Palomar Holdings, Inc. Reports Third Quarter 2024 Results

LA JOLLA, Calif., Nov. 04, 2024 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ:PLMR) ("Palomar" or "Company") reported net income of $30.5 million, or $1.15 per diluted share, for the third quarter of 2024 compared to net income of $18.4 million, or $0.73 per diluted share, for the third quarter of 2023. Adjusted net income⁽¹⁾ was $32.4 million, or $1.23 per diluted share, for the third quarter of 2024 as compared to $23.3 million, or $0.92 per diluted share, for the third quarter of 2023.

Third Quarter 2024 Highlights

• Gross written premiums increased by 32.2% to $415.0 million compared to $314.0 million in the third quarter of 2023
• Net income of $30.5 million compared to $18.4 million in the third quarter of 2023
• Adjusted net income(1) increased 39.3% to $32.4 million compared to $23.3 million in the third quarter of 2023
• Total loss ratio of 29.7% compared to 18.8% in the third quarter of 2023
• Catastrophe loss ratio(1) of 9.5% compared to -0.6% in the third quarter of 2023
• Combined ratio of 80.5% compared to 75.8% in the third quarter of 2023
• Adjusted combined ratio(1) of 77.1% compared to 70.9%, in the third quarter of 2023
• Adjusted combined ratio excluding catastrophe losses(1) of 67.6% compared to 71.5%, in the third quarter of 2023
• Annualized return on equity of 19.7% compared to 17.7% in the third quarter of 2023
• Annualized adjusted return on equity(1) of 21.0% compared to 22.3% in the third quarter of 2023

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

Mac Armstrong, Chairman and Chief Executive Officer, commented, "I am very pleased with our third quarter results as they clearly demonstrate our successful efforts to deliver consistent earnings and returns. In a quarter that experienced a heightened level of cat activity, we delivered 39% adjusted net income growth, a 77% adjusted combined ratio, and a 21% adjusted ROE. Our results further validate the concerted efforts that we have undertaken to diversify the business, reduce the volatility in our earnings base and profitably grow. We continued to generate robust top line growth achieving 32% gross written premium growth, driven by strength in our Earthquake and Casualty products as well as strong growth from our burgeoning Crop business. Importantly, our same-store⁽²⁾ premium growth rate was 38%, demonstrating the strong underlying momentum that exists across our portfolio of specialty insurance products.

Mr. Armstrong continued, "We have numerous energizing opportunities and initiatives associated with our Palomar 2X strategy. To capitalize on them, we successfully raised $116 million in August. A portion of the proceeds will fund our acquisition of First Indemnity of America Insurance Company and our entry into the surety market. We will use the remaining proceeds for organic growth and selected increases in risk participation in product categories including Crop and Earthquake. Our diversification into attractive lines with limited correlation to the P&C cycle such as Crop and Surety will further position Palomar to deliver consistent earnings growth over time."

(2) Excludes the impact of lines of business exited or discontinued during the quarter.

Underwriting Results

Gross written premiums increased 32.2% to $415.0 million compared to $314.0 million in the third quarter of 2023, while net earned premiums increased 58.1% compared to the prior year's third quarter. 

Losses and loss adjustment expenses for the third quarter were $40.3 million, comprised of $27.4 million of attritional losses and $12.9 million of catastrophe losses from Hurricanes Beryl, Debby, and Helene. The loss ratio for the quarter was 29.7%, comprised of an attritional loss ratio of 20.2% and a catastrophe loss ratio⁽¹⁾ of 9.5% compared to a loss ratio of 18.8% during the same period last year comprised of an attritional loss ratio of 19.4% and a catastrophe loss ratio⁽¹⁾ of -0.6%.

Underwriting income⁽¹⁾ for the third quarter was $26.4 million resulting in a combined ratio of 80.5% compared to underwriting income of $20.7 million resulting in a combined ratio of 75.8% during the same period last year. The Company's adjusted underwriting income⁽¹⁾ was $31.0 million resulting in an adjusted combined ratio⁽¹⁾ of 77.1% in the third quarter compared to adjusted underwriting income⁽¹⁾ of $25.0 million and an adjusted combined ratio⁽¹⁾ of 70.9% during the same period last year. The Company's adjusted combined ratio excluding catastrophe losses⁽¹⁾ was 67.6% compared to 71.5% during the same period last year.

