PLMR Palomar Holdings Inc

Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported net income of $25.7 million, or $1.00 per diluted share, for the second quarter of 2024 compared to net income of $17.6 million, or $0.69 per diluted share, for the second quarter of 2023. Adjusted net income(1) was $32.0 million, or $1.25 per diluted share, for the second quarter of 2024 as compared to $21.8 million, or $0.86 per diluted share, for the second quarter of 2023.

Second Quarter 2024 Highlights

• Gross written premiums increased by 40.4% to $385.2 million compared to $274.3 million in the second quarter of 2023
• Net income of $25.7 million, compared to $17.6 million in the second quarter of 2023
• Adjusted net income(1) of $32.0 million, compared to $21.8 million in the second quarter of 2023
• Total loss ratio of 24.9% compared to 21.5% in the second quarter of 2023
• Combined ratio of 79.1% compared to 79.0% in the second quarter of 2023
• Adjusted combined ratio(1) of 73.1%, compared to 72.2%, in the second quarter of 2023
• Annualized return on equity of 19.9%, compared to 17.2% in the second quarter of 2023
• Annualized adjusted return on equity(1) of 24.7%, compared to 21.3% in the second 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 second quarter results as we achieved record gross written premium and adjusted net income during the quarter. Additionally, our profitable growth remained robust with gross written premium and adjusted net income increasing 40% and 47%, respectively, year-over-year. Beyond the strong financial results achieved during the quarter, we had several other accomplishments including but not limited to: successfully placing our core excess of loss reinsurance program at June 1st on terms that were better than anticipated, bringing on several new leaders who will help scale the Company and execute our Palomar 2X strategy, and AM Best upgrading our Financial Strength Rating to an A."

Mr. Armstrong continued, “We introduced our Palomar 2X strategy at our investor day in 2022 with designs of doubling our underwriting income over a three-to-five-year time frame while generating an adjusted ROE in excess of 20%. Our second quarter results and our further raising of adjusted net income guidance for the year clearly demonstrates that we are tracking ahead of these ambitious goals.”

Underwriting Results

Gross written premiums increased 40.4% to $385.2 million compared to $274.3 million in the second quarter of 2023, while net earned premiums increased 47.1% compared to the prior year’s second quarter. 

Losses and loss adjustment expenses for the second quarter were $30.4 million, comprised of $27.0 million of attritional losses and $3.4 million of catastrophe losses from severe convective storms. The loss ratio for the quarter was 24.9%, comprised of an attritional loss ratio of 22.1% and a catastrophe loss ratio(1) of 2.8%, compared to a loss ratio of 21.5% during the same period last year comprised of an attritional loss ratio of 18.9% and a catastrophe loss ratio(1) of 2.6%. 

Underwriting income(1) for the second quarter was $25.6 million resulting in a combined ratio of 79.1% compared to underwriting income of $17.4 million resulting in a combined ratio of 79.0% during the same period last year. The Company’s adjusted underwriting income(1) was $32.9 million resulting in an adjusted combined ratio(1) of 73.1% in the second quarter compared to adjusted underwriting income(1) of $23.1 million and an adjusted combined ratio(1) of 72.2% during the same period last year.

Investment ResultsNet investment income increased by 43.7% to $8.0 million compared to $5.5 million in the prior year’s second 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 June 30, 2024 due to cash generated from operations. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.73 years at June 30, 2024. Cash and invested assets totaled $777.9 million at June 30, 2024. During the second quarter, the Company recorded immaterial net realized and unrealized gains related to its investment portfolio as compared to net realized and unrealized gains of $1.1 million during the same period last year.

Tax RateThe effective tax rate for the three months ended June 30, 2024 was 22.9% compared to 23.7% for the three months ended June 30, 2023. For the current quarter, the Company’s income tax rate differed from the statutory rate due primarily to the non-deductible executive compensation expense.

Stockholders’ Equity and ReturnsStockholders' equity was $532.6 million at June 30, 2024, compared to $413.7 million at June 30, 2023. For the three months ended June 30, 2024, the Company’s annualized return on equity was 19.9% compared to 17.2% for the same period in the prior year while adjusted return on equity(1) was 24.7% compared to 21.3% for the same period in the prior year. There were no share repurchases during the three months ended June 30, 2024.

