<br>(1,801)<br>41,956<br>29,847<br>Interest Expense<br>(270)<br>--<br>(475)<br>--<br>Net investment income<br>3,744<br>2,236<br>9,462<br>6,649<br>Net realized and unrealized gains on investments<br>(2,356)<br>(313)<br>(8,369)<br>(752)<br>Income before income taxes<br>5,198<br>122<br>42,574<br>35,744<br>Income tax expense<br>912<br>(124)<br>9,163<br>6,529<br>Net income<br>$ 4,286<br>$<br>246<br>$<br>33,411<br>$<br>29,215<br>Expenses Associated with transactions<br>45<br>--<br>130<br>411<br>Stock<br>-<br>based compensation expense<br>3,092<br>1,525<br>8,556<br>3,370<br>Amortization of intangibles<br>313<br>115<br>942<br>704<br>Expenses associated with catastrophe bond<br>--<br>--<br>1,992<br>1,698<br>Tax Impact<br>(376)<br>(166)<br>(1,395)<br>(1,156)<br>Adjusted net income<br>(1)<br>$<br>7,360<br>$<br>1,720<br>$<br>43,636<br>$ 34,242<br>Key Financial and Operating Metrics<br>Annualized Return on equity<br>4.6%<br>0.3%<br>11.7%<br>10.5%<br>Annualized Adjusted return on equity<br>(1)<br>7.9%<br>1.8%<br>15.3%<br>12.3%<br>Loss ratio<br>39.6%<br>44.0%<br>25.7%<br>18.8%<br>Expense ratio<br>55.1%<br>58.8%<br>56.4%<br>63.2%<br>Combined ratio<br>94.8%<br>102.8%<br>82.1%<br>82.0%<br>Adjusted combined ratio<br>(1)<br>90.3%<br>100.2%<br>77.1%<br>78.3%<br>Diluted earnings per share<br>$<br>0.17<br>$<br>0.01<br>$<br>1.29<br>$<br>1.12<br>Diluted adjusted earnings per share<br>(1)<br>$<br>0.29<br>$<br>0.07<br>$<br>1.69<br>$<br>1.31<br>Catastrophe losses<br>$<br>12,500<br>$<br>17,487<br>$ 13,529<br>$ 6,719<br>Catastrophe loss ratio<br>(1)<br>16.0%<br>27.0%<br>5.8%<br>4.0%<br>Adjusted combined ratio excluding catastrophe losses<br>(1)<br>74.3%<br>73.2%<br>71.4%<br>74.2%<br>Adjusted underwriting income<br>$<br>7,530<br>$<br>(161)<br>$<br>53,576<br>$<br>36,030<br>(1) Indicates non<br>-<br>GAAP financial measure; see<br>“Reconciliation of Non<br>-<br>GAAP Financial<br>Measures” for a reconciliation of the non<br>-<br>GAAP<br>financial measures to their most directly<br>comparable financial measures prepared in<br>accordance with GAAP. | |||||||||||||||||||||||||||
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| Reconciliation Of Non<br>-<br>GAAP Metrics Used In This Presentation<br>16<br>In Thousands<br>Three Months Ended<br>September 30<br>Nine Months Ended<br>September 30<br>2022<br>2021<br>2022<br>2021<br>Gross earned premiums<br>$<br>186,938<br>$ 117,276<br>$<br>484,005<br>$ 311,088<br>Ceded earned premiums<br>(108,996)<br>(52,556)<br>(249,766)<br>(145,100)<br>Net earned premiums<br>$ 77,942<br>$ 64,720<br>$<br>234,239<br>$ 165,988<br>Net earned premium ratio<br>41.7%<br>55.2%<br>48.4%<br>53.4%<br>Total revenue<br>$<br>80,692<br>$ 67,661<br>$<br>238,461<br>$ 174,620<br>Net Investment income<br>(3,744)<br>(2,236)<br>(9,462)<br>(6,649)<br>Net realized and unrealized (gains) losses on investments<br>2,356<br>313<br>8,369<br>752<br>Underwriting revenue<br>$<br>79,304<br>$ 65,738<br>$<br>237,368<br>$ 168,723<br>Income before income taxes<br>$<br>5,198<br>$ 122<br>$<br>42,574<br>$ 35,744<br>Net investment income<br>(3,744)<br>(2,236)<br>(9,462)<br>(6,649)<br>Net realized and unrealized (gains) losses on investments<br>2,356<br>313<br>8,369<br>752<br>Interest expense<br>270<br>--<br>475<br>--<br>Underwriting income<br>$<br>4,080<br>$ (1,801)<br>$<br>41,956<br>$<br>29,847<br>Expenses associated with transactions<br>45<br>--<br>130<br>411<br>Stock<br>-<br>based compensation expense<br>3,092<br>1,525<br>8,556<br>3,370<br>Amortization of intangibles<br>313<br>115<br>942<br>704<br>Expenses