Investment Results

Net investment income increased by 56.0% to $9.4 million compared to $6.0 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, 2024 due to proceeds from our August 2024 secondary offering and cash generated from operations. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.86 years at September 30, 2024. Cash and invested assets totaled $1,017.5 million at September 30, 2024. During the third quarter, the Company recorded $2.7 net realized and unrealized gains related to its investment portfolio as compared to net realized and unrealized losses of $1.4 million during the same period last year.

Tax Rate

The effective tax rate for the three months ended September 30, 2024 was 20.8% compared to 24.9% for the three months ended September 30, 2023. For the current quarter, the Company's income tax rate differed from the statutory rate due primarily to the tax impact of the permanent component of employee stock options.

Stockholders' Equity and Returns

Stockholders' equity was $703.3 million at September 30, 2024, compared to $421.3 million at September 30, 2023. For the three months ended September 30, 2024, the Company's annualized return on equity was 19.7% compared to 17.7% for the same period in the prior year while adjusted return on equity⁽¹⁾ was 21.0% compared to 22.3% for the same period in the prior year. There were no share repurchases during the three months ended September 30, 2024.

Full Year 2024 Outlook

For the full year 2024, the Company expects to achieve adjusted net income of $124 million to $128 million. This range includes additional catastrophe losses incurred during the fourth quarter of 2024 of approximately $8 million related to Hurricane Milton. 

Conference Call

As previously announced, Palomar will host a conference call Tuesday, November 5, 2024, to discuss its third 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 Third Quarter 2024 Earnings Conference Call. A replay will be available starting at 4:00 p.m. (Eastern Time) on November 5, 2024, and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13747528. The replay will be available until 11:59 p.m. (Eastern Time) on November 12, 2024.

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'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. 

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 

[email protected] 

Investor Relations

Jamie Lillis

1-203-428-3223

[email protected]

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, 2024 and 2023:

	Three Months Ended
	September 30,
	2024				2023				Change				% Change
	($ in thousands, except per share data)
Gross written premiums	$	414,977			$	313,998			$	100,979				32.2	%
Ceded written premiums		(255,267	)			(203,336	)			(51,931	)			25.5	%
Net written premiums		159,710				110,662				49,048				44.3	%
Net earned premiums		135,646				85,817				49,829				58.1	%
Commission and other income		715				465				250				53.8	%
Total underwriting revenue (1)		136,361				86,282				50,079				58.0	%
Losses and loss adjustment expenses		40,315				16,139				24,176				149.8	%
Acquisition expenses, net of ceding commissions and fronting fees		41,469				27,004				14,465				53.6	%
Other underwriting expenses		28,129				22,390				5,739				25.6	%
Underwriting income (1)		26,448				20,749				5,699				27.5	%
Interest expense		(87	)			(867	)			780				(90.0	)%
Net investment income		9,408				6,029				3,379				56.0	%
Net realized and unrealized gains (losses) on investments		2,734				(1,376	)			4,110				(298.7	)%
Income before income taxes		38,503				24,535				13,968				56.9	%
Income tax expense		8,006				6,103				1,903				31.2	%
Net income	$	30,497			$	18,432			$	12,065				65.5	%
Adjustments:
Net realized and unrealized (gains) losses on investments		(2,734	)			1,376				(4,110	)			(298.7	)%
Expenses associated with transactions		84				229				(145	)			(63.3	)%
Stock-based compensation expense		4,117				3,589				528				14.7	%
Amortization of intangibles		389				390				(1	)			(0.3	)%
Tax impact		91				(725	)			816				(112.6	)%
Adjusted net income (1)	$	32,444			$	23,291			$	9,153				39.3	%
Key Financial and Operating Metrics
Annualized return on equity		19.7	%			17.7	%
Annualized adjusted return on equity (1)		21.0	%			22.3	%
Loss ratio		29.7	%			18.8	%
Expense ratio		50.8	%			57.0	%
Combined ratio		80.5	%			75.8	%
Adjusted combined ratio (1)		77.1	%			70.9	%
Diluted earnings per share	$	1.15			$	0.73
Diluted adjusted earnings per share (1)	$	1.23			$	0.92
Catastrophe losses	$	12,924			$	(533	)
Catastrophe loss ratio (1)		9.5	%			(0.6	)%
Adjusted combined ratio excluding catastrophe losses (1)		67.6	%			71.5	%
Adjusted underwriting income (1)	$	31,038			$	24,957			$	6,081				24.4	%

(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.

