Press Release Details

LA JOLLA, Calif., May 04, 2022 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported net income of $14.5 million, or $0.56 per diluted share, for the first quarter of 2022 compared to $16.6 million, or $0.63 per diluted share, for the first quarter of 2021. Adjusted net income⁽¹⁾ was $17.6 million, or $0.68 per diluted share, for the first quarter of 2022 compared to $19.3 million, or $0.73 per diluted share, for the first quarter of 2021.

First Quarter 2022 Highlights

• Gross written premiums increased by 65.0% to $170.9 million compared to $103.6 million in the first quarter of 2021
• Net income of $14.5 million compared to $16.6 million in the first quarter of 2021
• Adjusted net income⁽¹⁾ of $17.6 million compared to $19.3 million in the first quarter of 2021
• Total loss ratio of 19.7% compared to negative 9.4% in the first quarter of 2021
• Combined ratio of 76.5% compared to 60.4% in the first quarter of 2021
• Adjusted combined ratio⁽¹⁾ of 72.1% compared to 53.3% in the first quarter of 2021
• Annualized return on equity of 15.0% compared to 18.0% in the first quarter of 2021
• Annualized adjusted return on equity⁽¹⁾ of 18.1% compared to 20.8% in the first quarter of 2021

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

Mac Armstrong, Chairman and Chief Executive Officer, commented, “We are pleased to report another strong quarter for Palomar. When we began the year, we identified four strategic priorities for calendar 2022: produce strong premium growth, continue to deliver consistent and predictable earnings, monetize investments made over the course of 2021, and scale our organization. I am very happy to report that we made strong progress across all four initiatives during the first quarter. Selected highlights of Q1 2022 include: delivering a 65% gross written premium increase compared to the prior year period and record residential earthquake new business, the successful renewal of our aggregate reinsurance program that effectively places a floor on our adjusted return on equity of 14% for 2022, writing $30 million of managed written premium for PLMR-FRONT in its second quarter of operation, and achieving an expense ratio of 56.8%, which constituted a meaningful sequential and year-over-year improvement. The momentum of our first quarter results well positions Palomar to deliver sustained growth and profitability in the year ahead.”

Underwriting Results
Gross written premiums increased 65.0% to $170.9 million compared to $103.6 million in the first quarter of 2021, while net earned premiums increased 61.6% compared to the prior year’s first quarter.

Losses and loss adjustment expenses for the first quarter were $15.0 million including $14.5 million of non-catastrophe attritional losses, and $0.5 million of unfavorable development on catastrophe losses from prior periods. The loss ratio for the quarter was 19.7%, comprised of a catastrophe loss ratio of 0.6%⁽¹⁾ and an non-catastrophe attritional loss ratio of 19.1%, compared to a loss ratio of negative 9.4% during the same period last year comprised of a catastrophe loss ratio of negative 20.5% and non-catastrophe attritional loss ratio of 11.1%.

Underwriting income⁽¹⁾ was $17.9 million resulting in a combined ratio of 76.5% compared to underwriting income of $18.6 million and a combined ratio of 60.4% during the same period last year. Excluding expenses related to transactions, stock-based compensation, amortization of intangibles, and catastrophe bonds, the Company’s adjusted combined ratio⁽¹⁾ was 72.1% in the first quarter compared to 53.3% during the same period last year. Non-catastrophe losses and loss ratio increased mainly due to the growth of lines of business subject to attritional losses, such as Specialty Homeowners, Flood, and Inland Marine.

When comparing our 2022 results to our first and second quarter results for 2021, it is important to remember the impact that Winter Storm Uri (“Uri”) had on our results during those periods. Uri resulted in negative losses and a negative loss ratio in the first quarter of 2021 offset by additional reinsurance expense, or ceded premium, in the first and second quarters of 2021.