Full Year 2024 OutlookFor the full year 2024, the Company is increasing its guidance range and now expects to achieve adjusted net income of $124 million to $130 million. This range includes $6.8 million of catastrophe losses incurred during the six months ended June 30, 2024 and additional catastrophe losses incurred during the third quarter of 2024 of approximately $5 million to $7 million related to Hurricanes Beryl and Debby.

Conference CallAs previously announced, Palomar will host a conference call Tuesday, August 6, 2024, to discuss its second 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 Second Quarter 2024 Earnings Conference Call. A replay will be available starting at 4:00 p.m. (Eastern Time) on August 6, 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 August 13, 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 StatementPalomar cautions you that statements contained in this press release may regard matters that are not historical facts but are forward-looking statements. These statements are based on the company’s current beliefs and expectations. The inclusion of forward-looking statements should not be regarded as a representation by Palomar that any of its plans will be achieved. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in the Company’s business. The forward-looking statements are typically, but not always, identified through use of the words "believe," "expect," "enable," "may," "will," "could," "intends," "estimate," "anticipate," "plan," "predict," "probable," "potential," "possible," "should," "continue," and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including unexpected expenditures and costs, unexpected results or delays in development and regulatory review, regulatory approval requirements, the frequency and severity of adverse events and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the Company's filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

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

Investor RelationsJamie Lillis1-203-428-3223investors@plmr.comSource: Palomar Holdings, Inc.

Summary of Operating Results:

The following tables summarize the Company’s results for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended
	June 30,
	2024				2023				Change				% Change
	($ in thousands, except per share data)
Gross written premiums	$	385,184			$	274,296			$	110,888				40.4	%
Ceded written premiums		(209,181	)			(169,109	)			(40,072	)			23.7	%
Net written premiums		176,003				105,187				70,816				67.3	%
Net earned premiums		122,285				83,107				39,178				47.1	%
Commission and other income		792				621				171				27.5	%
Total underwriting revenue(1)		123,077				83,728				39,349				47.0	%
Losses and loss adjustment expenses		30,431				17,905				12,526				70.0	%
Acquisition expenses, net of ceding commissions and fronting fees		35,806				26,057				9,749				37.4	%
Other underwriting expenses		31,233				22,350				8,883				39.7	%
Underwriting income(1)		25,607				17,416				8,191				47.0	%
Interest expense		(225	)			(1,064	)			839				(78.9	)%
Net investment income		7,960				5,541				2,419				43.7	%
Net realized and unrealized gains on investments		32				1,127				(1,095	)			(97.2	)%
Income before income taxes		33,374				23,020				10,354				45.0	%
Income tax expense		7,645				5,458				2,187				40.1	%
Net income	$	25,729			$	17,562			$	8,167				46.5	%
Adjustments:
Net realized and unrealized gains on investments		(32	)			(1,127	)			1,095				(97.2	)%
Expenses associated with transactions		472				—				472				—	%
Stock-based compensation expense		3,968				3,697				271				7.3	%
Amortization of intangibles		389				389				—				—	%
Expenses associated with catastrophe bond		2,483				1,590				893				56.2	%
Tax impact		(1,029	)			(317	)			(712	)			224.6	%
Adjusted net income(1)	$	31,980			$	21,794			$	10,186				46.7	%
Key Financial and Operating Metrics
Annualized return on equity		19.9	%			17.2	%
Annualized adjusted return on equity(1)		24.7	%			21.3	%
Loss ratio		24.9	%			21.5	%
Expense ratio		54.2	%			57.5	%
Combined ratio		79.1	%			79.0	%
Adjusted combined ratio(1)		73.1	%			72.2	%
Diluted earnings per share	$	1.00			$	0.69
Diluted adjusted earnings per share(1)	$	1.25			$	0.86
Catastrophe losses	$	3,441			$	2,159
Catastrophe loss ratio(1)		2.8	%			2.6	%
Adjusted combined ratio excluding catastrophe losses(1)		70.3	%			69.6	%
Adjusted underwriting income(1)	$	32,919			$	23,092			$	9,827				42.6	%
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.