	Nine Months Ended
	September 30,
	2024				2023				Change				% Change
	($ in thousands, except per share data)
Gross written premiums	$	1,168,239			$	838,406			$	329,833				39.3	%
Ceded written premiums		(692,620	)			(542,789	)			(149,831	)			27.6	%
Net written premiums		475,619				295,617				180,002				60.9	%
Net earned premiums		365,796				252,164				113,632				45.1	%
Commission and other income		2,035				1,781				254				14.3	%
Total underwriting revenue (1)		367,831				253,945				113,886				44.8	%
Losses and loss adjustment expenses		97,583				54,696				42,887				78.4	%
Acquisition expenses, net of ceding commissions and fronting fees		109,072				78,740				30,332				38.5	%
Other underwriting expenses		84,165				63,962				20,203				31.6	%
Underwriting income (1)		77,011				56,547				20,464				36.2	%
Interest expense		(1,052	)			(2,952	)			1,900				(64.4	)%
Net investment income		24,506				16,690				7,816				46.8	%
Net realized and unrealized gains (losses) on investments		5,768				(103	)			5,871				NM
Income before income taxes		106,233				70,182				36,051				51.4	%
Income tax expense		23,625				16,877				6,748				40.0	%
Net income	$	82,608			$	53,305			$	29,303				55.0	%
Adjustments:
Net realized and unrealized (gains) losses on investments		(5,768	)			103				(5,871	)			NM
Expenses associated with transactions		557				229				328				143.2	%
Stock-based compensation expense		11,905				10,737				1,168				10.9	%
Amortization of intangibles		1,168				1,092				76				7.0	%
Expenses associated with catastrophe bond		2,483				1,640				843				51.4	%
Tax impact		(734	)			(1,582	)			848				(53.6	)%
Adjusted net income (1)	$	92,219			$	65,524			$	26,695				40.7	%
Key Financial and Operating Metrics
Annualized return on equity		18.8	%			17.6	%
Annualized adjusted return on equity (1)		20.9	%			21.7	%
Loss ratio		26.7	%			21.7	%
Expense ratio		52.3	%			55.9	%
Combined ratio		78.9	%			77.6	%
Adjusted combined ratio (1)		74.5	%			72.1	%
Diluted earnings per share	$	3.19			$	2.10
Diluted adjusted earnings per share (1)	$	3.56			$	2.59
Catastrophe losses	$	19,724			$	3,432
Catastrophe loss ratio (1)		5.4	%			1.4	%
Adjusted combined ratio excluding catastrophe losses (1)		69.2	%			70.8	%
Adjusted underwriting income (1)	$	93,124			$	70,245			$	22,879				32.6	%
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.

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,
	2024				2023
	(Unaudited)
Assets
Investments:
Fixed maturity securities available for sale, at fair value (amortized cost: $896,775 in 2024; $675,130 in 2023)	$	882,980			$	643,799
Equity securities, at fair value (cost: $32,987 in 2024; $43,003 in 2023)		40,196				43,160
Equity method investment		2,499				2,617
Other investments		5,207				—
Total investments		930,882				689,576
Cash and cash equivalents		86,479				51,546
Restricted cash		105				306
Accrued investment income		7,495				5,282
Premiums receivable		326,674				261,972
Deferred policy acquisition costs, net of ceding commissions and fronting fees		86,408				60,990
Reinsurance recoverable on paid losses and loss adjustment expenses		58,889				32,172
Reinsurance recoverable on unpaid losses and loss adjustment expenses		360,164				244,622
Ceded unearned premiums		298,509				265,808
Prepaid expenses and other assets		104,831				72,941
Deferred tax assets, net		4,019				10,119
Property and equipment, net		409				373
Goodwill and intangible assets, net		11,147				12,315
Total assets	$	2,276,011			$	1,708,022
Liabilities and stockholders' equity
Liabilities:
Accounts payable and other accrued liabilities	$	75,424			$	42,376
Reserve for losses and loss adjustment expenses		497,438				342,275
Unearned premiums		739,623				597,103
Ceded premium payable		235,157				181,742
Funds held under reinsurance treaty		25,056				13,419
Income taxes payable		—				7,255
Borrowings from credit agreements		—				52,600
Total liabilities		1,572,698				1,236,770
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023		—				—
Common stock, $0.0001 par value, 500,000,000 shares authorized, 26,452,242 and 24,772,987 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		3				3
Additional paid-in capital		486,198				350,597
Accumulated other comprehensive loss		(10,139	)			(23,991	)
Retained earnings		227,251				144,643
Total stockholders' equity		703,313				471,252
Total liabilities and stockholders' equity	$	2,276,011			$	1,708,022