Investment Results
Net investment income increased by 16.2% to $2.6 million compared to $2.2 million in the prior year’s first quarter. The year over year increase was primarily due to a higher average balance of investments held during the three months ended March 31, 2022 due to cash generated from operations. Funds are generally invested conservatively in high quality securities, including government agency, asset and mortgage-backed securities, municipal and corporate bonds with an average credit quality of "A1/A+" with a small portion of our portfolio invested in equity securities. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 4.17 years at March 31, 2022. Cash and invested assets totaled $533.2 million at March 31, 2022. During the first quarter, the Company recorded realized and unrealized losses of $1.3 million related to its investment portfolio as compared to realized and unrealized losses of $739 thousand in last year’s first quarter.  

Tax Rate
The effective tax rate for the three months ended March 31, 2022 was 23.8% compared to 17.3% for the three months ended March 31, 2021. For the current quarter, the Company’s income tax rate was higher than the statutory rate due primarily to non-deductible executive compensation expense. For the three months ended March 31, 2021 our income tax rate was lower than the statutory rate due primarily to the tax impact of the permanent component of employee stock option exercises.

Stockholders’ Equity and Returns
Stockholders' equity was $380.4 million at March 31, 2022 compared to $394.2 million at December 31, 2021. For the three months ended March 31, 2022, the Company’s annualized return on equity was 15.0% compared to 18.0% for the same period in the prior year while adjusted return on equity⁽¹⁾ was 18.1% compared to 20.8% for the same period in the prior year. During the current quarter, the Company repurchased 219,061 shares, or $13.0 million, of the Company’s previously announced $100 million share repurchase authorization.

Full Year 2022 Outlook
For the full year 2022, the Company expects to achieve adjusted net income of $80 million to $85 million.

Conference Call
As previously announced, Palomar will host a conference call Thursday May 5, 2022, to discuss its first quarter 2022 results at 12:00 p.m. (Eastern Time). The conference call can be accessed by dialing 1-877-423-9813 (domestic) or 1-201-689-8573 (international) and asking for the Palomar First Quarter 2022 Earnings Call. A telephonic replay will be available starting at 3:00 p.m (Eastern Time) on May 5, 2022 and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13728464. The telephonic replay will be available until 11:59 pm (Eastern Time) on May 12, 2022.

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. and Palomar Excess and Surplus Insurance Company (“PESIC”). Palomar is an innovative insurer that focuses on the provision of specialty insurance for residential and commercial clients. Palomar’s underwriting and analytical expertise allow it to concentrate on certain markets that it believes are underserved by other insurance companies, such as the markets for earthquake, hurricane and flood insurance. Palomar’s insurance subsidiaries, Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., and Palomar Excess and Surplus Insurance Company, have a financial strength rating of “A-” (Excellent) from A.M. Best.

To learn more, visit PLMR.com.

Follow Palomar on Facebook, LinkedIn and Twitter: @PLMRInsurance

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 and net realized and unrealized gains and losses on investments. 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.

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.

Tangible stockholders’ equity is a non-GAAP financial measure defined as stockholders’ equity less 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
Bill Bold
1-619-890-5972
bbold@plmr.com

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

Summary of Operating Results

The following table summarizes the Company’s results for the three months ended March 31, 2022 and 2021:

		Three months ended
		March 31,
		2022				2021				Change				% Change
		($ in thousands, except per share data)
Gross written premiums		$	170,934			$	103,577			$	67,357			65.0		%
Ceded written premiums			(89,552	)			(43,364	)			(46,188	)		106.5		%
Net written premiums			81,382				60,213				21,169			35.2		%
Net earned premiums			76,032				47,053				28,979			61.6		%
Commission and other income			777				711				66			9.3		%
Total underwriting revenue (1)			76,809				47,764				29,045			60.8		%
Losses and loss adjustment expenses			14,954				(4,423	)			19,377			NM
Acquisition expenses			28,054				19,313				8,741			45.3		%
Other underwriting expenses			15,925				14,248				1,677			11.8		%
Underwriting income (1)			17,876				18,626				(750	)		(4.0	)	%
Interest expense			(93	)			—				(93	)		NM
Net investment income			2,579				2,219				360			16.2		%
Net realized and unrealized losses on investments			(1,278	)			(739	)			(539	)		72.9		%
Income before income taxes			19,084				20,106				(1,022	)		(5.1	)	%
Income tax expense			4,547				3,476				1,071			30.8		%
Net income		$	14,537			$	16,630			$	(2,093	)		(12.6	)	%
Adjustments:
Expenses associated with transactions and stock offerings			86				410				(324	)		(79.0	)	%
Stock-based compensation expense			2,760				938				1,822			194.2		%
Amortization of intangibles			315				337				(22	)		(6.5	)	%
Expenses associated with catastrophe bond, net of rebate			200				1,683				(1,483	)		NM
Tax impact			(325	)			(712	)			387			NM
Adjusted net income (1)		$	17,573			$	19,286			$	(1,713	)		(8.9	)	%
Key Financial and Operating Metrics
Annualized return on equity			15.0		%		18.0		%
Annualized adjusted return on equity (1)			18.1		%		20.8		%
Loss ratio			19.7		%		(9.4	)	%
Expense ratio			56.8		%		69.8		%
Combined ratio			76.5		%		60.4		%
Adjusted combined ratio (1)			72.1		%		53.3		%
Diluted earnings per share		$	0.56			$	0.63
Diluted adjusted earnings per share (1)		$	0.68			$	0.73
Catastrophe losses		$	481			$	(9,631	)
Catastrophe loss ratio (1)			0.6		%		(20.5	)	%
Adjusted combined ratio excluding catastrophe losses (1)			71.4		%		73.7		%
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)

		March 31,			December 31,
		2022			2021
		(Unaudited)
Assets
Investments:
Fixed maturity securities available for sale, at fair value (amortized cost: $461,206 in 2022; $426,122 in 2021)		$	444,320		$	432,682
Equity securities, at fair value (cost: $41,836 in 2022; $31,834 in 2021)			41,983			33,261
Total investments			486,303			465,943
Cash and cash equivalents			46,876			50,284
Restricted cash			63			87
Accrued investment income			2,648			2,725
Premium receivable			94,615			88,012
Deferred policy acquisition costs			54,977			55,953
Reinsurance recoverable on unpaid losses and loss adjustment expenses			113,726			127,947
Reinsurance recoverable on paid losses and loss adjustment expenses			32,082			29,368
Ceded unearned premiums			84,975			58,315
Prepaid expenses and other assets			31,479			37,072
Property and equipment, net			483			527
Intangible assets, net			9,201			9,501
Total assets		$	957,428		$	925,734
Liabilities and stockholders' equity
Liabilities:
Accounts payable and other accrued liabilities		$	26,561		$	21,284
Reserve for losses and loss adjustment expenses			165,112			173,366
Unearned premiums			316,675			284,665
Ceded premium payable			47,318			37,460
Funds held under reinsurance treaty			6,362			10,882
Deferred tax liabilities, net			—			3,908
Borrowings from credit agreements			15,000			—
Total liabilities			577,028			531,565
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021			—			—
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,231,571 and 25,428,929 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively			3			3
Additional paid-in capital			322,048			318,902
Accumulated other comprehensive income (loss)			(13,151)			5,312
Retained earnings			71,500			69,952
Total stockholders' equity			380,400			394,169
Total liabilities and stockholders' equity		$	957,428		$	925,734

Condensed Consolidated Income Statement

Palomar Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)

(in thousands, except shares and per share data)