	Six Months Ended
	June 30,
	2024				2023				Change				% Change
	($ in thousands, except per share data)
Gross written premiums	$	753,262			$	524,407			$	228,855				43.6	%
Ceded written premiums		(437,352	)			(339,453	)			(97,899	)			28.8	%
Net written premiums		315,910				184,954				130,956				70.8	%
Net earned premiums		230,151				166,347				63,804				38.4	%
Commission and other income		1,320				1,316				4				0.3	%
Total underwriting revenue(1)		231,471				167,663				63,808				38.1	%
Losses and loss adjustment expenses		57,268				38,557				18,711				48.5	%
Acquisition expenses, net of ceding commissions and fronting fees		67,604				51,736				15,868				30.7	%
Other underwriting expenses		56,036				41,572				14,464				34.8	%
Underwriting income(1)		50,563				35,798				14,765				41.2	%
Interest expense		(965	)			(2,084	)			1,119				(53.7	)%
Net investment income		15,098				10,661				4,437				41.6	%
Net realized and unrealized gains on investments		3,034				1,273				1,761				138.3	%
Income before income taxes		67,730				45,648				22,082				48.4	%
Income tax expense		15,619				10,774				4,845				45.0	%
Net income	$	52,111			$	34,874			$	17,237				49.4	%
Adjustments:
Net realized and unrealized gains on investments		(3,034	)			(1,273	)			(1,761	)			138.3	%
Expenses associated with transactions		472				—				472				—	%
Stock-based compensation expense		7,789				7,147				642				9.0	%
Amortization of intangibles		779				703				76				10.8	%
Expenses associated with catastrophe bond		2,483				1,640				843				51.4	%
Tax impact		(825	)			(857	)			32				(3.7	)%
Adjusted net income(1)	$	59,775			$	42,234			$	17,541				41.5	%
Key Financial and Operating Metrics
Annualized return on equity		20.8	%			17.5	%
Annualized adjusted return on equity(1)		23.8	%			21.2	%
Loss ratio		24.9	%			23.2	%
Expense ratio		53.1	%			55.3	%
Combined ratio		78.0	%			78.5	%
Adjusted combined ratio(1)		73.0	%			72.8	%
Diluted earnings per share	$	2.04			$	1.37
Diluted adjusted earnings per share(1)	$	2.34			$	1.66
Catastrophe losses	$	6,800			$	3,965
Catastrophe loss ratio(1)		3.0	%			2.4	%
Adjusted combined ratio excluding catastrophe losses(1)		70.1	%			70.4	%
Adjusted underwriting income(1)	$	62,086			$	45,288			$	16,798				37.1	%

(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 SubsidiariesCondensed Consolidated Balance Sheets (unaudited)(in thousands, except shares and par value data)
	June 30,				December 31,
	2024				2023
	(Unaudited)
Assets
Investments:
Fixed maturity securities available for sale, at fair value (amortized cost: $723,940 in 2024; $675,130 in 2023)	$	687,138			$	643,799
Equity securities, at fair value (cost: $32,987 in 2024; $43,003 in 2023)		37,761				43,160
Equity method investment		2,351				2,617
Other investments		2,641				—
Total investments		729,891				689,576
Cash and cash equivalents		47,840				51,546
Restricted cash		179				306
Accrued investment income		5,930				5,282
Premiums receivable		357,267				261,972
Deferred policy acquisition costs, net of ceding commissions and fronting fees		82,486				60,990
Reinsurance recoverable on paid losses and loss adjustment expenses		33,309				32,172
Reinsurance recoverable on unpaid losses and loss adjustment expenses		347,840				244,622
Ceded unearned premiums		303,477				265,808
Prepaid expenses and other assets		86,590				72,941
Deferred tax assets, net		9,450				10,119
Property and equipment, net		253				373
Goodwill and intangible assets, net		11,537				12,315
Total assets	$	2,016,049			$	1,708,022
Liabilities and stockholders' equity
Liabilities:
Accounts payable and other accrued liabilities	$	52,052			$	42,376
Reserve for losses and loss adjustment expenses		466,601				342,275
Unearned premiums		720,528				597,103
Ceded premium payable		231,182				181,742
Funds held under reinsurance treaty		13,080				13,419
Income taxes payable		—				7,255
Borrowings from credit agreements		—				52,600
Total liabilities		1,483,443				1,236,770
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023		—				—
Common stock, $0.0001 par value, 500,000,000 shares authorized, 24,984,638 and 24,772,987 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		3				3
Additional paid-in capital		363,904				350,597
Accumulated other comprehensive loss		(28,055	)			(23,991	)
Retained earnings		196,754				144,643
Total stockholders' equity		532,606				471,252
Total liabilities and stockholders' equity	$	2,016,049			$	1,708,022