Condensed Consolidated Income Statement

Palomar Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Income and Comprehensive Income (loss) (Unaudited) (in thousands, except shares and per share data)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024				2023				2024				2023
Revenues:
Gross written premiums	$	414,977			$	313,998			$	1,168,239			$	838,406
Ceded written premiums		(255,267	)			(203,336	)			(692,620	)			(542,789	)
Net written premiums		159,710				110,662				475,619				295,617
Change in unearned premiums		(24,064	)			(24,845	)			(109,823	)			(43,453	)
Net earned premiums		135,646				85,817				365,796				252,164
Net investment income		9,408				6,029				24,506				16,690
Net realized and unrealized gains (losses) on investments		2,734				(1,376	)			5,768				(103	)
Commission and other income		715				465				2,035				1,781
Total revenues		148,503				90,935				398,105				270,532
Expenses:
Losses and loss adjustment expenses		40,315				16,139				97,583				54,696
Acquisition expenses, net of ceding commissions and fronting fees		41,469				27,004				109,072				78,740
Other underwriting expenses		28,129				22,390				84,165				63,962
Interest expense		87				867				1,052				2,952
Total expenses		110,000				66,400				291,872				200,350
Income before income taxes		38,503				24,535				106,233				70,182
Income tax expense		8,006				6,103				23,625				16,877
Net income	$	30,497			$	18,432			$	82,608			$	53,305
Other comprehensive income, net:
Net unrealized gains (losses) on securities available for sale		17,917				(8,494	)			13,852				(6,706	)
Net comprehensive income	$	48,414			$	9,938			$	96,460			$	46,599
Per Share Data:
Basic earnings per share	$	1.18			$	0.75			$	3.28			$	2.15
Diluted earnings per share	$	1.15			$	0.73			$	3.19			$	2.10
Weighted-average common shares outstanding:
Basic		25,766,697				24,740,455				25,194,114				24,847,164
Diluted		26,479,566				25,244,828				25,877,257				25,340,602

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 September 30,
	2024								2023
	($ in thousands)
					% of								% of								%
	Amount				GWP				Amount				GWP				Change				Change
Product (1)
Earthquake	$	135,329				32.6	%		$	113,386				36.1	%		$	21,943				19.4	%
Fronting		84,945				20.5	%			94,954				30.2	%			(10,009	)			(10.5	)%
Inland Marine and Other Property		78,734				19.0	%			64,499				20.5	%			14,235				22.1	%
Crop		59,662				14.4	%			11,627				3.7	%			48,035				NM
Casualty		56,307				13.5	%			29,532				9.5	%			26,775				90.7	%
Total Gross Written Premiums	$	414,977				100.0	%		$	313,998				100.0	%		$	100,979				32.2	%
NM - not meaningful

	Nine Months Ended September 30,
	2024								2023
	($ in thousands)
					% of								% of								%
	Amount				GWP				Amount				GWP				Change				Change
Product (1)
Earthquake	$	376,088				32.2	%		$	314,810				37.6	%		$	61,278				19.5	%
Fronting		275,671				23.6	%			266,433				31.8	%			9,238				3.5	%
Inland Marine and Other Property		249,147				21.3	%			186,983				22.3	%			62,164				33.2	%
Casualty		166,762				14.3	%			58,065				6.9	%			108,697				187.2	%
Crop		100,571				8.6	%			12,115				1.4	%			88,456				NM
Total Gross Written Premiums	$	1,168,239				100.0	%		$	838,406				100.0	%		$	329,833				39.3	%
NM - not meaningful

(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 September 30,																Nine Months Ended September 30,
	2024								2023								2024								2023
	($ in thousands)																($ in thousands)
					% of								% of								% of								% of
	Amount				GWP				Amount				GWP				Amount				GWP				Amount				GWP
State
California	$	170,265				41.0	%		$	163,806				52.2	%		$	510,879				43.7	%		$	450,752				53.8	%
Texas		27,019				6.5	%			24,336				7.7	%			96,414				8.3	%			72,777				8.7	%
Hawaii		23,171				5.6	%			13,490				4.3	%			53,922				4.6	%			35,824				4.3	%
North Dakota		18,716				4.5	%			2,898				0.9	%			19,893				1.7	%			3,326				0.4	%
Washington		16,828				4.1	%			17,792				5.7	%			41,893				3.6	%			43,409				5.2	%
Wisconsin		15,519				3.7	%			1,211				0.4	%			17,374				1.5	%			3,095				0.4	%
Florida		14,433				3.5	%			11,549				3.7	%			58,153				5.0	%			36,309				4.3	%
Oregon		8,402				2.0	%			8,536				2.7	%			21,253				1.8	%			21,223				2.5	%
Other		120,624				29.1	%			70,380				22.4	%			348,458				29.8	%			171,691				20.4	%
Total Gross Written Premiums	$	414,977				100.0	%		$	313,998				100.0	%		$	1,168,239				100.0	%		$	838,406				100.0	%