associated with catastrophe bond, net of rebate<br>--<br>--<br>1,992<br>1,698<br>Adjusted underwriting income<br>$<br>7,530<br>$<br>(161)<br>$ 53,576<br>$<br>36,030<br>Net Income<br>$<br>4,286<br>$ 246<br>$<br>33,411<br>$ 29,215<br>Expenses associated with transactions<br>45<br>--<br>130<br>411<br>Stock<br>-<br>based compensation expense<br>3,092<br>1,525<br>8,556<br>3,370<br>Amortization of intangibles<br>313<br>115<br>942<br>704<br>Expenses associated with catastrophe bond, net of rebate<br>--<br>--<br>1,992<br>1,698<br>Tax impact<br>(376)<br>(166)<br>(1,395)<br>(1,156)<br>Adjust net income<br>$<br>7,360<br>$ 1,720<br>$<br>43,636<br>$ 34,242<br>Annualized adjusted net income<br>$<br>29,411<br>$ 6,880<br>$ 58,181<br>$ 45,656<br>Average stockholders’ equity<br>$<br>372,955<br>$ 377,260<br>$<br>381,007<br>$ 370,745<br>Annualized adjusted return on equity<br>7.9%<br>1.8%<br>15.3%<br>12.3% | |||||||||||||||||||||||||||
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| Reconciliation Of Non<br>-<br>GAAP Metrics Used In This Presentation<br>17<br>In Thousands<br>Three Months Ended<br>September 30<br>Nine Months Ended<br>September 30<br>2022<br>2021<br>2022<br>2021<br>Numerator: Sum of losses and loss adjustment expenses,<br>acquisition expenses, and other underwriting expenses, net of<br>commission and other income<br>$<br>73,862<br>$<br>66,521<br>$<br>192,283<br>$<br>136,141<br>Denominator: Net earned premiums<br>$<br>77,942<br>$<br>64,720<br>$<br>234,239<br>$<br>165,988<br>Combined Ratio<br>94.8%<br>102.8%<br>82.1%<br>82.0%<br>Adjustments to numerator:<br>Expenses associated with transactions and stock offerings<br>$<br>(45)<br>$<br>--<br>$<br>(130)<br>$<br>(411)<br>Stock<br>-<br>based compensation expense<br>(3,092)<br>(1,525)<br>(8,556)<br>(3,370)<br>Amortization of intangibles<br>(313)<br>(115)<br>(942)<br>(704)<br>Expenses associated with catastrophe bond, net of rebate<br>--<br>--<br>(1,992)<br>(1,698)<br>Adjusted combined ratio<br>90.3%<br>100.2%<br>77.1%<br>78.3%<br>Adjusted net income<br>$<br>7,360<br>$<br>1,720<br>$<br>43,636<br>$<br>34,242<br>Weighted<br>-<br>average common shares outstanding, diluted<br>25,787,625<br>26,043,680<br>25,808,387<br>26,133,664<br>Diluted adjusted earnings per share<br>$<br>0.29<br>$<br>0.07<br>$<br>1.69<br>$<br>1.31<br>Numerator: Losses and Loss adjustment expenses<br>$<br>30,900<br>$<br>28,475<br>$<br>60,251<br>$<br>31,288<br>Denominator: Net earned premiums<br>$ 77,942<br>$<br>64,720<br>$<br>234,239<br>$<br>165,988<br>Loss ratio<br>39.6%<br>44.0%<br>25.7%<br>18.8%<br>Numerator: Catastrophe losses<br>$<br>12,500<br>$<br>17,487<br>$<br>13,529<br>$<br>6,719<br>Denominator: Net earned premiums<br>$<br>77,942<br>$<br>64,720<br>$<br>234,239<br>$<br>165,988<br>Catastrophe loss ratio<br>16.0%<br>27.0%<br>5.8%<br>4.0% | |||||||||||||||||||||||||||
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| Reconciliation Of Non<br>-<br>GAAP Metrics Used In This Presentation<br>18<br>In Thousands<br>Three Months Ended<br>September 30<br>Nine Months Ended<br>September 30<br>2022<br>2021<br>2022<br>2021<br>Numerator: Sum of losses and loss adjustment expenses, acquisition expenses,<br>and other underwriting expenses, net of commission and other income<br>$<br>73,862<br>$<br>66,521<br>$<br>192,283<br>$ 136,141<br>Denominator: Net earned premiums<br>$<br>77,942<br>$ 64,720<br>$<br>234,239<br>$ 165,988<br>Combined ratio<br>94.8%<br>102.8%<br>82.1%<br>82.0%<br>Adjustments to numerator:<br>Expenses associated with transactions<br>$<br>(45)<br>$<br>--<br>$<br>(130)<br>$ (411)<br>Stock<br>-<br>based compensation expense<br>(3,092)<br>(1,525)<br>(8,556)<br>(3,370)<br>Amortization of intangibles<br>(313)<br>(115)<br>(942)<br>(704)<br>Expenses associated with catastrophe bond, net of rebate<br>--<br>--<br>(1,992)<br>(1,698)<br>Catastrophe Losses<br>(12,500)<br>(17,487)<br>(13,529)<br>(6,719)<br>Adjusted combined ratio excluding catastrophe losses<br>74.3%<br>73.2%<br>71.4%<br>74.2% | |||||||||||||||||||||||||||