		Three Months Ended
		March 31,
		2022			2021
Revenues:
Gross written premiums		$	170,934		$	103,577
Ceded written premiums			(89,552)			(43,364)
Net written premiums			81,382			60,213
Change in unearned premiums			(5,350)			(13,160)
Net earned premiums			76,032			47,053
Net investment income			2,579			2,219
Net realized and unrealized losses on investments			(1,278)			(739)
Commission and other income			777			711
Total revenues			78,110			49,244
Expenses:
Losses and loss adjustment expenses			14,954			(4,423)
Acquisition expenses			28,054			19,313
Other underwriting expenses			15,925			14,248
Interest expense			93			—
Total expenses			59,026			29,138
Income before income taxes			19,084			20,106
Income tax expense			4,547			3,476
Net income			14,537			16,630
Other comprehensive income, net:
Net unrealized losses on securities available for sale for the three months ended March 31, 2022 and 2021, respectively			(18,463)			(6,199)
Net comprehensive income (loss)		$	(3,926)		$	10,431
Per Share Data:
Basic earnings per share		$	0.57		$	0.65
Diluted earnings per share		$	0.56		$	0.63
Weighted-average common shares outstanding:
Basic			25,362,179			25,552,629
Diluted			25,899,290			26,256,281

Underwriting Segment Data

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

		Three Months Ended March 31,
		2022					2021
		($ in thousands)
					% of					% of
		Amount			GWP		Amount			GWP
Product
Residential Earthquake		$	46,336		27.1	%	$	35,898		34.7	%
Fronting Premiums			29,845		17.5	%		—		0.0	%
Commercial Earthquake			25,144		14.7	%		21,277		20.5	%
Inland Marine			18,237		10.7	%		7,834		7.6	%
Specialty Homeowners			16,284		9.5	%		14,002		13.5	%
Commercial All Risk			11,210		6.6	%		8,190		7.9	%
Hawaii Hurricane			6,914		4.0	%		6,137		5.9	%
Residential Flood			2,993		1.8	%		2,283		2.2	%
Other			13,971		8.1	%		7,956		7.7	%
Total Gross Written Premiums		$	170,934		100.0	%	$	103,577		100.0	%

		Three Months Ended March 31,
		2022					2021
		($ in thousands)
					% of					% of
		Amount			GWP		Amount			GWP
State
California		$	68,718		40.2	%	$	50,502		48.8	%
Texas			18,979		11.1	%		11,054		10.7	%
Hawaii			8,540		5.0	%		6,920		6.7	%
Washington			6,881		4.0	%		4,088		3.9	%
Florida			4,962		2.9	%		6,058		5.8	%
Oregon			4,373		2.6	%		2,904		2.8	%
Illinois			4,273		2.5	%		2,522		2.4	%
North Carolina			4,078		2.4	%		3,888		3.8	%
Other			50,130		29.3	%		15,641		15.1	%
Total Gross Written Premiums		$	170,934		100.0	%	$	103,577		100.0	%

		Three Months Ended March 31,
		2022					2021
		($ in thousands)
					% of					% of
		Amount			GWP		Amount			GWP
Subsidiary
PSIC		$	104,004		60.8	%	$	79,845		77.1	%
PESIC			66,930		39.2	%		23,732		22.9	%
Total Gross Written Premiums		$	170,934		100.0	%	$	103,577		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
		March 31,
		2022			2021			Change			% Change
		($ in thousands)
Gross earned premiums		$	138,924		$	91,293		$	47,631		52.2	%
Ceded earned premiums			(62,892)			(44,240)			(18,652)		42.2	%
Net earned premiums		$	76,032		$	47,053		$	28,979		61.6	%
Net earned premium ratio			54.7%			51.5%

Loss detail

		Three Months Ended
		March 31,
		2022			2021			Change			% Change
		($ in thousands)
Catastrophe losses		$	481		$	(9,631)		$	10,112		(105.0)
Non-catastrophe losses			14,473			5,208			9,265		177.9	%
Total losses and loss adjustment expenses		$	14,954		$	(4,423)		$	19,377		(438.1)	%

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

		Three Months Ended March 31,
		2022			2021
			(in thousands)
Reserve for losses and LAE net of reinsurance recoverables at beginning of period		$	45,419		$	34,470
Add: Incurred losses and LAE, net of reinsurance, related to:
Current year			13,449			(1,696)
Prior years			1,505			(2,727)
Total incurred			14,954			(4,423)
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year			1,490			1,680
Prior years			7,497			9,351
Total payments			8,987			11,031
Reserve for losses and LAE net of reinsurance recoverables at end of period			51,386			19,016
Add: Reinsurance recoverables on unpaid losses and LAE at end of period			113,726			188,448
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period		$	165,112		$	207,464