	Three Months Ended September 30,																Nine Months Ended September 30,
	2024								2023								2024								2023
	($ in thousands)																($ in thousands)
					% of								% of								% of								% of
	Amount				GWP				Amount				GWP				Amount				GWP				Amount				GWP
Subsidiary
PSIC	$	236,624				57.0	%		$	186,693				59.5	%		$	652,988				55.9	%		$	497,216				59.3	%
PESIC		159,305				38.4	%			127,305				40.5	%			472,909				40.5	%			341,190				40.7	%
Laulima		19,048				4.6	%			—				—	%			42,342				3.6	%			—				—	%
Total Gross Written Premiums	$	414,977				100.0	%		$	313,998				100.0	%		$	1,168,239				100.0	%		$	838,406				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,
	2024				2023				Change				% Change				2024				2023				Change				% Change
	($ in thousands)																($ in thousands)
Gross earned premiums	$	395,881			$	271,786			$	124,095				45.7	%		$	1,025,716			$	739,219			$	286,497				38.8	%
Ceded earned premiums		(260,235	)			(185,969	)			(74,266	)			39.9	%			(659,920	)			(487,055	)			(172,865	)			35.5	%
Net earned premiums	$	135,646			$	85,817			$	49,829				58.1	%		$	365,796			$	252,164			$	113,632				45.1	%
Net earned premium ratio		34.3	%			31.6	%											35.7	%			34.1	%

Loss detail

	Three Months Ended																Nine Months Ended
	September 30,																September 30,
	2024				2023				Change				% Change				2024				2023				Change				% Change
	($ in thousands)																($ in thousands)
Catastrophe losses	$	12,924			$	(533	)		$	13,457				NM			$	19,724			$	3,432			$	16,292				NM
Non-catastrophe losses		27,391				16,672				10,719				64.3	%			77,859				51,264				26,595				51.9	%
Total losses and loss adjustment expenses	$	40,315			$	16,139			$	24,176				149.8	%		$	97,583			$	54,696			$	42,887				78.4	%
Catastrophe loss ratio		9.5	%			(0.6	)%											5.4	%			1.4	%
Non-catastrophe loss ratio		20.2	%			19.4	%											21.3	%			20.3	%
Total loss ratio		29.7	%			18.8	%											26.7	%			21.7	%
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 September 30,								Nine Months Ended September 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Reserve for losses and LAE net of reinsurance recoverables at beginning of period	$	118,761			$	81,300			$	97,653			$	77,520
Add: Incurred losses and LAE, net of reinsurance, related to:
Current year		40,536				15,116				100,225				50,954
Prior years		(221	)			1,023				(2,642	)			3,742
Total incurred		40,315				16,139				97,583				54,696
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year		16,153				6,646				27,909				14,215
Prior years		5,649				(1,385	)			30,053				25,823
Total payments		21,802				5,261				57,962				40,038
Reserve for losses and LAE net of reinsurance recoverables at end of period		137,274				92,178				137,274				92,178
Add: Reinsurance recoverables on unpaid losses and LAE at end of period		360,164				232,170				360,164				232,170
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period	$	497,438			$	324,348			$	497,438			$	324,348

Reconciliation of Non-GAAP Financial Measures

For the three and nine months ended September 30, 2024 and 2023, 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,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Total revenue	$	148,503			$	90,935			$	398,105			$	270,532
Net investment income		(9,408	)			(6,029	)			(24,506	)			(16,690	)
Net realized and unrealized (gains) losses on investments		(2,734	)			1,376				(5,768	)			103
Underwriting revenue	$	136,361			$	86,282			$	367,831			$	253,945