Condensed Consolidated Income Statement

Palomar Holdings, Inc. and SubsidiariesCondensed Consolidated Statements of Income and Comprehensive Income (loss) (Unaudited)(in thousands, except shares and per share data)
	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2024				2023				2024				2023
Revenues:
Gross written premiums	$	385,184			$	274,296			$	753,262			$	524,407
Ceded written premiums		(209,181	)			(169,109	)			(437,352	)			(339,453	)
Net written premiums		176,003				105,187				315,910				184,954
Change in unearned premiums		(53,718	)			(22,080	)			(85,759	)			(18,607	)
Net earned premiums		122,285				83,107				230,151				166,347
Net investment income		7,960				5,541				15,098				10,661
Net realized and unrealized gains on investments		32				1,127				3,034				1,273
Commission and other income		792				621				1,320				1,316
Total revenues		131,069				90,396				249,603				179,597
Expenses:
Losses and loss adjustment expenses		30,431				17,905				57,268				38,557
Acquisition expenses, net of ceding commissions and fronting fees		35,806				26,057				67,604				51,736
Other underwriting expenses		31,233				22,350				56,036				41,572
Interest expense		225				1,064				965				2,084
Total expenses		97,695				67,376				181,873				133,949
Income before income taxes		33,374				23,020				67,730				45,648
Income tax expense		7,645				5,458				15,619				10,774
Net income	$	25,729			$	17,562			$	52,111			$	34,874
Other comprehensive income, net:
Net unrealized (losses) gains on securities available for sale		(1,550	)			(3,685	)			(4,064	)			1,789
Net comprehensive income	$	24,179			$	13,877			$	48,047			$	36,663
Per Share Data:
Basic earnings per share	$	1.03			$	0.71			$	2.09			$	1.40
Diluted earnings per share	$	1.00			$	0.69			$	2.04			$	1.37
Weighted-average common shares outstanding:
Basic		24,946,987				24,833,852				24,904,677				24,901,403
Diluted		25,617,916				25,309,526				25,554,445				25,384,409

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 June 30,
	2024								2023
	($ in thousands)
					% of								% of								%
	Amount				GWP				Amount				GWP				Change				Change
Product(1)
Earthquake	$	135,029				35.1	%		$	107,929				39.3	%		$	27,100				25.1	%
Fronting		95,896				24.9	%			79,724				29.1	%			16,172				20.3	%
Inland Marine and Other Property		93,453				24.3	%			69,779				25.4	%			23,674				33.9	%
Casualty		58,605				15.2	%			16,376				6.0	%			42,229				257.9	%
Crop		2,201				0.6	%			488				0.2	%			1,713				NM
Total Gross Written Premiums	$	385,184				100.0	%		$	274,296				100.0	%		$	110,888				40.4	%
NM - not meaningful

	Six Months Ended June 30,
	2024								2023
	($ in thousands)
					% of								% of
	Amount				GWP				Amount				GWP				Change				Change
Product(1)
Earthquake	$	240,759				32.0	%		$	201,424				38.4	%		$	39,335				19.5	%
Fronting		190,727				25.3	%			171,479				32.7	%			19,248				11.2	%
Inland Marine and Other Property		170,329				22.6	%			122,484				23.4	%			47,845				39.1	%
Casualty		110,539				14.7	%			28,532				5.4	%			82,007				287.4	%
Crop		40,908				5.4	%			488				0.1	%			40,420				NM
Total Gross Written Premiums	$	753,262				100.0	%		$	524,407				100.0	%		$	228,855				43.6	%
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 June 30,																Six Months Ended June 30,
	2024								2023								2024								2023
	($ in thousands)																($ in thousands)
					% of								% of								% of								% of
	Amount				GWP				Amount				GWP				Amount				GWP				Amount				GWP
State
California	$	183,396				47.6	%		$	157,057				57.3	%		$	340,614				45.2	%		$	288,946				55.1	%
Florida		29,796				7.7	%			12,664				4.6	%			43,720				5.8	%			24,760				4.7	%
Texas		28,600				7.4	%			25,231				9.2	%			69,396				9.2	%			48,441				9.2	%
Hawaii		18,235				4.7	%			12,228				4.5	%			30,751				4.1	%			22,333				4.3	%
Washington		13,063				3.4	%			13,645				5.0	%			25,066				3.3	%			25,617				4.9	%
New York		7,980				2.1	%			3,785				1.4	%			16,010				2.1	%			7,656				1.5	%
Oregon		5,776				1.5	%			5,907				2.2	%			12,851				1.7	%			12,687				2.4	%
Michigan		5,008				1.3	%			848				0.3	%			6,711				0.9	%			1,711				0.3	%
Other		93,330				24.2	%			42,931				15.7	%			208,143				27.6	%			92,256				17.6	%
Total Gross Written Premiums	$	385,184				100.0	%		$	274,296				100.0	%		$	753,262				100.0	%		$	524,407				100.0	%

