AM Best Upgrades Credit Ratings for Palomar Holdings, Inc. and Its Member Companies
30 Julio 2024 - 1:34PM
Business Wire
AM Best has upgraded the Long-Term Issuer Credit Rating
(Long-Term ICR) to “bbb” (Good) from “bbb-” (Good) of Palomar
Holdings, Inc. (Palomar) (Delaware) [NASDAQ: PLMR], the ultimate
parent and insurance holding company of Palomar Specialty Insurance
Company (PSIC) (Portland, OR), Palomar Excess and Surplus Insurance
Company (PESIC) (Phoenix, AZ) and Palomar Specialty Reinsurance
Company Bermuda Ltd. (Palomar Re) (Bermuda). Concurrently, AM Best
upgraded the Financial Strength Rating to A (Excellent) from A-
(Excellent) and the Long-Term ICRs to “a” (Excellent) from “a-”
(Excellent) of PSIC, PESIC and Palomar Re. The outlook of these
Credit Ratings (ratings) has been revised to stable from
positive.
The ratings reflect Palomar’s balance sheet strength, which AM
Best assesses as very strong, as well as its strong operating
performance, limited business profile and appropriate enterprise
risk management (ERM).
The upgrades reflect Palomar’s strong operating performance in
recent periods, which compares favorably to composite averages.
Palomar reported net income in each of the last five calendar
years, achieving comparatively greater levels of profitability in
more recent years. The combined ratio, based on GAAP reporting, was
well below 90 in each of the last three years, improving the
five-year average to the mid-80s, coupled with formidable return
measures. Management actively evaluates and culls the portfolio to
ensure adherence to strict underwriting standards, which lends
itself to comparatively favorable loss experience, offset by an
elevated expense ratio position. While the organization recorded
material premium growth, which is led by quake coverage, management
has considerable experience underwriting other areas of premium
growth that include general and excess casualty, as well as
professional liability. Strong performance is expected despite
growth of ancillary lines of business.
Palomar’s overall balance sheet strength is supported by the
strongest level of risk-adjusted capitalization, as measured by
Best’s Capital Adequacy Ratio (BCAR), which is expected to be
maintained in prospective periods. Furthermore, equity growth in
most years, solid liquidity and positive operating cash flows also
support the balance sheet. While loss reserve development has been
somewhat inconsistent, reported deficiencies have not had a
material impact on results. The group maintains an elevated
reinsurance dependency, reflective of its catastrophe exposed risk
profile with the strategic use of excess of loss and quota share
arrangements to mitigate potential volatility. Palomar writes a
variety of risks through its admitted and non-admitted entities,
primarily focusing on earthquake coverage in California, as well as
inland marine, commercial all risk, and excess property/casualty
products. Distribution strategies leverage several channels
including retail agents, wholesale brokers, program administrators
and carrier partnerships. While growth has been significant, an
appropriate ERM program partially mitigates potential
volatility.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best's Credit Ratings. For information
on the proper use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
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