Underwriting income and adjusted underwriting income

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Income before income taxes	$	38,503			$	24,535			$	106,233			$	70,182
Net investment income		(9,408	)			(6,029	)			(24,506	)			(16,690	)
Net realized and unrealized (gains) losses on investments		(2,734	)			1,376				(5,768	)			103
Interest expense		87				867				1,052				2,952
Underwriting income	$	26,448			$	20,749			$	77,011			$	56,547
Expenses associated with transactions		84				229				557				229
Stock-based compensation expense		4,117				3,589				11,905				10,737
Amortization of intangibles		389				390				1,168				1,092
Expenses associated with catastrophe bond		—				—				2,483				1,640
Adjusted underwriting income	$	31,038			$	24,957			$	93,124			$	70,245

Adjusted net income

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Net income	$	30,497			$	18,432			$	82,608			$	53,305
Adjustments:
Net realized and unrealized (gains) losses on investments		(2,734	)			1,376				(5,768	)			103
Expenses associated with transactions		84				229				557				229
Stock-based compensation expense		4,117				3,589				11,905				10,737
Amortization of intangibles		389				390				1,168				1,092
Expenses associated with catastrophe bond		—				—				2,483				1,640
Tax impact		91				(725	)			(734	)			(1,582	)
Adjusted net income	$	32,444			$	23,291			$	92,219			$	65,524

Annualized adjusted return on equity

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Annualized adjusted net income	$	129,776			$	93,164			$	122,959			$	87,365
Average stockholders' equity	$	617,959			$	417,521			$	587,282			$	403,044
Annualized adjusted return on equity		21.0	%			22.3	%			20.9	%			21.7	%

Adjusted combined ratio

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	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	$	109,198			$	65,068			$	288,785			$	195,617
Denominator: Net earned premiums	$	135,646			$	85,817			$	365,796			$	252,164
Combined ratio		80.5	%			75.8	%			78.9	%			77.6	%
Adjustments to numerator:
Expenses associated with transactions	$	(84	)		$	(229	)		$	(557	)		$	(229	)
Stock-based compensation expense		(4,117	)			(3,589	)			(11,905	)			(10,737	)
Amortization of intangibles		(389	)			(390	)			(1,168	)			(1,092	)
Expenses associated with catastrophe bond		—				—				(2,483	)			(1,640	)
Adjusted combined ratio		77.1	%			70.9	%			74.5	%			72.1	%

Diluted adjusted earnings per share

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024				2023				2024				2023
	(in thousands, except per share data)								(in thousands, except per share data)
Adjusted net income	$	32,444			$	23,291			$	92,219			$	65,524
Weighted-average common shares outstanding, diluted		26,479,566				25,244,828				25,877,257				25,340,602
Diluted adjusted earnings per share	$	1.23			$	0.92			$	3.56			$	2.59

Catastrophe loss ratio

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Numerator: Losses and loss adjustment expenses	$	40,315			$	16,139			$	97,583			$	54,696
Denominator: Net earned premiums	$	135,646			$	85,817			$	365,796			$	252,164
Loss ratio		29.7	%			18.8	%			26.7	%			21.7	%
Numerator: Catastrophe losses	$	12,924			$	(533	)		$	19,724			$	3,432
Denominator: Net earned premiums	$	135,646			$	85,817			$	365,796			$	252,164
Catastrophe loss ratio		9.5	%			(0.6	)%			5.4	%			1.4	%

Adjusted combined ratio excluding catastrophe losses

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	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	$	109,198			$	65,068			$	288,785			$	195,617
Denominator: Net earned premiums	$	135,646			$	85,817			$	365,796			$	252,164
Combined ratio		80.5	%			75.8	%			78.9	%			77.6	%
Adjustments to numerator:
Expenses associated with transactions	$	(84	)		$	(229	)		$	(557	)		$	(229	)
Stock-based compensation expense		(4,117	)			(3,589	)			(11,905	)			(10,737	)
Amortization of intangibles		(389	)			(390	)			(1,168	)			(1,092	)
Expenses associated with catastrophe bond		—				—				(2,483	)			(1,640	)
Catastrophe losses		(12,924	)			533				(19,724	)			(3,432	)
Adjusted combined ratio excluding catastrophe losses		67.6	%			71.5	%			69.2	%			70.8	%

Tangible Stockholders' equity

	September 30,				December 31,
	2024				2023
	(in thousands)
Stockholders' equity	$	703,313			$	471,252
Goodwill and intangible assets		(11,147	)			(12,315	)
Tangible stockholders' equity	$	692,166			$	458,937