	Three Months Ended June 30,																Six Months Ended June 30,
	2024								2023								2024								2023
	($ in thousands)																($ in thousands)
					% of								% of								% of								% of
	Amount				GWP				Amount				GWP				Amount				GWP				Amount				GWP
Subsidiary
PSIC	$	193,709				50.3	%		$	159,846				58.3	%		$	416,366				55.3	%		$	310,550				59.2	%
PESIC		177,109				46.0	%			114,450				41.7	%			313,603				41.6	%			213,857				40.8	%
Laulima		14,366				3.7	%			—				—	%			23,293				3.1	%			—				—	%
Total Gross Written Premiums	$	385,184				100.0	%		$	274,296				100.0	%		$	753,262				100.0	%		$	524,407				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																Six Months Ended
	June 30,																June 30,
	2024				2023				Change				% Change				2024				2023				Change				% Change
	($ in thousands)																($ in thousands)
Gross earned premiums	$	326,964			$	242,189			$	84,775				35.0	%		$	629,835			$	467,432			$	162,403				34.7	%
Ceded earned premiums		(204,679	)			(159,082	)			(45,597	)			28.7	%			(399,684	)			(301,085	)			(98,599	)			32.7	%
Net earned premiums	$	122,285			$	83,107			$	39,178				47.1	%		$	230,151			$	166,347			$	63,804				38.4	%
Net earned premium ratio		37.4	%			34.3	%											36.5	%			35.6	%

Loss detail

	Three Months Ended																Six Months Ended
	June 30,																June 30,
	2024				2023				Change				% Change				2024				2023				Change				% Change
	($ in thousands)																($ in thousands)
Catastrophe losses	$	3,441			$	2,159			$	1,282				59.4	%		$	6,800			$	3,965			$	2,835				71.5	%
Non-catastrophe losses		26,990				15,746				11,244				71.4	%			50,468				34,592				15,876				45.9	%
Total losses and loss adjustment expenses	$	30,431			$	17,905			$	12,526				70.0	%		$	57,268			$	38,557			$	18,711				48.5	%

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

	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Reserve for losses and LAE net of reinsurance recoverables at beginning of period	$	110,163			$	81,366			$	97,653			$	77,520
Add: Incurred losses and LAE, net of reinsurance, related to:
Current year		33,355				18,539				59,688				35,839
Prior years		(2,924	)			(634	)			(2,420	)			2,718
Total incurred		30,431				17,905				57,268				38,557
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year		6,861				6,176				11,756				7,569
Prior years		14,972				11,795				24,404				27,208
Total payments		21,833				17,971				36,160				34,777
Reserve for losses and LAE net of reinsurance recoverables at end of period		118,761				81,300				118,761				81,300
Add: Reinsurance recoverables on unpaid losses and LAE at end of period		347,840				216,783				347,840				216,783
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period	$	466,601			$	298,083			$	466,601			$	298,083

Reconciliation of Non-GAAP Financial Measures

For the three and six months ended June 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								Six Months Ended
	June 30,								June 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Total revenue	$	131,069			$	90,396			$	249,603			$	179,597
Net investment income		(7,960	)			(5,541	)			(15,098	)			(10,661	)
Net realized and unrealized gains on investments		(32	)			(1,127	)			(3,034	)			(1,273	)
Underwriting revenue	$	123,077			$	83,728			$	231,471			$	167,663

Underwriting income and adjusted underwriting income

	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Income before income taxes	$	33,374			$	23,020			$	67,730			$	45,648
Net investment income		(7,960	)			(5,541	)			(15,098	)			(10,661	)
Net realized and unrealized gains on investments		(32	)			(1,127	)			(3,034	)			(1,273	)
Interest expense		225				1,064				965				2,084
Underwriting income	$	25,607			$	17,416			$	50,563			$	35,798
Expenses associated with transactions		472				—				472				—
Stock-based compensation expense		3,968				3,697				7,789				7,147
Amortization of intangibles		389				389				779				703
Expenses associated with catastrophe bond		2,483				1,590				2,483				1,640
Adjusted underwriting income	$	32,919			$	23,092			$	62,086			$	45,288