Reconciliation of Non-GAAP Financial Measures

For the three ended March 31, 2022 and 2021, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows:

Underwriting revenue

		Three Months Ended
		March 31,
		2022			2021
		(in thousands)
Total revenue		$	78,110		$	49,244
Net investment income			(2,579)			(2,219)
Net realized and unrealized (gains) losses on investments			1,278			739
Underwriting revenue		$	76,809		$	47,764

Underwriting income

		Three Months Ended
		March 31,
		2022			2021
		(in thousands)
Income before income taxes		$	19,084		$	20,106
Net investment income			(2,579)			(2,219)
Net realized and unrealized (gains) losses on investments			1,278			739
Underwriting income		$	17,876		$	18,626

Adjusted net income

		Three Months Ended
		March 31,
		2022			2021
		(in thousands)
Net income		$	14,537		$	16,630
Adjustments:
Expenses associated with transactions and stock offerings			86			410
Stock-based compensation expense			2,760			938
Amortization of intangibles			315			337
Expenses associated with catastrophe bond, net of rebate			200			1,683
Tax impact			(325)			(712)
Adjusted net income		$	17,573		$	19,286

Annualized adjusted return on equity

		Three Months Ended
		March 31,
		2022			2021
		($ in thousands)
Annualized adjusted net income		$	70,292		$	77,144
Average stockholders' equity		$	387,284		$	370,048
Annualized adjusted return on equity			18.1	%		20.8	%

Adjusted combined ratio

		Three Months Ended
		March 31,
		2022			2021
		($ in thousands)
Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income		$	58,156		$	28,427
Denominator: Net earned premiums		$	76,032		$	47,053
Combined ratio			76.5	%		60.4	%
Adjustments to numerator:
Expenses associated with transactions and stock offerings		$	(86)		$	(410)
Stock-based compensation expense			(2,760)			(938)
Amortization of intangibles			(315)			(337)
Expenses associated with catastrophe bond, net of rebate			(200)			(1,683)
Adjusted combined ratio			72.1	%		53.3	%

Diluted adjusted earnings per share

		Three Months Ended
		March 31,
		2022			2021
		(in thousands, except per share data)
Adjusted net income		$	17,573		$	19,286
Weighted-average common shares outstanding, diluted			25,899,290			26,256,281
Diluted adjusted earnings per share		$	0.68		$	0.73

Catastrophe loss ratio

		Three Months Ended
		March 31,
		2022			2021
		($ in thousands)
Numerator: Losses and loss adjustment expenses		$	14,954		$	(4,423)
Denominator: Net earned premiums		$	76,032		$	47,053
Loss ratio			19.7	%		(9.4)	%
Numerator: Catastrophe losses		$	481		$	(9,631)
Denominator: Net earned premiums		$	76,032		$	47,053
Catastrophe loss ratio			0.6	%		(20.5)	%

Adjusted combined ratio excluding catastrophe losses

		Three Months Ended
		March 31,
		2022			2021
		($ in thousands)
Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income		$	58,156		$	28,427
Denominator: Net earned premiums		$	76,032		$	47,053
Combined ratio			76.5	%		60.4	%
Adjustments to numerator:
Expenses associated with transactions and stock offerings		$	(86)		$	(410)
Stock-based compensation expense			(2,760)			(938)
Amortization of intangibles			(315)			(337)
Expenses associated with catastrophe bond, net of rebate			(200)			(1,683)
Catastrophe losses			(481)			9,631
Adjusted combined ratio excluding catastrophe losses			71.4	%		73.7	%

Tangible Stockholders’ equity

		March 31,			December 31,
		2022			2021
		(in thousands)
Stockholders' equity		$	380,400		$	394,169
Intangible assets			(9,201)			(9,501)
Tangible stockholders' equity		$	371,199		$	384,668

 

Source: Palomar Holdings, Inc