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| 23.5%<br>12.9%<br>3.7%<br>32.5%<br>12.2%<br>5.1%<br>3.6%<br>1.5%<br>5.0%<br>Historical Growth and Current Business Mix<br>19<br>Q3 2022 GWP:<br>$253M<br>2014<br>2015<br>2016<br>2017<br>2018<br>2019<br>2020<br>2021<br>YTD'21<br>YTD'22<br>Annual Gross Written Premium By Year<br>$17M<br>$55M<br>$82M<br>$120M<br>$155M<br>$<br>252<br>M<br>$<br>354<br>M<br>$535M<br>$<br>643<br>M<br>$<br>385<br>M<br>Residential Earthquake<br>Commercial Earthquake<br>Hawaii Hurricane<br>Fronting<br>Inland Marine<br>Casualty<br>Commercial All Risk<br>Residential Flood<br>Other | |||||||||||||||||||||||||||
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| Innovative Technology Platform<br>20<br>•<br>Technology systems built for automation and efficiency<br>•<br>Integration between pricing models, policy administration and<br>analytics<br>•<br>Ability to rapidly quote and bind policies for producers<br>•<br>API development for partners with Palomar Automated Submission<br>System (PASS)<br>•<br>Real<br>-<br>time data and event reporting<br>•<br>Seamless communication with partner carriers and reinsurers<br>•<br>Scalable platform reduces operating costs and improves efficiency<br>API Capabilities<br>Customized API integration providing a streamlined transaction<br>process to satisfy partner needs<br>EMPHASIS ON THE USE OF TECHNOLOGY AND ANALYTICS ACROSS OUR BUSINESS | |||||||||||||||||||||||||||
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| Flexible Distribution Network<br>21<br>•<br>Predominant channel<br>for commercial property<br>and casualty insurance<br>•<br>Much higher average<br>premium than retail<br>business<br>•<br>Rapid scale via<br>utilization of existing<br>distribution<br>infrastructures<br>•<br>Products ultimately sold<br>by retailers and<br>wholesalers<br>•<br>Companion offers<br>•<br>Direct appointments<br>with captive agents<br>•<br>Reinsurance for<br>existing and new risks<br>RETAIL<br>AGENTS<br>WHOLESALE<br>BROKERS<br>PROGRAM<br>ADMINISTRATORS<br>CARRIER<br>PARTNERSHIPS<br>•<br>Primarily distribute<br>personal lines products<br>•<br>High retention rates and<br>rate stability<br>•<br>Cross<br>-<br>selling potential<br>•<br>Direct access to PASS,<br>our agency portal<br>MULTIPLE SOURCES OF GROWTH AND THE FLEXIBILITY TO RAPIDLY CAPITALIZE ON CHANGING MARKET CONDITIONS<br>UNIQUE DISTRIBUTION MODEL LEVERAGES SCALABILITY AND ACCESS TO DIFFERENT MARKETS<br>INCREASED DISTRIBUTION FOOTPRINT BY 16% YEAR<br>-<br>OVER<br>-<br>YEAR | |||||||||||||||||||||||||||
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| *Does not include all partnerships<br>2014<br>2022<br>2021<br>2020<br>2019<br>2018<br>2017<br>2016<br>2015<br>2014<br>STRATEGIC MATTERS<br>Strategic Partnerships<br>22<br>Eight years of partnerships continue with one of the most robust pipelines in the company’s history across multiple product c<br>ate<br>gories | |||||||||||||||||||||||||||
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