Adjusted net income

	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Net income	$	25,729			$	17,562			$	52,111			$	34,874
Adjustments:
Net realized and unrealized gains on investments		(32	)			(1,127	)			(3,034	)			(1,273	)
Expenses associated with transactions		472				—				472				—
Stock-based compensation expense		3,968				3,697				7,789				7,147
Amortization of intangibles		389				389				779				703
Expenses associated with catastrophe bond		2,483				1,590				2,483				1,640
Tax impact		(1,029	)			(317	)			(825	)			(857	)
Adjusted net income	$	31,980			$	21,794			$	59,775			$	42,234

Annualized adjusted return on equity

	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Annualized adjusted net income	$	127,920			$	87,176			$	119,550			$	84,468
Average stockholders' equity	$	517,131			$	409,178			$	501,928			$	399,230
Annualized adjusted return on equity		24.7	%			21.3	%			23.8	%			21.2	%

Adjusted combined ratio

	Three Months Ended								Six Months Ended
	June 30,								June 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	$	96,678			$	65,691			$	179,588			$	130,549
Denominator: Net earned premiums	$	122,285			$	83,107			$	230,151			$	166,347
Combined ratio		79.1	%			79.0	%			78.0	%			78.5	%
Adjustments to numerator:
Expenses associated with transactions	$	(472	)		$	—			$	(472	)		$	—
Stock-based compensation expense		(3,968	)			(3,697	)			(7,789	)			(7,147	)
Amortization of intangibles		(389	)			(389	)			(779	)			(703	)
Expenses associated with catastrophe bond		(2,483	)			(1,590	)			(2,483	)			(1,640	)
Adjusted combined ratio		73.1	%			72.2	%			73.0	%			72.8	%

Diluted adjusted earnings per share

	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2024				2023				2024				2023
	(in thousands, except per share data)								(in thousands, except per share data)
Adjusted net income	$	31,980			$	21,794			$	59,775			$	42,234
Weighted-average common shares outstanding, diluted		25,617,916				25,309,526				25,554,445				25,384,409
Diluted adjusted earnings per share	$	1.25			$	0.86			$	2.34			$	1.66

Catastrophe loss ratio

	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2024				2023				2024				2023
	(in thousands)								(in thousands)
Numerator: Losses and loss adjustment expenses	$	30,431			$	17,905			$	57,268			$	38,557
Denominator: Net earned premiums	$	122,285			$	83,107			$	230,151			$	166,347
Loss ratio		24.9	%			21.5	%			24.9	%			23.2	%
Numerator: Catastrophe losses	$	3,441			$	2,159			$	6,800			$	3,965
Denominator: Net earned premiums	$	122,285			$	83,107			$	230,151			$	166,347
Catastrophe loss ratio		2.8	%			2.6	%			3.0	%			2.4	%

Adjusted combined ratio excluding catastrophe losses

	Three Months Ended								Six Months Ended
	June 30,								June 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	$	96,678			$	65,691			$	179,588			$	130,549
Denominator: Net earned premiums	$	122,285			$	83,107			$	230,151			$	166,347
Combined ratio		79.1	%			79.0	%			78.0	%			78.5	%
Adjustments to numerator:
Expenses associated with transactions	$	(472	)		$	—			$	(472	)		$	—
Stock-based compensation expense		(3,968	)			(3,697	)			(7,789	)			(7,147	)
Amortization of intangibles		(389	)			(389	)			(779	)			(703	)
Expenses associated with catastrophe bond		(2,483	)			(1,590	)			(2,483	)			(1,640	)
Catastrophe losses		(3,441	)			(2,159	)			(6,800	)			(3,965	)
Adjusted combined ratio excluding catastrophe losses		70.3	%			69.6	%			70.1	%			70.4	%

Tangible Stockholders’ equity

	June 30,				December 31,
	2024				2023
	(in thousands)
Stockholders' equity	$	532,606			$	471,252
Goodwill and intangible assets		(11,537	)			(12,315	)
Tangible stockholders' equity	$	521,069			$	458,937